GAU Galiano Gold Inc

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2024

Commission File No. 001-33580

GALIANO GOLD INC.
(Translation of registrant's name into English)

Suite 1640, 1066 West Hastings Street
Vancouver, British Columbia, V6E 3X1, Canada
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F  [  ]  Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)  [  ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)  [  ]

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SUBMITTED HEREWITH

Exhibits 99.1 and 99.2 included with this report are hereby incorporated by reference as exhibits to the registrant's registration statement on Form F-10 (File No. 333-268945) (the "Registration Statement"), and to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

Exhibits
99.1	Consolidated financial statements for the years ended December 31, 2023 and 2022
99.2	Management's Discussion and Analysis for the years ended December 31, 2023 and 2022
99.3	Consent of Ernst & Young LLP
99.4	Consent of KPMG LLP
99.5	News release dated February 16, 2024

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GALIANO GOLD INC.

/s/ Matthew Freeman
________________________________
Matthew Freeman
Chief Financial Officer

Date:  February 16, 2024

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GALIANO GOLD INC.

CONSOLIDATED FINANCIAL STATEMENTS

 

Years ended December 31, 2023 and 2022

(Expressed in United States dollars, unless otherwise noted)

TABLE OF CONTENTS

Management's Responsibility for Financial Reporting	1
Report of Independent Registered Public Accounting Firms	2-3

Consolidated Statements of Financial Position	4
Consolidated Statements of Operations and Comprehensive Income	5
Consolidated Statements of Changes in Equity	6
Consolidated Statements of Cash Flow	7
Notes to the Consolidated Financial Statements	8 ‐ 48

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MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

Management's Report on Financial Statements

The consolidated financial statements of Galiano Gold Inc. have been prepared by, and are the responsibility of, the Company's management. The consolidated financial statements have been prepared by management on a going concern basis in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). When alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances. Financial statements are not exact since they include certain amounts based on estimates and judgements. Management has determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material respects.

The Board of Directors is responsible for ensuring management fulfills its financial reporting responsibilities. The Audit Committee meets with the Company's management and external auditors to discuss the results of the audits and to review the consolidated financial statements prior to the Audit Committee's submission to the Board of Directors for approval. The Audit Committee also reviews the quarterly financial statements and recommends them for approval to the Board of Directors, reviews with management the Company's systems of internal control, and reviews the scope of the external auditors' audit and non‐audit work. The Audit Committee is appointed by the Board, and all of its members are independent directors.

The consolidated financial statements have been audited by Ernst & Young LLP, Chartered Professional Accountants, in accordance with the standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders.

Management's Report on Internal Controls over Financial Reporting

Management has developed and maintains systems of internal accounting and administrative controls in order to provide, on a reasonable basis, assurance that the financial information is relevant, reliable and accurate and that the Company's assets are appropriately accounted for and adequately safeguarded. All internal control systems have inherent limitations, including the possibility of circumvention and overriding of controls, and therefore, may not prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on management's assessment, the Company's internal control over financial reporting is effective as at December 31, 2023.

 

"Matt Badylak"		"Matthew Freeman"
Matt Badylak		Matthew Freeman
Director, President and Chief Executive Officer		Executive Vice President and Chief Financial Officer

 

 

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Galiano Gold Inc.

Opinion on the financial statements

We have audited the accompanying consolidated statement of financial position of Galiano Gold Inc. [the "Company"] as of December 31, 2023, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for the year then ended, and the related notes [collectively referred to as the "consolidated financial statements"]. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and its financial performance and its cash flows for the year then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ["PCAOB"] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit has provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

Chartered Professional Accountants

 

We have served as the Company's auditor since 2023.

Vancouver, Canada

February 16, 2024

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Galiano Gold Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of financial position of Galiano Gold Inc. and its subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of operations and comprehensive income, cash flow and changes in equity for the year then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and its financial performance and its cash flows for the year then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ KPMG LLP

Chartered Professional Accountants

Vancouver, Canada

March 28, 2023

We served as the Company’s auditor from 2011 to 2023.

© 2021 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2023 AND 2022
(In thousands of United States Dollars)

			December 31, 2023			December 31, 2022
	Note		$			$
Assets
Current assets
Cash and cash equivalents	7		55,270			56,111
Receivables			29			54
Receivable due from related party	8		1,031			1,684
Prepaid expenses and deposits			764			756
			57,094			58,605
Non‐current assets
Financial assets	9		70,165			66,809
Investment in joint venture	10		85,818			54,148
Right‐of‐use asset			173			277
Property, plant and equipment			52			55
			156,208			121,289
Total assets			213,302			179,894
Liabilities
Current liabilities
Accounts payable and accrued liabilities			8,711			4,330
Payable due to related party	8		3,152			1,364
Lease liability			125			110
			11,988			5,804
Non‐current liabilities
Long‐term incentive plan liabilities	12		318			195
Lease liability			78			204
			396			399
Total liabilities			12,384			6,203
Equity
Share capital	11		579,619			579,591
Equity reserves	12		53,112			51,998
Accumulated deficit			(431,813	)		(457,898	)
Total equity			200,918			173,691
Total liabilities and equity			213,302			179,894
Proposed business combination	2		2
Commitments and contingencies	13		13

The accompanying notes form an integral part of these consolidated financial statements .

Approved on behalf of the Board of Directors:

"Matt Badylak"		"Greg Martin"
Director		Director

 

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GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In thousands of United States Dollars, except dollar per share amounts)

			2023			2022
	Note		$			$
Share of net income related to joint venture	10		31,670			46,517
Service fee earned as operators of joint venture	8		5,747			5,413
General and administrative expenses	14		(15,286	)		(11,100	)
Exploration and evaluation expenditures	15		(2,009	)		(1,411	)
Income from operations and joint venture			20,122			39,419
Impairment reversal on investment in joint venture	10		-			7,631
Impairment of exploration and evaluation assets			-			(1,628	)
Transaction costs	2		(378	)		‐
Finance income	16(a)		6,255			1,036
Finance expense	16(b)		(23	)		(5,647	)
Foreign exchange gain (loss)			109			(2	)
Net income and comprehensive income for the year			26,085			40,809
Weighted average number of shares outstanding:
Basic	18		224,946,412			224,943,453
Diluted	18		225,176,714			224,947,807
Net income per share:
Basic			0.12			0.18
Diluted			0.12			0.18

The accompanying notes form an integral part of these consolidated financial statements .

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GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In thousands of United States Dollars, except dollar per share amounts)

			Number of shares			Share capital			Equity reserves			Accumulated deficit			Total equity
	Note					$			$			$			$
Balance as at December 31, 2021			224,943,453			579,591			51,879			(498,707	)		132,763
Share ‐based compensation expense	12(a)		‐			‐			119			‐			119
Net income and comprehensive income for the year			‐			‐			‐			40,809			40,809
Balance as at December 31, 2022			224,943,453			579,591			51,998			(457,898	)		173,691
Issuance of common shares on exercise of stock options	12(a)		29,333			28			(9	)		‐			19
Share ‐based compensation expense	12(a)		‐			‐			1,123			‐			1,123
Net income and comprehensive income for the year			‐			‐			‐			26,085			26,085
Balance as at December 31, 2023			224,972,786			579,619			53,112			(431,813	)		200,918

The accompanying notes form an integral part of these consolidated financial statements .

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GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In thousands of United States Dollars)

			2023			2022
	Note		$			$
Operating activities:
Net income for the year			26,085			40,809
Adjustments for:
Share of net income related to joint venture	10		(31,670	)		(46,517	)
Impairment reversal on investment in joint venture	10		-			(7,631	)
Impairment of exploration and evaluation assets			-			1,628
Depreciation			143			146
Share‐based compensation	12,14		6,164			1,646
Finance income	16(a)		(6,255	)		(1,036	)
Finance expense	16(b)		17			5,642
Unrealized foreign exchange gain (loss)			7			(1	)
Operating cash flow before working capital changes			(5,509	)		(5,314	)
Change in non‐cash working capital	19		1,875			7,098
Cash (used in) provided by operating activities			(3,634	)		1,784
Investing activities:			2,899
Interest received						1,036
Expenditures on property, plant and equipment			(35	)		(4	)
Cash provided by investing activities			2,864			1,032
Financing activities:			19
Shares issued for cash on exercise of stock options	12(a)					‐
Lease payments			(127	)		(130	)
Cash used in financing activities			(108	)		(130	)
Impact of foreign exchange on cash and cash equivalents			37			(96	)
(Decrease) increase in cash and cash equivalents during the year			(841	)		2,590
Cash and cash equivalents, beginning of year			56,111			53,521
Cash and cash equivalents, end of year			55,270			56,111
Supplemental cash flow information	19

The accompanying notes form an integral part of these consolidated financial statements .

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1. Nature of operations

Galiano Gold Inc. ("Galiano" or the "Company") was incorporated on September 23, 1999 under the Business Corporations Act of British Columbia, Canada. The Company's head office and principal address is located at 1640 ‐ 1066 West Hastings Street Vancouver, British Columbia, V6E 3X1, Canada. The Company's registered and records office is located at Suite 3500, 1133 Melville Street, Vancouver, V6E 4E5. The Company's common shares trade on the Toronto Stock Exchange ("TSX") and NYSE American Exchange ("NYSE American") under the ticker symbol "GAU".

During the year, the Company's principal business activity was the operation of the Asanko Gold Mine ("the AGM") through a joint venture arrangement (the "JV") associated with the Company's 45% equity interest in the entity that holds the AGM mining licenses and gold exploration tenements (see note 10). The Government of Ghana has a 10% free‐carried interest in the AGM. The AGM consists of four main open‐pit mining areas: Abore, Miradani North, Nkran and Esaase, multiple satellite deposits and exploration projects located on the Asankrangwa Gold Belt in the Amansie West District of the Republic of Ghana ("Ghana"), West Africa.

In addition to its interest in the AGM, the Company holds a 100% interest in the Asumura property in Ghana.

2. Proposed business combination

On December 21, 2023, the Company announced it had entered into a binding share purchase agreement (the "SPA") with subsidiaries of Gold Fields Limited ("Gold Fields") to acquire Gold Fields' 45% interest in the AGM (the "Acquisition"). The objective of the Acquisition is to consolidate ownership of the AGM and establish Galiano as growing gold producer with robust financial strength, owning and operating one of the largest gold mines in West Africa. Upon closing of the Acquisition, the Company will own a 90% interest in the AGM with the Government of Ghana continuing to hold a 10% free-carried interest (non-controlling interest).

Under the terms of the SPA, total consideration payable to Gold Fields will comprise the following:

• $65.0 million cash payment on closing of the Acquisition;

• the issuance of 28.5 million common shares of the Company on closing of the Acquisition;

• $55.0 million of deferred consideration comprised of a:

  • $25.0 million cash payment on or before December 31, 2025; and

  • $30.0 million cash payment on or before December 31, 2026; and

• $30.0 million cash payment payable and contingent upon production of 100,000 gold ounces from the Nkran deposit.

Gold Fields will also receive a 1% net smelter return royalty on production from the Nkran deposit beginning upon 100,000 gold ounces being produced, and subject to a maximum of 447,000 gold ounces of production.

The Acquisition is not subject to shareholder votes, but is subject to various closing conditions, including receipt of all required regulatory approvals in North America and Ghana, which includes the approvals of the TSX and NYSE American stock exchanges. The Acquisition is expected to close in the first quarter of 2024.

Acquisition related costs incurred in 2023 amounted to $0.4 million, have been expensed, and are presented as transaction costs in the Statement of Operations and Comprehensive Income.

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3. Basis of presentation

(a) Statement of compliance

These consolidated financial statements have been prepared using accounting policies in accordance with IFRS as issued by the IASB and Interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

These consolidated financial statements were authorized for issue and approved by the Board of Directors on February 16, 2024.

(b) Basis of presentation and consolidation

These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments carried at fair value.

All amounts are expressed in thousands of United States dollars, unless otherwise stated, and the United States dollar is the functional currency of the Company and each of its subsidiaries. References to C$ are to Canadian dollars.

These consolidated financial statements incorporate the financial information of the Company and its subsidiaries as at December 31, 2023. Subsidiaries are entities controlled by the Company. Control exists when the Company has power, directly or indirectly, to govern the financial and operating policies of an entity as to obtain benefits from its activities. Subsidiaries are included in the consolidated financial statements of the Company from the effective date of acquisition up to the effective date of disposition or loss of control.

All significant intercompany amounts and transactions between the Company and its subsidiaries have been eliminated on consolidation.

The principal subsidiaries and joint arrangements to which the Company is a party, as well as their geographic locations, were as follows as at December 31, 2023:

¹ Name changed from Asanko Gold Exploration Ghana Ltd. to Galiano Gold Exploration Ghana Ltd. effective March 29, 2023.

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4. Significant accounting policies

The accounting policies described in this section were those applied by the Company and/or the JV (see note 10) during the years ended December 31, 2023 and 2022.

(a) Investments in joint arrangements

The Company conducts a portion of its business through joint arrangements where the parties are bound by contractual arrangements establishing joint control and decisions about the activities that significantly affect the returns of the investee require unanimous consent. A joint arrangement is classified as either a joint operation or a joint venture, subject to the terms that govern each investor's rights and obligations in the arrangement.

In a joint operation, the investor has rights and obligations to the separate assets and liabilities of the investee and in a joint venture, the investors have rights to the net assets of the joint arrangement. For a joint operation, the Company recognizes its share of the assets, liabilities, revenue, and expenses of the joint arrangement, while for a joint venture, the Company accounts for its investment in the joint arrangement using the equity method.

Under the equity method, the Company's investment in a joint venture is initially recognized at cost and subsequently increased or decreased to recognize the Company's share of net earnings or losses of the joint venture, after any adjustments necessary for impairment losses or reversal of impairment losses after the initial recognition date. The total carrying amount of the Company's investment in a joint venture also includes any long‐term debt interests which in substance form part of the Company's net investment. The Company's share of a joint venture's losses that are in excess of its investment are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the joint venture. The Company's share of net earnings or losses of a joint venture are recognized in net earnings during the period. Dividends and repayment of capital received from a joint venture are accounted for as a reduction in the carrying amount of the Company's investment. Balances between the Company and its joint ventures are not eliminated, but rather disclosed as related party transactions or balances.

At the end of each reporting period, the Company assesses whether there is any objective evidence that an investment in a joint venture is impaired. Objective evidence includes observable data indicating there is a measurable decrease in the estimated future cash flows of the joint venture's operations. When there is objective evidence that an investment is impaired, the carrying amount of such investment is compared to its recoverable amount, being the higher of its fair value less costs of disposal and value‐in‐use. If the recoverable amount of an investment is less than the carrying amount, the carrying amount is reduced to its recoverable amount and a corresponding impairment loss is recognized in the period in which the relevant circumstances are identified. When an impairment loss reverses in a subsequent period, the carrying amount of the investment is increased to the revised estimate of the recoverable amount to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had an impairment loss not been previously recognized. Following an impairment reversal, the Company will continue to recognize its share of net earnings to the extent the investment is anticipated to be recoverable through future cash flows of the joint venture. A reversal of an impairment loss is recognized in net earnings in the period in which the reversal occurs.

Similar to the assessment of impairment for subsidiaries, the Company reviews the mining properties and plant and equipment for a joint arrangement at the cash‐generating unit level to determine whether there is any indication that these assets are impaired.

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4. Significant accounting policies (continued)

(b) Foreign currency translation

Transactions in foreign currencies are initially recorded at the functional currency rate of exchange at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies (i.e. those currencies other than the functional currency)  are translated at the functional currency rate of exchange at the date of the statement of financial position. Foreign exchange gains (losses) are recorded in the consolidated statement of operations and comprehensive income for the year.

Non‐monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non‐monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

(c) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and short‐term investments with remaining maturities at initial recognition of ninety days or less, or that are fully redeemable without penalty or loss of interest.

(d) Inventories

Gold on hand, gold in process and stockpiled ore inventories are recorded at the lower of weighted average production cost and net realizable value. The cost of inventories includes the cost of raw materials, direct labour, mine‐site overhead expenses and applicable depreciation and depletion. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and long‐ term metal prices less estimated future costs to convert the inventories from their respective states into saleable form less estimated costs to sell.

Production costs are included in work‐in‐process inventory based on current costs incurred up to the point of dore production. The costs of finished goods represent the costs of work‐in‐process inventories plus applicable treatment costs. The costs of inventories sold during the period are presented as production costs and depreciation and depletion, as applicable, in the statement of operations and comprehensive income for the year.

Additions to the cost of ore stockpiles are based on the related current cost of production for the year, while reductions in the cost of ore stockpiles are based on the weighted‐average cost per tonne of ore in the stockpile. Stockpiles are segregated between current and non‐current inventories in the consolidated statement of financial position based on the planned period of usage.

Supplies and spare parts are valued at the lower of weighted‐average cost and net realizable value. Replacement costs of materials and spare parts are generally used as the best estimate of net realizable value. Provisions are recorded to reduce the carrying amount of materials and spare parts inventory to net realizable value to reflect current intentions for the use of redundant or slow‐moving items, or for physically obsolete items. Provisions for redundant and slow‐moving items are made by reference to specific items of inventory. The Company reverses write‐downs where there is a subsequent increase in net realizable value and where the inventory is still on hand.

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4. Significant accounting policies (continued)

(e) Mineral properties, plant and equipment ("MPP&E")

i. Mineral properties

Recognition

Capitalized costs of mining properties include the following:

• costs assigned to mining properties acquired in business combinations;
• expenditures incurred to develop mineral properties including pre‐production stripping costs;
• stripping costs in the production phase of a mine if certain criteria have been met (see below);
• costs to define and delineate known economic resources and develop the project;
• borrowing costs attributable to qualifying mining properties; and
• estimates of reclamation and closure costs.

Stripping costs

In open pit mining operations, it is necessary to incur costs to remove overburden and other mine waste materials in order to access the ore from which minerals can be extracted economically. Stripping costs incurred in order to provide initial access to the ore body (referred to as pre‐production stripping) are capitalized as incurred. Stripping costs incurred during the production stage of an open pit mine are accounted for as production costs in the consolidated statement of operations and comprehensive income during the period that the stripping costs were incurred, unless these costs provide a future economic benefit. Production phase stripping costs are considered to generate a future economic benefit when (i) it is probable that future economic benefit associated with the stripping activity will flow to the entity; (ii) the entity can identify the component of the ore body for which access has been improved; and (iii) the costs relating to the stripping activity associated with that component can be measured reliably. These costs are capitalized as mineral properties, plant and equipment.

Production costs are allocated between inventory produced and the stripping asset based on the volume of waste extracted compared with the expected volume, for a given volume of ore production. Stripping costs incurred and capitalized during the production phase are depleted using the units‐of‐production method over the proven and probable reserves (ore tonnes) of the component of the ore body to which access has been improved as a result of the specific stripping activity.

Management reviews the estimates of the waste and ore in each identified component of operating open pit mines at the end of each financial year, and when events and circumstances indicate that such a review should be made. Changes to the estimated identification of components and the associated waste and ore within each component are accounted for prospectively.

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4. Significant accounting policies (continued)

Exploration and evaluation expenditures

Exploration and evaluation expenditures include the costs of acquiring rights to explore, exploratory drilling and related exploration costs incurred on sites without an existing mine and on areas outside the boundary of a known mineral deposit which contain proven and probable reserves. Exploration and evaluation expenditures incurred on a mineral deposit, with the exception of acquisition costs and costs arising from the recognition of an asset retirement provision, are expensed as incurred up to the date of establishing that costs incurred on a mineral deposit are technically feasible and commercially viable.

Expenditures incurred on a mineral deposit subsequent to the establishment of its technical feasibility and commercial viability are capitalized and included in the carrying amount of the related mining property.

The technical feasibility and commercial viability of a mineral deposit is assessed based on a combination of factors, such as, but not limited to:

• the extent to which mineral reserves or mineral resources have been identified through a feasibility study or similar level document;
• the results of optimization studies and further technical evaluation carried out to mitigate project risks identified in the feasibility study;
• the status of environmental permits, and
• the status of mining leases or permits.

