VANCOUVER, BC, March 3, 2024 /PRNewswire/ - Galiano Gold Inc. ("Galiano" or the "Company") (TSX: GAU) (NYSE American: GAU) reports that an incident occurred on Saturday March 2, 2024, at the Asanko Gold Mine (the "AGM"), a 50:50 joint venture with Gold Fields Limited, which is managed and operated by Galiano. The incident occurred following an interaction between a group of illegal miners and contracted security officers on AGM's mining lease near the township of Tontokrom. Two security officers and a civil ...

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 Statemen ...

Financial Data and Key Metrics Changes - Galiano Gold ended Q3 2023 with total liquidity of $56 million and reported a net income of $11.4 million or $0.05 per share [4][10] - The Asanko Gold Mine produced over 35,000 ounces of gold, expecting to meet the top end of the annual production guidance of 130,000 ounces [9][20] - All-in sustaining costs were recorded at $1,445 per ounce, with a revised cost guidance for the full year between $1,500 and $1,600 per ounce [20][25] Business Line Data and Key Metrics Changes - The Asanko Gold Mine achieved a free cash flow of $24 million in Q3, with cash increasing to $137 million, up more than $45 million since the start of the year [24][26] - The joint venture's total liquidity grew to $145 million, reflecting strong operational performance [20][26] Market Data and Key Metrics Changes - Gold prices remained favorable, averaging just over $1,900 per ounce during the quarter, contributing to total revenues of $68 million [24] - The company anticipates a significant increase in production as mining operations recommence, with expectations to double production by 2025 [27][28] Company Strategy and Development Direction - Galiano Gold is focused on executing its life of mine plan, which is self-funded and aims to produce 1.85 million ounces of gold over an 8.5-year period at an all-in sustaining cash cost of $1,150 per ounce [21][28] - The company is investing heavily in exploration, forecasting approximately $15 million in expenditures for the year, and is exploring operational optimizations to enhance productivity [25][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recommencement of mining operations and the potential for increased gold production starting in Q2 2024 [7][40] - The management team emphasized the importance of meeting production and cost guidance to build integrity with stakeholders and enhance shareholder value [27][29] Other Important Information - Galiano Gold remains debt-free, providing a strong financial position to pursue future value-enhancing opportunities [4][26] - The company is actively working on operational optimizations, including the use of larger trucks and potential ore sorting technologies [36] Q&A Session Summary Question: Duration and cost of saprolite rock waste removal - Management indicated that the saprolite material is free-dig and does not require drill and blast activities, with expectations to transition to drill and blast by Q1 next year [32][35] Question: Operational optimizations and expected results - Management discussed ongoing operational optimizations, including the use of larger trucks and potential ore sorting, which are expected to yield better productivity and cost efficiencies [33][36] Closing Remarks - Management expressed optimism about ramping up production over the next 24 months and highlighted the progress made in mining operations [34][40]

Q3 2023 Performance Highlights - Gold production reached 35,779 ounces[26] - All-in Sustaining Costs (AISC) were $1,445 per ounce[26] - Gold revenue totaled $67.6 million and net income was $21.3 million[26] - The company held $136.9 million in cash and cash equivalents, $4.4 million in gold sales receivables, and $2.0 million in gold on hand with no debt as of September 30, 2023[26] - Adjusted EBITDA was $25.5 million[58] - Free cash flow generated was $24.0 million[58] Financial Position and Growth - Galiano Corporate cash and cash equivalents stand at $56.1 million[32,34,35,36] - The company maintains a debt-free status[32,33,36,45] - The Asanko Gold Mine (AGM) joint venture (JV) has $137 million in cash[32] Forward-Looking Plans - Mining operations recommenced on October 1, 2023, with higher-grade ore expected to be delivered to the plant in Q2 2024[26] - The company aims to double production to 250,000 ounces per year by 2025[32,39] - A new Life of Mine (LOM) plan highlights an average gold production of 217,000 ounces per year[43]

[Condensed Consolidated Interim Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Financial%20Statements) [Condensed Consolidated Interim Statements of Financial Position](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Financial%20Position) Galiano Gold's total assets grew to $202.8 million, driven by an increased investment in its joint venture, with total equity rising to $194.7 million | Financial Position (in thousands USD) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **202,762** | **179,894** | | Current Assets | 56,428 | 58,605 | | Non-current Assets | 146,334 | 121,289 | | **Total Liabilities** | **8,100** | **6,203** | | Current Liabilities | 7,886 | 5,804 | | Non-current Liabilities | 214 | 399 | | **Total Equity** | **194,662** | **173,691** | - The increase in non-current assets was mainly due to the growth in the value of the **Investment in joint venture**, which rose from **$54.1 million to $74.5 million**, and **Financial assets**, which increased from **$66.8 million to $71.6 million**[2](index=2&type=chunk) [Condensed Consolidated Interim Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Net income for the six-month period rose to $20.5 million, primarily driven by a $20.3 million share of income from its joint venture | Income Statement (in thousands USD) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Share of net income related to joint venture | 20,314 | - | | Service fee earned as operators of joint venture | 2,836 | 2,614 | | General and administrative expenses | (6,998) | (4,756) | | Exploration and evaluation expenditures | (1,885) | (192) | | **Income (loss) from operations and joint venture** | **14,267** | **(2,334)** | | Finance income | 6,149 | 13,380 | | **Net income for the period** | **20,454** | **11,029** | | **Basic Net income per share ($)** | **0.09** | **0.05** | - For the second quarter of 2023, net income was **$12.0 million**, slightly lower than the **$12.6 million in Q2 2022**, mainly due to lower finance income despite recognizing $11.0 million in income from the joint venture[4](index=4&type=chunk) [Condensed Consolidated Interim Statements of Changes in Equity](index=4&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Changes%20in%20Equity) Total equity increased to $194.7 million, driven by the period's net income of $20.5 million and share-based compensation expense | Changes in Equity (in thousands USD) | Six Months Ended June 30, 2023 | | :--- | :--- | | Balance as at December 31, 2022 | 173,691 | | Share-based compensation expense | 517 | | Net income and comprehensive income | 20,454 | | **Balance as at June 30, 2023** | **194,662** | [Condensed Consolidated Interim Statements of Cash Flow](index=5&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flow) The company saw a net cash decrease of $0.6 million, with negative operating cash flow resulting from the non-cash nature of its joint venture income | Cash Flow Summary (in thousands USD) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Cash (used in) provided by operating activities | (1,920) | (600) | | Cash provided by investing activities | 1,347 | 165 | | Cash used in financing activities | (62) | (67) | | **(Decrease) in cash and cash equivalents** | **(608)** | **(516)** | | **Cash and cash equivalents, end of period** | **55,503** | **53,005** | - Operating cash flow before working capital changes was **negative $3.4 million**, largely because the **$20.3 million share of net income from the joint venture is a non-cash item** and was adjusted out[8](index=8&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) [Note 1: Nature of Operations](index=6&type=section&id=1.%20Nature%20of%20operations) The company's principal business is operating the Asanko Gold Mine in Ghana through a 45% equity interest in a joint venture - The Company's primary business activity is managing the **Asanko Gold Mine (AGM)** via a joint venture (JV)[11](index=11&type=chunk) - Galiano holds a **45% equity interest** in the entity that owns the AGM mining licenses[11](index=11&type=chunk) - The company's common shares are traded on the Toronto Stock Exchange and NYSE American Exchange under the ticker **"GAU"**[10](index=10&type=chunk) [Note 2: Basis of Presentation](index=6&type=section&id=2.