CORRECTION: Austral Gold Announces Restart of Casposo Silver-Gold Mine Operations Following Release of an Updated Mineral Resource and Mineral Reserve Estimate

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sep 27, 2016) - This release corrects and replaces the release sent this morning at 8:00 am ET. The TSX Venture symbol was incorrect. The corrected release follows:

Austral Gold Limited. ("Austral" or the "Company") (AGD.AX)(TSX VENTURE:AAM) is pleased to announce that it is recommencing full operations at the Casposo gold-silver project ("Casposo" or the "Project") following receipt of the results of an updated Mineral Resource and Mineral Reserve estimate for Casposo in Argentina. The estimates were reviewed by independent consultants Roscoe Postle Associates ("RPA"), and are summarized in a National Instrument 43-101 ("NI 43-101") and JORC 2012 compliant Technical Report on the Casposo Gold-Silver Mine, Department of Calingasta, San Juan Province, Argentina (the "Casposo Technical Report" or "Technical Report") dated September 7, 2016. The Casposo Technical Report will be filed on SEDAR under the profile of Austral Gold within 45 days in accordance with NI 43-101. The Technical Report confirms that the optimisation of the plant and move to small scale mining will support a robust and economically viable underground gold and silver mine. All dollar amounts are quoted in U.S. dollars ("$").

Life of Mine Plan Highlights

• Changes in underground mining methods are expected to reduce dilution;

• Optimisation of processing plant is expected to improve efficiency of the plant;

• Mine life: 4 years;

• Pre-Tax NPV(5%) of $53 million and After-tax NPV(5%) of $37 million;

• Proven and Probable Mineral Reserves as of June 30, 2016, totaling 972,000 tonnes at 2.53 g/t Au and 231 g/t Ag, containing approximately 79,000 ounces of gold and 7.2 million ounces of silver;

• Measured and Indicated Mineral Resources as of June 30, 2016, inclusive of Mineral Reserves, totalling 1.4 million tonnes at 3.0 g/t Au and 238 g/t Ag, containing approximately 136,500 ounces gold and 10.8 million ounces silver;

• Average production of 800 tonnes per day (tpd) from underground (300,000 tonnes per year)

• All-In Sustaining Cost (AISC) of $1,038 per oz gold equivalent.

• Metallurgical recovery based on operating data averaging 91% for gold, 83% for silver;

• Average annual gold production of 21,000 ounces of gold and 1.7 million ounces of silver per year;

• Life of Mine (LOM) capital totals $41.7 million, including reclamation and closure costs.

• Proposed operations to be funded from Austral's existing and other internal cash resources

Austral Gold Chief Executive Officer, Stabro Kasaneva, remarked that, "The Life of Mine Plan provides a very solid basis for advancing to commissioning the full operation. The Plan supports the viability of moving to small scale underground mining methods and optimisation of the process plant. The positive results put us in a position to re-commence full operations. We look forward to continuing the operation of Casposo and working with the community to the benefit of all stakeholders."

"The results present an exciting opportunity for the Company and its shareholders, and it is a very significant moment for the company, representing our first operation in Argentina," remarked Austral Gold Chairman, Eduardo Elsztain. "The results confirm our expectations for Casposo, validating the original commitment of the Board of Directors, management, our investors and Argentina's stakeholders to push forward with recommissioning the operation and growing our precious metal production in Argentina and Chile."

CASH FLOW ANALYSIS

Project economics at an average gold price of $1,329/ounce and a silver price of $19/ounce, based on a consensus of independent forecasts for annual prices, resulted in Table 1.

Table 1: LOM Net Present Value
	Pre-Tax	After Tax
Net Present Value at a 5% discount rate (NPV5)	$53 million	$37 million
Net Present Value at a 7.5% discount rate (NPV7.5)	$52 million	$37 million
Net Present Value at a 10% discount rate (NPV10)	$50 million	$36 million

Notes:	All figures are reported on a 100% equity project basis and are rounded.
	Economic valuation is presented using a start date of June 30, 2016.

