Austral Gold Files Technical Report Supporting Robust Pre-Feasibility Study Results for Combined Guanaco Mine and Amancaya Project, Chile

Vancouver, British Columbia--(Newsfile Corp. - July 11, 2017) - Austral Gold Limited (ASX: AGD) (TSXV: AGLD) ("Austral" or the "Company") is pleased to announce the filing on SEDAR and the ASX of a Technical Report, prepared in accordance with National Instrument 43-101 and JORC Code, on the Guanaco and Amancaya Gold Project, Region II, Chile, dated 16 June, 2017, with an effective date of 31^st December 2016 (the "Technical Report"). The Technical Report supports the Company's pre-feasibility study, disclosed in the Company's announcement dated 9 June 2017.

Highlights of the Technical Report;

• After-Tax Net Present Value (NPV): $US71.3m at a 5.0% discount rate*
• Mine life of 5 years, based on Mineral Reserves
• Metal prices: based on a ramp-up from current prices to reserve prices of $US1,300/oz gold and $US20/oz silver, based on consensus of independent forecasts
• All-In Sustaining Cost ("AISC") of $US892/oz gold
• Combined average annual production of approximately 53,000 ozs gold, 370,000 ozs silver.
• Metallurgical recovery estimated to average 92% for gold, 80% for silver for the new processing plant
• Average operating cost over the mine life is $US111 per tonne milled.
• Life of Mine ("LOM") sustaining capital costs total $US66.4 million, including reclamation and closure.
• No additional CAPEX requirements for operation are envisaged, as all infrastructure plant and equipment has been fully funded as of end of December, 2016.

*Due to an adjustment to the capital cost estimate, economic results differ slightly from the Company's previous News Release on June 9, 2017.

Stabro Kasaneva, CEO of Austral Gold stated: "This is a significant step for Austral Gold in executing on its focus on high-margin production growth. Once the new processing plant enters operation the Company plans to transport the high grade Amancaya production, currently being stockpiled at Amancaya, to the new plant. We hope to see the efficiencies of the new plant positively impact our cash flow, with gold recoveries expected to improve by at least 25%. We hope to complete final commissioning of the new plant shortly and commence combined operations thereafter."

SUMMARY OF RESERVE AND RESOURCE ESTIMATES

Table 1: Amancaya and Guanaco Mineral Reserves - as at December 31, 2016
Austral Gold Ltd. - Guanaco and Amancaya Gold Project

Notes: Amancaya Mineral Reserve

1. Mineral Reserves followed the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definitions, 2014 and are compliant with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ("JORC") Code, 2012.
2. Underground Mineral Reserves are estimated at a break-even cut-off grade of 2.5 g/t AuEq for stopes and an incremental cut-off grade of 1.5 g/t AuEq for drifts. Open Pit Mineral Reserves are estimated at a cut-off grade of 1.53 g/t AuEq.
3. Mineral Reserves are estimated using an average long-term gold price of US$1,300 per ounce and silver price of US$20 per ounce.
4. Gold Equivalents (AuEq) were calculated as AuEq = Au + 0.0134 x Ag, based on a Au and Ag price of $1,300/oz and $20/oz and recoveries of Au and Ag of 92% and 80%, respectively.
5. A minimum mining width of 1.5 m was used for stopes and 3.5 m for drifts.
6. Stope dilution: 0.5 m in the hanging wall and 0.5 m in the footwall (1.0 m total).
7. Drift dilution: 0.25 m in each of the side walls (0.5 m total).
8. Bulk density is 2.5 t/m³.
9. Numbers may not add due to rounding.

Notes: Guanaco Mineral Reserve

1. Mineral Reserves followed CIM definitions, 2014 and are compliant with the JORC Code.
2. Mineral Reserves are estimated at a break-even cut-off grade of 2.0 g/t AuEq for stopes and an incremental cut-off grade of 1.0 g/t AuEq for drifts.
3. Mineral Reserves are estimated using an average long-term gold price of US$1,300 per ounce and silver price of US$20 per ounce.
4. Gold Equivalents (AuEq) were calculated as AuEq = Au + 0.0134 x Ag, based on a Au and Ag price of $1,300/oz and $20/oz and recoveries of Au and Ag of 92% and 80%, respectively.
5. A minimum mining width of 1.5 m was used for stopes and 3.5 m for drifts.
6. Stope dilution: 0.5 m in the hanging wall and 0.5 m in the footwall (1.0 m total).
7. Drift dilution: 0.25 m in each of the side walls (0.5 m total).
8. Bulk density is 2.5 t/m³.
9. Numbers may not add due to rounding.

