McFarlane Lake Mining Limited press release

GALIANO GOLD ANNOUNCES AN IMPROVED LONG-TERM OUTLOOK AT THE ASANKO GOLD MINE

2023-02-22

CSE - Canadian National Stock Exchange · Gold · Copper · Cobalt · Nickel · Arsenic · Canada · Production & Operations

Canada NewsWire

VANCOUVER, BC , Feb. 22, 2023 /CNW/ - Galiano Gold Inc. ("Galiano" or the " Company") (TSX: GAU) (NYSE American: GAU), as operator of the Asanko Gold Mine ("AGM") under the joint venture ("JV") with Gold Fields Ltd. ("Gold Fields") (JSE: GFI) (NYSE: GFI), is pleased to report the results of an independent Feasibility Study report ("Independent FS"), which includes the reinstatement of Mineral Reserves, along with Galiano's operating outlook at the AGM. The adoption and implementation of the revised life-of-mine ("LOM") plan and the operating outlook remain subject to approval pursuant to the JV agreement. The AGM located in Ghana , West Africa is a 50:50 JV with Gold Fields, which is managed and operated by Galiano. All figures are stated in US dollars unless otherwise stated.

The reinstated Mineral Reserve and updated Mineral Resource estimates, underpinning the Independent FS, was led by SRK Consulting ( Canada ) Inc. ("SRK") and was reported in accordance with National Instrument 43-101 ("NI 43-101"). The Mineral Reserve estimate forms the basis of a revised LOM plan at the AGM, encompassing 4 main open-pit mining areas: Abore, Miradani North, Esaase and Nkran, and 2 satellite deposits: Dynamite Hill and Adubiaso. The Independent FS demonstrates an operating plan with a total LOM production of 1.85 million ounces ("Moz") of gold, at an all-in-sustaining cost ("AISC") of $1,143 1 per oz. Production during the LOM averages 217,000 oz of gold per year. Using the base case of $1,700 per oz gold price, the AGM has an after-tax net present value discounted at 5% ("NPV5%") of $343 million .

AGM Updated Independent FS Highlights - 100% basis, using a base case of $1,700 /oz gold

Robust mine economics : $478 million pre-tax NPV5% and $343 million after-tax NPV5%. Highly leveraged to the gold price: after-tax NPV5% of $535 million , at $1,900 per oz gold. Low cash costs: $905 /oz average total cash costs 1 and $1,143 /oz average AISC 1 . Increased production profile : annual average gold production of 254,000 oz from 2025 to 2030, inclusive. Mining to recommence in 2023 : mining contractors expected to be in operation at Abore during the fourth quarter. Reinstated Proven and Probable Mineral Reserves (assuming a gold price of $1,500 /oz): 2.068 Moz Au (48.9 Mt at 1.31 g/t Au). Increased Measured and Indicated Mineral Resources (assuming a gold price of $1,800 /oz) : 3.504 Moz Au (82.3 Mt at 1.32 g/t Au), inclusive of Mineral Reserves, representing an increase of +21% in total ounces, compared to the previous Mineral Resource estimate dated February 28, 2022 . Increased Inferred Mineral Resources (assuming a gold price of $1,800 /oz) : 1.084 Moz Au (25.1 Mt at 1.34 g/t Au), representing an increase of +251% in total ounces, compared to the previous Mineral Resource estimate dated February 28, 2022 .

| | | 1 See "Non-IFRS performance measures" | | |

"On the back of significant exploration success, the new life of mine plan now includes four cornerstone deposits at the Asanko Gold Mine. The plan demonstrates a solid production profile averaging 217,000 ounces per year with an extended mine life through 2031," stated Matt Badylak , Galiano's President and Chief Executive Officer. "Restructuring our operating cost base in 2022 has in part enabled the life of mine plan to achieve all-in-sustaining costs of $1,143 per ounce 4 , which is expected to generate approximately $500 million in cumulative cash flow over the mine life. Significant opportunities also remain to further enhance the asset through both the continued optimization of operations, and exploration success on the highly prospective Asankrangwa gold belt.

