Arizona Eagle Mining Corp. press release

GALIANO GOLD REPORTS Q4 AND FULL YEAR 2022 OPERATING AND FINANCIAL RESULTS

2023-03-28

TSXV - TSX Venture Exchange · Canada · Corporate Finance

Canada NewsWire

(All dollar amounts are United States dollars unless otherwise stated)

VANCOUVER, BC , March 28, 2023 /CNW/ - Galiano Gold Inc. ("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU) reports fourth quarter ("Q4") and full year 2022 operating and financial results for the Company and the Asanko Gold Mine ("AGM"), located in Ghana , West Africa . The AGM is a 50:50 joint venture ("JV") with Gold Fields Limited ("Gold Fields") (JSE: GFI) (NYSE: GFI) which is managed and operated by Galiano. All financial information contained in this news release is reported in US$.

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Asanko Gold Mine JV Key Metrics (100% basis):

Safety: 2022 saw a very strong safety performance with no lost-time injuries ("LTI") nor total recordable injuries ("TRI") recorded during the quarter, resulting in 12-month rolling LTI and TRI frequency rates of 0.00 and 0.15 per million employee hours worked, respectively. However, the fatal accident announced on February 6, 2023 , demonstrates that we must maintain our focus on all safety processes at the AGM given a fundamental goal of the Company is to create and maintain Zero Harm operations. Improved long-term outlook: Reported the results of an independent National Instrument 43-101 ("NI 43-101") Feasibility Study report ("Independent FS"), which includes the reinstatement of Mineral Reserves at the AGM. The reinstated Mineral Reserve and updated Mineral Resource estimates, underpinning the Independent FS, were led by SRK Consulting ( Canada ) Inc. The Mineral Reserve estimate forms the basis of a revised life-of-mine ("LOM") plan at the AGM, encompassing 4 main open-pit mining areas: Abore, Miradani North, Nkran and Esaase, and 2 satellite deposits: Dynamite Hill and Adubiaso. The Company published the details of the new LOM plan on March 28, 2023 in a report titled "NI 43-101 Technical Report and Feasibility Study for Asanko Gold Mine, Ghana " with an effective date of December 31, 2022 (collectively the "2023 Technical Report"). Key highlights from the 2023 Technical Report include: Production performance: Gold production of 34,090 ounces during the fourth quarter and annual gold production of 170,342 ounces, achieving the upper end of revised guidance of 160,000 to 170,000 ounces. Milling performance: Achieved milling throughput of 5.8 million tonnes ("Mt") of material at a grade of 1.1 g/t during the year. Metallurgical recovery averaged 80% for the year, which was lower than prior years due to lower realized recoveries from Esaase in the first quarter and processing of lower grade stockpiles during the balance of 2022. Cost performance and cash flow: Total cash costs 1 of $1,157 /oz and AISC 1 of $1,346 /oz for the year ended December 31, 2022 . Additionally, the JV generated positive cash flows from operations of $75.5 million and free cash flow 1 of $43.8 million during the year. Total cash costs 1 and AISC 1 for Q4 2022 were $1,031 /oz and $1,191 /oz, respectively. Financial performance: Gold revenue of $296.5 million generated from 167,849 gold ounces sold at an average realized price of $1,767 /oz for the year. Net income after tax of $103.2 million during the year, which included an impairment reversal on mineral properties of $63.2 million , and Adjusted EBITDA 1 of $79.2 million . Exploration success: Completed extensive infill drilling at Esaase, Miradani North, Abore, Midras and Nkran, the results of which were incorporated into the Independent FS, which saw a 21% increase in total Measured and Indicated ounces (after depletion) and a 251% increase in total Inferred ounces compared to the previous estimates dated February 28, 2022 . Furthermore, an extensive exploration drill program was completed with positive results at Nkran, intercepting several high-grade intervals within and below the resource shell, in addition to the first phase of testing the underground potential of the deposit. Robust liquidity: $91.3 million in cash and cash equivalents, $3.6 million in gold on hand, $2.7 million in gold sales receivables and no debt as of December 31, 2022 . 2023 guidance: The AGM is expected to produce between 100,000 to 120,000 ounces at AISC 1 guidance of between $1,900 /oz to $1,975 /oz. AISC 1 is anticipated to be elevated in 2023 primarily due to waste stripping necessary to restart mining at Abore, which will benefit future years production, as well as higher expenditures on the tailings storage facility ("TSF").

