Galiano Gold Inc 6-K, filed Feb 13, 2026
Galiano Gold Inc. (GAU)
About this 6-K
Galiano Gold Inc filed this 6-K on February 13, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2026
Commission File No. 001-33580
GALIANO GOLD INC.
(Translation of registrant's name into English)
Suite 1640, 1066 West Hastings Street
Vancouver, British Columbia, V6E 3X1, Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F
Form 20-F [ ] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) [ ]
SUBMITTED HEREWITH
Exhibits 99.1 and 99.2 included with this report are hereby incorporated by reference as exhibits to the registrant's registration statement on Form F-10 (File No. 333-288285) (the "Registration Statement"), and to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GALIANO GOLD INC.
/s/ Matthew Freeman
________________________________
Matthew Freeman
Chief Financial Officer
Date: February 13, 2026
GALIANO GOLD INC.
CONSOLIDATED FINANCIAL STATEMENTSYears ended December 31, 2025 and 2024
(Expressed in United States dollars, unless otherwise noted)
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
Management's Report on Financial Statements
The consolidated financial statements of Galiano Gold Inc. have been prepared by, and are the responsibility of, the Company's management. The consolidated financial statements have been prepared by management on a going concern basis in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. When alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances. Financial statements are not exact since they include certain amounts based on estimates and judgements. Management has determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material respects.
The Board of Directors is responsible for ensuring management fulfills its financial reporting responsibilities. The Audit Committee meets with the Company's management and external auditors to discuss the results of the audits and to review the consolidated financial statements prior to the Audit Committee's submission to the Board of Directors for approval. The Audit Committee also reviews the quarterly financial statements and recommends them for approval to the Board of Directors, reviews with management the Company's systems of internal control, and reviews the scope of the external auditors' audit and non-audit work. The Audit Committee is appointed by the Board, and all of its members are independent directors.
The consolidated financial statements have been audited by Ernst & Young LLP, Chartered Professional Accountants, in accordance with the standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders.
Management's Report on Internal Controls over Financial Reporting
Management has developed and maintains systems of internal accounting and administrative controls in order to provide, on a reasonable basis, assurance that the financial information is relevant, reliable and accurate and that the Company's assets are appropriately accounted for and adequately safeguarded. All internal control systems have inherent limitations, including the possibility of circumvention and overriding of controls, and therefore, may not prevent or detect misstatements. Management has assessed the effectiveness of the Company's internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on management's assessment, the Company's internal control over financial reporting is effective as at December 31, 2025.
| "Matt Badylak" | "Matthew Freeman" | |
| Matt Badylak | Matthew Freeman | |
| Director, President & Chief Executive Officer | Executive Vice President & Chief Financial Officer |
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Galiano Gold Inc.
Opinion on the consolidated financial statements
We have audited the accompanying consolidated statements of financial position of Galiano Gold Inc. (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), changes in equity and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended, in conformity with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.
Basis for opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
Chartered Professional Accountants
We have served as the Company's auditor since 2023.
Vancouver, Canada
February 12, 2026
GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2025 AND DECEMBER 31, 2024
(In thousands of United States dollars)
| December 31, 2025 | December 31, 2024 | ||||||
| Note | $ | $ | |||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | 7 | 108,327 | 105,775 | ||||
| Accounts receivable | 71 | 104 | |||||
| Inventories | 8 | 70,802 | 42,830 | ||||
| Value added tax receivables | 10,808 | 8,328 | |||||
| Prepaid expenses and other | 9 | 12,175 | 8,548 | ||||
| 202,183 | 165,585 | ||||||
| Non-current assets | |||||||
| Mineral properties, plant and equipment | 10 | 388,609 | 329,429 | ||||
| Other non-current assets | 12,15(b) | 8,259 | 5,339 | ||||
| 396,868 | 334,768 | ||||||
| Total assets | 599,051 | 500,353 | |||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | 11 | 87,053 | 55,064 | ||||
| Income taxes payable | 24 | 4,167 | - | ||||
| Financial liabilities | 26 | 77,317 | 9,284 | ||||
| Lease liabilities | 13 | 16,806 | 15,937 | ||||
| Deferred consideration | 14 | 28,242 | 23,535 | ||||
| Provisions | 15(a) | 6,995 | 6,995 | ||||
| 220,580 | 110,815 | ||||||
| Non-current liabilities | |||||||
| Lease liabilities | 13 | 20,269 | 22,935 | ||||
| Deferred and contingent consideration | 14 | 26,308 | 47,835 | ||||
| Asset retirement provisions | 15(b) | 75,732 | 66,060 | ||||
| Deferred tax liabilities | 24 | 23,024 | - | ||||
| Other non-current liabilities | 26 | 11,480 | 4,939 | ||||
| 156,813 | 141,769 | ||||||
| Total liabilities | 377,393 | 252,584 | |||||
| Equity | |||||||
| Common shareholders' equity | |||||||
| Share capital | 16 | 619,311 | 616,203 | ||||
| Equity reserves | 54,530 | 52,948 | |||||
| Accumulated deficit | (454,985 | ) | (425,695 | ) | |||
| Total common shareholders' equity | 218,856 | 243,456 | |||||
| Non-controlling interest | 18 | 2,802 | 4,313 | ||||
| Total equity | 221,658 | 247,769 | |||||
| Total liabilities and equity | 599,051 | 500,353 | |||||
| Commitments and contingencies | 26 |
The accompanying notes form an integral part of these consolidated financial statements.
Approved on behalf of the Board of Directors:
| "Matt Badylak" | "Greg Martin" |
| Director | Director |
GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In thousands of United States dollars, except share and per share a mounts)
| December 31, 2025 | December 31, 2024 | ||||||
| Note | $ | $ | |||||
| Revenue | 19 | 447,767 | 231,339 | ||||
| Realized and unrealized losses on gold hedges (1) | 19,26 | (119,324 | ) | (23,121 | ) | ||
| Net revenue | 328,443 | 208,218 | |||||
| Cost of sales: | |||||||
| Production costs | 20 | (166,665 | ) | (115,769 | ) | ||
| Depreciation and depletion | 10 | (62,761 | ) | (23,603 | ) | ||
| Royalties | 21 | (33,004 | ) | (13,957 | ) | ||
| Total cost of sales | (262,430 | ) | (153,329 | ) | |||
| Income from mine operations | 66,013 | 54,889 | |||||
| General and administrative expenses | 22 | (25,264 | ) | (20,022 | ) | ||
| Exploration and evaluation expenditures | (4,206 | ) | (6,142 | ) | |||
| Termination of offtake agreement | - | (13,063 | ) | ||||
| Share of net income related to joint venture | - | 2,432 | |||||
| Service fee earned as operators of joint venture | - | 976 | |||||
| Gain on derecognition of equity investment in joint venture | - | 1,416 | |||||
| Income from operations and joint venture | 36,543 | 20,486 | |||||
| Transaction costs | 6 | - | (2,492 | ) | |||
| Finance income | 23(a) | 6,056 | 5,853 | ||||
| Finance expense(1) | 23(b) | (17,786 | ) | (15,183 | ) | ||
| Foreign exchange gain (loss) | 5,669 | (123 | ) | ||||
| Income before taxes | 30,482 | 8,541 | |||||
| Current income tax expense | 24 | (38,259 | ) | - | |||
| Deferred income tax expense | 24 | (23,024 | ) | - | |||
| Net (loss) income and comprehensive (loss) income for the year | (30,801 | ) | 8,541 | ||||
| Net (loss) income attributable to: | |||||||
| Common shareholders of the Company | (29,290 | ) | 6,118 | ||||
| Non-controlling interest | 18 | (1,511 | ) | 2,423 | |||
| Net (loss) income for the year | (30,801 | ) | 8,541 | ||||
| Weighted average number of shares outstanding: | |||||||
| Basic | 258,375,097 | 250,651,506 | |||||
| Diluted | 25 | 258,375,097 | 255,772,078 | ||||
| Net (loss) income per share attributable to common shareholders: | |||||||
| Basic | (0.11 | ) | 0.02 | ||||
| Diluted | (0.11 | ) | 0.02 |
(1) December 31, 2024 figures have been restated as a result of changes to the presentation of realized and unrealized losses on gold hedge derivative instruments . For more information, refer to Note 3(n).
The accompanying notes form an integral part of these consolidated financial statements.
GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In thousands of United States dollars , except for number of common shares)
| Non- | |||||||||||||||||||
| Number of | Share | Equity | Accumulated | controlling | Total | ||||||||||||||
| shares | capital | reserves | deficit | interest | equity | ||||||||||||||
| Note | $ | $ | $ | $ | $ | ||||||||||||||
| Balance as at January 1, 2024 | 224,972,786 | 579,619 | 53,112 | (431,813 | ) | - | 200,918 | ||||||||||||
| Issuance of common shares: | |||||||||||||||||||
| Business combination, net of share issuance costs | 6 | 28,500,000 | 32,449 | - | - | 1,890 | 34,339 | ||||||||||||
| Exercise of stock options | 17(a) | 3,605,160 | 4,135 | (1,292 | ) | - | - | 2,843 | |||||||||||
| Share-based compensation expense | 17(e) | - | - | 1,128 | - | - | 1,128 | ||||||||||||
| Net income and comprehensive income for the year | - | - | - | 6,118 | 2,423 | 8,541 | |||||||||||||
| Balance as at December 31, 2024 | 257,077,946 | 616,203 | 52,948 | (425,695 | ) | 4,313 | 247,769 | ||||||||||||
| Issuance of common shares: | |||||||||||||||||||
| Exercise of stock options | 17(a) | 2,634,495 | 3,011 | (953 | ) | - | - | 2,058 | |||||||||||
| Equity-settled long-term incentive plan awards |
17(b) |
77,996 | 97 | - | - | - | 97 | ||||||||||||
| Share-based compensation expense | 17(e) | - | - | 2,535 | - | - | 2,535 | ||||||||||||
| Net loss and comprehensive loss for the year | - | - | - | (29,290 | ) | (1,511 | ) | (30,801 | ) | ||||||||||
| Balance as at December 31, 2025 | 259,790,437 | 619,311 | 54,530 | (454,985 | ) | 2,802 | 221,658 |
The accompanying notes form an integral part of these consolidated financial statements.
GALIANO GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In thousands of United States dollars)
| December 31, 2025 | December 31, 2024 | ||||||
| Note | $ | $ | |||||
| Operating activities: | |||||||
| Net (loss) income for the year | (30,801 | ) | 8,541 | ||||
| Adjustments for: | |||||||
| Depreciation and depletion | 10,22 | 62,880 | 23,737 | ||||
| Share-based compensation | 17(e) | 10,306 | 6,874 | ||||
| Share of net income related to joint venture | - | (2,432 | ) | ||||
| Gain on derecognition of equity investment in joint venture | - | (1,416 | ) | ||||
| Transaction costs | 6 | - | 2,492 | ||||
| Finance income | 23(a) | (6,056 | ) | (5,853 | ) | ||
| Finance expense | 23(b) | 17,786 | 15,183 | ||||
| Unrealized loss on gold hedge derivative instruments | 19,28(b) | 74,553 | 13,606 | ||||
| Unrealized foreign exchange gain | (2,850 | ) | (686 | ) | |||
| Income tax expense | 24 | 38,259 | - | ||||
| Income taxes paid | 24 | (34,092 | ) | - | |||
| Deferred income tax expense | 24 | 23,024 | - | ||||
| Operating cash flow before working capital changes | 153,009 | 60,046 | |||||
| Change in working capital | 27 | 4,985 | (4,300 | ) | |||
| Cash provided by operating activities | 157,994 | 55,746 | |||||
| Investing activities: | |||||||
| Expenditures on mineral properties, plant and equipment | 10 | (114,923 | ) | (66,901 | ) | ||
| Deferred consideration paid | 6,14 | (25,000 | ) | - | |||
| Net cash and cash equivalents assumed on acquisition | - | 47,502 | |||||
| Transaction costs paid | 6 | - | (2,492 | ) | |||
| Redemption of preferred shares in joint venture | - | 25,000 | |||||
| Interest received | 23(a) | 3,412 | 4,707 | ||||
| Purchase of other assets | (460 | ) | (2,027 | ) | |||
| Cash (used in) provided by investing activities | (136,971 | ) | 5,789 | ||||
| Financing activities: | |||||||
| Lease liability payments | 13 | (19,265 | ) | (13,400 | ) | ||
| Revolving credit facility related costs | 12 | (3,483 | ) | - | |||
| Shares issued for cash on exercise of stock options | 17(a) | 2,058 | 2,843 | ||||
| Share issuance costs | - | (41 | ) | ||||
| Cash used in financing activities | (20,690 | ) | (10,598 | ) | |||
| Impact of foreign exchange on cash and cash equivalents | 2,219 | (432 | ) | ||||
| Net increase in cash and cash equivalents during the year | 2,552 | 50,505 | |||||
| Cash and cash equivalents, beginning of year | 105,775 | 55,270 | |||||
| Cash and cash equivalents, end of year | 108,327 | 105,775 | |||||
| Supplemental cash flow information | 27 |
The accompanying notes form an integral part of these consolidated financial statements.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
1. Nature of operations
Galiano Gold Inc. ("Galiano" or the "Company") was incorporated on September 23, 1999 under the Business Corporations Act of British Columbia, Canada. The Company's head office and principal address is located at 1640 - 1066 West Hastings Street, Vancouver, British Columbia, V6E 3X1, Canada. The Company's registered and records office is located at Suite 3500, 1133 Melville Street, Vancouver, V6E 4E5. The Company's common shares trade on the Toronto Stock Exchange and NYSE American Exchange under the ticker symbol "GAU".
Until March 4, 2024, the Company's principal business activity was the operation of the Asanko Gold Mine ("AGM") through a joint venture arrangement (the "JV") associated with the Company's then 45% equity interest in the entity that held the AGM mining licenses and gold exploration tenements (see note 6).
On March 4, 2024 (the "Acquisition Date"), the Company acquired Gold Fields Limited's ("Gold Fields") 45% interest in the AGM (the "Acquisition"). As of the Acquisition Date, the Company owns a 90% interest in the AGM with the Government of Ghana continuing to hold a 10% free-carried interest (non-controlling interest). Refer to note 6 for further details on the Acquisition.
The AGM consists of four main open-pit mining areas: Nkran, Esaase, Abore and Miradani North, multiple satellite deposits and exploration projects located on the Asankrangwa Gold Belt in the Amansie West District of the Republic of Ghana ("Ghana"), West Africa.
2. Basis of presentation
(a) Statement of compliance
These consolidated financial statements have been prepared on a going concern basis using accounting policies in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the International Financial Reporting Interpretations Committee.
These consolidated financial statements were authorized for issue and approved by the Board of Directors on February 12, 2026.
(b) Basis of presentation and consolidation
These consolidated financial statements have been prepared on a historical cost basis, except for financial instruments carried at fair value.
All amounts are expressed in thousands of United States ("US") dollars, unless otherwise stated, and the United States dollar is the functional currency of the Company and each of its subsidiaries. References to C$ are to Canadian dollars.
Certain comparative period financial information has been restated to conform to the current year presentation.
These consolidated financial statements incorporate the financial information of the Company and its subsidiaries as at December 31, 2025. Subsidiaries are entities controlled by the Company. Control exists when the Company has power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Subsidiaries are included in the consolidated financial statements of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. The results of operations and cash flows of Asanko Gold Ghana Ltd. ("AGGL"), Adansi Gold Company (GH) Ltd. and Shika Group Finance Limited were consolidated commencing on March 4, 2024 (refer to note 6).
All significant intercompany amounts and transactions between the Company and its subsidiaries have been eliminated on consolidation.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
2. Basis of presentation (continued)
The principal subsidiaries to which the Company is a party, as well as their geographic locations, were as follows as at December 31, 2025:
| Affiliate name | Location | Interest | Classification and accounting method |
| Galiano International (Isle of Man) Ltd. | Isle of Man | 100% | Consolidated |
| Galiano Gold (Isle of Man) Ltd. | Isle of Man | 100% | Consolidated |
| Asanko Gold Ghana Ltd.1 | Ghana | 90% | Consolidated |
| Adansi Gold Company (GH) Ltd. 1 | Ghana | 100% | Consolidated |
| Shika Group Finance Limited1 | Isle of Man | 100% | Consolidated |
| 13579 Holding Limited2 | Malta | 100% | Consolidated |
1 From January 1, 2024 to March 3, 2024, the Company equity accounted for its then 45% interest in AGGL and 50% interest in each of Adansi Gold Company (GH) Ltd. and Shika Group Finance Limited.
2 Galiano Gold Netherlands B.V., a Netherlands domiciled company, was migrated to Malta during the fourth quarter of 2025 and the business name was changed to 13579 Holding Limited.
3. Material accounting policy information
The accounting policies described in this section were those applied by the Company during the years ended December 31, 2025 and 2024.
(a) Business combinations
Upon the acquisition of a business, the acquisition method of accounting is applied, whereby the purchase consideration is allocated to the identifiable assets, liabilities and contingent liabilities (identifiable net assets) acquired on the basis of fair value at the date of acquisition.
Acquisition related costs, other than costs to issue equity securities of the Company, including investment banking fees, legal fees, accounting fees, valuation fees, and other professional or consulting fees, are expensed as incurred. The cost to issue equity securities of the Company as consideration for the acquisition are reduced from share capital as share issuance costs.
Non-controlling interests are measured at fair value as at the date of acquisition.
Upon the acquisition of control, any previously held interest is re-measured to fair value at the date control is obtained resulting in a gain or loss upon the acquisition of control.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period (up to 12 months from the acquisition date) to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. Revisions to provisional amounts are accounted for retrospectively.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(b) Foreign currency translation
Transactions in foreign currencies are initially recorded at the functional currency rate of exchange at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies (i.e. those currencies other than the functional currency) are translated at the functional currency rate of exchange at the date of the statement of financial position. Foreign exchange gains (losses) are recorded in the consolidated statement of operations and comprehensive income (loss) for the year.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
(c) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and short-term investments with remaining maturities at initial recognition of ninety days or less, or that are fully redeemable without penalty or loss of interest.
(d) Inventories
Gold on hand, gold-in-process, and stockpiled ore inventories are recorded at the lower of weighted average production cost and net realizable value. The cost of inventories includes the cost of mining contractors, direct labour, raw materials and consumables, mine site overhead expenses and applicable depreciation and depletion. Net realizable value is calculated as the estimated price at the time of sale based on prevailing metal prices less estimated future costs to convert the inventories from their respective states into saleable form less estimated costs to sell.
Production costs are included in gold-in-process inventory based on current costs incurred up to the point of dore production. The cost of gold on hand represents the cost of gold-in-process inventories plus applicable treatment costs. The costs of inventories sold during the period are presented as production costs and depreciation and depletion, as applicable, in the statement of operations and comprehensive income (loss) for the year.
Additions to the cost of ore stockpiles are based on the related current cost of production for the year, while reductions in the cost of ore stockpiles are based on the weighted-average cost per tonne of ore in the stockpile.
Supplies and spare parts are valued at the lower of weighted-average cost and net realizable value. Replacement costs of materials and spare parts are generally used as the best estimate of net realizable value. Provisions are recorded to reduce the carrying amount of materials and spare parts inventory to net realizable value to reflect current intentions for the use of redundant or slow-moving items, or for physically obsolete items. Provisions for redundant and slow-moving items are made by reference to specific items of inventory. The Company reverses write-downs where there is a subsequent increase in net realizable value and the inventory is still on hand.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(e) Mineral properties, plant and equipment ("MPP&E")
(i) Mineral properties
Recognition
Capitalized costs of mineral properties include the following:
- costs assigned to mineral properties acquired in business combinations;
- expenditures incurred to develop mineral properties including pre-production stripping costs;
- stripping costs in the production phase of a mine if certain criteria have been met (see below);
- costs to define and delineate known economic resources and develop the project;
- borrowing costs attributable to qualifying mining properties, if any; and
- estimates of associated reclamation and closure costs.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(e) MPP&E (continued)
(i) Mineral properties (continued)
Stripping costs
In open pit mining operations, it is necessary to incur costs to remove overburden and other mine waste materials in order to access the ore from which minerals can be extracted economically. Stripping costs incurred in order to provide initial access to the ore body (referred to as pre-production stripping) are capitalized as incurred. The pre-production stripping period is deemed to end when an open pit achieves steady state production in line with the Company's mine plan. Stripping costs incurred during the production stage of an open pit mine are accounted for as production costs in the consolidated statement of operations and comprehensive income (loss) during the period that the stripping costs were incurred, unless these costs provide a future economic benefit. Production phase stripping costs are considered to generate a future economic benefit when (i) it is probable that future economic benefit associated with the stripping activity will flow to the entity; (ii) the entity can identify the component of the ore body for which access has been improved; and (iii) the costs relating to the stripping activity associated with that component can be measured reliably. These costs are capitalized as mineral properties, plant and equipment.
Production costs are allocated between inventory produced and deferred stripping assets based on the volume of waste extracted compared with the expected waste volume for a given volume of ore production, the latter is known as a 'strip ratio'. The strip ratio is derived from the Company's estimated mineral reserves on a pit-by-pit basis.
Management reviews estimates of waste and ore tonnes in each identified component of operating open pit mines at the end of each financial year, and when events and circumstances indicate that such a review should be made. Changes to the estimated identification of components and the associated waste and ore within each component are accounted for prospectively.
Depletion
The Company uses a number of criteria to assess whether a mine is in the condition necessary for it to be capable of operating in a manner intended by management which if met, will determine if a mineral property should be depleted. These criteria include, but are not limited to:
- completion of operational commissioning of each major mine and plant component;
- demonstrated ability to mine and mill consistently and without significant interruption at a pre-determined average rate of designed capacity;
- the passage of a reasonable period of time for testing of all major mine and plant components;
- gold recoveries at or near expected production levels; and
- a significant portion of available funding is directed towards operating activities.
Mineral properties that are operating as intended by management are depleted on a deposit-by-deposit basis using the units-of-production method over the mine's estimated proven and probable mineral reserves and will commence when the open pit is capable of operating in the manner intended by management. Mineral properties that do not meet these criteria are not depleted.
Deferred stripping assets are depleted using the units-of-production method over the specific open pit mineral reserves that directly benefit from the specific stripping activity.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(e) MPP&E (continued)
(ii) Exploration and evaluation assets and expenditures
Exploration and evaluation expenditures include the costs of acquiring rights to explore, exploratory drilling and related exploration costs incurred on tenements without an existing mine and on areas outside the boundary of a known mineral deposit that contains proven and probable reserves. Exploration and evaluation expenditures incurred on a tenement, with the exception of property acquisition costs that are capitalized to exploration and evaluation assets, are expensed as incurred up to the date of establishing that the tenement has defined mineral resources and demonstrated technical feasibility and commercial viability.
Expenditures incurred on a tenement subsequent to the establishment of its technical feasibility and commercial viability are capitalized and included in the carrying amount of the related mining property.
The technical feasibility and commercial viability of a mineral deposit is assessed based on a combination of factors, such as, but not limited to:
- the extent to which mineral reserves or mineral resources have been identified through a feasibility study or similar level document;
- the results of optimization studies and further technical evaluation carried out to mitigate project risks identified in the feasibility study;
- the status of environmental permits, and
- the status of mining leases or permits.
(iii) Plant and equipment
Recognition
The cost of plant and equipment consists of the purchase price, costs directly attributable to the delivery of the asset to the location and the condition necessary for it to be capable of operating in the manner intended by management, including the cost of testing whether the asset is operating in the manner intended by management, and estimates of associated reclamation and closure costs. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. Where significant components of an asset have differing useful lives, depreciation is calculated on each separate component.
Depreciation
Depreciation of an asset begins when it is available for use (i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management).
The carrying amounts of plant and equipment are depreciated using either the straight-line or units-of-production method over the shorter of the estimated useful life of the asset or the estimate life of mine. The significant classes of depreciable plant and equipment and their estimated useful lives are as follows:
| Asset Class | Estimated Useful Life |
| Processing plant & related components and infrastructure | Units of production over life of mine |
| Mobile and other mine equipment components | 3 to 10 years |
| Computer equipment and software | 3 years |
| Right-of-use assets | Straight-line over lease term |
Management reviews the estimated useful lives, residual values and depreciation methods of the Company's plant and equipment at the end of each financial year, and when events and circumstances indicate that such a review should be made. Changes to estimated useful lives, residual values or depreciation methods resulting from such review are accounted for prospectively.
Major maintenance and repairs
Expenditure on major maintenance and repairs includes the cost of replacement parts of assets and overhaul costs. Where an asset or part of an asset is replaced and it is probable that future economic benefits associated with the item will be available to the Company, that expenditure is capitalized and the carrying amount of the item replaced is derecognized. Similarly, overhaul costs associated with major maintenance are capitalized when it is probable that future economic benefits will be available and any remaining carrying amounts of the cost of previous overhauls are derecognized. All other maintenance and repair costs are expensed as incurred.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(e) MPP&E (continued)
(iv) Impairment of non-financial assets
The carrying amounts of assets included in MPP&E are reviewed for impairment when events and changes in circumstances indicate that the related carrying amounts may not be recoverable. If any such indication exists, the recoverable amount of the relevant cash-generating unit ("CGU") is estimated in order to determine the extent of impairment. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
The carrying amounts of the CGUs are compared to their recoverable amounts where the recoverable amount is the higher of value-in-use ("VIU") and fair value less costs of disposal ("FVLCD"). FVLCD is defined as the amount that would be obtained from the sale of the asset in an orderly transaction between market participants at the measurement date. VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and from its ultimate disposal. The fair value of mine sites is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects. If a reliable estimate of future cash flows cannot be made, then fair value is determined by reference to market prices for comparable assets. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. An impairment is recognized immediately in the consolidated statement of operations and comprehensive income (loss).
Mineral properties, plant and equipment that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed. When an impairment loss reverses in a subsequent period, the revised carrying amount shall not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset previously, less subsequent depletion and depreciation expense. Reversals of impairment losses are recognized in the consolidated statement of operations and comprehensive income (loss) in the period in which the reversals occur.
(v) Derecognition
Upon disposal or abandonment, the carrying amounts of MPP&E are derecognized and any associated gains or losses are recognized in the consolidated statement of operations and comprehensive income (loss).
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(f) Leases
At inception of a contract, the Company assesses whether a contract is or contains a lease. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether it has the right to obtain substantially all of the economic benefits from and to direct the use of the identified asset.
At commencement or on modification of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of its relatively standalone prices.
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
- amounts expected to be payable under a residual value guarantee; and
- the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease, unless the Company is reasonably certain not to terminate early.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(f) Leases (continued)
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option, or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in the consolidated statement of operations and comprehensive income (loss) if the carrying amount of the right-of-use asset has been reduced to zero.
The Company has elected to apply the practical expedient under IFRS 16 to account for certain lease arrangements that include both lease and non-lease components as a single lease component.
Short-term leases and leases of low-value assets
The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including office equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight- line basis over the lease term.
(g) Provisions
General
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of operations and comprehensive income (loss), net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as finance expense in the consolidated statement of operations and comprehensive income (loss).
Asset retirement provisions
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. The Company records the estimated present value of future cash flows associated with mine site reclamation as a liability when the liability is incurred with a corresponding increase in the carrying value of the related reclamation asset. A pre-tax, risk-free rate discount rate that reflects the time value of money is used to calculate the net present value. The liability is accreted over time to reflect the unwinding of the discount with accretion expense included in finance expense in the consolidated statement of operations and comprehensive income (loss). Changes in estimates or circumstances include changes in legal or regulatory requirements, increased obligations arising from exploration activities or additional mining, changes to reclamation cost estimates, changes to inflation rates and changes to risk-free discount rates. Changes in estimates that result in a change to the carrying value of the asset retirement provision have a corresponding change in the carrying amount of the related asset.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(h) Revenue from contracts with customers
Revenue is derived from the sale of gold and by-products. Revenue is recognized for contracts with customers when there is persuasive evidence that all of the following criteria are met:
- the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;
- the Company can identify each party's rights regarding the goods to be transferred;
- the Company can identify the payment terms for the goods to be transferred;
- the contract has commercial substance (i.e. the risk, timing or amount of the Company's future cash flows is expected to change as a result of the contract); and
- it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods that will be transferred to the customer.