%20Basis%20of%20presentation) The financial statements were prepared according to IAS 34, using accounting policies consistent with the 2022 annual report - The financial statements adhere to **International Accounting Standard (IAS) 34** and are consistent with the accounting policies from the 2022 annual report[13](index=13&type=chunk)[14](index=14&type=chunk) - The company's principal subsidiaries and joint arrangements are listed, including its **45% interest in Asanko Gold Ghana Ltd.** and **50% interests in Adansi Gold Company (GH) Ltd.** and **Shika Group Finance Limited**, all accounted for using the equity method[18](index=18&type=chunk) [Note 4: Balances Due From/To Related Party](index=8&type=section&id=4.%20Balances%20due%20from%2Fto%20related%20party) The company earns a service fee from the joint venture and reported a net payable of $2.6 million to the JV as of June 30, 2023 | Related Party Balances (in thousands USD) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Receivable due from related party (JV) | 473 | 1,684 | | Payable due to related party (JV) | 3,107 | 1,364 | - The company earned a service fee of **$2.8 million** from the JV for the six months ended June 30, 2023, compared to **$2.6 million** for the same period in 2022[23](index=23&type=chunk) [Note 5: Financial Assets](index=9&type=section&id=5.%20Financial%20assets) The fair value of the company's preference shares in a JV entity increased to $71.6 million, resulting in a $4.8 million gain | Preference Shares Fair Value (in thousands USD) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Balance, beginning of period | 66,809 | 72,426 | | Fair value adjustment for the period | 4,768 | (5,617) | | **Balance, end of period** | **71,577** | **66,809** | [Note 6: Asanko Gold Mine Joint Venture](index=9&type=section&id=6.%20Asanko%20Gold%20Mine%20joint%20venture) The investment in the Asanko Gold Mine JV increased to $74.5 million, reflecting the company's share of the JV's strong net income - The company and Gold Fields each own a **45% equity interest** in Asanko Gold Ghana Ltd. ("AGGL"), which owns the AGM, with the Government of Ghana holding a **10% free-carried interest**[30](index=30&type=chunk) | Change in Investment in JV (in thousands USD) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Balance, beginning of period | 54,148 | - | | Company's share of the JV's net income | 20,314 | 46,517 | | **Balance, end of period** | **74,462** | **54,148** | [Operating and Financial Results of the AGM JV (100% Basis)](index=10&type=section&id=6.1%20Operating%20and%20financial%20results%20of%20the%20AGM%20JV) On a 100% basis, the AGM JV's net income surged to $45.0 million despite lower revenue, due to reduced production costs AGM JV Statement of Income (100% Basis, in thousands USD) | | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Revenue | 129,259 | 162,417 | | Production costs | (68,261) | (105,486) | | Depreciation and depletion | (4,955) | (22,014) | | **Income from mine operations** | **49,063** | **26,796** | | **Net income for the period** | **44,992** | **2,165** | AGM JV Financial Position (100% Basis, in thousands USD) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | 112,914 | 91,271 | | Total Current Assets | 182,069 | 157,187 | | **Total Assets** | **379,694** | **337,827** | | Total Current Liabilities | 25,752 | 31,589 | | **Total Liabilities** | **86,725** | **89,850** | [Incremental Disclosures for AGM JV](index=12&type=section&id=6.2%20Incremental%20Disclosures) Key disclosures include lower gold sales, a new government levy, an increased asset retirement provision, and an undrawn credit facility - The AGM sold **68,086 ounces of gold** in the first six months of 2023, compared to **88,165 ounces** in the same period of 2022[38](index=38&type=chunk) - The Government of Ghana imposed a new **1% Growth and Sustainability Levy (GSL)** on gold revenues, effective May 1, 2023, which is recorded as a royalty expense[43](index=43&type=chunk) - The JV's asset retirement provision increased from **$58.1 million to $61.0 million**, primarily due to a change in estimate related to the tailings storage facility[51](index=51&type=chunk)[52](index=52&type=chunk) - The JV has a **$30.0 million revolving credit facility (RCF)** with Rand Merchant Bank, which was undrawn as of June 30, 2023[59](index=59&type=chunk) [Note 8: Equity Reserves and Long-Term Incentive Plan Awards](index=17&type=section&id=8.%20Equity%20reserves%20and%20long-term%20incentive%20plan%20awards) The company manages several incentive plans, with cash-settled awards recorded as liabilities and new stock options granted in H1 2023 - The company's incentive plans include stock options, Restricted Share Units (RSUs), Performance Share Units (PSUs), and Deferred Share Units (DSUs)[63](index=63&type=chunk) - All RSU, PSU, and DSU awards are **cash-settled**, meaning they are treated as financial liabilities and recorded at fair value at each reporting date[63](index=63&type=chunk)[65](index=65&type=chunk) [Stock Options](index=17&type=section&id=8.1%20Stock%20options) Outstanding stock options increased to 13.0 million after 4.6 million new options were granted in the first half of 2023 | Stock Option Movement | Number of Options | Weighted Avg. Exercise Price (C$) | | :--- | :--- | :--- | | Balance, Dec 31, 2022 | 8,497,170 | 1.04 | | Granted | 4,574,000 | 0.85 | | Expired | (54,168) | 1.07 | | **Balance, June 30, 2023** | **13,017,002** | **0.97** | [RSU, PSU, DSU, and Phantom Units](index=18&type=section&id=8.2%20RSU%2C%20PSU%2C%20DSU%2C%20and%20Phantom%20Units) The number of outstanding cash-settled units and their corresponding liabilities increased across all award types during H1 2023 | Outstanding Units & Liability (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **RSUs Outstanding** | 621,639 | 534,508 | | RSU Liability ($) | 101 | 169 | | **PSUs Outstanding** | 2,501,482 | 1,739,401 | | PSU Liability ($) | 408 | 503 | | **DSUs Outstanding** | 4,340,175 | 3,132,000 | | DSU Liability ($) | 2,537 | 1,664 | [Note 9: Commitments and Contingencies](index=21&type=section&id=9.%20Commitments%20and%20contingencies) The company has total contractual obligations of $8.1 million, primarily due within one year, and a $5.9 million parent company guarantee | Contractual Obligations (in thousands USD) | Within 1 year | 1 - 5 years | Total June 30, 2023 | | :--- | :--- | :--- | :--- | | Accounts payable & related party payable | 4,272 | - | 4,272 | | Long-term incentive plan (cash-settled) | 3,494 | 73 | 3,567 | | Corporate office leases | 134 | 158 | 292 | | **Total** | **7,900** | **231** | **8,131** | - The company has provided a parent company guarantee of **$5.9 million** for the unfunded portion of the AGM's reclamation bond[77](index=77&type=chunk) [Note 10: General and Administrative (G&A) Expenses](index=21&type=section&id=10.%20General%20and%20administrative%20(G&A)%20expenses) G&A expenses increased to $7.0 million for the six-month period, driven by a significant rise in share-based compensation costs | G&A Expenses (in thousands USD) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Wages, benefits and consulting | (2,944) | (3,719) | | Share-based compensation | (2,490) | 370 | | Office, rent and administration | (630) | (603) | | **Total G&A expense** | **(6,998)** | **(4,756)** | [Note 11: Exploration and Evaluation (E&E) Expenditures](index=22&type=section&id=11.%20Exploration%20and%20evaluation%20(E&E)%20expenditures) Exploration and evaluation expenditures rose sharply to $1.9 million in H1 2023, primarily due to increased spending on drilling and assays | E&E Expenses (in thousands USD) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Drilling and assays | (1,486) | (29) | | Contractors and consulting | (218) | (72) | | Crop compensation, community and permitting | (143) | (9) | | **Total E&E expense** | **(1,885)** | **(192)** | [Note 15: Segmented Information](index=23&type=section&id=15.%20Segmented%20information) The company operates as a single segment, with the majority of its assets and all comprehensive income generated from its West Africa operations | Geographic Allocation of Total Assets (in thousands USD) | Canada | West Africa | Total | | :--- | :--- | :--- | :--- | | **June 30, 2023** | **56,707** | **146,055** | **202,762** | | December 31, 2022 | 58,900 | 120,994 | 179,894 | | Geographic Income (Loss) for Six Months Ended June 30, 2023 (in thousands USD) | Canada | West Africa | Total | | :--- | :--- | :--- | :--- | | (Loss) income from operations and joint venture | (4,077) | 18,344 | 14,267 | | **Net (loss) income and comprehensive (loss) income** | **(2,656)** | **23,110** | **20,454** |

| Condensed Consolidated Interim Statements of Financial Position | 2 | | --- | --- | | Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss) | 3 | | Condensed Consolidated Interim Statements of Changes in Equity | 4 | | Condensed Consolidated Interim Statements of Cash Flow | 5 | | Notes to the Condensed Consolidated Interim Financial Statements | 6-24 | GALIANO GOLD INC. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS UNAUDITED 1 GALIANO GOLD INC. UNAUDITED CONDENSED ...