| _ | | 1 See "Non-IFRS Performance Measures" |

Galiano Gold Highlights:

Stable balance sheet: Cash and cash equivalents of $56.1 million and $1.7 million in receivables as at December 31, 2022 , while remaining debt-free. Positive earnings: Net income after tax of $40.8 million or $0.18 per common share during the year, which included the Company's share of the JV's net earnings for the year. Generative exploration: During the quarter, the Company initiated a Phase 1 drilling program on its wholly owned Asumura property on the Sefwi gold belt in Ghana , consisting of 95 planned drill holes designed to test for gold mineralization along two interpreted structural trends with coincident surface gold anomalies identified through soil sampling. As of December 31, 2022 , 12 holes have been completed with 30 additional holes in progress.

"In the fourth quarter, the AGM had yet another strong financial and operating period. Despite the anticipated lower grades being processed, the stockpiles continued to generate cash to further strengthen the AGM's balance sheet, building a solid foundation to fund the next stage of development at the AGM," stated Matt Badylak , Galiano's President and Chief Executive Officer. "With the independent feasibility study now complete and Mineral Reserves reinstated for the AGM, our focus as the JV operators will now shift to optimizing the life of mine plan to enhance the project's economics, and restart mining as soon as possible, currently expected during the fourth quarter of this year. I am also very encouraged with the continued exploration success achieved in 2022 and the advancement of further exploration work on the highly prospective Asankrangwa gold belt.

Additionally, at the corporate level, our balance sheet remains debt free with more than $55 million of cash, and we are excited to have commenced a drilling program at our 100% owned Asumura property on the Sefwi gold belt in Ghana ."

Asanko Gold Mine – Summary of quarterly operational and financial highlights (100% basis)

| Asanko Gold Mine (100% basis) | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | | Ore mined ('000t) | - | 144 | 675 | 1,075 | 1,623 | | Waste mined ('000t) | - | 107 | 1,320 | 5,279 | 8,752 | | Total mined ('000t) | - | 251 | 1,995 | 6,354 | 10,375 | | Strip ratio (W:O) | - | 0.7 | 2.0 | 4.9 | 5.4 | | Average gold grade mined (g/t) | - | 1.8 | 1.6 | 1.3 | 1.2 | | Mining cost ($/t mined) | - | 25.27 | 8.30 | 4.64 | 3.75 | | Ore transportation from Esaase ('000 t) | 503 | 699 | 901 | 1,304 | 1,264 | | Ore transportation cost ($/t trucked) | 6.19 | 6.55 | 6.19 | 5.82 | 6.13 | | Ore milled ('000t) | 1,518 | 1,423 | 1,406 | 1,482 | 1,472 | | Average mill head grade (g/t) | 0.8 | 1.1 | 1.3 | 1.3 | 1.2 | | Average recovery rate (%) | 80 | 88 | 84 | 69 | 91 | | Processing cost ($/t milled) | 10.06 | 10.45 | 10.40 | 9.46 | 10.07 | | G&A cost ($/t milled) | 4.20 | 4.89 | 5.40 | 6.17 | 5.86 | | Gold produced (oz) | 34,090 | 43,899 | 50,010 | 42,343 | 50,278 | | Gold sales (oz) | 34,202 | 45,482 | 46,236 | 41,929 | 51,368 | | Average realized gold price ($/oz) | 1,686 | 1,687 | 1,832 | 1,846 | 1,771 | | Total cash costs 1 ($/oz) | 1,031 | 1,001 | 1,218 | 1,361 | 1,257 | | All-in sustaining costs 1 ($/oz) | 1,191 | 1,178 | 1,431 | 1,559 | 1,539 | | All-in sustaining margin 1 ($/oz) | 495 | 509 | 401 | 287 | 232 | | All-in sustaining margin 1 ($m) | 16.9 | 23.2 | 18.5 | 12.0 | 11.9 | | Revenue ($m) | 57.8 | 76.9 | 84.9 | 77.5 | 91.1 | | Income (loss) from mine operations ($m) | 19.2 | 25.7 | 16.2 | 10.6 | (8.9) | | Adjusted net income (loss) after tax 1 ($m) | 19.6 | 17.3 | 13.7 | 7.4 | (11.4) | | Cash provided by operating activities ($m) | 11.1 | 26.1 | 34.3 | 3.9 | 14.0 | | Free cash flow 1 ($m) | 5.5 | 16.3 | 25.3 | (3.4) | (3.6) |

