GAU.TO · 2023-05-04 12:00:00

Galiano GOLD Reports Q1 2023 Operating and Financial Results

Financials

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

GALIANO GOLD REPORTS Q1 2023 OPERATING

AND FINANCIAL RESULTS

Vancouver, British Columbia, May 4, 2023 – Galiano Gold Inc. (“Galiano” or the “Company”) (TSX, NYSE

American: GAU) reports first quarter (“Q1”) 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, NYSE: GFI) which is managed and operated by Galiano. All financial

information contained in this news release is unaudited and reported in US$.

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

 Safety: On February 6, 2023, the Company reported that two contractors had been fatally injured

following an incident near the tailings storage facility (“TSF”). The Company has taken actions to

further reinforce the Company’s sustained commitment to Zero Harm and industry best practices in

safety culture.

 Production performance: Gold production of 32,678 ounces during the first quarter, in line with 2023

production guidance of 100,000 to 120,000 ounces.

 Milling performance: Achieved milling throughput of 1.6 million tonnes (“Mt”) of ore at a grade of 0.9

g/t during the quarter. Metallurgical recovery averaged 73% for the quarter, which was lower than

prior periods due to processing lower grade stockpiles during Q1 2023.

 Cost performance and cash flow: Total cash costs1 of $1,083/oz and AISC¹ of $1,268/oz for the three

months ended March 31, 2023. Additionally, the JV generated positive cash flow from operations of

$18.9 million and Free Cash Flow¹ of $12.0 million during the quarter.

 Revised AISC guidance: 2023 AISC¹ guidance for the AGM has been revised from between $1,900/oz

to $1,975/oz to between $1,650/oz to $1,750/oz due to strong operational cost performance in Q1.

 Financial performance: Gold revenue of $65.1 million generated from 35,174 gold ounces sold at an

average realized price of $1,850/oz for the quarter. Net income of $20.6 million during the quarter

and Adjusted EBITDA1 of $22.9 million.

 Exploration success: Advanced the first phase of an exploration drilling program at Nkran South

Extension with the aim of increasing mineral reserves by converting inferred mineral resources to

indicated mineral resources between the current Nkran Cut 3 reserve shell and the $1,800/oz

resource shell, as well as to test for new mineralization along the southern margin of the deposit.

 Robust liquidity: $102.8 million in cash and cash equivalents, $7.0 million in gold sales receivables,

$1.8 million in gold on hand and no debt as of March 31, 2023.

1 See “Non‐IFRS Performance Measures”

Galiano Gold Highlights:

 Improved long‐term outlook at the AGM: The Company published the details of a new life‐of‐mine

(“LOM”) plan for the AGM on March 28, 2023 in a technical report titled “NI 43‐101 Technical Report

and Feasibility Study for Asanko Gold Mine, Ghana” with an effective date of December 31, 2022

(“2023 Technical Report”). The 2023 Technical Report was prepared independently by SRK Consulting

(Canada) Inc. and includes the reinstatement of Mineral Reserves at the AGM. The new LOM plan

identifies four main open‐pit mining areas: Abore, Miradani North, Nkran and Esaase, and two satellite

deposits: Dynamite Hill and Adubiaso.

 Stable balance sheet: Cash and cash equivalents of $56.2 million as at March 31, 2023, while

remaining debt‐free.

 Positive earnings: Net income of $8.5 million or $0.04 per common share during the quarter, which

includes the Company’s share of the JV’s net earnings for the quarter.

 Generative exploration: During the quarter, the Company completed Phase 1 of its drilling program

on its wholly owned Asumura property on the Sefwi gold belt in Ghana, designed to test for gold

mineralization along two interpreted structural trends with coincident surface gold anomalies

identified through soil sampling. A total of 95 holes were drilled for 12,467 metres in Phase 1,

comprising 9,045 metres of reverse circulation drilling and 3,422 metres of diamond drilling.

“The first quarter marked multiple milestones for Galiano,” stated Matt Badylak, Galiano’s President and

Chief Executive Officer, “We reinstated Mineral Reserves with the updated 2023 AGM Technical Report,

demonstrating an improved eight‐year mine life, with annual production averaging 217,000 ounces of

gold per year at all‐in sustaining costs of $1,143 per ounce. Significant optimization opportunities have

been identified and an aggressive exploration program is underway on the large, highly prospective land

package. During the quarter, we continued to generate significant cash flows through stockpile

processing, further strengthening the AGM’s balance sheet to move forward with the revised life of mine

plan. At the corporate level, we closed the quarter with over $56 million in cash, no debt, and remain in

an enviable position to further grow the Company.