Realized and unrealized losses on gold hedge derivative financial instruments are presented within net revenue in the Statement of Operations and Comprehensive Income (Loss). Revenues resulting from settlement of gold hedges via physical delivery of gold ounces are recorded as revenue using the spot gold price on the settlement date. Any corresponding realized gain or loss on settlement of the gold hedge is recorded within net revenue.
Revenue from gold and any by-product metals is generally recorded at the time of physical delivery of the refined gold (i.e. when gold is credited to the counterparty's gold account), which is also the date when control of the gold passes to the customer.
(i) Government royalties
Royalty payments to governments which are based on gross revenue are not considered income taxes and are recognized as an expense in the statement of operations and comprehensive income (loss).
(j) Financial instruments
(i) Financial assets
Recognition and measurement
The Company recognizes a financial asset in its statement of financial position when the Company becomes party to the contractual provisions of the instrument. All financial assets are initially recorded at fair value plus directly attributable transaction costs and classified as either (i) financial assets subsequently measured at amortized cost, (ii) financial assets subsequently measured at fair value through other comprehensive income (loss) or (iii) financial assets subsequently measured at fair value through profit or loss. The basis of classification takes into consideration both the Company's business model for managing and the contractual cash flow characteristics of the financial assets.
A financial asset is measured at amortized cost if the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset is measured at fair value through other comprehensive income (loss) if the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(j) Financial instruments (continued)
(i) Financial assets (continued)
Recognition and measurement (continued)
A financial asset is measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income. Fair value changes in financial assets classified as fair value through profit or loss, if any, are recognized in the consolidated Statement of Operations and Comprehensive Income (Loss).
Derecognition
A financial asset is derecognized when the contractual rights to receive cash flows from the asset have expired.
(ii) Financial liabilities
Recognition and measurement
All financial liabilities are initially recorded at fair value less transaction costs. All financial liabilities are subsequently measured at amortized cost using the effective interest method, except for:
- financial liabilities at fair value through profit or loss;
- financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies;
- financial guarantee contracts;
- commitments to provide a loan at a below-market interest rate; and
- contingent consideration recognized by an acquirer in a business combination to which IFRS 3, Business combinations, applies.
An entity may, at initial recognition, irrevocably designate a financial liability as measured at fair value through profit or loss when a contract contains one or more embedded derivatives, or when doing so results in more relevant information, because either (a) it eliminates or significantly reduces a measurement or recognition inconsistency (i.e. an accounting mismatch); or (b) a group of financial liabilities or financial assets and financial liabilities is managed, and its performance is evaluated on a fair value basis.
Fair value changes of financial liabilities classified as fair value through profit or loss, if any, are recognized in the consolidated Statement of Operations and Comprehensive Income (Loss).
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(k) Share-based compensation
The Company has a share option plan and share unit plan which are described in note 17. The Company records equity-settled share-based compensation for options and share units using the fair value method with graded vesting or cliff vesting, as appropriate. Under the fair value method, share-based payments are measured at the fair value of the consideration received or the fair value of the equity instruments issued or liabilities incurred, whichever is more reliably measurable, and are charged over the vesting period to the consolidated statement of operations and comprehensive income (loss). The offset is credited to equity reserves ratably over the vesting period, after adjusting for the number of awards that are expected to vest. For share options, the fair value of share-based compensation awards is determined at the date of grant using the Black-Scholes option pricing model.
Expenses recognized for unvested forfeited awards are reversed. For awards that are cancelled, any expense not yet recognized is recognized immediately in the statement of operations and comprehensive income (loss).
Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the terms had not been modified over the original vesting period. In addition, an expense is recognized for any modification which increases the total fair value of the share-based payment arrangement as measured at the date of modification, over the remainder of the vesting period.
For cash-settled share-based payments, the Company measures the goods or services acquired and the liability incurred at the fair value of the liability. Cash-settled awards are fair valued using the number of estimated vested awards multiplied by the share price of the Company's common shares, and including an estimate of relevant performance factors, if applicable. The corresponding share-based compensation expense is recognized over the vesting period of the award. As these awards will be settled in cash, the liability is remeasured at fair value at each reporting period and at the date of settlement, with changes in fair value recognized as share-based compensation expense in the consolidated statement of operations and comprehensive income (loss) in the period incurred.
(l) Income taxes
Income tax on the profit or loss for the years presented comprises current and deferred income tax. Income tax is recognized in the consolidated statement of operations and comprehensive income (loss), except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
Current income tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.
Deferred income tax is recognized in respect of unused tax losses, tax credits and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax rates that have been substantively enacted at the reporting date.
A deferred income tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a future income tax asset will be recovered, it does not recognize the asset.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
3. Material accounting policy information (continued)
(l) Income taxes (continued)
The Company records foreign exchange gains and losses representing the impacts of movements in foreign exchange rates on the tax bases of non-monetary assets and liabilities which are denominated in foreign currencies. Foreign exchange gains and losses relating to the translation of the deferred income tax balance from local statutory accounts to functional currency accounts are included in deferred income tax expense or recovery in the consolidated statement of operations and comprehensive income (loss).
(m) Income (loss) per share
Basic income (loss) per share is computed by dividing net income (loss) for the year by the weighted-average number of common shares outstanding during the year. The computation of diluted income (loss) per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on income (loss) per share. For this purpose, the treasury stock method is used for the assumed proceeds upon the exercise of stock options that are used to purchase common shares at the average market price during the year.
(n) Voluntary change in accounting policy - presentation of losses on gold hedge derivative instruments
The Company periodically enters into gold price hedge instruments that are settled in either cash or physical delivery of gold ounces and meet the definition of a derivative financial instrument. These contracts are within the scope of IFRS 9 and as such, prior to settlement, changes in fair value of these derivative instruments are presented as unrealized gains or losses in the Statement of Comprehensive Income (Loss). The Company previously presented these gains or losses within finance expense in the Statement of Comprehensive Income (Loss).
During the year ended December 31, 2025, the Company physically settled a portion of its gold hedge contracts and determined that losses on gold hedge contracts would result in improved information for users if presented within net revenue, to better reflect the Company's intended physical settlement of these contracts. Unrealized gains or losses on gold hedge contracts are also presented within net revenue. Under this new accounting policy, gold ounces physically delivered to a customer to settle gold hedge contracts are recognized on a gross basis in revenue using the spot price of gold on the settlement date, thus reflecting cash received under the contract and settlement of the related derivative instrument. This new presentation provides reliable and more relevant information for users of the financial statements reflecting the Company's intended physical delivery of gold under these contracts, and aligns with how the Company monitors and manages performance of gold hedge contracts. Comparative year information for net revenue and finance expense have been restated to conform with this voluntary accounting policy change, which resulted in finance expense being reduced by $23.1 million and net revenue decreasing by the same amount. There is no impact on comparative year net income or earnings per share resulting from this accounting policy change.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
4. Changes in accounting standards
(a) Accounting standards adopted during the year
There were no new accounting standards effective January 1, 2025 that impacted these consolidated financial statements.
(b) Accounting standards and amendments issued but not yet adopted
The following standards and interpretations, which may be applicable to the Company, have been issued but are not yet effective as of December 31, 2025:
IFRS 18
On April 9, 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements, a new standard on presentation and disclosure in financial statements with a focus on updates to the statement of profit or loss. The key new concepts introduced in IFRS 18 relate to: the structure of the statement of profit or loss; required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity's financial statements; and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will not impact the recognition or measurement of items in the financial statements, but may change what an entity reports as its 'operating profit or loss'. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also applies to comparative information. The Company is evaluating how IFRS 18 will impact the presentation and disclosures in its consolidated financial statements in future periods.
IFRS 7 and 9
In May 2024, the IASB issued amendments to the classification and measurement of financial instruments (IFRS 7 and IFRS 9), which included clarification that a financial liability is derecognized on the 'settlement date'; an accounting policy option to derecognize financial liabilities that are settled through an electronic payment system before settlement date if certain conditions are met; clarification on how to assess the contractual cash flow characteristics of financial assets that include environmental, social and governance-linked features; and requires additional disclosures under IFRS 7 for financial assets and liabilities with contractual terms that reference a contingent event. The amendments to IFRS 7 and IFRS 9 will be effective for annual reporting periods beginning on or after January 1, 2026. The Company is currently analysing how the amendments to IFRS 7 and IFRS 9 may impact the Company's consolidated financial statements.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
5. Significant accounting judgements and estimates
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Management believes the judgements, estimates and assumptions used in these consolidated financial statements are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows.
The accounting judgements and estimates which have the most significant effect on these financial statements are as follows:
Judgements
Assessment of indicators of impairment of MPP&E
The Company considers both external and internal sources of information in assessing whether there are any indications that the value of its MPP&E is impaired. External sources of information the Company considers include changes in the market, economic and legal environment in which it operates that are not within its control and affect the recoverable amount of the Company's MPP&E. Internal sources of information the Company considers include the manner in which MPP&E is being used or is expected to be used and indications of economic performance of the assets. The judgements are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these assumptions, which may impact the recoverable amount of the assets. In such circumstances, the carrying value of the Company's MPP&E may be impaired with the impact recorded in the consolidated statement of operations and comprehensive income (loss).
Estimates
Purchase price accounting
The measurement of consideration transferred and fair value of assets acquired and liabilities assumed required the Company to make certain judgements and estimates taking into account information available at the time of acquisition about future events, including but not limited to: estimates of mineral reserves and resources acquired, exploration potential, future operating costs and capital expenditures, reclamation and closure costs, timing of development of the Nkran pit, future gold prices, discount rates and tax rates.
Deferred and contingent consideration
The Company has made estimates in determining the fair value as of the reporting date of contingent consideration payable to Gold Fields associated with the Acquisition. Estimates include the timing of production from the Nkran pit, future gold prices and selection of discount rates. Changes to these estimates may result in actual payments in the future differing from the amounts currently recorded in these financial statements.
Mineral reserves
Estimates of the quantities of proven and probable mineral reserves form the basis for the Company's life-of-mine plans, which are used for accounting purposes, including: the calculation of depletion expense, the capitalization of stripping costs, and the forecasting and timing of cash flows related to the asset retirement provisions and impairment assessments, if any. To the extent that these estimates of proven and probable mineral reserves vary, there could be changes in depletion expense, stripping assets, asset retirement provisions and impairment charges) recorded.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
5. Significant accounting judgements and estimates (continued)
Estimates (continued)
Depletion of MPP&E
Estimates are made of recoverable ounces in the Company's mining properties, which are depleted based on ore tonnes contained in proven and probable mineral reserves. To the extent that changes are made to the estimate of proven and probable mineral reserves, the depletion charge may change.
Estimates are also made of the waste and ore tonnes in each identified component or phase of operating open pit mines, as capitalized stripping costs are depleted based on ore tonnes contained. The estimated ratio of waste to ore is also the basis on which the Company determines the amount of stripping costs to capitalize. Changes in the estimate of waste and ore tonnes may change the related depletion charge of capitalized stripping costs or the rate at which future costs are capitalized.
Plant and equipment are depreciated to their estimated residual value over the estimated useful life of the asset. Should the actual useful life of the plant or equipment vary, future depreciation charges may change.
Measurement of inventory costs
The Company estimates quantities of ore in stockpiles and recoverable gold contained in gold-in-process and gold on hand in order to determine the cost of inventories and the weighted average costs of gold sold during the year. To the extent that these estimates vary, production costs of gold may change.
Net realizable value of inventories
Estimates of net realizable value are based on the most reliable evidence available, at the time that the estimates are made, of the amount that the inventories are expected to realize. In order to determine the net realizable value of gold on hand, gold-in-process and stockpiled ore, the Company estimates future metal selling prices, production forecasts, realized grades and recoveries, timing of processing, and future costs to convert the respective inventories into saleable form, if applicable. Reductions in metal price forecasts, increases in estimated future costs to convert, reductions in the number of recoverable ounces, and a delay in timing of processing can result in a write-down of the carrying amounts of the Company's stockpiled ore inventory.
Materials and supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, to the extent net realizable value of materials and spares must be estimated, replacement costs of the materials and spare parts are generally used as the best estimate of net realizable value.
Current and deferred Income taxes
In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. Levels of future taxable income are affected by, among other things, the price of gold, quantities of proven and probable mineral reserves, production costs, and foreign currency exchange rates.
Where tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of current income taxes and deferred income tax assets and liabilities recorded in these financial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period that the changes occur.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
5. Significant accounting judgements and estimates (continued)
Estimates (continued)
Asset retirement provisions
Provisions for reclamation and closure cost obligations represent management's best estimate of the present value of the future cash outflows required to settle closure cost liabilities. Significant judgements and estimates are required in forming assumptions of future activities, future cash outflows, the timing of those cash outflows and selection and application of discount and inflation rates. These assumptions are formed based on environmental and regulatory requirements or the Company's environmental policies which may give rise to constructive obligations. The Company's assumptions are reviewed at the end of each reporting period and adjusted to reflect management's current best estimates, and changes in any of the above factors may result in a change to the provision recognized by the Company. Changes to these estimates and judgements may result in actual expenditures in the future differing from the amounts currently recorded in these financial statements.
6. Acquisition of control of the AGM
On March 4, 2024, the Company completed the acquisition of Gold Fields' 45% interest in the AGM JV. Following the closing of the Acquisition, the Company owns a 90% interest in AGGL, the entity which holds the AGM's mining concessions and licenses, a 100% interest in Adansi Gold Company (GH) Ltd., an entity which holds exploration licenses in Ghana, and a 100% interest in Shika Group Finance Limited. The Company also acquired a 100% interest in GFI Netherlands B.V. (subsequently renamed to 13579 Holding Limited), the entity through which Gold Fields held its former 45% interest in the JV.
The Company began consolidating the operating results, cash flows and net assets of the AGM commencing on March 4, 2024.
The total consideration payable to Gold Fields comprised the following:
- $65.0 million in cash on closing;
- issuance of 28.5 million common shares of the Company on closing;
- $55.0 million of deferred consideration (note 14) comprised of a:
- $25.0 million cash payment on or before December 31, 2025 (paid); and
- $30.0 million cash payment on or before December 31, 2026 (collectively "Deferred Consideration")
The Deferred Consideration is to be paid in cash subject to the Company's right to satisfy up to 20% of each payment with common shares of the Company, subject to Gold Fields not owning more than 19.9% of the Company's issued and outstanding common shares at that time; and
- $30.0 million cash payment contingently payable upon production of 100,000 gold ounces from the Nkran deposit ("Contingent Consideration").
Gold Fields also received a 1% net smelter return royalty on production from the Nkran deposit beginning upon 100,000 gold ounces being produced, and subject to a maximum of 447,000 gold ounces of production ("Nkran Royalty"). Galiano has a right of first refusal on any full or partial disposition of the Nkran Royalty by Gold Fields.
During the year ended December 31, 2024, the Company incurred $2.5 million of acquisition-related costs, which were presented as transaction costs in the Statements of Operations and Comprehensive Income (Loss).
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
6. Acquisition of control of the AGM (continued)
The following table highlights the final allocation, as at December 31, 2024, of the purchase price to the assets acquired and liabilities assumed based on the Company's estimates of fair value.
| Final $ |
|||
| Assets acquired | |||
| Cash and cash equivalents | 112,502 | ||
| Accounts receivable | 102 | ||
| Inventories | 41,158 | ||
| Value added tax receivables | 7,885 | ||
| Prepaid expenses and other | 5,509 | ||
| Reclamation deposits | 5,308 | ||
| Mineral properties, plant and equipment | 244,584 | ||
| Liabilities assumed | |||
| Accounts payable and accrued liabilities | (44,475 | ) | |
| Lease liabilities | (19,176 | ) | |
| Asset retirement provisions | (53,537 | ) | |
| Net assets acquired | 299,860 | ||
| Non-controlling interest | (1,890 | ) | |
| Net assets attributable to Galiano | 297,970 |
7. Cash and cash equivalents
| December 31, 2025 | December 31, 2024 | |||||
| $ | $ | |||||
| Cash held in banks | 98,799 | 23,454 | ||||
| Short-term investments | 9,528 | 82,321 | ||||
| Cash and cash equivalents | 108,327 | 105,775 |
The Company's short-term investments are held with highly-rated financial institutions. The weighted-average interest rate on short-term investments at December 31, 2025 was approximately 3.9% (as at December 31, 2024 - 4.0%).
8. Inventories
| December 31, 2025 | December 31, 2024 | |||||
| $ | $ | |||||
| Gold dore on hand | 469 | 10,216 | ||||
| Gold-in-process | 3,880 | 2,229 | ||||
| Ore stockpiles | 49,361 | 12,117 | ||||
| Supplies | 17,092 | 18,268 | ||||
| Total inventories | 70,802 | 42,830 |
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
9. Prepaid expenses and other
| December 31, 2025 | December 31, 2024 | |||||
| $ | $ | |||||
| Prepaid expenses | 7,649 | 7,039 | ||||
| Marketable securities | 4,526 | 1,509 | ||||
| Total prepaid expenses and other | 12,175 | 8,548 |
10. Mineral properties, plant and equipment
| Exploration | Plant, | ||||||||||||||||||||
| and | buildings | Right-of- | Assets | ||||||||||||||||||
| Mineral | evaluation | and | use | under | Corporate | ||||||||||||||||
| properties | assets | equipment | assets | construction | assets | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||
| Cost | |||||||||||||||||||||
| As at January 1, 2024 | - | - | - | 623 | - | 496 | 1,119 | ||||||||||||||
| Acquired under the Acquisition (note 6) | 12,421 | 3,964 | 180,817 | 19,176 | 28,206 | - | 244,584 | ||||||||||||||
| Additions | 67,060 | - | - | 27,816 | 5,658 | 19 | 100,553 | ||||||||||||||
| Change in asset retirement provisions (note 15(b)) | 10,628 | - | - | - | - | - | 10,628 | ||||||||||||||
| Transfers | 17,895 | - | 14,185 | - | (32,080 | ) | - | - | |||||||||||||
| As at December 31, 2024 | 108,004 | 3,964 | 195,002 | 47,615 | 1,784 | 515 | 356,884 | ||||||||||||||
| Additions | 106,197 | - | 1,260 | 11,157 | 8,818 | 76 | 127,508 | ||||||||||||||
| Change in asset retirement provisions (note 15(b)) | 6,992 | - | - | - | - | - | 6,992 | ||||||||||||||
| Transfers | - | - | 8,677 | - | (8,677 | ) | - | - | |||||||||||||
| As at December 31, 2025 | 221,193 | 3,964 | 204,939 | 58,772 | 1,925 | 591 | 491,384 | ||||||||||||||
| Accumulated depreciation and depletion | |||||||||||||||||||||
| As at January 1, 2024 | - | - | - | (450 | ) | - | (444 | ) | (894 | ) | |||||||||||
| Depreciation and depletion expense | (9,970 | ) | - | (5,672 | ) | (10,889 | ) | - | (30 | ) | (26,561 | ) | |||||||||
| As at December 31, 2024 | (9,970 | ) | - | (5,672 | ) | (11,339 | ) | - | (474 | ) | (27,455 | ) | |||||||||
| Depreciation and depletion expense | (50,099 | ) | - | (9,281 | ) | (15,915 | ) | - | (25 | ) | (75,320 | ) | |||||||||
| As at December 31, 2025 | (53,436 | ) | - | (14,953 | ) | (27,254 | ) | - | (499 | ) | (96,142 | ) | |||||||||
| Net book value: | |||||||||||||||||||||
| As at December 31, 2024 | 98,034 | 3,964 | 189,330 | 36,276 | 1,784 | 41 | 329,429 | ||||||||||||||
| As at December 31, 2025 | 161,124 | 3,964 | 189,986 | 31,518 | 1,925 | 92 | 388,609 |
Additions to mineral interests include capitalized stripping costs at the Abore and Esaase deposits of $50.7 million and $33.2 million of pre-stripping costs at the Nkran deposit during the year ended December 31, 2025 (year ended December 31, 2024 - $58.9 million of capitalized stripping costs at Abore).
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
10. Mineral properties, plant and equipment (continued)
Depreciation and depletion expense included $62.9 million recognized in the Statement of Operations and Comprehensive (Loss) Income for the year ended December 31, 2025, and included a credit of $12.4 million to depreciation expense, which was capitalized to inventories (year ended December 31, 2024 - credit of $2.8 million to depreciation expense, which was capitalized to inventories).
Refer to note 22 for depreciation expense on corporate fixed assets, which is recorded within general and administrative expenses.
Refer to note 12 for details of the revolving credit facility, which is secured by a first priority charge against AGGL's assets, including mineral properties, plant and equipment.
11. Accounts payable and accrued liabilities
The Company's accounts payable and accrued liabilities are primarily comprised of amounts outstanding for purchases relating to mining operations, exploration and evaluation activities and corporate expenses. The normal credit period for supplier payables is typically between 30 to 90 days. Accounts payable and accrued liabilities are comprised of the following items:
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Supplier payables | 22,226 | 10,570 | ||||
| Accrued liabilities | 36,737 | 24,366 | ||||
| Royalties, mineral rights fees and withholding taxes | 14,510 | 13,189 | ||||
| Current portion of long-term incentive plan liabilities (note 17) | 13,580 | 6,939 | ||||
| Total accounts payable and accrued liabilities | 87,053 | 55,064 |
12. Revolving credit facility
On December 19, 2025, the Company's subsidiary AGGL entered into a revolving credit facility (the "RCF") with FirstRand Bank Limited, acting through its Rand Merchant Bank division. The RCF has a 4-year term and floating interest rate based on the Secured Overnight Financing Rate (SOFR) plus a margin of 3.95% per annum, while the undrawn portion of the RCF is subject to a standby fee of 1.38% per annum.
The RCF is guaranteed by certain subsidiaries of the Company and is also secured by a first priority charge against AGGL's assets, and a first priority share pledge of certain of the Company's subsidiaries.
The RCF includes financial covenants, to be tested semi-annually, requiring AGGL to maintain the following: (a) gearing ratio of net indebtedness to net worth not less than 0.25:1; (b) net leverage ratio based on net indebtedness to rolling four quarters earnings before interest, taxes and depreciation ("EBITDA") not less than 2.50:1; and (c) an interest coverage ratio, based on rolling four quarters EBITDA divided by net finance costs, greater than 4.00:1. As of December 31, 2025, the Company had not drawn on the RCF and was in full compliance with all covenants.
During the year ended December 31, 2025, the Company incurred $2.6 million of costs associated with finalizing the RCF agreement. These costs have been presented within prepaid expenses and other non-current assets in the Statement of Financial Position.
Additionally, the Company was required to deposit $0.9 million of cash into a reserve account in connection with closing the RCF. This cash is restricted until the term of the RCF expires and has been presented within other non-current assets in the Statement of Financial Position.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
13. Lease liabilities
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Balance, beginning of year | 38,872 | 203 | ||||
| Leases assumed in Acquisition (note 6) | - | 19,176 | ||||
| Leases entered into during the year (note 10) | 11,157 | 27,816 | ||||
| Lease payments | (19,265 | ) | (13,400 | ) | ||
| Interest expense (note 23(b)) | 6,311 | 5,077 | ||||
| Total lease liabilities, end of year | 37,075 | 38,872 | ||||
| Less: current portion of lease liabilities | (16,806 | ) | (15,937 | ) | ||
| Total non-current portion of lease liabilities | 20,269 | 22,935 |
During the year ended December 31, 2025, the Company incurred $129.5 million relating to variable lease payments under mining services and other mining related contracts, which have not been included in the measurement of lease liabilities (year ended December 31, 2024 - $71.7 million of variable lease payments).
14. Deferred and contingent consideration
In accordance with the Acquisition agreement, certain consideration payable to Gold Fields is deferred in time or contingent upon certain future events. The Company recognized the following financial liabilities at fair value as of the acquisition date, which were subsequently remeasured as of December 31, 2025 in accordance with IFRS 9, Financial Instruments ("IFRS 9").
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Deferred Consideration | 28,242 | 50,109 | ||||
| Contingent Consideration | 19,320 | 16,873 | ||||
| Nkran Royalty | 6,988 | 4,388 | ||||
| Total deferred and contingent consideration | 54,550 | 71,370 | ||||
| Less: current portion of Deferred Consideration | (28,242 | ) | (23,535 | ) | ||
| Total non-current portion of deferred and contingent consideration | 26,308 | 47,835 |
(a) Deferred consideration
$55.0 million of the aggregate consideration payable to Gold Fields was deferred with $25.0 million due on or before December 31, 2025 (paid) and $30.0 million due on or before December 31, 2026. The Company estimated the fair value of the Deferred Consideration at initial recognition by discounting the contractual future cash flows at a discount rate of 6.3%. After initial recognition, the Deferred Consideration was measured at amortized cost.
During the year ended December 31, 2025, the Company recognized accretion expense of $3.1 million on the Deferred Consideration liability in finance expense in the Statement of Operations and Comprehensive (Loss) Income (year ended December 31, 2024 - $2.5 million of accretion expense). Additionally, the Company paid to Gold Fields the first deferred payment of $25.0 million in the fourth quarter of 2025. The $30.0 million payment due to Gold Fields on or before December 31, 2026 has been presented as a current liability in the Statement of Financial Position.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
14. Deferred and contingent consideration (continued)
(a) Deferred consideration (continued)
The following table summarizes the change in the carrying amount of the Deferred Consideration for the years ended December 31, 2025 and 2024:
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Balance, beginning of year | 50,109 | - | ||||
| Initial recognition at fair value | - | 47,628 | ||||
| Payments | (25,000 | ) | - | |||
| Accretion expense (note 23) | 3,133 | 2,481 | ||||
| Balance, end of year | 28,242 | 50,109 |
(b) Contingent consideration
$30.0 million of the aggregate consideration payable to Gold Fields is contingent upon 100,000 gold ounces being produced from the Nkran deposit. In accordance with IFRS 3 and IFRS 9, contingent consideration payable by an acquirer in a business combination shall be subsequently measured at fair value through profit or loss. The Company remeasured the fair value of the Contingent Consideration to $19.3 million at December 31, 2025 and recognized a $2.4 million fair value adjustment in finance expense in the Statement of Operations and Comprehensive (Loss) Income for the year ended December 31, 2025 (year ended December 31, 2024 - fair value adjustment of $3.5 million recognized in finance expense).
The following table summarizes the change in the carrying amount of the Contingent Consideration for the years ended December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | |||||
| $ | $ | |||||
| Balance, beginning of year | 16,873 | - | ||||
| Initial recognition at fair value | - | 13,337 | ||||
| Change in fair value during the year | 2,447 | 3,536 | ||||
| Balance, end of year | 19,320 | 16,873 |
The Company estimated the fair value of the Contingent Consideration at December 31, 2025 by discounting forecast future cash flows based upon the expected payment date from the current life of mine plan at a discount rate of 14.5% (December 31, 2024 - 14.5% discount rate). The Contingent Consideration falls within level 3 of the fair value hierarchy.
