Midland Exploration Inc. press release

GALIANO GOLD REPORTS Q4 AND FULL YEAR 2023 OPERATING AND FINANCIAL RESULTS

2024-02-16

TSXV - TSX Venture Exchange · Lithium · Copper · Gold · Silver · Molybdenum · Nickel · Cobalt · Canada · Corporate Finance

Canada NewsWire

VANCOUVER, BC , Feb. 16, 2024 /CNW/ - Galiano Gold Inc. ("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU) is pleased to report its fourth quarter ("Q4") and full year 2023 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") which is managed and operated by Galiano. On December 21, 2023 , the Company announced it had reached an agreement with Gold Fields to acquire its 45% interest in the AGM.

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All financial information contained in this news release is reported in United States dollars.

Consolidation of AGM

On December 21, 2023 , the Company announced it had entered into a binding share purchase agreement ("SPA") with subsidiaries of Gold Fields to acquire its 45% interest in the AGM JV (the "Acquisition"). The objective of the Acquisition is to consolidate ownership of the AGM and establish Galiano as growing gold producer with robust financial strength, owning and operating one of the largest gold mines in West Africa . Upon closing of the Acquisition, the Company will own a 90% interest in the AGM with the Government of Ghana continuing to hold a 10% free-carried interest.

The Acquisition is expected to close in the first quarter of 2024, pending receipt of customary regulatory approvals in Ghana .

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

Safety: There were no lost-time injuries and one total recordable injury recorded during the fourth quarter, resulting in 12‐month rolling LTI and TRI frequency rates of 0.50 and 1.65 per million employee hours worked, respectively. Production performance: Gold production of 31,947 ounces during the fourth quarter. 2023 annual gold production of 134,077 ounces, exceeding the top end of upward revised guidance of between 120,000 to 130,000 ounces. Milling performance: Achieved mill throughput of 1.5 million tonnes ("Mt") of ore at a grade of 0.8 grams per tonne ("g/t") during the fourth quarter. Metallurgical recovery in Q4 2023 was 84%. Mill throughput for 2023 totaled 6.1 Mt, a new record for the AGM. Cost performance: Total cash costs 1 of $1,352 per gold ounce ("/oz") and all-in sustaining costs 1 ("AISC") of $2,065 /oz for the three months ended December 31, 2023 . Full year 2023 AISC 1 amounted to $1,522 /oz, at the lower end of downward revised guidance of between $1,500 /oz to $1,600 /oz. Q4 2023 AISC 1 was elevated as anticipated due to higher sustaining capital expenditures related to Abore waste stripping and implementation of a water treatment system at the tailings storage facility ("TSF"). Cash flow generation: The JV generated positive cash flow from operations of $24.1 million and Free Cash Flow 1 of $2.3 million during the fourth quarter. Full year 2023 Free Cash Flow 1 totaled $48.4 million . Financial performance: Gold revenue of $59.3 million generated from 30,555 gold ounces sold at an average realized price of $1,942 /oz during the fourth quarter. Net income of $3.7 million and Adjusted EBITDA 1 of $9.0 million during the fourth quarter. Restart of mining: Hard rock mining operations at the AGM restarted on October 1, 2023 , with waste stripping activities ongoing. The Abore pit remains on track to deliver higher grade ore to the processing plant, as compared to the current stockpile processing, in Q2 2024. Exploration focus: Infill drilling at Abore, designed to convert inferred Mineral Resources to the indicated Mineral Resource category, and early stage drill testing at the Gyagyatreso prospect were completed. Other 2023 exploration programs included drilling at Midras South to advance the deposit towards a potential maiden Mineral Reserve estimate, and at Nkran to support potential Mineral Resource upgrades. Preliminary exploration work was also undertaken across the AGM's regional greenfields targets – with focus on the Aburi and Sky Gold concessions. Robust liquidity: $138.7 million in cash and cash equivalents, $5.7 million in gold sales receivables, $5.1 million in gold on hand and no debt as of December 31, 2023 .

| | | 1 See " 8. Non-IFRS measures " |

Galiano Highlights:

Consolidation of AGM JV: On December 21, 2023 , the Company announced the execution of the SPA to acquire Gold Fields' 45% interest in the AGM JV. Stable balance sheet: Cash and cash equivalents of $55.3 million as at December 31, 2023 and no debt. Earnings: Net loss of $5.8 million or $0.03 per common share during the fourth quarter, which includes the Company's share of the JV's net earnings for the quarter and a downward fair value adjustment on the Company's preferred shares in the JV.