Borrowing costs

Borrowing costs directly relating to the financing of qualifying assets are added to the capitalized cost of those related assets until such time as the assets are substantially ready for their intended use or sale which, in the case of mining properties, is when they are capable of commercial production. Where funds have been borrowed specifically to finance a project, the amount capitalized represents the actual borrowing costs incurred. Where the funds used to finance a project form part of general borrowings, the amount capitalized is calculated using a weighted average of rates applicable to relevant general borrowings of the Company during the period. Capitalized borrowing costs are depreciated over the life of the related asset.

All other borrowing costs are recognized in the consolidated statement of operations and comprehensive income in the year in which they are incurred. Borrowing costs are included as part of interest paid in the statement of cash flows.

Depletion

Mineral properties in production are depleted on a deposit‐by‐deposit basis using the units‐of‐production method over the mine's estimated proven and probable reserves, with the exception of deferred stripping which is depleted using the unit‐of‐ production method over the reserves that directly benefit from the specific stripping activity, and will commence when the mine is capable of operating in the manner intended by management. In the event proven and probable reserves are not identified management will use their best estimate from internally generated information.

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4. Significant accounting policies (continued)

The Company uses a number of criteria to assess whether the mine is in the condition necessary for it to be capable of operating in a manner intended by management. These criteria include, but are not limited to:

• completion of operational commissioning of each major mine and plant component;
• demonstrated ability to mine and mill consistently and without significant interruption at a pre‐determined average rate of designed capacity;
• the passage of a reasonable period of time for testing of all major mine and plant components;
• gold recoveries at or near expected production levels; and
• a significant portion of available funding is directed towards operating activities.

Mineral properties in development are not depleted.

ii. Plant and equipment

Recognition

The cost of plant and equipment consists of the purchase price, costs directly attributable to the delivery of the asset to the location and the condition necessary for it to be capable of operating in the manner intended by management, including the cost of testing whether these assets are operating in the manner intended by management. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. Where significant components of an asset have differing useful lives, depreciation is calculated on each separate component.

Depreciation

Depreciation of an asset begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

The carrying amounts of plant and equipment are depreciated using either the straight‐line or units‐of‐production method over the shorter of the estimated useful life of the asset or the life of mine. The significant classes of depreciable plant and equipment and their estimated useful lives are as follows:

Management reviews the estimated useful lives, residual values and depreciation methods of the Company's plant and equipment at the end of each financial year, and when events and circumstances indicate that such a review should be made. Changes to estimated useful lives, residual values or depreciation methods resulting from such review are accounted for prospectively.

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4. Significant accounting policies (continued)

Major maintenance and repairs

Expenditure on major maintenance and repairs includes the cost of replacement parts of assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that future economic benefits associated with the item will be available to the Company, that expenditure is capitalized and the carrying amount of the item replaced is derecognized. Similarly, overhaul costs associated with major maintenance are capitalized when it is probable that future economic benefits will be available and any remaining carrying amounts of the cost of previous overhauls are derecognized. All other maintenance and repair costs are expensed as incurred.

iii. Impairment of non‐financial assets

The carrying amounts of assets included in mineral properties, plant and equipment are reviewed for impairment when events and changes in circumstances indicate that the related carrying amounts may not be recoverable. If any such indication exists, the recoverable amount of the relevant cash‐generating unit ("CGU") is estimated in order to determine the extent of impairment. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

The carrying amounts of the CGUs are compared to their recoverable amounts where the recoverable amount is the higher of value‐in‐use ("VIU") and fair value less costs to sell ("FVLCS"). FVLCS is defined as the amount that would be obtained from the sale of the asset in an orderly transaction between market participants at the measurement date. VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and from its ultimate disposal. The fair value of mine sites is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects. If a reliable estimate of future cash flows cannot be made, then fair value is determined by reference to market prices for comparable assets. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. An impairment is recognized immediately in the consolidated statement of operations and comprehensive income.

Mineral properties, plant and equipment that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. When an impairment loss reverses in a subsequent period, the revised carrying amount shall not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset previously, less subsequent depletion and depreciation. Reversals of impairment losses are recognized in the consolidated statement of operations and comprehensive income in the period in which the reversals occur.

iv. Derecognition

Upon disposal or abandonment, the carrying amounts of mineral properties and plant and equipment are derecognized and any associated gains or losses are recognized in the consolidated statement of operations and comprehensive income.

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4. Significant accounting policies (continued)

(f) Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether it has the right to obtain substantially all of the economic benefits from and to direct the use of the identified asset.

At commencement or on modification of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of its relative stand‐alone prices.

The Company recognizes a right‐of‐use asset and a lease liability at the lease commencement date. The right‐of‐use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, or the site on which it is located, less any lease incentives received.

The right‐of‐use asset is subsequently depreciated using the straight‐line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right‐of‐use asset reflects that the Company will exercise a purchase option. In that case, the right‐of‐use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right‐of‐use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in‐substance fixed payments;

• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable under a residual value guarantee; and

• the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.

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4. Significant accounting policies (continued)

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option, or if there is a revised in‐substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right‐of‐use asset or is recorded in the consolidated statement of operations and comprehensive income if the carrying amount of the right‐of‐use asset has been reduced to zero.

The Company has elected to apply the practical expedient under IFRS 16 to account for certain lease arrangements that include both lease and non-lease components as a single lease component.

Short‐term leases and leases of low‐value assets

The Company has elected not to recognize right‐of‐use assets and lease liabilities for leases of low‐value assets and short‐term leases, including office equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight‐ line basis over the lease term.

(g) Provisions

General

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of operations and comprehensive income, net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre‐tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as finance expense in the consolidated statement of operations and comprehensive income.

Asset retirement provisions

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. The Company records the estimated present value of future cash flows associated with site reclamation as a liability when the liability is incurred with a corresponding increase in the carrying value of the related assets. Discount rates using a pre‐tax, risk‐free rate that reflect the time value of money are used to calculate the net present value. The liability is accreted over time to reflect the unwinding of the discount with the accretion expense included in finance costs in the consolidated statement of operations and comprehensive income. Changes in estimates or circumstances include changes in legal or regulatory requirements, increased obligations arising from additional mining and exploration activities, changes to cost estimates, changes to the discount rate and changes to the risk‐free interest rates. Changes in estimates that result in a change to the carrying value of the asset retirement provision have a corresponding change in the carrying amount of the related asset.

(h) Revenue from contracts with customers

Revenue is derived from the sale of gold and by‐products. Revenue is recognized for contracts with customers when there is persuasive evidence that all of the following criteria are met:

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4. Significant accounting policies (continued)

• the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;

• the Company can identify each party's rights regarding the goods or services to be transferred;

• the Company can identify the payment terms for the goods or services to be transferred;

• the contract has commercial substance (i.e. the risk, timing or amount of the Company's future cash flows is expected to change as a result of the contract); and

• it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Revenue from gold and any by‐product metals is generally recorded at the time of physical delivery of the refined gold (i.e. when gold is credited to the counterparty's gold account), which is also the date when control of the gold passes to the customer. Revenue from saleable gold produced during the testing phase of production activities, and the cost of producing those items, is recognized in profit or loss.

(i) Government royalties

Royalty payments to governments which are based on gross revenue are not considered income taxes and are recognized as an expense in the statement of operations and comprehensive income.

(j) Financial instruments

(i) Financial assets

Recognition and measurement

The Company recognizes a financial asset in its statement of financial position when the Company becomes party to the contractual provisions of the instrument. All financial assets are initially recorded at fair value plus directly attributable transaction costs and classified as either (i) financial assets subsequently measured at amortized cost, (ii) financial assets subsequently measured at fair value through other comprehensive income or (iii) financial assets subsequently measured at fair value through profit or loss. The basis of classification takes into consideration both the Company's business model for managing and the contractual cash flow characteristics of the financial assets.

A financial asset is measured at amortized cost if the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through other comprehensive income if the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income. Fair value changes in financial assets classified as fair value through profit or loss, if any, are recognized in the consolidated statement of operations and comprehensive income.

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4. Significant accounting policies (continued)

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized when:

a. the contractual rights to receive cash flows from the asset have expired, or

b. the Company has transferred its contractual rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass‐through 'arrangement; and either (a) the Company has transferred substantially all the risks and rewards of ownership of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

(ii) Financial liabilities

Recognition and measurement

All financial liabilities are initially recorded at fair value less transaction costs. All financial liabilities are subsequently measured at amortized cost using the effective interest method, except for:

- financial liabilities at fair value through profit or loss;

- financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies;

- financial guarantee contracts;

- commitments to provide a loan at a below‐market interest rate; and

- contingent consideration recognized by an acquirer in a business combination to which IFRS 3, Business combinations, applies.

An entity may, at initial recognition, irrevocably designate a financial liability as measured at fair value through profit or loss when a contract contains one or more embedded derivatives, or when doing so results in more relevant information, because either (a) it eliminates or significantly reduces a measurement or recognition inconsistency (i.e. an accounting mismatch); or (b) a group of financial liabilities or financial assets and financial liabilities is managed, and its performance is evaluated on a fair value basis.

Fair value changes of financial liabilities classified as fair value through profit or loss, if any, are recognized in the consolidated statement of operations and comprehensive income.

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4. Significant accounting policies (continued)

(k) Share‐based compensation

The Company has a share option plan and share unit plan which are described in note 12. The Company records all share‐based compensation for options using the fair value method with graded vesting. Under the fair value method, share‐based payments are measured at the fair value of the consideration received or the fair value of the equity instruments issued or liabilities incurred, whichever is more reliably measurable, and are charged over the vesting period to the consolidated statement of operations and comprehensive income. The offset is credited to equity reserves ratably over the vesting period, after adjusting for the number of awards that are expected to vest. For share options, the fair value of share‐based compensation awards is determined at the date of grant using the Black‐Scholes option pricing model. Cash-settled awards are fair valued using the number of estimated vested awards multiplied by the share price of the Company's common shares.

Expenses recognized for unvested forfeited awards are reversed. For awards that are cancelled, any expense not yet recognized is recognized immediately in the statement of operations and comprehensive income.

Where the terms of an equity‐settled award are modified, as a minimum an expense is recognized as if the terms had not been modified over the original vesting period. In addition, an expense is recognized for any modification which increases the total fair value of the share‐based payment arrangement as measured at the date of modification, over the remainder of the vesting period.

For cash‐settled share‐based payments (see note 12), the Company measures the goods or services acquired and the liability incurred at the fair value of the liability. The corresponding share‐based compensation expense is recognized over the vesting period of the award. As these awards will be settled in cash, the liability is remeasured at fair value at each reporting period and at the date of settlement, with changes in fair value recognized in the consolidated statement of operations and comprehensive income in the period incurred.

(l) Income taxes

Income tax on the profit or loss for the years presented comprises current and deferred income tax. Income tax is recognized in the consolidated statement of operations and comprehensive income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current income tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred income tax is recognized in respect of unused tax losses, tax credits and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax rates that have been substantively enacted at the reporting date.

A deferred income tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a future income tax asset will be recovered, it does not recognize the asset.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis.

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4. Significant accounting policies (continued)

The Company records foreign exchange gains and losses representing the impacts of movements in foreign exchange rates on the tax bases of non‐monetary assets and liabilities which are denominated in foreign currencies. Foreign exchange gains and losses relating to the translation of the deferred income tax balance from local statutory accounts to functional currency accounts are included in deferred income tax expense or recovery in the consolidated statement of operations and comprehensive income.

(m) Income per share

Basic income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. The computation of diluted income per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on income per share. For this purpose, the treasury stock method is used for the assumed proceeds upon the exercise of stock options that are used to purchase common shares at the average market price during the period.

5. Changes in accounting standards

(a) Accounting standards adopted during the year

The Company adopted the following new IFRS standard effective January 1, 2023. The nature and impact of the new standard on the Company's current period financial statements, if any, are outlined below. Adoption of the standard was made in accordance with the applicable transitional provisions.

Amendments to IAS 1

On February 12, 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2, Making Materiality Judgements). The amendments help companies provide useful accounting policy disclosures and include requiring companies to disclose their material accounting policies rather than their significant accounting policies; clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and as such need not be disclosed; and clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material to a company's financial statements. The amendments are effective for annual periods beginning on or after January 1, 2023, with early adoption permitted. The amendments to IAS 1 did not have a material impact on the Company's annual consolidated financial statements for the year ended December 31, 2023.

(b) Accounting standards and amendments issued but not yet adopted

There were no accounting standards or amendments to existing standards issued but not yet adopted as of December 31, 2023 that are expected to have a material effect on the Company's or the JV's financial statements in the future.

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6. Significant accounting judgements and estimates

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Management believes the judgements, estimates and assumptions used in these consolidated financial statements are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows.

The accounting judgements and estimates which have the most significant effect on these financial statements and the financial results of the JV are as follows:

Judgements

Assessment of indicators of impairment or impairment reversal of equity investment in joint venture and MPP&E

The Company considers both external and internal sources of information in assessing whether there are any indications that its equity investment in the JV and/or the JV's MPP&E are impaired, or if a previously recognized impairment has reversed. External sources of information the Company considers include changes in the market, economic and legal environment in which the JV operates that are not within its control and affect the recoverable amount of the Company's equity investment. Internal sources of information the Company considers include the manner in which MPP&E of the JV are being used or are expected to be used and indications of economic performance of the assets. The judgements are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these assumptions, which may impact the recoverable amount of the assets. In such circumstances, the carrying value of the Company's equity investment in the JV and/or the JV's MPP&E may be impaired or a prior period's impairment charge reversed with the impact recorded in the consolidated statement of operations and comprehensive income.

Estimates

Recoverable amount assessments of the equity investment in the JV and MPP&E

When facts and circumstances suggest the carrying value of the Company's equity investment in the JV and/or the JV's MPP&E may be impaired, or a previously recognized impairment may have reversed, the Company is required to estimate the recoverable amount through a FVLCS or VIU approach. Estimating the recoverable amount requires management to make significant estimates about the future life of mine cash flows of the AGM which may include, but may not be limited to, changes to the current estimates of in‐situ ounces, ore tonnes to be mined in future periods, strip ratios, head grades, recovery rates, gold price assumptions, mining costs, processing costs, trucking costs, capital and closure costs, as well as discount rates.

When assessing the recoverable amount of a CGU without defined mineral reserves, management may be required to make significant estimates about the fair value of in‐situ mineral resources by reference to market values for comparable assets.

When facts and circumstances suggest the carrying value of the JV's MPP&E may be impaired or a previously recognized impairment has reversed, the same policies and set of assumptions as described above are applied.

Mineral reserves

Estimates of the quantities of proven and probable mineral reserves form the basis for the JV's life‐of‐mine plans, which are used for a number of key business and accounting purposes, including: the calculation of depletion expense, the capitalization of stripping costs, the forecasting and timing of cash flows related to the asset retirement provision and impairment assessments, if any. To the extent that these estimates of proven and probable mineral reserves vary, there could be changes in depletion expense, stripping assets, asset retirement provisions and impairment charges (or reversals) recorded.

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6. Significant accounting judgements and estimates (continued)

Depletion of mineral interests and plant and equipment

Estimates are made of recoverable ounces in the JV's mining properties which are depleted based on recoverable tonnes contained in proven and probable reserves. To the extent that changes are made to the estimate of proven and probable reserves, the depletion charge may change.

Plant and equipment are depreciated to their estimated residual value over the estimated useful life of the asset. Should the actual useful life of the plant or equipment vary, future depreciation charges may change.

Measurement of inventory costs

The JV estimates quantities of ore in stockpiles and in process and the recoverable gold contained in this material in order to determine the cost of inventories and the weighted average costs of finished goods sold during the period. To the extent that these estimates vary, production costs of finished goods may change.

Net realizable value of inventory

Estimates of net realizable value are based on the most reliable evidence available, at the time that the estimates are made, of the amount that the inventories are expected to realize. In order to determine the net realizable value of gold dore, gold‐in‐process and stockpiled ore, the JV estimates future metal selling prices, production forecasts, realized grades and recoveries, timing of processing, and future costs to convert the respective inventories into saleable form, if applicable. Reductions in metal price forecasts, increases in estimated future costs to convert, reductions in the number of recoverable ounces, and a delay in timing of processing can result in a write‐down of the carrying amounts of the JV's stockpiled ore inventory.

Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, to the extent net realizable value of materials and spares must be estimated, replacement costs of the materials and spare parts are generally used as the best estimate of net realizable value.

Current and deferred Income taxes

In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. Levels of future taxable income are affected by, among other things, market gold prices, production costs, quantities of proven and probable gold reserves, interest rates and foreign currency exchange rates.

Where applicable tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities recorded in the financial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period that the changes occur.

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6. Significant accounting judgements and estimates (continued)

Asset retirement provisions

Provisions for reclamation and closure cost obligations represent management's best estimate of the present value of the future cash outflows required to settle closure cost liabilities. Significant judgements and estimates are required in forming assumptions of future activities, future cash outflows, the timing of those cash outflows and application of discount and inflation rates. These assumptions are formed based on environmental and regulatory requirements or the Company's environmental policies which may give rise to constructive obligations. The JV's assumptions are reviewed at the end of each reporting period and adjusted to reflect management's current best estimate and changes in any of the above factors can result in a change to the provision recognized by the JV. Changes to these estimates and judgements may result in actual expenditures in the future differing from the amounts currently provided for.

Preferred shares

The Company holds preferred shares (without a fixed redemption date) in the JV which have been classified as financial assets measured at fair value through profit or loss. As at December 31, 2023, management estimated the fair value of the preferred shares by discounting the forecast future preferred share redemptions from the AGM. Several estimates were made to determine the forecast future cash flows including, but not limited to, long‐term realized gold prices, mineable reserves, mining and processing costs per tonne, ore grades, and metallurgical recoveries. Additionally, judgement was required to determine the appropriate discount rate used to calculate the present value of the forecast future cash flows.

7. Cash and cash equivalents

The Company's short‐term investments are held with highly rated Canadian financial institutions. The weighted average interest rate earned on short-term investments at December 31, 2023 was approximately 5.5%.

8. Balances due from/to related party

Under the terms of the Joint Venture Agreement (the “JVA”) that governs the management of the JV (note 10), the Company remains the manager and operator of the JV and receives a fee for services rendered to the JV of $7.3 million per annum (originally $6.0 million, but adjusted annually for inflation) less 20% withholding taxes payable in Ghana.

During the year ended December 31, 2023, the Company earned a service fee of $5.8 million (year ended December 31, 2022 - $5.4 million). For the year ended December 31, 2023, the service fee was comprised of a gross service fee of $7.2 million less withholding taxes payable in Ghana of $1.4 million (year ended December 31, 2022 - gross service fee of $6.8 million less withholding taxes of $1.4 million). As at December 31, 2023, the Company had a receivable due from the JV in respect of the service fee in the amount of $1.0 million, net of withholding taxes (December 31, 2022 ‐ $1.7 million).

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8. Balances due from/to related party (continued)

As at December 31, 2023, the Company had a payable due to the JV in the amount of $3.2 million relating to reimbursement for third party supplier costs and administrative and exploration services performed by the JV on the Company’s wholly owned Asumura property in Ghana (December 31, 2022 – $1.4 million).  During the year ended December 31, 2023, the JV provided administrative and exploration services on the Company’s Asumura property totaling $0.2 million (year ended December 31, 2022 – $0.3 million).

All transactions with related parties have occurred in the normal course of operations. All amounts are unsecured, non‐interest bearing and have no specific terms of settlement.

9. Financial assets

As part of the joint venture transaction (note 10), the Company initially subscribed to 184.9 million non‐voting fixed redemption price redeemable preferred shares in Shika Group Finance Limited (the "preferred shares"), which were issued at a par value of $1 per redeemable share. The preferred shares have no fixed redemption date. As these preferred shares have no contractual fixed terms of repayment that arise on specified dates, they are measured at fair value through profit or loss at each reporting period end.

The following table summarizes the change in the carrying amount of the Company's preferred shares held in the joint venture during the years presented:

As at December 31, 2023, the Company re‐measured the fair value of the redeemable preferred shares to $70.2 million. Management’s best estimate of the fair value of the preferred shares was determined by discounting forecast future preferred share redemptions using a discount rate of 15.0% (December 31, 2022 – discount rate of 14.8%).

