Austral Gold Announces Filing of 2017 Financial Year Annual Report

Vancouver, British Columbia--(Newsfile Corp. - September 29, 2017) - Austral Gold Limited (TSXV: AGLD) (ASX: AGD) ('the Company" or "Austral or "the Group"") is pleased to announce that the Annual Report for June 30, 2017 has been filed on the Australian Stock Exchange (www.asx.com.au) and SEDAR under the Company's profile name (www.sedar.com).

Highlights for 2017 FY (July 1 2016- June 30, 2017):

• Commenced open pit mining operations on the Central Vein at Amancaya, which is a high grade gold and silver vein hosted deposit approximately 70 kilometres from the Guanaco mine.
• The pre-feasibility study completed for the combined operation of both Guanaco and Amancaya has demonstrated robust economics and a life of mine of five years from current reserves. The Amancaya ore is being trucked to the nearby plant at Guanaco, which has greatly reduced the capital expenditure.
• Completed construction of the 1,500 tonnes per day agitation leach and Merrill-Crowe processing plant in Chile to process production from our Guanaco and Amancaya mining operations.
• Connected to the Taltal Wind Farm and commenced a power supply agreement with the northern Chile power grid. This grid connection should not only decrease current power consumption costs by more than 50%, but it should also significantly reduce the carbon footprint of the Guanaco operation by avoiding the diesel consumption that is currently used to generate power at the on-site power plant.
• Following the acquisition of our initial interest in the Casposo mine from Troy Resources in FY16, we exercised the option to acquire a further 19% in March 2017. There have now been three full quarters of production at Casposo and Austral Gold personnel have acted quickly to enhance the operations and spearhead the resumption of gold and silver production.
• Ramped up exploration activities throughout the year with the most prospective results realised to date including the discovery of a new high grade gold vein at the Amancaya property.
• Our CEO, Stabro Kasaneva structured and strengthened the corporate and technical teams to manage the scale up of our operations, and to lead efforts to continuously improve operations and pursue further value adding opportunities.
• Major work was done to establish a platform of long term reserves at our operations. During FY17, a maiden reserve and resource estimate, in accordance with both NI 43-101 and JORC2012, for both the Guanaco and Amancaya mines was completed. Similarly, for the re-commissioned Casposo mine, a new resource and reserve estimate was completed by independent consultants in September 2016 which coincided with the relaunch of production at the Casposo mine.
• Completed the acquisition of Argentex Mining Corporation in August 2016, which owns the Ping? 1/4 ino Project, an advanced stage Silver-Gold-Zinc-Lead-Indium development project located in Santa Cruz, Argentina. In the last 15 years, 6 mines have been constructed in Santa Cruz, making it one of the most prolific precious metal provinces in the world, including world class deposits such as Cerro Vanguardia and Cerro Negro.
• Successfully dual listed on the TSX-V, a key exchange for resource stocks, under the ticker AGLD. The Company now trades on both the ASX (AGD) and the TSX-V.

Eduardo Elzstain, Chairman of Austral Gold said "The 2017 financial year ('FY17') has been another year of significant progress for Austral Gold. We expanded our asset base, constructed a new processing facility at our flagship Guanaco mine in Chile and strengthened our team. Combined, these put us in a solid position as we look to continue to grow and seek value enhancing opportunities. Austral Gold continued to deliver stable production and FY17 was the fifth consecutive year where we met or exceeded production guidance. We expect to be able to grow future production as Austral Gold realises the benefits from the investment we have made in expanding production capacity in Chile, and from the increase in our ownership of the Casposo mine in Argentina from 51% to 70%.

Operating Results and Dividends

*excluding gain/(loss) on movements in financial assets and gain on acquisition of subsidiary

Note: Readers are cautioned that net/(loss) profit before finance costs, income tax expense and depreciation ('Adjusted EBITDA') do not have standardised meanings as prescribed by IFRS and may not be comparable to similar measures presented by other companies. Further, readers are cautioned that Adjusted EBITDA should not replace profit or loss or cash flows from operating, investing and financing activities (as determined in accordance with IFRS), as an indicator of the Company's performance.

Net loss attributable to shareholders for FY17 was US$4.4 million (FY16: net profit US$25.1 million).

Revenue of US$104m in FY17 (FY16: US$55.9m) as production increased to 81,591 AuEq oz (FY16: 40,395AuEq oz). The increase of US$48m was due to (i) the re-commissioning of the Casposo mine during the period (+US$38m increase vs. FY16); (ii) the sales volume and average gold price achieved at Guanaco (+ US$7m), and (iii) the US$2.5m revenue from collection of silver tax credits at Casposo.

Cost of production increased by 79% which is attributable to the start-up of the Casposo mine. Casposo averaged cash costs of US$998/AuEq oz in the three quarters of production during FY17. Guanaco mine maintained its cash cost levels (US$759/AuEq oz in FY17 compared to 761/AuEq oz in FY16).

Gross profit of US$12.6m or 12.1% (including US$29.9m of depreciation) during FY17 (FY16: US$4.6m or 8.3% and US$14.6m respectively). Excluding deprecation, a gross profit of US$42.6m or 40.9% (FY16:US$19.3m or 34.5%) was earned.

