GAU.TO · 2023-08-02 12:00:00

Galiano GOLD Reports Q2 2023 Operating and Financial Results

Financials

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

GALIANO GOLD REPORTS Q2 2023 OPERATING

AND FINANCIAL RESULTS

Vancouver, British Columbia, August 2, 2023 – Galiano Gold Inc. (“Galiano” or the “Company”) (TSX,

NYSE American: GAU) is pleased to report its second quarter (“Q2”) 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. All

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

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

 Safety: No lost‐time injuries (“LTI”) and one total recordable injury (“TRI”) recorded during the

quarter, resulting in 12‐month rolling LTI and TRI frequency rates of 0.37 and 1.12 per million

employee hours worked, respectively.

 Production performance and upward revised guidance: Gold production of 33,673 ounces during the

second quarter. Year‐to‐date gold production of 66,351 ounces. Full year gold production guidance

has been revised upward from between 100,000 to 120,000 ounces to between 120,000 to 130,000

ounces.

 Milling performance: Achieved milling throughput of 1.5 million tonnes (“Mt”) of ore at a grade of 0.8

g/t during the quarter. Metallurgical recovery in Q2 2023 was 85%.

 Cost performance and cash flow: Total cash costs1 of $1,127 per gold ounce (“/oz”) and all‐in

sustaining costs1 (“AISC”) of $1,374/oz for the three months ended June 30, 2023. Additionally, the JV

generated positive cash flow from operations of $18.0 million and Free Cash Flow1 of $10.1 million

during the quarter.

 Financial performance: Gold revenue of $64.0 million generated from 32,912 gold ounces sold at an

average realized price of $1,944/oz for the quarter. Net income of $24.4 million and Adjusted EBITDA1

of $25.5 million during the quarter.

 Mining contract awarded: A competitive tender process was conducted during Q2 2023 and a

preferred contractor was selected by the JV partners to resume mining operations at the AGM, with

Abore scheduled to start in Q4 2023.

 Exploration focus: Drilled 5,204 metres at Kaniago West with an objective to evaluate the strike and

depth extent of the deposit in order to assess potential economic viability. Completed the extension

drilling program at Nkran South.

 Robust liquidity: $112.9 million in cash and cash equivalents, $12.0 million in gold sales receivables,

$2.3 million in gold on hand and no debt as of June 30, 2023.

1 See “Non‐IFRS Performance Measures”

Galiano Gold Highlights:

 Stable balance sheet: Cash and cash equivalents of $55.5 million as at June 30, 2023, while remaining

debt‐free.

 Positive earnings: Net income of $12.0 million or $0.05 per common share during the quarter, which

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

 Board changes: Gordon Fretwell did not stand for re‐election at the Company’s Annual General

Meeting and as such resigned as a director of the Company effective June 1, 2023. The Company

would like to express its gratitude to Mr. Fretwell for his years of leadership and service to the

Company.

“The second quarter saw continued momentum on achieving our stated milestones,” stated Matt Badylak,

Galiano’s President and Chief Executive Officer, “We awarded a mining contract to restart mining at the

Asanko Gold Mine during the fourth quarter, in line with the 2023 Technical Report schedule, while

continuing to generate significant cash flows through stockpile processing. This has further strengthened

the AGM’s balance sheet in anticipation of a capital‐intensive second half of 2023. At the corporate level,

we closed the quarter with $56 million in cash, no debt, and remain in an enviable position to pursue

accretive opportunities for growth. I am also pleased with the progress our health and safety teams have

made to strengthen safety awareness across site, reinforce our commitment to Zero Harm and maintain

a culture of best practices at the Asanko Gold Mine.

Looking ahead, as a result of higher metallurgical recoveries, we have increased the AGM’s 2023

production guidance, from 100,000 to 120,000 ounces to between 120,000 to 130,000 ounces.”

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

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

Ore mined (‘000t) ‐ ‐ ‐ 144 675

Waste mined (‘000t) ‐ ‐ ‐ 107 1,320

Total mined (‘000t) ‐ ‐ ‐ 251 1,995

Strip ratio (W:O) ‐ ‐ ‐ 0.7 2.0

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

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

Ore transportation from Esaase (‘000 t) 729 1,367 503 699 901

Ore transportation cost ($/t trucked) 5.88 5.51 6.19 6.55 6.19

Ore milled (‘000t) 1,457 1,566 1,518 1,423 1,406

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

Average recovery rate (%) 85 73 80 88 84

Processing cost ($/t milled) 11.01 9.78 10.06 10.45 10.40

G&A cost ($/t milled) 4.68 4.09 4.20 4.89 5.40

Gold produced (oz) 33,673 32,678 34,090 43,899 50,010

Gold sold (oz) 32,912 35,174 34,202 45,482 46,236

Average realized gold price ($/oz) 1,944 1,850 1,686 1,687 1,832

Total cash costs1 ($/oz) 1,127 1,083 1,031 1,001 1,218

All‐in sustaining costs1 ($/oz) 1,374 1,268 1,191 1,178 1,431

All‐in sustaining margin1 ($/oz) 570 582 495 509 401

All‐in sustaining margin1 ($m) 18.8 20.5 16.9 23.2 18.5

Revenue ($m) 64.1 65.2 57.8 76.9 84.9

Income from mine operations ($m) 24.4 24.7 19.2 25.7 16.2

Adjusted net income1 ($m) 24.4 20.6 19.6 17.3 13.7

Cash provided by operating activities ($m) 18.0 18.9 11.1 26.1 34.3

Free cash flow1 ($m) 10.1 12.0 5.5 16.3 25.3

Asanko Gold Mine – Financial and operational highlights for the three and six months ended June 30,

2023 and 2022 (100% basis)

 The AGM produced 33,673 ounces of gold during Q2 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 85%. Compared

to Q1 2023, recoveries improved from 73% to 85% due to the composition of the feed blend processed

having a higher percentage of oxide ore during Q2 2023.

 Sold 32,912 ounces of gold in Q2 2023 at an average realized gold price of $1,944/oz for total revenue

of $64.1 million (including $0.1 million of by‐product silver revenue), a decrease of $20.8 million from

Q2 2022. The decrease in revenue quarter‐on‐quarter was primarily a function of a 29% reduction in

sales volumes relative to Q2 2022, partly offset by a 6% increase in realized gold prices.

 Income from mine operations for Q2 2023 totaled $24.4 million compared to income from mine

operations of $16.2 million in Q2 2022. The increase in income from mine operations was due to a

$29.0 million decrease in cost of sales (which resulted from fewer ounces sold, at a lower unit cost,

driven by the successful labour cost restructuring completed in 2022 as well as processing ore that

had no carrying value for accounting purposes), partly offset by the $20.8 million reduction in revenue

described above.

 Reported Adjusted EBITDA1 of $25.5 million in Q2 2023 compared to $21.1 million in Q1 2022. The

increase in Adjusted EBITDA1 was largely driven by higher gold prices and lower operating costs as

described above.

 Despite inflationary cost pressures, the lower operating costs described above, resulted in a 7%

reduction to total cash costs1 from $1,218/oz in Q2 2022 to $1,127/oz in Q2 2023.

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

Asanko Gold Mine (100% basis)

Financial results

Revenue 64,066 84,885 129,259 162,417

Income from mine operations 24,406 16,244 49,063 26,796

Net inc ome 24,378 15,803 44,992 2,165

Adjus ted net inc ome

24,378 13,723 44,992 21,085

Adjus ted EBITDA

25,541 21,064 48,404 34,169

Ca s h and ca s h equiv alents 112,914 70,283 112,914 70,283

Ca s h generated from operating a cti vi ti es 17,979 34,344 36,922 38,269

Free ca s h flow

10,113 25,338 22,072 21,975

AISC margin

18,760 18,541 39,286 30,593

Key mine performance data

Gold produced (ounces) 33,673 50,010 66,351 92,353

Gold sold (ounces) 32,912 46,236 68,086 88,165

Avera ge r ealized gold price ($/oz) 1,944 1,832 1,896 1,839

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

1,127 1,218 1,104 1,286

AISC ($ per gold ounce sold)

1,374 1,431 1,319 1,492

Three months ended June 30, Six months ended June 30,

 AISC1 for Q2 2023 was $1,374/oz compared to $1,431/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, however capital costs were marginally higher on a per ounce basis due to significant

investment in the next raise of the tailings storage facility.

 The AGM generated $18.0 million of cash flow from operating activities and free cash flow1 of $10.1

million during Q2 2023. This compares to $34.3 million of cash flow from operating activities and free

cash flow1 of $25.3 million during Q2 2022. Despite higher AISC margins1, the decrease in free cash

flow1 was primarily due to fewer gold ounces sold in Q2 2023.