It is also important to note that the Joint Venture held $91 million of cash at December 31, 2022 2 placing the AGM in a strong position to execute the life of mine plan, commencing with the restart of mining later this year."

AGM INDEPENDENT FEASIBILITY STUDY OVERVIEW

The Independent FS was prepared in accordance with NI 43-101 and led by SRK with an effective date of December 31, 2022 . The Company will file a Technical Report on SEDAR at www.sedar.com in accordance with NI 43-101, and on its website within 45 days.

Table 1: LOM Highlights

| General | Units | Value | | Gold price assumption (base case) | $/oz | 1,700 | | Average gold production | oz/year | 217,000 | | Peak average gold production (2025 to 2030, inclusive) | oz/year | 254,000 | | Total gold production | Moz | 1.8 | | Mine life | years | 8.5 | | Total ore mined | million tonnes | 41.7 | | Average mill head grade | g/t Au | 1.31 | | Average mill recovery rate | % | 89 % | | Proven and Probable Mineral Reserves | Moz Au | 2.1 | | Economics | | | | Net present value (NPV 5%) (pre-tax) | $ M | 477.8 | | LOM cumulative cash flow (pre-tax) | $ M | 673.7 | | Net present value (NPV 5%) (after-tax) | $ M | 343.3 | | LOM cumulative cash flow ( after-tax) | $ M | 490.8 | | Operating Costs | | | | Mining cost 3 | $/t mined | 3.66 | | Processing cost | $/t milled | 10.80 | | G&A cost 4 | $/t milled | 6.00 | | Total cash costs 1 | $/oz sold | 905 | | AISC 1 | $/oz sold | 1,143 | | Capital Costs | | | | Development capital (excluding deferred stripping) | $ M | 58.4 | | Sustaining capital (excluding deferred stripping) | $ M | 95.2 | | Closure costs | $ M | 80.9 |

| 1 See "Non-IFRS Performance Measures" below. | | 2 Unaudited as at December 31, 2022. | | 3 Mining costs include deferred stripping of $428.4M LOM and ore transportation of $101.3M LOM. | | 4 G&A costs include management fee payable to Galiano of approximately $7M per year. |

ECONOMIC SENSITIVITIES

Using the base case gold price of $1,700 /oz and incorporating only Proven and Probable Mineral Reserves, the project has an after-tax NPV5% of $343 million . A sensitivity analysis was conducted on the base case after-tax NPV5% of the Independent FS, using the following variables: gold price, capital expenditure and operating costs, as illustrated in Table 2 and Figure 1.

Table 2: Sensitivity to Gold Price

| Gold Price

($/oz) | $1,500 | $1,600 | $1,700

(Base Case) | $1,800 | $1,900 | | Pre-tax Free Cashflow ($M) | $324 | $499 | $674 | $849 | $1,024 | | Pre-tax _NPV5 _% ($M) | $202 | $340 | $478 | $615 | $753 | | After-tax Free Cashflow ($M) | $256 | $371 | $491 | $612 | $733 | | After-tax _NPV5 _% ($M) | $155 | $248 | $343 | $439 | $535 |

[](https://mma.prnewswire.com/media/2007271/Galiano_Gold_IncGALIANO_GOLD_ANNOUNCES_AN_IMPROVED_LONG_TERM_O.html)

| _Note: __Sensitivity for "Mining OPEX" is inclusive of deferred stripping costs _ | | |

AGM MINE PLAN

The revised mine plan is based on the following sequencing and timeline:

Fourth quarter 2023: the Abore pit; First half of 2024: limited mining activities at the Esaase pit with a return to full production in late 2026; Mid-2024: the Miradani North pit; Mid-2025: the Nkran pit; Mid-2026: the Adubiaso pit; Mid-2027: the Dynamite Hill pit.

Figures 2 and 3 show the annual total tonnes mined and annual ore tonnes mined by deposit.