[Galiano Gold Q4 and Full Year 2022 Results](index=1&type=section&id=Galiano%20Gold%20Q4%20and%20Full%20Year%202022%20Results) [Asanko Gold Mine (AGM) JV Performance (100% Basis)](index=1&type=section&id=Asanko%20Gold%20Mine%20(AGM)%20JV%20Performance%20(100%25%20Basis)) The Asanko Gold Mine achieved its 2022 production guidance and established a robust long-term plan via a new Feasibility Study AGM Full Year 2022 vs 2021 Financial & Operational Highlights (100% Basis) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Operations** | | | | Gold Produced (ounces) | 170,342 | 210,241 | | Gold Sold (ounces) | 167,849 | 216,076 | | Average Realized Gold Price ($/oz) | $1,767 | $1,767 | | Total Cash Costs ($/oz) | $1,157 | $1,177 | | All-in Sustaining Costs (AISC) ($/oz) | $1,346 | $1,431 | | **Financials (in millions)** | | | | Revenue | $297.1 | $382.4 | | Net Income (Loss) After Tax | $103.2 | $(114.5) | | Adjusted EBITDA | $79.2 | $76.7 | | Cash from Operating Activities | $75.5 | $86.6 | | Free Cash Flow | $43.8 | $25.9 | - A new NI 43-101 Feasibility Study outlines a revised life-of-mine plan with a **$343 million after-tax NPV5%**, average LOM AISC of **$1,143/oz**, and average annual gold production of **217,000 ounces**[3](index=3&type=chunk) - The AGM ended 2022 with a robust liquidity position, holding **$91.3 million in cash and cash equivalents** and no debt[6](index=6&type=chunk) - Safety performance was strong with **zero lost-time injuries (LTI)** in Q4, resulting in a 12-month rolling LTI frequency rate of **0.00 per million hours worked**[3](index=3&type=chunk) [Galiano Gold Inc. Corporate Performance](index=2&type=section&id=Galiano%20Gold%20Inc.%20Corporate%20Performance) The company returned to profitability in 2022, driven by its share of JV earnings, while maintaining a debt-free balance sheet Galiano Gold Inc. Full Year 2022 vs 2021 Financial Highlights | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Income (Loss) After Tax | $40.8M | $(68.9)M | | Net Income (Loss) Per Share | $0.18 | $(0.31) | | Adjusted Net Income After Tax | $6.3M | $7.7M | | Adjusted EBITDA | $28.8M | $28.5M | | Cash and Cash Equivalents (Year-End) | $56.1M | $53.5M | - The company's balance sheet remains stable and **debt-free**, with cash and cash equivalents of **$56.1 million** as of December 31, 2022[6](index=6&type=chunk)[19](index=19&type=chunk) - The significant increase in net income was primarily due to the Company's share of the JV's earnings, which included a **$63.2 million impairment reversal** on mineral properties[10](index=10&type=chunk)[11](index=11&type=chunk) - Galiano initiated a Phase 1 drilling program at its 100% owned Asumura property to test for gold mineralization[6](index=6&type=chunk) [2023 Outlook](index=6&type=section&id=2023%20Outlook) The 2023 forecast anticipates lower production and higher costs due to significant capital investment, aiming for cash flow neutrality 2023 AGM Guidance and Budget | Metric | 2023 Guidance/Budget | | :--- | :--- | | Gold Production (ounces) | 100,000 - 120,000 | | AISC ($/oz) | $1,900 - $1,975 | | Sustaining Capital | $38 million | | Development Capital | $24 million | | Exploration Budget | $15 million | - AISC is expected to be high in 2023 primarily due to waste stripping at Abore and increased expenditures on the tailings storage facility (TSF)[12](index=12&type=chunk) - Despite a capital-intensive year, the AGM is projected to **break even on cash flow**, assuming production meets guidance at prevailing gold prices[15](index=15&type=chunk) [Non-IFRS Performance Measures](index=6&type=section&id=Non-IFRS%20Performance%20Measures) The company uses non-IFRS metrics like AISC and free cash flow to supplement its standard financial reporting - The report uses non-IFRS measures such as **Total Cash Costs, AISC, Adjusted EBITDA, Free Cash Flow, and Adjusted Net Income** to provide additional performance information[17](index=17&type=chunk) - All-in Sustaining Costs (AISC) is calculated based on World Gold Council guidance and includes total cash costs, corporate overhead, and sustaining capital expenditures[20](index=20&type=chunk) - Free cash flow is defined as cash flows from operating activities adjusted for capital expenditures and is used to evaluate the JV's capacity to meet cash outflows[22](index=22&type=chunk) [Forward-Looking Statements and Risk Factors](index=7&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The report contains forward-looking statements subject to significant risks including gold price volatility and operational hazards - The report includes forward-looking statements concerning operating plans, drilling programs, production and cost guidance, and capital expenditures[25](index=25&type=chunk)[26](index=26&type=chunk) - Key assumptions include stable gold prices, accuracy of mineral reserve estimates, and continued agreement with JV partner Gold Fields on operating the AGM[26](index=26&type=chunk) - The company identifies numerous risk factors, including **metallurgical recovery risks, geopolitical risks in Ghana, operational hazards, and commodity price volatility**[27](index=27&type=chunk)

GALIANO GOLD INC. MANAGEMENT'S DISCUSSION AND ANALYSIS For the three and nine months ended September 30, 2022 and 2021 (Expressed in United States dollars) TABLE OF CONTENTS | 1. | Third quarter 2022 highlights | 3 | | --- | --- | --- | | 2. | Business overview | 4-6 | | 3. | Guidance and outlook | 7 | | 4. | Results of the AGM | 8-15 | | | | 16- | | 5. | Financial results of the Company | 17 | | 6. | Selected quarterly financial data | 18 | | | | 19- | | 7. | Liquidity and capital resources | 21 | | | | 21 ...

NYSE: GAU TSX: GAU Q2 2022 UPDATE FORWARD LOOKING INFORMATION 2 Cautionary Note Regarding Forward-Looking Statements Certain statements and information contained in this presentation 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 e ...