For the year ended December 31, 2023, the Company recognized an upward fair value adjustment on its preferred shares of $3.4 million in finance income (year ended December 31, 2022 – $5.6 million downward fair value adjustment recognized in finance expense). The preferred shares are classified as a Level 3 financial asset in the fair value hierarchy.

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10. Investment in joint venture

The Company is party to an arrangement under which the Company and a subsidiary of Gold Fields each own a 45% equity interest in Asanko Gold Ghana Ltd. ("AGGL"), which owns the AGM. The Government of Ghana retains a 10% free‐carried interest in AGGL.  The Company and Gold Fields also each own a 50% interest in Adansi Gold Company (GH) Ltd. ("Adansi Ghana"), which owns a number of exploration licenses, and finally the Company and Gold Fields each have a 50% interest in the JV entity, Shika Group Finance Limited ("Shika").

As the JV is structured within the legal entities of AGGL, Adansi Ghana and Shika, the JV represents a joint venture as defined under IFRS 11 - Joint Arrangements, and the Company equity accounts for its interest in the JV.

The following table summarizes the change in the carrying amount of the Company's investment in the joint venture:

The Company recognized its 45% interest in the JV's net earnings for the year ended December 31, 2023, which amounted to $31.7 million (year ended December 31, 2022 - $46.5 million).

During the year ended December 31, 2022, the Company reversed a $7.6 million impairment charge previously recorded on its equity investment as a result of the AGM's reinstating its mineral reserves as of December 31, 2022.

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10. Investment in joint venture (continued)

Operating and financial results of the AGM JV for the years ended December 31, 2023 and 2022

Summarized financial information for the Company's investment in the JV is outlined in the table below.

All disclosures in this note 10 are on a 100% JV basis, unless otherwise indicated. The JV applies the same material accounting policies as the Company as described in note 4.

Statement of Income for the years ended December 31, 2023 and 2022

 

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10. Investment in joint venture (continued)

The assets and liabilities of the AGM JV, on a 100% basis, as at December 31, 2023 and 2022 were as follows:

 

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10. Investment in joint venture (continued)

The Company has provided the following incremental disclosures for stakeholders to evaluate the financial performance and financial condition of the AGM. All amounts in the following tables and descriptions are on a 100% basis.

(i) Revenue

AGGL has an offtake agreement (the "Offtake Agreement") with a special purpose vehicle of Red Kite Opportunities Master Fund Limited ("Red Kite") under which the AGM will sell 100% of future gold production from the AGM up to a maximum of 2.2 million ounces. The gold sale price will be a spot price selected by Red Kite during a nine‐day quotational period following shipment of gold from the mine.

During the year ended December 31, 2023, the AGM sold a portion of its production to the Bank of Ghana under the country's gold buying program. As agreed with Red Kite, gold ounces sold to the Bank of Ghana were considered delivered under the Offtake Agreement, and in consideration the AGM paid to Red Kite a "make whole" payment which was calculated in a similar manner to a nine‐day quotational period. The "make whole" payments made to Red Kite were recognized as a reduction of revenues.

During the year ended December 31, 2023, the AGM sold 134,163 ounces of gold to Red Kite under the Offtake Agreement (year ended December 31, 2022 - 167,849 ounces). As of December 31, 2023, the AGM has delivered 1,601,268 gold ounces to Red Kite under the Offtake Agreement.

Included in revenue of the AGM is $0.6 million relating to by-product silver sales for the year ended December 31, 2023 (year ended December 31, 2022 - $0.6 million).

(ii) Production costs

The following is a summary of production costs by nature for the AGM, on a 100% basis, for the years ended December 31, 2023 and 2022:

During the year ended December 31, 2023, the AGM recognized a $0.7 million reversal of previously recorded net realizable value adjustments on its stockpile inventory, of which $0.5 million was credited against production costs and $0.2 million was credited against depreciation expense. The gold price assumption applied in the net realizable value calculation was $2,090 per ounce, and management estimated future costs of processing the stockpiles based upon historical and projected information.

During the year ended December 31, 2022, the AGM recognized a $15.3 million reversal of previously recorded net realizable value adjustments on its stockpile inventory, of which $11.0 million was credited against production costs and $4.3 million was credited against depreciation expense. The gold price assumption applied in the net realizable value calculation was $1,850 per ounce, and management estimated future costs of processing the stockpiles based upon historical and projected information.

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10. Investment in joint venture (continued)

(iii) Royalties

All of the AGM's concessions are subject to a 5% gross revenue royalty payable to the Government of Ghana. The AGM's Akwasiso mining concession is also subject to an additional 2% net smelter return royalty payable to the previous owner of the mineral tenement, and the AGM's Esaase mining concession is also subject to an additional 0.5% net smelter return royalty payable to the Bonte Liquidation Committee.

On April 3, 2023, the Government of Ghana imposed a special levy, the Growth and Sustainability Levy ("GSL"), on all companies operating in Ghana with an effective date of May 1, 2023. The purpose of the GSL is to support growth and fiscal sustainability of the Ghanaian economy. For mining companies in Ghana, the GSL is levied at a rate of 1% of gold revenues for the fiscal years 2023 to 2025. The JV has presented the 1% GSL as royalties expense in profit and loss.

(iv) Impairment reversal on MPP&E

During the year ended December 31, 2022, the AGM recorded an impairment reversal on MPP&E of $63.2 million resulting from an improved outlook and new life of mine plan for the AGM.

(v) Severance expense

During the year ended December 31, 2022, the JV completed a process of right‐sizing its workforce and recognized an $18.0 million severance expense associated with restructuring its labour force, which was recorded within general and administrative expenses.

(vi) Finance expense and income

The following is a summary of finance expense incurred by the JV for the years ended December 31, 2023 and 2022:

For the year ended December 31, 2023, finance income of $4.6 million related primarily to interest earned on cash balances and short-term investments (year ended December 31, 2022 - $0.8 million of finance income related primarily to interest earned on cash balances).

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10. Investment in joint venture (continued)

(vii) Inventories

The following is a summary of inventories held by the AGM, on a 100% basis, as at December 31, 2023 and 2022:

During the year ended December 31, 2023, the JV recognized a $4.4 million provision against supplies inventory which was recorded in production costs (year ended December 31, 2022 - nil).  Additionally, during the year ended December 31, 2023, the JV reclassified $2.6 million of insurance and capital spares to mineral properties, plant and equipment (year ended December 31, 2022 - nil).

     (viii) Reclamation deposit

The AGM is required to provide security to the Environmental Protection Agency of Ghana ("EPA") for the performance by the AGM of its reclamation obligations in respect of its mining leases.

The AGM deposits a reclamation deposit in a Ghanaian bank and the reclamation deposit is required to be held until receiving a final reclamation completion certificate from the EPA. The AGM is expected to be released from this requirement 45 days following the third anniversary of the date that the AGM receives a final completion certificate. The reclamation deposit accrues interest and is $5.3 million as of December 31, 2023 (December 31, 2022 - $5.0 million). Additionally, bank guarantees of $16.4 million have been provided to the EPA, 50% of which is provided by the Company (see note 13).

(ix) Mineral properties, plant and equipment

Additions to mineral properties, plant and equipment

During the year ended December 31, 2023, the AGM capitalized $55.3 million in expenditures related to MPP&E, excluding asset retirement costs (year ended December 31, 2022 - additions of $17.1 million). Additionally, during the year ended December 31, 2023, the JV also capitalized $18.8 million in right-of-use assets associated with a mining services contract.

The AGM did not incur any deferred stripping costs during the years ended December 31, 2023 or 2022.

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10. Investment in joint venture (continued)

(x) Lease liabilities

The following table shows the movement in the lease liabilities of the AGM for the years ended December 31, 2023 and 2022:

(xi) Asset retirement provisions

The following table shows the movement in the asset retirement provisions of the AGM for the years ended December 31, 2023 and 2022:

The asset retirement provisions consist of reclamation and closure costs for the JV's Ghanaian mining properties. Reclamation and closure activities include land rehabilitation, dismantling of buildings and mine facilities, ongoing care and maintenance and other costs.

As at December 31, 2023, the AGM's reclamation cost estimates were discounted using a long‐term risk‐free discount rate of 3.9% (December 31, 2022 - 3.9%).

(xii) Legal provision

A services provider of the AGM filed a dispute with an arbitration tribunal alleging the AGM breached the terms of a services agreement and claimed approximately $25 million in damages. The arbitrator ruled in favour of the AGM that there had not been a breach of any terms of the contract, yet made an award to the counterparty of approximately $13 million plus interest for services rendered. The AGM, consistent with the arbitration ruling, maintains the view that there was no breach of contract and all contractual amounts were paid as due. The AGM therefore is undertaking an appeals process in the Court of Appeal in Ghana. A provision of $7.0 million has been recorded as of December 31, 2023 (December 31, 2022 - $2.0 million), as management's best estimate to settle the claim. While the Company cannot reasonably predict the ultimate outcome of these actions, and inherent uncertainties exist in predicting such outcomes, the Company believes the estimated provision is reasonable based on the information currently available.

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10. Investment in joint venture (continued)

     (xiii) Preferred shares

There was no change in the JV partners' preferred share investments in the JV for the years ended December 31, 2023 and 2022.  As of December 31, 2023, the JV partners in combination continue to own 264.9 million preferred shares.

    (xiv) Cash flows

The cash flows of the AGM, on a 100% basis, were as follows for the years ended December 31, 2023 and 2022:

11. Share capital

(a) Authorized:

Unlimited common shares without par value or restrictions.

(b) Base shelf prospectus

On December 21, 2022, the Company filed a final short form base shelf prospectus (the "Prospectus") under which the Company may sell from time‐to‐time common shares, warrants, subscription receipts, units, debt securities and/or share purchase contracts of the Company, up to an aggregate of $300 million. The Prospectus has a term of 25‐months from the filing date. As of December 31, 2023, no securities were issued under the Prospectus.

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12. Equity reserves and long‐term incentive plan awards

The Company has a stock option plan and a share unit plan under which restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs") may be awarded to directors, officers, employees and other service providers. All awards under the share unit plan may be designated by the Company's Board of Directors to be settled in either cash, shares or a combination thereof. As of December 31, 2023, all units awarded have been cash‐settled.

Under the two plans, when combined, the number of shares issuable cannot exceed 9% of the issued and outstanding common shares of the Company. Specifically, shares reserved for issuance under the share unit plan, when designated as equity‐settled, may not exceed 5% of the issued and outstanding common shares of the Company. Share units awarded as cash‐settled units will not be considered in computing the limits of the share unit plan.

RSUs, PSUs and DSUs are cash-settled awards and therefore represent financial liabilities, which are recorded at fair value at each reporting date and adjusted for the completed proportion of the vesting period, with any changes recorded as shared-based compensation expense in the Statement of Operations and Comprehensive Income. The financial liability associated with these cash-settled awards is recorded in accounts payable and accrued liabilities for amounts expected to be settled within one year, and a separate long-term incentive plan liability for amounts to be settled in excess of one year, as of the balance sheet date.

(a) Stock options

Options granted typically vest in one-third increments every twelve months following the grant date for a total vesting period of three years. Stock options have a maximum term of 5 years following the grant date.

The following table is a reconciliation of the movement in the number of stock options outstanding for the years ended December 31, 2023 and 2022:

During the year ended December 31, 2023, the Company recognized share‐based compensation expense relating to stock options of $1.1 million (year ended December 31, 2022 - $0.1 million).

During the year ended December 31, 2023, there were 29,333 stock options exercised with a weighted average exercise price of C$0.84 for total aggregate proceeds of $19 (year ended December 31, 2022 - nil).

The fair value of stock options granted is determined using the Black Scholes pricing model. For options granted during the year ended December 31, 2023, the weighted average expected life, dividend yield and forfeiture rate were 3.65 years, nil and 20.28%, respectively. For options granted during the year ended December 31, 2022, the weighted average expected life, dividend yield and forfeiture rate were 3.76 years, nil and 15.92%, respectively.

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12. Equity reserves and long‐term incentive plan awards (continued)

Other weighted‐average conditions and assumptions used in the Black Scholes models were as follows for options granted during the years presented:

The following table summarizes the stock options outstanding and exercisable as at December 31, 2023:

(b) Restricted share units

RSUs granted vest in one-third increments every twelve months following the grant date for a total vesting period of three years.  The following table is a reconciliation of the movement in the number of RSU awards outstanding for the years ended December 31, 2023 and 2022:

For all RSUs granted during the year ended December 31, 2023, the awards vest in three equal tranches over a service period of three years and had an estimated weighted-average forfeiture rate of 24.23% (year ended December 31, 2022 - awards granted vest over a service period of three years and had an estimated forfeiture rate of 22.8%).

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12. Equity reserves and long‐term incentive plan awards (continued)

The following table is a reconciliation of the movement in the RSU liability for the years ended December 31, 2023 and 2022:

(c) Performance share units

PSUs vest in either one-half or one-third increments every twelve months following the grant date for a total vesting period of two or three years and also contain a performance condition(s) applied to the number of units that vest on a yearly basis. The number of units that vest will be determined by the Company's relative share price performance in comparison to a peer group of companies or upon achievement of certain Company strategic objectives. The PSU performance multiplier ranges from 0% to 150%.

The following table is a reconciliation of the movement in the number of PSU awards outstanding for the years ended December 31, 2023 and 2022:

For all PSUs granted during the year ended December 31, 2023, the awards vest in three equal tranches over a service period of three years and had an estimated weighted-average forfeiture rate of 18.84% (year ended December 31, 2022 - awards granted vest over a service period of two or three years and had an estimated weighted-average forfeiture rate of 18.84%).

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12. Equity reserves and long‐term incentive plan awards (continued)

The following table is a reconciliation of the movement in the PSU liability for the years ended December 31, 2023 and 2022:

(d) Deferred share units

DSUs granted vest over a period of one year and will be paid to directors upon their retirement from the Board of Directors of the Company or upon a change of control.

The following table is a reconciliation of the movement in the number of DSU awards outstanding for the years ended December 31, 2023 and 2022:

For all DSUs granted during the year ended December 31, 2023, the awards vest over a service period of one year and had an estimated weighted-average forfeiture rate of nil (year ended December 31, 2022 - awards granted had no vesting terms or conditions and had an estimated weighted-average forfeiture rate of nil).

The following table is a reconciliation of the movement in the DSU liability for the years ended December 31, 2023 and 2022:

The financial liability associated with cash‐settled DSU awards is presented in the Statement of Financial Position within accounts payable and accrued liabilities.

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12. Equity reserves and long‐term incentive plan awards (continued)

(e) Phantom share units

On November 6, 2020, the Company granted 1,000,000 cash-settled phantom share units to the Chair of the Board.  The units vested three years from the grant date, but will only become payable upon the Chair's departure from the Board or upon a change of control of the Company, in a cash settlement amount equal to the value of 1,000,000 common shares as at the Chair's departure date or date of change of control.

The phantom share units represent a financial liability, as they will be settled in cash, and are marked-to-market at each reporting period end and presented in the Statement of Financial Position within accounts payable and accrued liabilities.

The following table is a reconciliation of the movement in the phantom share unit liability for the years ended December 31, 2023 and 2022:

13. Commitments and contingencies

Commitments

The following table reflects the Company's contractual obligations as they fall due, excluding commitments and liabilities of the JV, as at December 31, 2023 and 2022:

In addition to the above commitments, the Company has provided various parent company guarantees related to the unfunded portion of the AGM's reclamation bond in the amount of $8.2 million (December 31, 2022 ‐ $5.9 million).

Contingencies

Due to the nature of its business, the Company and/or the JV may be subject to regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. While the Company cannot reasonably predict the ultimate outcome of these actions, and inherent uncertainties exist in predicting such outcomes, the Company believes that the ultimate resolution of these actions is not reasonably likely to have a material adverse effect on the Company's or JV's financial condition or future results of operations.

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14. General and administrative ("G&A") expenses

The following is a summary of G&A expenses incurred by the Company during the years ended December 31, 2023 and 2022. The G&A expenses for the years presented include, but are not limited to, those expenses incurred in order to earn the service fee as operators of the JV (note 10).

15. Exploration and evaluation ("E&E") expenditures

The following is a summary of E&E expenses incurred by the Company during the years ended December 31, 2023 and 2022. E&E expenses incurred relate to work performed on the Company's wholly owned Asumura and Mali properties.

16. Finance income and expense

(a) Finance income

The following is a summary of finance income recorded by the Company during the years ended December 31, 2023 and 2022:

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16. Finance income and expense (continued)

(b) Finance expense

The following is a summary of finance expense recorded by the Company during the years ended December 31, 2023 and 2022:

17. Income tax

(a) Tax expense

Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings from continuing operations before taxes. These differences result from the following items:

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17. Income tax (continued)

(b) Deferred tax liabilities and assets

The significant components of the Company's deferred tax assets and liabilities as at December 31, 2023 and 2022 were as follows:

As at December 31, 2023, the Company has tax losses of $75.4 million (December 31, 2022 - $73.9 million) in Canada which expire between 2027 and 2043.

Deductible temporary differences and unused tax losses for which no deferred tax assets have been recognized are attributable to the following:

The aggregate amount of deductible temporary differences associated with investments in subsidiaries for which deferred taxes have not been recognized as at December 31, 2023 was $88.2 million (December 31, 2022 - deductible temporary differences of $133.1 million).

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18. Income per share

For the years ended December 31, 2023 and 2022, the calculation of basic and diluted earnings per share is based on the following data:

For the year ended December 31, 2023, excluded from the calculation of weighted average shares outstanding were 8,271,335 stock options that were determined to be anti‐dilutive (year ended December 31, 2022 - 1,400,539 stock options were determined to be anti‐dilutive).

19. Supplemental cash flow information

The following table summarizes the changes in non‐cash working capital for the years ended December 31, 2023 and 2022:

20. Segmented information

Geographic Information

As at December 31, 2023, the Company has only one reportable operating segment being the corporate function with its head office in Canada. Total assets in West Africa include the Company's 45% interest in the AGM JV.

Geographic allocation of total assets and liabilities

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20. Segmented information (continued)

Geographic allocation of the Statement of Operations and Comprehensive Income

For the year ended December 31, 2023:

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20. Segmented information (continued)

For the year ended December 31, 2022:

21. Capital management

The Company's objectives in managing capital are to ensure that the Company has the financial capacity to support its operations with sufficient capability to manage unforeseen operational or industry developments, to ensure the Company has the capital and capacity to support the long‐term growth strategies of the JV, and to provide returns for shareholders and benefits for other stakeholders. The Company defines capital that it manages as total shareholders' equity, being a total of $200.9 million as at December 31, 2023 (December 31, 2022 - $173.7 million).

The Company is not subject to externally imposed capital requirements or covenants.

The Company manages its capital structure and makes adjustments to it in light of general economic conditions, the risk characteristics of the underlying assets and the Company's working capital requirements associated with ongoing operations and corporate development plans. The Company does not currently pay dividends. The Board of Directors reviews and approves any material transactions out of the ordinary course of business, including proposals on acquisitions or other major investments or divestitures, as well as capital and operating budgets. The Company's investment policy is to invest its cash in highly liquid short‐term interest‐bearing investments with maturities of 180 days or less from the original date of acquisition.

The Company has not made any changes to its policies and processes for managing capital during the year.

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22. Financial instruments

As at December 31, 2023, the Company's financial instruments consist of cash and cash equivalents, receivable due from related party, preferred shares in the JV, accounts payable and accrued liabilities, payable due to related party and long‐term incentive plan liabilities. The Company classifies cash and cash equivalents, accounts receivable, the related party receivable, accounts payable and accrued liabilities and accounts payable due to related party as financial assets or liabilities and are measured at amortized cost. The preferred shares in the JV and long‐term incentive plan liabilities are a financial asset and a financial liability, respectively, measured at fair value through profit or loss and fall within Level 3 of the fair value hierarchy as discussed below.

The fair value hierarchy comprises:

Level 1 - fair values based on unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 - fair values based on inputs that are observable for the asset or liability, either directly or indirectly; and

Level 3 - fair values based on inputs for the asset or liability that are not based on observable market data.

There were no transfers between the levels during the years ended December 31, 2023 or 2022.

As at December 31, 2023, the carrying and fair values of the Company's financial instruments by category are as follows:

¹ Accounts payable includes the current portion of long-term incentive plan liabilities, which are measured at fair value through profit or loss.

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22. Financial instruments (continued)

The risk exposure arising from these financial instruments is summarized as follows:

(a) Credit risk

Credit risk is the risk of an unexpected loss if a customer or the issuer of a financial instrument fails to meet its contractual obligations. The Company is subject to credit risk on cash and cash equivalent balances held at banks in Canada, Isle of Man and Mali. The risk of loss associated with cash investments is considered to be low as the majority of the Company's cash and cash equivalents are held with highly rated banking institutions.

As at December 31, 2023, the Company had a receivable due from the JV of $1.0 million (December 31, 2022 - $1.7 million). Credit risk associated with the related party receivable is considered to be low based on the liquidity of available funds of the JV.

In addition, the Company is exposed to credit risk on its preferred share investments in the JV (note 9). With respect to the 132.4 million preferred shares, credit risk is mitigated by monitoring the financial condition of the JV on a regular basis. The Company's maximum exposure to credit risk in relation to the preferred shares at the reporting date is the carrying value of the financial asset totaling $70.2 million.

(b) Liquidity risk

Liquidity risk encompasses the risk that the Company cannot meet its financial obligations as they fall due. The Company manages liquidity risk through a rigorous planning and budgeting process, which is reviewed and updated on a regular basis, to help determine the funding requirements to support current operations, expansion and development plans, and by managing the Company's capital structure (note 21). By managing liquidity risk, the Company aims to ensure that it will have sufficient liquidity to settle obligations and liabilities as they fall due. Subsequent to the JV Transaction, the Company's only direct source of revenue is the service fee earned as operators of the AGM JV, as any free cash flows generated by AGM are no longer within the Company's exclusive control as the disposition of cash from the JV is governed by the JVA (note 10). However, through a combination of the Company's cash balance and interest earned thereon, cash flows from its investment in the JV, and the ongoing management fee receipts from the JV (note 8), the Company believes it is in a position to meet all working capital requirements, contractual obligations and commitments as they fall due. The Company's cash flows, however, and its ability to meet working capital requirements and contractual obligations are significantly influenced by the price of gold and the performance of the AGM. The Company aims to manage its liquidity by ensuring that, even in a low gold price environment, it can manage spending and provide adequate cash flow to meet all commitments.

As at December 31, 2023, the Company had a cash and cash equivalents balance of $55.3 million (December 31, 2022 - $56.1 million) allowing it to settle current liabilities of $12.0 million (December 31, 2022 - $5.8 million) as they become due.

(c) Market risk

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As disclosed in note 9, the Company holds preferred shares in the JV which are carried at fair value through profit or loss with fair value determined by reference to a discounted cash flow model. Changes in interest rates would impact the discount rate applied to forecast future cash flows and accordingly the fair value of the preferred shares; however, changes in interest rates would not impact the amount or timing of forecast future cash flows.

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22. Financial instruments (continued)

With all other variables unchanged, a 1% decrease (increase) in the preferred share discount rate would have resulted in a $2.5 million increase and a $2.4 million decrease, respectively, to the Company's net income for the year ended December 31, 2023 (year ended December 31, 2022 - 1% decrease (increase) in the discount rate would have resulted in a $2.8 million increase and a $2.7 million decrease, respectively, to the Company's net income for the year).

The Company's cash and cash equivalents earn interest income at variable rates and accordingly future interest income is subject to fluctuations in short‐term interest rates. A +/‐1% change in short‐term interest rates during the year would have resulted in a $0.6 million increase or decrease to the Company's interest income for the year ended December 31, 2023 (year ended December 31, 2022 - $0.5 million increase or decrease).

(ii) Foreign currency risk

As at December 31, 2023 and 2022, the Company's exposure to foreign currency risk was limited to the balances presented below. Acronyms of "ZAR" and "XOF" refer to the South African Rand and West African Franc, respectively.

A +/‐10% change in the prevailing exchange rates as at December 31, 2023, with all other variables held constant, would have resulted in a $0.8 million decrease (increase) to the Company's net income for the year ended December 31, 2023 (year ended December 31, 2022 - $0.3 million decrease (increase) to net income).

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22. Financial instruments (continued)

(iii) Price risk

Price risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from currency risk or interest rate risk. Future cash flows from the JV are expected to be received as redemptions of the Company’s preferred shares in the JV (note 9). From time to time, the JV enters into hedging programs to manage the AGM’s exposure to gold price risk with an objective of margin protection. For the year ended December 31, 2023, the fair value of the preferred shares would not be materially impacted by a 5% increase (decrease) in the gold price as there would be no change to the estimated timing of distributions made to the JV partners (year ended December 31, 2022 – 10% increase (decrease) in the gold price would not have materially impacted the fair value of preferred shares as there would be no change to the estimated timing of distributions).

23. Related party transactions

In addition to the service fee earned as operator of the JV and administrative and exploration services provided by the JV to the Company on its wholly owned Asumura property (note 8), the Company's related party transactions included compensation paid to key management personnel (being directors and executive officers of the Company), which was as follows for the years ended December 31, 2023 and 2022:

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GALIANO GOLD INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the years ended December 31, 2023 and 2022

(Expressed in United States dollars)

TABLE OF CONTENTS

1. Fourth quarter and full year 2023 highlights	3-4
2. Business overview	4-8
3. Guidance and outlook	8
4. Results of the Asanko Gold Mine	9-17
5. Results of the Company	18-19
6. Selected quarterly financial data	20
7. Liquidity and capital resources	21-23
8. Non-IFRS measures	23-28
9. Summary of outstanding share data	28
10. Related party transactions	28
11. Critical accounting policies and estimates	29
12. Risks and uncertainties	29-30
13. Internal control	30-31
14. Qualified Persons	31
15. Cautionary statements	32-35

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This Management's Discussion and Analysis ("MD&A") of Galiano Gold Inc. ("Galiano" or the "Company") has been prepared by management as of February 16, 2024 and should be read in conjunction with the Company's audited consolidated annual financial statements, and the notes thereto, for the years ended December 31, 2023 and 2022, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

Galiano was incorporated on September 23, 1999, under the Business Corporations Act of British Columbia, Canada.

Additional information on the Company, including its most recent Annual Information Form ("AIF"), is available under the Company's SEDAR+ profile at www.sedarplus.ca and the Company's website: www.galianogold.com.

All dollar amounts herein are expressed in United States dollars ("US dollars") unless otherwise stated. References to $ means US dollars and C$ are to Canadian dollars.

This MD&A contains forward-looking statements and should be read in conjunction with the risk factors described in sections "12. Risks and uncertainties" and "15. Cautionary statements" at the end of this MD&A.

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1. Fourth quarter and full year 2023 highlights

The Asanko Gold Mine ("the AGM") is a 50:50 joint venture ("JV") with Gold Fields Limited ("Gold Fields"), which is managed and operated by Galiano. Galiano owns a 45% equity interest in the entity that holds the AGM mining licenses.

1.1 Acquisition of Gold Fields' 45% interest in AGM JV

On December 21, 2023, the Company announced it had entered into a binding share purchase agreement (the "SPA") with subsidiaries of Gold Fields to acquire its 45% interest in the AGM JV (the "Acquisition"). The strategic rationale of the Acquisition is to consolidate ownership of the AGM, one of the largest gold mines in West Africa, and establish Galiano as a growing gold producer with robust financial strength. Upon closing of the Acquisition, the Company will own a 90% interest in the AGM with the Government of Ghana continuing to hold a 10% free-carried interest (non-controlling interest).

The Acquisition is expected to close in the first quarter of 2024, pending receipt of customary regulatory approvals in Ghana. Conditional approvals of the Toronto Stock Exchange (“TSX”) and the NYSE American (“NYSE American”) have been received as of the date of this MD&A.  Refer to section 2.1(a) for details on consideration payable to Gold Fields.

1.2 Key Metrics of the AGM JV (on a 100% basis)

• Safety: There were no lost-time injuries ("LTI") and one total recordable injury ("TRI") recorded during the fourth quarter, resulting in 12‐month rolling LTI and TRI frequency rates of 0.50 and 1.65 per million employee hours worked, respectively.

• Production performance: Gold production of 31,947 ounces during the fourth quarter. 2023 annual gold production of 134,077 ounces, exceeding the top end of upward revised guidance of between 120,000 to 130,000 ounces.

• Milling performance: Achieved mill throughput of 1.5 million tonnes (“Mt”) of ore at a grade of 0.8 grams per tonne (“g/t”) during the fourth quarter. Metallurgical recovery in Q4 2023 was 84%. Mill throughput for 2023 totaled 6.1 Mt, a new record for the AGM.

• Cost performance: Total cash costs¹ of $1,352 per gold ounce (“/oz”) and all-in sustaining costs¹ (“AISC”) of $2,065/oz for the three months ended December 31, 2023. Full year 2023 AISC¹ amounted to $1,522/oz, at the lower end of downward revised guidance of between $1,500/oz to $1,600/oz. Q4 2023 AISC¹ was elevated as anticipated due to higher sustaining capital expenditures related to Abore waste stripping and implementation of a water treatment system at the tailings storage facility (“TSF”).

• Cash flow generation: The JV generated positive cash flow from operations of $24.1 million and Free Cash Flow¹ of $2.3 million during the fourth quarter. Full year 2023 Free Cash Flow¹ totaled $48.4 million.

• Financial performance: Gold revenue of $59.3 million generated from 30,555 gold ounces sold at an average realized price of $1,942/oz during the fourth quarter. Net income of $3.7 million and Adjusted EBITDA¹ of $9.0 million during the fourth quarter.

• Restart of mining: Hard rock mining operations at the AGM restarted on October 1, 2023, with waste stripping activities ongoing. The Abore pit remains on track to deliver higher grade ore to the processing plant, as compared to the current stockpile processing, in Q2 2024.

• Exploration focus: Infill drilling at Abore, designed to convert inferred Mineral Resources to the indicated Mineral Resource category, and early stage drill testing at the Gyagyatreso prospect were completed. Other 2023 exploration programs included drilling at Midras South to advance the deposit towards a potential maiden Mineral Reserve estimate, and at Nkran to support potential Mineral Resource upgrades. Preliminary exploration work was also undertaken across the AGM’s regional greenfields targets – with focus on the Aburi and Sky Gold concessions.

• Robust liquidity: $138.7 million in cash and cash equivalents, $5.7 million in gold sales receivables, $5.1 million in gold on hand and no debt as of December 31, 2023.

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¹ See "8. Non-IFRS measures"

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1.3 Highlights of the Company

• Consolidation of AGM JV: On December 21, 2023, the Company announced the execution of the SPA to acquire Gold Fields’ 45% interest in the AGM JV.

• Stable balance sheet: Cash and cash equivalents of $55.3 million as at December 31, 2023 and no debt.

• Earnings: Net loss of $5.8 million or $0.03 per common share during the fourth quarter, which includes the Company’s share of the JV’s net earnings for the quarter and a downward fair value adjustment on the Company’s preferred shares in the JV.

2. Business overview

As of the date of this MD&A, Galiano owns a 45% equity interest in the entity that holds the AGM mining licenses and gold exploration tenements and a 50% equity interest in an exploration entity (collectively the "joint venture" or "JV") on the Asankrangwa Gold Belt in the Republic of Ghana ("Ghana"), West Africa. Galiano is the operator of the JV and currently receives a gross annual service fee from the JV of $7.3 million. Gold Fields also owns a 45% equity interest in the AGM, with the Government of Ghana owning a 10% free-carried interest.

The AGM consists of four main open-pit mining areas: Abore, Miradani North, Nkran and Esaase, multiple satellite deposits and a carbon-in-leach ("CIL") processing plant, with a current capacity of 5.8 Mt per annum.

In addition to its interest in the AGM, the Company holds the 100% owned Asumura property in Ghana.

Galiano is focused on creating a sustainable business capable of value creation for all stakeholders through production, exploration, accretive business acquisitions and disciplined deployment of its financial resources. The Company's shares are listed on TSX and the NYSE American under the symbol "GAU".

2.1  Key business developments in 2023

a) Acquisition of Gold Fields' 45% interest in AGM JV

The Company announced on December 21, 2023 it had entered into a binding SPA with Gold Fields to acquire its 45% interest in the AGM JV, increasing Galiano's equity interest in the AGM to 90%.  Under the terms of the SPA, total consideration payable to Gold Fields will comprise the following:

• $65.0 million cash payment on closing of the Acquisition, equivalent to Gold Fields' effective interest in the cash balance at the JV;

• the issuance of 28.5 million common shares of the Company on closing of the Acquisition, resulting in Gold Fields owning approximately 19.9% of the Company's issued and outstanding common shares;

• $55.0 million of deferred consideration comprised of a:

  • $25.0 million cash payment on or before December 31, 2025; and

  • $30.0 million cash payment on or before December 31, 2026 (collectively "Deferred Consideration").

The Deferred Consideration is to be paid in cash subject to the Company's right to satisfy up to 20% of each payment with common shares, subject to Gold Fields not owning more than 19.9% of the Company's issued and outstanding common shares at that time; and

• $30.0 million cash payment contingent upon production of 100,000 gold ounces from the Nkran deposit.

Gold Fields will also receive a 1% net smelter return royalty (the "Nkran Royalty") on production from the Nkran deposit beginning upon 100,000 gold ounces being produced, and subject to a maximum of 447,000 gold ounces of production. Galiano has a right of first refusal on any full or partial disposition of the Nkran Royalty by Gold Fields.

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Upon closing of the Acquisition, Galiano will enter into an amended investor rights agreement with Gold Fields, which includes a 12-month standstill period and other customary rights, including a pre-emptive right for Gold Fields to maintain its ownership interest as at closing of the Acquisition.

The Acquisition is not subject to shareholder votes, but is subject to various closing conditions, including receipt of all required regulatory approvals in North America and Ghana, which includes the approvals of the TSX and NYSE American (conditional approvals received as of the date of this MD&A). The Acquisition is expected to close in the first quarter of 2024.

b) Mining restart at the AGM

The AGM recommenced mining operations on October 1, 2023 in accordance with the life-of-mine (“LOM”) plan. Waste stripping activities at Abore are ongoing and the deposit is scheduled to deliver higher grade mill feed, as compared to the current stockpile processing, in the second quarter of 2024.

As Esaase was previously mined from 2018 to 2022, all infrastructure and permits are in place to allow a restart of mining when planned.

c) Changes to Board and Management

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.

On April 1, 2023, Krista Muhr joined the Company as Senior Vice President, Investor Relations. Mrs. Muhr brings 20 years of experience working with public companies in the global metals and mining sector with strong ESG (as defined herein) and capital market credentials at senior levels.

2.2  Updated NI 43-101 Technical Report

The Company published the details of a new LOM plan for the AGM on March 28, 2023 in a National Instrument 43-101 ("NI 43-101") technical report titled "NI 43‐101 Technical Report and Feasibility Study for Asanko Gold Mine, Ghana" with an effective date of December 31, 2022 (the "2023 Technical Report"), which included the reinstatement of Mineral Reserves and demonstrated an improved long-term outlook for the mine. The 2023 Technical Report was prepared independently by SRK Consulting (Canada) Inc. Highlights of the 2023 Technical Report, on a 100% basis, include:

• Proven Mineral Reserves of 7.2 Mt at 0.67 g/t for 0.2 million ounces ("Moz") gold contained and Probable Mineral Reserves of 41.7 Mt at 1.43 g/t for 1.9 Moz gold contained. Mineral Reserves were reported assuming a gold price of $1,500/oz.

• Measured Mineral Resources of 7.4 Mt at 0.67 g/t for 0.2 Moz gold contained and Indicated Mineral Resources of 75.0 Mt at 1.39 g/t for 3.3 Moz gold contained, inclusive of Mineral Reserves. Mineral Resources were reported assuming a gold price of $1,800/oz.

• Inferred Mineral Resources of 25.1 Mt at 1.34 g/t for 1.1 Moz gold contained.

• 21% increase in total Measured and Indicated ounces and a 251% increase in total inferred ounces compared to the previous technical report dated February 28, 2022.

• Diversified feed source with 4 main open-pit mining areas: Abore, Miradani North, Esaase and Nkran, and 2 satellite deposits: Dynamite Hill and Adubiaso.

• Robust mine economics with a $343 million after-tax net present value discounted at 5% ("NPV_5%") and a $478 million pre-tax NPV_5%, applying a $1,700/oz gold price.

• Low cash costs: $905/oz average total cash costs¹ and $1,143/oz average AISC¹ over the LOM.

• Increased production profile: annual average gold production of 254,000 ounces from 2025 to 2030, inclusive, and LOM average annual production of 217,000 ounces per year.

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For further information regarding the Mineral Reserve and Mineral Resource estimates and to review scientific and technical information contained in the 2023 Technical Report, readers are encouraged to read the entire 2023 Technical Report found under the Company's SEDAR+ profile at www.sedarplus.ca.

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2.3  Financial and operating highlights

		Three months ended December 31,						Year ended December 31,
(All amounts in 000's of US dollars, unless otherwise stated)		2023			2022			2023			2022
Galiano Gold Inc.
Net (loss) income		(5,758	)		28,500			26,085			40,809
Adjusted EBITDA1		98			8,169			26,754			28,827
Cash and cash equivalents		55,270			56,111			55,270			56,111
Asanko Gold Mine (100% basis)
Financial results
Revenue		59,514			57,808			256,543			297,136
Income from mine operations		8,675			19,167			81,483			71,653
Net income		3,664			83,712			69,940			103,223
Adjusted net income1		3,664			19,627			69,940			58,058
Adjusted EBITDA1		9,020			22,810			82,899			79,248
Cash and cash equivalents		138,655			91,271			138,655			91,271
Cash generated from operating activities		24,058			11,135			100,720			75,479
Free cash flow1		2,285			5,528			48,373			43,780
AISC margin1		(3,758	)		16,930			51,787			70,664
Key mine performance data
Gold produced (ounces)		31,947			34,090			134,077			170,342
Gold sold (ounces)		30,555			34,202			134,163			167,849
Average realized gold price ($/oz)		1,942			1,686			1,908			1,767
Total cash costs ($ per gold ounce sold)1		1,352			1,031			1,148			1,157
AISC ($ per gold ounce sold)1		2,065			1,191			1,522			1,346

 

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2.4  Environmental, Social and Corporate Governance ("ESG")

Sustainability is at the core of the Company's business strategy. The Company believes that a comprehensive sustainability strategy is integral to meeting its strategic objectives in positively supporting relationships with its internal and external stakeholders, improve its risk management, reduce the AGM's cost of production and both directly and indirectly benefit the catchment communities that the Company operates in, beyond the life of the mine.

The Company implements its sustainability program with a focus on four key areas: (1) protecting human rights; (2) ensuring the occupational health and safety of employees and local communities; (3) advancing the socio-economic welfare and health of local catchment communities; and (4) managing environmental impacts of operations and exploration activities. For further details on the Company's sustainability program, refer to the Company's 2022 Sustainability Report (the "2022 Sustainability Report") published on July 27, 2023, which is available on the Company's website at www.galianogold.com. The disclosures and metrics of the 2022 Sustainability Report align with international reporting standards including the Global Reporting Initiative and the Metals and Mining Standards of the Sustainability Accounting Standards Board.

In May 2023, the Canadian Parliament passed Bill S-211, an act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff. This will require Canadian companies to annually report on the due diligence steps they are taking to both identify and address labour risks in their supply chain. The Company has determined that it meets the criteria to adhere to these reporting requirements and will provide a detailed report and respond to a questionnaire on measures it has taken to identify, address, and prevent forced labour, prison labour, and child labour in its supply chain. The Company intends to submit its report and the questionnaire by no later than May 31, 2024, to the Minister of Public Safety and Emergency Preparedness.

In June 2023, the International Sustainability Standards Board ("ISSB") released its inaugural IFRS Sustainability Disclosure Standards, specifically IFRS S1 "General Requirements for Disclosure of Sustainability-related Financial Information" and IFRS S2 "Climate-related Disclosures", the purpose of which is to standardize a single, global baseline of sustainability disclosures for capital markets. IFRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. IFRS S2 sets out specific climate-related disclosures and is designed to be used in conjunction with IFRS S1. Both standards fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures ("TCFD").  IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after January 1, 2024, with early adoption permitted.