Looking ahead, we have improved 2023 cost guidance, reducing all‐in sustaining costs from over $1,900

per ounce to between $1,650 to $1,750 per ounce. We continue to focus on the plan to re‐commence

hard rock mining during the fourth quarter of 2023, while working to strengthen safety awareness across

site to achieve our goal of Zero Harm at the Asanko Gold Mine.”

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

Asanko Gold Mine (100% basis) Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022

Ore mined (‘000t) ‐ ‐ 144 675 1,075

Waste mined (‘000t) ‐ ‐ 107 1,320 5,279

Total mined (‘000t) ‐ ‐ 251 1,995 6,354

Strip ratio (W:O) ‐ ‐ 0.7 2.0 4.9

Average gold grade mined (g/t) ‐ ‐ 1.8 1.6 1.3

Mining cost ($/t mined) ‐ ‐ 25.27 8.30 4.64

Ore transportation from Esaase (‘000 t) 1,367 503 699 901 1,304

Ore transportation cost ($/t trucked) 5.51 6.19 6.55 6.19 5.82

Ore milled (‘000t) 1,566 1,518 1,423 1,406 1,482

Average mill head grade (g/t) 0.9 0.8 1.1 1.3 1.3

Average recovery rate (%) 73 80 88 84 69

Processing cost ($/t milled) 9.78 10.06 10.45 10.40 9.46

G&A cost ($/t milled) 4.09 4.20 4.89 5.40 6.17

Gold produced (oz) 32,678 34,090 43,899 50,010 42,343

Gold sales (oz) 35,174 34,202 45,482 46,236 41,929

Average realized gold price ($/oz) 1,850 1,686 1,687 1,832 1,846

Total cash costs1 ($/oz) 1,083 1,031 1,001 1,218 1,361

All‐in sustaining costs1 ($/oz) 1,268 1,191 1,178 1,431 1,559

All‐in sustaining margin1 ($/oz) 582 495 509 401 287

All‐in sustaining margin1 ($m) 20.5 16.9 23.2 18.5 12.0

Revenue ($m) 65.2 57.8 76.9 84.9 77.5

Income (loss) from mine operations ($m) 24.7 19.2 25.7 16.2 10.6

Adjusted net income (loss)1 ($m) 20.6 19.6 17.3 13.7 7.4

Cash provided by operating activities ($m) 18.9 11.1 26.1 34.3 3.9

Free cash flow1 ($m) 12.0 5.5 16.3 25.3 (3.4)

Asanko Gold Mine – Financial and operational highlights for the three months ended March 31, 2023

and 2022 (100% basis)

 The AGM produced 32,678 ounces of gold during Q1 2023, as the processing plant achieved milling

throughput of 1.6 Mt of ore at a grade of 0.9 g/t with metallurgical recovery averaging 73%. Recovery

was lower than prior periods due mainly to processing of lower grade stockpiles and was in line with

expectations.

 Sold 35,174 ounces of gold in Q1 2023 at an average realized gold price of $1,850/oz for total revenue

of $65.2 million (including $0.1 million of by‐product silver revenue), a decrease of $12.3 million from

Q1 2022. The decrease in revenue quarter‐on‐quarter was primarily a function of a 16% reduction in

sales volumes relative to Q1 2022.

 Total cost of sales (including depreciation and depletion and royalties) amounted to $40.5 million in

Q1 2023, a decrease of $26.4 million from Q1 2022. The decrease in cost of sales was primarily due to

16% fewer gold ounces sold, lower mining contractor costs and processing ore that had no carrying

value for accounting purposes. Labour costs were also lower in Q1 2023 resulting from the

restructuring of the AGM’s workforce completed at the end of Q1 2022 ($4.5 million decrease). These

factors were partly offset by inflationary pressures on key reagents and other consumables.

Depreciation and depletion expense was also $7.6 million lower in Q1 2023 relative to Q1 2022, due

mainly to fewer gold ounces sold, lower depreciation on mining related assets resulting from the

temporary cessation of mining at the end of Q2 2022, processing existing stockpiles that had no

carrying value for accounting purposes, and lower depreciation on capitalized leases. These factors

were partly offset by the impact on depreciation caused by the $63.2 million impairment reversal on

MPP&E recorded at December 31, 2022.