Table 2: Amancaya and Guanaco Mineral Resources -as at December 31, 2016
Austral Gold Ltd. - Guanaco and Amancaya Gold Project

Notes: Amancaya Resource

1. Mineral Resources followed CIM definitions, 2014 and are compliant with the JORC Code.
2. Mineral Resources are reported inclusive of Mineral Reserves.
3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
4. Open pit Mineral Resources are reported at a cut-off grade of 1.5 g/t AuEq. Pit optimization shells were used to constrain the resources. Underground Mineral Resources are estimated at a cut-off grade of 2.5 g/t AuEq beneath the open pit shells.
5. Mineral Resources are estimated using a long-term gold price of US$1,300 per ounce, and a silver price of US$20 per ounce.
6. Gold Equivalents (AuEq) were calculated as AuEq = Au + 0.0134 x Ag, based on a gold and silver price of $1,300/oz and $20/oz and recoveries of gold and silver of 92% and 80%, respectively.
7. Minimum width for the open pit resource is 1.0 m and 1.5 m for the underground resource.
8. Bulk density is 2.50 t/m³.
9. Numbers may not add due to rounding.

Notes: Guanaco Resource

1. Mineral Resources followed CIM definitions, 2014 and are compliant with the JORC Code.
2. Mineral Resources are reported inclusive of Mineral Reserves and do not include dilution.
3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
4. Mineral Resources are reported at a 1.5 g/t AuEq cut-off grade where AuEq = Au + (0.0134 * Ag).
5. Mineral Resources are estimated using a long-term gold price of US$1,300 per ounce, and a silver price of US$20 per ounce.
6. Gold Equivalents (AuEq) were calculated as AuEq = Au + 0.0134 x Ag, based on a Au and Ag price of $1,300/oz and $20/oz and recoveries of Au and Ag of 92% and 80%, respectively.
7. A minimum mining width of 1.5 m was not used for the estimation of the Mineral Resource.
8. Bulk density is 2.50 t/m³.
9. Numbers may not add due to rounding.

The conversion of the Indicated Resources into Mineral Reserves for Amancaya is approximately 84%, reflecting the high-grade nature of the deposit. Inferred Resources are not included in the Mineral Reserve estimate or the economic analysis.

BACKGROUND

The Guanaco Gold Project is currently held by Austral Gold through its wholly-owned subsidiary Guanaco Mining Company Ltd (GMC). GMC has a 99.99% interest in Guanaco Compañía (Cía.) Minera SpA (GCM), the subsidiary entity in Chile that owns and currently operates the Guanaco Mine. The Guanaco Gold Project has produced approximately 50,000 oz of gold per year for the last four years and is projected to continue at this rate for the next five years, as described in the LOM plan. Following purchase of the Amancaya project from Yamana Gold in 2014 and an infill drilling program in 2016 the Company has been assessing the possibility to run both Guanaco and Amancaya as a combined operation, with all production treated at a new processing plant built at Guanaco. RPA was commissioned to undertake the Technical Report used by the Company to undertake a Pre-Feasibility Study.

MINING METHODOLOGY

The mining methodology used at Guanaco consists of sub-level open stoping (SLOS) and mining is carried out by following the veins with drifts on two levels, separated by 16 m (20 m floor to floor). The main production at Guanaco comes from the Cachinalito West vein, with additional production coming from the Dumbo and Perseverancia veins.

Stopes are designed at a minimum mining thickness of 1.5 m with planned dilution of 0.5 m on either side resulting in final stope widths of 2.5 m. Drifts are designed at 3.5 m with 0.25 m of dilution on either side resulting in a final width of 4 m. Sill pillars of four metres in height are left every 40 m (vertical) and ten metre wide rib pillars are left every 70 m (horizontal).

