Mr. Nick Brodie reports

GALANE GOLD LTD. RELEASES FINANCIAL AND OPERATING RESULTS FOR 2015

Galane Gold Ltd. has released its financial results for the year ended Dec. 31, 2015. (All amounts are in U.S. dollars unless otherwise indicated.)

A copy of the audited consolidated financial statements for the year ended Dec. 31, 2015, prepared in accordance with international financial reporting standards and the corresponding management's discussion and analysis will be available under the company's profile on SEDAR.

Galane Gold chief executive officer, Nick Brodie, commented: "The financial results for 2015 reflect the challenging gold price environment that all gold producers faced in 2015. Despite this, the Galane management team managed three significant achievements in the year.

"Firstly, the commencement of commercial production at Tau underground in the third quarter of 2015: The work required to build an underground mine and restructure an operation from an open-pit mine cannot be underestimated. We have now started exploration from underground of the Tau orebody and are hopeful that this will form the long-term backbone of the Mupane operations.

"This was followed closely by our acquisition of Galaxy Gold Mining Ltd. and approximately 1.5 million ounces of gold. The Galaxy Gold mine in South Africa met all of our acquisition criteria, including that the property is near term production, cost a fraction of replacement cost, has the ability to increase production with minimal capital requirements, has a drill-ready plan to potentially increase the resource and is surrounded by prospective targets. It is our aim to restart production in 2016 and generate positive operating cash flows from the operations before the year-end.

"Lastly, the most significant achievement of Galane Gold's management team was to restructure the business over the course of 2015 as the price of gold fell. These efforts by management put the company in a positive position in 2016 to take advantage of an increasing gold price.

"The Galane management team has committed itself to making 2016 another transformative year for the company as we look to commence production at Galaxy."

Highlights for 2015:

• Commercial production commenced at Tau underground in third quarter 2015. In 2015, 93,617 tonnes at a head grade of 2.74 grams per tonne were mined.
• The Galaxy acquisition was completed in fourth quarter 2015 with measured and indicated mineral resources of 602,696 ounces of gold and an inferred mineral resource of 886,199 ounces of gold acquired for approximately $8.50 per ounce (1) (4).
• Operating cash cost (2) was $1,039 per ounce (excluding royalties) for the year and $823 per ounce for fourth quarter 2015.
• The company produced 24,321 ounces of gold at the Mupane property. Production during the year was managed to control operating costs due to the low gold price environment.
• The closing cash balance was $1.9-million after:
  • Operating cash inflow of $2.3-million;
  • Repayment of $2.0-million of the Samsung facility;
  • Capital investment in Tau underground of $5.2-million.
• The loss attributable to Galane shareholders after tax for 2015 was $8.6-million.

Outlook (3)

Mupane property

The company completed a new five-year mine plan for the Mupane property, which will form the guide for the company's short-term goals and long-term strategy. The company intends to utilize the following resources during 2016:

• Tau underground: The company has previously disclosed its intention to exploit the reported measured and indicated mineral resources of approximately 128,600 ounces of gold for Tau through underground mining (4) (5). The company commenced stoping in August, 2015, in the Eastern mineralized body, which will continue for approximately six months. Development will continue in some instances through reef to reach the main mineralized body, which lies under the current open pit. It is currently anticipated that the company will commence stoping on the main mineralized body in third quarter 2016. It is estimated that the company will process approximately 200,000 tonnes at an average grade of 2.4 g/t with the grade increasing when the company reaches the main mineralized body. While developing underground, the company intends to commence exploration to attempt to confirm the extension of the Tau mineralized body at depth.
• Low-grade stockpiles: The company will process approximately 700,000 tonnes of low-grade stockpile at an average grade of 0.80 g/t, which is located at the run-of-mine pad at the processing plant. The stockpiles being used form part of the 1.4 million tonnes of low-grade stockpiles, which it reviewed during 2015.
• Tekwane: The company will continue to selectively strip mine the high-grade areas and will use a screening plant at the mine site to reduce the tonnage and increase the potential grade to be delivered to the plant. It is planning to process approximately 23,000 tonnes at an average grade of 2.3 g/t.

The company's mine plan for Mupane is subject to change according to the prevailing gold price. The company will adopt the appropriate plan for that prevailing gold price environment.