Asanko Gold Mine – Financial and operational highlights for the three months and years ended December 31, 2022 and 2021 (100% basis)

| | Three months ended December 31, | Year ended December 31, | | | | (All amounts in 000's of US dollars, unless otherwise stated) | 2022 | 2021 | 2022 | 2021 | | Asanko Gold Mine (100% basis) | | | | | | Financial results | | | | | | Revenue | 57,808 | 91,075 | 297,136 | 382,380 | | Income (loss) from mine operations | 19,167 | (8,949) | 71,653 | 58,026 | | Net income (loss) after tax | 83,712 | (164,575) | 103,223 | (114,472) | | Adjusted net income (loss) after tax 1 | 19,627 | (11,411) | 58,058 | 38,692 | | Adjusted EBITDA 1 | 22,810 | 1,595 | 79,248 | 76,712 | | | | | | | | Cash and cash equivalents | 91,271 | 49,211 | 91,271 | 49,211 | | Cash generated from operating activities | 11,135 | 13,953 | 75,479 | 86,602 | | Free cash flow 1 | 5,528 | (3,617) | 43,780 | 25,921 | | AISC margin 1 | 16,930 | 11,917 | 70,664 | 72,602 | | | | | | | | Key mine performance data | | | | | | Gold produced (ounces) | 34,090 | 50,278 | 170,342 | 210,241 | | Gold sold (ounces) | 34,202 | 51,368 | 167,849 | 216,076 | | | | | | | | Average realized gold price ($/oz) | 1,686 | 1,771 | 1,767 | 1,767 | | | | | | | | Total cash costs ($ per gold ounce sold) 1 | 1,031 | 1,257 | 1,157 | 1,177 | | All-in sustaining costs ($ per gold ounce sold) 1 | 1,191 | 1,539 | 1,346 | 1,431 |