The cash flow to be generated over the LOM are shown in Table 2;

Table 2: LOM Cash Flow
UNITS	2016	2017	2018	2019	2020	Total
US$ '000	Year 1	Year 2	Year 3	Year 4	Year 5
Au ounces recovered	11,168	18,603	24,525	17,924		72,221
Ag ounces recovered	1,292,271	2,541,028	1,439,876	729,225		6,002,400
Au Gross Revenue	15,002	24,526	32,334	23,631		95,492
Ag Gross Revenue	24,430	48,038	27,221	13,786		113,475
Total Gross Revenue	39,432	72,564	59,555	37,417		208,967
Net Revenue	36,552	67,143	55,563	35,033		194,291
Total Operating Cost	13,648	29,234	28,738	25,157		96,777
Operating Cash flow	22,904	37,910	26,825	9,876		97,514
Total Capex (Incl Working Capital)	8,177	14,603	13,047	4,705	1,185	41,717
Taxes	1,846	8,325	5,142	1,045		16,357
After-Tax Cash flow	12,880	14,982	8,636	4,126	(1,185)	39,439
Note: Numbers may not add due to rounding. Only Mineral Reserves have been used in generating the cash flow analysis. No Inferred Resources have been used in this cash flow model.

COST SUMMARY

Table 3: Operating Costs Summary
LOM OPERATING COST
Mining (Underground)	US$/t milled	40.07
Processing	US$/t milled	37.51
G&A	US$/t milled	21.53
Total Unit Operating Cost	US$/t milled	99.11

Average cost per ounce metrics for LOM are shown in Table 4;

Table 4: Average Cost per Ounce Metrics
Cost per Ounce		Operating	AISC
Gold, Silver as by product	US$/oz Au	(231)	550
Gold Equivalent	US$/oz AuEq	656	1,038
Silver, Gold as byproduct	US$/oz Ag	0.21	9.61
Silver Equivalent	US$/AgEq	5.49	13.09

Notes:

Under current price assumptions, neither gold nor silver dominates revenue - they are co-products. As such, AISC calculated according to World Gold Council guidance with silver as a by-product, may not be comparable to other gold operations.

CASH FLOW SENSITIVITY ANALYSIS

Economic risk analysis was examined by running cash flow sensitivities on Gold and Silver Price, head grade, recovery, operating costs and capital costs. The pre-tax NPV @ 5% was calculated for reasonable variations of each input.

The cash flow is most sensitive to metal prices and head grades as shown in Table 5. It is least sensitive to recoveries and capital costs (which are low given that Casposo is being recommissioned).

Table 5: Pre-tax NPV (5%) Sensitivity Analysis

Parameter Variables	Units	Lowest	Lower	Base	Higher	Highest
Gold Price	US$/oz	1,000	1,200	1,329	1,400	-
Recovery %	% Au	87%	89%	91%	93%	95%
Head Grade	g/t Au	2.02	2.27	2.52	2.77	3.03
Operating Cost	$ millions	87	92	97	106	116
Capital Cost	$ millions	38	40	42	46	50
Pre Tax NPV@5%	Units	Lowest	Lower	Base	Higher	Highest
Gold Price	$ millions	7	35	53	63	-
Recovery %	$ millions	44	49	53	56	60
Head Grade	$ millions	17	35	53	71	89
Operating Cost	$ millions	62	57	53	44	35
Capital Cost	$ millions	57	55	53	49	45

Austral is currently consolidating exploration and mining geology databases and is expecting to define and prioritise brownfield targets for future drilling.

By way of background, Austral acquired a 51% interest in Casposo from a subsidiary of Troy Resources Limited (Troy) on March 4, 2016 for $1,000,000, with a reciprocal purchase and sale obligation for an additional 19% interest for the sum of $1,000,000 to be transferred and paid on March 4, 2017. In addition, Austral and Troy have agreed that Casposo will pay Troy $2,000,000 within 12 months as from March 4, 2016, out of which $1,000,000 has been already paid. In turn, Austral has options to acquire: (i) an additional ten percent (10%) for $1,500,000 within the period commencing on December 31, 2018, and ending on January 15, 2019, (ii) an additional ten percent (10%) for $2,500,000 within the period commencing on December 31, 2019, and January 15, 2020, and (iii) the last ten percent (10%) for $3,000,000 within the period commencing on December 31, 2020, and ending on January 15, 2021. These purchase price options may be subject to an adjustment based on an increase in the price of silver during such period. Pursuant to the Troy Agreement, Austral agreed to obtain from other sources or provide to Casposo funding or financing of up to US $10,000,000 towards developing and implement a re-engineering plan to recommission Casposo.