[](https://mma.prnewswire.com/media/2007270/Galiano_Gold_IncGALIANO_GOLD_ANNOUNCES_AN_IMPROVED_LONG_TERM_O.html)

[](https://mma.prnewswire.com/media/2007269/Galiano_Gold_IncGALIANO_GOLD_ANNOUNCES_AN_IMPROVED_LONG_TERM_O.html)

AGM PROCESSING

The processing facility will continue to operate at the rate of approximately 5.8M tonnes per annum ("Mtpa") throughout the remaining life of mine to mid-2031. The life of mine is expected to produce a total of 1.846 Moz Au from a reserve of 2.068 Moz with a weighted average recovery of 89% (see below, Tables 3 & 4, and Figure 4).

As of December 31, 2022 , current stockpiled ore inventory totaled 7.2 Mt at 0.67 g/t gold. The stockpiles are of sufficient tonnage and grade to continue operations, both independently and as supplemental feed, until the Abore pit has exposed sufficient ore to produce the majority of mill feed, expected by the second quarter 2024.

Table 3: Annual Mill Feed Grade, Gold Production & AISC 1 Profiles

| Year | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | Total | | Mill Feed Grade (g/t Au) | 0.68 | 0.99 | 1.45 | 1.39 | 1.58 | 1.60 | 1.57 | 1.51 | 0.76 | 1.31 | | Au Recovered (koz) | 107 | 167 | 254 | 243 | 246 | 262 | 275 | 244 | 49 | 1,846 | | Recovery % | 85 % | 91 % | 94 % | 94 % | 84 % | 88 % | 94 % | 87 % | 77 % | 89 % |

[](https://mma.prnewswire.com/media/2007268/Galiano_Gold_IncGALIANO_GOLD_ANNOUNCES_AN_IMPROVED_LONG_TERM_O.html)

| Note | | 1 See "Non-IFRS Performance Measures" below. |

Table 4: Summary of Mining & Processing Inputs

| Mining & Processing Inputs | Units | Value | | Mining | | | | Mining duration | years | 5.8 | | Total ore mined | million tonnes | 41.7 | | Average mined ore gold grade | g/t | 1.43 | | Total waste mined | million tonnes | 300.9 | | Total material mined | million tonnes | 342.6 | | Strip ratio | Waste (t) : Ore (t) | 7.21 | | Existing stockpiles tonnage | million tonnes | 7.2 | | Existing stockpiles gold grade | g/t | 0.67 | | Processing | | | | Life of mine | years | 8.5 | | Annual feed rate | Mtpa | 5.8 | | Total tonnes processed | million tonnes | 48.9 | | Average mill head gold grade | g/t | 1.31 | | Average gold recovery | % | 89 % |

TAILINGS MANAGEMENT

The AGM has a single existing paddock/valley tailings storage facility ("TSF"), which is fully lined and has incorporated a total of 6 stages. Stage 7 is currently under construction and involves the amalgamation of Stage 5 and Stage 6. The life of mine facility design includes a total of 8 stages, providing storage capacity for an additional 51 million dry tonnes placement of tailings, which exceeds LOM tailings requirements.

ADDITIONAL INFRASTRUCTURE

The AGM site is an established operation, with most of the infrastructure already in place to support the life of mine:

A carbon-in-leach process plant with various structures, including offices, stores, workshops and reagent storage / mixing facilities; An administration block, exploration offices, core storage area, medical clinic and laboratory; Accommodation facilities; Multiple boreholes for water supply and a water treatment plant; A 161 kV incoming power line from the Asawinso substation; and Multiple site accesses via sealed public roads, and an airstrip located adjacent to the mill.

An existing 28 km haul road between Obotan and Esaase supports the haulage of Esaase ore to the mill. A new 11 km haul road to the Miradani North deposit is planned to be constructed throughout 2023 and 2024.