The Mupane processing plant continues to focus on continuing stabilization and optimization of the processing operations. There are no major plant projects scheduled at the Mupane property for 2016 as the company believes it has implemented all material optimization projects.

Galaxy property

The company acquired Galaxy in fourth quarter 2015. For the rest of 2015, the company prepared a short-term plan to refurbish the existing plant, construct a new tailings retreatment facility and recommence underground mining operations at the Galaxy property. Implementation of the plan is subject to the company raising sufficient funds, which the company is currently targeting to do in second quarter 2016.

• Plant refurbishment: The plant is a standard crush, mill, float and carbon in leach (CIL) with a capacity of 15,000 tonnes per month. To refurbish the whole plant, the company estimates that it will take three months, and material parts of the refurbishment will be a new crusher, maintenance of the conveyors, a new ball mill gearbox, relining tanks, new gearboxes and agitators for the CIL plant, complete refurbishment of the elution plant, and a new cyanide plant.
• Tailings retreatment facility: The company plans to build a CIL plant within the footprint of the existing plant to process 25,000 tonnes per month of tailings material. It is estimated that the construction of the plant will take four months from commencement. It will involve the construction of six CIL leach tanks, a CIL feeding section, carbon recovery plant and the associated civils.
• Underground: The underground operations have been maintained to a good standard while under care and maintenance. Operations underground can be recommenced within a month of commencement with minor refurbishment to the tramming infrastructure, new hoppers, increased ventilation, a new compressor and refurbishment of the electrical cabling. The company intends to use the same mining contractor it uses at the Mupane property, and the contractor will provide the necessary underground labour and mining equipment.

The short-term plan will process material from three sources (6):

• Giles and Woodbine: Giles has a measured and indicated mineral resource of 898,268 tonnes at 3.94 g/t, and Woodbine has a measured and indicated mineral resource of 614,813 tonnes at 3.82 g/t. Mining will be done using the reef-over-hand method in stopes that have already been developed (4). It is estimated that in the first year of mining, 20,000 tonnes at an average grade of 3.0 g/t can be mined taking into account dilution.
• Princeton: Princeton has a measured and indicated mineral resource of 1,094,862 tonnes at 4.87 g/t. Mining will be long-hole stoping using trackless mining equipment (4). It is estimated that it will take up to five months to undertake the necessary development to restart operations, and annual production from then on will be approximately 135,000 tonnes at 4.5 g/t based on the company's internal mine plan.
• Tailings: Next to the existing plant are the Hostel East and West dumps, which contain 1,443,397 tonnes at 0.79 g/t. These will be sluiced to the plant with feed going to the new tailings retreatment facility and into the existing plant to fill the plant as required.

The short-term plan estimates that in steady state, annual production will be approximately 17,000 ounces of gold.

Work has already commenced on an expansion plan to take annual production up to 60,000 ounces of gold over nine years with the expansion commencing in year three after commencement of the short-term plan. It is currently envisaged that the company will commence a desk-stop study first, the results of which will then be used to support a prefeasibility study to be completed within two years.

(1) The purchase price equation for Galaxy in the Dec. 31, 2015, annual financial statements estimates a preliminary purchase price of $12,526,313, and the technical disclosure regarding mineral resources and mineral reserves is reported in the technical report in respect of the Galaxy Gold mine entitled "A technical report on the Galaxy Gold mine, Mpumalanga province, South Africa," which was issued Jan. 4, 2016, with an effective date of Sept. 1, 2015, and was prepared by Minxcon (Pty.) Ltd. and approved by Daniel van Heerden, BEng (min.), MCom (bus. admin.), PrEng, FSAIMM, AMMSA, a qualified person as defined by National Instrument 43-101. The Galaxy technical report satisfies the requirements to be a prefeasibility study and was reviewed by the directors of Minxcon (Pty.) Ltd., specifically Mr. van Heerden; Uwe Engelmann, BSc (zoo. and bot.), BSc honours (geol.), PrSciNat, MGSSA; Dario Clemente, NHD (ext. met.), GCC, BLDP (WBS), MMMA, FSAIMM; and Johan Odendaal, BSc (geol.), BSc (min. econ.), MSc (min. eng.), PrSciNat, FSAIMM, MGSSA, all of whom are qualified persons as defined by NI 43-101 and independent of Galane Gold for the purposes of NI 43-101.

