The 22-year old striker has been heavily linked with a return to Italy's Serie A with reports indicating that he will soon sign with the Rossoneri.
Following Tuesday night's 0-0 draw with QPR at Loftus Road, Mancini stated that Balotelli was to have a medical with Milan.
"Both clubs are talking about him," Mancini told Sky Sports. "I think maybe tomorrow they conclude. I think that Mario is due for a medical.
"We are very sorry because we love Mario. But I think that he had this big chance to go back to Italy and to play for another top club like Milan."
Whilst Gandini posted the following on Twitter: "Transfer agreement for Balotelli signed with Manchester City.
"Medicals tomorrow in Milan, then personal terms until 2017 signing."