(c) Nkran royalty
Gold Fields is entitled to a 1% net smelter return royalty on gold revenue generated from the Nkran deposit beginning upon 100,000 gold ounces being produced, and subject to a maximum of 447,000 gold ounces of production. In accordance with IFRS 3 and IFRS 9, contingent consideration payable by an acquirer in a business combination shall be subsequently measured at fair value through profit or loss.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
14. Deferred and contingent consideration (continued)
(c) Nkran royalty (continued)
The Company estimated the fair value of the Nkran Royalty by discounting forecast future cash flows at a discount rate of 14.5% (December 31, 2024 - 14.5% discount rate). The gold price assumption applied in estimating future royalty payments as of December 31, 2025 was based on a long-term consensus gold price of $2,950 per ounce. The Company remeasured the fair value of the Nkran Royalty to $7.0 million as of December 31, 2025, and recognized a $2.6 million fair value adjustment in finance expense in the Statements of Operations and Comprehensive (Loss) Income for the year ended December 31, 2025 (year ended December 31, 2024 - fair value adjustment of $1.4 million recognized in finance expense). The Nkran Royalty falls within level 3 of the fair value hierarchy.
The following table summarizes the change in the carrying amount of the Nkran Royalty for the year ended December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | |||||
| $ | $ | |||||
| Balance, beginning of year | 4,388 | - | ||||
| Initial recognition at fair value | - | 3,030 | ||||
| Change in fair value during the year | 2,600 | 1,358 | ||||
| Balance, end of year | 6,988 | 4,388 |
15. Provisions
(a) Legal provision
In 2019, a services provider of the AGM filed a dispute with an arbitration tribunal alleging the AGM breached the terms of a services agreement and claimed approximately $25.0 million in damages. The arbitrator ruled in favour of the AGM that there had not been a breach of any terms of the contract yet made an award to the counterparty of approximately $13.0 million plus interest for services rendered. The AGM, consistent with the arbitration ruling, maintains the view that there was no breach of contract, and all contractual amounts were paid as due. The AGM therefore is undertaking an appeals process in the Court of Appeal in Ghana. A provision of $7.0 million has been recorded as of December 31, 2025 (December 31, 2024 - $7.0 million), which represents management's best estimate to settle the claim. While the Company cannot reasonably predict the ultimate outcome of these actions, and inherent uncertainties exist in predicting such outcomes, the Company believes the estimated provision is reasonable based on the information currently available.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
15. Provisions (continued)
(b) Asset retirement provisions
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Balance, beginning of year | 66,060 | - | ||||
| Assumed in Acquisition (note 6) | - | 53,537 | ||||
| Accretion expense (note 23(b)) | 2,889 | 2,246 | ||||
| Change in estimate (note 10) | 6,992 | 10,628 | ||||
| Reclamation undertaken during the year | (209 | ) | (351 | ) | ||
| Total asset retirement provisions, end of year | 75,732 | 66,060 |
The asset retirement provisions consist of reclamation and closure costs for the AGM's mining properties. Reclamation and closure activities include land rehabilitation, dismantling of buildings and mine facilities, ongoing care and maintenance and other costs. As at December 31, 2025, the Company's reclamation cost estimates were discounted using a long-term risk-free discount rate of 4.1% (December 31, 2024 - 4.5%).
The Company is required to provide security to the Environmental Protection Agency of Ghana ("EPA") for the performance by the Company of its reclamation obligations in respect of its mining leases at the AGM. The Company deposits a reclamation deposit in a Ghanaian bank, and the reclamation deposit is required to be held until receiving a final reclamation completion certificate from the EPA. The Company is expected to be released from this requirement 45 days following the third anniversary of the date that the Company receives a final completion certificate. As of December 31, 2025, the Company had provided reclamation deposits totaling $5.4 million (December 31, 2024 - $5.3 million). Additionally, the Company has provided bank guarantees to the EPA in the amount of $16.2 million (December 31, 2024 - $16.5 million). The reclamation deposits have been presented within other non-current assets in the Statement of Financial Position.
16. Share capital
(a) Authorized:
Unlimited common shares without par value or restrictions.
(b) Issued and outstanding common shares
| Number of shares $ |
Amount $ |
|||||
| Balance, January 1, 2024 | 224,972,786 | 579,619 | ||||
| Issued on closing of Acquisition (note 6), net of issuance costs | 28,500,000 | 32,449 | ||||
| Issued pursuant to exercise of stock options (note 17(a)) | 3,605,160 | 4,135 | ||||
| Balance, December 31, 2024 | 257,077,946 | 616,203 | ||||
| Issued pursuant to exercise of stock options (note 17(a)) | 2,634,495 | 3,011 | ||||
| Equity-settled restricted s hare units (note 17(b)) | 77,996 | 97 | ||||
| Balance, December 31, 2025 | 259,790,437 | 619,311 |
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
16. Share capital (continued)
(c) Base shelf prospectus
On July 8, 2025, the Company filed a final short form base shelf prospectus (the "Prospectus"), under which the Company may sell from time-to-time common shares, warrants, subscription receipts, units, debt securities and/or share purchase contracts of the Company, up to an aggregate of $500 million. The Prospectus has a term of 25-months from the filing date. As of the date of these financial statements, no securities have been issued under the Prospectus.
17. Equity reserves and long-term incentive plan awards
The Company has a stock option plan and a share unit plan under which restricted share units ("RSUs"), performance share units ("PSUs"), deferred share units ("DSUs") and phantom share units may be awarded to directors, officers, employees and other service providers. All awards under the share unit plan may be designated by the Company's Board of Directors to be settled in either cash, shares or a combination thereof.
Under the two plans, when combined, the number of shares issuable cannot exceed 9% of the issued and outstanding common shares of the Company. Specifically, shares reserved for issuance under the share unit plan, when designated as equity-settled, may not exceed 5% of the issued and outstanding common shares of the Company. Share units designated as cash-settled units at the grant date are not considered in computing the limits of the share unit plan. Share units designated at the time of grant as being settled in either cash or shares, at the Board's discretion, are considered in computing limits under the share unit plan as they may be dilutive upon vesting.
RSUs, PSUs and DSUs granted prior to 2025 may be settled in cash or equity at the discretion of the Board. Given the Company's past practice of settling in cash, these awards have been designated as cash-settled awards at the time of grant, and therefore represent financial liabilities, which are recorded at fair value at each reporting date and adjusted for the completed proportion of the vesting period, with any changes recorded as shared-based compensation expense in the Statements of Operations and Comprehensive Income (Loss). The financial liability associated with these cash-settled awards is recorded in accounts payable and accrued liabilities for amounts expected to be settled within one year of the balance sheet date. A separate long-term incentive plan liability is presented within other non-current liabilities for amounts to be settled more than one year as of the balance sheet date.
The long-term incentive plan awards granted in 2025 were designated by the Board to be settled in shares upon vesting.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
17. Equity reserves and long-term incentive plan awards (continued)
(a) Stock options
Options granted typically vest in one-third increments every twelve months following the grant date for a total vesting period of three years. Stock options have a maximum term of five years following the grant date. The fair value of stock options granted is determined using the Black Scholes option pricing model. Expected volatility was determined based on the historical volatility of the Company's share price over a period consistent with the expected life of the stock options.
The following table is a reconciliation of the movement in the number of stock options outstanding for the years ended December 31, 2025 and 2024:
| Number of Options |
Weighted average exercise price C$ |
|||||
| Balance, January 1, 2024 | 12,575,335 | 0.97 | ||||
| Granted | 3,534,000 | 1.31 | ||||
| Exercised | (3,605,160 | ) | 1.08 | |||
| Expired/Forfeited | (1,454,336 | ) | 0.98 | |||
| Balance, December 31, 2024 | 11,049,839 | 1.04 | ||||
| Granted | 2,494,000 | 1.81 | ||||
| Exercised | (2,634,495 | ) | 1.08 | |||
| Forfeited | (855,669 | ) | 1.07 | |||
| Balance, December 31, 2025 | 10,053,675 | 1.21 |
For stock options granted during the years ended December 31, 2025 and 2024, the following assumptions were applied in the Black Scholes option pricing model:
| Year ended December 31, | ||||||
| 2025 | 2024 | |||||
| Expected life of option (years) | 3.6 | 3.7 | ||||
| Forfeiture rate | 17.6% | 17.9% | ||||
| Dividend yield | 0.0% | 0.0% | ||||
| Risk-free rate | 4.0% | 4.3% | ||||
| Volatility | 56.0% | 57.6% | ||||
| Black Scholes fair value per option (in US dollars) | $ | 0.55 | $ | 0.44 | ||
The following table summarizes stock options outstanding and exercisable as at December 31, 2025:
| Total options outstanding | Total options exercisable | |||||||||||||||||
| Weighted | Weighted | Weighted | Weighted | |||||||||||||||
| average | average | average | average | |||||||||||||||
| Range of | Number of | contractual life | exercise price | Number of | contractual life | exercise price | ||||||||||||
| exercise price | options | (years) | C$ | options | (years) | C$ | ||||||||||||
| C$0.00-C$1.00 | 4,317,004 | 1.77 | 0.76 | 3,302,999 | 1.62 | 0.72 | ||||||||||||
| C$1.01-C$2.00 | 5,693,337 | 3.04 | 1.55 | 1,695,332 | 1.16 | 1.42 | ||||||||||||
| C$2.01-C$3.00 | 43,334 | 3.37 | 2.37 | - | - | - | ||||||||||||
| 10,053,675 | 2.50 | 1.21 | 4,998,331 | 1.46 | 0.96 | |||||||||||||
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
17. Equity reserves and long-term incentive plan awards (continued)
(a) Stock options (continued)
The following table summarizes share-based compensation expense recognized on stock options and aggregate gross proceeds received by the Company on stock option exercises for the years ended December 31, 2025 and 2024:
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Share-based compensation expense | 1,049 | 1,128 | ||||
| Gross proceeds from stock option exercises | 2,058 | 2,843 | ||||
(b) Restricted share units
RSUs granted vest in one-third increments every twelve months following the grant date for a total vesting period of three years. The following table is a reconciliation of the movement in the number of RSUs outstanding for the years ended December 31, 2025 and 2024:
| Number of RSUs | ||||||
| December 31, 2025 | December 31, 2024 | |||||
| Balance, beginning of year | 548,284 | 564,237 | ||||
| Assumed in Acquisition | - | 75,760 | ||||
| Granted | 223,000 | 270,000 | ||||
| Settled in cash | (204,581 | ) | (302,046 | ) | ||
| Settled in common shares | (77,996 | ) | - | |||
| Forfeited | (49,267 | ) | (59,667 | ) | ||
| Balance, end of year | 439,440 | 548,284 | ||||
For all RSUs granted during the year ended December 31, 2025, the awards vest in three equal tranches over a service period of three years and had an estimated weighted average forfeiture rate of 8.8% (year ended December 31, 2024 - awards granted vest over a service period of three years and had an estimated forfeiture rate of 23.9%). RSU awards granted in 2025 have been classified as equity-settled awards, and therefore the fair value determined on the grant date is amortized over the vesting period of three years.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
17. Equity reserves and long-term incentive plan awards (continued)
(b) Restricted share units (continued)
The following table is a reconciliation of the movement in the RSU liability for the years ended December 31, 2025 and 2024:
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Balance, beginning of year | 380 | 265 | ||||
| Assumed in Acquisition | - | 30 | ||||
| Awards vested and change in fair value, net of forfeited awards | 439 | 494 | ||||
| Settled in cash | (281 | ) | (409 | ) | ||
| Equity-settled units transferred to share capital | (97 | ) | - | |||
| Total RSU liability, end of year | 441 | 380 | ||||
| Less: current portion of RSU liability | (357 | ) | (281 | ) | ||
| Total non-current RSU liability, end of year | 84 | 99 |
(c) Performance share units
PSUs granted prior to December 31, 2023 vest in either one-half or one-third increments every twelve months following the grant date for a total vesting period of three years. PSUs granted from January 1, 2024 onwards have a cliff vesting feature and vest after a service period of three years.
All PSUs contain a performance criterion applied to the number of units that vest. The number of units that vest will be determined by the Company's relative share price performance in comparison to a peer group of companies or upon achievement of certain Company strategic objectives. The PSU performance multiplier ranges from 0% to 150%.
The following table is a reconciliation of the movement in the number of PSUs outstanding for the years ended December 31, 2025 and 2024:
| Number of PSUs | ||||||
| December 31, 2025 | December 31, 2024 | |||||
| Balance, beginning of year | 1,476,487 | 2,501,482 | ||||
| Granted | 612,000 | 884,000 | ||||
| Settled in cash | (592,750 | ) | (1,709,427 | ) | ||
| Added due to performance condition | 154,498 | 191,383 | ||||
| Forfeited | (58,267 | ) | (390,951 | ) | ||
| Balance, end of year | 1,591,968 | 1,476,487 | ||||
For all PSUs granted during the year ended December 31, 2025, the awards cliff vest after a service period of three years, had an estimated forfeiture rate of 7.0% and a fair value per award of C$1.76 (year ended December 31, 2024 - awards cliff vest over a service period of three years and had an estimated forfeiture rate of 20.8%). PSUs granted in 2025 have been designated as equity-settled awards, and therefore the fair value determined on the grant date is amortized equally over the vesting period of three years.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
17. Equity reserves and long-term incentive plan awards (continued)
(c) Performance share units (continued)
The following table is a reconciliation of the movement in the PSU liability for the years ended December 31, 2025 and 2024:
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Balance, beginning of year | 927 | 1,497 | ||||
| Awards vested and change in fair value, net of forfeited awards | 1,112 | 1,909 | ||||
| Settled in cash | (719 | ) | (2,479 | ) | ||
| Total PSU liability, end of year | 1,320 | 927 | ||||
| Less: current portion of PSU liability | (918 | ) | (560 | ) | ||
| Total non-current PSU liability, end of year | 402 | 367 |
(d) Deferred share units
DSUs granted vest over a period of one year and will be paid to directors upon their retirement from the Board of Directors of the Company or upon a change of control.
The following table is a reconciliation of the movement in the number of DSUs outstanding for the years ended December 31, 2025 and 2024:
| Number of DSUs | ||||||
| December 31, 2025 | December 31, 2024 | |||||
| Balance, beginning of year | 4,830,900 | 5,068,275 | ||||
| Granted | 962,900 | 1,045,200 | ||||
| Settled in cash | - | (1,194,975 | ) | |||
| Forfeited | - | (87,600 | ) | |||
| Balance, end of year | 5,793,800 | 4,830,900 | ||||
For all DSUs granted during the year ended December 31, 2025 and 2024, the awards vest quarterly over a service period of one year and had an estimated weighted-average forfeiture rate of 0.0%. All DSUs granted during the year ended December 31, 2025 had a fair value per award of C$1.76. DSU awards granted in 2025 have been classified as equity-settled awards, and therefore the fair value determined on the grant date is amortized over the vesting period of one year. During the year ended December 31, 2025, the Company recognized $1.2 million of share-based compensation expense related to equity-settled DSU awards (year ended December 31, 2024 - nil as DSU awards granted were designated as cash-settled).
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
17. Equity reserves and long-term incentive plan awards (continued)
(d) Deferred share units
The following table is a reconciliation of the movement in the DSU liability for the years ended December 31, 2025 and 2024:
| December 31, 2025 $ |
December 31, 2025 $ |
|||||
| Balance, beginning of year | 6,098 | 4,695 | ||||
| Awards vested and change in fair value, net of forfeited awards | 6,219 | 3,343 | ||||
| Effect of foreign exchange on DSU liability | (12 | ) | - | |||
| Settled in cash | - | (1,940 | ) | |||
| Total DSU liability, end of year | 12,305 | 6,098 |
The financial liability associated with cash-settled DSU awards is presented in accounts payable and accrued liabilities in the Statement of Financial Position.
(e) Share-based compensation expense
The following table is a summary of share-based compensation expense for the years ended December 31, 2025 and 2024:
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Equity-settled awards: | ||||||
| Stock options (note 17(a)) | 1,049 | 1,128 | ||||
| Share units | 1,486 | - | ||||
| Share-based compensation expense, equity-settled awards | 2,535 | 1,128 | ||||
| Share-based compensation expense, cash-settled awards | 7,771 | 5,746 | ||||
| Total share-based compensation expense (note 22) | 10,306 | 6,874 |
18. Non-controlling interest ("NCI")
| December 31, 2025 | December 31, 2024 | |||||
| $ | $ | |||||
| Balance, beginning of year | 4,313 | - | ||||
| NCI assumed in Acquisition (note 6) | - | 1,890 | ||||
| Net (loss) earnings attributable to NCI | (1,511 | ) | 2,423 | |||
| Balance, end of year | 2,802 | 4,313 |
The Government of Ghana's 10% free-carried interest in AGGL is considered to be an NCI. The Government has a nominee on the board of directors of AGGL and is entitled to 10% of declared dividends paid out of the subsidiary; however, the Government does not have to contribute to the subsidiary's capital investment. No dividends shall be paid to the NCI until such time that AGGL has retained earnings, which is expected to occur in the latter half of the life of mine.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
19. Revenue
During the year ended December 31, 2025, the Company physically settled a portion of its gold hedges (note 26) and delivered 10,000 gold ounces to the customer. The sale of these gold ounces was recorded as revenue based on the London Bullion Market Association PM spot gold price on the date of delivery. Separately, the corresponding realized loss on the gold hedge derivative instrument was recorded within net revenue in the Statement of Operations and Comprehensive Income (Loss). The following table outlines the components of the Company's revenue and net revenue for the years ended December 31, 2025 and December 31, 2024. Note that the Company has restated its comparative year presentation of realized and unrealized losses gold hedge derivative instruments such that they are presented within net revenue, rather than as a finance expense in the Statement of Operations and Comprehensive Income (Loss). Refer to note 3(n) for a discussion on how the Company accounts for realized and unrealized losses on gold hedge contracts.
| December 31, 2025 $ |
December 31, 2024 $ |
|||||
| Gold revenue at spot prices | 447,030 | 230,808 | ||||
| By-product silver revenue | 737 | 531 | ||||
| Revenue | 447,767 | 231,339 | ||||
| Realized loss on gold hedges (note 28(b)) | (44,771 | ) | (9,515 | ) | ||
| Realized revenue | 402,996 | 221,824 | ||||
| Unrealized loss on gold hedges (notes 26 & 28(b)) | (74,553 | ) | (13,606 | ) | ||
| Net revenue | 328,443 | 208,218 |
During the year ended December 31, 2024, for the period until December 4, 2024, AGGL had an offtake agreement (the "Offtake Agreement") with a special purpose vehicle of RK Mine Finance Master Fund I Limited ("Red Kite") under which the AGM would sell 100% of future gold production from the AGM up to a maximum of 2.2 million ounces. The realized gold sale price was a spot price selected by Red Kite during a nine-day quotational period following shipment of gold from the mine. The Offtake Agreement was terminated on December 4, 2024 for total cash consideration of $13.1 million, which was presented as an expense in the Statement of Operations and Comprehensive Income for the year ended December 31, 2024.
Subsequent to the termination of the Offtake Agreement, the Company sold its gold to London Bullion Market Association registered banks at spot gold prices. During the years ended December 31, 2025 and 2024, the AGM also sold a portion of its production to the Bank of Ghana under the country's gold buying program.
During the year ended December 31, 2025, revenue from three customers accounted for approximately 50%, 26%, and 17% of the Company's total revenue, respectively (year ended December 31, 2024 - one customer accounted for 90%).
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
20. Production costs
The following is a summary of production costs by nature recorded by the Company during the years ended December 31, 2025 and 2024. Production costs of the AGM in the comparative period were consolidated by the Company from March 4, 2024 onwards.
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Raw materials and consumables | 52,680 | 47,609 | ||||
| Salaries and employee benefits | 26,663 | 19,957 | ||||
| Contractors and consultants | 79,210 | 28,722 | ||||
| Change in ore stockpiles, gold-in-process and gold dore inventories | (16,708 | ) | 2,266 | |||
| Insurance, government fees, permits and other | 24,820 | 17,215 | ||||
| Total production costs | 166,665 | 115,769 | ||||
21. Royalties
All of the AGM's concessions are subject to a 5% gross revenue royalty payable to the Government of Ghana. Furthermore, the Nkran deposit is subject to an additional 1% royalty on a portion of production as described in note 14(c) and the Esaase deposit is subject to an additional 0.5% net smelter return royalty payable to the Bonte Liquidation Committee.
For mining companies in Ghana, the Growth and Sustainability Levy ("GSL") was levied at a rate of 1% of revenues until March 31, 2025. Effective April 1, 2025, the Government of Ghana passed a bill to increase the GSL on gold mining companies from 1% to 3% until December 31, 2028. The Company has presented the GSL within royalties expense in the Statements of Operations and Comprehensive Income (Loss).
22. General and administrative ("G&A") expenses
The following is a summary of G&A expenses incurred during the years ended December 31, 2025 and 2024. G&A expenses of the AGM in the comparative period were consolidated by the Company from March 4, 2024 onwards.
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Wages, benefits and consulting | (9,064 | ) | (8,004 | ) | ||
| Office, rent and administration | (1,583 | ) | (1,431 | ) | ||
| Professional and legal | (1,256 | ) | (1,325 | ) | ||
| Share-based compensation (note 17 (e)) | (10,306 | ) | (6,874 | ) | ||
| Travel, marketing, investor relations and regulatory | (1,417 | ) | (944 | ) | ||
| Withholding taxes | (1,519 | ) | (1,310 | ) | ||
| Depreciation | (119 | ) | (134 | ) | ||
| Total G&A expense | (25,264 | ) | (20,022 | ) | ||
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
23. Finance income and expense
(a) Finance income
The following is a summary of finance income recorded by the Company during the years ended December 31, 2025 and 2024. Finance income earned by the AGM in the comparative period was consolidated by the Company from March 4, 2024 onwards.
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Interest income | 3,412 | 4,707 | ||||
| Fair value adjustment on marketable securities | 2,557 | (518 | ) | |||
| Fair value adjustment on preferred shares | - | 1,654 | ||||
| Other | 87 | 10 | ||||
| Total finance income | 6,056 | 5,853 | ||||
(b) Finance expense
The following is a summary of finance expense recorded by the Company during the years ended December 31, 2025 and 2024. Finance expense incurred by the AGM in the comparative period was consolidated by the Company from March 4, 2024 onwards.
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Interest on lease liabilities (note 13) | (6,311 | ) | (5,077 | ) | ||
| Accretion expense on as set retirement provisions (note 15(b)) | (2,889 | ) | (2,246 | ) | ||
| Accretion expense on deferred consideration (note 14(a)) | (3,133 | ) | (2,481 | ) | ||
| Change in fair value of contingent consideration (notes 14(b) and (c)) | (5,047 | ) | (4,894 | ) | ||
| Other | (406 | ) | (485 | ) | ||
| Total finance expense | (17,786 | ) | (15,183 | ) | ||
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
24. Income taxes
(a) Current income tax
Income tax expense differs from the amount that would result from applying Canadian federal and provincial income tax rates to earnings from continuing operations before taxes. These differences result from the following items:
| Year ended December 31, | ||||||
| 2025 | 2024 | |||||
| $ | $ | |||||
| Average statutory tax rate | 27% | 27% | ||||
| Income before income taxes | 30,482 | 8,541 | ||||
| Expected income tax expense | 8,230 | 2,306 | ||||
| Effect of differences in tax rates in foreign jurisdictions | 3,309 | 1,168 | ||||
| Unrealized loss on gold hedges | 30,569 | - | ||||
| Change in unrecognized deferred tax assets | 11,327 | (5,651 | ) | |||
| Non-deductible expenses | 7,271 | 4,576 | ||||
| Share of net income related to joint venture | - | (657 | ) | |||
| Fair value adjustment on redeemable preferences shares | - | (447 | ) | |||
| Gain on derecognition of equity investment in joint venture | - | (382 | ) | |||
| Deferred tax assets acquired | - | (1,867 | ) | |||
| Foreign accrual property income | 577 | 954 | ||||
| Income tax expense | 61,283 | - | ||||
| Total income tax represented by: | ||||||
| Current tax expense | (38,259 | ) | - | |||
| Deferred tax expense | (23,024 | ) | - | |||
| Total income tax expense | (61,283 | ) | - | |||
During the year ended December 31, 2025, the Company recognized current income tax expense of $38.3 million (year ended December 31, 2024 - nil) and paid income tax installments totaling $34.1 million. In Ghana, income tax installments are paid quarterly, with 90% of estimated taxes due by December 31st of the current tax year. Any remaining tax payments are made upon filing of the annual tax return.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
24. Income taxes (continued)
(b) Deferred income tax ("DIT")
The significant components of the Company's deferred tax assets and liabilities as at December 31, 2025 and 2024 were as follows:
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Deferred tax assets: | ||||||
| Deferred financing costs | - | 12,952 | ||||
| Provisions | 3,958 | 3,963 | ||||
| Right-of-use asset | 1,951 | 22 | ||||
| Operating losses | - | 2,462 | ||||
| Non-capital losses | 247 | 12 | ||||
| Deferred tax liabilities: | ||||||
| Mineral properties, plant and equipment | (28,933 | ) | (17,330 | ) | ||
| Asset retirement provisions | - | (2,046 | ) | |||
| Lease liabilities | - | (19 | ) | |||
| Other | (247 | ) | (16 | ) | ||
| Net deferred tax assets (liabilities) | (23,024 | ) | - | |||
During the year ended December 31, 2025, the Company recognized DIT expense of $23.0 million (year ended December 31, 2024 - nil). The DIT expense arises due to the initial recognition of deferred taxes on certain liabilities of the AGM that may not have tax basis at the time those liabilities are expected to be incurred.
As at December 31, 2025, the Company has tax losses of $81.8 million (December 31, 2024 - $80.0 million) in Canada, which expire between 2029 and 2045. The Company has no unutilized tax losses in Ghana (December 31, 2024 - $7.0 million).
Unrecognized deferred tax assets are comprised of the following:
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Non-capital losses carried forward | 21,844 | 21,590 | ||||
| Mineral properties, plant and equipment | 1,064 | 1,034 | ||||
| Financial liabilities | 30,570 | - | ||||
| Accounts payable and accrued liabilities | 3,843 | 2,036 | ||||
| Deferred financing costs | 13,374 | - | ||||
| Lease liabilities | - | 2,105 | ||||
| Asset retirement provisions | 20,976 | 22,880 | ||||
| Capital losses | 2,475 | 2,476 | ||||
| Other | 225 | 354 | ||||
| Total | 94,371 | 52,475 | ||||
The aggregate amount of deductible temporary differences associated with investments in subsidiaries for which deferred taxes have not been recognized as at December 31, 2025 was $2.0 million (December 31, 2024 - deductible temporary differences of $2.0 million).
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
25. (Loss) income per share
For the year ended December 31, 2025 and 2024, the calculation of basic and diluted (loss) income per share is based on the following data:
| Year ended December 31, | ||||||
| 2025 | 2024 | |||||
| Net (loss) income for the year attributable to common shareholders | $ | (29,290 | ) | $ | 6,118 | |
| Number of shares | ||||||
| Weighted average number of ordinary shares - basic | 258,375,097 | 250,651,506 | ||||
| Effect of dilutive stock options | - | 5,120,572 | ||||
| Weighted average number of ordinary shares - diluted | 258,375,097 | 255,772,078 | ||||
For the year ended December 31, 2025, the effect of all potentially dilutive securities was anti-dilutive given that the Company reported a net loss for the year.
For the year ended December 31, 2024, excluded from the calculation of diluted weighted average shares were 558,000 stock options that were determined to be anti-dilutive.
26. Commitments and contingencies
Commitments
The following table reflects the Company's contractual obligations as they fall due as at December 31, 2025 and 2024.
| Over | December 31, | December 31, | |||||||||||||
| Within 1 year | 1 - 5 years | 5 years | 2025 | 2024 | |||||||||||
| Accounts payable and accrued liabilities | 73,473 | - | - | 73,473 | 48,125 | ||||||||||
| Income taxes payable | 4,167 | - | - | 4,167 | - | ||||||||||
| ZCC gold hedges | 77,317 | 10,994 | - | 88,311 | 13,758 | ||||||||||
| Long-term incentive plan (cash-settled awards) | 13,580 | 486 | - | 14,066 | 7,405 | ||||||||||
| Mining and other services contracts | 21,991 | 40,427 | 1,483 | 63,901 | 44,590 | ||||||||||
| Asset retirement provisions (undiscounted) | - | 11,063 | 70,490 | 81,553 | 75,770 | ||||||||||
| Deferred and contingent consideration (undiscounted) | 30,000 | 41,595 | 1,409 | 73,004 | 94,237 | ||||||||||
| Corporate office lease | 115 | 446 | - | 561 | 83 | ||||||||||
| Total commitments | 220,643 | 105,011 | 73,382 | 399,036 | 283,968 |
The zero cost collar ("ZCC") gold hedges commitment represents the mark-to-market fair value of the AGM's current gold hedging program. The settlement amount of these hedges will be dependent on the price of gold at the settlement date. The portion of the ZCC gold hedge liability that is expected to be settled in greater than one year from the balance sheet date has been presented within other non-current liabilities in the Statement of Financial Position. The Company does not apply hedge accounting to the ZCC hedges. The ZCC hedges are for 57,500 gold ounces of production in 2026 and 7,500 gold ounces in 2027. The ZCC hedges have a weighted-average put strike of $2,277 per ounce and a weighted-average call strike of $3,025 per ounce. ZCC hedges can be settled in either cash or by physical delivery of gold.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
26. Commitments and contingencies (continued)
Long-term incentive plan commitments due within one year include all cash settled DSU awards to directors of the Company, as they are considered to be current liabilities as the timing of those payments is beyond the control of the Company in the event that a director is to retire or there is a change of control.
The Company has a number of mining and other service contracts. These contracts include monthly fixed fees as well as variable cost measures. The contractual obligations disclosed in the preceding table relate only to the fixed fees payable to the contractors.
The timing of contingent payments to Gold Fields, totaling $43.0 million, is based upon management's best estimate of when payments would be required to be made based upon the current life of mine plan.
Contingencies
Due to the nature of its business, the Company and its subsidiaries may be subject to regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. While the Company cannot reasonably predict the ultimate outcome of these actions, and inherent uncertainties exist in predicting such outcomes, the Company believes that the ultimate resolution of these actions is not reasonably likely to have a material adverse effect on the Company's financial condition or future results of operations.
27. Supplemental cash flow information
The following table discloses non-cash transactions impacting the Statements of Cash Flow for the years presented:
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Change in asset retirement provisions included in MPP&E | 6,992 | 10,628 | ||||
| Capitalized leases included in MPP&E | 11,157 | 27,826 | ||||
The following table summarizes the change in working capital for the years ended December 31, 2025 and 2024:
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Accounts receivable | 43 | 1,027 | ||||
| Inventories | (15,457 | ) | 1,170 | |||
| Value added tax receivables | 719 | (721 | ) | |||
| Prepaid expenses and other | 34 | (765 | ) | |||
| Accounts payable and accrued liabilities | 19,646 | (5,011 | ) | |||
| Change in non-cash working capital | 4,985 | (4,300 | ) | |||
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
28. Financial instruments
(a) Financial assets and liabilities by categories
| Fair value through | ||||||||||||
| profit or loss | Amortized cost | Carrying value | Fair value | |||||||||
| As at December 31, 2025 | $ | $ | $ | $ | ||||||||
| Financial assets: | ||||||||||||
| Cash and cash equivalents (note 7) | - | 108,327 | 108,327 | 108,327 | ||||||||
| Accounts receivable | - | 71 | 71 | 71 | ||||||||
| Marketable securities (note 9)(1) | 4,526 | - | 4,526 | 4,526 | ||||||||
| Total financial assets | 4,526 | 108,398 | 112,924 | 112,924 | ||||||||
| Financial liabilities: | ||||||||||||
| Accounts payable and accrued liabilities(2) | 13,580 | 73,473 | 87,053 | 87,053 | ||||||||
| Financial liabilities(2) | 77,317 | - | 77,317 | 77,317 | ||||||||
| Lease liabilities (note 13) | - | 37,075 | 37,075 | 37,075 | ||||||||
| Deferred consideration (note 14(a)) | - | 28,242 | 28,242 | 28,242 | ||||||||
| Contingent consideration (note 14(b)) | 19,320 | - | 19,320 | 19,320 | ||||||||
| Nkran royalty (note 14(c)) | 6,988 | - | 6,988 | 6,988 | ||||||||
| Other non-current liabilities(2) | 11,480 | - | 11,480 | 11,480 | ||||||||
| Total financial liabilities | 128,685 | 138,790 | 267,475 | 267,475 |
(1) Marketable securities are presented within prepaid expenses and other in the Statement of Financial Position.
(2) Accounts payable, financial liabilities, and other non-current liabilities include long-term incentive plan and gold hedge instrument liabilities, which are measured at fair value through profit or loss. Long-term incentive plan liabilities relate to cash settled share-based payments accounted for under IFRS 2 and are measured at fair value at each reporting date, with changes recognized in profit or loss.Accounts payable, financial liabilities, and other non-current liabilities include long-term incentive plan and gold hedge instrument liabilities, which are measured at fair value through profit or loss. Long-term incentive plan liabilities relate to cash settled share-based payments accounted for under IFRS 2 and are measured at fair value at each reporting date, with changes recognized in profit or loss.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
28. Financial instruments (continued)
(a) Financial assets and liabilities by categories (continued)
| Fair value through | ||||||||||||
| profit or loss | Amortized cost | Carrying value | Fair value | |||||||||
| As at December 31, 2024 | $ | $ | $ | $ | ||||||||
| Financial assets: | ||||||||||||
| Cash and cash equivalents | - | 105,775 | 105,775 | 105,775 | ||||||||
| Accounts receivable | - | 104 | 104 | 104 | ||||||||
| Marketable securities(1) | 1,509 | - | 1,509 | 1,509 | ||||||||
| Total financial assets | 1,509 | 105,879 | 107,388 | 107,388 | ||||||||
| Financial liabilities: | ||||||||||||
| Accounts payable and accrued liabilities(2) | 6,939 | 48,125 | 55,064 | 55,064 | ||||||||
| Financial liabilities(2) | 9,284 | - | 9,284 | 9,284 | ||||||||
| Lease liabilities | - | 38,872 | 38,872 | 38,872 | ||||||||
| Deferred consideration | - | 50,109 | 50,109 | 50,109 | ||||||||
| Contingent consideration | 16,873 | - | 16,873 | 16,873 | ||||||||
| Nkran royalty | 4,388 | - | 4,388 | 4,388 | ||||||||
| Other non-current liabilities(2) | 4,939 | - | 4,939 | 4,939 | ||||||||
| Total financial liabilities | 42,423 | 137,106 | 179,529 | 179,529 |
(1) Marketable securities are presented within prepaid expenses and other in the Statement of Financial Position.
(2) Accounts payable, financial liabilities, and other non-current liabilities include long-term incentive plan and gold hedge instrument liabilities, which are measured at fair value through profit or loss.
(b) Derivative instruments
The Company's derivatives are comprised of ZCC gold hedging instruments. The losses on derivatives for the years ended December 31, 2025 and 2024 are presented in the table below. Realized and unrealized losses on gold hedge derivative instruments are presented within net revenue in the Statement of Operations and Comprehensive Income (Loss).
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Realized losses on ZCC gold hedges (note 19) | 44,771 | 9,515 | ||||
| Unrealized losses on ZCC gold hedges (note 19) | 74,553 | 13,606 | ||||
(c) Fair value hierarchy
The categories of the fair value hierarchy that reflect the inputs to valuation techniques used to measure fair value are as follows:
Level 1: fair values based on unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
28. Financial instruments (continued)
(c) Fair value hierarchy (continued)
Level 3: fair values based on inputs for the asset or liability based on unobservable market data.
Long-term incentive plan liabilities, Contingent Consideration and the Nkran Royalty are recorded at fair value at the reporting date and fall within Level 3 of the fair value hierarchy. The ZCC gold hedging instruments and marketable securities are also recorded at fair value at the reporting date and fall within Level 1 of the fair value hierarchy.
There were no transfers between the fair value levels during the years ended December 31, 2025 or 2024.
Refer to note 14 for a discussion on the valuation techniques applied to the Contingent Consideration and Nkran Royalty. Long-term incentive plan liabilities are valued based on the estimated number of outstanding vested awards multiplied by the Company's share price as of the reporting date. ZCC gold hedging instruments and marketable securities are valued using observable market prices.
(d) Financial instrument risks
The Company has exposure to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth and shareholder returns. The principal financial risks to which the Company is exposed are described as follows.
Credit risk
Credit risk is the risk of an unexpected loss if a customer or the issuer of a financial instrument fails to meet its contractual obligations. The Company is subject to credit risk on cash and cash equivalent balances held at banks in Canada, Isle of Man, and Ghana. The Company invests its cash and cash equivalents with the objective of maintaining safety of principal and providing adequate liquidity to meet all current obligations. In making allocation decisions, management attempts to avoid unacceptable concentration of credit risk to any single counterparty. The risk of loss associated with cash investments is considered to be low as the majority of the Company's cash and cash equivalents are held with highly-rated financial institutions.
As at December 31, 2025, the Company had a $10.8 million value added tax receivable due from the Government of Ghana (December 31, 2024 - $8.3 million). The credit risk associated with value added tax receivables is considered to be low based on historical collection experience. However, should the Government of Ghana not honour its commitments or default on its obligations, the Company may incur losses.
Liquidity risk
Liquidity risk encompasses the risk that the Company cannot meet its financial obligations as they fall due. The Company manages liquidity risk through a rigorous planning and budgeting process, which is reviewed and updated on a regular basis, to help determine the funding requirements to support current operations, expansion and development plans, and by managing the Company's capital structure. By managing liquidity risk, the Company aims to ensure that it will have sufficient liquidity to settle obligations and liabilities as they fall due.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
28. Financial instruments (continued)
(d) Financial Instrument risks (continued)
Liquidity risk (continued)
Through a combination of the Company's cash balance, and interest earned thereon, cash flows generated by the AGM and funds available to be drawn under the RCF, the Company believes it is in a position to meet all working capital requirements, contractual obligations, and commitments as they fall due. However, the Company's cash flows and its ability to meet working capital requirements and contractual obligations are significantly influenced by the price of gold and the performance of the AGM. The Company manages its liquidity by ensuring that it can manage spending and provide adequate cash flow to meet all commitments.
As at December 31, 2025, the Company continues to maintain its ability to meet its financial obligations as they come due.
Market Risk
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The average interest rate earned by the Company on its cash and cash equivalents during the year ended December 31, 2025 was 3.5% (year ended December 31, 2024 - 4.6%). A +/-1% change in short-term interest rates during the year would have resulted in a $1.1 million increase or decrease to the Company's interest income for the year ended December 31, 2025 (year ended December 31, 2024 - $1.2 million increase or decrease).
The Contingent Consideration and Nkran Royalty are financial liabilities measured at fair value through profit or loss with fair value determined by reference to a discounted cash flow model. Changes in interest rates would impact the discount rate applied to forecast future cash flows and accordingly the fair value of these financial liabilities. Any change in interest rates would therefore impact the Company's earnings, but would not impact cash payments required to be paid under the terms of the Acquisition agreement. The following table highlights the sensitivity of the fair values related to these financial liabilities for a 1% decrease (increase) in the underlying discount rate.
| Change in fair value | ||||||||||||
| Year ended December 31, 2025 | Year ended December 31, 2024 | |||||||||||
| 1% increase to discount rate $ |
1% decrease to discount rate $ |
1% increase to discount rate $ |
1% decrease to discount rate $ |
|||||||||
| Contingent consideration | (539 | ) | 559 | (612 | ) | 641 | ||||||
| Nkran royalty | (289 | ) | 303 | (218 | ) | 229 | ||||||
The Company's RCF is also subject to interest rate risk as the facility has a floating interest rate. Changes in interest rates would impact interest payments on funds drawn under the RCF. As of December 31, 2025, the Company had not drawn on the RCF.
(ii) Foreign currency risk
The Company reports its financial statements in US dollars; however, the Company operates in Canada and Ghana where the primary currencies are the Canadian dollar and Ghanaian Cedi ("GHS"), respectively. As a result, the financial results of the Company's operations as reported in US dollars are subject to changes in the value of the US dollar relative to local currencies. Since the Company's gold sales are denominated in US dollars and a portion of the Company's operating and capital costs are in local currencies, the Company may be negatively impacted by strengthening local currencies relative to the US dollar and positively impacted by the inverse.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
28. Financial instruments (continued)
(d) Financial Instrument risks (continued)
Market Risk (continued)
(ii) Foreign currency risk (continued)
As at December 31, 2025 and 2024, the Company's exposure to foreign currency risk was limited to the balances presented below.
| Foreign currency amount | USD Equivalent | ||||||||
| December 31, 2025 | C$ | GHS | $ | ||||||
| Cash and cash equivalents | 715 | 41,910 | 4,511 | ||||||
| Receivables | 30 | 513 | 70 | ||||||
| Value added tax receivables | - | 113,557 | 10,808 | ||||||
| Accounts payable and accrued liabilities | (1,938 | ) | (56,575 | ) | (6,799 | ) | |||
| Long-term incentive plan liabilities | (19,280 | ) | - | (14,066 | ) | ||||
| Lease liabilities | (592 | ) | - | (432 | ) | ||||
| Net exposure to foreign currency | (21,065 | ) | 99,405 | (5,908 | ) | ||||
| Foreign currency amount | USD Equivalent | ||||||||
| December 31, 2024 | C$ | GHS | $ | ||||||
| Cash and cash equivalents | 220 | 118,772 | 8,232 | ||||||
| Receivables | 53 | 941 | 101 | ||||||
| Value added tax receivables | - | 122,325 | 8,328 | ||||||
| Accounts payable and accrued liabilities | (1,901 | ) | (121,094 | ) | (9,529 | ) | |||
| Long-term incentive plan liabilities | (10,640 | ) | - | (7,405 | ) | ||||
| Lease liabilities | (117 | ) | - | (83 | ) | ||||
| Net exposure to foreign currency | (12,385 | 120,944 | (356 | ) | |||||
A +/-10% change in the prevailing exchange rates as at December 31, 2025, with all other variables held constant, would have resulted in a $0.7 million decrease (increase) to the Company's net loss for the year ended December 31, 2025 (year ended December 31, 2024 - $0.1 million decrease (increase) to net income).
(ii) Price risk
Price risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from currency risk or interest rate risk. The Company is exposed to gold price risk as changes in the gold price may affect the Company's earnings or the value of its financial instruments. The Company's revenue is directly dependent on gold prices, which have demonstrated significant volatility and are beyond the Company's control.
From time to time, the Company enters into hedging programs to manage its exposure to gold price risk with an objective of margin protection, specifically during periods of forecast elevated capital spend. The Board of Directors continually assess the Company's strategy towards its gold hedging program. The effectiveness of gold hedging programs is directly dependent on the price of gold and can impact the Company's earnings and cash flows, as the Company remeasures hedging instruments to fair value at each reporting date and may incur realized gains or losses at maturity. Refer to notes 19 and 28(b) for disclosure of realized losses recorded on the Company's gold hedging instruments during the year.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
29. Segmented information
Geographic Information
As at December 31, 2025, the Company has one reportable segment, being the AGM, and has provided segmented information based on geographic location.
Geographic allocation of total assets and liabilities
| Canada $ |
Ghana $ |
Total $ |
|||||||
| Current assets | 47,307 | 154,876 | 202,183 | ||||||
| Mineral properties, plant and equipment and right-of-use assets | 514 | 388,095 | 388,609 | ||||||
| Other non-current assets | - | 8,259 | 8,259 | ||||||
| Total assets | 47,821 | 551,230 | 599,051 | ||||||
| Current liabilities | 43,712 | 176,868 | 220,580 | ||||||
| Non-current liabilities | 27,148 | 129,665 | 156,813 | ||||||
| Total liabilities | 70,860 | 306,533 | 377,393 |
| Canada | Ghana | Total | |||||||
| December 31, 2024 | $ | $ | $ | ||||||
| Current assets | 88,190 | 77,395 | 165,585 | ||||||
| Mineral properties, plant and equipment | 111 | 329,318 | 329,429 | ||||||
| Other non-current assets | - | 5,339 | 5,339 | ||||||
| Total assets | 88,301 | 412,052 | 500,353 | ||||||
| Current liabilities | 33,255 | 77,560 | 110,815 | ||||||
| Non-current liabilities | 48,300 | 93,469 | 141,769 | ||||||
| Total liabilities | 81,555 | 171,029 | 252,584 |
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
29. Segmented information (continued)
Geographic Information (continued)
Geographic allocation of the Statement of Operations and Comprehensive Income (Loss)
For the year ended December 31, 2025:
| Canada | Ghana | Total | |||||||
| $ | $ | $ | |||||||
| Revenue | - | 447,767 | 447,767 | ||||||
| Realized and unrealized losses on gold hedge | - | (119,324 | ) | (119,324 | ) | ||||
| Net revenue | - | 328,443 | 328,443 | ||||||
| Cost of sales: | |||||||||
| Production costs | - | (166,665 | ) | (166,665 | ) | ||||
| Depreciation and depletion | - | (62,761 | ) | (62,761 | ) | ||||
| Royalties | - | (33,004 | ) | (33,004 | ) | ||||
| Income from mine operations | - | 66,013 | 66,013 | ||||||
| General and administrative expenses | (22,158 | ) | (3,106 | ) | (25,264 | ) | |||
| Exploration and evaluation expenditures | - | (4,206 | ) | (4,206 | ) | ||||
| (Loss) income from operations and joint venture | (22,158 | ) | 58,701 | 36,543 | |||||
| Finance income | 5,490 | 566 | 6,056 | ||||||
| Finance expense | (8,214 | ) | (9,572 | ) | (17,786 | ) | |||
| Foreign exchange gain | 76 | 5,593 | 5,669 | ||||||
| (Loss) income before income taxes | (24,806 | ) | 55,288 | 30,482 | |||||
| Current income tax expense | - | (38,259 | ) | (38,259 | ) | ||||
| Deferred income tax expense | - | (23,024 | ) | (23,024 | ) | ||||
| Net (loss) income and comprehensive (loss) income for the year | (24,806 | ) | (5,995 | ) | (30,801 | ) |
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
29. Segmented information (continued)
Geographic Information (continued)
Geographic allocation of the Statement of Operations and Comprehensive Income (Loss)
For the year ended December 31, 2024:
| Canada | Ghana | Total | |||||||
| $ | $ | $ | |||||||
| Revenue | - | 231,339 | 231,339 | ||||||
| Realized and unrealized losses on gold hedge derivative instruments | - | (23,121 | ) | (23,121 | ) | ||||
| Net revenue | - | 208,218 | 208,218 | ||||||
| Cost of sales | |||||||||
| Production costs | - | (115,769 | ) | (115,769 | ) | ||||
| Depreciation and depletion | - | (23,603 | ) | (23,603 | ) | ||||
| Royalties | - | (13,957 | ) | (13,957 | ) | ||||
| Income from mine operations | - | 54,889 | 54,889 | ||||||
| General and administrative expenses | (17,984 | ) | (2,038 | ) | (20,022 | ) | |||
| Exploration and evaluation expenditures | - | (6,142 | ) | (6,142 | ) | ||||
| Termination of offtake agreement | - | (13,063 | ) | (13,063 | ) | ||||
| Share of net income related to joint venture | - | 2,432 | 2,432 | ||||||
| Service fee earned as operators of joint venture | 976 | - | 976 | ||||||
| Gain on derecognition of equity investment in joint venture | 1,416 | - | 1,416 | ||||||
| (Loss) income from operations and joint venture | (15,592 | ) | 36,078 | 20,486 | |||||
| Transaction costs | (2,492 | ) | - | (2,492 | ) | ||||
| Finance income | 3,926 | 1,927 | 5,853 | ||||||
| Finance expense | (7,394 | ) | (7,789 | ) | (15,183 | ) | |||
| Foreign exchange loss | (87 | ) | (36 | ) | (123 | ) | |||
| Net (loss) income and comprehensive (loss) income for the year | (21,639 | ) | 30,180 | 8,541 |
30. Capital management
The Company's objectives in managing capital are to ensure that the Company has the financial capacity to support its operations with sufficient capability to manage unforeseen operational, economic and/or industry developments, such that the Company has the capital and capacity to support its long-term growth strategies, and to provide returns for shareholders and benefits for other stakeholders. The Company defines capital that it manages as total shareholders' equity, being a total of $218.9 million as at December 31, 2025 (December 31, 2024 - $243.5 million).
The Company is subject to financial covenants under the RCF (note 12). Although the Company had not drawn on the RCF as of December 31, 2025, the Company was in compliance with the financial covenants.
| GALIANO GOLD INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In thousands of United States Dollars, unless otherwise noted |
30. Capital management (continued)
The Company manages its capital structure and makes adjustments considering general economic conditions, the risk characteristics of the underlying assets and the Company's working capital requirements associated with ongoing operations and corporate development plans. The Company does not currently pay dividends. The Board of Directors reviews and approves any material transactions out of the ordinary course of business, including proposals on acquisitions or other major investments or divestitures, as well as capital and operating budgets. The Company's investment policy is to invest its cash in highly liquid short-term interest-bearing investments with maturities of 180 days or less from the original date of acquisition.
The Company has not made any changes to its policies and processes for managing capital during the year.
31. Related Parties
The Company's related party transactions included compensation made to key management personnel, being the directors and executive officers of the Company, which was as follows for the years ended December 31, 2025 and 2024:
| Year ended December 31, | ||||||
| 2025 $ |
2024 $ |
|||||
| Salaries and benefits | 1,914 | 1,621 | ||||
| Share-based compensation | 8,957 | 5,092 | ||||
| Total compensation paid to related parties | 10,871 | 6,713 | ||||
During the year ended December 31, 2024, prior to the closing of the Acquisition, the Company was the manager and operator of the AGM JV and earned a gross service fee of $1.2 million, less withholding taxes payable in Ghana of $0.2 million, for a net service fee of $1.0 million, which was recognized in the Statement of Operations and Comprehensive Income.
Management's Discussion and Analysis
For the years ended December 31, 2025 and 2024
(Expressed in United States dollars, unless otherwise stated)
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
This Management's Discussion and Analysis ("MD&A") of Galiano Gold Inc. ("Galiano" or the "Company") has been prepared by management and approved by the Board of Directors as of February 12, 2026 and should be read in conjunction with the Company's audited consolidated annual financial statements, and the notes thereto, for the years ended December 31, 2025 and 2024. The audited consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
This discussion covers the year ended December 31, 2025 and the subsequent period up to the date of issuance of this MD&A. All dollar amounts herein are expressed in United States dollars ("US dollars") unless otherwise stated. References to $ means US dollars and C$ are to Canadian dollars. The first, second, third, and fourth quarters of the Company's fiscal years ("FY") are referred to as "Q1", "Q2", "Q3", and "Q4", respectively.
The Company has included certain non-IFRS performance measures throughout this MD&A. These performance measures are employed by management to assess the Company's operating and financial performance and to assist in business decision-making. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors and other stakeholders use this information to evaluate the Company's operating and financial performance; however, as explained elsewhere herein, these non-IFRS performance measures do not have any standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Accordingly, these performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Please refer to "Non-IFRS Measures" in this MD&A for additional information regarding these non-IFRS measures.
This MD&A contains forward-looking statements and should be read in conjunction with the risk factors described under the headings
"Risks and Uncertainties" and "Cautionary Statements" at the end of this MD&A.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
TABLE OF CONTENTS
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
BUSINESS OVERVIEW
Galiano was incorporated on September 23, 1999, under the Business Corporations Act of British Columbia, Canada. Galiano is a gold mining company with a strategic vision to become a mid-tier producer. The Company’s operating gold mine is the Asanko Gold Mine (“AGM”) located on the Asankrangwa Gold Belt in the Republic of Ghana (“Ghana”), West Africa. The AGM consists of four main open-pit deposits: Abore, Nkran, Esaase and Miradani North, multiple satellite deposits and a carbon-in-leach processing plant, with a capacity of 5.8 million tonnes (“Mt”) per annum. The AGM’s Nkran and Abore deposits have also demonstrated potential for future underground mining operations. Additionally, the AGM owns various exploration licenses across the highly prospective and underexplored Asankrangwa Gold Belt.
Galiano is focused on creating a sustainable business capable of value creation for all stakeholders through production, exploration, and disciplined deployment of its financial resources.
The Company's common shares trade under the symbol "GAU" on the Toronto Stock Exchange in Canada and the NYSE American Stock Exchange in the United States.
Additional information on the Company, including its most recent Annual Information Form ("AIF"), is available under the Company's SEDAR+ profile at www.sedarplus.ca and the Company's website: www.galianogold.com.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Q4 2025 AND FY 2025 HIGHLIGHTS
Safety
-
No lost-time injuries ("LTI") nor total recordable injuries ("TRI") reported during Q4 2025. The AGM has achieved 6.5 million hours worked without an LTI.
-
12-month rolling LTI and TRI frequency rates as of December 31, 2025 of 0.24 and 0.48 per million hours worked, respectively.
Financial
-
Cash and cash equivalents of $108.3 million as of December 31, 2025 and no debt.
-
Generated cash flow from operating activities of $55.8 million during Q4 2025 and $158.0 million for FY 2025.
-
Paid $25.0 million to Gold Fields Limited during Q4 2025 to settle the first deferred acquisition costs payment.
-
Income from mine operations of $51.1 million during Q4 2025 and $66.0 million for FY 2025. Adjusted income from mine operations1, excluding unrealized losses on gold hedge instruments, of $68.6 million during Q4 2025 and $140.6 million for FY 2025.
-
Net income of $0.06 and adjusted net income1 $0.15 per common share (basic) during Q4 2025. Net loss of $0.11 and adjusted net income1 of $0.23 per common share (basic) for FY 2025.
-
Adjusted EBITDA1 of $85.5 million during Q4 2025 and $182.2 million for FY 2025.
Mining
-
Mined 1.6 Mt of ore at an average mined grade of 0.9 grams per tonne ("g/t") gold and a strip ratio of 8.0:1 during Q4 2025. Mined 5.8 Mt of ore at an average mined grade of 0.9 g/t gold and a strip ratio of 7.5:1 during FY 2025.
-
Development of Cut 3 at the Nkran deposit continued to ramp up during the quarter with 4.5 Mt of material mined, an increase of 23% compared to Q3 2025. For FY 2025, 10.7 Mt of material was mined at Nkran.
-
Mining operations at Esaase resumed in early November 2025 following the community incident that occurred in September 2025.
Processing
-
1.4 Mt of ore was milled at an average feed grade of 1.0 g/t gold, with metallurgical recovery averaging 91% during Q4 2025. For FY 2025, 4.9 Mt of ore was milled at an average feed grade of 0.9 g/t gold, with metallurgical recovery averaging 90%.
-
Produced 37,574 ounces of gold during the quarter, a 15% increase compared to Q3 2025. Annual gold production achieved 121,191 ounces for FY 2025, within the revised guidance range.
-
Sold 38,276 ounces of gold during the quarter at a record quarterly average price of $4,164 per ounce ("/oz") and sold 127,134 ounces of gold for the year at an average price of $3,516/oz, excluding the effect of realized losses on gold hedging instruments.
________________________________________________
1 Non-IFRS measure. Refer to "Non-IFRS Measures" in this MD&A.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Cost and Capital Expenditures
-
All-in sustaining costs1 ("AISC") of $2,033/oz in Q4 2025. AISC1 for the quarter was 11% lower compared Q3 2025 due to higher gold ounces sold. AISC1 for FY 2025 amounted to $2,233/oz, within revised guidance of between $2,200/oz to $2,300/oz.
-
Capitalized development pre-stripping costs at Nkran Cut 3 of $11.1 million during Q4 2025 and $33.2 million for FY 2025.
Exploration
-
Results from the Phase 2 drilling program at Abore were released2 during Q4 2025. These positive results led to an expanded drilling program with 10,907m drilled in Q4 2025. This program was designed to establish continuity of known mineralization, as well as to test for continuations of the Abore mineralizing system at depths up to 200m below previous drilling and below the Mineral Resource boundary. See "Exploration Activities" for additional details.
Mineral Reserves and Resources
-
The Company updated the Mineral Reserve and Mineral Resource estimates for the AGM effective December 31, 2025. Refer to section "Mineral Reserve and Mineral Resource Estimates" in this MD&A for additional details.
-
Reported maiden underground Mineral Resource estimates for the Abore and Nkran deposits totaling 0.8 million ounces (“Moz”) gold contained, with estimated Indicated Mineral Resources of 3.4 Mt at an average grade of 2.74 g/t and estimated Inferred Mineral Resources of 6.5 Mt at an average grade of 2.52 g/t.
FY 2026 Guidance
-
For FY 2026, gold production guidance at the AGM is forecast between 140,000 ounces and 160,000 ounces. Higher mined grades are expected to be progressively mined from Abore over the course of the year, therefore gold production is forecast to be weighted to the back half of FY 2026.
-
AISC1 guidance for FY 2026 is forecast between $2,000/oz and $2,300/oz at a gold price assumption of $4,500/oz and under the current royalty framework in Ghana.
RECENT DEVELOPMENTS
-
On December 19, 2025, the Company entered into a $75 million revolving credit facility (the "RCF") with FirstRand Bank Limited, acting through its Rand Merchant Bank division ("RMB"). The purpose of the RCF is for general working capital requirements. The RCF has a 4-year term and floating interest rate based on the Secured Overnight Financing Rate (SOFR) plus a margin of 3.95% per annum, while the undrawn portion of the RCF is subject to a standby fee of 1.38% per annum. The RCF is guaranteed by certain subsidiaries of the Company and is also secured by a first priority charge against the AGM's assets, and a first priority share pledge of certain of the Company's subsidiaries. The RCF contains financial covenants, to be tested semi-annually, which include gearing, net leverage and interest coverage ratios. As of December 31, 2025, the Company had not drawn on the RCF and was in full compliance with all covenants.
-
The Government of Ghana has proposed a draft bill to amend the country's gold royalty framework. Under the proposed bill, royalties payable by mining companies on gold sold would be subject to a sliding scale of between 9% to 12%, with the upper limit applicable when spot gold prices are trading above $4,500/oz. The proposed amendments are still subject to Parliamentary approval.
________________________________________________
2 Refer to the Company's news release titled "Galiano Gold Advances Towards A Maiden Underground Resource At Abore With Additional High-Grade Results Encountered Including 4.7 g/t Au Over 28m And 3.5 g/t Au Over 17m" dated November 17, 2025, which is available under the Company's SEDAR+ profile at www.sedarplus.ca.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
BUSINESS STRATEGY AND GROWTH INITIATIVES
The Company’s strategic priority is to grow its business into a sustainable mid-tier gold producer, with a focus on organic growth and mine life extension at the AGM through continued success in our exploration strategies, as well as accretive acquisition opportunities. These objectives are underpinned by the Company’s capital allocation strategy, which focuses on deployment of capital to grow the AGM’s production profile, extend its mine life, maximize asset value, and ultimately return capital to shareholders. The Company’s current growth initiatives are captured under the following headings, which the Company believes will drive shareholder value over the short, medium and long-term.
Organic Growth at the AGM
Near-Term Organic Production Growth - Improved Throughput and Higher Grades from Abore
Installation of the secondary crushing circuit in July 2025, combined with improving grades from Abore, positions the AGM for meaningful near-term production growth. Mill throughput is expected to rise by approximately 15% in FY 2026, supported by higher-grade ore sourced from lower elevations of the Abore pit through 2026 and 2027. As a result, the Company forecasts an approximate 25% increase in FY 2026 production compared to FY 2025.
The AGM's Abore deposit has grown over the past two years from a satellite deposit to one of the AGM's cornerstone primary deposits, hosting open pit Probable Mineral Reserves of 9.3 Mt at 1.16 g/t for 346,000 ounces gold contained as of December 31, 2025, in addition to an underground Mineral Resource as described below.
Medium-Term Production Growth - Nkran
Following the depletion of open pit Mineral Reserves at Abore, the AGM is positioned to further increase its production profile by transitioning to the higher-grade Nkran deposit. As of December 31, 2025, the Nkran deposit hosts open pit Probable Mineral Reserves of 10.6 Mt at 1.67 g/t for 570,000 ounces gold contained. Waste stripping of Nkran Cut 3 is progressing on schedule, with steady-state ore delivery to the processing plant expected by early 2029. Once in full production, the Company anticipates annual gold production well above 200,000 ounces per annum.
Long-Term Growth - Underground Mining at Nkran and Abore
The known mineral deposits hosted along the four shear corridors at the AGM share common geological features, which control gold distribution and placement in the same regional tectonic setting. Importantly, these features are consistent with classic orogenic gold deposits that can extend kilometers in the vertical direction and are known to host long-life underground mines globally. In the past year, the Company’s brownfield exploration strategy has focused on testing the vertical extents of mineralization at Nkran and Abore by drilling beneath the open pit Mineral Reserve shells at these deposits.
On the back of successful exploration results, the Company has published maiden underground Mineral Resource estimates for the Nkran and Abore deposits (refer to “Mineral Reserve and Mineral Resource Estimates” in this MD&A for additional information) effective December 31, 2025. These deposits currently host underground Indicated Mineral Resources of 3.4 Mt at 2.74 g/t for 303,000 ounces gold contained and underground Inferred Mineral Resources of 6.5 Mt at 2.52 g/t for 525,000 ounces gold contained as of December 31, 2025, highlighting the scale and growth potential of the underground system below the existing open pit operations.
These initial underground Mineral Resources confirm that mineralization continues below the current open pit limits, with sufficient volume, grade and geometry to potentially support economic extraction. Importantly, mineralization at both deposits remains open along strike and at depth, and further growth is expected with ongoing drilling planned for 2026. The Company’s immediate priority is to expand these underground Mineral Resources through step-out drilling and advance these deposits through mining studies toward Mineral Reserve classification, thereby extending the AGM’s mine life. These workstreams are targeted for completion within the next 12 to 24 months.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Long-Term Growth - Esaase Mineral Reserve Expansion
Given the extensive drilling completed at the Esaase deposit to date, and the relatively wide distribution of mineralization, it is uniquely positioned for rapid open pit Mineral Reserve expansion at current metal prices. The existing Mineral Reserve estimate is based on a gold price of $1,900/oz; however, current drilling demonstrates that the Mineral Reserve continues to expand laterally and at depth without a material increase to strip ratios, up to and beyond metal prices of $2,500/oz. The objective of the Company’s 2026 drilling program at Esaase is to rapidly convert Inferred Mineral Resources contained within the $2,400/oz Mineral Resource shell and perform mining studies to significantly expand Esaase’s Mineral Reserve base. Such an expansion would extend the life of mine and provide an additional source of mill feed to complement potential underground ore production from Abore and Nkran. The Company expects to incorporate the results of this exploration program into the AGM’s December 31, 2026 Mineral Reserve estimate and revised life of mine plan.
Exploration
The Company continues to invest significantly in exploration at the AGM and has delivered meaningful results over the past three years, including the discovery of high-grade zones at the Abore Main and South pits and successful drilling beneath the existing Mineral Reserve boundaries at Nkran and Abore.
Over the next two to three years, the Company’s strategic objective is to add 1.0 million to 1.5 million gold ounces to the AGM’s combined open pit and underground Mineral Resources and Reserves, relative to the December 31, 2025 estimate, through continued brownfield and targeted greenfield exploration.
2026 GUIDANCE AND OUTLOOK
FY 2026 Production and Cost Guidance
The AGM is forecast to produce between 140,000 ounces and 160,000 ounces of gold at AISC1 between $2,000/oz and $2,300/oz (at a gold price assumption of $4,500/oz). Relative to FY 2025 reported AISC1, FY 2026 AISC guidance is higher by approximately $80/oz due to higher royalties resulting from higher forecast gold prices.
AISC1 guidance does not reflect the amendments to Ghana’s royalty framework that have been proposed to Parliament. If the royalty amendments were ratified by Parliament, the Company’s AISC1 would increase by approximately $375/oz at current spot gold prices. AISC1 for the AGM is anticipated to be lower from FY 2027 onwards compared to FY 2026 due to higher relative gold production.
With the secondary crusher commissioned and continuing to be optimized, the Abore deposit is expected to provide the majority of mill feed in FY 2026, with the Esaase deposit providing supplementary ore. Higher mined grades are expected from Abore in the second half of the year, therefore gold production is forecast to be weighted to the back half of FY 2026. Given the expected ramp-up of gold production over FY 2026, the Company has provided indicative production ranges for the first and second half of 2026 as follows.
| Unit | H1 2026 | H2 2026 | |
| Gold production | Oz | 60,000 to 70,000 | 80,000 to 90,000 |
As previously disclosed, gold production is expected to experience a further positive step change beyond FY 2026.
Total sustaining capital expenditures are guided to between $16 million to $18 million for FY 2026, excluding sustaining capitalized stripping costs. Sustaining capital expenditures in FY 2026 include the expansion of the tailings facility, minor upgrades to the processing plant, and upgrades to mine camp infrastructure.
Development capital for FY 2026 is guided at between $120 million to $140 million, which primarily relates to Nkran Cut 3 waste stripping ($100 million to $120 million) and village resettlement costs.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Exploration expenditures at the AGM are guided to between $17 million to $19 million for FY 2026, which includes approximately 52,000 meters of drilling, as well as ground geophysics and regional prospecting and mapping. The 2026 exploration program is primarily focused on (a) infill drilling at Abore to improve data density in the underground Mineral Resource and support a potential maiden underground Mineral Reserve, (b) an initial phase of drilling to increase Mineral Reserves and Mineral Resources at Esaase by drilling the deposit in line with the current gold price environment, and (c) targeting discoveries in both near mine and greenfield areas of the AGM’s tenements.
MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES
The Company published updated Mineral Reserve and Mineral Resource estimates for the AGM on February 12, 2026. Highlights of the AGM's updated Mineral Reserve and Mineral Resource estimates, with an effective date of December 31, 2025, included:
-
Proven and Probable Mineral Reserves of 47.5 Mt at 1.29 g/t for 1.97 Moz gold contained. Mineral Reserves were reported based on gold prices of $1,900/oz for Esaase, $1,700/oz for Nkran, Abore, Adubiaso, and Midras South, and $1,500/oz for Miradani North and Dynamite Hill.
-
Measured and Indicated Mineral Resources for open pit mines of 77.0 Mt at 1.27 g/t for 3.14 Moz gold contained, inclusive of Mineral Reserves. Open pit Mineral Resources were reported based on gold prices of $2,400/oz for Esaase, Adubiaso and Midras South, and $1,800/oz for Miradani North, Akwasiso, Asuadai and Dynamite Hill. Open pit Mineral Resources for Nkran and Abore are reported within the current Mineral Reserve pit designs.
- Open pit Inferred Mineral Resources of 20.7 Mt at 1.14 g/t for 0.76 Moz gold contained.
-
Maiden underground Mineral Resource estimates for the Nkran and Abore deposits totaling 3.4 Mt of Indicated Mineral Resources at an average grade of 2.74 g/t, containing an estimated 0.30 Moz gold, and 6.5 Mt of Inferred Mineral Resources at an average grade of 2.52 g/t, containing an estimated 0.53 Moz gold. Underground Mineral Resource estimates are based on a gold price of $2,400/oz and a mineable stope cut-off grade of 1.5 g/t gold.
-
Underground Mineral Resources are limited by the extent of current exploration drilling and are believed to represent a small portion of a much larger mineralizing system at Nkran and Abore, which remain open along strike and at depth beyond the current extent of Mineral Resources.
Refer to the Company's news release dated February 12, 2026, a copy of which is available under the Company's SEDAR+ profile at www.sedarplus.ca, for additional disclosure regarding the AGM's Mineral Reserve and Mineral Resource estimates, including key assumptions underlying the estimates.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
SELECTED OPERATIONAL AND FINANCIAL HIGHLIGHTS
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | |
| Mining | |||||
| Ore mined ('000t) | 1,575 | 1,605 | 1,365 | 1,296 | 531 |
| Waste mined ('000t) | 12,661 | 12,493 | 9,824 | 9,124 | 8,698 |
| Strip ratio (W:O) | 8.0 | 7.8 | 7.2 | 7.0 | 16.4 |
| Average gold grade mined (g/t) | 0.9 | 0.8 | 0.8 | 0.8 | 1.0 |
| Mining cost ($/t mined) - mine-wide(1) | 3.48 | 3.36 | 3.65 | 3.36 | 3.41 |
| Mining cost ($/t mined) - producing(1) | 3.94 | 3.38 | 3.59 | 3.31 | 3.41 |
| Mining cost ($/t mined) - development(1) | 2.48 | 3.29 | 4.00 | 3.98 | - |
| Ore tonnes trucked ('000 t) | 1,069 | 1,288 | 1,030 | 1,053 | 685 |
| Ore transportation cost ($/t trucked) | 4.45 | 4.35 | 4.49 | 4.43 | 4.75 |
| Processing | |||||
| Ore milled ('000t) | 1,369 | 1,283 | 1,193 | 1,086 | 1,179 |
| Average mill head grade (g/t) | 1.0 | 0.9 | 0.8 | 0.8 | 0.9 |
| Average recovery rate (%) | 91 | 91 | 89 | 87 | 85 |
| Processing cost ($/t milled) | 12.13 | 12.57 | 12.89 | 14.37 | 15.84 |
| General and administrative cost ($/t milled) | 7.58 | 6.62 | 6.24 | 5.78 | 6.28 |
| Gold produced (oz) | 37,574 | 32,533 | 30,350 | 20,734 | 28,508 |
| Capital expenditures | |||||
| Sustaining capital ($m) | 4.4 | 4.2 | 2.2 | 1.3 | 0.8 |
| Development capital ($m) | 0.7 | 2.9 | 4.9 | 3.3 | 2.0 |
| Sustaining capitalized stripping costs ($m) | 11.7 | 11.9 | 15.1 | 11.9 | 19.1 |
| Development capitalized stripping costs - Nkran ($m) | 11.1 | 12.0 | 6.9 | 3.2 | - |
| Financial, costs and cash flow | |||||
| Gross revenue ($m) | 159.7 | 114.2 | 97.3 | 76.6 | 64.6 |
| Gold sold (oz) | 38,276 | 32,577 | 29,287 | 26,994 | 24,673 |
| Average gold sales price - gross ($/oz)(2) | 4,164 | 3,501 | 3,317 | 2,833 | 2,609 |
| Average gold sales price - net ($/oz)(3) | 3,744 | 3,099 | 2,951 | 2,651 | 2,437 |
| AISC ($/oz sold)(5) | 2,033 | 2,283 | 2,251 | 2,501 | 2,638 |
| Income (loss) from mine operations ($m) | 51.1 | 10.0 | 24.7 | (19.8) | 26.1 |
| Adjusted income from mine operations ($m)(4) | 68.6 | 35.1 | 26.5 | 10.5 | 17.5 |
| Adjusted net income (loss) ($m)(4) | 40.0 | (2.8) | 21.0 | 0.4 | 5.1 |
| Adjusted EBITDA ($m)(4) | 85.5 | 37.8 | 39.9 | 19.0 | 21.2 |
| Cash flow from operating activities ($m) | 55.8 | 40.4 | 35.8 | 25.9 | 13.8 |
(1) Total mining cost per tonne includes total mining costs for all producing deposits (Abore and Esaase) and deposits in development (Nkran). Producing mining cost per tonne reflects unit mining rates at the Abore and Esaase deposits combined, while development mining cost per tonne reflects unit mining rates at the Nkran deposit only.
(2) Gross average gold sales price is a non-IFRS measure and calculated by dividing gross revenue as reported in the Company's consolidated financial statements by the number of gold ounces sold.
(3) Net average gold sales price is a non-IFRS measure and calculated by dividing gross revenue less realized losses on gold hedge derivative instruments as reported in the Company's consolidated financial statements by the number of gold ounces sold.
(4) Non-IFRS measure. Refer to "Non-IFRS Measures" in this MD&A.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Q4 2025 Operational Analysis for the Asanko Gold Mine
Mining
Abore
-
Mined 1.2 Mt of ore at an average grade of 1.0 g/t gold, an increase in mined grade of 12% from Q3 2025.
-
Strip ratio of 6.1:1, largely in line with Q3 2025.
-
The Company continued to focus on accelerating mining activities at Abore with an objective of accessing higher grade ore at depth in the second half of 2026.
Esaase
-
Mining operations at Esaase resumed in early November following the community incident that occurred on September 9, 2025.
-
Mined 0.2 Mt of ore at an average grade of 0.7 g/t gold.
-
Strip ratio of 4.6:1, a decrease of 28% from Q3 2025.
Nkran
-
Mined 4.5 Mt of material, including 0.2 Mt of ore, an increase in total material mined of 23% from Q3 2025, as the mining contractor continued to ramp up Cut 3 waste stripping.
-
The mining contractor is expected to mobilize additional mining equipment over the coming quarters, which is forecast to result in higher volumes mined in FY 2026.
Mining Costs
Mining cost per tonne at Abore and Esaase averaged $3.94 per tonne ("/t") in Q4 2025, 16% higher than mining costs of $3.41/t at Abore in Q4 2024. The increase in mining cost per tonne was attributable to higher drill and blast costs in Q4 2025.
Refer to "Capital Expenditures" below for a discussion on Nkran mining costs.
Ore Transportation
Ore transportation reflects ore transported from mined deposits located greater than 5 kilometers ("km") from the processing plant, which currently includes the Abore and Esaase deposits. Ore transported from nearer deposits is considered rehandling, the costs of which are included in mining costs. During the quarter, 1.1 Mt of ore was trucked from the Abore and Esaase deposits to the processing plant, compared to 0.7 Mt in Q4 2024, an increase of 56%, due to higher mined volumes.
Ore transportation unit costs in Q4 2025 were $4.45/t and were lower than the comparative period in Q4 2024 due to the 56% increase in ore tonnes trucked, which reduced fixed costs on a per unit basis.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Processing
Gold Production
The AGM produced 37,574 ounces of gold during Q4 2025, an increase of 15% from Q3 2025, as the processing plant in Q4 2025 milled 1.4 Mt of ore at an average grade of 1.0 g/t with metallurgical recovery averaging 91%. Recovery rates and head grades gradually improved each quarter in 2025.
Milled Tonnes
Mill throughput in Q4 2025 was 7% higher than Q3 2025, and 16% higher than the comparative period of 2024, due to the commissioning of the permanent secondary crushing circuit at the AGM processing plant in July 2025. Milling rates in Q4 2025 continued to show improvement with the secondary crushing circuit fully operational, with mill throughput increasing 16% in the second half of 2025 compared to the first half of the year.
Average Head Grade
Mill feed grades during Q4 2025 were 8% higher than Q3 2025 and 9% higher than Q4 2024, as a higher proportion of higher grade Abore ore was processed in Q4 2025.
Processing Costs
Processing cost per tonne for Q4 2025 was $12.13, 4% lower than Q3 2025 and 23% lower than Q4 2024. The decrease in processing cost per tonne in Q4 2025 was driven by more tonnes milled compared to Q3 2025 and Q4 2024, which decreased fixed processing costs on a per unit basis.
Capital Expenditures
Sustaining capital expenditures, excluding capitalized stripping costs, during Q4 2025 totaled $4.4 million and related primarily to a tailings facility expansion.
Development capital expenditures during Q4 2025 totaled $0.7 million (excluding Nkran pre-stripping costs) and related primarily to drilling of boreholes at Nkran and village resettlement early works.
Development of Cut 3 at the Nkran deposit commenced in February 2025 and continued to ramp up throughout the year. During the quarter, 4.3 Mt of waste was mined at a cost of $2.48/t or $11.1 million. These stripping costs are classified as development capital expenditure.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Total Cash Costs and AISC
Total Cash Costs1
For Q4 2025 and FY 2025, total cash costs1 were $1,429/oz and $1,565/oz, respectively, compared to $1,426/oz and $1,273/oz in the comparative periods of 2024. Total cash costs1 were higher in the 2025 periods due to higher royalties, a result of higher average gold sales prices and an increase in Ghana's Growth and Sustainability Levy ("GSL") effective April 1, 2025. Additionally, during the 2024 comparative periods, low grade stockpiled ore was processed that had no accounting book value and, as such, had no mining cost attributed to it, which resulted in lower total cash costs1. Partly offsetting these factors in Q4 2025 was a 55% increase in gold ounces sold compared to Q4 2024.
Total cash costs1 in Q4 2025 were 8% lower, on a per ounce basis, than Q3 2025 due to more gold ounces sold, partly offset by higher royalties expense.
AISC1
For Q4 2025 and FY 2025, AlSC1 was $2,033/oz and $2,233/oz, respectively, compared to $2,638/oz and $2,063/oz in the comparative periods of 2024. The decrease in AlSC1 quarter-on-quarter resulted primarily from a 55% increase in gold ounces sold in Q4 2025. The increase in AlSC1 year-over-year was mainly due to the increase in total cash costs1 described above, partly offset by a 12% increase in gold ounces sold in FY 2025.
Relative to Q3 2025, AlSC1 decreased by 11% in Q4 2025 on a per ounce basis, resulting from higher gold ounces sold.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
EXPLORATION ACTIVITIES
The Company holds a district-scale land package of 476km2 on the highly prospective and underexplored Asankrangwa Gold Belt. During Q4 2025, the AGM conducted exploration programs to assess existing mineralization and expansion potential at several deposits, while also evaluating their broader resource prospects. Concurrent efforts focused on identifying greenfield exploration opportunities throughout the regional tenement portfolio.
Abore
Additional positive results from the Phase 2 drilling program at Abore, carried out in Q3 2025, were released in Q4 2025. These results continued to confirm multiple significant high-grade intercepts, demonstrating continuity of mineralization within new ore shoots identified earlier in 2025 that lie below the existing Mineral Reserve and Mineral Resource. Continued drilling success prompted an expansion of the 2025 Abore drilling program by a further 11,000m demonstrating the Company's strategic focus on increasing Abore's Mineral Resource.
Drilling at Abore continued through Q4 2025 with an additional 10,907m of the planned 11,000m of diamond drilling completed during the quarter. This most recent drilling program was designed to test for further extensions of mineralization immediately below the known Mineral Resource, including several deeper step-out holes to test for mineralization up to 200m below previous drilling levels, and the continuation of the Abore granite, which hosts the bulk of mineralization.
Significant intercepts from the expanded Abore drilling program included:
-
Hole ABDD25-431: 14.2 g/t gold ("Au") over 15m from 231m
-
Hole ABDD25-444: 4.4 g/t Au over 30m from 306m
-
Hole ABDD25-453: 30.4 g/t Au over 4m from 500m
-
Hole ABDD25-428: 2.5 g/t Au over 45m from 213m
-
Hole ABDD25-429: 4.7 g/t Au over 24m from 151m
-
Hole ABDD25-448: 3.0 g/t Au over 11m from 480m and 3.4 g/t Au over 15m from 496m and 2.5 g/t Au over 27m from 529m
-
Hole ABDD25-443: 2.3 g/t Au over 23m from 401m
-
Hole ABDD25-447: 2.3 g/t Au over 19m from 247m
Refer to the Company's news releases dated November 17, 2025 and January 29, 2026, copies of which are available under the Company's SEDAR+ profile at www.sedarplus.ca, for additional information regarding these drill results, including data verification and quality assurance and quality control measures.
Greenfield Targets
Work on regional greenfield targets across the AGM's tenements was focused on the Nsoroma target area located along strike to the southwest of the Nkran deposit. The ground Induced Polarization survey over the Nsoroma target was completed in early Q4 2025 and an initial drill test consisting of 2,164m of reverse circulation and 190m of diamond drilling were completed during the quarter. Drilling intersected favourable geology consisting of quartz veins in sheared metasediments and minor intervals of granites highlighting the prospectivity. Only minor low-grade intercepts of gold were encountered; however, the drilling demonstrated the area is host to an active gold system within a large structural corridor interpreted to be the extension of the Nkran shear zone. Further work in the area is ongoing with additional geophysics and drilling planned for 2026.
Exploration Cost
Exploration expenditure for FY 2025 was $11.8 million, which was marginally lower than revised guidance of $13.0 million.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
Sustainability is at the core of Galiano's business strategy. The Company believes that a comprehensive sustainability strategy is integral to meeting its strategic objectives by positively supporting stakeholder relationships, improving risk management, reducing the AGM's production costs, and benefiting catchment communities beyond the life of the mine.
For further details on the Company's sustainability program, refer to the Company's 2024 Sustainability Report (the "2024 Sustainability Report") published on May 12, 2025, which is available on the Company's website at www.galianogold.com.
Health & Safety
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | |
| Health and safety | |||||
| LTIs(1) | - | - | - | 2 | 1 |
| TRIs(1) | - | 1 | - | 3 | 3 |
| 12-month rolling LTI frequency rate(1) | 0.24 | 0.39 | 0.42 | 0.43 | 0.15 |
(1) The Company records and reports injuries in accordance with the International Council on Mining and Metals' (ICMM) Mining Principles.
Safety performance during Q4 2025 remained robust, with 6.5 million hours worked without an LTI. As of December 31, 2025, it had been 275 days since an LTI occurred.
Social Performance
Implementation of the Five-Year Socio-Economic Development Plan continued during Q4 2025, with steady progress across education, livelihood, and community infrastructure initiatives.
Environmental Performance
Environmental monitoring during Q4 2025 indicated compliance with regulatory standards for water, air quality, and noise. Routine quarterly regulatory inspections were completed during Q4 2025, with no non-conformances identified.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
MACROECONOMIC FACTORS
Gold Price
The price of gold is the largest single external factor in determining the Company's profitability and cash flow from operations. Therefore, the financial performance of the Company is expected to be closely linked to the price of gold. Historically, the price of gold has been subject to volatile price movements over short periods of time and affected by numerous macroeconomic factors that are beyond the Company's control. The price of gold may be impacted by currency exchange rate fluctuations and the relative strength of the US dollar, the supply of and demand for gold, geopolitical events, and macroeconomic factors, such as interest rates and inflation expectations. During Q4 2025, the price of gold traded between a low of $3,872/oz in early October and a high of $4,481/oz in late December. The average price for Q4 2025 amounted to $4,143/oz, based on the London Bullion Market Association ("LBMA") PM benchmark, compared to the Q4 2024 average price of $2,663/oz. Gold prices during Q4 2025 were influenced by central bank purchasing, geopolitical risks, and volatility in interest rates and the US dollar, among other factors. Central bank demand for gold continues to be a key driver influencing prices, as central banks diversify their reserve holdings away from treasuries and into gold.
During Q4 2025, the Company's average gross gold sales price was $4,164/oz, excluding the effect of realized losses on gold hedging instruments.
Management continues to evaluate opportunities to leverage the historically high gold price environment to protect the Company's balance sheet, particularly during periods of elevated forecast capital expenditures relative to the life of mine average.
Ghana Economy
In October 2023, the International Monetary Fund ("IMF") and the Ghana government reached a staff-level agreement on the first review of its $3.0 billion financing arrangement over a 3-year period (the "IMF Loan"). In December 2025, the IMF and Ghana agreed on the fifth review of the country's economic reform agenda, providing Ghana with access to an additional $385.0 million under the IMF Loan, bringing total disbursements under the IMF Loan to $2.8 billion.
Ghana’s recent fiscal climate has not materially impacted the operations of the AGM, as much of the cost structure is tied to the US dollar.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
During Q4 2025 and FY 2025, the Ghanaian Cedi ("Cedi") appreciated by approximately 20% and 41%, respectively, relative to the US dollar. The Cedi's appreciation puts moderate pressure on the AGM's cost and capital structure. However, most of the AGM's significant cost drivers (e.g. mining contracts, diesel) are denominated in US dollars, thus isolating them from volatile movements in the Cedi.
The Government of Ghana has proposed a draft bill to amend the country's royalty framework such that gold royalties are subject to a sliding scale, starting at 9% and increasing to 12% if gold prices exceed $4,500/oz. The proposed bill is still subject to Parliamentary approval. Additionally, the Government of Ghana recently announced that it would eliminate long-term investment stability agreements for mining companies. This reform measure has no impact on Galiano as the Company does not have a stability agreement with the Government of Ghana.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
REVIEW OF Q4 2025 CONSOLIDATED FINANCIAL RESULTS
Selected financial results for the three months ended December 31, 2025 and 2024
| Three months ended December 31, | ||
| 2025 | 2024 | |
| (in thousands of US dollars, except per share amounts) | $ | $ |
| Revenue | 159,676 | 64,551 |
| Realized and unrealized (loss) gain on gold hedge derivative instruments | (33,500) | 4,326 |
| Net revenue | 126,176 | 68,877 |
| Cost of sales: | ||
| Production costs | (43,490) | (31,270) |
| Depreciation and depletion | (20,058) | (7,602) |
| Royalties | (11,489) | (3,891) |
| Total cost of sales | (75,037) | (42,763) |
| Income from mine operations | 51,139 | 26,114 |
| General and administrative expenses | (6,278) | (3,966) |
| Exploration and evaluation expenditures | (946) | (1,684) |
| Termination of offtake agreement | - | (13,063) |
| Income from operations | 43,915 | 7,401 |
| Finance income | 759 | 603 |
| Finance expense | (4,541) | (6,023) |
| Foreign exchange gain | 3,633 | 1,388 |
| Income before taxes | 43,766 | 3,369 |
| Current income tax expense | (16,431) | - |
| Deferred income tax expense | (8,278) | - |
| Net income and comprehensive income | 19,057 | 3,369 |
| Weighted average number of shares outstanding: | ||
| Basic | 259,769,010 | 257,069,680 |
| Diluted | 268,893,809 | 261,892,102 |
| Net income per share attributable to common shareholders: | ||
| Basic | 0.06 | 0.00 |
| Diluted | 0.06 | 0.00 |
Revenue
During Q4 2025, the Company sold 38,276 ounces of gold at a quarterly record average gold price of $4,164/oz for gross revenue of
$159.7 million (including $0.3 million of by-product silver revenue). During Q4 2024, the Company sold 24,673 ounces of gold at an average gold price of $2,609/oz for gross revenue of $64.6 million (including $0.2 million of by-product silver revenue). The average gold sales price, including the effect of realized gold hedging losses, for Q4 2025 amounted to $3,744/oz.
The increase in revenue quarter-on-quarter was due to a 60% increase in average gold sales prices and a 55% increase in gold ounces sold.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Realized and unrealized losses on gold hedges
In Q4 2025, the Company changed its presentation of realized and unrealized (losses) gains on gold hedge derivative instruments from a component of finance expense to a component of net revenue. The comparative period financial information was restated to conform with the current period presentation.
The increase in loss on gold hedge derivative instruments during Q4 2025 was due to the rising gold price environment, of which $16.1 million was a realized loss on settled hedges and $17.4 million related to unrealized losses on hedges to be settled in 2026.
Refer to "Liquidity and Capital Resources" in this MD&A for details regarding the Company's gold hedging program.
Production Costs
During Q4 2025, the Company incurred production costs of $43.5 million, compared to $31.3 million in Q4 2024. Production costs were higher than the comparative period due to more gold ounces sold in Q4 2025.
Depreciation and Depletion
During Q4 2025, depreciation and depletion expense was $20.1 million, compared to $7.6 million in Q4 2024. The increase resulted from higher depletion expense on Abore and Esaase development and capitalized stripping costs, as well as more gold ounces sold in Q4 2025.
Royalties
The Ghanaian government charges a 5% royalty on revenues earned through sales of precious metals from the AGM's concessions. The AGM's Esaase concession is also subject to a 0.5% net smelter return royalty payable to the Bonte Liquidation Committee. The Esaase royalty is presented within production costs.
The Government of Ghana also imposed the GSL on May 1, 2023, which amounted to 1% of revenues for gold mining companies. Effective April 1, 2025, the Government of Ghana increased the GSL on gold mining companies to 3% and until December 31, 2028. The GSL is presented as a royalty expense in the Statement of Operations.
Royalties expense was higher during Q4 2025 due to higher recorded revenues and the aforementioned increase in the GSL.
General and Administrative ("G&A") Expenses
The following table summarizes G&A expenses for the three months ended December 31, 2025 and 2024:
| Three months ended December 31, | ||
| 2025 | 2024 | |
| (in thousands of US dollars) | $ | $ |
| Wages, benefits and consulting | (2,002) | (2,130) |
| Office, rent and administration | (465) | (338) |
| Professional and legal | (103) | (205) |
| Share-based compensation | (2,500) | 368 |
| Travel, marketing, investor relations and regulatory | (381) | (318) |
| Withholding taxes | (798) | (1,310) |
| Depreciation | (29) | (33) |
| Total G&A expenses | (6,278) | (3,966) |
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
G&A expenses in Q4 2025 were $2.3 million higher than Q4 2024 due to a $2.9 million increase in share-based compensation expense, resulting from an increase in the fair value of cash-settled long-term incentive plan awards linked to the price of the Company's common shares. This increase was partly offset by lower withholding taxes in Q4 2025 relating to a tax optimization strategy.
Finance Expense
The following table summarizes the components of finance expense for the three months ended December 31, 2025 and 2024:
| Three months ended December 31, | ||
| 2025 | 2024 | |
| (in thousands of US dollars) | $ | $ |
| Interest on lease liabilities | (1,439) | (1,548) |
| Accretion expense on as set retirement provisions | (750) | (757) |
| Accretion expense on deferred consideration | (811) | (759) |
| Change in fair value of contingent consideration | (1,397) | (2,804) |
| Other | (144) | (155) |
| Total finance expense | (4,541) | (6,023) |
Finance expense was $1.5 million lower in Q4 2025 due to the change in fair value of contingent consideration payable to Gold Fields Limited, which resulted from fewer discounting periods.
Foreign Exchange Gain
The increase in foreign exchange gain during Q4 2025 was due to the appreciation of the Cedi against the US dollar, which increased by approximately 20% during the quarter. The majority of the foreign exchange gain was unrealized and related to the quarter-end revaluation of value added tax receivables in Ghana that are denominated in Cedis.
Current and Deferred Income Tax Expense
During Q4 2025, the Company recorded current income tax ("CIT") and deferred income tax ("DIT") expenses of $16.4 million and $8.3 million, respectively. The CIT expense relates entirely to taxable income generated in Ghana by the AGM, which is subject to a statutory tax rate of 35%.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
REVIEW OF FY 2025 CONSOLIDATED FINANCIAL RESULTS
Selected financial results for the years ended December 31, 2025, 2024 and 2023
| Year ended December 31, | |||
| 2025 | 2024(1) | 2023(1) | |
| (in thousands of US dollars, except per share amounts) | $ | $ | $ |
| Revenue | 447,767 | 231,339 | - |
| Realized and unrealized losses on gold hedges | (119,324) | (23,121) | - |
| Net revenue | 328,443 | 208,218 | - |
| Cost of sales: | |||
| Production costs | (166,665) | (115,769) | - |
| Depreciation and depletion | (62,761) | (23,603) | - |
| Royalties | (33,004) | (13,957) | - |
| Total cost of sales | (262,430) | (153,329) | - |
| Income from mine operations | 66,013 | 54,889 | - |
| General and administrative expenses | (25,264) | (20,022) | (15,286) |
| Exploration and evaluation expenditures | (4,206) | (6,142) | (2,009) |
| Termination of offtake agreement | - | (13,063) | - |
| Share of net income related to joint venture | - | 2,432 | 31,670 |
| Service fee earned as operators of joint venture | - | 976 | 5,747 |
| Gain on derecognition of equity investment in joint venture | - | 1,416 | - |
| Income from operations and joint venture | 36,543 | 20,486 | 20,122 |
| Transaction costs | - | (2,492) | (378) |
| Finance income | 6,056 | 5,853 | 6,255 |
| Finance expense | (17,786) | (15,183) | (23) |
| Foreign exchange gain (loss) | 5,669 | (123) | 109 |
| Income before taxes | 30,482 | 8,541 | 26,085 |
| Current income tax expense | (38,259) | - | - |
| Deferred income tax expense | (23,024) | - | - |
| Net (loss) income and comprehensive (loss) income | (30,801) | 8,541 | 26,085 |
| Weighted average number of shares outs tanding: | |||
| Basic | 258,375,097 | 250,651,506 | 224,946,412 |
| Diluted | 258,375,097 | 255,772,078 | 225,176,714 |
| Net (loss) income per share attributable to common shareholders: | |||
| Basic | (0.11) | 0.02 | 0.12 |
| Diluted | (0.11) | 0.02 | 0.12 |
(1) The Company acquired Gold Fields Limited's 45% equity interest in the AGM on March 4, 2024, thereby increasing the Company's equity interest to 90% as of this date. The Company therefore consolidated the financial results of the AGM commencing on March 4, 2024. Prior to this date, the Company accounted for its previous 45% equity interest in the AGM by applying the equity method of accounting.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Revenue
During FY 2025, the Company sold 127,134 ounces of gold at an average gold price of $3,516/oz for gross revenue of $447.8 million (including $0.7 million of by-product silver revenue). During FY 2024, the Company recognized sales on 96,430 ounces of gold at an average gold price of $2,394/oz for gross revenue of $231.3 million (including $0.5 million of by-product silver revenue). The average gold sales price for FY 2025, including the effect of realized gold hedging losses, amounted to $3,164/oz.
The increase in revenue year-on-year was due to a 47% increase in average gold sales prices and a 32% increase in gold ounces sold. Gold ounces sold in FY 2025 were higher than FY 2024 as the Company only consolidated the financial results of the AGM from March 4, 2024 onwards in the comparative year.
Realized and unrealized losses on gold hedges
The increase in loss on gold hedge derivative instruments during FY 2025 was due to the rising gold price environment, of which $44.8 million was a realized loss on settled hedges and $74.5 million related to unrealized losses on hedges to be settled in 2026.
Refer to "Liquidity and Capital Resources" in this MD&A for details regarding the Company's gold hedging program.
Production Costs
During FY 2025, the Company incurred production costs of $166.7 million, compared to $115.8 million in FY 2024. Production costs were higher in FY 2025 due to more gold ounces sold.
Depreciation and Depletion
During FY 2025, depreciation and depletion expense was $62.8 million, compared to $23.6 million in FY 2024. The increase in depreciation and depletion expense resulted from higher depreciation recorded on right-of-use lease assets associated with mining services contracts, depletion of Abore and Esaase development and capitalized stripping costs, and more gold ounces sold in FY 2025.
Royalties
Royalties expense was higher in FY 2025 due to higher recorded revenues and the aforementioned increase in the GSL.
G&A Expenses
The following table summarizes G&A expenses for the years ended December 31, 2025 and 2024:
| Year ended December 31, | ||
| 2025 | 2024 | |
| (in thousands of US dollars) | $ | $ |
| Wages, benefits and consulting | (9,064) | (8,004) |
| Office, rent and administration | (1,583) | (1,431) |
| Professional and legal | (1,256) | (1,325) |
| Share-based compensation | (10,306) | (6,874) |
| Travel, marketing, investor relations and regulatory | (1,417) | (944) |
| Withholding taxes | (1,519) | (1,310) |
| Depreciation | (119) | (134) |
| Total G&A expenses | (25,264) | (20,022) |
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
G&A expenses for FY 2025 were $5.2 million higher than FY 2024 primarily due to the Company consolidating the financial results of the AGM in the comparative year from March 4, 2024 to September 30, 2024. Additionally, share-based compensation expense was
$3.4 million higher in FY 2025, resulting from an increase in the fair value of cash-settled long-term incentive plan awards linked to the price of the Company's common shares.
Finance Expense
The following table summarizes the components of finance expense for the years ended December 31, 2025 and 2024:
| Year ended December 31, | ||
| 2025 | 2024 | |
| (in thousands of US dollars ) | $ | $ |
| Interest on lease liabilities | (6,311) | (5,077) |
| Accretion expense on asset retirement provisions | (2,889) | (2,246) |
| Accretion expense on deferred consideration | (3,133) | (2,481) |
| Change in fair value of contingent consideration | (5,047) | (4,894) |
| Other | (406) | (485) |
| Total finance expense | (17,786) | (15,183) |
Interest on lease liabilities and accretion expense on asset retirement provisions were higher in FY 2025 due to the Company consolidating the financial results of the AGM for the entire twelve month period in FY 2025; whereas, in FY 2024, the Company only consolidated the financial results of the AGM from March 4, 2024 onwards.
Foreign Exchange Gain (Loss)
The increase in foreign exchange gain during FY 2025 was due to the appreciation of the Cedi against the US dollar, which increased during FY 2025 by approximately 41%. The majority of the foreign exchange gain related to realized and unrealized gains on value added tax receivables in Ghana that are denominated in Cedis.
Current and Deferred Income Tax Expense
During FY 2025, the Company recorded CIT and DIT expenses of $38.3 million and $23.0 million, respectively. The CIT expense relates entirely to taxable income generated in Ghana by the AGM, which is subject to a statutory tax rate of 35%. In the comparative year, the Company did not recognize CIT expense as the Company's operating Ghanaian subsidiary had tax loss carryforwards that were utilized to offset taxable income.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
FINANCIAL CONDITION
| December 31, | December 31, | ||
| 2025 | 2024 | ||
| (in thousands of US dollars) |
$ | $ | |
| Cash and cash equivalents | 108,327 | 105,775 | Cash and cash equivalents increased resulting from positive operating cash flow and supported by record high gold prices, partly offset by capital expenditures and capitalized lease payments at the AGM, and payment of the $25 million deferred cash consideration to Gold Fields . |
| Other current assets | 93,856 | 59,810 | Other current as sets increased primarily due to a buildup of ore stockpiles. |
| Non-current assets | 396,868 | 334,768 | Non-current assets increased due to capitalized stripping costs at the Abore, Esaase and Nkran deposits, as well as construction costs related to the secondary crushing circuit. |
| Total assets | 599,051 | 500,353 | |
| Current liabilities | 220,580 | 110,815 | Current liabilities increased due to gold hedge liabilities and higher mining contractor payables. |
| Non-current liabilities | 156,813 | 141,769 | Non-current liabilities increased due to gold hedge liabilities and the recognition of a mining services lease for the Nkran deposit, partly offset by a reduction in deferred consideration following the $25 million cash payment to Gold Fields in Q4 2025. |
| Total liabilities | 377,393 | 252,584 | Shareholders' equity decreased as the Company had a net loss for the year ended December 31, 2025. |
| Common shareholders' equity |
218,856 | 243,456 | |
| Non-controlling interest | 2,802 | 4,313 | |
| Total liabilities and equity |
599,051 | 500,353 |
LIQUIDITY AND CAPITAL RESOURCES
A key financial objective of the Company is actively managing its cash balance and liquidity to achieve positive operating cash flows that internally fund operating, capital and project development requirements, and generate shareholder returns. Material changes in the Company's liquidity and capital resources will be substantially determined by the success or failure of the Company's operations, exploration, and development programs, the ability to obtain equity or other sources of financing, and the price of gold.
On December 19, 2025, the Company entered into the $75.0 million RCF with RMB. The purpose of the RCF is for general working capital requirements. The RCF has a 4-year term and floating interest rate based on the Secured Overnight Financing Rate (SOFR) plus a margin of 3.95% per annum, while the undrawn portion of the RCF is subject to a standby fee of 1.38% per annum. The RCF is guaranteed by certain subsidiaries of the Company and is also secured by a first priority charge against Asanko Gold Ghana Ltd.'s ("AGGL") assets, and a first priority share pledge of certain of the Company's subsidiaries.
The RCF includes financial covenants, to be tested semi-annually, requiring AGGL to maintain the following: (a) gearing ratio of net indebtedness to net worth not less than 0.25:1; (b) net leverage ratio based on net indebtedness to rolling four quarters earnings before interest, taxes, depreciation and amortization ("EBITDA")1 not less than 2.50:1; and (c) an interest coverage ratio, based on rolling four quarters EBITDA1 divided by net finance costs, greater than 4.00:1. As of December 31, 2025, the Company had not drawn on the RCF and was in full compliance with all covenants.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
The Company's cash and cash equivalents of $108.3 million as of December 31, 2025, together with available funds under the RCF and projected cash flows from operations over the next 12 months at current spot gold prices, are expected to be sufficient to satisfy the Company's financial, operating, capital commitments and contractual obligations requiring settlement within the next 12 months, including the $30.0 million deferred consideration payment due to Gold Fields Limited on December 31, 2026. However, the Company's cash flows and its ability to meet working capital requirements and contractual obligations is significantly influenced by the price of gold. Volatility in the gold price contributes to risk that cash flow from operations and other sources of liquidity will be insufficient to meet the Company's financial obligations as they become due and fund the Company's ongoing development and exploration projects. The Company aims to manage its liquidity by ensuring that it can manage spending and provide adequate cash flow to meet all commitments as they fall due.
On July 8, 2025, the Company filed a base shelf prospectus ("Prospectus"), under which the Company may sell from time to time securities of the Company, up to an aggregate of $500.0 million. The Prospectus has a term of 25-months from the filing date. No securities have been issued under the Prospectus as of the date of this MD&A.
Working Capital
As at December 31, 2025, the Company had net working capital deficiency of $11.4 million (December 31, 2024 - net working capital of $61.8 million). The decrease in net working capital since December 31, 2024 was primarily driven by an increase in the fair value of the Company's gold hedge derivative liabilities. The Company intends to settle the derivative liabilities via physical delivery of gold ounces. Refer to the discussion under the heading "Gold Price Hedging" below for further details on the Company's gold hedging program.
| (in thousands of US dollars) | December 31, 2025 $ |
December 31, 2024 $ |
| Cash and cash equivalents | 108,327 | 105,775 |
| Accounts receivable | 71 | 104 |
| Inventories | 70,802 | 42,830 |
| Value added tax receivables | 10,808 | 8,328 |
| Prepaid expenses and other | 12,175 | 8,548 |
| Accounts payable and accrued liabilities | (87,053) | (55,064) |
| Income taxes payable | (4,167) | - |
| Financial liabilities | (77,317) | (9,284) |
| Lease liabilities - current | (16,806) | (15,937) |
| Deferred consideration | (28,242) | (23,535) |
| Total net working capital | (11,402) | 61,765 |
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Cash Flows
The following table provides a summary of the Company's cash flows for the three months and years ended December 31, 2025 and 2024:
| Three months ended December 31, | Year ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| (in thousands of US dollars ) | $ | $ | $ | $ |
| Cash provided by (used in): | ||||
| Operating activities | 55,839 | 13,806 | 157,994 | 55,746 |
| Investing activities | (55,925) | (25,272) | (136,971) | 5,789 |
| Financing activities | (8,727) | (4,655) | (20,690) | (10,598) |
| Impact of foreign exchange on cash and cash equivalents |
700 | 980 | 2,219 | (432) |
| (Decrease) increase in cash and cash equivalents | (8,113) | (15,141) | 2,552 | 50,505 |
| Cash and cash equivalents, beginning of period | 116,440 | 120,916 | 105,775 | 55,270 |
| Cash and cash equivalents, end of period | 108,327 | 105,775 | 108,327 | 105,775 |
Cash Flows from Operating Activities
The $42.0 million increase in operating cash flows during Q4 2025 was driven by higher revenues resulting from higher average gold sales prices and more gold ounces sold, as compared to the same period in 2024.
The $102.2 million increase in operating cash flows during FY 2025, relative to FY 2024, was driven by higher revenues as described under the heading "Revenue" in section "Review of Year-to-Date Consolidated Financial Results" of this MD&A. Higher revenues were partly offset by higher operating costs related to the ongoing development of the Abore deposit and recommencement of mining activities at the Esaase deposit in Q1 2025.
Cash Flows used in Investing Activities
During Q4 2025, the Company invested $31.6 million in additions to mineral properties, plant and equipment ("MPP&E") and paid
$25.0 million in deferred consideration to Gold Fields Limited (Q4 2024 - invested $24.7 million in additions to MPP&E). Total cash expenditures on MPP&E during Q4 2025 included $11.1 million of pre-stripping costs at Nkran Cut 3, capitalized infill drilling at Abore and costs related to a tailings facility expansion. The increase in capital expenditure during Q4 2025 was due to the commencement of pre-stripping at Nkran Cut 3 during Q1 2025, partly offset by lower capitalized stripping costs at Abore in the current quarter.
During FY 2025, the Company invested $114.9 million in additions to MPP&E, paid $25.0 million in deferred consideration to Gold Fields Limited, and earned $3.4 million of interest on cash balances (FY 2024 - invested $66.9 million in additions to MPP&E and earned $4.7 million of interest on cash balances, notwithstanding the cash flow impact of the transaction with Gold Fields Limited). The increase in capital expenditure during FY 2025 was driven by the commencement of pre-stripping at Nkran Cut 3 and construction costs associated with the completed secondary crushing circuit. Additionally, in the comparative period of 2024, the Company only consolidated the cash flows of the AGM from March 4, 2024 onwards.
Cash Flows used in Financing Activities
Cash flows used in financing activities primarily related to capitalized lease payments on the Company's mining and other service contracts. The increase in cash flows used in financing activities for both periods in 2025, compared to the comparative periods in 2024, was due to additional mining contractor lease agreements entered into during the current year.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
The Company also incurred $3.5 million in fees and other costs associated with closing the RCF in Q4 2025.
Commitments and Contractual Obligations
The following table summarizes the Company's commitments and contractual obligations as at December 31, 2025 and December 31, 2024.
| Less than | 1-3 | 4-5 | After | December 31, | December 31, | |
| (in thousands of US dollars) | 1 year | years | years | 5 years | 2025 | 2024 |
| Accounts payable and accrued liabilities |
73,473 | - | - | - | 73,473 | 48,125 |
| Income taxes payable | 4,167 | - | - | - | 4,167 | - |
| Gold hedges | 77,317 | 10,994 | - | - | 88,311 | 13,758 |
| Long-term incentive plan (cash-settled awards) |
13,580 | 486 | - | - | 14,066 | 7,405 |
| Mining and other services contracts | 21,991 | 25,870 | 14,557 | 1,483 | 63,901 | 44,590 |
| Asset retirement provisions (undiscounted) |
- | 3,248 | 7,815 | 70,490 | 81,553 | 75,770 |
| Deferred and contingent consideration (undiscounted) |
30,000 | - | 41,595 | 1,409 | 73,004 | 94,237 |
| Corporate office lease | 115 | 239 | 207 | - | 561 | 83 |
| Total commitments | 220,643 | 40,837 | 64,174 | 73,382 | 399,036 | 283,968 |
The gold hedges commitment represents the mark-to-market fair value of the Company's current gold hedging program (see "Gold Price Hedging" below) based upon a spot price of approximately $4,308/oz as of December 31, 2025. The settlement amount of these hedges will depend on the price of gold at the settlement date.
Long-term incentive plan commitments due within one year include all cash-settled deferred share unit ("DSU") awards granted to directors of the Company prior to 2025 amounting to $12.3 million. These commitments are current liabilities because the timing of payments could be accelerated if a director retires, or in the event of a change of control. DSU awards granted in 2025 will be settled by the issuance of the Company's common shares.
The Company has a number of mining and other service contracts. These contracts include monthly fixed fees as well as variable cost measures. The contractual obligations disclosed in the above table relate only to the fixed fees payable to the contractors. The variable cost measures of these contracts are dependent volumes, such as bank cubic meters mined or ore tonnes transported. The expense relating to these variable payments and recognized as an operating expense was $37.4 million and $129.5 million for the three months and year ended December 31, 2025, respectively (three months and year ended December 31, 2024 - $22.7 million and $71.7 million, respectively). The mining services contracts include termination clauses, which allow the Company to terminate the agreements provided a termination fee is paid to the contractor.
The timing of contingent payments to Gold Fields Limited, totaling $43.0 million, is based upon management's best estimate of when payments would be required to be made based upon the AGM's current life of mine plan.
Contingencies
A former services provider of the AGM filed a dispute with an arbitration tribunal alleging the AGM breached the terms of a services agreement and claimed approximately $25.0 million in damages. The arbitrator ruled in favour of the AGM, declaring there had not been a breach of any terms of the contract, yet made an award to the counterparty of approximately $13.0 million plus interest for services rendered. The AGM, consistent with the arbitration ruling, maintains the view that there was no breach of contract, and all contractual amounts were paid as due. The AGM therefore is undertaking an appeals process in the Court of Appeal in Ghana. A provision of $7.0 million has been recorded as at December 31, 2025 as management's best estimate to settle the claim (December 31, 2024 - $7.0 million). While the Company cannot reasonably predict the ultimate outcome of these actions, and inherent uncertainties exist in predicting such outcomes, the Company believes the estimated provision is reasonable based on the information currently available.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Due to the nature of its business, the Company may from time to time be subject to regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. While the Company cannot reasonably predict the ultimate outcome of any such actions, and inherent uncertainties exist in predicting such outcomes, the Company believes that the ultimate resolution of these actions is not reasonably likely to have a material adverse effect on the Company's financial condition or future results of operations.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Gold Price Hedging
The Company periodically enters into gold hedging arrangements to mitigate gold price risk during periods of planned elevated capital investment. During the three months and year ended December 31, 2025, the Company realized a $16.1 million and a $44.8 million loss on its gold hedging arrangements, respectively (three months and year ended December 31, 2024 - realized losses of $4.2 million and $9.5 million, respectively). The Company does not apply hedge accounting to the gold hedges.
The Company has gold hedges for 57,500 gold ounces of production in 2026 and 7,500 ounces in 2027. The gold hedges have a weighted average put strike of $2,277/oz and a weighted average call strike of $3,025/oz.
SUMMARY OF QUARTERLY FINANCIAL RESULTS
The following table provides a summary of unaudited financial data for the last eight quarters. Except for basic and diluted income (loss) per share, the totals in the following table are presented in thousands of US dollars.
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
| Gross revenue | 159,676 | 114,197 | 97,304 | 76,590 | 64,551 | 71,130 | 63,963 | 31,695 |
| Income (loss) from mine operations | 51,139 | 9,977 | 24,653 | (19,756) | 26,114 | 7,730 | 20,646 | 399 |
| Income (loss) from operations and JV | 43,915 | 176 | 18,779 | (26,327) | 7,401 | 4,190 | 12,092 | (3,197) |
| Net income (loss) for the period | 19,057 | (42,020) | 21,554 | (29,392) | 3,369 | 1,100 | 7,280 | (3,208) |
| Basic and diluted net income (loss) per share |
$0.06 | ($0.15) | $0.07 | ($0.10) | $0.00 | $0.00 | $0.03 | ($0.01) |
| Adjusted net income (loss) attributable to common shareholders (1) |
39,959 | (2,770) | 21,133 | 3,410 | 4,646 | 17,743 | 8,805 | 6,493 |
| Adjusted basic net income (loss) per share(1) |
$0.15 | ($0.01) | $0.08 | $0.01 | $0.02 | $0.07 | $0.03 | $0.03 |
| Cash provided by operating activities | 55,839 | 40,449 | 35,814 | 25,892 | 13,806 | 24,449 | 4,463 | 13,028 |
| EBITDA(1) | 67,635 | 50,412 | 49,851 | 23,018 | 16,424 | 30,787 | 18,972 | 2,872 |
(1) Non-IFRS measure. Refer to "Non-IFRS Measures" in this MD&A.