The AGM produced 34,090 ounces of gold during Q4 2022, as the processing plant achieved milling throughput of 1.5Mt of material processed at a grade of 0.8g/t. The mill feed was sourced entirely from existing lower grade stockpiles. Produced 170,342 ounces of gold in 2022, achieving the upper end of revised 2022 production guidance of 160,000–170,000 ounces as stockpile grades performed better than expected. Sold 34,202 ounces of gold in Q4 2022 at an average realized gold price of $1,686 /oz for total revenue of $57.8 million (including $0.1 million of by-product silver revenue), a decrease of $33.3 million from Q4 2021. The decrease in revenue quarter-on-quarter was a function of a 33% reduction in sales volumes and a 5% decrease in realized gold prices relative to Q4 2021. Total cost of sales (including depreciation and depletion and royalties) amounted to $38.6 million in Q4 2022, a decrease of $61.4 million from Q4 2021. The decrease in cost of sales was primarily due to 33% fewer gold ounces sold and processing material that had no carrying value for accounting purposes. Labour costs were also lower in Q4 2022 resulting from the restructuring of the AGM's workforce completed in Q1 2022 ( $2.6 million decrease). These factors were partly offset by inflationary pressures on key reagents, electricity and other consumables. Depreciation and depletion expense was also $14.0 million lower in Q4 2022 relative to Q4 2021, due mainly to fewer gold ounces sold. Income from mine operations for Q4 2022 totaled $19.2 million compared to a loss from mine operations of $8.9 million in Q4 2021. The increase in income from mine operations was due to a $61.4 million decrease in cost of sales, partly offset by a $33.3 million decrease in revenue (as described above). As a result of the positive results received from the Esaase metallurgical test work (in Q3 2022) and reinstatement of mineral reserves at the AGM as of December 31, 2022 , an impairment reversal on mineral properties, plant and equipment of $63.2 million was recorded by the AGM in Q4 2022. Reported Adjusted EBITDA 1 of $79.2 million in 2022 compared to $76.7 million in 2021. Total cash costs 1 were $1,031 /oz in Q4 2022 compared to $1,257 /oz in Q4 2021, an 18% decrease. Although gold sales volumes decreased by 33% in Q4 2022, total cash costs per ounce 1 were lower compared to Q4 2021 as a result of lower mining contractor costs and the processing of material that had no carrying value for accounting purposes. In addition, labour costs were lower in Q4 2022 as mentioned above and ore transportation costs were $4.7 million lower due to fewer tonnes trucked to the processing facility. These factors were partly offset by inflationary pressures on key reagents and consumables as previously mentioned. AISC 1 for Q4 2022 was $1,191 /oz compared to $1,539 /oz in the comparative period. AISC 1 was lower in the current quarter primarily due to the decrease in total cash costs per ounce 1 mentioned above and lower sustaining lease payments ( $78 /oz decrease) related to the temporary cessation of mining at the end of Q2 2022. General and administrative expenses were also $28 /oz lower in Q4 2022 relative to Q4 2021 as a result of the AGM's workforce restructuring previously described. The AGM generated $11.1 million of cash flows from operating activities and free cash flow 1 of $5.5 million during Q4 2022. This compares to $14.0 million of cash flows from operating activities and negative $3.6 million of free cash flow 1 during Q4 2021. The increase in free cash flow 1 was primarily due to higher AISC margin 1 and lower capital spend in Q4 2022.

Galiano Gold Inc. – Financial highlights for the three months and years ended December 31, 2022 and 2021

| | Three months ended December 31, | Year ended December 31, | | | | (All amounts in 000's of US dollars, except per share amounts) | 2022 | 2021 | 2022 | 2021 | | Galiano Gold Inc. | | | | | | Net income (loss) after tax | 28,500 | (91,033) | 40,809 | (68,883) | | Net income (loss) after tax per share | 0.13 | (0.40) | 0.18 | (0.31) | | Adjusted net (loss) income after tax 1 | (6,010) | (14,478) | 6,299 | 7,672 | | Adjusted net (loss) income after tax per share 1 | (0.03) | (0.06) | 0.03 | 0.03 | | Adjusted EBITDA 1 | 8,169 | 344 | 28,827 | 28,498 | | Cash and cash equivalents | 56,111 | 53,521 | 56,111 | 53,521 |

The Company reported net income after tax of $28.5 million in Q4 2022, compared to a net loss after tax of $91.0 million in Q4 2021. The increase in earnings during Q4 2022 was due to the recognition of the Company's share of the JV's net earnings for the year (which included its 45% interest in the AGM's $63.2 million impairment reversal) and a $7.6 million impairment reversal recorded by the Company on its equity investment in the AGM JV, which were partly offset by a $22.2 million downward fair value adjustment on the Company's preference shares in the JV. In Q4 2021, the Company recognized its share of the JV's net loss, which included a $153.2 million impairment charge. Adjusted EBITDA 1 for Q4 2022 amounted to $8.2 million , compared to $0.3 million in Q4 2021. The increase in Adjusted EBITDA 1 was primarily a result of the Company's share of the JV's Adjusted EBITDA. From Q1 to Q3 2022, the Company did not recognize its share of the JV's net earnings as the recoverable amount of the Company's equity investment was estimated to be nil. Due to the reinstatement of mineral reserves by the AGM as of December 31, 2022 , the Company reversed the impairments taken on its share of the JV's net earnings for the nine months ended September 30, 2022 , which amounted to $8.8 million . Cash provided by operating activities in Q4 2022 was $0.8 million , compared to cash utilized in operations of $2.3 million in Q4 2021. The increase in cash provided by operations was primarily due to collection of the Company's JV service fee which amounted to $2.4 million in Q4 2022. As at December 31, 2022 , the Company had cash and cash equivalents of $56.1 million and $1.7 million in receivables, while remaining debt-free.