The Amancaya deposit consists of mainly northwest and southeast veins, with dip direction of 70° to 85°. The country rock comprises highly competent dacite-andesite.

The open pit mine at Amancaya will be carried out as a conventional operation using 30 t trucks and a combination of excavators and front-end loaders. Waste and ore will be blasted and mined separately using a "trenching" method to reduce the amount of dilution.

The SLOS mining methods planned at Amancaya are similar to those used at the Guanaco Mine. The Amancaya orebody is generally thinner than Guanaco resulting in the use of split-blasting to minimize dilution during drift development. Split blasting involves the separate blasting of ore and waste in the drift face.

Vertical crater retreat (VCR) mining will be used to connect the upper and lower drifts and create an open face for longhole blasting.

Ore from Amancaya will be hauled by contractor via a 75 km road to the new mill located at the Guanaco mining complex.

The underground operations at Guanaco and Amancaya are designed to produce approximately 1,000 tpd and 800 tpd, respectively. The open pit at Amancaya is expected to produce 400 tpd. Each operation will overlap to produce an average mill feed of approximately 1,000 tpd during peak production in 2017 and 2018.

MINERAL PROCESSING

The Company restarted leach pad stacking in September 2010 and the first gold bar was poured in December 2010. With the acquisition and start of mining at Amancaya, commissioning of a 1,500 tpd agitated leach milling circuit commenced in March 2017, and is expected to be fully operational by July 2017. The capacity of the mill was selected to allow for potential increases in production. The new plant is integrated into the existing operation in order to minimize construction and capital costs as much as possible. The existing crushing operation will be utilized to prepare feed for the milling circuit. The existing Merrill-Crowe circuit was refurbished to accommodate ore with higher silver concentrations from Amancaya and the zinc precipitate that is produced in the Merrill-Crowe circuit will be processed in the existing refinery.

The Company plans to direct all ore to the milling circuit and stop heap leaching as soon as the plant is operational. Ore that is already stacked on the leach pad will continue leaching as long as it is economic to do so. At the end of leaching, the ore will be rinsed with water to remove residual cyanide that is entrained in the leach pad.

The processing circuits include:

• Three stage crushing circuit
• Reversing conveyor to feed either the heap leach operation or the milling circuit
• Covered stockpile
• Single stage ball milling circuit operated in closed circuit with hydro-cyclones
• Pre-leach thickener
• Three-stage agitated leach circuit
• Three-stage counter-current-decantation (CCD) wash circuit
• Filter feed tank and plate and frame pressure filters to recover solution and produce filtered tailings
• Loading of the tailings with a front end loader and truck haulage to dry tailings deposit
• Dry tailings deposit
• Refurbished Merrill-Crowe circuit for precious metal recovery including:
  • Clarifying filters
  • De-aeration tower
  • Zinc cementation (i.e., precipitation)
  • Precipitate filters

From the covered stockpile, two vibrating feeders are used to remove ore from the bottom of the stockpile and feed it to a series of conveyors that are used to feed the ball mill.

ENVIRONMENTAL, PERMITTING AND SOCIAL CONSIDERATIONS

Environmental Impact Statements ("DIAs") have been approved for the Guanaco and Amancaya Projects, including:

• The Guanaco operation that was permitted by Amax
• Reopening of the Guanaco operation by Austral Gold
• Opening of the Amancaya Mine
• Installing the 33 kV Electrical Transmission Line

In addition to the DIAs, environmental studies and numerous environmental permits have been issued to support mining at Guanaco and Amancaya, as outlined in Section 20 of the Technical Report.

Due to the remote location, Guanaco and Amancaya do not have a large impact on local residents, which are generally supportive of mining operations. Environmental studies and environmental permits have been issued to support mining at Guanaco and Amancaya.

CAPITAL AND OPERATING COST ESTIMATES

The estimated sustaining capital costs for Amancaya and Guanaco from December 31, 2016 forward are summarized in Table 3. Since the capital costs for the new mill were incurred in 2016, all costs from 2017 forward are treated as sustaining capital costs. The Company expects to be able fund these from operations. This, however, remains uncertain and the Company will assess any funding needs on a needs basis.