"The AGM continues to perform well, with full year 2023 gold production surpassing the upper end of guidance of between 120,000 to 130,000 ounces," stated Matt Badylak, Galiano's President and Chief Executive Officer. "Strong production enabled the mine to continue to generate cash during the fourth quarter despite the planned elevated capital expenditure. With mining operations at the AGM having recommenced during the quarter, Abore is on track to deliver higher grade ore to the processing plant by the second quarter of 2024. Health and safety remain a top priority throughout the organization, and I am encouraged by the progress and execution of safety measures and strategies at the AGM.

At the corporate level, I am very pleased with the announcement of our acquisition of Gold Fields' 45% interest in the joint venture. This transaction is transformational for Galiano and provides a strong foundation to grow into a mid-tier gold producer. Galiano closed the quarter with $55 million in cash and no debt, and on a pro forma basis, after closing the acquisition with Gold Fields, the consolidated Galiano group will have approximately $130 million in cash while remaining debt free. The strengthening of our balance sheet will allow us to execute on our self-financed life of mine plan at the AGM, in addition to seeking additional opportunities for long term growth."

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

| Asanko Gold Mine (100% basis) | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 | | Mining | | | | | | | Ore mined ('000t) | 22 | - | - | - | - | | Waste mined ('000t) | 3,415 | - | - | - | - | | Total mined ('000t) | 3,437 | - | - | - | - | | Strip ratio (W:O) | 155.2 | - | - | - | - | | Average gold grade mined (g/t) | 0.7 | - | - | - | - | | Mining cost ($/t mined) 2 | 4.30 | - | - | - | - | | Ore tonnes trucked ('000 t) | 657 | 695 | 729 | 1,367 | 503 | | Ore transportation cost ($/t trucked) | 6.54 | 6.63 | 5.88 | 5.51 | 6.19 | | Processing | | | | | | | Ore milled ('000t) | 1,486 | 1,573 | 1,457 | 1,566 | 1,518 | | Average mill head grade (g/t) | 0.8 | 0.8 | 0.8 | 0.9 | 0.8 | | Average recovery rate (%) | 84 | 87 | 85 | 73 | 80 | | Processing cost ($/t milled) | 9.94 | 9.69 | 11.01 | 9.78 | 10.06 | | G&A cost ($/t milled) | 5.55 | 4.16 | 4.68 | 4.09 | 4.20 | | Gold produced (oz) | 31,947 | 35,779 | 33,673 | 32,678 | 34,090 | | Financials, costs and cash flow | | | | | | | Revenue ($m) | 59.5 | 67.8 | 64.1 | 65.2 | 57.8 | | Gold sold (oz) | 30,555 | 35,522 | 32,912 | 35,174 | 34,202 | | Average realized gold price ($/oz) | 1,942 | 1,902 | 1,944 | 1,850 | 1,686 | | Total cash costs 1 ($/oz) | 1,352 | 1,056 | 1,127 | 1,083 | 1,031 | | All-in sustaining costs 1 ($/oz) | 2,065 | 1,445 | 1,374 | 1,268 | 1,191 | | All-in sustaining margin 1 ($/oz) | (123) | 457 | 570 | 582 | 495 | | All-in sustaining margin 1 ($m) | (3.8) | 16.2 | 18.8 | 20.5 | 16.9 | | Income from mine operations ($m) | 8.7 | 23.7 | 24.4 | 24.7 | 19.2 | | Adjusted net income 1 ($m) | 3.7 | 21.3 | 24.4 | 20.6 | 19.6 | | Cash provided by operating activities ($m) | 24.1 | 39.7 | 18.0 | 18.9 | 11.1 | | Free cash flow 1 ($m) | 2.3 | 24.0 | 10.1 | 12.0 | 5.5 |

| 2 No unit mining costs in Q1 to Q3 2023 as no tonnes were mined. |

Asanko Gold Mine – Financial and operational highlights for the three months and years ended December 31, 2023 and 2022 (100% basis)