Although the ISSB has issued IFRS S1 and IFRS S2, the standards are not currently mandated in Canada. The Canadian Securities Administrators are responsible for Canadian reporting issuer disclosure requirements. The Canadian Sustainability Standards Board (“CSSB”) was formed to review the final ISSB standards and consider their suitability for adoption in Canada.  Consultation efforts by the CSSB are currently underway and decisions about adoption, including how effective dates are determined in Canada, will be part of the CSSB’s initial discussions.

In March 2022, the United States Securities and Exchange Commission ("SEC") announced plans to enhance and standardize climate-related disclosures for reporting issuers. The proposed disclosure rules would require reporting issuers to disclose both climate-related risks that are reasonably likely to have a material impact on their business, results of operations or financial condition, in addition to Scope 1, Scope 2, and certain Scope 3 emissions.  The SEC has yet to finalize its ESG disclosure rules for reporting issuers. It is not yet clear how the SEC's ESG disclosure rules will interact with Canadian standards.

During 2023, the Company advanced its development of Climate-Related Financial Disclosures with the completion of an assessment of our alignment with the TCFD recommendations.  The Company is currently evaluating how the ISSB's sustainability disclosure standards will impact its disclosure obligations.

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2.5  Macroeconomic factors

During the three months ended December 31, 2023, the average London PM gold price was $1,972/oz, while gold prices traded in a range from $1,810/oz to $2,149/oz. With inflation readings in the US declining from prior year benchmarks, market participants (CME Group) forecast that the US Federal Reverse will begin cutting its overnight lending rate in 2024. In response to this market view, the yield on US 10-year Treasuries moved significantly lower from a high of 5.02% on October 23, 2023 to 3.87% on December 29, 2023. Concurrently, the US dollar displayed weakness during this period relative to most major global currencies as future interest rate cuts generally indicate less demand for US dollars. It is largely viewed that a weaker US dollar is a positive for gold prices.

Gold prices trading near all-time highs benefitted the JV's operating performance during the quarter, and consequently the Company's share of the JV's net income. Management continues to implement and evaluate opportunities to hedge the JV's gold price risk, particularly in light of capital expenditures expected during the periods following the restart of mining operations.

In October 2023, the International Monetary Fund ("IMF") and the Ghana government reached a staff-level agreement on the first review of its $3 billion financing arrangement over a 3-year period (the "IMF Loan"). The first tranche of the IMF loan totaling $600 million was paid in May 2023, and a second tranche of $600 million was approved in January 2024 following a debt restructuring plan between Ghana and its creditors.

3. Guidance and outlook

3.1  2023 Guidance for the AGM JV (100% basis)

During the year ended December 31, 2023, the AGM produced 134,077 ounces of gold, exceeding the upper end of revised production guidance of between 120,000 to 130,000 ounces of gold (originally 100,000 to 120,000 ounces and revised upwards to 120,000 to 130,000 ounces in Q2 2023).

Full year 2023 AISC¹ amounted to $1,522/oz, in line with revised cost guidance of between $1,500/oz to $1,600/oz (originally $1,900/oz to $1,975/oz, revised downward to between $1,650/oz to $1,750/oz in Q1 2023 and further revised downward to between $1,500/oz to $1,600/oz in Q3 2023). As highlighted in the 2023 Technical Report, AISC¹ was elevated in 2023 compared to the expected LOM average primarily due to waste stripping necessary to recommence mining, beginning at Abore, which will benefit future years production, as well as higher expenditures on the TSF.

Sustaining capital expenditure for 2023 amounted to $31.0 million (excluding capitalized waste stripping at Abore), which was lower than revised guidance of $37 million (originally $38 million and revised to $43 million in Q2 2023 and again to $37 million in Q3 2023).  Sustaining capital was lower than guidance due to timing of completion of a TSF lift and implementation of a water treatment system at the TSF. Capitalized waste stripping costs at Abore totaled $10.9 million in 2023 compared to revised guidance of $13 million. Waste stripping activities at Abore were impacted by slower than expected contractor mobilization and heavier precipitation during Ghana's rainy season; however, Abore is still on track to deliver higher grade ore, than the current stockpile processing, by the second quarter of 2024.

Development capital expenditure for 2023 amounted to $6.7 million, which was lower than revised guidance of $10 million (originally $24 million and revised to $17 million in Q2 2023 and again to $10 million in Q3 2023). Development capital was lower than guidance due to timing of site establishment activities at Miradani North.

Exploration spend for 2023 amounted to $14.1 million, largely in line with guidance of $15 million.

3.2  2024 Guidance for the AGM JV (100% basis)

The Company will provide guidance for its consolidated business after closing of the Acquisition.

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¹  See "8. Non-IFRS measures"

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4. Results of the AGM

All results of the AGM in this section are on a 100% basis, unless otherwise noted. For the three months and year ended December 31, 2023, the Company's attributable equity interest in the AGM was 45%.

4.1  Operating performance

The following table and subsequent discussion provide a summary of the operating performance of the AGM (on a 100% basis) for the three months and years ended December 31, 2023 and 2022, unless otherwise noted.

² Excludes Galiano's service fee for the three months and years ended December 31, 2023 and 2022, and for the three months and year ended December 31, 2022 severance costs associated with the AGM's workforce restructuring.

a) Health and safety

There were no LTIs and one TRI reported during the quarter, and the rolling 12‐month LTI and TRI frequency rates were 0.50 and 1.65, respectively. The Company reports recordable LTI and TRI cases in accordance with the International Council on Mining and Metals' (ICMM) Mining Principles.

b) Mining

During the quarter, waste stripping activities at Abore commenced with 3.4 Mt of waste rock mined. Mining cost per tonne for the quarter amounted to $4.30 per tonne (“/t”). Mining cost per tonne for the year ended December 31, 2023 is higher than Q4 2023 due to the fact that certain mining overhead costs were incurred during the first nine months of 2023, however there were no associated tonnes mined.

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c) Ore transportation

During the quarter, 0.7 Mt of stockpiled ore was trucked from the Esaase pit to the processing plant, moderately higher than the 0.5 Mt in Q4 2022. Total ore transportation costs in Q4 2023 were $6.54/t and higher than the comparative period due to higher diesel prices.

d) Processing

The AGM produced 31,947 ounces of gold during Q4 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 84%. Recoveries continued to improve from 73% in Q1 2023, when the mill feed comprised predominately Esaase fresh ore, to 84% in Q4 2023 due to the composition of the feed blend processed having a higher percentage of oxide ore during the current quarter.

A portion of the low grade stockpiled ore processed during the quarter had no accounting book value, and as such had no mining cost attributed to it. Stockpiled ore fed to the processing plant during the quarter yielded ounces that were in line with expectations. The nature of stockpiled ore, however, can result in highly variably grades and metallurgical recoveries; therefore, the current quarter performance may not be indicative of future performance.

Processing cost per tonne for Q4 2023 was $9.94, in line with the $10.06 unit rate in Q4 2022, while on an absolute basis processing costs were largely unchanged quarter-on-quarter.

e) Total cash costs and AISC

For the three months and year ended December 31, 2023, total cash costs¹ were $1,352/oz and $1,148/oz, respectively, compared to the three months and year ended December 31, 2022 of $1,031/oz and $1,157/oz, respectively. Gold sales volumes decreased by 11% in Q4 2023, which had the effect of increasing fixed costs on a per ounce basis. Additionally, a portion of the mill feed during Q4 2023 included stockpiled ore which had a higher average cost, resulting in higher production costs.  The AGM also recorded a $2.3 million provision against supplies inventory during Q4 2023, resulting in a $75/oz increase to total cash costs¹.

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Relative to Q3 2023, total cash costs¹ were higher in Q4 2023, increasing by 28% from $1,056/oz to $1,352/oz. Total cash costs per ounce¹ were higher in Q4 2023 primarily due to 14% fewer gold ounces sold as well as recording the aforementioned supplies inventory provision.

For the three months and year ended December 31, 2023, AlSC¹ for the AGM amounted to $2,065/oz and $1,522/oz, respectively, compared to $1,191/oz and $1,346/oz in the comparative periods of 2022. The increase in AlSC¹ from Q4 2022 to Q4 2023 was predominantly due to the increase in total cash costs per ounce¹ described above, and higher sustaining capital expenditures ($504/oz increase) to support the restart of mining in Q4 2023 (including pre-stripping activities at Abore), implementation of a water treatment system and a TSF lift.

Relative to Q3 2023, AlSC¹ increased by 43% from $1,445/oz to $2,065/oz. The increase in AISC¹ was primarily due to the increase in total cash costs per ounce¹ described above and higher sustaining capital expenditures ($293/oz increase) to support the restart of mining in Q4 2023 and implementation of a water treatment system.

For the three months and year ended December 31, 2023, the AGM incurred non-sustaining capital expenditures and exploration expenditures of $5.6 million and $20.8 million, respectively, compared to $3.0 million and $16.8 million during the comparative periods in 2022. Non-sustaining capital expenditures and exploration expenditures during Q4 2023 related primarily to Abore site preparations, Abore Mineral Resource conversion drilling and work performed on various greenfield exploration targets.

4.2  Exploration update

The JV holds a district-scale land package of 476km² on the prospective and underexplored Asankrangwa Gold Belt. The following exploration programs were undertaken during the year to evaluate the current and potential expanded mineralization of several of the AGM's deposits to improve the Mineral Resource estimate and to assess the broader potential of these deposits. Additionally, work was undertaken to identify new growth targets across the wider regional AGM tenements.

• Nkran South - a phase 1 drilling program was completed during the year to upgrade a zone of inferred Mineral Resources at the south end of the deposit and determine the potential for growth in the open pit Mineral Reserves. In addition to the potential expansion of Mineral Reserves, the Company is incorporating the drilling results into the Nkran underground study that is currently underway. As of December 31, 2023, 13 holes have been completed for 6,689 meters ("m").

Based on the positive results reported in the Company's news release dated October 25, 2023, the Company has confirmed the primary mineralized zones at Nkran are contiguous and remain open at the southern end of the deposit. The mineralized zones currently extend up to 185m immediately along strike to the south of the proposed Nkran Cut 3 pit shell. Drilling highlights from the Nkran South program included the following:

• Hole NKPC22-111: 19m @ 3.0 g/t gold from 567m
• Hole NKPC22-114W1: 18m @ 2.6 g/t gold from 361m
• Hole NKPC23-116: 19.5m @ 1.6 g/t gold from 451m
• Hole NKPC23-118: 9m @ 5.9 g/t gold from 565m
• Hole NKPC23-119: 19m @ 1.3 g/t gold from 483m and 7m @ 5.6 g/t gold from 324m

Refer to the Company's news release dated October 25, 2023 for additional information regarding these drill results, including data verification and quality assurance and quality control measures.

• Abore - an infill drilling program has been initiated to convert inferred Mineral Resources below the current Mineral Reserve pit shell and the infilling zones within the current $1,800/oz Mineral Resource pit shell to the indicated Mineral Resource category. The initial program consisted of a planned 63 holes totaling approximately 15,800m, but was expanded based on positive drilling results.  As of December 31, 2023, 84 holes have been completed for 22,470m.

Early results returned strong intercepts outside the current reserve pit shell including 36m @ 2.1 g/t gold from 278m and 21m @ 2.6 g/t gold from 226m, highlighting potential pit expansion opportunities. Refer to the Company's news release dated October 25, 2023 for additional information regarding these drill results, including data verification and quality assurance and quality control measures.

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• Midras South - the Midras South deposit lies approximately 5 kilometers south of the AGM processing plant along the Takorase - Afraso shear zone. An infill drilling program for inferred Mineral Resources has been initiated to upgrade the primary mineralized zones to the indicated Mineral Resource category to advance the deposit towards a potential maiden Mineral Reserve estimate. This initial phase consisted of a planned 77 holes totaling approximately 7,400m and was drilled along vertical fences, spaced approximately 30m apart.  As of December 31, 2023, 52 holes have been completed for 5,061m. Two of the fertile structural trends that host mineralization at Midras South also remain open along strike and are considered targets for further exploration drilling.

Drilling highlights from the Midras South program included the following:

• Hole MSRC23-253: 28m @ 1.2 g/t gold from 24m
• Hole MSRC23-257: 10m @ 2.6 g/t gold from 18m
• Hole MSRC23-258: 12m @ 2.5 g/t gold from 5m
• Hole MSRC23-284: 18m @ 4.0 g/t gold from 7m
• Hole MSRC23-285: 3m @ 26.6 g/t gold from 24m
• Hole MSRC23-287: 17m @ 2.3 g/t gold from 24m

Refer to the Company's news release dated October 25, 2023 for additional information regarding these drill results, including data verification and quality assurance and quality control measures.

• Gyagyatreso - the Gyagyatreso deposit is located approximately 4 kilometers northwest of the AGM processing plant. A drill program has been planned to test for potential near surface mineralization along the Esaase-Abore-Kaniago shear trend. This initial phase consisted of a planned 68 holes totaling approximately 7,100m.  As of December 31, 2023, 55 holes have been completed for 5,783m.

Drilling highlights from the Gyagyatreso program included the following:

• Hole GYDD23-004: 20m @ 1.7 g/t gold from 32m
• Hole GYDD23-011: 13m @ 1.3 g/t gold from 42m
• Hole GYDD23-038: 11m @ 3.6 g/t gold from 98m
• Hole GYDD23-045: 38m @ 2.0 g/t gold from 20m

Drill results received to date demonstrate that mineralization is present over at least 2 kilometers of strike length. The full extent of the surficial geochemical anomaly has not yet been tested and mineralization remains open along strike to the southwest and northeast. Refer to the Company's news release dated October 25, 2023 for additional information regarding these drill results, including data verification and quality assurance and quality control measures.

• Akwasiso - a drill program has been planned to evaluate the underground potential of the Akwasiso deposit. The program consists of 4 deep holes totaling approximately 2,500m which was completed as planned during the quarter. Results of the drilling have better delineated the shape of the Akwasiso intrusive at depth and will be used to evaluate future opportunities.

• Kaniago West - Drilling at Kaniago West is aimed at evaluating the strike and depth extent of the deposit in order to assess potential economic viability. As of December 31, 2023, 17 holes have been completed for 5,204m. Modeling of these results will be conducted in 2024 in order to assess the viability of a potential resource at Kaniago West.

In addition to the drill programs above, the JV also initiated geophysical surveys and soil sampling programs on several regional greenfield targets across the AGM's tenements with an objective of identifying new potential drill targets. Highlights of this work include the identification of significant surficial geochemical targets at the Sky Gold B and Aburi concessions, where follow up work and potential drill testing is planned for 2024.

Refer to the Company's news release dated October 25, 2023 for additional information regarding these soil survey results.

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4.3  Financial results

The following table presents excerpts of the financial results of the JV for the three months and years ended December 31, 2023 and 2022. These results are presented on a 100% basis.

Three months and years ended December 31, 2023 and 2022

a) Revenue

During Q4 2023, the AGM sold 30,555 ounces of gold at an average realized gold price of $1,942/oz for total revenue of $59.5 million (including $0.2 million of by-product silver revenue). During Q4 2022, the AGM sold 34,202 ounces of gold at an average realized gold price of $1,686/oz for total revenue of $57.8 million (including $0.1 million of by-product silver revenue). The increase in revenue quarter-on-quarter was due to a 15% increase in realized gold prices relative to Q4 2022, partly offset by an 11% reduction in sales volumes.

During the year ended December 31, 2023, the AGM sold 134,163 ounces of gold at an average realized gold price of $1,908/oz for total revenue of $256.5 million (including $0.6 million of by-product silver revenue). During the comparative period of 2022, the AGM sold 167,849 ounces of gold at an average realized gold price of $1,767/oz for total revenue of $297.1 million (including $0.6 million of by-product silver revenue). The decrease in revenue year-on-year was due to a 20% reduction in sales volumes, partly offset by an 8% increase in realized gold prices.

The AGM continues to sell all the gold it produces to a special purpose vehicle of Red Kite Opportunities Master Fund Limited ("Red Kite") under an offtake agreement (the "Offtake Agreement"). The terms of the Offtake Agreement require the AGM to sell 100% of its gold production up to a maximum of 2.2 million ounces to Red Kite.  As of December 31, 2023, 1,601,268 gold ounces have been delivered to Red Kite under the Offtake Agreement (December 31, 2022 - 1,467,105 gold ounces delivered).

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During the three months and year ended December 31, 2023, the AGM sold a portion of its production to the Bank of Ghana under the country's gold buying program. As agreed with Red Kite, gold ounces sold to the Bank of Ghana were considered delivered under the Offtake Agreement, and in consideration the AGM paid to Red Kite a "make whole" payment which was calculated in a similar manner to a nine‐day quotational period. The "make whole" payments made to Red Kite were recognized as a reduction of revenues.

b) Production costs and royalties

During the three months and year ended December 31, 2023, the AGM incurred production costs of $42.9 million and $146.8 million, respectively, compared to $32.5 million and $179.8 million in the comparative periods of 2022, respectively.

Production costs were higher in Q4 2023 primarily due to a portion of the mill feed including stockpiled ore which had a higher average cost, resulting in higher production costs. The AGM also recorded a $2.3 million provision against supplies inventory and a $5.0 million provision related to a contract dispute with a former mining contractor. These factors were partly offset by 11% fewer gold ounces sold in Q4 2023.

Production costs were lower in 2023 primarily due to 20% 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 2023 resulting from restructuring the AGM's workforce at the end of Q1 2022 ($4.8 million decrease). These factors were partly offset by inflationary pressures on key reagents and other consumables in 2023 and a $15.3 million reversal of previously recorded net realizable value adjustments on stockpile inventory in 2022, of which $11.0 million was credited against production costs.

The Ghanaian government charges a 5% royalty on revenues earned through sales of minerals from the AGM’s concessions. The AGM’s Akwasiso mining concession is also subject to a further 2% net smelter return royalty payable to the previous owner of the mineral tenement, and the Esaase concession is subject to a 0.5% net smelter return royalty payable to the Bonte Liquidation Committee.  The Akwasiso and Esaase royalties are presented in production costs.

On April 3, 2023, the Government of Ghana imposed a special levy, the Growth and Sustainability Levy ("GSL"), on all companies operating in Ghana with an effective date of May 1, 2023. The purpose of the GSL is to support growth and fiscal sustainability of the Ghanaian economy. For mining companies in Ghana, the GSL is levied at a rate of 1% of gold revenues for the fiscal years 2023 to 2025. The JV has presented the 1% GSL as royalties expense in the Statement of Operations.

Royalties payable to the Government of Ghana are presented as a component of cost of sales and amounted to $3.6 million and $14.6 million for the three months and year ended December 31, 2023, respectively (three months and year ended December 31, 2022 - $2.9 million and $14.9 million, respectively). Royalties expense was higher in Q4 2023 due to higher earned revenue and the introduction of the GSL in April 2023, while royalties expense was lower in 2023 due to lower revenue, partly offset by the GSL.

c) Depreciation and depletion

Depreciation and depletion on mineral properties, plant and equipment (“MPP&E”) recognized during Q4 2023 was $4.4 million compared to $3.2 million in Q4 2022. Depreciation and depletion expense was higher in Q4 2023 due to processing stockpiled ore that had a higher cost, higher depreciation on capitalized leases and a $63.2 million impairment reversal on MPP&E recorded at December 31, 2022. These factors were partly offset by fewer gold ounces sold in Q4 2023.

Depreciation and depletion on MPP&E recognized during the year ended December 31, 2023 was $13.6 million compared to $30.8 million in the comparative period of 2022. Depreciation and depletion expense was lower in 2023 due to fewer gold ounces sold; lower depreciation on mining related assets due to 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 impairment reversal on MPP&E described above and recorded at December 31, 2022.

d) Exploration and evaluation ("E&E") expenditures

During the three months and year ended December 31, 2023, the AGM recorded E&E expenses of $2.2 million and $7.4 million, respectively, (see 4.2 "Exploration update") compared to $1.2 million and $10.5 million of E&E expenses in the comparative periods of 2022, respectively. E&E expenses during the quarter related to Midras South infill drilling, Gyagyatreso first-pass drilling, trenching greenfield targets and general overhead costs, and were higher in Q4 2023 relative to the comparative period due to timing of drilling campaigns. E&E expense was higher for the year ended December 31, 2022 as drilling programs were undertaken on several mining concessions to support the AGM's updated Mineral Reserve and Mineral Resource estimates.