On March 4, 2024, the Company completed the acquisition of Gold Fields Limited's 45% equity interest in the AGM and as of this date commenced consolidating the financial results of the AGM. The increase in the Company's revenue, income from mine operations, income from operations, cash provided by operating activities and EBITDA1 since Q1 2024 was due to consolidating the AGM's financial results and cash flows.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
The decrease in EBITDA1 in Q4 2024 was due to the Company terminating a gold sales offtake agreement and paying a $13.1 million termination fee.
The net loss in Q1 2025 was primarily attributable to a $30.2 million unrealized loss and a $4.9 million realized loss on gold hedging instruments.
From Q2 2025 to Q4 2025, improved mining and production rates at the AGM, coupled with higher average gold sales prices, led to strong revenue, income from operations and operating cash flow.
The net loss in Q3 2025 was due to a $25.1 million unrealized loss and a $13.1 million realized loss on gold hedging instruments. The Company also recorded CIT and DIT expenses of $21.8 million and $14.7 million, respectively.
The increase in gross revenue, income from mine operations, income from operations and adjusted net income1 during Q4 2025 was due to more gold ounces sold and higher average gold sales prices.
NON-IFRS MEASURES
The Company has included certain non-IFRS performance measures throughout this MD&A. These performance measures are employed by management to assess the Company's operating and financial performance and to assist in business decision-making. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors and other stakeholders use this information to evaluate the Company's operating and financial performance; however, as explained elsewhere herein, these non-IFRS performance measures do not have any standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Accordingly, these performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Total Cash Costs per Gold Ounce Sold
The Company has included the non-IFRS performance measure of total cash costs per gold ounce sold throughout this MD&A. The Company follows the recommendations of the Gold Institute Production Cost Standard (the "Gold Institute"). The Gold Institute, which ceased operations in 2002, was a non-regulatory body and represented a global group of suppliers of gold and gold products. The production cost standard developed by the Gold Institute remains the generally accepted standard of reporting cash costs of production by many gold mining companies. Management uses total cash costs per gold ounce sold to monitor the operating performance of the AGM. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, some investors use this information to evaluate the Company's performance and ability to generate cash flow.
The following table provides a reconciliation of the AGM's total cash costs per gold ounce sold to production costs of the Company (the nearest IFRS measure) as presented in the audited consolidated annual financial statements of the Company for the years ended December 31, 2025 and 2024.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
| Three months ended December 31, | Year ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| (in thousands of US dollars, except per ounce amounts) |
$ | $ | $ | $ |
| Production costs | 43,490 | 31,270 | 166,665 | 115,769 |
| Unconsolidated production costs(1) | - | - | - | 20,810 |
| Fair value adjustments on acquired inventories(2) | - | 205 | - | (7,626) |
| Adjusted production costs | 43,490 | 31,475 | 166,665 | 128,953 |
| By-product silver revenue | (287) | (187) | (737) | (648) |
| Royalties | 11,489 | 3,891 | 33,004 | 15,992 |
| Total cash costs | 54,692 | 35,179 | 198,932 | 144,297 |
| Gold ounces sold | 38,276 | 24,673 | 127,134 | 113,357 |
| Total cash costs per gold ounce sold ($/oz) | 1,429 | 1,426 | 1,565 | 1,273 |
(1) Unconsolidated production costs presented in the table above relate to periods when the Company accounted for its interest in the AGM joint venture using the equity method of accounting.
(2) Fair value adjustments on acquired inventories have been restated to retrospectively adjust for final purchase price accounting adjustments as of the March 4, 2024 transaction date.
AISC per Gold Ounce Sold
The Company has adopted the reporting of "AISC per gold ounce sold", which is a non-IFRS performance measure. The Company believes that the AISC per gold ounce measure provides additional insight into the costs of producing gold by capturing all of the expenditures required for the discovery, development and sustaining of gold production and allows the Company to assess its ability to support capital expenditures to sustain future production from the generation of operating cash flows. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, some investors use this information to evaluate the AGM's performance and ability to generate cash flow.
AISC adjusts total cash costs for mine site G&A expenses, reclamation cost accretion, sustaining capitalized stripping costs, sustaining capital expenditures and sustaining lease payments on the AGM's mining and service lease agreements. Sustaining capital expenditures, capitalized stripping costs, reclamation cost accretion and lease payments are not line items on the Company's financial statements. Sustaining capital expenditures are defined as those capital expenditures which do not materially benefit annual or life of mine gold ounce production at a mine site. A material benefit to a mine site is considered to be at least a 10% increase in annual or life of mine production, net present value, or mineral reserves compared to the remaining life of mine of the operation. As such, sustaining costs exclude all expenditures at the AGM's new projects and certain expenditures at the AGM's operating sites which are deemed expansionary in nature. Capitalized stripping costs represent costs incurred at steady-state operations during the period; these costs are generally not considered expansionary in nature as the stripping phase is expected to take less than 12 months and resulting ore production is of a short-term duration. Reclamation cost accretion represents the growth in the AGM's reclamation provision due to the passage of time. This amount does not reflect cash outflows, but it is considered to be representative of the periodic costs of reclamation and remediation. Lease payments on mining and service lease agreements represent cash outflows. Reclamation cost accretion is presented in finance expense in the Company's financial results.
The following table provides a reconciliation of AISC for the AGM to production costs and various operating expenses of the Company (the nearest IFRS measures) as presented in the audited consolidated annual financial statements of the Company for the years ended December 31, 2025 and 2024.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
| Three months ended December 31, | Year ended December 31, | |||
| (in thousands of US dollars except per ounce amounts) |
2025 | 2024 | 2025 | 2024 |
| $ | $ | $ | $ | |
| Total cash costs (as reconciled above) | 54,692 | 35,179 | 198,932 | 144,297 |
| G&A expenses of the AGM (see table below) | 800 | 759 | 3,194 | 2,511 |
| Sustaining capital expenditures and capitalized stripping costs (see table below) |
16,681 | 22,138 | 61,379 | 64,835 |
| Reclamation accretion expense(1) | 750 | 757 | 2,889 | 2,689 |
| Sustaining lease payments(2) | 4,874 | 6,262 | 17,448 | 19,508 |
| All-in sustaining cost | 77,797 | 65,095 | 283,842 | 233,840 |
| Gold ounces sold | 38,276 | 24,673 | 127,134 | 113,357 |
| All-in sustaining cost per gold ounce sold ($/oz) | 2,033 | 2,638 | 2,233 | 2,063 |
(1) Accretion expense for the year ended December 31, 2024 was $2,246 per the Company's audited consolidated annual financial statements. Unconsolidated accretion expense of the AGM for the period January 1, 2024 to March 3, 2024 amounted to $443, when the Company accounted for its previous 45% equity interest in the AGM by applying the equity method of accounting.
(2) Sustaining lease payments for the three months and year ended December 31, 2025 were $5,467 and $19,265, respectively, per the Company's audited consolidated annual financial statements, which included $28 and $122 of lease payments for corporate office space, respectively, and $565 and $1,695 of non-sustaining lease payments on a mining services contract, respectively.
The following table reconciles G&A expenses of the AGM to the Company's G&A expenses (the nearest IFRS measure) as presented in the Statements of Operations of the Company's audited consolidated annual financial statements for the years ended December 31, 2025 and 2024. Unconsolidated G&A expenses of the AGM relate to the period from January 1, 2024 to March 3, 2024 when the Company accounted for its previous 45% equity interest in the AGM by applying the equity method of accounting.
| Three months ended December 31, | Year ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| (in thousands of US dollars) | $ | $ | $ | $ |
| Consolidated G&A expenses | 6,278 | 3,966 | 25,264 | 20,022 |
| Add (less): | ||||
| Corporate G&A expenses | (5,478) | (3,207) | (22,070) | (17,971) |
| Unconsolidated G&A expenses of the AGM | - | - | - | 460 |
| G&A expenses of the AGM | 800 | 759 | 3,194 | 2,511 |
The following table reconciles sustaining capital expenditures and sustaining capitalized stripping costs to the Company's total MPP&E additions (the nearest IFRS measure) as presented in note 10 of the Company's audited consolidated annual financial statements for the years ended December 31, 2025 and 2024. Unconsolidated MPP&E additions of the AGM relate to the period January 1, 2024 to March 3, 2024, when the Company accounted for its previous 45% equity interest in the AGM by applying the equity method of accounting.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
| Three months ended December 31, | Year ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| (in thousands of US dollars) | $ | $ | $ | $ |
| Additions to MPP&E (note 10 of financial statements) |
31,010 | 22,453 | 127,508 | 100,553 |
| Add (less): | ||||
| Non-sustaining capital expenditures | (14,895) | (2,539) | (53,468) | (12,150) |
| Capital expenditures - corporate | (11) | (9) | (76) | (19) |
| Non-cash additions related to leases | - | - | (11,157) | (27,816) |
| Change in accounts payable related to capitalized stripping costs |
577 | 2,233 | 1,428 | (5,836) |
| Unconsolidated MPP&E additions of the AGM | - | - | - | 10,103 |
| Sustaining capital expenditures | 16,681 | 22,138 | 61,379 | 64,835 |
EBITDA and Adjusted EBITDA
EBITDA, which is a non-IFRS measure, provides an indication of the Company's continuing capacity to generate income from operations before considering the Company's financing decisions, costs of amortizing capital assets and income tax expense. Accordingly, EBITDA comprises net income (loss) excluding finance expense, finance income, depreciation and depletion expense and income taxes. Adjusted EBITDA, also a non-IFRS measure, adjusts EBITDA to exclude non-recurring items and non-cash items ("Adjusted EBITDA") and includes the calculated Adjusted EBITDA of the AGM joint venture for periods prior to the consolidation of its ownership.
The following table provides a reconciliation of the Company's EBITDA and Adjusted EBITDA to net income (loss) of the Company (the nearest IFRS measure) as presented in the Company's audited consolidated annual financial statements for the years ended December 31, 2025 and 2024.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
| Three months ended December 31, | Year ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| (in thousands of US dollars ) | $ | $ | $ | $ |
| Net income (loss) | 19,057 | 3,369 | (30,801) | 8,541 |
| Add back (deduct): | ||||
| Depreciation and depletion expense | 20,087 | 7,635 | 62,880 | 23,737 |
| Finance income | (759) | (603) | (6,056) | (5,853) |
| Finance expense | 4,541 | 6,023 | 17,786 | 15,183 |
| Current income tax expense | 16,431 | - | 38,259 | - |
| Deferred income tax expense | 8,278 | - | 23,024 | - |
| EBITDA | 67,635 | 16,424 | 105,092 | 41,608 |
| Add back (deduct): | ||||
| Unrealized loss (gain) on gold hedge derivatives | 17,425 | (8,565) | 74,553 | 13,606 |
| Non-cash long-term incentive plan compensation | 425 | 253 | 2,535 | 1,128 |
| Termination of offtake agreement | - | 13,063 | - | 13,063 |
| Share of net income related to joint venture | - | - | - | (2,432) |
| Gain on derecognition of equity investment in joint venture |
- | - | - | (1,416) |
| Transaction costs | - | - | - | 2,492 |
| Galiano's attributable interest in JV Adjusted | - | - | - | 3,243 |
| EBITDA | ||||
| Adjusted EBITDA | 85,485 | 21,175 | 182,180 | 71,292 |
Adjusted Net Income (Loss)
The Company has included the non-IFRS performance measures of adjusted net income (loss) and adjusted net income (loss) per share throughout this MD&A. Neither adjusted net income (loss) nor adjusted net income (loss) per share have any standardized meaning and are, therefore, unlikely to be comparable to other measures presented by other issuers. Adjusted net income (loss) excludes certain non-cash items from net income (loss) to provide a measure which helps the Company and investors to evaluate the results of the underlying core operations of the Company and its ability to generate cash flows. The Company believes that the presentation of adjusted net income (loss) is appropriate to provide additional information to investors regarding items that management does not expect to continue at the same level in the future or that management does not believe to reflect the Company's ongoing operating performance or operating performance of the current period. The Company further believes that its presentation of this non-IFRS financial measure provides information that is useful to investors because it is an important indicator of the strength of operations and the performance of the Company's core business.
The following table provides a reconciliation of adjusted net income (loss) to net income (loss) of the Company (the nearest IFRS measure) as presented in the Company's audited consolidated annual financial statements for the years ended December 31, 2025 and 2024.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
| Three months ended December 31, | Year ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| (in thousands of US dollars, except per share amounts ) |
$ | $ | $ | $ |
| Net income (loss ) attributable to common shareholders |
16,826 | 946 | (29,290) | 6,118 |
| Unrealized loss (gain) on gold hedge derivatives (1) | 15,683 | (7,709) | 67,098 | 12,245 |
| Deferred income tax expense(1) | 7,450 | - | 20,722 | - |
| Realized purchase price adjustments on inventories | - | (348) | - | 8,352 |
| Termination of offtake agreement(1) | - | 11,757 | - | 11,757 |
| Gain on derecognition of equity investment in joint venture | - | - | - | (1,416) |
| Transaction costs | - | - | - | 2,492 |
| Adjusted net income | 39,959 | 4,646 | 58,530 | 39,548 |
| Basic weighted average common shares outstanding | 259,769,010 | 257,069,680 | 258,375,097 | 250,651,506 |
| Diluted weighted average common shares outstanding | 268,893,809 | 261,892,102 | 265,817,349 | 255,772,078 |
| Adjusted net (loss) income per share - basic | $0.15 | $0.02 | $0.23 | $0.16 |
| Adjusted net (loss) income per share - diluted | $0.15 | $0.02 | $0.22 | $0.15 |
(1) Reflects the Company's 90% interest in the AGM.
Adjusted Income from Mine Operations
The Company has included the non-IFRS performance measures of adjusted income from mine operations in this MD&A. Adjusted income from mine operations has no standardized meaning and is therefore unlikely to be comparable to other measures presented by other issuers. Adjusted income from mine operations is calculated by adding back unrealized losses (gains) on the Company's gold hedge derivative instruments to income from mine operations as reported in the Company's Statement of Operations and Comprehensive Income. The Company believes adjusted income from mine operations provides a measure which helps management and investors to evaluate the financial results of the underlying core operations of the Company and its ability to generate cash flows in the current period.
The following table provides a reconciliation of adjusted income from mine operations to income from mine operations of the Company (the nearest IFRS measure) as presented in the Company's audited consolidated annual financial statements for the years ended December 31, 2025 and 2024.
| Three months ended December 31, | Year ended December 31, | |||
| 2025 | 2024 | 2025 | 2024 | |
| (in thousands of US dollars) | $ | $ | $ | $ |
| Income from mine operations | 51,139 | 26,114 | 66,013 | 54,889 |
| Unrealized loss (gain) on gold hedge derivative instruments | 17,425 | (8,565) | 74,553 | 13,606 |
| Adjusted income from mine operations | 68,564 | 17,549 | 140,566 | 68,495 |
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
OUTSTANDING SHARE DATA
As of the date of this MD&A, there were 259,790,437 common shares of the Company issued and outstanding and 10,053,675 stock options outstanding (each exercisable to purchase one common share at exercise prices ranging between C$0.62 and C$2.37 per share). Additionally, there are 2,568,904 long-term incentive plan ("LTIP") awards, comprising restricted share units, performance share units and DSUs, that will be settled in equity. The maximum number of common shares issuable upon conversion of these LTIP awards is 3,200,904 common shares. The fully diluted outstanding share count at the date of this MD&A is 273,045,016.
RELATED PARTY TRANSACTIONS
As at December 31, 2025, the Company's related parties are its subsidiaries and key management personnel, defined as directors and executive officers of the Company. During the normal course of operations, the Company enters into transactions with its related parties. During the year ended December 31, 2025, all related party transactions were in the normal course of business, including compensation payments to key management personnel, which are disclosed in the following table.
| Year ended December 31, | ||
| 2025 | 2024 | |
| $ | $ | |
| Salaries and benefits | 1,914 | 1,621 |
| Share-based compensation | 8,957 | 5,092 |
| Total compensation paid to related parties | 10,871 | 6,713 |
During the year ended December 31, 2024, other than compensation paid to key management personnel, the only related party transactions were with the AGM in respect of the Company's service fee earned for being the operator of the AGM joint venture until March 3, 2024. For the year ended December 31, 2024, the joint venture service fee was comprised of a gross service fee of $1.2 million, less withholding taxes payable in Ghana of $0.2 million.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Management believes the estimates and assumptions used in preparing the audited consolidated annual financial statements for the years ended December 31, 2025 and 2024 are reasonable; however, actual results could differ from those estimates and assumptions and could impact future results of operations and cash flows. The Company's significant accounting judgements and estimates are presented in note 5 of the audited consolidated annual financial statements for the years ended December 31, 2025 and 2024.
Changes in Accounting Policies including Initial Adoption
Accounting standards adopted during the period
There were no new accounting standards effective January 1, 2025 that impacted the Company's audited consolidated financial statements for the year ended December 31, 2025.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
Accounting standards and amendments issued but not yet adopted
The following standards and interpretations, which may be applicable to the Company, have been issued but are not yet effective as of December 31, 2025:
IFRS 18
On April 9, 2024, the IASB issued IFRS 18, Presentation and Disclosure in Financial Statements, a new standard on presentation and disclosure in financial statements with a focus on updates to the statement of profit or loss. The key new concepts introduced in IFRS 18 relate to: the structure of the statement of profit or loss; required disclosures in the financial statements for certain profit or loss performance measures that are reported outside an entity's financial statements; and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. IFRS 18 will not impact the recognition or measurement of items in the financial statements, but may change what an entity reports as its 'operating profit or loss'. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027 and also applies to comparative information. The Company is evaluating how IFRS 18 will impact the disclosures in its consolidated financial statements in future periods.
IFRS 7 and 9
In May 2024, the IASB issued amendments to the classification and measurement of financial instruments (IFRS 7 and IFRS 9), which included clarification that a financial liability is derecognized on the 'settlement date'; an accounting policy option to derecognize financial liabilities that are settled through an electronic payment system before settlement date if certain conditions are met; clarification on how to assess the contractual cash flow characteristics of financial assets that include environmental, social and governance-linked features; and requires additional disclosures under IFRS 7 for financial assets and liabilities with contractual terms that reference a contingent event. The amendments to IFRS 7 and IFRS 9 will be effective for annual reporting periods beginning on or after January 1, 2026. The Company is currently analysing how the amendments to IFRS 7 and IFRS 9 may impact the Company's consolidated financial statements.
RISKS AND UNCERTAINTIES
Financial Instruments and Risk
The Company's business, operations and future prospects are subject to significant risks. For details of these risks, refer to the risk factors set forth in the Company's most recently filed AIF for the year ended December 31, 2024, which can be found under the Company's SEDAR+ profile at www.sedarplus.ca, and the Company's most recently filed Form 40-F Annual Report for the year ended December 31, 2024, which can be found on EDGAR at www.sec.gov.
Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair the business, operations, prospects and share price of the Company. If any of the risks actually occur, the business of the Company may be harmed, and its financial condition and results of operations may suffer significantly.
Financial Instruments
As at December 31, 2025, the Company's financial instruments consist of cash and cash equivalents, accounts receivable, marketable securities, accounts payable and accrued liabilities, lease liabilities, financial liabilities (gold hedge derivatives), long-term incentive plan liabilities, deferred and contingent consideration payable to Gold Fields Limited and the 1% net smelter return royalty on production from the Nkran deposit (the "Nkran Royalty") payable to Gold Fields Limited. The Company classifies cash and cash equivalents and accounts receivables as financial assets measured at amortized cost, while accounts payable and accrued liabilities, lease liabilities and deferred consideration are classified as other financial liabilities and measured at amortized cost. Marketable securities, long-term incentive plan liabilities, contingent consideration and the Nkran Royalty are financial assets and financial liabilities, respectively, measured at fair value through profit or loss. Marketable securities fall within Level 1 of the fair value hierarchy, while the aforementioned financial liabilities all fall within Level 3. The gold hedge derivative liabilities are also recorded at fair value at the reporting date and fall within Level 1 of the fair value hierarchy. Refer to note 14 of the Company's audited consolidated annual financial statements for the years ended December 31, 2025 and 2024 for discussion on the significant assumptions made in determining the fair value of the contingent consideration and Nkran Royalty.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
The credit risk, liquidity risk and market risk associated with the Company's financial instruments are disclosed in note 28(d) of the Company's audited consolidated annual financial statements for the years ended December 31, 2025 and 2024. The Company's strategies to manage these risks have not changed materially during the year.
As at December 31, 2025, the carrying and fair values of the Company's financial instruments by category are as follows (in thousands of US dollars):
| Fair value through profit or loss |
Amortized cost |
Carrying value |
Fair value |
|
| As at December 31, 2025 | $ | $ | $ | $ |
| Financial assets | ||||
| Cash and cash equivalents | - | 108,327 | 108,327 | 108,327 |
| Accounts receivable | - | 71 | 71 | 71 |
| Marketable securities(1) | 4,526 | - | 4,526 | 4,526 |
| Total financial assets | 4,526 | 108,398 | 112,924 | 112,924 |
| Financial liabilities | ||||
| Accounts payable and accrued liabilities(2) | 13,580 | 73,473 | 87,053 | 87,053 |
| Financial liabilities(2) | 77,317 | - | 77,317 | 77,317 |
| Lease liabilities | - | 37,075 | 37,075 | 37,075 |
| Deferred consideration | - | 28,242 | 28,242 | 28,242 |
| Contingent consideration | 19,320 | - | 19,320 | 19,320 |
| Nkran royalty | 6,988 | - | 6,988 | 6,988 |
| Other non-current liabilities(2) | 11,480 | - | 11,480 | 11,480 |
| Total financial liabilities | 128,685 | 138,790 | 267,475 | 267,475 |
(1) Marketable securities are presented within prepaid expenses and other in the Statement of Financial Position.
(2) Accounts payable, financial liabilities and other non-current liabilities include long-term incentive plan liabilities and gold hedge derivative liabilities, which are measured at fair value through profit or loss.
INTERNAL CONTROL
Disclosure Controls and Procedures
Evaluation of disclosure controls and procedures are designed to provide reasonable assurance that all relevant information gathered and reported to senior management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), is done on a timely basis, so that appropriate decisions can be made regarding public disclosure. Internal control over financial reporting ("ICFR") is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management of the Company, with the participation of the CEO and the CFO, have evaluated the design and operating effectiveness of the Company's disclosure controls and procedures and the design as required by Canadian and United States securities legislation, and have concluded that, as of December 31, 2025, such disclosure controls and procedures were effective.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
ICFR
The Company's management, with the participation of its CEO and CFO, is responsible for establishing and maintaining adequate ICFR. Under the supervision of the CEO and CFO, the Company's ICFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company's ICFR includes policies and procedures that:
-
pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions and dispositions of assets of the Company;
-
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS and that the Company's receipts and expenditures are made only in accordance with authorizations of management and the Company's Board of Directors; and
-
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the Company's consolidated financial statements.
The Company's management, with the participation of its CEO and CFO, assessed the effectiveness of the Company's ICFR. In making this assessment, management used the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management and the CEO and CFO have concluded that, as of December 31, 2025, the Company's ICFR was effective.
Change in ICFR
During the three months ended December 31, 2025, there were no changes in ICFR that have materially affected, or are reasonably likely to materially affect, the Company's ICFR.
Limitations of Controls and Procedures
The Company's management, including the CEO and CFO, believes that any disclosure controls and procedures or ICFR, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Due to the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control.
The design of any control system also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
QUALIFIED PERSONS
The exploration information contained in this MD&A has been reviewed and approved by Mr. Chris Pettman, P.Geo, Vice President Exploration of Galiano. For further information regarding the exploration information in this MD&A, including the Quality Control and Quality Assurance and data verification measures taken with respect to such exploration information, refer to the Company's news releases dated May 5, 2025, July 14, 2025, August 20, 2025, November 17, 2025 and January 29, 2026, which are filed on the Company's SEDAR+ profile at www.sedarplus.ca.
Mr. Eric Chen, P.Geo., Vice President Mineral Resources of Galiano, has reviewed and approved the Mineral Resource estimates included in this MD&A.
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
All other scientific and technical information contained in this MD&A has been reviewed and approved by Mr. Amri Sinuhaji, P.Eng., Vice President Technical Services of Galiano. Mr. Pettman, Mr. Chen and Mr. Sinuhaji are "Qualified Persons" as defined by National Instrument 43-101, Standards of Disclosure for Mineral Projects ("NI 43-101").
CAUTIONARY STATEMENTS
Cautionary Statement on Forward-Looking Information
The Company cautions readers regarding forward-looking statements found in this MD&A and in any other statement made by, or on behalf of the Company. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", "estimates", "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", or "might" occur. Forward-looking statements are made based on management's beliefs, estimates and opinions and are given only as of the date of this MD&A. Such statements may constitute "forward-looking information" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation.
Forward-looking statements are statements not based on historical information, and which relate to future operations, strategies, financial results or other developments. Forward-looking statements reflect the Company's current views with respect to expectations, beliefs, assumptions, estimates and forecasts about the business of the Company and the industry and markets in which the Company operates. Forward-looking statements include, but are not limited to, statements with respect to:
- the deferred consideration payable in connection with the transaction with Gold Fields Limited that closed on March 4, 2024;
- the future price of gold;
- the operating plans for the AGM;
- the estimation of Mineral Reserves and Mineral Resources;
- the objective to increase Mineral Reserves, including any targets for additions to Mineral Reserves through exploration activities;
- the timing and amount of estimated future production from the AGM, including production rates and gold recovery;
- the timing of fleet mobilization and volumes mined at the Nkran deposit;
- operating costs with respect to the operation of the AGM;
- capital expenditures that are required to sustain and expand mining activities;
- the meeting of working capital requirements, contractual obligations and other financial commitments as they fall due;
- the timing, costs and project economics associated with the development plans for the AGM;
- the availability of capital to fund the AGM's expansion plans and to fund the AGM's development plans;
- the focus of future exploration programs;
- any additional work programs to be undertaken by the Company;
- timing of delivery of higher grade ore from Abore and Esaase;
- the Company's planned and future drilling programs, including the timing thereof;
- expectations and timing with respect to ramping up of mining activities at Nkran;
- expectations regarding processing plant milling capacity and milling rates;
- expectations regarding the RCF;
- the ability of the AGM to maintain current inventory levels;
- the timing of the development of new deposits;
- success of exploration activities;
- hedging practices;
- currency exchange rate fluctuations;
- central bank interest rate forecast;
- estimate of a legal provision;
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
- requirements for additional capital;
- operating cash flows;
- government regulation of mining operations;
- regulatory investigations, claims, lawsuits and other proceedings;
- environmental risks and remediation measures;
- advancement and implementation of the Company's sustainability program;
- changes in accounting policies and resulting impact on disclosures; and
- usefulness of certain non-IFRS measures.
Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions, which are difficult to predict. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. The Company's actual future results or performance are subject to certain risks and uncertainties, including but not limited to:
- Mineral Reserve and Mineral Resource estimates may change and may prove to be inaccurate;
- exploration activities may not result in the delineation of additional Mineral Resources or the conversion of Mineral Resources into Mineral Reserves within anticipated timeframes, or at all;
- life of mine estimates are based on a number of factors and assumptions and may prove to be incorrect;
- actual production, costs, returns and other economic and financial performance may vary from the Company's estimates in response to a variety of factors, many of which are not within the Company's control;
- inflationary pressures and the effects thereof;
- sustained increases in costs, or decreases in the availability, of commodities consumed or otherwise used by the Company may adversely affect the Company;
- adverse geotechnical and geological conditions (including geotechnical failures) may result in operating delays and lower throughput or recovery, closures or damage to mine infrastructure;
- the ability of the Company to treat the number of tonnes planned, recover valuable materials, remove deleterious materials and process gold as planned is dependent on a number of factors and assumptions which may not be present or occur as expected;
- risks related to artisanal and illegal mining activities at or near the AGM, including that the Company's mineral properties may experience a loss of ore, and the Company may experience lack of access to its mineral properties and other issues, due to illegal mining activities;
- the Company's operations may encounter delays in or losses of production due to equipment delays or the availability of equipment;
- the ability of the Company to manage procurement risks, including securing timely and cost-effective equipment and services, and mitigate risks related to supplier performance, fraud, collusion, bribery, kickbacks and unethical procurement practices.