| | Three months ended December 31, | Year Ended December 31, | | | | (All amounts in 000's of US dollars, unless otherwise stated) | 2023 | 2022 | 2023 | 2022 | | Asanko Gold Mine (100% basis) | | | | | | Financial results | | | | | | Revenue | 59,514 | 57,808 | 256,543 | 297,136 | | Income from mine operations | 8,675 | 19,167 | 81,483 | 71,653 | | Net income | 3,664 | 83,712 | 69,940 | 103,223 | | Adjusted net income 1 | 3,664 | 19,627 | 69,940 | 58,058 | | Adjusted EBITDA 1 | 9,020 | 22,810 | 82,899 | 79,248 | | | | | | | | Cash and cash equivalents | 138,655 | 91,271 | 138,655 | 91,271 | | Cash generated from operating activities | 24,058 | 11,135 | 100,720 | 75,479 | | Free cash flow 1 | 2,285 | 5,528 | 48,373 | 43,780 | | AISC margin 1 | (3,758) | 16,930 | 51,787 | 70,664 | | | | | | | | Key mine performance data | | | | | | Gold produced (ounces) | 31,947 | 34,090 | 134,077 | 170,342 | | Gold sold (ounces) | 30,555 | 34,202 | 134,163 | 167,849 | | | | | | | | Average realized gold price ($/oz) | 1,942 | 1,686 | 1,908 | 1,767 | | | | | | | | Total cash costs ($ per gold ounce sold) 1 | 1,352 | 1,031 | 1,148 | 1,157 | | AISC ($ per gold ounce sold) 1 | 2,065 | 1,191 | 1,522 | 1,346 |

The AGM produced 31,947 ounces of gold during Q4 2023, as the processing plant achieved milling throughput of 1.5 Mt of ore at a grade of 0.8 g/t with metallurgical recovery averaging 84%. Produced 134,163 ounces of gold in 2023, exceeding the upper end of revised 2023 production guidance of between 120,000 to 130,000 ounces as stockpile grades performed better than expected. Sold 30,555 ounces of gold in Q4 2023 at an average realized gold price of $1,942 /oz for total revenue of $59.5 million (including $0.2 million of by-product silver revenue), an increase of $1.7 million from Q4 2022. The increase in revenue quarter-on-quarter was due to a 15% increase in realized gold prices relative to Q4 2022, partly offset by an 11% reduction in sales volumes. Income from mine operations for Q4 2023 totaled $8.7 million compared to $19.2 million in Q4 2022. The decrease in income from mine operations was due to a $10.4 million increase in cost of sales that resulted from a portion of the mill feed including stockpiled ore which had a higher average cost, recognizing a $5.0 million legal provision related to a dispute with a former mining contractor, and recording a $2.3 million provision against supplies inventory. This was partly offset by the $1.7 million increase in revenue described above. Reported Adjusted EBITDA 1 of $9.0 million in Q4 2023 compared to $22.8 million in Q4 2022. The decrease in Adjusted EBITDA 1 was largely driven by the decrease in income from mine operations described above and favourable foreign exchange movements in Q4 2022. Total cash costs 1 in Q4 2023 amounted to $1,352 /oz compared to $1,031 /oz in Q4 2022. Gold sales volumes decreased by 11% in Q4 2023, which had the effect of increasing fixed costs on a per ounce basis. Additionally, a portion of the mill feed during Q4 2023 included stockpiled ore which had a higher average cost, resulting in higher production costs. The AGM also recorded a $2.3 million provision against supplies inventory during Q4 2023, resulting in a $75 /oz increase to total cash costs 1 . AISC 1 for Q4 2023 was $2,065 /oz compared to $1,191 /oz in the comparative period. AISC 1 was higher in the current quarter predominately due to the increase in total cash costs per ounce 1 described above and higher sustaining capital expenditures ( $504 /oz increase) to support the restart of mining in Q4 2023 (including pre-stripping activities at Abore), implementation of a water treatment system and additional work completed on a TSF lift. The AGM generated $24.1 million of cash flow from operating activities and free cash flow 1 of $2.3 million during Q4 2023. This compares to $11.1 million of cash flow from operating activities and free cash flow 1 of $5.5 million during Q4 2022. The decrease in free cash flow 1 was primarily due to higher capital spend to support a restart of mining operations.

