GAU.TO · 2022-11-09 12:00:00

Galiano GOLD Reports Q3 2022 Financial and Operating Results

Production Results Financials

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

GALIANO GOLD REPORTS Q3 2022 FINANCIAL AND OPERATING

RESULTS

Vancouver, British Columbia, November 9, 2022 – Galiano Gold Inc. (“Galiano” or the “Company”) (TSX,

NYSE American: GAU) reports third quarter (“Q3”) 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 (JSE, NYSE: GFI) which is managed and operated by Galiano. All financial

information contained in this release is unaudited and reported in US dollars.

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

 Culture of Safety: Strong safety performance with no lost‐time injuries (“LTI”) nor total recordable

injuries (“TRI”) recorded during the quarter, resulting in 12‐month rolling LTI and TRI frequency rates

of nil and 0.25 per million employee hours worked, respectively. As of September 30, 2022, the AGM

had achieved 9.4 million employee hours worked without an LTI.

 Metallurgical recoveries at Esaase: Independent third‐party metallurgical test work completed on the

Esaase deposit with overall weighted average estimated gold recoveries of 87%. These results support

past test work and are in‐line with metallurgical recoveries previously assigned to the Esaase deposit.

 Production and revised guidance: Gold production of 43,899 ounces during the quarter. Year‐to‐date

production of 136,252 ounces, resulting in a further upward revision of guidance to 160,000 to 170,000

ounces for 2022.

 Milling performance: Achieved milling throughput of 1.4 million tonnes (“Mt”) of ore at a grade of

1.1g/t and metallurgical recovery averaged 88% during the quarter, a continued improvement in

recoveries since Q1 2022.

 Cost performance and cash flow: Total cash costs per ounce1 of $1,001 and all‐in sustaining costs1

(“AISC”) of $1,178/oz during the quarter, resulting in positive cash flows from operations of $26.1

million and free cash flow1 of $16.3 million.

 Financial performance: Gold revenue of $76.8 million generated from 45,482 gold ounces sold at an

average realized price of $1,687/oz. Net income after tax of $17.3 million during the quarter and

Adjusted EBITDA1 of $22.3 million.

 Exploration success: Completed a successful infill drilling program at Nkran which intercepted several

high‐grade intervals within and below the resource shell described in the AGM’s National Instrument

43‐101 Technical Report (effective February 28, 2022). Additionally, deep directional drilling continued

at Nkran to explore the underground potential of the deposit and define the continuity and extension

of mineralization below the limits of observed Mineral Resources. This drill program also intersected

high grade mineralization.

1 See “Non‐IFRS performance measures”

 Improving liquidity: $85.8 million in cash, $6.5 million in gold on hand, $0.4 million in gold sales

receivables and no debt as of September 30, 2022.

Galiano Gold Highlights:

 Stable balance sheet: Cash and cash equivalents of $54.7 million and $2.7 million in receivables as at

September 30, 2022, while remaining debt‐free.

 Earnings: Net income after tax of $1.3 million or $0.01 per common share during the quarter.

“The AGM had yet another strong financial and operating quarter; the combination of higher gold

production and all‐in sustaining margins1 resulted in a further strengthening of the AGM’s balance sheet.

Higher production for the quarter was driven by improved metallurgical recoveries and stockpile material

performing better than expected. As a result of continued robust production, we are again revising 2022

gold production guidance for the AGM to 160,000 to 170,000 ounces,” said Matt Badylak, President and

Chief Executive Officer. “We are also pleased to have concluded the metallurgical test work program at

Esaase which provides greater clarity on the deposit’s metallurgical recoveries. These results, in

conjunction with strong exploration success achieved during the quarter, pave the way to reinstate

Mineral Reserves for the Asanko Gold Mine, which will be described in the upcoming Feasibility Study

Technical Report prepared in full by independent consultants. This work is progressing on schedule and is

expected to be completed in Q1 2023.”

Asanko Gold Mine ‐ Summary of Q3 2022 Operational and Financial Results (100% basis)

Asanko Gold Mine (100% basis) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021

Ore mined (‘000t) 144 675 1,075 1,623 1,464

Waste mined (‘000t) 107 1,320 5,279 8,752 10,017

Total mined (‘000t) 251 1,995 6,354 10,375 11,481

Strip ratio (W:O) 0.7 2.0 4.9 5.4 6.8

Average gold grade mined (g/t) 1.8 1.6 1.3 1.2 1.3

Mining cost ($/t mined) 25.27 8.30 4.64 3.75 3.28

Ore transportation from Esaase (‘000 t) 699 901 1,304 1,264 1,272

Ore transportation cost ($/t trucked) 6.55 6.19 5.82 6.13 5.88

Ore milled (‘000t) 1,423 1,406 1,482 1,472 1,542

Average mill head grade (g/t) 1.1 1.3 1.3 1.2 1.1

Average recovery rate (%) 88 84 69 91 90

Processing cost ($/t milled) 10.45 10.40 9.46 10.07 9.68

G&A cost ($/t milled) 4.89 5.40 6.17 5.86 5.78

Gold production (oz) 43,899 50,010 42,343 50,278 49,543

Gold sales (oz) 45,482 46,236 41,929 51,368 48,435

Average realized gold price ($/oz) 1,687 1,832 1,846 1,771 1,758

Asanko Gold Mine (100% basis) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021

Total cash costs1 ($/oz) 1,001 1,218 1,361 1,257 1,273

All‐in sustaining costs1 ($/oz) 1,178 1,431 1,559 1,539 1,598

All‐in sustaining margin1 ($/oz) 509 401 287 232 160

All‐in sustaining margin1 ($m) 23.2 18.5 12.0 11.9 7.8

Revenue ($m) 76.9 84.9 77.5 91.1 85.3

Income (loss) from mine operations ($m) 25.7 16.2 10.6 (8.9) 13.0

Adjusted net income (loss) after tax 1 ($m) 17.3 13.7 7.4 (11.4) 7.7

Cash provided by operating activities ($m) 26.1 34.3 3.9 14.0 26.5

 The AGM produced 43,899 ounces of gold during the quarter, as the processing plant achieved milling

throughput of 1.4Mt of ore processed at a grade of 1.1g/t with metallurgical recovery averaging 88%.

The significant work undertaken in Q2 2022 to optimize the AGM’s plant performance assisted in the

higher recoveries achieved during the period.

 Sold 45,482 ounces of gold in Q3 2022 at an average realized gold price of $1,687/oz for total revenue

of $76.9 million (including $0.2 million of by‐product silver revenue), a decrease of $8.4 million from

Q3 2021. The decrease in revenue quarter‐on‐quarter was a function of a 6% reduction in sales

volumes and a 4% decrease in realized gold prices relative to Q3 2021.

 Total cost of sales (including depreciation and depletion and royalties) amounted to $51.2 million in

Q3 2022, a decrease of $21.1 million from Q3 2021. The decrease in cost of sales was primarily due to

6% fewer gold ounces sold and a $3.2 million positive net realizable value (“NRV”) adjustment on

stockpile inventory in Q3 2022. Production costs in Q3 2022 also benefited from lower labour costs

resulting from the rationalization of the AGM’s workforce completed in Q1 2022. Depreciation and

depletion expense was also $5.0 million lower in Q3 2022 primarily due to the pause in mining at

Akwasiso and Esaase and a reduction in the cost base of depreciable assets due to the impairment

recorded at December 31, 2021.

 Total cash costs per ounce1 were $1,001 in Q3 2022 compared to $1,273 in Q3 2021. Although gold

sales volumes decreased by 6% in Q3 2022, total cash costs per ounce1 decreased from Q3 2021 as a

result of lower mining costs resulting from the winding down of operations at Akwasiso and a positive

$3.2 million NRV adjustment on stockpile inventory as mentioned above. In addition, labour costs

were $4.3 million lower in Q3 2022 as a result of the AGM’s workforce restructuring mentioned above.

These factors were partly offset by general inflationary pressures on electricity, fuel and other key

consumables and reagents. Total cash costs per ounce1 for Q3 2022 included approximately $480/oz

of historical mining costs associated with stockpiled ore.

 Income from mine operations for Q3 2022 totaled $25.7 million compared to income from mine

operations of $13.0 million in Q3 2021. The increase in income from mine operations was due to a

$21.1 million decrease in cost of sales, partly offset by an $8.4 million decrease in revenue (as

described above).

 The AGM generated $26.1 million of cash flows from operating activities during Q3 2022 compared

to $26.5 million of cash flows from operating activities during Q3 2021. Operating cash flows in Q3

2022 were comparable Q3 2021 as improved AISC margins1 in the current period were offset by a

$13.3 million increase in working capital movements from Q3 2021.

Galiano Gold Inc. – Summary of Q3 2022 Financial Results

Galiano Gold Inc. (consolidated) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021

Net income (loss) after tax ($m) 1.3 12.6 (1.5) (91.0) 4.1

Net income (loss) after tax per share 0.01 0.06 (0.01) (0.40) 0.02

Adjusted net income (loss) 1 ($m) 1.3 12.6 (1.5) (14.5) 4.1

Adjusted net income (loss) per share1 0.01 0.06 (0.01) (0.06) 0.02

 The Company reported net income after tax of $1.3 million in Q3 2022 compared to net income after

tax of $4.1 million in Q3 2021. The decrease in earnings during Q3 2022 was primarily due to a $3.4

million reduction in the Company’s share of the JV’s net earnings from Q3 2021.

 Cash generated by operating activities in Q3 2022 was $1.5 million, compared to cash used in

operating activities of $2.8 million in Q3 2021. The increase in cash generated from operations during

Q3 2022 was primarily due to collecting $3.8 million of the Company’s JV service fee receivable and

lower corporate head office expenses (cash basis) due to a reduction in headcount.

 As at September 30, 2022, the Company held cash and cash equivalents of $54.7 million and $2.7

million in receivables for a gross liquidity position of $57.4 million and no debt.

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 nine

months ended September 30, 2022 and 2021, which are available at www.galianogold.com and filed

on SEDAR.

1 Non‐IFRS Performance Measures

The Company has included certain non‐IFRS performance measures in this press 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 per ounce of gold sold and production royalties of 5%. Excluded from total cash costs are one‐

time severance charges and net realizable value adjustments on stockpile inventory resulting from lower

expected gold recovery recorded in Q4 2021 as the magnitude of such adjustments were not indicative of costs

in that period.

 All‐in Sustaining Costs Per Gold Ounce

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,

capitalized stripping costs, reclamation cost accretion and lease payments made to and interest expense on the

AGM’s mining and service contractors per ounce of gold sold.

 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 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.

Enquiries:

Todd Romaine

EVP Sustainability and Investor Relations

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

Telephone: 1‐604‐416‐0088

Email: [email protected]

About Galiano Gold Inc.

Galiano’s vision is to build a sustainable business capable of long‐term value creation for its stakeholders

through a combination of exploration, accretive M&A activities and the disciplined deployment of its

financial resources. The Company currently operates and manages the Asanko Gold Mine, located in

Ghana, West Africa which is jointly owned with Gold Fields Ltd. The Company is strongly committed to

the highest standards for environmental management, social responsibility, and health and safety for 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.

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 drilling programs and use of the results; the expected

restating of mineral reserves; the timing of the upcoming Feasibility Study Technical Report; and statements

regarding the usefulness 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 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 resource estimates; the ability of the AGM to continue to operate, produce and ship

doré from the AGM site to be refined during the COVID‐19 pandemic or any other infectious disease outbreak; 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 resource estimates may change and may prove to be

inaccurate; mineral reserves may not be reinstated; metallurgical recoveries may not be economically viable; risks

associated with the Company ceasing its mining operations during 2022; 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; 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

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; 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; the Company's exploration programs may not successfully reinstate

mineral reserves; risks associated with establishing new mining operations; the Company's common shares may

experience price and trading volume volatility; the Company has never paid dividends; 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; Company 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; ability to repatriate funds; risks related to the Company's internal controls over financial reporting and

compliance with applicable accounting regulations and securities laws; 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; risks related to information systems security threats; the Company’s growth, future profitability and

ability to obtain financing may be impacted by global financial conditions; and the risk factors described under the

heading “Risk Factors” in the Company’s Annual Information Form.

Although the Company has attempted to identify important factors that could cause actual results or events to differ

materially from those described in the forward‐looking statements, you are cautioned that this list is not exhaustive

and there may be other factors that the Company has not identified. Furthermore, the Company undertakes no

obligation to update or revise any forward‐looking statements included in, or incorporated by reference in, this news

release if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required

by applicable law.

Neither Toronto Stock Exchange nor the Investment Industry Regulatory Organization of Canada accepts

responsibility for the adequacy or accuracy of this release.

Source: Galiano Gold Inc.

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