 Income from mine operations for Q1 2023 totaled $24.7 million compared to income from mine

operations of $10.6 million in Q1 2022. The increase in income from mine operations was due to a

(All amounts in 000's of US dollars, unless otherwise stated) 2023 2022

Asanko Gold Mine (100% basis)

Financial results

Rev enue 65,193 77,532

Inc ome from mine operations 24,657 10,552

Net inc ome (loss) 20,614 (13,638)

Adjus ted net inc ome

20,614 7,362

Adjus ted EBITDA

22,863 13,105

Ca s h and ca s h equiv alents 102,750 45,298

Ca s h generated from operating a cti vi ti es 18,943 3,925

Free ca s h flow

11,959 (3,363)

AISC margin

20,471 12,034

Key mine performance data

Gold produced (ounces) 32,678 42,343

Gold sold (ounces) 35,174 41,929

Avera ge re a l i ze d gold price ($/oz) 1,850 1,846

Total ca s h cos ts ($ per gold ounce sold)

1,083 1,361

AISC ($ per gold ounce sold)

1,268 1,559

Three months ended March 31,

$26.4 million decrease in cost of sales, partly offset by a $12.3 million decrease in revenue (as

described above).

 Reported Adjusted EBITDA1 of $22.9 million in Q1 2023 compared to $13.1 million in Q1 2022.

 Total cash costs1 were $1,083/oz in Q1 2023 compared to $1,361/oz in Q1 2022, a 20% decrease.

Although gold sales volumes decreased by 16% in Q1 2023, total cash costs per ounce1 were lower

compared to Q1 2022 as a result of lower mining contractor costs and the processing of ore that had

no carrying value for accounting purposes. In addition, labour costs were lower in Q1 2023 ($4.5

million decrease) as a result of the AGM’s workforce restructuring completed at the end of Q1 2022.

These factors were partly offset by inflationary pressures on key reagents and other consumables.

 AISC1 for Q1 2023 was $1,268/oz compared to $1,559/oz in the comparative period. AISC1 was lower

in the current quarter predominately due to the decrease in total cash costs per ounce1 mentioned

above and lower sustaining lease payments ($105/oz decrease) related to the temporary cessation of

mining since the end of Q2 2022. This was partly offset by an increase in sustaining capital

expenditures ($92/oz increase) relating to a TSF lift.

 The AGM generated $18.9 million of cash flows from operating activities and free cash flow1 of $12.0

million during Q1 2023. This compares to $3.9 million of cash flows from operating activities and

negative $3.4 million of free cash flow1 during Q1 2022. The increase in free cash flow1 was primarily

due to higher AISC margins1.

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

 The Company reported net income of $8.5 million in Q1 2023, compared to a net loss of $1.5 million

in Q1 2022. The increase in earnings during Q1 2023 was due to the recognition of the Company’s

share of the JV’s net earnings for the quarter and a $2.3 million positive fair value adjustment on the

Company’s preference shares in the JV. During Q1 2022, the Company did not recognize its share of

the JV’s net loss as the carrying value of the Company’s investment in the JV was nil as at March 31,

2022.

 Adjusted EBITDA1 for Q1 2023 amounted to $6.7 million, compared to a loss of $1.5 million in Q1

2022. The increase in Adjusted EBITDA1 was primarily a result of the Company’s share of the JV’s

Adjusted EBITDA. During Q1 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.

 Cash used in operating activities in Q1 2023 was $0.5 million, compared to $3.2 million in Q1 2022.

The reduction in cash used in operating activities from Q1 2022 to Q1 2023 was driven by working

capital movements, specifically related to the Company’s service fee receivable from the JV.

 As of March 31, 2023, the Company had cash and cash equivalents of $56.2 million, while remaining

debt‐free.

(All amounts in 000's of US dollars, unless otherwise stated) 2023 2022

Galiano Gold Inc.

Net inc ome (loss) 8,493 (1,537)

Net inc ome (loss) per shar e 0.04 (0.01)

Adjus ted EBITDA

6,739 (1,534)

Ca s h and ca s h equiv alents 56,173 50,384

Three months ended March 31,

2023 AGM Outlook

The Company provided preliminary guidance for 2023 based on the new LOM plan for the AGM, which

outlined production of between 100,000 to 120,000 ounces at AISC¹ between $1,900/oz and $1,975/oz.

Given the strong performance in Q1 2023, the AISC¹ is now expected to be between $1,650/oz to

$1,750/oz. AISC¹ is still anticipated to be elevated in 2023 compared to the LOM average 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.

The Company is not adjusting capital guidance, and it continues to work on obtaining the necessary joint

venture approvals and develop a detailed mining restart plan that may impact the timing of capital

expenditures in 2023. It is currently expected that $38 million of sustaining capital expenditures, excluding

capitalized waste stripping, will be spent on the TSF Stage 7 expansion, plant infrastructure and water

management in 2023 (spend as of March 31, 2023: $4.9 million). Additionally, development capital of $24

million is expected to be spent on Abore and Miradani North site establishments (spend as of March 31,

2023: $0.9 million).