Galiano Gold Inc. – Financial highlights for the three months and years ended December 31, 2023 and 2022

| | Three months ended December 31, | Year ended December 31, | | | | (All amounts in 000's of US dollars, unless otherwise stated) | 2023 | 2022 | 2023 | 2022 | | Galiano Gold Inc. | | | | | | Net (loss) income | (5,758) | 28,500 | 26,085 | 40,809 | | Net (loss) income per common share | (0.03) | 0.13 | 0.12 | 0.18 | | Adjusted net (loss) income 1 | (5,758) | (6,010) | 26,085 | 6,299 | | Adjusted net (loss) income per common share 1 | (0.03) | (0.03) | 0.12 | 0.03 | | Adjusted EBITDA 1 | 98 | 8,169 | 26,754 | 28,827 | | Cash and cash equivalents | 55,270 | 56,111 | 55,270 | 56,111 |

The Company reported a net loss of $5.8 million in Q4 2023, compared to net income of $28.5 million in Q4 2022. The reduction in net earnings during Q4 2023 was primarily due to a $3.9 million downward fair value adjustment on the Company's preferred shares in the JV and higher general and administrative expenses resulting from an increase in the fair value of cash‐settled long‐term incentive plan awards linked to the Company's share price. Net income was higher in Q4 2022 due to the Company recording its share of the JV's net earnings which amounted to $46.5 million , and included the Company's share of an impairment reversal recorded at the AGM JV. Partly offsetting the higher share of JV net income in Q4 2022 was a $22.2 million downward fair value adjustment on the Company's preferred shares in the JV. Adjusted EBITDA 1 for Q4 2023 amounted to $0.1 million , compared to $8.2 million in Q4 2022. The decrease in Adjusted EBITDA 1 was due to a reduction in the Company's attributable interest in the AGM JV's Adjusted EBITDA 1 and higher share-based compensation expense in Q4 2023. Cash used in operating activities in Q4 2023 was $1.6 million , compared to cash provided by operating activities of $0.8 million in Q4 2022. The increase in cash used in operating activities from Q4 2022 to Q4 2023 was largely driven by a positive working capital movement in Q4 2022 due to higher accounts payable and collecting the Company's service fee receivable from the JV. As of December 31, 2023 , the Company had cash and cash equivalents of $55.3 million and no debt.

2024 AGM Guidance

The Company will provide guidance for its consolidated business after closing of the Acquisition.

| This news release should be read in conjunction with Galiano's Management's Discussion and Analysis and the Audited Annual Consolidated Financial Statements for the years ended December 31, 2023 and 2022, 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 Gold 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 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. Adjusted net income and adjusted net income per common share The Company has included the non-IFRS performance measures of adjusted net income and adjusted net income per common share. Neither adjusted net income nor adjusted net income per share have any standardized meaning and are therefore unlikely to be comparable to other measures presented by other issuers. Adjusted net income excludes certain non-cash items or non-recurring items from net income or net loss to provide a measure which helps the Company and investors to evaluate the results of the underlying core operations of the Company or the JV and its ability to generate cash flows and is an important indicator of the strength of the Company's or the JV's operations and performance of its core business.

Qualified Person

Richard Miller , P.Eng., Vice President Technical Services with Galiano Gold Inc., is a Qualified Person as defined by Canadian National Instrument 43-101, Standards of Disclosure for Mineral Projects, and has approved the scientific and technical information contained in this news release.

About Galiano Gold Inc.

Galiano is focused on creating a sustainable business capable of value creation for all stakeholders through production, exploration and disciplined deployment of its financial resources. The Company operates and manages the Asanko Gold Mine, which is located in Ghana , West Africa , and jointly owned with Gold Fields. Galiano is committed to the highest standards for environmental management, social responsibility, and the health and safety of its employees and neighbouring communities. For more information, please visit www.galianogold.com .

Cautionary Note Regarding Forward-Looking Statements

Certain statements and information contained in this news release constitute "forward-looking statements" within the meaning of applicable U.S. securities laws and "forward-looking information" within the meaning of applicable Canadian securities laws, which we refer to collectively as "forward-looking statements". Forward-looking statements are statements and information regarding possible events, conditions or results of operations that are based upon assumptions about future conditions and courses of action. All statements and information other than statements of historical fact may be forward looking statements. In some cases, forward-looking statements can be identified by the use of words such as "seek", "expect", "anticipate", "budget", "plan", "estimate", "continue", "forecast", "intend", "believe", "predict", "potential", "target", "may", "could", "would", "might", "will" and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook.