Mangazeya Mining : Announces Filing of its Q1 2016 Financial Statements and MD&A Quarterly Highlights

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TORONTO, ONTARIO, May 27, 2016 - Mangazeya Mining Ltd. ('Mangazeya' or the 'Company') (NEX: MGZ.H) announced the filing of its unaudited interim condensed financial statements ('Financial Statements'), management's discussion and analysis - quarterly highlights ('QH') for the first quarter ended March 31, 2016. All figures are quoted in Canadian dollars unless otherwise indicated.

Highlights for 1Q include:

• Mangazeya started production early this year, gold produced was 1,850 ounces and gold sold amounted to 1,127 ounces;
• Revenues for the period made up $2,026k. The average gold price in 1Q 2016 increased comparing with the average gold price for 2015 from $1,502 to $1,632 per ounce or by 8.7% (from 1,177 USD to 1,190 USD per ounce or by 1.1%);
• TCC for Q1 2016 ($943 per ounce) increased comparing with average TCC for 2015 ($648 per ounce) due to increase in stripping ratio, decrease in average grade;
• The Company reached positive EBITDA in Q1 2016 in the amount of $633k comparing with negative EBITDA in Q1 2015 in the amount of ($1,210)k;
• Cash flow from operating activities before changes in working capital amounted to $744k for 1Q 2016 compared to cash flow used in operating activities of ($1,326) in Q1 2015;
• Capital expenditures for 1Q 2016 amounted to $2,224 with $1,753k spent on mining equipment for the Savkinskoye mine, $230k spent on EEA (Savkinskoye - $100k and Zolinsko-Arkiinskaya area - $86k). For the same period of 2015 the capital expenditures were $955k including $561k spent on mining equipment for the Savkinskoye, $286k spent on mining assets for Savkinskoye and $105k spent on EEA mainly on Savkinskoye;
• On March 4, 2016 the Company completed a share-for-debt transaction with Mangazeya Center LLC. Pursuant to the transaction the ultimate beneficial owner owns approximately 88.7%, other 11.3% of shares trade on NEX and the Company has settled all of shareholder debts;
• In April 2016 the Company received another exploration and mining license for additional areas of Nasedkino. It is expected that the new areas will lead to an increase of estimated reserves of Nasedkino;
• In April 2016 Mangazeya Mining LLC entered into an agreement with Sberbank PLC on a short-term facility loan for US$ 10 million with the interest rate of 5.1% and payable by several installments till the end of 2016. The facility will be used to finance operational activity.

Roman Kashuba, CEO commented, 'It was a good start, though we faced some problems and the beginning of the year was not like expected. The temporary flooding made us work with lower grading ore. However, we managed to start production earlier this year and we aim to reach full capacity in the middle of the year.'

Financial Results for Q1 2016

The Company reported operating income of $401k in Q1 2016 compared to loss of $1,210k in Q1 2015. The increase was mainly the result of the beginning of production and sale in Q1 2016 whereas in Q1 2015 the Company suspended production.

Administrative costs for Q1 2016 decreased by 35% to $581k from $895k in Q1 2015 due to cost reduction as a result of changes in service agreement on third party services.

During Q1 2016, the Company incurred finance expenses of $1,260k compared to $4,466k in Q1 2015 due to conversion of loans to equity in March 2016.

Cash received from operating activity (before changes in working capital) in Q1 2016 was $744k as compared to outflow of $1,326k in Q1 2015. The increase was due to the sale of gold. Cash flow from investing activities in Q1 2016 was $5,207k as compared to outflow of $948k in Q1 2015. The inflow was due to repayment of short-term loans issued to a related party, partially offset by acquisition of pit equipment and increase in drilling expenditures. Cash used in financing activities in Q1 2016 was $30k compared to cash received from financing activities of $5,088k in Q1 2015. In Q1 2016 the Company has not received any loans.

The Financial Statement and MD&A are available on Mangazeya's website at http://mangazeyamining.ru/ and have been filed on SEDAR at www.sedar.com.

About Mangazeya Mining Ltd.

Mangazeya Mining Ltd. is a NEX-listed mining and exploration company, focused on the development of mineral resources in the Russian Federation.

Caution Concerning Forward-Looking Information

This news release contains forward looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws (collectively, 'forward-looking statements') relating, but not limited to, the Company's expectations, intentions and beliefs (including, without limitation, statements regarding, the Bridge Loan (including the timing of advances thereunder and the terms thereof), the Company's financial position, financial alternatives and the Company's ability to continue operations and the Loan Facility (including the occurrence of an event of default thereunder and its potential effect on the Company)). Words such as 'may', 'will', 'should', 'anticipate', 'plan', 'expect', 'believe', 'estimate' and similar terminology are used to identify forward-looking statements. Such statements are based on assumptions, estimates, opinions and analysis made by the management of the Company in light of their experience, current conditions and their expectations of future developments as well as other factors which they believe to be reasonable and relevant. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties that may cause actual results to vary include but are not limited to: the Company's ability to obtain additional financing on acceptable terms or at all; the Company's ability to demonstrate compliance with NEX listing requirements; changes in equity and debt markets; inflation; uncertainties relating to the availability and costs of financing needed to complete exploration, development and production activities; failure to establish estimated mineral resources or mineral reserves (the Company's mineral resource and mineral reserve figures are estimates and no assurances can be given that the indicated levels of gold will be produced); exploration costs varying significantly from estimates; delays in the exploration and development of, and/or commercial production from, the properties in which the Company has an interest; unexpected geological or
hydrological conditions; the speculative nature of mineral exploration and development, including the uncertainty of reserve and resource estimates; operational and technical difficulties, including the failure of major mining and/or milling equipment; the ability of the Company to service its existing debt facilities; fluctuations in gold and other commodity prices; the existence of undetected or unregistered interests or claims, whether in contract or in tort, over the property of the Company; success of future exploration and development initiatives; competition; operating performance of facilities; environmental and safety risks, including increased regulatory burdens, seismic activity, weather and other natural phenomena; inability to, or delays in, obtaining necessary permits and approvals from government authorities; risks relating to labour; and other exploration, development and operating risks; changes to and compliance with applicable laws and regulations, including environmental laws; political, economic and other risks arising from the Company's activities in Russia; fluctuations in foreign exchange rates; and those risks set out in the Company's public documents filed on SEDAR. Although the Company believes that the assumptions and factors used in preparing the forward-looking information are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all.

Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact:
Roman Kashuba
Chief Executive Officer
Mangazeya Mining Ltd.
r.kashuba@mangazeya.ru

Non-IFRS financial measures (average gold price, total cash cost per ounce of gold, adjusted EBITDA). See definition and reconciliation the MD&A for 2015. Non-IFRS performance measures provide additional information and should not be considered in isolation or a substitute for measure of performance prepared in accordance with IFRS.