[Condensed Consolidated Interim Statements of Financial Position](index=2&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Financial%20Position) Total assets and equity increased, while liabilities decreased, driven by non-current assets and reduced accumulated deficit [Financial Position Overview](index=2&type=section&id=2.1%20Financial%20Position%20Overview) Total assets and equity increased, while liabilities decreased, driven by non-current assets and reduced accumulated deficit | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------- | :------------------ | :-------------------- | :--------- | :--------- | | **Assets** | | | | | | Current assets | 58,445 | 61,668 | (3,223) | -5.23% | | Non-current assets | 87,670 | 74,528 | 13,142 | 17.63% | | **Total assets** | **146,115** | **136,196** | **9,919** | **7.28%** | | **Liabilities** | | | | | | Current liabilities | 2,130 | 2,643 | (513) | -19.41% | | Non-current liabilities | 534 | 790 | (256) | -32.41% | | **Total liabilities** | **2,664** | **3,433** | **(769)** | **-22.40%** | | **Equity** | | | | | | Share capital | 579,591 | 579,591 | 0 | 0.00% | | Equity reserves | 51,538 | 51,879 | (341) | -0.66% | | Accumulated deficit | (487,678) | (498,707) | 11,029 | -2.21% | | **Total equity** | **143,451** | **132,763** | **10,688** | **8.05%** | - Non-current financial assets significantly increased by **$13.2 million** from **$72.4 million** at December 31, 2021, to **$85.6 million** at June 30, 2022[2](index=2&type=chunk) - The accumulated deficit improved by **$11.0 million**, moving from **$(498.7) million** to **$(487.7) million**, contributing to the overall increase in total equity[2](index=2&type=chunk) [Condensed Consolidated Interim Statements of Operations and Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Net income improved from an operating loss due to increased finance income, despite no joint venture earnings contribution [Operations and Comprehensive Income Overview](index=3&type=section&id=3.1%20Operations%20and%20Comprehensive%20Income%20Overview) Net income improved from an operating loss due to increased finance income, despite no joint venture earnings contribution | Metric | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Service fee earned as operators of joint venture | 1,307 | 1,240 | 2,614 | 2,480 | | Share of net earnings related to joint venture | - | 5,713 | - | 19,087 | | General and administrative expenses | (2,004) | (3,779) | (4,756) | (7,703) | | Exploration and evaluation expenditures | (55) | (373) | (192) | (373) | | (Loss) income from operations and joint venture | (752) | 2,801 | (2,334) | 13,491 | | Finance income | 13,337 | 2,186 | 13,380 | 4,598 | | Finance expense | (7) | (21) | (16) | (32) | | Foreign exchange (loss) gain | (12) | 38 | (1) | (25) | | **Net income and comprehensive income for the period** | **12,566** | **5,004** | **11,029** | **18,032** | | Basic Net income per share | 0.06 | 0.02 | 0.05 | 0.08 | | Diluted Net income per share | 0.06 | 0.02 | 0.05 | 0.08 | - Net income for the three months ended June 30, 2022, increased by **151%** to **$12.6 million** from **$5.0 million** in the prior year, primarily driven by a significant increase in finance income[4](index=4&type=chunk) - Finance income saw a substantial increase, rising from **$2.2 million** to **$13.3 million** for the three months ended June 30, 2022, and from **$4.6 million** to **$13.4 million** for the six months ended June 30, 2022[4](index=4&type=chunk) - The Company did not recognize any share of net earnings related to the joint venture for both the three and six months ended June 30, 2022, compared to **$5.7 million** and **$19.1 million**, respectively, in the prior year[4](index=4&type=chunk) [Condensed Consolidated Interim Statements of Changes in Equity](index=4&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Changes%20in%20Equity) Total equity increased due to net income, partially offset by a decrease in equity reserves from share-based compensation [Equity Movements](index=4&type=section&id=4.1%20Equity%20Movements) Total equity increased due to net income, partially offset by a decrease in equity reserves from share-based compensation | Metric | December 31, 2021 ($ thousands) | June 30, 2022 ($ thousands) | Change ($ thousands) | | :-------------------------------------- | :-------------------- | :---------------- | :--------- | | Share capital | 579,591 | 579,591 | 0 | | Equity reserves | 51,879 | 51,538 | (341) | | Accumulated deficit | (498,707) | (487,678) | 11,029 | | **Total equity** | **132,763** | **143,451** | **10,688** | **Key Equity Changes (Six months ended June 30, 2022):** * **Share-based compensation expense:** $(341) thousand * **Net income and comprehensive income for the period:** $11,029 thousand - Total equity increased by **$10.7 million** from **$132.8 million** at December 31, 2021, to **$143.5 million** at June 30, 2022[5](index=5&type=chunk) - The accumulated deficit decreased by **$11.0 million**, reflecting the net income generated during the period[5](index=5&type=chunk) [Condensed Consolidated Interim Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased for the six months, primarily from operating activities, despite a positive Q2 operating cash flow [Cash Flow Overview](index=5&type=section&id=5.1%20Cash%20Flow%20Overview) Cash and cash equivalents decreased for the six months, primarily from operating activities, despite a positive Q2 operating cash flow | Activity | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Operating activities | 2,565 | (3,134) | (600) | (7,813) | | Investing activities | 123 | 285 | 165 | 3,829 | | Financing activities | (33) | 141 | (67) | 368 | | Impact of foreign exchange on cash | (34) | 21 | (14) | 13 | | **Increase (decrease) in cash and cash equivalents** | **2,621** | **(2,687)** | **(516)** | **(3,603)** | | Cash and cash equivalents, beginning of period | 50,384 | 61,235 | 53,521 | 62,151 | | **Cash and cash equivalents, end of period** | **53,005** | **58,548** | **53,005** | **58,548** | - Cash provided by operating activities significantly improved, moving from a use of **$3.1 million** in Q2 2021 to a provision of **$2.6 million** in Q2 2022[7](index=7&type=chunk) - For the six months ended June 30, 2022, cash used in operating activities decreased to **$0.6 million** from **$7.8 million** in the prior year[7](index=7&type=chunk) - Cash provided by investing activities decreased substantially for the six-month period, from **$3.8 million** in 2021 to **$0.2 million** in 2022, mainly due to the absence of preferred share redemption and exploration asset acquisition activities seen in the prior year[7](index=7&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=6&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) Key financial statement notes detail operations, accounting policies, related party transactions, and joint venture performance [1. Nature of operations](index=6&type=section&id=1.%20Nature%20of%20operations) Galiano Gold Inc. operates the Asanko Gold Mine JV in Ghana and holds exploration properties in Ghana and Mali - Galiano Gold Inc. operates the Asanko Gold Mine (AGM) through a 50:50 joint venture, holding a **45% economic interest** in the mine located in Ghana, West Africa[9](index=9&type=chunk) - The Company's common shares trade on the Toronto Stock Exchange (TSX) and NYSE American Exchange (NYSE American) under the ticker symbol 'GAU'[8](index=8&type=chunk) - In addition to the AGM, Galiano Gold holds **100% owned** exploration properties in Ghana (Asumura) and Mali[10](index=10&type=chunk) [2. Basis of presentation](index=6&type=section&id=2.%20Basis%20of%20presentation) Financial statements adhere to IAS 34 and IFRS, with all amounts in thousands of USD, reflecting the Company and its controlled subsidiaries - The financial statements adhere to International Accounting Standard (IAS) 34 - Interim Financial Reporting and International Financial Reporting Standards (IFRS)[11](index=11&type=chunk) - All financial figures are presented in thousands of United States dollars, which serves as the functional currency for the Company and its subsidiaries[13](index=13&type=chunk) | Affiliate name | Location | Interest | Classification and accounting method | | :-------------------------------- | :--------- | :------- | :--------------------------------- | | Galiano Gold South Africa (PTY) Ltd. | South Africa | 100% | Consolidated | | Galiano International (Isle of Man) Limited | Isle of Man | 100% | Consolidated | | Galiano Gold (Isle of Man) Limited | Isle of Man | 100% | Consolidated | | Galiano Gold Exploration Mali SARL | Mali | 100% | Consolidated | | Asanko Gold Exploration Ghana Limited | Ghana | 100% | Consolidated | | Asanko Gold Ghana Limited | Ghana | 45% | Joint venture; equity method | | Adansi Gold Company (GH) Limited | Ghana | 50% | Joint venture; equity method | | Shika Group Finance Limited | Isle of Man | 50% | Joint venture; equity method | [3. Significant accounting judgements and estimates](index=7&type=section&id=3.%20Significant%20accounting%20judgements%20and%20estimates) Financial statements involve significant judgments and estimates, especially for mineral reserves, with the JV using internal models for depletion and impairment - Management makes significant judgments and estimates, including those affecting mineral reserves, which are crucial for depletion expense, stripping costs, asset retirement provisions, and impairment assessments[19](index=19&type=chunk)[21](index=21&type=chunk) - The Company was unable to declare mineral reserves for the AGM in its updated National Instrument 43-101 Technical Report filed on March 29, 2022[21](index=21&type=chunk) - The JV uses internal models to estimate life-of-mine tonnes for units-of-production depletion of mineral properties, plant, and equipment[22](index=22&type=chunk) [4. Balances due from/to related party](index=8&type=section&id=4.%20Balances%20due%20from%2Fto%20related%20party) The Company earns an annual service fee as AGM JV operator, reporting a receivable from the JV and a payable for services - The Company receives an arm's length service fee of **$6.5 million** per annum (adjusted for inflation) as the manager and operator of the JV[23](index=23&type=chunk) | Metric | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Service fee earned | 1,307 | 1,240 | 2,614 | 2,480 | | Gross service fee | 1,700 | 1,500 | 3,300 | 3,100 | | Withholding taxes payable in Ghana | (400) | (300) | (700) | (600) | **Related Party Balances:** * **Receivable due from JV (June 30, 2022):** $5.1 million (December 31, 2021: $7.3 million) * **Payable due to JV (June 30, 2022):** $0.1 million (December 31, 2021: nil) [5. Financial assets](index=9&type=section&id=5.%20Financial%20assets) The Company holds redeemable preference shares in a JV entity, measured at fair value through profit or loss, with a significant positive fair value adjustment - The Company holds **132.4 million** non-voting fixed redemption price redeemable preference shares in Shika Group Finance Limited, classified as a Level 3 financial asset[27](index=27&type=chunk)[28](index=28&type=chunk) | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :---------------------------------- | :------------------ | :-------------------- | | Balance, beginning of period | 72,426 | 78,299 | | Fair value adjustment for the period | 13,214 | (873) | | Redemption of preferred shares | - | (5,000) | | **Balance, end of period** | **85,640** | **72,426** | **Fair Value Adjustment (Finance Income):** * **Three and six months ended June 30, 2022:** $13.2 million (positive) * **Three and six months ended June 30, 2021:** $2.1 million and $4.4 million (positive), respectively - The increase in fair value was primarily driven by better mine performance, improved stockpiled ore grades, and enhanced working capital[28](index=28&type=chunk) [6. Asanko Gold Mine joint venture](index=9&type=section&id=6.%20Asanko%20Gold%20Mine%20joint%20venture) The AGM JV reported net income, but Galiano did not recognize its share due to nil recoverable equity, with decreased revenues and production costs [6.1 Investment in AGM Joint Venture](index=10&type=section&id=6.1%20Investment%20in%20AGM%20Joint%20Venture) Galiano Gold holds a 45% economic interest in the AGM JV but did not recognize its share of net earnings due to nil recoverable investment - Galiano Gold Inc. and Gold Fields each own a **45% economic interest** in Asanko Gold Ghana Limited (AGGL), which owns the AGM, with the Government of Ghana holding a **10% free-carried interest**[30](index=30&type=chunk) - The Company did not recognize its share of the JV's net earnings for the three and six months ended June 30, 2022, as the recoverable amount of its equity investment in the JV was nil[31](index=31&type=chunk) | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :---------------------------------- | :------------------ | :-------------------- | | Balance, beginning of period | - | 59,159 | | Company's share of the JV's net loss | - | (51,528) | | Impairment of investment in joint venture | - | (7,631) | | **Balance, end of period** | **-** | **-** | [6.2 Operating and Financial Results of AGM JV](index=10&type=section&id=6.2%20Operating%20and%20Financial%20Results%20of%20AGM%20JV) AGM JV reported decreased revenues and production costs, with varied net income results for the three and six-month periods | Metric | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Revenues | 84,885 | 95,219 | 162,417 | 206,024 | | Production costs | (52,261) | (62,208) | (105,486) | (119,309) | | Income from mine operations | 16,244 | 18,058 | 26,796 | 54,005 | | Income (loss) from operations | 14,156 | 12,967 | (31) | 43,113 | | **Net income after tax for the period** | **15,803** | **12,705** | **2,165** | **42,435** | **AGM JV Assets and Liabilities:** | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :-------------------------------- | :------------------ | :-------------------- | | Total assets | 286,246 | 294,320 | | Total liabilities | 139,327 | 149,566 | | Equity | 146,919 | 144,754 | - AGM JV revenues decreased by **10.85%** for the three months and **21.16%** for the six months ended June 30, 2022, compared to the prior year[33](index=33&type=chunk) - Net income after tax for the JV increased by **24.38%** for the three months ended June 30, 2022, but decreased significantly by **94.89%** for the six months ended June 30, 2022[33](index=33&type=chunk) [6.3 Revenues (JV)](index=12&type=section&id=6.3%20Revenues%20(JV)) AGM JV revenues are primarily from gold sales under an offtake agreement, with minor contributions from by-product silver sales - The AGM sold **46,236 ounces of gold** for the three months and **88,165 ounces** for the six months ended June 30, 2022, under an offtake agreement with Red Kite[36](index=36&type=chunk) - As of June 30, 2022, the AGM has delivered **1,387,421 ounces** to Red Kite under the Offtake Agreement, which remains in effect until all contracted **2.2 million ounces** are delivered or terminated[35](index=35&type=chunk)[37](index=37&type=chunk) - By-product silver sales contributed **$0.2 million** and **$0.3 million** to revenue for the three and six months ended June 30, 2022, respectively[38](index=38&type=chunk) [6.4 Production Costs and Royalties (JV)](index=12&type=section&id=6.4%20Production%20Costs%20and%20Royalties%20(JV)) AGM JV production costs decreased, influenced by inventory adjustments, and are subject to government royalties | Production Cost Category | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Raw materials and consumables | (14,637) | (13,479) | (27,772) | (26,596) | | Salaries and employee benefits | (7,159) | (9,797) | (17,322) | (19,721) | | Contractors (net of deferred stripping costs) | (14,732) | (28,406) | (42,435) | (62,730) | | Change in stockpile, gold-in-process and gold dore inventories | (10,823) | (5,493) | (7,564) | (212) | | Insurance, government