Life of Mine Plan Details

RPA reviewed and validated the Mineral Resource, Mineral Reserve, production schedule, and cost estimates for the Casposo operations as received from Austral.

For information with respect to the key assumptions, parameters and risks associated with the estimates included therein and other technical information, please refer to the Technical Report on the Casposo Gold-Silver mine to be filed on SEDAR within the next 45 days.

A summary of areas described in the Technical Report is included below:

Mineral Resources

The Mineral Resources for Casposo are contained in the Kamila (including Aztec, B-Vein Inca and Mercado zones), Julieta and Casposo Norte deposits and are summarised in Table 6.

In RPA's opinion, sampling and assaying have been carried out using industry-standard quality assurance/quality control (QA/QC) practices, and the resulting database is appropriate for use in Mineral Resource estimation.

In RPA's opinion, interpretations of the geology and the three-dimensional (3D) wireframes of the estimation domains are reasonable, and the resource estimates have been prepared using appropriate methodology and assumptions including: treatment of high assays, composite length, search parameters, bulk density, interpolation, cut-off grade and classification.

The Mineral Resources are classified and reported in accordance with Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral Reserves dated May 10, 2014 (CIM definitions) as incorporated in NI 43-101, as well as JORC 2012.

Table 6: Mineral Resources as of June 30, 2016
Classification	Tonnes (000)	Grades (g/t)			Contained Metal (000 oz)
		Ag	Au	Au Eq	Ag	Au	Au Eq
Total Measured + Indicated	1,415	238	3.00	5.94	10,811	136.5	270.0
Total Inferred	1,090	140	5.0	6.7	5,040	176	238.2

Notes:

1. Mineral Resources were estimated in compliance with both CIM and JORC definitions.

2. Mineral Resources are estimated using an average long-term silver price of $15 per ounce, and a gold price of $1,200 per ounce.

3. Mineral Resources are estimated at a cut-off grade of 2 g/t Au Eq.

4. Gold equivalents (Au Eq) are calculated using a factor of 1 g Au = 81 g Ag, based on metal prices, and metallurgical recoveries (92% for gold, 87% for silver).

5. A minimum wireframe width of 0.5 m was used.

6. Bulk density is 2.6 t/m³.

7. Mineral Resources are inclusive of Mineral Reserves.

8. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

9. Numbers may not add due to rounding.

10. The Qualified Person (QP) is Chester Moore, P.Eng., an employee of Roscoe Postle Associates ("RPA").

The Kamila deposit remains open down plunge to the southeast of the Inca 3 zone. The Casposo Norte and Julieta zones are not completely delineated and many smaller targets on the property remain to be fully explored.

Mineral Reserves and Mining

The estimated Mineral Reserves are shown in Table 7.

Table 7: Proven and Probable Mineral Reserves as of June 30, 2016
	Tonnes (000)	Grades (g/t)			Contained Metal (oz)
		Ag	Au	Au Eq	Ag	Au	Au Eq
Proven	115,000	170	1.76	3.87	630,000	6,500	14,300
Probable	857,000	240	2.63	5.59	6,602,000	72,500	154,000
Total Reserves	972,000	231	2.53	5.38	7,232,000	79,000	168,300

Notes:

1. Mineral Reserves were estimated in compliance with both CIM and JORC definitions.

2. Mineral Reserves were estimated at a cut-off grade of 2.8 g/t Au Eq. Development was evaluated at an incremental cut-off grade of 1.3 g/t Au Eq.

3. Gold equivalents (AuEq) were calculated using a factor of 1 g Au = 81 g Ag, based on metal prices and metallurgical recoveries (92% for gold, 87% for silver).

4. Mineral Reserves were estimated using an average long-term silver price of $15 per ounce and gold price of $1,200 per ounce.

5. A minimum mining width 2 m was used.

6. Bulk density is 2.6 t/m³.

7. Numbers may not add due to rounding.

8. The Qualified Person (QP) is Jason Cox, P.Eng., an employee of Roscoe Postle Associates ("RPA").

There are no known mining, metallurgical, infrastructure, permitting, or other relevant factors that could materially affect the Mineral Reserve estimate.