CAPITAL, AISC AND OPERATING COSTS

Operating costs have been compiled based on the following sources and assumptions:

Mining unit costs have been estimated based on recent competitive tenders; Processing unit costs have been estimated from first principles and compared with historical actual process costs; General and Administration ("G&A") costs are based on ongoing and anticipated costs; and Capital expenditure has been estimated from first principals.

Table 5: AGM LOM Capital Expenditures

| Total Capital Costs | ($M) | | Development Capital | | | Deferred Stripping (Nkran) | 258.5 | | Site Establishment | 58.4 | | Subtotal Development Capital | 316.9 | | Sustaining Capital | | | Deferred Stripping (other pits) | 169.8 | | Site Establishment | 23.0 | | Tailings Storage Facility and Water Treatment | 44.7 | | Plant and Infrastructure | 27.5 | | Subtotal Sustaining | 265.1 | | Closure and Reclamation | | | Mine Closure and Reclamation | 80.9 | | Total Capital Costs | 662.8 |

| _Note: __Numbers may not sum due to rounding _ | | |

Table 6: Life of Mine All -in Sustaining Cost 1 Components

| Component | Amount ($M) | Unit Value

($/oz sold) | | Mining Costs | 723 | 392 | | Ore Transportation | 101 | 55 | | Processing Costs | 528 | 286 | | Stockpile movement | 17 | 9 | | G&A | 294 | 159 | | Royalties | 162 | 88 | | Refining costs | 8 | 4 | | Reclamation Accretion | 12 | 7 | | Sustaining Capital | 95 | 52 | | Sustaining Stripping Costs | 170 | 92 | | All-in Sustaining Costs 1 | 2,110 | 1,143 |

| Note | | 1 See "Non-IFRS Performance Measures" below. | | |

OPPORTUNITIES

Mining methodologies can be further optimized for all deposits. Opportunity remains to upsize the planned mining equipment, which can reduce operating costs and increase mining advance rates, effectively reducing the duration of pre-stripping. The AGM will incorporate operating technology improvements as part of its Standard Operating Procedures prior to commencement of mining, aimed at improving productivity and safety performance.

The AGM also holds the largest land package on the highly prospective and underexplored Asankrangwa Gold Belt, totaling approximately 476 square kilometres of land tenements. Going forward, the AGM will evaluate the viability of expanding reserves and extending mine life further by testing for extensions of mineralization at depth and along strike at all the current orebodies.

Table 7: Summary of Life of Mine Operating Data & Cash Flows @ $1,700 /oz Au (in US$000's)