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e) General and administrative ("G&A") expenses

During the three months and year ended December 31, 2023, the AGM recorded G&A expenses of $0.8 million and $2.7 million, respectively, compared to a credit of $0.5 million and an expense of $20.8 million in the comparative periods of 2022, respectively.

The lower G&A expense in Q4 2022 was due to actual severance payouts associated with the AGM's workforce restructuring being less than previous estimates, resulting in the reversal of a portion of severance provisions. G&A expense was higher for the year ended December 31, 2022 due to the recognition of an $18.0 million severance provision related to the AGM's workforce restructuring undertaken at the end of Q1 2022. Notwithstanding the severance provision, G&A expenses in 2023 were comparable to 2022.

f) Finance expense

Finance expense for the three months and year ended December 31, 2023 was $3.2 million and $5.6 million, respectively, compared to $1.0 million and $6.5 million during the comparative periods of 2022, respectively. Finance expense was higher in Q4 2023 due to an unrealized loss on the AGM's zero cost gold collar ("ZCCs") hedges and higher interest expense on capitalized leases.

For the year ended December 31, 2023, finance expense was lower due to a $2.9 million provision related to a Ghana Revenue Authority ("GRA") audit recorded in Q3 2022. This was partly offset by 2023 including a $1.0 million unrealized loss on ZCCs hedges and higher interest expense on capitalized leases. All gold hedges for the period January to December 2023 expired unutilized. In 2022, the AGM did not have any gold hedging instruments.

g) Finance income

Finance income of $1.4 million and $4.6 million for the three months and year ended December 31, 2023, respectively, were higher than the comparative periods in 2022 due to higher interest rates earned on cash and short-term investments (maturities of 90 days or less).

h) Legal provision

A services provider of the AGM filed a dispute with an arbitration tribunal alleging the AGM breached the terms of a services agreement and claimed approximately $25 million in damages. The arbitrator ruled in favour of the AGM that there had not been a breach of any terms of the contract, yet made an award to the counterparty of approximately $13 million plus interest for services rendered. The AGM, consistent with the arbitration ruling, maintains the view that there was no breach of contract and all contractual amounts were paid as due. The AGM therefore is undertaking an appeals process in the Court of Appeal in Ghana. A provision of $7.0 million has been recorded as of December 31, 2023 as management's best estimate to settle the claim (December 31, 2022 - $2.0 million). While the Company cannot reasonably predict the ultimate outcome of these actions, and inherent uncertainties exist in predicting such outcomes, the Company believes the estimated provision is reasonable based on the information currently available.

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4.4  Cash flows

The following table provides a summary of cash flows for the AGM on a 100% basis for the three months and years ended December 31, 2023 and 2022:

a) Cash flows from operating activities

The increase in operating cash flows during the three months and year ended December 31, 2023 was largely driven by higher realized gold prices and lower working capital tie-up.

b) Cash used in investing activities

During Q4 2023, the AGM invested $22.3 million in additions to MPP&E, compared to $5.7 million in Q4 2022, and earned $1.4 million of interest on cash balances. Total cash expenditure on MPP&E during the quarter included $18.8 million of sustaining capital related primarily to raising the height of the TSF, implementation of a water treatment system at the TSF and waste stripping at Abore. Development and exploration capital expenditure was $3.5 million primarily related to Abore site preparations and haul road diversions and Mineral Resource conversion drilling at Abore.

The increase in cash flows invested in MPP&E in Q4 2023 resulted from capital investments to execute the AGM’s LOM plan as outlined in the 2023 Technical Report, which included higher sustaining capital expenditures ($14.9 million increase) and higher development capital ($1.7 million increase) relative to Q4 2022.

During the year ended December 31, 2023, the AGM invested $55.3 million in additions to MPP&E, compared to $17.2 million in the comparative period of 2022, and earned $4.6 million of interest on cash balances. Total cash expenditure on MPP&E during 2023 included $41.9 million of sustaining capital related mainly to raising the height of the TSF, implementation of a water treatment system and waste stripping at Abore, and $13.4 million of development and exploration capital expenditure for site preparations and haul road construction at Abore, Nkran South extension drilling and Abore conversion and infill drilling.

The increase in cash flows invested in MPP&E in 2023 resulted from higher sustaining capital expenditures ($30.9 million increase) related to raising the height of the TSF, implementation of a water treatment system and waste stripping at Abore, and higher development and exploration capital ($7.2 million increase) related to drilling programs at Nkran South and Abore, and development activities to support a restart of mining at Abore.

c) Cash used in financing activities

For the three months ended December 31, 2023, cash used in financing activities related to lease payments on the JV's mining service contract as well as reclamation bond deposits.

For the year ended December 31, 2023, cash used in financing activities related to lease payments on the JV's mining service contract, fees associated with the JV's revolving credit facility ("RCF") and reclamation bond deposits.

The increase in cash used in financing activities during Q4 2023 relative to Q4 2022 was due to higher lease payments on mining contracts and payment of reclamation bond deposits.

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The decrease in cash used in financing activities during the year ended December 31, 2023, relative to the comparative period, was due to the temporary cessation of mining activities in 2022 resulting in lower mining contractor lease payments in the current year.

d) Liquidity position

In October 2019, the JV entered into a $30.0 million RCF with Rand Merchant Bank ("RMB"). During the year ended December 31, 2022, the maturity date of the RCF was extended to September 30, 2023 (with utilization subject to credit review) and was subject to a facility maintenance fee of 0.70% per annum.  The JV is currently in discussions with RMB to extend the term of the RCF.

As at December 31, 2023, the JV held cash and cash equivalents of $138.7 million, $5.7 million in gold sales receivables and $5.1 million in gold on hand. This compares to December 31, 2022 when the JV held $91.3 million in cash and cash equivalents, $2.7 million in receivables from gold sales and $3.6 million in gold on hand. The Company does not control the funds of the JV. The liquidity of the Company is further discussed in section "7. Liquidity and capital resources".

e) Gold price hedges

During the year ended December 31, 2023, the AGM entered into ZCCs to mitigate gold price risk during a period of elevated capital investment. All gold hedges in 2023 expired unutilized.

As of the date of this MD&A, the AGM has entered into ZCCs covering approximately 50% of the AGM's forecast gold production for the first half of 2024 with put strikes of $1,900/oz and call strikes between $2,097/oz to $2,173/oz. The January 2024 ZCCs expired unutilized.

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5. Results of the Company

5.1   Financial performance

The following table is a summary of the Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company for the three months ended December 31, 2023 and 2022 and the years ended December 31, 2023, 2022 and 2021.

a) Share of net income related to the AGM JV

For the three months and year ended December 31, 2023, the Company recognized its 45% interest in the JV's net earnings which amounted to $1.7 million and $31.7 million, respectively, compared to $46.5 million in the comparative periods of 2022. The Company did not recognize its share of the JV's net income from Q1 2022 to Q3 2022 as the recoverable amount of the Company's investment in the JV was estimated to be nil at March 31, 2022, June 30, 2022 and September 30, 2022, which resulted in the amount recognized in Q4 2022 to be higher than normal.

b) Service fee earned as operators of the AGM JV

Under the terms of the Joint Venture Agreement ("JVA"), the Company is the operator of the AGM and, in consideration for managing the operations of the mine, currently receives a gross annual service fee from the JV of $7.3 million (originally $6.0 million per annum, but adjusted annually for inflation). For the three months and year ended December 31, 2023, the Company earned a gross service fee of $1.8 million (less withholding taxes payable in Ghana of $0.3 million) and $7.2 million (less withholding taxes payable in Ghana of $1.4 million), respectively.

During the three months and year ended December 31, 2022, the Company earned a gross service fee of $1.8 million (less withholding taxes of $0.4 million) and $6.8 million (less withholding taxes of $1.4 million), respectively. The increase in the gross service fee during 2023 was due to an annual inflationary adjustment made in Q3 2023.

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c) G&A expenses

G&A expenses for the three months and years ended December 31, 2023 and 2022 comprised the following:

G&A expenses in Q4 2023 were $2.6 million higher than Q4 2022 primarily due to a $2.3 million increase in share-based compensation expense resulting from an increase in the fair value of cash‐settled long‐term incentive plan awards linked to the Company's share price. Wages and benefits were higher in Q4 2023 due to a higher accrual for short-term incentive compensation.

G&A expenses in 2023 were $4.2 million higher than 2022 mainly due to a $4.5 million increase in share-based compensation expense resulting from an increase in the fair value of cash‐settled long‐term incentive plan awards linked to the Company's share price and the vesting of the related awards over the year. Additionally, 2022 share‐based compensation expense was reduced by awards forfeited resulting from employee resignations. The increase in share-based compensation expense was partly offset by lower audit fees in 2023.

d) E&E expenditures

E&E expenses for the three months and year ended December 31, 2023 were $0.9 million lower and $0.6 million higher than the comparative periods in 2022, respectively.  E&E expense was higher in 2023 due to a Phase 1 drilling campaign undertaken on the Company's wholly owned Asumura property in Ghana, which was initiated in Q4 2022 completed in the first half of 2023.

e) Finance income

Finance income includes changes in the fair value of the Company's preferred share investment in the JV and interest earned on cash and short-term investments with maturities less than 90 days. For the three months and year ended December 31, 2023, the Company recognized a $3.9 million downward and a $3.4 million upward fair value adjustment, respectively, on its preferred shares in the JV (three months and year ended December 31, 2022 - a $22.2 million downward fair value adjustment ($16.6 million through finance income and $5.6 million through finance expense) and a $5.6 million downward fair value adjustment through finance expense, respectively). The upward fair value adjustment on preferred shares in 2023 related to an earlier time period of expected cash distributions and a change in forecast timing of distributions.

Relative to the comparative periods in 2022, interest earned on cash balances and short-term investments was $0.2 million and $1.9 million higher during the three months and year ended December 31, 2023, respectively, due to rising interest rates.

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6. Selected quarterly financial data

The following table provides a summary of unaudited financial data for the last eight quarters. Except for basic and diluted income (loss) per share, the totals in the following table are presented in thousands of US dollars.

 

		2023								2022
		Q4		Q3		Q2		Q1		Q4		Q3		Q2			Q1
		$		$		$		$		$		$		$			$
Share of net income related to joint venture		1,728		9,628		11,007		9,307		46,517		-		-			-
Service fee earned as operators of joint venture		1,463		1,448		1,418		1,418		1,418		1,381		1,307			1,307
General and administrative expenses		(5,419	)	(2,869	)	(3,148	)	(3,850	)	(2,854	)	(3,490	)	(2,004	)		(2,752	)
Exploration and evaluation expenditures		(43	)	(81	)	(472	)	(1,413	)	(938	)	(281	)	(55	)		(137	)
(Loss) income from operations and joint venture		(2,271	)	8,126		8,805		5,462		44,143		(2,390	)	(752	)		(1,582	)
Impairment reversal on investment in joint venture		-		-		-		-		7,631		-		-			-
Impairment of exploration and evaluation assets		-		-		-		-		(1,628	)	-		-			-
Other (expense) income		(3,487	)	3,263		3,156		3,031		(21,646	)	3,670		13,318			45
Net (loss) income for the period		(5,758	)	11,389		11,961		8,493		28,500		1,280		12,566			(1,537	)
Basic and diluted (loss) income per share		($0.03	)	$0.05		$0.05		$0.04		$0.13		$0.01		$0.06			($0.01	)
Adjusted net (loss) income for the period1		(5,758	)	11,389		11,961		8,493		(6,010	)	1,280		12,566			(1,537	)
Adjusted basic and diluted (loss) income per share1		($0.03	)	$0.05		$0.05		$0.04		($0.03	)	$0.01		$0.06			($0.01	)
EBITDA1		(2,554	)	8,161		8,870		5,519		50,205		(2,378	)	(727	)		(1,534	)

The results of the Company are heavily influenced by its share of profits and losses related to the JV, which is directly related to the underlying performance of the AGM.

From Q1 2022 to Q3 2022, the Company did not recognize its share of the JV’s net earnings as the recoverable amount of the Company’s equity investment in the JV was estimated to be nil during those periods. Other income for Q2 2022 and Q3 2022 includes a $13.2 million and a $3.4 million positive fair value adjustment on the Company’s preferred shares in the JV, respectively, largely driven by strong operating performance resulting in improved working capital of the AGM.

During Q4 2022, as a result of the JV’s reinstatement of Mineral Reserves in the AGM’s 2023 Technical Report, the Company recommenced the recognition of its share of the JV’s net earnings and also recognized a $7.6 million impairment reversal on its equity investment in the JV, leading to a significant increase in net income over the prior quarters. Other expense in Q4 2022 includes a $22.2 million negative fair value adjustment on the Company’s preferred shares in the JV resulting from a change in the timing of expected cash distributions and applying a higher discount rate to forecast preferred share redemptions primarily due to a Ghana country risk premium applied resulting from the economic conditions in the country at that time. Additionally, the Company also recognized a $1.6 million impairment on its wholly owned Mali exploration assets in Q4 2022.

During Q1 2023 to Q3 2023, improvements in net income and EBITDA¹ over prior periods are reflective of the JV’s underlying performance and rising gold price environment. The reduction in net earnings during Q4 2023 was primarily due to a $3.9 million downward fair value adjustment on the Company’s preferred shares in the JV resulting from a change in forecast timing of distributions and higher G&A expense due to higher share-based compensation expense, as described in section 5.1.c.

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7. Liquidity and capital resources

A key financial objective of the Company is to actively manage its cash balance and liquidity in order to meet the Company's strategic plans, as well as those of the JV in accordance with the JVA. The Company shares control of the JV and aims to manage the JV in such a manner as to generate positive cash flows from the AGM's operating activities in order to fund its operating, capital and project development requirements, and to return capital to the JV partners. A summary of the Company's net assets and key financial ratios related to liquidity are presented in the table below.  Note that the December 31, 2023 and December 31, 2022 balances below do not include any assets or liabilities of the JV.

		December 31, 2023			December 31, 2022
(in thousands of US dollars, except outstanding shares and options)		$			$
Cash and cash equivalents		55,270			56,111
Other current assets		1,824			2,494
Non-current assets		156,208			121,289
Total assets		213,302			179,894
Current liabilities		11,988			5,804
Non-current liabilities		396			399
Total liabilities		12,384			6,203
Total equity		200,918			173,691
Working capital		45,106			52,801
Total common shares outstanding		224,972,786			224,943,453
Total stock options outstanding		12,575,335			8,497,170
Key financial ratios
Current ratio1		4.76			10.10
Total liabilities -to-equity		0.06			0.04

Subsequent to the original JV transaction with Gold Fields, other than the JV service fee, the Company has no current direct sources of revenue and any cash flows generated by the AGM are not within the Company's exclusive control as the distribution of cash from the JV is governed by the JVA. The JVA provides that "Distributable Cash" will be calculated and distributed quarterly, if available. Further information regarding the definition of "Distributable Cash" is included in section "8.3 EBITDA and Adjusted EBITDA". However, given the Company's cash balance and interest earned thereon, zero debt and ongoing service fee receipts from the JV, the Company believes it is in a position to meet all working capital requirements, contractual obligations and other financial commitments as they fall due (see "Commitments" below) during the next 12 months, including consideration payable to Gold Fields following the closing of the Acquisition to acquire their 45% interest in the AGM JV.

On December 21, 2022, the Company filed a final short form base shelf prospectus (the "Prospectus") under which the Company may sell from time-to-time common shares, warrants, subscription receipts, units, debt securities and/or share purchase contracts of the Company, up to an aggregate of $300 million.  The Prospectus has a term of 25-months from the filing date. As of the date of this MD&A, no securities have been issued under the Prospectus.

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7.1  Commitments

The following table summarizes the Company's contractual obligations as at December 31, 2023 and December 31, 2022. Note the following table excludes commitments and liabilities of the JV for the periods presented.

		Within												December			December
(in thousands of US dollars)		1  year			1 - 3 years			4 - 5 years			Over 5 years			31, 2023			31, 2022
Accounts payable, accrued liabilities and payable due to related party		5,724			-			-			-			5,724			3,173
Long-term incentive plan (cash-settled awards)		6,139			318			-			-			6,457			2,716
Corporate office leases		135			90			-			-			225			348
Total		11,998			408			-			-			12,406			6,237

The Company intends to utilize cash on hand to settle the above noted commitments. In addition to the above commitments, the Company has provided various parent company guarantees related to the unfunded portion of the AGM's reclamation bonds in the amount of $8.2 million (December 31, 2022 - $5.9 million).

Refer to note 2 of the Company’s consolidated annual financial statements for the years ended December 31, 2023 and 2022 for a discussion on the consideration payable to Gold Fields under the Acquisition.

7.2  Contingencies

Due to the nature of its business, the Company and/or the JV may from time to time be subject to regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. While the Company cannot reasonably predict the ultimate outcome of any such actions, and inherent uncertainties exist in predicting such outcomes, the Company believes that the ultimate resolution of these actions is not reasonably likely to have a material adverse effect on the Company's or the JV's financial condition or future results of operations.

7.3  Cash flows

The following table provides a summary of the Company's cash flows for the three months and years ended December 31, 2023 and 2022:

		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars)		$			$			$			$
Cash provided by (used in):
Operating activities		(1,574	)		842			(3,634	)		1,784
Investing activities		759			536			2,864			1,032
Financing activities		(14	)		(31	)		(108	)		(130	)
Impact of foreign exchange on cash and cash equivalents		20			48			37			(96	)
(Decrease) increase in cash and cash equivalents during the period		(809	)		1,395			(841	)		2,590
Cash and cash equivalents, beginning of period		56,079			54,716			56,111			53,521
Cash and cash equivalents, end of period		55,270			56,111			55,270			56,111

a)  Cash (used in) provided by operating activities

During Q4 2023, the Company utilized cash flows in operations of $1.6 million (three months ended December 31, 2022 - generated cash flows from operations of $0.8 million) due to corporate head office expenses, net of JV service fee receipts.

The increase in cash used in operating activities from Q4 2022 to Q4 2023 was largely driven by a positive working capital movement in Q4 2022 due to higher accounts payable and collecting the Company's service fee receivable from the JV.

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During the year ended December 31, 2023, the Company utilized cash flows in operations of $3.6 million (year ended December 31, 2022 - generated cash flows from operations of $1.8 million) due to corporate head office expenses, net of JV service fee receipts.

The increase in cash used in operating activities from 2022 to 2023 was largely driven by collection of historical JV service fee receivables in 2022 and higher long-term incentive plan award payouts in 2023.

b)  Cash provided by investing activities

During the three months and year ended December 31, 2023, cash provided by investing activities amounted to $0.8 million and $2.9 million, respectively, and related to interest earned on cash balances and short-term investments (with maturities less than 90 days).

The increase in cash provided by investing activities during 2023 was due to higher interest rates earned on cash balances and short-term investments.

8. Non-IFRS measures

The Company has included certain non-IFRS performance measures throughout this MD&A. These performance measures are employed by management to assess the Company's operating and financial performance and to assist in business decision-making. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors and other stakeholders use this information to evaluate the Company's operating and financial performance; however, as explained elsewhere herein, 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.

The JV does not calculate this information for use by both JV partners, rather it is calculated by the Company solely for the Company's own disclosure purposes.

8.1 Operating cash costs and total cash costs per gold ounce

The Company has included the non-IFRS performance measures of operating cash costs and total cash costs per gold ounce sold on a by-product basis throughout this MD&A. The Company follows the recommendations of the Gold Institute Production Cost Standard (the "Gold Institute"). The Gold Institute, which ceased operations in 2002, was a non-regulatory body and represented a global group of suppliers of gold and gold products. The production cost standard developed by the Gold Institute remains the generally accepted standard of reporting cash costs of production by many gold mining companies. Management uses operating cash costs and total cash costs per gold ounce sold to monitor the operating performance of the JV. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, some investors use this information to evaluate the Company's performance and ability to generate cash flow. Other companies may calculate operating cash costs and total cash costs per gold ounce sold differently.