Planned and unplanned dilution, minimum mining width, and extraction were included in the resource to reserve conversion at the stope optimization and design stage. The design shapes were drawn to represent final mined out volumes. An extraction factor of 95% is applied to both stopes and drifts. Dilution included in the design averages 33% across all veins (stopes and development).

MINING METHODS

The Casposo Mine consists of a number of narrow steeply dipping orebodies known as Aztec, B-Vein, B-Vein1, Inca0, Inca1, Inca2A, Inca2B, Mercado, and Julieta. Open pit mining in Kamila and Mercado pits was completed in 2013, and all mining is currently planned as underground, although there is potential for open pit mining at Julieta. The main production from the underground mine to date has been from Inca1, Aztec, and Inca2A.

The mining method at the Casposo Mine is expected to be Longitudinal Longhole Retreat, which was the historical method used at the mine. Mine production is expected to be made up of a combination of ore development through sill drifts (34%) and stope production (66%).

Austral is modifying previous operating practices in a number of ways to better control dilution:

• Reduced stope heights from 20 m to 15 m.

• Smaller drift size (4.5 m by 4.5 m)

• Installation of cable bolts on the hangingwall.

• Revised blasting practices.

The veins are to be accessed by sub-level footwall drives, driven from the main ramp at 15 m intervals, except where pre-existing drives at 20 m intervals will be used. Stopes are designed using a minimum mining width of 2 m and are 10.5 m high, while sill drifts are designed at 4.5 m high and on average 4.0 m to 5.0 m wide. Stope lengths vary depending on the ore body, however, are limited to a maximum of 15 m due to geotechnical constraints.

Mining is planned to progress in a bottom up fashion. Stopes on each level are to be accessed in the middle and developed along strike, at both the top and bottom elevations. Once sill development is completed, the stopes are drilled and blasted. Drilling and blasting start at the end of the stoping blocks and mucked in retreating vertical slices.

PRODUCTION SCHEDULE

The production schedule covers a mine life of four years based on the Mineral Reserves outlined in the Casposo Technical Report. Austral has been engaged in the development and rehabilitation work at the Casposo mine since April 2016, and production is expected to begin by the end of Q3 2016 at Aztec, Inca1, Inca2A, and Inca2B, which are all accessible with current existing development. The production schedule is summarized in Table 8.

Table8: Production Schedule
	Units	2016	2017	2018	2019	TOTAL
Total Mill Feed	Tonnes (000)	150	322	297	206	976
	g/t Au	2.53	1.97	2.81	2.96	2.52
	g/t Ag	322	295	182	132	230
Recovery Au	%	91.2%	91.2%	91.2%	91.2%	91.2%
Recovery Ag	%	83.0%	83.0%	83.0%	83.0%	83.0%
Recovered Au	Oz (000)	11	19	25	18	72
Recovered Ag	Oz (000)	1,292	2,541	1,440	729	6,002
Recovered Au Eq	Oz (000)	26.4	51.5	42.8	26.97	148

PROCESS

The processing and recovery method is whole ore cyanide leaching for extraction of the precious metal from the ore and Merrill-Crowe counter-current decantation (CCD) and filtration for recovery of the metal from the leach circuit. The Casposo Mine recovers gold and silver doré which is to be transported to a refining facility in Brampton, Ontario Canada for further processing into high purity gold and silver.

The Casposo processing plant has a nameplate throughput of 400,000 tpa of ore. The current underground mine plan delivers approximately 300,000 tpa of ore, and Austral plans to operate the plant on an intermittent basis to retain the nominal plant throughput.

Austral's plant modifications are expected to increase operational efficiency in the crushing and grinding circuits, and in tailings filtration and water management.

CAPITAL & OPERATING COST ESTIMATES

Austral has been carrying out a program of mine development, process improvements, and operational readiness since April 2016. The estimated capital costs (expressed in US dollars) from June 30, 2016 forward are summarised in Table 9.