| Description | | Units | LOM | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032-2035 | | Ore mined | kt | 41,718 | 20 | 5,138 | 7,185 | 6,495 | 8,349 | 7,855 | 6,678 | - | - | - | | | Waste mined | kt | 300,908 | 3,809 | 37,926 | 50,003 | 68,245 | 75,335 | 54,838 | 10,752 | - | - | - | | | Strip ratio | # | 7.2 | 194.0 | 7.4 | 7.0 | 10.5 | 9.0 | 7.0 | 1.6 | - | - | - | | | Mined Grade | g/t | 1.43 | 0.67 | 1.10 | 1.37 | 1.33 | 1.32 | 1.51 | 1.88 | - | - | - | | | | | | | | | | | | | | | | | | Ore processed | kt | 48,920 | 5,787 | 5,792 | 5,794 | 5,794 | 5,794 | 5,794 | 5,794 | 5,794 | 2,579 | - | | | Grade Milled | g/t | 1.31 | 0.68 | 0.99 | 1.45 | 1.39 | 1.58 | 1.60 | 1.57 | 1.51 | 0.76 | - | | | Processing recovery | % | 89.3 % | 84.6 % | 90.5 % | 93.9 % | 93.9 % | 83.6 % | 88.2 % | 94.0 % | 86.6 % | 77.2 % | - | | | | | | | | | | | | | | | | | | Gold produced | kt | 1,846 | 107 | 167 | 254 | 243 | 246 | 262 | 275 | 244 | 49 | - | | | | | | | | | | | | | | | | | | Revenue | | 3,138,047 | 181,366 | 283,951 | 431,347 | 412,583 | 418,210 | 445,475 | 467,313 | 415,323 | 82,479 | - | | | | | | | | | | | | | | | | | | Mining Costs | | 723,172 | 13,065 | 95,182 | 108,652 | 131,083 | 134,643 | 157,284 | 74,396 | 5,809 | 3,059 | - | | | Ore Transportation | | 101,327 | 21,022 | 14,950 | 227 | 211 | 18,762 | 12,094 | 14 | 21,438 | 12,610 | - | | | Processing Costs | | 528,273 | 60,683 | 59,663 | 62,809 | 63,544 | 63,282 | 63,668 | 64,285 | 62,735 | 27,606 | - | | | Stockpile movement (non-cash) | | 16,634 | 14,602 | (11,861) | (20,023) | (18,679) | (34,994) | (28,228) | (1,644) | 77,898 | 39,562 | - | | | G&A | | 293,534 | 38,070 | 38,367 | 38,070 | 38,189 | 38,784 | 37,832 | 28,761 | 23,642 | 11,821 | - | | | Royalties | | 161,960 | 10,062 | 15,089 | 21,620 | 20,644 | 22,052 | 23,132 | 23,366 | 21,515 | 4,481 | - | | | Refining costs | | 8,251 | 477 | 747 | 1,134 | 1,085 | 1,100 | 1,171 | 1,229 | 1,092 | 217 | - | | | Reclamation Accretion (non-cash) | | 12,007 | 2,119 | 2,119 | 2,119 | 2,119 | 2,119 | 1,413 | - | - | - | - | | | Sustaining Capital | | 95,249 | 38,488 | 3,500 | 19,680 | 22,207 | 4,447 | 2,625 | 2,115 | 1,750 | 438 | - | | | Sustaining Stripping Costs 1 | | 169,846 | 10,322 | 46,392 | 38,339 | 27,389 | 29,361 | 18,042 | - | - | - | - | | | All-in sustaining costs | | 2,110,253 | 208,908 | 264,149 | 272,626 | 287,792 | 279,556 | 289,033 | 192,521 | 215,878 | 99,792 | - | | | All-in sustaining costs | US$/oz | 1,143 | 1,958 | 1,581 | 1,074 | 1,186 | 1,136 | 1,103 | 700 | 884 | 2,057 | - | | | | | | | | | | | | | | | | | | Nkram prestrip | | 258,532 | - | - | 40,754 | 92,696 | 96,035 | 29,048 | - | - | - | - | | | Development capex | | 58,361 | 23,663 | 30,940 | 3,758 | - | - | - | - | - | - | - | | | Rehabilitation cash outflow | | 80,857 | - | - | - | - | - | 11,792 | 20,214 | 20,214 | 19,449 | 9,187 | | | Working Capital inflows | | (15,000) | - | - | - | - | - | - | - | - | (15,000) | - | | | Other non-cash items in AISC | | (28,640) | (16,721) | 9,742 | 17,904 | 16,560 | 32,875 | 26,816 | 1,644 | (77,898) | (39,562) | - | | | Cash Taxes | | 182,923 | - | - | 1,372 | 27,705 | 40,214 | 14,415 | 31,119 | 68,099 | - | - | | | | | | | | | | | | | | | | | | Free cash flow after tax | | 490,760 | (34,483) | (20,880) | 94,933 | (12,169) | (30,470) | 74,371 | 221,815 | 189,031 | 17,800 | (9,187) | | | | | | | | | | | | | | | | | | NPV | | 343,320 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating cash flow after tax 2 | | 1,072,748 | 37,989 | 59,953 | 197,463 | 130,122 | 99,373 | 124,087 | 223,930 | 190,781 | 18,237 | (9,187) | | | | | | | | | | | | | | | | | | 1 Excludes the pre-strip at Nkran | | | | | | | | | | | | | | | 2 Cash flow after tax before capital expenditures and stripping costs | | | | | | | | | | | | | |

2023 OUTLOOK

The Company is providing 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 joint venture approvals are obtained. The AGM is expected to produce between 100,000 - 120,000 oz at AISC 1 between $1,900 and $1,975 per ounce. The 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 the Miradani North site establishment.