fees, permits and other | (4,906) | (4,978) | (10,454) | (9,802) | | Share-based compensation | (4) | (55) | 61 | (248) | | **Total production costs** | **(52,261)** | **(62,208)** | **(105,486)** | **(119,309)** | - Total production costs for the AGM JV decreased by **16.0%** for the three months and **11.6%** for the six months ended June 30, 2022, compared to the prior year[38](index=38&type=chunk) - The AGM recognized a **$3.8 million** reversal of net realizable value adjustments on stockpile inventory in Q2 2022 (**$2.8 million** credited to production costs, **$1.0 million** to depreciation expense), and a **$10.5 million** reversal for the six-month period (**$7.3 million** to production costs, **$3.2 million** to depreciation expense)[38](index=38&type=chunk)[39](index=39&type=chunk) - All AGM concessions are subject to a **5% gross revenue royalty** to the Government of Ghana, with additional net smelter return royalties on specific mining concessions[40](index=40&type=chunk) [6.5 Inventories (JV)](index=13&type=section&id=6.5%20Inventories%20(JV)) AGM JV total inventories decreased, with a significant reduction in ore stockpiles and an increase in gold dore on hand | Inventory Category | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :----------------------- | :------------------ | :-------------------- | | Gold dore on hand | 8,211 | 3,244 | | Gold-in-process | 2,703 | 1,563 | | Ore stockpiles | 34,902 | 51,470 | | Materials and spare parts | 26,978 | 24,562 | | **Total inventories** | **72,794** | **80,839** | | Less non-current inventories: Ore stockpiles | (2,479) | (5,143) | | **Total current inventories** | **70,315** | **75,696** | - Total inventories held by the AGM JV decreased by **9.95%** from **$80.8 million** at December 31, 2021, to **$72.8 million** at June 30, 2022[41](index=41&type=chunk) - Ore stockpiles saw a significant reduction from **$51.5 million** to **$34.9 million**, while gold dore on hand increased from **$3.2 million** to **$8.2 million**[41](index=41&type=chunk) [6.6 Reclamation Deposit (JV)](index=13&type=section&id=6.6%20Reclamation%20Deposit%20(JV)) The AGM is required to provide security for reclamation obligations, with the deposit increasing and supported by bank guarantees - The AGM is required to provide security to the Environmental Protection Agency of Ghana (EPA) for reclamation obligations[42](index=42&type=chunk) - The reclamation deposit carried at **$4.6 million** as of June 30, 2022, increased from **$1.9 million** at December 31, 2021[43](index=43&type=chunk) - Total security for Obotan deposits is **$15.6 million** (**$4.6 million** deposit, **$10.9 million** bank guarantee), and for Esaase deposits is **$1.1 million** (**$0.2 million** deposit, **$0.9 million** bank guarantee)[44](index=44&type=chunk)[45](index=45&type=chunk) [6.7 Mineral Properties, Plant and Equipment (JV)](index=14&type=section&id=6.7%20Mineral%20Properties%2C%20Plant%20and%20Equipment%20(JV)) Additions to AGM MPP&E decreased, with no deferred stripping costs in 2022, following a significant impairment in 2021 - Additions to mineral properties, plant and equipment (MPP&E) for the AGM were **$3.5 million** for the three months and **$5.9 million** for the six months ended June 30, 2022, a decrease from **$10.5 million** and **$17.3 million** respectively in 2021[46](index=46&type=chunk) - No costs related to stripping activities were deferred during the six months ended June 30, 2022, compared to **$5.1 million** deferred in the prior year[47](index=47&type=chunk) - An impairment of **$153.2 million** to MPP&E was recorded by the JV during the year ended December 31, 2021, due to lower-than-expected gold recovery and the inability to declare mineral reserves[48](index=48&type=chunk) [6.8 Severance Provisions (JV)](index=14&type=section&id=6.8%20Severance%20Provisions%20(JV)) The AGM recognized a significant severance provision in Q1 2022 due to workforce restructuring, with current and non-current portions - The AGM recognized a **$21.0 million** severance provision in Q1 2022 due to workforce restructuring[49](index=49&type=chunk) - As of June 30, 2022, the total severance provision was **$13.7 million**, with **$6.7 million** expected to be paid within 12 months (current liability) and **$7.0 million** after June 30, 2023 (non-current liability)[49](index=49&type=chunk) [6.9 Asset Retirement Provisions (JV)](index=15&type=section&id=6.9%20Asset%20Retirement%20Provisions%20(JV)) AGM asset retirement provisions decreased due to a change in estimate, primarily from an increased long-term risk-free discount rate | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------ | :-------------------- | | Balance, beginning of period | 81,028 | 72,693 | | Accretion expense | 1,072 | 1,191 | | Change in estimate | (7,211) | 7,307 | | Reclamation undertaken during the period | (51) | (163) | | **Balance, end of period** | **74,838** | **81,028** | | Less: current portion | (2,422) | - | | **Total non-current portion** | **72,416** | **81,028** | - The total asset retirement provisions for the AGM decreased by **$6.19 million** from **$81.0 million** at December 31, 2021, to **$74.8 million** at June 30, 2022[51](index=51&type=chunk) - The change in estimate during the period was a credit of **$7.2 million**, primarily due to an increase in the long-term risk-free discount rate from **1.5%** to **3.0%**[51](index=51&type=chunk)[52](index=52&type=chunk) [6.10 Preferred Shares (JV)](index=15&type=section&id=6.10%20Preferred%20Shares%20(JV)) JV partners' preferred share investments remained stable with no distributions during the six months ended June 30, 2022 | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :-------------------------------- | :------------------ | :-------------------- | | Balance, beginning of period | 264,880 | 274,880 | | Distributions to partners | - | (10,000) | | **Balance, end of period** | **264,880** | **264,880** | - The balance of JV partners' preferred share investments remained stable at **$264.88 million** for the six months ended June 30, 2022, with no distributions made during the period[53](index=53&type=chunk) [6.11 Revolving Credit Facility (JV)](index=15&type=section&id=6.11%20Revolving%20Credit%20Facility%20(JV)) The AGM JV maintains a $30.0 million revolving credit facility, with no balance drawn as of June 30, 2022 - The JV has a **$30.0 million** revolving credit facility (RCF) with Rand Merchant Bank, maturing in September 2022[54](index=54&type=chunk) - As of June 30, 2022, the balance drawn under the RCF was nil, consistent with December 31, 2021[54](index=54&type=chunk) - Standby charges associated with the RCF were **$0.1 million** for the three months and **$0.2 million** for the six months ended June 30, 2022[55](index=55&type=chunk) [6.12 Finance Expense (JV)](index=16&type=section&id=6.12%20Finance%20Expense%20(JV)) AGM JV finance expense increased for three months but decreased for six months, with higher accretion charges on asset retirement provisions | Finance Expense Category | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Premiums paid for hedging instruments | - | (192) | - | (281) | | Interest on lease liabilities | (67) | (70) | (170) | (163) | | Accretion charges on asset retirement provisions | (586) | (267) | (1,072) | (589) | | Interest and fees associated with RCF | (133) | (201) | (246) | (512) | | Other | (64) | (48) | (89) | (97) | | **Total finance expense** | **(850)** | **(778)** | **(1,577)** | **(1,642)** | - Total finance expense for the AGM JV increased by **9.25%** for the three months ended June 30, 2022, but decreased by **3.90%** for the six months ended June 30, 2022[57](index=57&type=chunk) - Accretion charges on asset retirement provisions significantly increased, more than doubling for both the three and six-month periods in 2022 compared to 2021[57](index=57&type=chunk) [6.13 Cash Flows (JV)](index=16&type=section&id=6.13%20Cash%20Flows%20(JV)) AGM JV cash from operating