Table 9: Summary of Capital Costs
Item	Units	Total	2016	2017	2018	2019	2020
Mine Development	$ millions	29.2	4.9	12.7	9.9	1.7	-
Sustaining Capital	$ millions	6.3	2.2	0.9	3.2	-
Working Capital	$ millions	2.0	1.0	1.0	-	-	-
Reclamation & Closure	$ millions	4.2				3.0	1.2
Total	$ millions	41.7	8.1	14.6	13.0	4.7	1.2

Mine development is based on the LOM plan requirements, and a unit rate of $2,200/m, based on actual costs incurred at the mine.

Sustaining capital includes budgeted plant improvements, such as changes to the belt filter and cyanide detoxification circuit to improve efficiency and reduce costs, some mobile equipment purchases, and general site maintenance costs. Mountain Pass Consulting estimated reclamation and closure costs of $4.2 million.

Operating costs for the LOM plan are shown below in Table 10.

Table 10: Summary of Operating Costs
Unit Costs	Unit	Total	2016	2017	2018	2019
Mining (Underground)	US$/t milled	40.07	34.60	36.96	40.07	48.90
Processing	US$/t milled	31.51	36.20	35.06	36.40	43.90
G&A	US$/t milled	21.53	19.97	18.62	20.20	29.10
Total Unit Operating Cost	US$/t milled	99.11	90.77	90.65	96.67	125.91
Total Costs	Unit	Total	2016	2017	2018	2019
Mining (Underground)	US$ '000	39,127	5,202	11,920	11,913	10,092
Processing	US$ '000	36,631	5,443	11,308	10,820	9,060
G&A	US$ '000	21,020	3,003	6,006	6,006	6,006
Total Operating Cost	US$ '000	96,777	13,648	29,234	28,738	25,157

Operating cost estimates include mining, processing, and general and administration (G&A) expenses. Operating costs were budgeted based on costs incurred during previous mining activities and have been compiled by area based on estimated labour requirements, consumables, and other expenditures according to the updated mine plan and process design.

The power requirements will be met by the existing power line to site that has the capacity to transmit 18 MW of power, which is well in excess of the requirements of the operation.

SOCIAL & ENVIRONMENTAL

All required studies were completed and the Environmental Impact Assessment (EIA) for Casposo was submitted in 2007. It was reviewed by a multi-disciplinary commission, approved in 2009, and renewed every two years subsequently. The fourth update was presented recently, with approval due in March 2018.

Austral reports that it has all required permits to carry out operations. Calingasta is a mining town and the town is home to a Mining Technology school. As a result, in the view of RPA, the mine enjoys better than average local support. The social and community relations are reported to be excellent.

A Mine closure plan was prepared by Mountain Pass LLC (Mountain Pass) in December 2014.

TECHNICAL INFORMATION

The Casposo Technical Report summarizing the results of the PFS is being prepared in accordance with NI 43-101 and will be filed under the Company's profile on SEDAR within 45 days of this press release. The RPA Qualified Persons (QPs) for the Casposo Technical Report include:

• Kathleen A. Altman, Ph.D., P.E. (metallurgy, processing, and environmental)

• Jason J. Cox, P.Eng. (mining, Mineral Reserves, costs, and economic analysis)

• Chester M. Moore, P.Eng., (geology and Mineral Resources)

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

About Austral Gold

Austral Gold Limited is a growing precious metals mining, development and exploration company building a portfolio of quality assets in Chile and Argentina. The Company's flagship Guanaco project in Chile is a low-cost gold and silver producing mine with further exploration upside. The company is also operator of the Casposo mine in San Juan, Argentina, which is currently being recommissioned. 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 (TSX VENTURE:AAM) and the Australian Securities Exchange (AGD.AX). For more information, please consult the company's website www.australgold.com.au.

Neither the 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.

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: expectations regarding the filing of a technical report and the expected content of the technical report; statements with respect to the Company's proposed operations at Casposo, including recommencement of operations; expectation that dilution will be reduced; expectation that optimisation of plant improve operational efficiency; LOM, cash flow and other economic projections; the ability to fund operations from existing and other internal cash resources; matters relating to future exploration; matters relating to the implementation of the mine closure plan; any future increases in the Company's interest in Casposo and the related payments; the future mine grades, recovering and production rates expected from Casposo; the estimation of mineral reserves and mineral resources; the realization of mineral reserve and mineral resource estimates; and the outlook for prices of gold and silver.

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 extract mineralization at Casposo profitably and its 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.