TABLE 3: SUMMARY OF CAPITAL COSTS
Austral Gold Limited — Guanaco and Amancaya Mines

Unit operating costs for the LOM plan are shown in Table 4. The average operating cost over the life of mine is estimated at US$111 per tonne milled.

TABLE 4: SUMMARY OF LOM UNIT OPERATING COSTS
Austral Gold Limited — Guanaco and Amancaya Mines

The total operating cost over the life of mine is estimated at US$160 million.

CASH FLOW ANALYSIS

Considering Guanaco and Amancaya on a stand-alone basis, the undiscounted pre-tax cash flow totals $93 million over the current mine life.

After-Tax Net Present Values (NPV) at various discount rates are:

• 5% discount rate is $71.3 million.
• 7.5% discount rate is $66.1 million.
• 10% discount rate is $61.4 million.

QUALIFIED PERSONS

The Technical Report on the Guanaco and Amancaya Gold Project, Region ii, Chile was prepared in accordance with CIM definitions 2014 in National Instrument 43-101 and JORC Code, 2012. The Technical Report has been filed under the company's profile on SEDAR and the ASX. The RPA Qualified Persons (QPs) for the Guanaco and Amancaya Technical Report include:

• Kathleen Ann Altman, P.E., Ph.D. (Metallurgy)
• Jason J. Cox, P.Eng. (Mineral Reserves)
• Ian Weir, P.Eng. (Mineral Reserves)
• Chester M. Moore, P.Eng., (Mineral Resources)

This press release has been reviewed and approved by the RPA Qualified Persons.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Austral Gold

Austral Gold Limited is a growing precious metals mining, development and exploration company building a portfolio of quality assets in Chile and Argentina. The Company's flagship Guanaco project in Chile is a low-cost gold and silver producing mine with further exploration upside. Austral commenced open-pit mining operations at Amancaya in 2017. Amancaya is 75km from the Guanaco processing plant, where the Company intends to transport production. A PFS completed in mid-2017 showed robust financial performance is expected from operating both operations as a combined operation, with five years of mine life from reserves. The Company also owns 70% and is operator of the underground silver-gold Casposo mine in San Juan, Argentina. With an experienced local technical team and highly regarded major shareholder, Austral's goal is to continue to strengthen its asset base through acquisition and discovery. Austral Gold Limited is listed on the TSX Venture Exchange (TSXV: AGLD), and the Australian Securities Exchange (ASX: AGD). For more information, please consult the company's website: www.australgold.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

On behalf of Austral Gold Limited:
"Stabro Kasaneva"
CEO

For Further Information Please Contact:
Mike Brown, VP Corporate Development
mike.brown@australgold.com
Canada: +1 604 568 2496
Australia: + 61 2 9380 7233
South America: + 54 11 4323 7558

Forward Looking Statements

Statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements are statements that are not historical, and consist primarily of projections - statements regarding future plans, expectations and developments. Words such as "expects", "intends", "plans", "may", "could", "potential", "should", "anticipates", "likely", "believes" and words of similar import tend to identify forward-looking statements. Forward-looking statements in this news release include the Company's plan to transport the high grade Amancaya production currently being stockpiled at Amancaya to its new plant; its expectation that the new plant will be operational shortly and its plans to direct all ore to the milling circuit and stop heap leaching as soon as the plant is in operation; the expectation that efficiencies of the new plant will positively impact cash flows and improve gold recoveries; and those concerning cost and performance projections, including the LOM plan production. All of these forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, business integration risks; uncertainty of production, development plans and cost estimates, metallurgical recoveries, commodity price fluctuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets, uncertainty in the measurement of mineral reserves and resource estimates, Austral's ability to attract and retain qualified personnel and management, potential labour unrest, reclamation and closure requirements for mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond the Company's control, the availability of capital to fund all of the Company's projects and other risks and uncertainties identified under the heading "Risk Factors" in the Company's continuous disclosure documents filed on SEDAR. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Austral cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. Austral's forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and Austral does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements.

Austral Gold Limited ABN 30 075 860 472 (ASX: AGD) (TSXV: AGLD)

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