(2) Total operating cash cost excluding royalties is a non-generally accepted accounting principle measure. Refer to supplemental information to management's discussion and analysis in the company's management's discussion and analysis for the year ended Dec. 31, 2015, for reconciliation to measures reported in the company's financial statements.

(3) This is forward-looking information and is based on a number of assumptions.

(4) Mineral resources are not mineral reserves and do not have demonstrated economic viability. Inferred mineral resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic limits to be applied. Inferred mineral resources are too speculative geologically to have economic considerations applied to them to enable them to be categorized as mineral reserves. There is no certainty that mineral resources can be upgraded to mineral reserves through continued exploration.

(5) On March 18, 2013, Galane Gold issued an update to the mineral resources in respect of the Mupane property with an effective date of Dec. 31, 2012. The full text of the update is available on Galane Gold's SEDAR profile. The attached Tau results table summarizes the results at Tau.

  
                                       TAU RESULTS
  
Category                                     Measured                             Indicated                       
Deposit   Cut-off grade (g/t)   Tons (000)   Au (g/t)   Au (000 oz)   Tons (000)   Au (g/t)   Au (000 oz)

Tau                     0.80          578       3.00          55.7          824       2.75          72.8         

Category                                Measured and indicated                     Inferred                       
Deposit   Cut-off grade (g/t)   Tons (000)   Au (g/t)   Au (000 oz)   Tons (000)   Au (g/t)   Au (000 oz)

Tau                     0.80        1,402       2.85         128.6          723       3.05          70.9 

Resource tonnages and gold grades were reported at a 0.5-gram-per-tonne-gold-cut-off grade. Resources 
from contiguous portions of the mineralization outside of the optimized pit shell, and potentially 
amenable to underground mining methods, were reported at a cut-off grade of 0.8 g/t gold. A 0.8-gram-
per-tonne-gold-grade shell was used, and a gold price of $1,700 (U.S.) was used.

(6) Certain mineral resources and mineral reserves for the Galaxy property are summarized from the Galaxy technical report.

                              GALAXY MINERAL RESOURCES AND MINERAL RESERVES 

                                   Measured and indicated mineral resource              Inferred mineral resource      
                                   Tonnes t    Grade Au g/t     Content oz      Tonnes t     Grade Au g/t     Content oz

Woodbine                            614,813            3.82         75,471     1,021,635             3.36        110,321
Giles                               898,268            3.94        113,856     1,267,906             3.86        157,273
Princeton                         1,094,862            4.87        171,522     1,249,489             6.14        246,484
Hostel East dump                    958,401            0.76         23,562       164,506             0.68          3,581
Hostel West dump                    484,996            0.86         13,367       107,961             0.85          2,947
Total (underground and surface)   6,226,907            3.01        602,696     8,095,521             3.40        886,199

The manual mineral resource estimate is from block plans. Mineral resources estimated from adjacent modelled areas 
are for grade distribution. Orebody volume is estimated from digital wire frame. The mineral resource estimate was 
carried out by P. Obermeyer of Minxcon (BSc honours (geol.), PrSciNat) under the supervision of and verified by 
U. Engelmann as qualified person of this report. The inferred mineral resources have a large degree of uncertainty 
as to their existence and whether they can be mined economically or legally. Only mineral resources lying within 
the legal boundaries are reported. Mineral resources are inclusive of mineral reserves. Mineral resources are 
declared at cut-offs shown in the table. All figures are in metric tonnes.

      SUMMARIZED GALAXY GOLD MINE MINERAL RESERVE STATEMENT 
                       AS AT AUG. 31, 2015

Mineral reserve category        Tonnes t      Grade Au g/t    Content oz

Probable mineral reserves      1,457,322              3.37       169,586
Total mineral reserves         1,457,322              3.37       169,586

Tonnages refer to tonnes delivered to the metallurgical plant. All 
figures are in metric tonnes. Different dilution, recovery and 
mine call factor applied to each orebody and tailings storage 
facility.

Information of a technical and scientific nature that forms the basis of the disclosure in the press release has been approved by Charles Byron, PrSciNat, MAusIMM, MGSSA, chief geologist for Galane Gold, a qualified person as defined by National Instrument 43-101.

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