The following table provides a reconciliation of operating and total cash costs per gold ounce sold of the AGM to production costs of the AGM on a 100% basis (the nearest IFRS measure) as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022.

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		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars, except per ounce amounts)		$			$			$			$
Production costs as reported		42,900			32,518			146,805			179,849
Other adjustments 4		(5,000	)		-			(7,000	)		-
Adjusted production costs		37,900			32,518			139,805			179,849
Share-based compensation expense included in production costs		-			(1	)		142			47
By-product revenue		(183	)		(151	)		(591	)		(604	)
Total operating cash costs		37,717			32,366			139,356			179,292
Royalties		3,589			2,901			14,642			14,867
Total cash costs		41,306			35,267			153,998			194,159
Gold ounces sold		30,555			34,202			134,163			167,849
Operating cash costs per gold ounce sold ($/oz)		1,234			946			1,039			1,068
Total cash costs per gold ounce sold ($/oz)		1,352			1,031			1,148			1,157

8.2 AISC per gold ounce

In June 2013, the World Gold Council, a non-regulatory association of many of the world's leading gold mining companies established to promote the use of gold to industry, provided guidance for the calculation of "AISC per gold ounce" in an effort to encourage improved understanding and comparability of the total costs associated with mining an ounce of gold. The Company has adopted the reporting of "AISC gold ounce", which is a non-IFRS performance measure. The Company believes that the AISC per gold ounce measure provides additional insight into the costs of producing gold by capturing all of the expenditures required for the discovery, development and sustaining of gold production and allows the Company to assess its ability to support capital expenditures to sustain future production from the generation of operating cash flows. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, some investors use this information to evaluate the JV's performance and ability to generate cash flow, distribution of which is subject to the terms of the JVA. Other companies may calculate AISC per gold ounce sold differently.

AISC adjusts total cash costs for G&A expenses, reclamation cost accretion, sustaining capitalized stripping costs, sustaining capital expenditures and lease payments and interest expense on the AGM's mining and service lease agreements. Sustaining capital expenditures, capitalized stripping costs, reclamation cost accretion and lease payments and interest expense on lease agreements are not line items on the AGM's financial statements. Sustaining capital expenditures are defined as those capital expenditures which do not materially benefit annual or life of mine gold ounce production at a mine site.  A material benefit to a mine site is considered to be at least a 10% increase in annual or life of mine production, net present value, or reserves compared to the remaining life of mine of the operation. As such, sustaining costs exclude all expenditures at the AGM's new projects and certain expenditures at the AGM's operating sites which are deemed expansionary in nature. Capitalized stripping costs represent costs incurred at steady-state operations during the period; these costs are generally not considered expansionary in nature as the stripping phase is expected to take less than 12 months and resulting ore production is of a short-term duration. Reclamation cost accretion represents the growth in the AGM's decommissioning provision due to the passage of time. This amount does not reflect cash outflows, but it is considered to be representative of the periodic costs of reclamation and remediation. Lease payments on mining and service lease agreements represent cash outflows while interest expense represents the financing component inherent in the lease. Reclamation cost accretion and lease interest are included in finance expense in the AGM's results as disclosed in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022.

All-in sustaining margin per ounce is calculated as the difference between the average realized gold price for the period and AISC per gold ounce sold.  All-in sustaining margin is calculated as all-in sustaining margin per ounce multiplied by the number of gold ounces sold during the period.

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The following table provides a reconciliation of AISC of the AGM to production costs and various operating expenses of the AGM on a 100% basis (the nearest IFRS measure), as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022.

		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars except per ounce amounts)		$			$			$			$
Total cash costs (as reconciled above)		41,306			35,267			153,998			194,159
General and administrative expenses - JV 5		745			387			2,698			2,752
Sustaining capital expenditures (see table below)		18,826			3,841			41,886			10,978
Reclamation cost accretion		574			708			2,394			2,527
Sustaining lease payments (see table below)		839			508			1,641			15,247
Interest on lease liabilities		808			14			1,601			207
All-in sustaining cost		63,098			40,725			204,218			225,870
Gold ounces sold		30,555			34,202			134,163			167,849
All-in sustaining cost per gold ounce sold ($/oz) - JV		2,065			1,191			1,522			1,346
Average realized price per gold ounce sold ($/oz)		1,942			1,686			1,908			1,767
All-in sustaining margin ($/oz)		(123	)		495			386			421
All-in sustaining margin		(3,758	)		16,930			51,787			70,664

For the three months and year ended December 31, 2023, the Company incurred corporate G&A expenses, net of the JV service fee, of $0.8 million and $3.2 million, respectively, which excludes share-based compensation expense and depreciation expense totaling $3.1 million and $6.3 million, respectively (three months and year ended December 31, 2022 - G&A expenses, net of the JV service fee, of $0.6 million and $3.9 million, respectively, which excludes share‐based compensation expense and depreciation expense totaling $0.8 million and $1.8 million, respectively).

The Company's attributable gold ounces sold for the three months and year ended December 31, 2023 were 13,750 and 60,373, respectively (three months and year ended December 31, 2022 - 15,391 and 75,532 gold ounces, respectively), resulting in additional AISC for the Company of $62/oz and $54/oz for the periods presented, respectively, in addition to the AGM's AISC presented in the above table (three months and year ended December 31, 2022 -  $42/oz and $52/oz, respectively).

The following table reconciles sustaining capital expenditures to cash flows used in investing activities of the AGM on a 100% basis (the nearest IFRS measure), as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022.

		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars)		$			$			$			$
Cash used in investing activities - JV		20,934			5,099			50,706			16,452
Less:
Non-sustaining capital expenditures		(3,459	)		(1,806	)		(13,383	)		(6,167	)
Change in AP related to capital expenditures not included in AISC		1			(13	)		1			(87	)
Interest earned on cash balances		1,350			561			4,562			780
Total sustaining capital expenditures		18,826			3,841			41,886			10,978

Refer to section "4.1(e) Total cash costs and AISC" for a discussion on non-sustaining capital expenditures.

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The following table reconciles sustaining lease payments to cash flows used in financing activities of the AGM on a 100% basis (the nearest IFRS measure), as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022.

		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars)		$			$			$			$
Cash used in financing activities - JV		1,236			531			2,209			15,590
Less:
Fees paid on revolving credit facility		(51	)		(23	)		(222	)		(343	)
Reclamation bond deposits		(346	)		-			(346	)		-
Total sustaining lease payments		839			508			1,641			15,247

8.3 EBITDA and Adjusted EBITDA

Earnings before interest, taxes, depreciation and amortization ("EBITDA") provides an indication of the Company's continuing capacity to generate income from operations before considering the Company's financing decisions and costs of amortizing capital assets. Accordingly, EBITDA comprises net income excluding interest expense, interest income, amortization and depletion and income taxes. Adjusted EBITDA adjusts EBITDA to exclude non-recurring items and non-cash items and includes the calculated Adjusted EBITDA of the JV ("Adjusted EBITDA"). Other companies may calculate EBITDA and Adjusted EBITDA differently. The JV does not calculate this information for use by both JV partners, rather it is calculated by the Company solely for the Company's own disclosure purposes.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA attributable to the Company based on its economic interest in the JV to net income (the nearest IFRS measure) of the Company per the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022. All adjustments are shown net of estimated income tax.

		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars )		$			$			$			$
Net (loss) income for the period		(5,758	)		28,500			26,085			40,809
Add back (deduct):
Depreciation expense		36			36			143			146
Finance income		3,163			16,046			(6,255	)		(1,036	)
Finance expense		5			5,623			23			5,647
EBITDA for the period		(2,554	)		50,205			19,996			45,566
Add back (deduct):
Adjustment for non-cash long-term incentive plan compensation		321			219			1,123			119
Share of net income related to joint venture		(1,728	)		(46,517	)		(31,670	)		(46,517	)
Impairment reversal on investment in joint venture		-			(7,631	)		-			(7,631	)
Impairment loss on exploration and evaluation assets		-			1,628			-			1,628
Galiano's attributable interest in JV Adjusted    EBITDA (below)		4,059			10,265			37,305			35,662
Adjusted EBITDA for the period		98			8,169			26,754			28,827

The following table reconciles the JV's EBITDA and Adjusted EBITDA for the three months and years ended December 31, 2023 and 2022 to the results of the JV as disclosed in note 10 to the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022.

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		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars)		$			$			$			$
JV net income for the period		3,664			83,712			69,940			103,223
Add back (deduct):
JV depreciation and depletion expense		4,350			3,222			13,613			30,767
JV finance income		(1,381	)		(567	)		(4,602	)		(801	)
JV finance expense		3,226			1,036			5,589			6,471
JV EBITDA for the period		9,859			87,403			84,540			139,660
Add back (deduct):
Impairment reversal on MPP&E		-			(63,200	)		-			(63,200	)
JV severance costs		-			(885	)		-			18,035
JV lease payments (capitalized leases)		(839	)		(508	)		(1,641	)		(15,247	)
JV Adjusted EBITDA for the period		9,020			22,810			82,899			79,248
Galiano's attributable interest in JV Adjusted EBITDA for the period		4,059			10,265			37,305			35,662

While the above figure reflects an estimate of the Company's "attributable interest" in Adjusted EBITDA generated from the AGM, cash and cash equivalents held by the JV are not within the Company's exclusive control as the distribution of cash from the JV is governed by the JVA. The JVA provides that "Distributable Cash" will be calculated and distributed quarterly, if available. "Distributable Cash" means an amount to be calculated at each calendar quarter-end, as being the lesser of (i) cash and cash equivalents which are projected at that time to be surplus to all the JV companies taken together, after providing for all amounts anticipated to be required to be paid during a period of at least the ensuing two calendar quarters in order to pay the net obligations (net of anticipated revenues during such two subsequent quarters) which will arise out of the operations contemplated by the current approved program and budget while also providing for retention of a reasonable amount of cash and cash equivalents for working capital, contingencies and reserves, all of which factors shall be considered by the management committee; and (ii) the maximum amount permissible for distributions to shareholders of a particular JV company at that time in accordance with applicable law and the terms of any third party loan or other agreement in effect which limits distributions from the JV companies ("Distributable Cash"). Distributable Cash is to be paid out by the JV in certain priority generally to interest and principal of loans, redemption of the preferred shares issued by Shika Group Finance (of which shares each partner holds 132.4 million preferred shares as at December 31, 2023, after redemptions paid by the JV in 2019, 2020 and 2021) and finally as dividends on common shares of Asanko Gold Ghana Ltd. (which the JV partners own 45% each and the Government of Ghana holds 10%).

8.4 Free Cash Flow

The Company uses the financial measure Free Cash Flow, which is a non-IFRS financial measure, to supplement information in its consolidated annual financial statements ("Free Cash Flow"). Free Cash Flow does not have any standardized meaning prescribed under IFRS, and therefore it may not be comparable to similar measures employed by other companies. The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the JV's performance with respect to its operating cash flow capacity to meet non-discretionary outflows of cash. 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 services contractors for leases capitalized under IFRS 16.

The following table provides a reconciliation of Free Cash Flow of the AGM to its cash flows from operating activities on a 100% basis (the nearest IFRS measure), as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2023 and 2022.

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		Three months ended December 31,						Year ended December 31,
		2023			2022			2023			2022
(in thousands of US dollars )		$			$			$			$
Cash flows from operating activities - JV		24,058			11,135			100,720			75,479
Less:
Cash flows used in investing activities - JV		(20,934	)		(5,099	)		(50,706	)		(16,452	)
Lease payments (capitalized leases)		(839	)		(508	)		(1,641	)		(15,247	)
JV Free Cash Flow for the period		2,285			5,528			48,373			43,780

9. Summary of outstanding share data

As of the date of this MD&A, there were 224,997,453 common shares of the Company issued and outstanding and 12,570,668 stock options outstanding (with exercise prices ranging between C$0.53 and C$2.20 per share). The fully diluted outstanding share count at the date of this MD&A is 237,568,121.

10.  Related party transactions

As at December 31, 2023, the Company's related parties are its subsidiaries and the JV, and key management personnel (being directors and executive officers of the Company). During the normal course of operations, the Company enters into transactions with its related parties. During the three months and year ended December 31, 2023, all related party transactions were in the normal course of business including compensation payments to key management personnel.

During the three months and year ended December 31, 2023, other than compensation paid to key management personnel, the only related party transactions were with the JV in respect of the Company's service fee as operator of the AGM and costs incurred by the JV on behalf of the Company in respect of its wholly owned Asumura property. For the three months and year ended December 31, 2023, the JV service fee was comprised of a gross service fee of $1.8 million and $7.2 million, respectively, less withholding taxes payable in Ghana of $0.3 million and $1.4 million (three months and year ended December 31, 2022 - gross service fee of $1.8 million and $6.8 million, respectively, less withholding taxes payable in Ghana of $0.4 million and $1.4 million, respectively). As at December 31, 2023, the Company had a $1.0 million receivable owing from the JV in relation to the Company's service fee earned for being the operator of the JV (December 31, 2022 - $1.7 million).

During the three months and year ended December 31, 2023, the JV provided administrative and exploration services on the Company's Asumura property totaling nil and $0.2 million, respectively (three months and year ended December 31, 2022 - $0.1 million and $0.3 million, respectively). As at December 31, 2023, the Company had a payable due to the JV in the amount of $3.2 million relating to reimbursement for third party supplier costs and administrative and exploration services performed by the JV on the Company's wholly owned Asumura property in Ghana (December 31, 2022 - $1.4 million). The Company has no other contractual or other commitments related to these services.

In addition to the service fee earned as operator of the JV and administrative and exploration services performed by the JV on the Company's Asumura property in Ghana, the Company's related party transactions included compensation paid to key management personnel, which was as follows for the years presented:

		Year ended December 31,
		2023			2022
		$			$
Salaries and benefits		1,873			1,942
Share-based compensation		4,671			1,343
Total compensation		6,544			3,285

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11.  Critical accounting policies and estimates

11.1 Estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Management believes the estimates and assumptions used in the consolidated annual financial statements are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows. The Company's significant accounting judgements and estimates are presented in note 6 of the audited consolidated annual financial statements for the years ended December 31, 2023 and 2022.

There were no material changes to the Company's or JV's significant accounting judgements or estimates during the year ended December 31, 2023, except as disclosed in the Company's audited consolidated annual financial statements for the years ended December 31, 2023 and 2022.

11.2 Changes in Accounting Policies including Initial Adoption

(a) Accounting standards adopted during the year

The Company adopted the following new IFRS standard effective January 1, 2023. The nature and impact of the new standard on the Company's current period financial statements, if any, are outlined below. Adoption of the standard was made in accordance with the applicable transitional provisions.

Amendments to IAS 1

On February 12, 2021, the IASB issued Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2, Making Materiality Judgements). The amendments help companies provide useful accounting policy disclosures and include requiring companies to disclose their material accounting policies rather than their significant accounting policies; clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and as such need not be disclosed; and clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material to a company's financial statements. The amendments are effective for annual periods beginning on or after January 1, 2023, with early adoption permitted. The amendments to IAS 1 did not have a material impact on the Company's annual consolidated financial statements for the year ended December 31, 2023.

(b) Accounting standards and amendments issued but not yet adopted

There were no accounting standards or amendments to existing standards issued but not yet adopted as of December 31, 2023 that are expected to have a material effect on the Company's or the JV's financial statements in the future.

12.  Risks and uncertainties

12.1 Financial instruments and risk

The Company's business, operations and future prospects are subject to significant risks. For details of these risks, refer to the risk factors set forth in the Company's most recently filed AIF for the year ended December 31, 2022, which can be found under the Company's SEDAR+ profile at www.sedarplus.ca, and the Company's most recently filed Form 40-F Annual Report for the year ended December 31, 2022, which can be found on EDGAR at www.sec.gov.

Management is not aware of any significant changes to the risks identified in the Company's most recently filed AIF, with the exception of risks related to the restart of mining which have reduced due to a successful restart of mining on October 1, 2023, risks related to the Company's ability to close the Acquisition and risks related to the expected benefits of the Acquisition, nor has the Company's mitigation of those risks changed significantly during the year ended December 31, 2023, except for the ZCCs gold hedging strategy previously mentioned.  Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair the business, operations, prospects and share price of the Company and/or the JV. If any of the risks actually occur, the business of the Company and/or the JV may be harmed, and its financial condition and results of operations may suffer significantly.

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a) Financial instruments

As at December 31, 2023, the Company's financial instruments consist of cash and cash equivalents, accounts receivable, receivable due from related party, preferred shares in the JV, accounts payable and accrued liabilities, related party payables and long-term incentive plan liabilities. The Company classifies cash and cash equivalents, accounts receivable and related party receivables as financial assets measured at amortized cost, while accounts payable and accrued liabilities and related party payables are classified as other financial liabilities and measured at amortized cost. The preferred shares in the JV and long-term incentive plan liabilities are a financial asset and a financial liability, respectively, measured at fair value through profit or loss, and both fall within Level 3 of the fair value hierarchy. Refer to note 9 of the Company's audited consolidated annual financial statements for the year ended December 31, 2023 for discussion on the significant assumptions made in determining the fair value of the preferred shares.

The credit risk, liquidity risk and market risk associated with the Company's financial instruments are disclosed in note 22 of the Company's consolidated annual financial statements for the years ended December 31, 2023 and 2022. There were no material changes to credit risk, liquidity risk or market risk, nor how the Company manages these risks, during the three months and year ended December 31, 2023.

As at December 31, 2023, the carrying and fair values of the Company's financial instruments by category are as follows:

		Fair value through profit or loss			Amortized cost			Carrying value			Fair value
		$			$			$			$
Financial assets:
Cash and cash equivalents		-			55,270			55,270			55,270
Receivables and receivable due from related party		-			1,060			1,060			1,060
Preferred shares in AGM JV		70,165			-			70,165			70,165
Total financial assets		70,165			56,330			126,495			126,495
Financial liabilities:
Accounts payable, accrued liabilities and payable due to related party1		6,139			5,724			11,863			11,863
Long-term incentive plan liabilities		318			-			318			318
Lease liability		-			203			203			203
Total financial liabilities		6,457			5,927			12,384			12,384

13.  Internal control

13.1  Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures are designed to provide reasonable assurance that all relevant information gathered and reported to senior management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), on a timely basis so that appropriate decisions can be made regarding public disclosure. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management of the Company, with the participation of the CEO and the CFO, have evaluated the design and operating effectiveness of the Company's disclosure controls and procedures and the design as required by Canadian and United States securities legislation, and have concluded that, as of December 31, 2023, such disclosure controls and procedures were effective.

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13.2  Internal Control over Financial Reporting

The Company's management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision of the CEO and CFO, the Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company's internal control over financial reporting includes policies and procedures that:

• pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that the Company's receipts and expenditures are made only in accordance with authorizations of management and the Company's Board of Directors; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the Company's consolidated financial statements.

The Company's management, with the participation of its CEO and CFO, assessed the effectiveness of the Company's internal control over financial reporting. In making this assessment, management used the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management and the CEO and CFO have concluded that, as of December 31, 2023, the Company's internal control over financial reporting was effective.

13.3 Changes in Internal Control over Financial Reporting

There has been no change in the Company's internal control over financial reporting during the three months ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

13.4 Limitations of controls and procedures

The Company's management, including the CEO and CFO, believes that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

14.  Qualified Persons

The exploration information in this MD&A has been reviewed and approved by Mr. Chris Pettman, P.Geo, Vice President Exploration of Galiano. For further information regarding the exploration information in this MD&A, including the Quality Control and Quality Assurance and data verification measures taken with respect to such exploration information, please see the Company's news release dated October 25, 2023 and filed on the Company's SEDAR+ profile at www.sedarplus.ca. All other scientific and technical information contained in this MD&A has been approved by Mr. Richard Miller, P.Eng., Vice President Technical Services of Galiano. Mr. Pettman and Mr. Miller are "Qualified Persons" as defined by NI 43-101.

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15.  Cautionary statements

15.1 Cautionary statement on forward-looking information

The Company cautions readers regarding forward-looking statements found in this MD&A and in any other statement made by, or on behalf of the Company. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", "estimates", "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", or "might" occur. Forward-looking statements are made based on management's beliefs, estimates and opinions and are given only as of the date of this MD&A. Such statements may constitute "forward-looking information" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation.

Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements reflect the Company's current views with respect to expectations, beliefs, assumptions, estimates and forecasts about the business of the JV and the Company and the industry and markets in which the JV and the Company operate.  Forward-looking statements include, but are not limited to, statements with respect to:

• the ability of the Company to satisfy the conditions required to close the Acquisition;
• the receipt of all necessary regulatory approvals in connection with the Acquisition;
• the expected timing for closing the Acquisition;
• the consideration payable in connection with the Acquisition;
• the entering into an amended investor rights agreement with Gold Fields, upon closing of the Acquisition;
• the future price of gold;
• the operating plans for the AGM under the JV between the Company and Gold Fields;
• the estimation of Mineral Reserves and Mineral Resources;
• the timing and amount of estimated future production from the AGM, including production rates and gold recovery;
• operating costs with respect to the operation of the AGM;
• capital expenditures that are required to sustain and expand mining activities;
• the meeting of working capital requirements, contractual obligations and other financial commitments as they fall due;
• the timing, costs and project economics associated with the JV's development plans for the AGM;
• estimates regarding the AGM's consumption of key reagents and consumables;
• the availability of capital to fund the JV's expansion plans and to fund the Company's contributions to the JV's development plans;
• mine restart plans and timing thereof;
• any additional work programs to be undertaken by the Company;
• performance of stockpiled ore above management's forecast;
• timing of delivery of higher grade ore from the Abore pit;
• the Company's planned and future drilling programs, including at Abore, Midras South, Nkran, Akwasiso, Gyagyatreso and Kaniago West;
• the ability of the AGM to maintain current inventory levels;
• the timing of the development of new deposits;
• success of exploration activities;
• permitting timelines;
• renewal of exploration licenses;
• hedging practices;
• currency exchange rate fluctuations;
• central bank interest rate forecast;
• use of the IMF Loan, including the approval of a second tranche;
• possible extension of the RCF;
• estimate of a legal provision;
• requirements for additional capital;
• timing of expected cash distributions;

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• operating cash flows;
• government regulation of mining operations;
• regulatory investigations, claims, lawsuits and other proceedings;
• environmental risks and remediation measures;
• advancement and implementation of the Company's sustainability program;
• preparation and timing of submission of report on measures taken by the Company to identify and address labour risks in its supply chain;
• timing of announcement and implementation of the SEC's ESG disclosure rules;
• climate-related and sustainability disclosure standards and obligations;
• changes in accounting policies and resulting impact on disclosures; and
• usefulness of certain non-IFRS measures.

Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions, which are difficult to predict.  These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. The JV and the Company's actual future results or performance are subject to certain risks and uncertainties, including but not limited to:

• Mineral Reserve and Mineral Resource estimates may change and may prove to be inaccurate;
• metallurgical recoveries may not be economically viable;
• life of mine estimates are based on a number of factors and assumptions and may prove to be incorrect;
• risks related to the Company's ability to close the Acquisition;
• risks related to the expected benefits of the Acquisition;
• 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 due to illegal mining activities;
• the AGM'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 its common shares;
• 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;

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• 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;
• 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 AIF.

Forward-looking statements are necessarily based upon estimates and assumptions, which are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and many of which, regarding future business decisions, are subject to change. Assumptions underlying the Company's expectations regarding forward-looking statements or information contained in this MD&A include, among others:

• 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;

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• the global financial markets and general economic conditions will be stable and prosperous in the future;
• the AGM will not experience any significant uninsured production disruptions that would materially affect revenues;
• 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.

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 MD&A if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.

Historical results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate future results from operations. Historically, the Company's operations have been primarily funded from debt and share issuances, as well as the exercise of stock options. The Company has had and may have future capital requirements in excess of its currently available resources. In the event the Company's plans change, its assumptions change or prove inaccurate, or its capital resources in addition to projected cash flow, if any, prove to be insufficient to fund its future operations, the Company may be required to seek additional financing.

Although the Company has to-date been able to raise capital, there can be no assurance that the Company will have sufficient financing to meet its future capital requirements or that additional financing will be available on terms acceptable to the Company in the future.

15.2 Cautionary note for United States investors

All technical disclosure in this MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ materially from the requirements of United States securities laws applicable to domestic Unites States issuers.  The terms "mineral reserves", "proven mineral reserves", "probable mineral reserves", "mineral resources", "measured mineral resources", "indicated mineral resources" and "inferred mineral resources" used in this MD&A are in reference to the mining terms defined in the Canadian Institute of Mining, Metallurgy and Petroleum Standards, as adopted by National Instrument 43-101 Standards of Disclosure for Mineral Projects. The Company's disclosure of mineralization and other technical information herein may differ significantly from the information that would be disclosed had the Company prepared the reserve and resource estimates under the standards adopted under the rule of the SEC applicable to domestic United States issuers. Accordingly, the disclosure in this MD&A regarding the JV's mineral properties is not comparable to the disclosure of United States issuers subject to the SEC's mining disclosure requirements.

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Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement on Form F-10 (File no. 333-268945) of our report dated February 16, 2024, with respect to the consolidated financial statements of Galiano Gold Inc., included in this Current Report on Form 6-K. 

/s/ Ernst and Young LLP

Chartered Professional Accountants

February 16, 2024

Vancouver, Canada

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

Galiano Gold Inc.

We consent to the use of our report dated March 28, 2023 on the consolidated financial statements of Galiano Gold Inc. (the Company) which comprise the consolidated statement of financial position as of December 31, 2022, the related consolidated statements of operations and comprehensive income, changes in equity and cash flow the year then ended, and the related notes (collectively the consolidated financial statements) which is included in Exhibit 99.4 to the Company's current report on Form 6-K dated February 16, 2024 furnished to the United States Securities and Exchange Commission.

We also consent to the incorporation by reference of such report in the Registration Statement (No. 333-268945) on Form F-10 of the Company.

/s/ KPMG LLP

Chartered Professional Accountants

Vancouver, Canada

February 16, 2024

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GALIANO GOLD REPORTS Q4 AND FULL YEAR
2023 OPERATING AND FINANCIAL RESULTS

Vancouver, British Columbia, February 16, 2024 - Galiano Gold Inc. ("Galiano" or the "Company") (TSX, NYSE American: GAU) is pleased to report its fourth quarter ("Q4") and full year 2023 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. On December 21, 2023, the Company announced it had reached an agreement with Gold Fields to acquire its 45% interest in the AGM.

All financial information contained in this news release is reported in United States dollars.

Consolidation of AGM

• On December 21, 2023, the Company announced it had entered into a binding share purchase agreement ("SPA") with subsidiaries of Gold Fields to acquire its 45% interest in the AGM JV (the "Acquisition"). The objective of the Acquisition is to consolidate ownership of the AGM and establish Galiano as growing gold producer with robust financial strength, owning and operating one of the largest gold mines in West Africa. Upon closing of the Acquisition, the Company will own a 90% interest in the AGM with the Government of Ghana continuing to hold a 10% free-carried interest.

The Acquisition is expected to close in the first quarter of 2024, pending receipt of customary regulatory approvals in Ghana.

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

• Safety: There were no lost-time injuries and one total recordable injury recorded during the fourth quarter, resulting in 12‐month rolling LTI and TRI frequency rates of 0.50 and 1.65 per million employee hours worked, respectively.

• Production performance: Gold production of 31,947 ounces during the fourth quarter. 2023 annual gold production of 134,077 ounces, exceeding the top end of upward revised guidance of between 120,000 to 130,000 ounces.

• Milling performance: Achieved mill throughput of 1.5 million tonnes (“Mt”) of ore at a grade of 0.8 grams per tonne (“g/t”) during the fourth quarter. Metallurgical recovery in Q4 2023 was 84%. Mill throughput for 2023 totaled 6.1 Mt, a new record for the AGM.

• Cost performance: Total cash costs¹ of $1,352 per gold ounce (“/oz”) and all-in sustaining costs¹ (“AISC”) of $2,065/oz for the three months ended December 31, 2023. Full year 2023 AISC¹ amounted to $1,522/oz, at the lower end of downward revised guidance of between $1,500/oz to $1,600/oz. Q4 2023 AISC¹ was elevated as anticipated due to higher sustaining capital expenditures related to Abore waste stripping and implementation of a water treatment system at the tailings storage facility (“TSF”).

• Cash flow generation: The JV generated positive cash flow from operations of $24.1 million and Free Cash Flow¹ of $2.3 million during the fourth quarter. Full year 2023 Free Cash Flow¹ totaled $48.4 million.

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¹ See "8. Non-IFRS measures"

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• Financial performance: Gold revenue of $59.3 million generated from 30,555 gold ounces sold at an average realized price of $1,942/oz during the fourth quarter. Net income of $3.7 million and Adjusted EBITDA¹ of $9.0 million during the fourth quarter.

• Restart of mining: Hard rock mining operations at the AGM restarted on October 1, 2023, with waste stripping activities ongoing. The Abore pit remains on track to deliver higher grade ore to the processing plant, as compared to the current stockpile processing, in Q2 2024.

• Exploration focus: Infill drilling at Abore, designed to convert inferred Mineral Resources to the indicated Mineral Resource category, and early stage drill testing at the Gyagyatreso prospect were completed. Other 2023 exploration programs included drilling at Midras South to advance the deposit towards a potential maiden Mineral Reserve estimate, and at Nkran to support potential Mineral Resource upgrades. Preliminary exploration work was also undertaken across the AGM’s regional greenfields targets – with focus on the Aburi and Sky Gold concessions.

• Robust liquidity: $138.7 million in cash and cash equivalents, $5.7 million in gold sales receivables, $5.1 million in gold on hand and no debt as of December 31, 2023.

Galiano Highlights:

• Consolidation of AGM JV: On December 21, 2023, the Company announced the execution of the SPA to acquire Gold Fields' 45% interest in the AGM JV.

• Stable balance sheet: Cash and cash equivalents of $55.3 million as at December 31, 2023 and no debt.

• Earnings: Net loss of $5.8 million or $0.03 per common share during the fourth quarter, which includes the Company’s share of the JV’s net earnings for the quarter and a downward fair value adjustment on the Company’s preferred shares in the JV.

“The AGM continues to perform well, with full year 2023 gold production surpassing the upper end of guidance of between 120,000 to 130,000 ounces,” stated Matt Badylak, Galiano’s President and Chief Executive Officer. “Strong production enabled the mine to continue to generate cash during the fourth quarter despite the planned elevated capital expenditure. With mining operations at the AGM having recommenced during the quarter, Abore is on track to deliver higher grade ore to the processing plant by the second quarter of 2024. Health and safety remain a top priority throughout the organization, and I am encouraged by the progress and execution of safety measures and strategies at the AGM.

At the corporate level, I am very pleased with the announcement of our acquisition of Gold Fields' 45% interest in the joint venture. This transaction is transformational for Galiano and provides a strong foundation to grow into a mid-tier gold producer.  Galiano closed the quarter with $55 million in cash and no debt, and on a pro forma basis, after closing the acquisition with Gold Fields, the consolidated Galiano group will have approximately $130 million in cash while remaining debt free. The strengthening of our balance sheet will allow us to execute on our self-financed life of mine plan at the AGM, in addition to seeking additional opportunities for long term growth."

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

Asanko Gold Mine (100% basis)	Q4 2023	Q3 2023	Q2 2023	Q1 2023	Q4 2022
Mining
Ore mined ('000t)	22	-	-	-	-
Waste mined ('000t)	3,415	-	-	-	-
Total mined ('000t)	3,437	-	-	-	-
Strip ratio (W:O)	155.2	-	-	-	-
Average gold grade mined (g/t)	0.7	-	-	-	-
Mining cost ($/t mined)2	4.30	-	-	-	-
Ore tonnes trucked ('000 t)	657	695	729	1,367	503
Ore transportation cost ($/t trucked)	6.54	6.63	5.88	5.51	6.19
Processing
Ore milled ('000t)	1,486	1,573	1,457	1,566	1,518
Average mill head grade (g/t)	0.8	0.8	0.8	0.9	0.8
Average recovery rate (%)	84	87	85	73	80
Processing cost ($/t milled)	9.94	9.69	11.01	9.78	10.06
G&A cost ($/t milled)	5.55	4.16	4.68	4.09	4.20
Gold produced (oz)	31,947	35,779	33,673	32,678	34,090
Financials, costs and cash flow
Revenue ($m)	59.5	67.8	64.1	65.2	57.8
Gold sold (oz)	30,555	35,522	32,912	35,174	34,202
Average realized gold price ($/oz)	1,942	1,902	1,944	1,850	1,686
Total cash costs1 ($/oz)	1,352	1,056	1,127	1,083	1,031
All-in sustaining costs1 ($/oz)	2,065	1,445	1,374	1,268	1,191
All-in sustaining margin1 ($/oz)	(123)	457	570	582	495
All-in sustaining margin1 ($m)	(3.8)	16.2	18.8	20.5	16.9
Income from mine operations ($m)	8.7	23.7	24.4	24.7	19.2
Adjusted net income1 ($m)	3.7	21.3	24.4	20.6	19.6
Cash provided by operating activities ($m)	24.1	39.7	18.0	18.9	11.1
Free cash flow1 ($m)	2.3	24.0	10.1	12.0	5.5

² No unit mining costs in Q1 to Q3 2023 as no tonnes were mined.

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Asanko Gold Mine - Financial and operational highlights for the three months and years ended December 31, 2023 and 2022 (100% basis)

		Three months ended December 31,						Year ended December 31,
(All amounts in 000's of US dollars, unless otherwise stated)		2023			2022			2023			2022
Asanko Gold Mine (100% basis)
Financial results
Revenue		59,514			57,808			256,543			297,136
Income from mine operations		8,675			19,167			81,483			71,653
Net income		3,664			83,712			69,940			103,223
Adjusted net income1		3,664			19,627			69,940			58,058
Adjusted EBITDA1		9,020			22,810			82,899			79,248
Cash and cash equivalents		138,655			91,271			138,655			91,271
Cash generated from operating activities		24,058			11,135			100,720			75,479
Free cash flow1		2,285			5,528			48,373			43,780
AISC margin1		(3,758	)		16,930			51,787			70,664
Key mine performance data
Gold produced (ounces)		31,947			34,090			134,077			170,342
Gold sold (ounces)		30,555			34,202			134,163			167,849
Average realized gold price ($/oz)		1,942			1,686			1,908			1,767
Total cash costs ($ per gold ounce sold)1		1,352			1,031			1,148			1,157
AISC ($ per gold ounce sold)1		2,065			1,191			1,522			1,346

• The AGM produced 31,947 ounces of gold during Q4 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 84%.

• Produced 134,163 ounces of gold in 2023, exceeding the upper end of revised 2023 production guidance of between 120,000 to 130,000 ounces as stockpile grades performed better than expected.

• Sold 30,555 ounces of gold in Q4 2023 at an average realized gold price of $1,942/oz for total revenue of $59.5 million (including $0.2 million of by-product silver revenue), an increase of $1.7 million from Q4 2022. The increase in revenue quarter-on-quarter was due to a 15% increase in realized gold prices relative to Q4 2022, partly offset by an 11% reduction in sales volumes.

• Income from mine operations for Q4 2023 totaled $8.7 million compared to $19.2 million in Q4 2022. The decrease in income from mine operations was due to a $10.4 million increase in cost of sales that resulted from a portion of the mill feed including stockpiled ore which had a higher average cost, recognizing a $5.0 million legal provision related to a dispute with a former mining contractor, and recording a $2.3 million provision against supplies inventory. This was partly offset by the $1.7 million increase in revenue described above.

• Reported Adjusted EBITDA¹ of $9.0 million in Q4 2023 compared to $22.8 million in Q4 2022. The decrease in Adjusted EBITDA¹ was largely driven by the decrease in income from mine operations described above and favourable foreign exchange movements in Q4 2022.

• Total cash costs¹ in Q4 2023 amounted to $1,352/oz compared to $1,031/oz in Q4 2022. Gold sales volumes decreased by 11% in Q4 2023, which had the effect of increasing fixed costs on a per ounce basis. Additionally, a portion of the mill feed during Q4 2023 included stockpiled ore which had a higher average cost, resulting in higher production costs. The AGM also recorded a $2.3 million provision against supplies inventory during Q4 2023, resulting in a $75/oz increase to total cash costs¹.

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• AISC¹ for Q4 2023 was $2,065/oz compared to $1,191/oz in the comparative period. AISC¹ was higher in the current quarter predominately due to the increase in total cash costs per ounce¹ described above and higher sustaining capital expenditures ($504/oz increase) to support the restart of mining in Q4 2023 (including pre-stripping activities at Abore), implementation of a water treatment system and additional work completed on a TSF lift.

• The AGM generated $24.1 million of cash flow from operating activities and free cash flow¹ of $2.3 million during Q4 2023. This compares to $11.1 million of cash flow from operating activities and free cash flow¹ of $5.5 million during Q4 2022.  The decrease in free cash flow¹ was primarily due to higher capital spend to support a restart of mining operations.

Galiano Gold Inc. - Financial highlights for the three months and years ended December 31, 2023 and 2022

		Three months ended December 31,						Year ended December 31,
(All amounts in 000's of US dollars, unless otherwise stated)		2023			2022			2023			2022
Galiano Gold Inc.
Net (loss) income		(5,758	)		28,500			26,085			40,809
Net (loss) income per common share		(0.03	)		0.13			0.12			0.18
Adjusted net (loss) income1		(5,758	)		(6,010	)		26,085			6,299
Adjusted net (loss) income per common share1		(0.03	)		(0.03	)		0.12			0.03
Adjusted EBITDA1		98			8,169			26,754			28,827
Cash and cash equivalents		55,270			56,111			55,270			56,111

• The Company reported a net loss of $5.8 million in Q4 2023, compared to net income of $28.5 million in Q4 2022. The reduction in net earnings during Q4 2023 was primarily due to a $3.9 million downward fair value adjustment on the Company's preferred shares in the JV and higher general and administrative expenses resulting from an increase in the fair value of cash‐settled long‐term incentive plan awards linked to the Company's share price.

Net income was higher in Q4 2022 due to the Company recording its share of the JV's net earnings which amounted to $46.5 million, and included the Company's share of an impairment reversal recorded at the AGM JV. Partly offsetting the higher share of JV net income in Q4 2022 was a $22.2 million downward fair value adjustment on the Company's preferred shares in the JV.

• Adjusted EBITDA¹ for Q4 2023 amounted to $0.1 million, compared to $8.2 million in Q4 2022. The decrease in Adjusted EBITDA¹ was due to a reduction in the Company's attributable interest in the AGM JV's Adjusted EBITDA¹ and higher share-based compensation expense in Q4 2023.

• Cash used in operating activities in Q4 2023 was $1.6 million, compared to cash provided by operating activities of $0.8 million in Q4 2022. The increase in cash used in operating activities from Q4 2022 to Q4 2023 was largely driven by a positive working capital movement in Q4 2022 due to higher accounts payable and collecting the Company's service fee receivable from the JV.

• As of December 31, 2023, the Company had cash and cash equivalents of $55.3 million and no debt.

2024 AGM Guidance

The Company will provide guidance for its consolidated business after closing of the Acquisition.

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This news release should be read in conjunction with Galiano's Management's Discussion and Analysis and the Audited Annual Consolidated Financial Statements for the years ended December 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 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.

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• 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.

Contact Information

Krista Muhr

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

Telephone: 1-778-239-0446

Email: info@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 ability of the Company to satisfy the conditions required to close the Acquisition; the receipt of all necessary regulatory approvals in connection with the Acquisition; the expected timing for closing the Acquisition; the operating plans for the AGM under the JV between the Company and Gold Fields; the ability of the Company to execute on its self-financed life of mine (“LOM”) plan at the AGM; opportunities for growth at the corporate level; commitment to health and safety; planned and future drilling programs; anticipated production and cost guidance; mine restart plans and timing thereof; timing of delivery of higher grade ore from the Abore pit; 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 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.

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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; risks related to the Company’s ability to close the Acquisition; risks related to the expected benefits of the Acquisition; 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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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 the Toronto Stock Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this news release.

Source: Galiano Gold Inc.

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