FY17 administration expenses increased by 87% to US$15.5m (FY16: US$8.3m) while costs remained constant as a % of revenue at 15%. Higher administration costs were mainly due to additions to the corporate team to manage the expansion of operations, restructuring of operations at Casposo, costs related to the acquisition of Argentex, the cost of technical reports and higher public company costs resulting from the company's listing on the TSX.V.

The loss in the fair value of financial assets of US$2.3m in FY17 was due to a decrease in the number and fair value of the Fortuna shares and warrants held during the period.

Finance costs increased by US$273k in FY17 to US$729k mainly due to an increase in borrowings during the period used to finance operations and the building of the new agitation leach plant at Guanaco mine site.

An interim unfranked dividend of A$0.009 (US$$0.006) per ordinary share or A$4,670,849 US$3,361,656) was paid on 1 February 2017.

FY2017 Production Summary

* Casposo production includes the last three Quarters. Production during recommissioning is not included in these figures.
** Austral Gold owned 51% of Casposo from commissioning until Feb, 2017, when it increased its stake in Casposo to 71%
*** AuEq is based on a gold:silver ratio of 1:72

Financial Position

The net assets of Austral have decreased by US$4.5 million since 30 June 2016 to US$103.4m at 30 June 2017 (2016: US$107.9m).

The decrease in financial assets is mainly explained by the sale of the Fortuna shares during FY2017 and the 19.9% investment in Argentex through a private placement no longer classified as a financial asset as a result of the transaction to acquire the remaining shares of Argentex not held by Austral in August 2016.

The increase in inventory is mainly explained by (i) the stock pile of Amancaya (partially offset by the reduction of the stock pile at Casposo); and (ii) the higher gold/silver in process in Guanaco due to production cut-off dates. Materials and spare parts remain at similar levels as previous year despite an increase in the allowance for inventory obsolescence (increased by US$~800K at Casposo).

Non-current assets increased by US$26.7m in FY17 compared to the prior year primarily due to an increase in capital expenditures at Guanaco as a result of the construction of the new agitation leach plant.

Provisions increased by US$4.5m in FY17 due to an increase in the mine closure provision for Guanaco. The increase in liabilities by $24.4m in FY17 is mainly due to financing required to construct the agitation leach plant at Guanaco and for short-term working capital at both Casposo and Guanaco.

As at 30 June 2017, the Austral Group had a current ratio equal to 1.4x along with US$6m cash and cash equivalents. The Group used part of its FY17 operating cashflows of US$27.7 m (FY16: US$15.5m), proceeds from the sale of financial assets and increase in short-term credit facilities to meet its final commitments regarding deferred consideration for the acquisitions of Cachinalito and Amancaya and for capital expenditures to support production and construction of the new plant at Guanaco and support the work on recommissioning the Casposo mine.

About Austral Gold

Austral Gold Limited is a growing precious metals mining, development and exploration company building a portfolio of quality assets in Chile and Argentina. The Company's flagship Guanaco mine in Chile is operated with the Amancaya mine with processing of ore from both mines at a new agitation leach plant at Guanaco. There is significant exploration upside at and around both operations, with a new vein discovery at Amancaya. The Company also owns 70% and is operator of the underground silver-gold Casposo mine in San Juan, Argentina. With an experienced local technical team and highly regarded major shareholder, Austral's goal is to continue to strengthen its asset base through acquisition and discovery. Austral Gold Limited is listed on the TSX Venture Exchange (TSXV: AGLD), and the Australian Securities Exchange (ASX: AGD). For more information, please consult the company's website: www.australgold.com

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

On behalf of Austral Gold Limited:

"Stabro Kasaneva"

CEO

For Further Information Please Contact:

Mike Brown, VP Corporate Development

Mike.brown@australgold.com

Canada: +1 604 568 2496

Argentina: + 54 11 4323 7558

Forward Looking Statements

Statements in this news release that are not historical facts are forward-looking statements.Forward-looking statements are statements that are not historical, and consist primarily of projections - statements regarding future plans, expectations and developments.Words such as "expects", "intends", "plans", "may", "could", "potential", "should", "anticipates", "likely", "believes" and words of similar import tend to identify forward-looking statements.Forward-looking statements in this news release include: our belief that the grid connection with the Northern Chile power grid should not only decrease current power consumption costs by more than 50%, but it should also significantly reduce the carbon footprint of the Guanaco operation by avoiding the diesel consumption that is currently used to generate power at the on-site power plant, we arein a solid position as we look to continue to grow and seek value enhancing opportunities, our expectation to be able to grow future production as Austral Gold realises the benefits from the investment we have made in expanding production capacity in Chile, and from the increase in our ownership of the Casposo mine in Argentina from 51% to 70%." All of these forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, business integration risks; uncertainty of production, development plans and cost estimates, commodity price fluctuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets, uncertainty in the measurement of mineral reserves and resource estimates, Austral's ability to attract and retain qualified personnel and management, potential labour unrest, reclamation and closure requirements for mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond the Company's control, the availability of capital to fund all of the Company's projects and other risks and uncertainties identified under the heading "Risk Factors" in the Company's continuous disclosure documents filed on SEDAR.You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Austral cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. Austral's forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and Austral does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements.

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

Suite 203, 80 William St, Sydney NSW 2011 | T +61 2 9380 7233 | F +61 2 8354 0992 | info@australgold.com.au | www.australgold.com.au