Galiano Gold Inc. – Financial highlights for the three and six months ended June 30, 2023 and 2022

 The Company reported net income of $12.0 million in Q2 2023, compared to net income of $12.6

million in Q2 2022. Net income was largely unchanged quarter‐on‐quarter as during Q2 2023 the

Company recognized its share of the JV’s net earnings of $11.0 million and a $2.4 million positive fair

value adjustment on the Company’s preference shares in the JV. During Q2 2022, the Company did

not recognize its share of the JV’s net earnings as the estimated recoverable amount of the Company’s

investment in the JV was nil as at June 30, 2022, while a $13.2 million positive fair value adjustment

on the Company’s preference shares in the JV was recorded.

 Adjusted EBITDA1 for Q2 2023 amounted to $9.6 million, compared to a loss of $1.2 million in Q2

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

Adjusted EBITDA1. During Q2 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 Q2 2023 was $1.4 million, compared to cash provided by operating

activities of $2.6 million in Q2 2022. The increase in cash used in operating activities from Q2 2022 to

Q2 2023 was driven by working capital movements, specifically related to the Company’s service fee

receivable from the JV.

 As of June 30, 2023, the Company had cash and cash equivalents of $55.5 million, while remaining

debt‐free.

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 and six months

ended June 30, 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

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

Galiano Gold Inc.

Net inc ome 11,961 12,566 20,454 11,029

Net inc ome per shar e ‐ basic 0.05 0.06 0.09 0.05

Adjus ted EBITDA

9,634 (1,181) 16,374 (2,603)

Ca s h and ca s h equiv alents 55,503 53,005 55,503 53,005

Three months ended June 30, Six months ended June 30,

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.

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

use of contractors; the hazards and risks normally encountered in the exploration, development and production of

gold; the Company's operations are subject to environmental hazards and compliance with applicable environmental

laws and regulations; the effects of climate change or extreme weather events may cause prolonged disruption to

the delivery of essential commodities which could negatively affect production efficiency; the Company's operations

and workforce are exposed to health and safety risks; unexpected costs and delays related to, or the failure of the

Company to obtain, necessary permits could impede the Company's operations; the Company's title to exploration,

development and mining interests can be uncertain and may be contested; geotechnical risks associated with the

design and operation of a mine and related civil structures; the Company's properties may be subject to claims by

various community stakeholders; risks related to limited access to infrastructure and water; risks associated with

establishing new mining operations; the Company's revenues are dependent on the market prices for gold, which

have experienced significant recent fluctuations; the Company may not be able to secure additional financing when

needed or on acceptable terms; the Company’s shareholders may be subject to future dilution; risks related to the

control of AGM cashflows and operation through a joint venture; risks related to changes in interest rates and foreign

currency exchange rates; risks relating to credit rating downgrades; changes to taxation laws applicable to the

Company may affect the Company's profitability and ability to repatriate funds; risks related to the Company's

internal controls over financial reporting and compliance with applicable accounting regulations and securities laws;

risks related to information systems security threats; non‐compliance with public disclosure obligations could have

an adverse effect on the Company’s stock price; the carrying value of the Company's assets may change and these

assets may be subject to impairment charges; risks associated with changes in reporting standards; the Company's

primary asset is held through a joint venture, which exposes the Company to risks inherent to joint ventures, including

disagreements with joint venture partners and similar risks; the Company may be liable for uninsured or partially

insured losses; the Company may be subject to litigation; damage to the Company’s reputation could result in

decreased investor confidence and increased challenges in developing and maintaining community relations which

may have adverse effects on the business, results of operations and financial conditions of the joint venture and the

Company and the Company’s share price; the Company may be unsuccessful in identifying targets for acquisition or

completing suitable corporate transactions, and any such transactions may not be beneficial to the Company or its

shareholders; the Company must compete with other mining companies and individuals for mining interests; the

Company’s growth, future profitability and ability to obtain financing may be impacted by global financial conditions;

the Company’s common shares may experience price and trading volume volatility; the Company has never paid

dividends and does not expect to do so in the foreseeable future; the Company’s shareholders may be unable to sell

significant quantities of the Company’s common shares into the public trading markets without a significant

reduction in the price of its common shares, or at all; and the risk factors described under the heading “Risk Factors”

in the Company’s Annual Information Form.

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