activities significantly increased, while cash used in investing and financing activities decreased | Activity | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Operating activities | 34,344 | 10,822 | 38,269 | 46,176 | | Investing activities | (3,407) | (9,427) | (5,863) | (20,721) | | Financing activities | (5,706) | (19,504) | (10,643) | (48,397) | | Impact of foreign exchange on cash | (246) | 21 | (691) | (2) | | **Increase (decrease) in cash and cash equivalents** | **24,985** | **(18,088)** | **21,072** | **(22,944)** | | Cash and cash equivalents, beginning of period | 45,298 | 59,398 | 49,211 | 64,254 | | **Cash and cash equivalents, end of period** | **70,283** | **41,310** | **70,283** | **41,310** | - The AGM JV generated significantly more cash from operating activities in Q2 2022 (**$34.3 million**) compared to Q2 2021 (**$10.8 million**)[57](index=57&type=chunk) - Cash used in investing activities decreased substantially for both the three and six-month periods in 2022, indicating reduced capital expenditures[57](index=57&type=chunk) - Cash used in financing activities also decreased significantly, from **$19.5 million** to **$5.7 million** for the three months, and from **$48.4 million** to **$10.6 million** for the six months ended June 30, 2022[57](index=57&type=chunk) [7. Share capital](index=17&type=section&id=7.%20Share%20capital) Galiano Gold Inc. has unlimited authorized common shares, with its $50.0 million ATM offering expiring without any shares issued - The Company has an unlimited number of authorized common shares without par value or restrictions[58](index=58&type=chunk) - An At-the-Market (ATM) agreement allowed the Company to sell up to **$50.0 million** in common shares for general corporate and working capital requirements[58](index=58&type=chunk) - No common shares were issued under the ATM offering as of June 30, 2022, and the agreement expired subsequent to the quarter-end[59](index=59&type=chunk) [8. Equity reserves and long-term incentive plan awards](index=17&type=section&id=8.%20Equity%20reserves%20and%20long-term%20incentive%20plan%20awards) The Company operates cash-settled, marked-to-market stock option and share unit plans, with total issuable shares capped at 9% of outstanding common shares [8.1 Stock Options](index=17&type=section&id=8.1%20Stock%20Options) Stock options vest over three years with a five-year term, resulting in a credit to share-based compensation expense in 2022 - Stock options vest in **1/3 increments** over three years and have a maximum term of **5 years**[62](index=62&type=chunk) | Metric | Number of Options | Weighted average exercise price (C$ thousands) | | :-------------------------- | :---------------- | :--------------------------------- | | Balance, December 31, 2021 | 11,680,170 | 1.61 | | Granted | 4,490,000 | 0.66 | | Cancelled/Expired/Forfeited | (4,712,337) | 1.96 | | **Balance, June 30, 2022** | **11,457,833** | **1.10** | **Share-based compensation expense (stock options):** * **Three months ended June 30, 2022:** $(0.5) million (credit) * **Six months ended June 30, 2022:** $(0.3) million (credit) - The Company recognized a credit of **$0.5 million** and **$0.3 million** to share-based compensation expense for stock options for the three and six months ended June 30, 2022, respectively[63](index=63&type=chunk) [8.2 Restricted Share Units (RSUs)](index=18&type=section&id=8.2%20Restricted%20Share%20Units%20(RSUs)) Cash-settled RSUs vest over three years and are marked-to-market, with total RSU liability decreasing due to settlements and fair value changes - RSUs are cash-settled awards, vesting in **1/3 increments** over three years, and are marked-to-market at each reporting period end[64](index=64&type=chunk) | Metric | June 30, 2022 | December 31, 2021 | | :------------------------------------------ | :------------ | :---------------- | | **Number of RSUs Outstanding:** | | | | Balance, beginning of period | 1,184,594 | 2,421,200 | | Granted | 299,900 | 271,400 | | Settled in cash | (537,941) | (937,624) | | Cancelled/Forfeited | (312,879) | (570,382) | | **Balance, end of period** | **633,674** | **1,184,594** | | **RSU Liability ($ thousands):** | | | | Balance, beginning of period | 575 | 1,658 | | Awards vested and change in fair value, net | (189) | 65 | | Settled in cash | (280) | (1,148) | | **Total RSU liability, end of period** | **106** | **575** | | Current portion | (91) | (408) | | Non-current portion | 15 | 167 | - The total RSU liability decreased from **$575 thousand** at December 31, 2021, to **$106 thousand** at June 30, 2022, primarily due to cash settlements and a net decrease from vested awards and fair value changes[65](index=65&type=chunk) [8.3 Performance Share Units (PSUs)](index=18&type=section&id=8.3%20Performance%20Share%20Units%20(PSUs)) Cash-settled PSUs vest over two or three years based on performance criteria, with the total PSU liability increasing due to grants and fair value changes - PSUs are cash-settled awards with vesting periods of two or three years, subject to performance criteria (relative share price or strategic objectives) that can adjust the number of vested units from **0% to 150%**[66](index=66&type=chunk)[67](index=67&type=chunk) | Metric | June 30, 2022 | December 31, 2021 | | :------------------------------------------ | :------------ | :---------------- | | **Number of PSUs Outstanding:** | | | | Balance, beginning of period | 571,000 | - | | Granted | 1,588,900 | 893,400 | | Settled in cash | (88,167) | - | | Cancelled/Forfeited | (332,332) | (322,400) | | **Balance, end of period** | **1,739,401** | **571,000** | | **PSU Liability ($ thousands):** | | | | Balance, beginning of period | 87 | - | | Awards vested and change in fair value, net | 59 | 87 | | Settled in cash | (46) | - | | **Total PSU liability, end of period** | **100** | **87** | | Current portion | (69) | (54) | | Non-current portion | 31 | 33 | - The total PSU liability increased from **$87 thousand** at December 31, 2021, to **$100 thousand** at June 30, 2022, driven by new grants and fair value changes, partially offset by cash settlements[68](index=68&type=chunk) [8.4 Deferred Share Units (DSUs)](index=19&type=section&id=8.4%20Deferred%20Share%20Units%20(DSUs)) Cash-settled DSUs have no vesting terms, are recognized at fair value on grant, and are payable upon director retirement or change of control - DSUs are cash-settled awards with no vesting terms, recognized at **100% fair value** on the grant date, and payable upon a director's retirement or a change of control[69](index=69&type=chunk) | Metric | June 30, 2022 | December 31, 2021 | | :------------------------------------------ | :------------ | :---------------- | | **Number of DSUs Outstanding:** | | | | Balance, beginning of period | 844,200 | - | | Granted | 988,400 | 844,200 | | **Balance, end of period** | **1,832,600** | **844,200** | | **DSU Liability ($ thousands):** | | | | Balance, beginning of period | 608 | - | | Awards vested and change in fair value | 146 | 608 | | **Total DSU liability, end of period** | **754** | **608** | - The total DSU liability increased from **$608 thousand** at December 31, 2021, to **$754 thousand** at June 30, 2022, due to new grants and fair value adjustments[69](index=69&type=chunk)[70](index=70&type=chunk) [8.5 Phantom Share Units](index=20&type=section&id=8.5%20Phantom%20Share%20Units) Phantom share units granted to the Chair of the Board are cash-settled, vest over three years, and are marked-to-market as a long-term liability - **1,000,000** cash-settled phantom share units were granted to the Chair of the Board in November 2020, vesting three years from the grant date and payable upon departure or change of control[71](index=71&type=chunk) - These units are marked-to-market at each reporting period and presented as a long-term incentive plan liability[72](index=72&type=chunk) | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :------------------------------------------ | :------------------ | :-------------------- | | Balance, beginning of period | 277 | 56 | | Awards vested and change in fair value | (46) | 221 | | **Total phantom share unit liability, end of period** | **231** | **277** | [9. Commitments and contingencies](index=20&type=section&id=9.