Despite the capital-intensive year, the AGM is estimated 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.

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.

| Note | | 1 See "Non-IFRS Performance Measures" below. | | |

AGM MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

Table 8: Mineral Resource Estimate as of December 31, 2022

| | Measured | Indicated | Measured + Indicated | Inferred | | | | | | | | | | | Tonnes | Grade | Au Cont. | Tonnes | Grade | Au Cont. | Tonnes | Grade | Au Cont. | Tonnes | Grade | Au Cont. | | Deposit | (Mt) | (g/t) | (koz) | (Mt) | (g/t) | (koz) | (Mt) | (g/t) | (koz) | (Mt) | (g/t) | (koz) | | Nkran | - | - | - | 15.3 | 1.89 | 931 | 15.3 | 1.89 | 931 | 3.6 | 1.83 | 209 | | Esaase | - | - | - | 30.6 | 1.25 | 1,227 | 30.6 | 1.25 | 1,227 | 8.2 | 1.26 | 334 | | Abore | - | - | - | 12.8 | 1.16 | 477 | 12.8 | 1.16 | 477 | 3.6 | 1.14 | 131 | | Adubiaso | - | - | - | 3.1 | 1.47 | 148 | 3.1 | 1.47 | 148 | 0.1 | 1.05 | 3 | | Akwasiso | - | - | - | 1.4 | 1.16 | 52 | 1.4 | 1.16 | 52 | 0.2 | 1.28 | 9 | | Asuadai | - | - | - | 1.6 | 1.23 | 64 | 1.6 | 1.23 | 64 | 0.1 | 1.29 | 4 | | Dynamite Hill | - | - | - | 2.2 | 1.34 | 95 | 2.2 | 1.34 | 95 | 1.0 | 1.24 | 40 | | Midras South | - | - | - | - | - | - | - | - | - | 5.4 | 1.32 | 232 | | Miradani North | - | - | - | 7.9 | 1.39 | 352 | 7.9 | 1.39 | 352 | 2.9 | 1.30 | 122 | | Stockpiles | 7.4 | 0.67 | 158 | - | - | - | 7.4 | 0.67 | 158 | - | - | - | | Total | 7.4 | 0.67 | 158 | 75.0 | 1.39 | 3,346 | 82.3 | 1.32 | 3,504 | 25.1 | 1.34 | 1,084 |

Notes on Mineral Resource Estimates:

Mr. Malcolm Titley of CSA Global UK is the Qualified Person responsible for the Nkran Mineral Resource statement. Dr. Oy Leuangthong , PEng and Mr. Glen Cole , PGeo of SRK Consulting ( Canada ) Inc. are Qualified Persons responsible Mineral Resource statements for Esaase, Abore, Miradani North, Adubiaso, Midras South, Akwasiso, Asuadai and Dynamite Hill. Mineral Resources are not Mineral Reserves and have not demonstrated economic viability. All figures have been rounded to reflect the relative accuracy of the estimates. Due to rounding, some columns or rows may not compute exactly as shown. Reported within an optimized pit shell assuming a price of USD1,800 /oz gold and using various cut-off grades: 0.40 g/t gold for Nkran; 0.50 g/t in Oxides and 0.60 g/t gold in Transition and Fresh for Esaase; and 0.45 g/t gold for all other deposits. Metallurgical recovery of 94% for all deposits, except in Esaase, where gold recoveries vary based on lithology. All tonnages are reported as in situ dry tonnes. Mineral Resources are inclusive of Mineral Reserves. Galiano's share of the project on an equity basis is 45%. All quantities are reported on a 100% basis.