2023 AGM Outlook

The Company has provided preliminary guidance for 2023 based on the Independent FS, which may be adjusted in the near term as the short-term stockpile processing plan and profile of capital spend is refined and the required JV approvals are obtained. The AGM is expected to produce between 100,000-120,000 ounces at AISC 1 between $1,900 /oz and $1,975 /oz. AISC 1 is anticipated to be elevated in 2023 primarily due to waste stripping necessary to restart mining at Abore, which will benefit future years production, as well as higher expenditures on the TSF.

It is expected that $38 million of sustaining capital expenditures will be spent on the TSF Stage 7 expansion, plant infrastructure and water management in 2023. Additionally, development capital of $24 million is expected to be spent on Abore and Miradani North site establishments.

For 2023, the exploration budget at the AGM is estimated at $15 million , which includes approximately 40,000 metres of drilling, as well as ground geophysics, trenching, soil sampling and regional mapping. The 2023 exploration program is focused on targeting discoveries on underexplored greenfield areas of the AGM tenements, as well as increasing the Mineral Reserve and Mineral Resources at the known deposits.

Despite the capital-intensive year, the AGM is expected to break even in terms of cash flow, assuming production achieves the top end of guidance at prevailing metal prices. The investment in 2023 will provide a solid foundation for the next phase of the operation.

| This news release should be read in conjunction with Galiano's Management's Discussion and Analysis and the Audited Consolidated Annual Financial Statements for the years ended December 31, 2022 and 2021, which are available at www.galianogold.com and filed on SEDAR. |

1 Non-IFRS Performance Measures The Company has included certain non-IFRS performance measures in this news release. These non-IFRS performance measures do not have any standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Accordingly, these performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Refer to the Non-IFRS Measures section of Galiano's Management's Discussion and Analysis for an explanation of these measures and reconciliations to the Company's and the JV's reported financial results in accordance with IFRS.

Total Cash Costs per ounce Management of the Company uses total cash costs per gold ounce sold to monitor the operating performance of the JV. Total cash costs include the cost of production, adjusted for share-based compensation expense, by-product revenue and production royalties of 5% per ounce of gold sold.

All-in Sustaining Costs Per Gold Ounce and All-in Sustaining Margin The Company has adopted the reporting of "all-in sustaining costs per gold ounce" ("AISC") as per the World Gold Council's guidance. AISC include total cash costs, corporate overhead expenses, sustaining capital expenditure, sustaining capitalized stripping costs, reclamation cost accretion and lease payments made to and interest expense on the AGM's mining and service lease agreements per ounce of gold sold. Excluded from AISC are one-time severance charges in line with World Gold Council guidance. All-in sustaining margin is calculated by taking the average realized gold price for a period less that period's AISC.

EBITDA and Adjusted EBITDA EBITDA provides an indication of the Company's continuing capacity to generate income from operations before taking into account the Company's financing decisions and costs of amortizing capital assets. Accordingly, EBITDA comprises net income (loss) excluding interest expense, interest income, amortization and depletion, and income taxes. Adjusted EBITDA adjusts EBITDA to exclude non-recurring items and to include the Company's interest in the adjusted EBITDA of the JV. Other companies and JV partners may calculate EBITDA and Adjusted EBITDA differently.

Free cash flow The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use free cash flow to evaluate the JV's performance with respect to its operating cash flow capacity to meet non-discretionary outflows of cash. The presentation of free cash flow is not meant to be a substitute for the cash flow information presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Free cash flow is calculated as cash flows from operating activities of the JV adjusted for cash flows associated with sustaining and non-sustaining capital expenditures and payments made to mining and service contractors for leases capitalized under IFRS 16.