%20Commitments%20and%20contingencies) The Company has contractual obligations, a parent company guarantee for the AGM's reclamation bond, and faces ordinary course legal contingencies | Commitment Category | Within 1 year ($ thousands) | 1 - 5 years ($ thousands) | Over 5 years ($ thousands) | At June 30, 2022 ($ thousands) | At December 31, 2021 ($ thousands) | | :------------------------------------------ | :---------------- | :---------------- | :--------------- | :------------------- | :--------------------- | | Accounts payable and accrued liabilities | 1,108 | - | - | 1,108 | 1,467 | | Long-term incentive plan (cash-settled awards) | 914 | 277 | - | 1,191 | 1,547 | | Corporate office leases | 131 | 300 | - | 431 | 501 | | **Total** | **2,153** | **577** | **-** | **2,730** | **3,515** | - The Company's total contractual obligations decreased from **$3.5 million** at December 31, 2021, to **$2.7 million** at June 30, 2022[73](index=73&type=chunk) - Galiano Gold has provided a parent company guarantee of **$5.9 million** for the unfunded portion of the AGM's reclamation bond[73](index=73&type=chunk) - The Company believes that the ultimate resolution of potential regulatory investigations, claims, and lawsuits is not reasonably likely to have a material adverse effect on its financial condition or future results[74](index=74&type=chunk) [10. General and administrative expenses](index=21&type=section&id=10.%20General%20and%20administrative%20expenses) General and administrative expenses decreased due to lower wages, benefits, consulting costs, and a credit from share-based compensation | Expense Category | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Wages, benefits and consulting | (1,355) | (2,540) | (3,719) | (4,495) | | Office, rent and administration | (304) | (234) | (603) | (511) | | Professional and legal | (231) | (216) | (380) | (361) | | Share-based compensation | 188 | (593) | 370 | (1,933) | | Travel, marketing, investor relations and regulatory | (265) | (159) | (350) | (329) | | Depreciation and other | (37) | (37) | (74) | (74) | | **Total** | **(2,004)** | **(3,779)** | **(4,756)** | **(7,703)** | - Total general and administrative expenses decreased by **47.0%** for the three months and **38.3%** for the six months ended June 30, 2022[76](index=76&type=chunk) - The reduction was significantly influenced by a credit of **$0.188 million** in share-based compensation for the three months and **$0.370 million** for the six months in 2022, compared to expenses in 2021[76](index=76&type=chunk) [11. Finance income](index=21&type=section&id=11.%20Finance%20income) Finance income significantly increased due to a substantial positive fair value adjustment on redeemable preference shares | Income Category | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Fair value adjustment on redeemable preference shares | 13,214 | 2,111 | 13,214 | 4,434 | | Interest income and other | 123 | 75 | 166 | 164 | | **Total** | **13,337** | **2,186** | **13,380** | **4,598** | - Total finance income surged by **509%** for the three months and **191%** for the six months ended June 30, 2022[77](index=77&type=chunk) - The fair value adjustment on redeemable preference shares was the primary contributor, increasing from **$2.1 million** to **$13.2 million** for the three-month period and from **$4.4 million** to **$13.2 million** for the six-month period[77](index=77&type=chunk) [12. Income per share](index=22&type=section&id=12.%20Income%20per%20share) Basic and diluted income per share increased for Q2 but decreased for the six-month period, with no dilutive securities in 2022 | Metric | Three months ended June 30, 2022 | Three months ended June 30, 2021 | Six months ended June 30, 2022 | Six months ended June 30, 2021 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income after tax for the period ($ thousands) | 12,566 | 5,004 | 11,029 | 18,032 | | Weighted average number of ordinary shares - basic | 224,943,453 | 224,675,424 | 224,943,453 | 224,511,162 | | Weighted average number of ordinary shares - diluted | 224,943,453 | 225,294,015 | 224,943,453 | 225,129,368 | | **Basic Net income per share ($)** | **0.06** | **0.02** | **0.05** | **0.08** | | **Diluted Net income per share ($)** | **0.06** | **0.02** | **0.05** | **0.08** | - Basic and diluted income per share for the three months ended June 30, 2022, increased to **$0.06** from **$0.02** in the prior year[78](index=78&type=chunk) - For the six months ended June 30, 2022, basic and diluted income per share decreased to **$0.05** from **$0.08** in the prior year[78](index=78&type=chunk) - There were no dilutive securities for the three and six months ended June 30, 2022[78](index=78&type=chunk) [13. Supplemental cash flow information](index=22&type=section&id=13.%20Supplemental%20cash%20flow%20information) Non-cash working capital significantly contributed to cash from operating activities, reversing prior year's cash usage | Metric | Three months ended June 30, 2022 ($ thousands) | Three months ended June 30, 2021 ($ thousands) | Six months ended June 30, 2022 ($ thousands) | Six months ended June 30, 2021 ($ thousands) | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Receivables and receivable due from related party | 3,597 | (1,246) | 2,191 | (2,077) | | Prepaid expenses and deposits | 266 | 238 | 516 | 284 | | Accounts payable and accrued liabilities | (390) | 158 | (702) | (2,368) | | **Change in non-cash working capital** | **3,473** | **(850)** | **2,005** | **(4,161)** | - Non-cash working capital provided **$3.47 million** in cash for the three months ended June 30, 2022, a significant improvement from using **$0.85 million** in the prior year[79](index=79&type=chunk) - For the six months ended June 30, 2022, non-cash working capital provided **$2.01 million** in cash, compared to using **$4.16 million** in the prior year[79](index=79&type=chunk) - The change was primarily driven by a positive movement in receivables and receivable due from related party[79](index=79&type=chunk) [14. Segmented information](index=23&type=section&id=14.%20Segmented%20information) The Company operates as a single segment, with West Africa holding most non-current assets and significantly contributing to finance income - The Company has one reportable operating segment: the corporate function with its head office in Canada[81](index=81&type=chunk) | Geographic Segment | Total Assets (June 30, 2022, $ thousands) | Total Liabilities (June 30, 2022, $ thousands) | | :----------------- | :------------------------------ | :----------------------------------- | | Canada | 58,812 | 2,485 | | West Africa | 87,303 | 179 | | **Total** | **146,115** | **2,664** | **Geographic Allocation of Statement of Operations (Six months ended June 30, 2022, $ thousands):** | Metric | Canada | West Africa | Total | | :------------------------------------------ | :------- | :---------- | :------ | | Service fee earned as operators of joint venture | 2,614 | - | 2,614 | | Loss from operations and joint venture | (2,108) | (226) | (2,334) | | Finance income | 166 | 13,214 | 13,380 | | **Net (loss) income and comprehensive (loss) income** | **(1,957)** | **12,986** | **11,029** | - West Africa accounts for the majority of total assets (**$87.3 million**) and is the primary source of finance income (**$13.2 million**) for the six months ended June 30, 2022[82](index=82&type=chunk)[84](index=84&type=chunk) [15. Subsequent event](index=25&type=section&id=15.%20Subsequent%20event) Subsequent to quarter-end, on July 4, 2022, the Company granted 1,299,400 Deferred Share Units to its directors - On July 4, 2022, the Company granted **1,299,400 DSUs** to directors[85](index=85&type=chunk)