For 2023, the exploration budget at the AGM is estimated at $15 million (spend as of March 31, 2023:

$3.5 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 known deposits.

This news release should be read in conjunction with Galiano’s Management’s Discussion and Analysis

and the Unaudited Condensed Consolidated Interim Financial Statements for the three months ended

March 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 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.

 Adjusted net income (loss) and adjusted net income (loss) per common share

The Company has included the non‐IFRS performance measures of adjusted net income (loss) and adjusted net

income (loss) per common share. Neither adjusted net income (loss) nor adjusted net income (loss) per share

have any standardized meaning and are therefore unlikely to be comparable to other measures presented by

other issuers. Adjusted net income (loss) 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.

Enquiries:

Krista Muhr

Toll‐Free (N. America): 1‐855‐246‐7341

Telephone: 1‐778‐239‐0446

Email: [email protected]

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.

Forward‐looking statements in this news release include, but are not limited to: the operating plans for the AGM

under the JV between the Company and Gold Fields; planned and future drilling programs; anticipated production

and cost guidance; mine restart plans and timing thereof; expectations regarding AISC, capital expenditures and

exploration budget; and statements regarding the usefulness and comparability of certain non‐IFRS measures. Such

forward‐looking statements are based on a number of material factors and assumptions, including, but not limited

to: the Company and Gold Fields will agree on the manner in which the JV will operate the AGM, including agreement

on the new LOM plan, development plans and capital expenditures; the price of gold will not decline significantly or

for a protracted period of time; the accuracy of the estimates and assumptions underlying mineral reserve and

mineral resource estimates; the Company’s ability to raise sufficient funds from future equity financings to support

its operations, and general business and economic conditions; the global financial markets and general economic

conditions will be stable and prosperous in the future; the ability of the JV and the Company to comply with applicable

governmental regulations and standards; the mining laws, tax laws and other laws in Ghana applicable to the AGM

and the JV will not change, and there will be no imposition of additional exchange controls in Ghana; the success of

the JV and the Company in implementing its development strategies and achieving its business objectives; the JV will

have sufficient working capital necessary to sustain its operations on an ongoing basis and the Company will continue

to have sufficient working capital to fund its operations and contributions to the JV; and the key personnel of the

Company and the JV will continue their employment.

The foregoing list of assumptions cannot be considered exhaustive.

Forward‐looking statements involve known and unknown risks, uncertainties and other factors which may cause

actual results, performance or achievements to differ materially from those anticipated in such forward‐looking

statements. The Company believes the expectations reflected in such forward‐looking statements are reasonable,

but no assurance can be given that these expectations will prove to be correct and you are cautioned not to place

undue reliance on forward‐looking statements contained herein. Some of the risks and other factors which could

cause actual results to differ materially from those expressed in the forward‐looking statements contained in this

news release, include, but are not limited to: the mineral reserve and mineral resource estimates may change and

may prove to be inaccurate; metallurgical recoveries may not be economically viable; risks associated with the

Company ceasing its mining operations during 2023; LOM estimates are based on a number of factors and

assumptions and may prove to be incorrect; the risk that the Company and Gold Fields will not agree on the manner

in which the JV will operate the AGM; actual production, costs, returns and other economic and financial performance

may vary from the Company's estimates in response to a variety of factors, many of which are not within the

Company's control; inflationary pressures and the effects thereof; the AGM has a limited operating history and is

subject to risks associated with establishing new mining operations; sustained increases in costs, or decreases in the

availability, of commodities consumed or otherwise used by the Company may adversely affect the Company; adverse

geotechnical and geological conditions (including geotechnical failures) may result in operating delays and lower

throughput or recovery, closures or damage to mine infrastructure; the ability of the Company to treat the number

of tonnes planned, recover valuable materials, remove deleterious materials and process ore, concentrate and

tailings as planned is dependent on a number of factors and assumptions which may not be present or occur as

expected; the JV’s mineral properties may experience a loss of ore due to illegal mining activities; the Company's

operations may encounter delays in or losses of production due to equipment delays or the availability of equipment;

outbreaks of COVID‐19 and other infectious diseases may have a negative impact on global financial conditions,

demand for commodities and supply chains and could adversely affect the Company’s business, financial condition

and results of operations and the market price of the common shares of the Company; the Company's operations are

subject to continuously evolving legislation, compliance with which may be difficult, uneconomic or require significant

expenditures; the Company may be unsuccessful in attracting and retaining key personnel; labour disruptions could

adversely affect the Company's operations; recoveries may be lower in the future and have a negative impact on the

Company’s financial results; the lower recoveries may persist and be detrimental to the AGM and the Company; the

Company's business is subject to risks associated with operating in a foreign country; risks related to the Company's

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