- outbreaks of infectious diseases may have a negative impact on global financial conditions, demand for commodities and supply chains and could adversely affect the Company's business, financial condition and results of operations and the market price of its common shares;
- the Company's operations are subject to continuously evolving legislation, compliance with which may be difficult, uneconomic or require significant expenditures;
- the Company may be unsuccessful in attracting and retaining key personnel;
- labour disruptions could adversely affect the Company's operations;
- metallurgical recoveries may not be economically viable, or recoveries may be lower in the future and have a negative impact on the Company's gold production and financial results;
- the Company's business is subject to risks associated with operating in a foreign country;
- risks related to the Company's use of mining and other contractors;
- the hazards and risks normally encountered in the exploration, development and production of gold;
- the Company's operations are subject to environmental hazards and compliance with applicable environmental laws and regulations;
- the effects of climate change or extreme weather events may cause prolonged disruption to the delivery of essential commodities which could negatively affect production efficiency;
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
- the Company's operations and workforce are exposed to health and safety risks;
- unexpected costs and delays related to, or the failure of the Company to obtain, necessary permits could impede the Company's operations;
- the Company's title to exploration, development and mining interests can be uncertain and may be contested;
- geotechnical risks associated with the design and operation of a mine and related civil structures;
- the Company's properties may be subject to claims by various community stakeholders;
- risks related to limited access to infrastructure and water;
- risks associated with establishing new mining operations;
- the Company's revenues are dependent on the market prices for gold, which have recently experienced significant fluctuations;
- the Company may not be able to secure additional financing when needed or on acceptable terms;
- the Company's shareholders may be subject to future dilution;
- risks related to changes in interest rates and foreign currency exchange rates;
- changes to taxation laws applicable to the Company may affect the Company's profitability and ability to repatriate funds;
- risks related to the Company's internal controls over financial reporting and compliance with applicable accounting regulations and securities laws;
- risks related to information systems security threats;
- non-compliance with public disclosure obligations could have an adverse effect on the Company's share price;
- the carrying value of the Company's assets may change and these assets may be subject to impairment charges;
- risks associated with changes in reporting standards;
- the Company may be liable for uninsured or partially insured losses;
- the Company may be subject to litigation;
- damage to the Company's reputation could result in decreased investor confidence and increased challenges in developing and maintaining community relations which may have adverse effects on the business, results of operations and financial conditions of the Company and the Company's share price;
- the Company may be unsuccessful in identifying targets for acquisition or completing suitable corporate transactions, and any such transactions may not be beneficial to the Company or its shareholders;
- the Company must compete with other mining companies and individuals for mining interests;
- the Company's growth, future profitability and ability to obtain financing may be impacted by global financial conditions;
- the Company's common shares may experience price and trading volume volatility;
- the Company has never paid dividends and does not expect to do so in the foreseeable future;
- the Company's shareholders may be unable to sell significant quantities of the Company's common shares into the public trading markets without a significant reduction in the price of its common shares, or at all; and
- any such other risk factors described under the heading "Risk Factors" in the Company's most recently filed AIF.
Forward-looking statements are necessarily based upon estimates and assumptions, which are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and many of which, regarding future business decisions, are subject to change. Assumptions underlying the Company's expectations regarding forward-looking statements or information contained in this MD&A include, among others:
- the price of gold will not decline significantly or for a protracted period of time;
- the accuracy of the estimates and assumptions underlying Mineral Reserve and Mineral Resource estimates;
- the Company's ability to raise sufficient funds from future equity financings to support its operations, and general business and economic conditions;
- the global financial markets and general economic conditions will be stable and prosperous in the future;
| GALIANO GOLD INC. Management's Discussion and Analysis For the years ended December 31, 2025 and 2024 |
- the AGM will not experience any significant uninsured production disruptions that would materially affect revenues;
- the ability of the Company to comply with applicable governmental regulations and standards;
- the mining laws, tax laws and other laws in Ghana applicable to the AGM will not change, and there will be no imposition of additional exchange controls in Ghana;
- the success of the Company in implementing its development strategies and achieving its business objectives;
- the Company will have sufficient working capital necessary to sustain its operations on an ongoing; and
- the key personnel of the Company will continue their employment.
Although the Company has attempted to identify important factors that could cause actual results or events to differ materially from those described in the forward-looking statements, you are cautioned that this list is not exhaustive and there may be other factors that the Company has not identified. Furthermore, the Company undertakes no obligation to update or revise any forward-looking statements included in, or incorporated by reference in, this MD&A if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.
Historical results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate future results from operations. Historically, the Company's operations have been primarily funded by operating cash flows and from debt and share issuances. The Company has had and may have future capital requirements in excess of its currently available resources. In the event the Company's plans change, its assumptions change or prove inaccurate, or its capital resources in addition to projected cash flow, if any, prove to be insufficient to fund its future operations, the Company may be required to seek additional financing.
Although the Company has to date been able to raise capital, there can be no assurance that the Company will have sufficient financing to meet its future capital requirements or that additional financing will be available on terms acceptable to the Company in the future.
Cautionary Note for United States Investors
All technical disclosure in this MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ materially from the requirements of United States securities laws applicable to domestic United States issuers. The terms "mineral reserves", "proven mineral reserves", "probable mineral reserves", "mineral resources", "measured mineral resources", "indicated mineral resources" and "inferred mineral resources" used in this MD&A are in reference to the mining terms defined in the Canadian Institute of Mining, Metallurgy and Petroleum Standards, as adopted by NI 43-101. The Company's disclosure of mineralization and other technical information herein may differ significantly from the information that would be disclosed had the Company prepared the reserve and resource estimates under the standards adopted under the rule of the Securities and Exchange Commission ("SEC") applicable to domestic United States issuers. Accordingly, the disclosure in this MD&A regarding the Company's mineral properties is not comparable to the disclosure of United States issuers subject to the SEC's mining disclosure requirements.
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement on Form F-10/A (File no. 333-288285) of Galiano Gold Inc. (the “Company”) of our report dated February 12, 2026, with respect to the consolidated statements of financial position as of December 31, 2025 and 2024 and the consolidated statements of operations and comprehensive income (loss), changes in equity and cash flows for each of the years then ended, included in this Current Report on Form 6-K.
/s/ Ernst and Young LLP
Chartered Professional Accountants
Vancouver, Canada
February 12, 2026
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GALIANO GOLD REPORTS
FOURTH QUARTER AND FULL YEAR 2025 RESULTS
Vancouver, British Columbia, February 12, 2026 - Galiano Gold Inc. ("Galiano" or the "Company") (TSX, NYSE American: GAU) is pleased to report its fourth quarter ("Q4") and full year ("FY") 2025 operating and financial results. Galiano owns a 90% interest in the Asanko Gold Mine ("AGM") located on the Asankrangwa Gold Belt in the Republic of Ghana, West Africa.
All financial information contained in this news release is reported in United States dollars.
Q4 AND FY 2025 HIGHLIGHTS
Safety
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No lost-time injuries ("LTI") nor total recordable injuries ("TRI") reported during Q4 2025. The AGM has achieved 6.5 million hours worked without an LTI.
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12‐month rolling LTI and TRI frequency rates as of December 31, 2025 of 0.24 and 0.48 per million hours worked, respectively.
Financial
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Cash and cash equivalents of $108.3 million as of December 31, 2025 and no debt.
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Generated cash flow from operating activities of $55.8 million during Q4 2025 and $158.0 million for FY 2025.
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Paid $25.0 million to Gold Fields Limited during Q4 2025 to settle the first deferred acquisition cost payment.
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Income from mine operations of $51.1 million during Q4 2025 and $66.0 million for FY 2025. Adjusted income from mine operations1, excluding unrealized losses on gold hedge instruments, of $68.6 million during Q4 2025 and $140.6 million for FY 2025.
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Net income of $0.06 and adjusted net income1 $0.15 per common share (basic) during Q4 2025. Net loss of $0.11 and adjusted net income1 of $0.23 per common share (basic) for FY 2025.
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Adjusted EBITDA1 of $85.5 million during Q4 2025 and $182.2 million for FY 2025.
Mining
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Mined 1.6 million tonnes ("Mt") of ore at an average mined grade of 0.9 grams per tonne ("g/t") gold and a strip ratio of 8.0:1 during Q4 2025. Mined 5.8 Mt of ore at an average mined grade of 0.9 g/t gold and a strip ratio of 7.5:1 during FY 2025.
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Development of Cut 3 at the Nkran deposit continued to ramp up during the quarter with 4.5 Mt of material mined, an increase of 23% compared to Q3 2025. For FY 2025, 10.7 Mt of material was mined at Nkran.
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Mining operations at Esaase resumed in early November 2025 following the community incident that occurred in September 2025.
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1 Non-IFRS measure. Refer to section "Non-IFRS Performance Measures" in this news release.
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Processing
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1.4 Mt of ore was milled at an average feed grade of 1.0 g/t gold, with metallurgical recovery averaging 91% during Q4 2025. For FY 2025, 4.9 Mt of ore was milled at an average feed grade of 0.9 g/t gold, with metallurgical recovery averaging 90%.
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Produced 37,574 ounces of gold during the quarter, a 15% increase compared to Q3 2025. Annual gold production achieved 121,191 ounces for FY 2025, within the revised guidance range.
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Sold 38,276 ounces of gold during the quarter at a record quarterly average price of $4,164 per ounce ("/oz") and sold 127,134 ounces of gold for the year at an average price of $3,516/oz, excluding the effect of realized losses on gold hedging instruments.
Cost and Capital Expenditures
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All-in sustaining costs1 (“AISC”) of $2,033/oz in Q4 2025. AISC1 for the quarter was 11% lower compared Q3 2025 due to higher gold ounces sold. AISC1 for FY 2025 amounted to $2,233/oz, within revised guidance of between $2,200/oz to $2,300/oz.
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Capitalized development pre-stripping costs at Nkran Cut 3 of $11.1 million during Q4 2025 and $33.2 million for FY 2025.
Exploration
- Results from the Phase 2 drilling program at Abore were released2 during Q4 2025. These positive results led to an expanded drilling program with 10,907m drilled in Q4 2025. This program was designed to establish continuity of known mineralization, as well as to test for continuations of the Abore mineralizing system at depths up to 200m below previous drilling and below the Mineral Resource boundary.
FY 2026 Guidance
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For FY 2026, gold production guidance at the AGM is forecast between 140,000 ounces and 160,000 ounces. Higher mined grades are expected to be progressively mined from Abore over the course of the year, therefore gold production is forecast to be weighted to the back half of FY 2026. FY 2026 gold production is forecast to increase approximately 25% compared to FY 2025.
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AISC1 guidance for FY 2026 is forecast between $2,000/oz and $2,300/oz at a gold price assumption of $4,500/oz and under the current royalty framework in Ghana.
"The fourth quarter capped off a year of strong operating momentum at the AGM, with gold production increasing for a fourth consecutive quarter and rising more than 80% compared to the first quarter of 2025. The successful commissioning and optimization of the secondary crusher has been a key milestone, lifting plant performance to near nameplate capacity, while improving mined grades at Abore continue to drive near-term organic growth," said Matt Badylak, Galiano's President and Chief Executive Officer.
"During the quarter, we made the first $25 million deferred payment to Gold Fields yet still closed the year with $108 million in cash. This financial strength supports our plans to advance stripping at Nkran Cut 3 in 2026 and continue executing our growth strategy in a disciplined manner. With gold production expected between 140,000 to 160,000 ounces in 2026, an increase of approximately 25% year-on-year, we are well positioned to grow production and execute on our aggressive exploration strategy to unlock the full long-term potential of the AGM."
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2 Refer to the Company's news release titled "Galiano Gold Advances Towards A Maiden Underground Resource At Abore With Additional High-Grade Results Encountered Including 4.7 g/t Au Over 28m And 3.5 g/t Au Over 17m" dated November 17, 2025, which is available under the Company's SEDAR+ profile at www.sedarplus.ca.
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FY 2026 GUIDANCE AND OUTLOOK
FY 2026 Production and Cost Guidance
The AGM is forecast to produce between 140,000 ounces and 160,000 ounces of gold at AISC1 between $2,000/oz and $2,300/oz (at a gold price assumption of $4,500/oz). Relative to FY 2025 reported AISC1, FY 2026 AISC guidance is higher by approximately $80/oz due to higher royalties resulting from higher forecast gold prices.
AISC1 guidance does not reflect the amendments to Ghana's royalty framework that have been proposed to Parliament. If the royalty amendments were ratified by Parliament, the Company's AISC1 would increase by approximately $375/oz at current spot gold prices. AISC1 for the AGM is anticipated to be lower from FY 2027 onwards compared to FY 2026 due to higher relative gold production.
With the secondary crusher commissioned and continuing to be optimized, the Abore deposit is expected to provide the majority of mill feed in FY 2026, with the Esaase deposit providing supplementary ore. Higher mined grades are expected from Abore in the second half of the year, therefore gold production is forecast to be weighted to the back half of FY 2026. Given the expected ramp-up of gold production over FY 2026, the Company has provided indicative production ranges for the first and second half of 2026 as follows.
| Unit | H1 2026 | H2 2026 | |
| Gold production | Oz | 60,000 to 70,000 | 80,000 to 90,000 |
As previously disclosed, gold production is expected to experience a further positive step change beyond FY 2026.
Total sustaining capital expenditures are guided to $16 million to $18 million for FY 2026, excluding sustaining capitalized stripping costs. Sustaining capital expenditures in FY 2026 include the expansion of the tailings facility, minor upgrades to the processing plant, and upgrades to mine camp infrastructure.
Development capital for FY 2026 is guided at between $120 million to $140 million, which primarily relates to Nkran Cut 3 waste stripping ($100 million to $120 million) and village resettlement costs.
Exploration expenditures at the AGM are guided to $17 million to $19 million for FY 2026, which includes approximately 52,000 meters of drilling, as well as ground geophysics and regional prospecting and mapping. The 2026 exploration program is primarily focused on (a) infill drilling at Abore to improve data density in the underground Mineral Resource and support a potential maiden underground Mineral Reserve, (b) an initial phase of drilling to increase Mineral Reserves and Mineral Resources at Esaase by drilling the deposit in line with the current gold price environment, and (c) targeting discoveries in both near mine and greenfield areas of the AGM’s tenements.
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SUMMARY OF QUARTERLY OPERATIONAL AND FINANCIAL HIGHLIGHTS
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | |
| Health and safety | |||||
| LTIs(1) | - | - | - | 2 | 1 |
| TRIs(1) | - | 1 | - | 3 | 3 |
| 12-month rolling LTI frequency rate | 0.24 | 0.39 | 0.42 | 0.43 | 0.15 |
| Mining | |||||
| Ore mined ('000t) | 1,575 | 1,605 | 1,365 | 1,296 | 531 |
| Waste mined ('000t) | 12,661 | 12,493 | 9,824 | 9,124 | 8,698 |
| Strip ratio (W:O) | 8.0 | 7.8 | 7.2 | 7.0 | 16.4 |
| Average gold grade mined (g/t) | 0.9 | 0.8 | 0.8 | 0.8 | 1.0 |
| Mining cost ($/t mined) - mine-wide(2) | 3.48 | 3.36 | 3.65 | 3.36 | 3.41 |
| Mining cost ($/t mined) - producing(2) | 3.94 | 3.38 | 3.59 | 3.31 | 3.41 |
| Mining cost ($/t mined) - development(2) | 2.48 | 3.29 | 4.00 | 3.98 | - |
| Ore tonnes trucked ('000 t) | 1,069 | 1,288 | 1,030 | 1,053 | 685 |
| Ore transportation cost ($/t trucked) | 4.45 | 4.35 | 4.49 | 4.43 | 4.75 |
| Processing | |||||
| Ore milled ('000t) | 1,369 | 1,283 | 1,193 | 1,086 | 1,179 |
| Average mill head grade (g/t) | 1.0 | 0.9 | 0.8 | 0.8 | 0.9 |
| Average recovery rate (%) | 91 | 91 | 89 | 87 | 85 |
| Processing cost ($/t milled) | 12.13 | 12.57 | 12.89 | 14.37 | 15.84 |
| General and administrative cost ($/t milled) | 7.58 | 6.62 | 6.24 | 5.78 | 6.28 |
| Gold produced (oz) | 37,574 | 32,533 | 30,350 | 20,734 | 28,508 |
| Capital expenditures | |||||
| Sustaining capital ($m) | 4.4 | 4.2 | 2.2 | 1.3 | 0.8 |
| Development capital ($m) | 0.7 | 2.9 | 4.9 | 3.3 | 2.0 |
| Sustaining capitalized stripping costs ($m) | 11.7 | 11.9 | 15.1 | 11.9 | 19.1 |
| Development capitalized stripping costs - Nkran ($m) | 11.1 | 12.0 | 6.9 | 3.2 | - |
| Financial, costs and cash flow | |||||
| Gross revenue ($m) | 159.7 | 114.2 | 97.3 | 76.6 | 64.6 |
| Gold sold (oz) | 38,276 | 32,577 | 29,287 | 26,994 | 24,673 |
| Average gold sales price - gross ($/oz)(3) | 4,164 | 3,501 | 3,317 | 2,833 | 2,609 |
| Average gold sales price - net ($/oz)(4) | 3,744 | 3,099 | 2,951 | 2,651 | 2,437 |
| AISC ($/oz sold)(5) | 2,033 | 2,283 | 2,251 | 2,501 | 2,638 |
| Income (loss) from mine operations ($m) | 51.1 | 10.0 | 24.7 | (19.8) | 26.1 |
| Adjusted income from mine operations ($m)(5) | 68.6 | 35.1 | 26.5 | 10.5 | 17.5 |
| Adjusted net income (loss) ($m)(5) | 40.0 | (2.8) | 21.0 | 0.4 | 5.1 |
| Adjusted EBITDA ($m)(5) | 85.5 | 37.8 | 39.9 | 19.0 | 21.2 |
| Cash flow from operating activities ($m) | 55.8 | 40.4 | 35.8 | 25.9 | 13.8 |
(1) The Company records and reports injuries in accordance with the International Council on Mining and Metals' (ICMM) Mining Principles.
(2) Total mining cost per tonne includes total mining costs for all producing deposits (Abore and Esaase) and deposits in development (Nkran). Producing mining cost per tonne reflects unit mining rates at the Abore and Esaase deposits combined, while development mining cost per tonne reflects unit mining rates at the Nkran deposit only.
(3) Gross average gold sales price is a non-IFRS measure and calculated by dividing gross revenue as reported in the Company's consolidated financial statements by the number of gold ounces sold.
(4) Net average gold sales price is a non-IFRS measure calculated by dividing gross revenue less realized losses on gold hedge derivative instruments as reported in the Company's consolidated financial statements by the number of gold ounces sold.
(5) Refer to "Non-IFRS Performance Measures" in this news release.
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Mining
- Mined 1.2 Mt of ore at the Abore deposit at an average grade of 1.0 g/t gold, an increase in mined grade of 12% from Q3 2025. The strip ratio at Abore was 6.1:1, in line with Q3 2025. The Company continued to focus on accelerating mining activities at Abore with an objective of accessing higher grade ore at depth in the second half of 2026.
- Mining operations at Esaase resumed in early November following the community incident that occurred on September 9, 2025.
- Mined 0.2 Mt of ore at the Esaase deposit at an average grade of 0.7 g/t gold. The strip ratio at Esaase was 4.6:1, a decrease of 28% from Q3 2025. Mined volumes at Esaase were impacted by the community incident that occurred in September 2025 and strategically focusing mining operations on the Abore deposit for the second half of the year.
- Mining cost per tonne at Abore and Esaase averaged $3.94 per tonne ("/t") in Q4 2025, 16% higher than mining costs of $3.41/t at Abore in Q4 2024. The increase in mining cost per tonne was attributable to higher drill and blast costs in Q4 2025.
- Mining continued to ramp up at Cut 3 of the Nkran deposit with 4.5 Mt of material mined, including 0.2 Mt of ore, during Q4 2025, an increase of 23% from Q3 2025.
- At Nkran, mining cost per tonne was $2.48 for Q4 2025, 25% lower than Q3 2025, due to higher tonnes mined.
Processing
- The AGM produced 37,574 ounces of gold during Q4 2025, an increase of 15% from Q3 2025, as the processing plant milled 1.4 Mt of ore at an average grade of 1.0 g/t gold with metallurgical recovery averaging 91%.
- FY 2025 gold production of 121,191 ounces, a 5% increased compared to FY 2024, and within revised FY 2025 guidance range.
- With the secondary crushing circuit at the AGM processing plant commissioned (in late July 2025), milling performance in December 2025 achieved nameplate annual capacity of 5.8 Mt.
- Processing cost per tonne for Q4 2025 was $12.13, 4% lower than Q3 2025 and 23% lower than Q4 2024. The decrease in processing cost per tonne in Q4 2025 was driven by more tonnes milled compared to Q3 2025 and Q4 2024, which decreased fixed processing costs on a per unit basis.
Capital Expenditures
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Sustaining capital expenditures, excluding capitalized stripping costs, during Q4 2025 totaled $4.4 million and related primarily to a tailings facility expansion.
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Development capital expenditures during Q4 2025 totaled $0.7 million (excluding Nkran pre-stripping costs) and related primarily to drilling of boreholes at Nkran and village resettlement early works.
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Development of Cut 3 at the Nkran deposit commenced in February 2025 and continued to ramp up throughout the year. During Q4 2025, 4.3 Mt of waste was mined at a cost of $2.48/t or $11.1 million. These stripping costs are classified as development capital expenditures. The Company anticipates a further ramp up of mining activities at Nkran in 2026 following the mobilization of additional equipment by the mining contractor.
Costs
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AISC1 for Q4 2025 was $2,033/oz, compared to $2,638/oz in Q4 2024. The decrease in AlSC1 was primarily driven by a 55% increase in gold ounces sold in Q4 2025.
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Relative to Q3 2025, AISC1 decreased by 11% in Q4 2025 on a per ounce basis, resulting from higher gold ounces sold.
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Exploration
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Additional positive results from the Phase 2 drilling program at Abore, carried out in Q3 2025, were released in Q4 20253. These results continued to confirm multiple significant high-grade intercepts, demonstrating continuity of mineralization within new ore shoots identified earlier in 2025 that lie below the existing Mineral Reserve and Mineral Resource.
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Continued drilling success prompted an expansion of the 2025 Abore drilling program by a further 11,000m demonstrating the Company's strategic focus on increasing Abore's Mineral Resource. 10,907m of the planned 11,000m of diamond drilling was completed during Q4 2025. This most recent drilling program was designed to test for further extensions of mineralization immediately below the known Mineral Resource, including several deeper step-out holes to test for mineralization up to 200m below previous drilling levels, and the continuation of the Abore granite, which hosts the bulk of mineralization. Refer to the Company’s news release dated January 29, 2026, which is available under the Company’s SEDAR+ profile, for significant intercepts reported from the expanded Abore drilling program.
Balance Sheet
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The Company has maintained a strong cash position with $108.3 million as of December 31, 2025 and no debt.
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The Company finalized a $75 million revolving credit facility (the "RCF") with FirstRand Bank Limited, acting through its Rand Merchant Bank division, in Q4 2025. The purpose of the RCF is for general working capital requirements. The RCF has a 4-year term and floating interest rate based on the Secured Overnight Financing Rate (SOFR) plus a margin of 3.95% per annum, while the undrawn portion of the RCF is subject to a standby fee of 1.38% per annum. As of December 31, 2025, the Company had not drawn on the RCF and was in full compliance with all covenants.
CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2025 AND 2024
| Three months ended December 31, | ||
| (All amounts in 000's of US dollars, except per share amounts) | 2025 | 2024 |
| Gross revenue | 159,676 | 64,551 |
| Income from mine operations | 51,139 | 26,114 |
| Adjusted income from mine operations (1) | 68,564 | 147,199 |
| Net income attributable to common shareholders | 16,826 | 946 |
| Net income per share attributable to common shareholders | 0.06 | 0.00 |
| Adjusted net income attributable to common shareholders (1) | 39,959 | 4,646 |
| Adjusted net income per share attributable to common shareholders (1) | 0.15 | 0.02 |
| Adjusted EBITDA(1) | 85,485 | 21,175 |
| Cash and cash equivalents | 108,327 | 105,775 |
| Cash generated from operating activities | 55,839 | 13,806 |
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The Company sold 38,276 ounces of gold in Q4 2025 at a quarterly record average gold price (before the effect of realized hedging losses) of $4,164/oz for gross revenue of $159.7 million. The increase in revenue from the comparative period was due to a 60% increase in average gold sales prices and a 55% increase in gold ounces sold. The average gold sales price, including the effect of realized gold hedging losses, for Q4 2025 amounted to $3,744/oz.
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Income from mine operations for Q4 2025 totaled $51.1 million, compared to $26.1 million in Q4 2024. The increase in income from mine operations was due to higher revenues as described above. This was partly offset by higher depletion expense on Abore and Esaase development and capitalized stripping costs during Q4 2025. Royalties expense was also higher in Q4 2025 due to higher earned revenues and an increase to Ghana Growth and Sustainability Levy ("GSL") from 1% to 3% effective April 1, 2025.
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The Company reported net income attributable to common shareholders of $16.8 million in Q4 2025, compared to net income of $0.9 million in Q4 2024. The increase in net income during Q4 2025 was primarily due to higher recorded revenues, partly offset by higher royalties and income taxes.
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Reported Adjusted EBITDA1 of $85.5 million in Q4 2025, compared to $21.2 million in Q4 2024. The increase in Adjusted EBITDA1 was primarily driven by higher revenues, partly offset by higher royalties and realized gold hedging losses, as described above.
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The Company generated $55.8 million of cash flow from operating activities in Q4 2025, compared to $13.8 million in Q4 2024. The increase in operating cash flow was primarily driven by higher average gold sales prices during the quarter.
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Paid $25.0 million to Gold Fields Limited during Q4 2025 to settle the first deferred acquisition costs payment.
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As of December 31, 2025, the Company had cash and cash equivalents of $108.3 million and no debt.
CONSOLIDATED FINANCIAL HIGHLIGHTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
| Year ended December 31, | ||
| (All amounts in 000's of US dollars, except per share amounts) | 2025 | 2024 |
| Revenue | 447,767 | 231,339 |
| Income from mine operations | 66,013 | 54,889 |
| Adjusted income from mine operations (2) | 140,566 | 68,495 |
| Net (loss) income attributable to common shareholders | (29,290) | 6,118 |
| Net (loss) income per share attributable to common shareholders | (0.11) | 0.02 |
| Adjusted net income attributable to common shareholders (2) | 58,530 | 39,548 |
| Adjusted net income per share attributable to common shareholders (2) | 0.23 | 0.16 |
| Adjusted EBITDA(1) | 182,180 | 71,292 |
| Cash and cash equivalents | 108,327 | 105,775 |
| Cash generated from operating activities | 157,994 | 55,746 |
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The Company sold 127,134 ounces of gold during the year ended December 31, 2025 at an average gold price (before the effect of realized hedging losses) of $3,516/oz for gross revenue of $447.8 million. The increase in revenue from FY 2024 was due to a 47% increase in average gold sales prices and 32% increase in gold ounces sold. Gold ounces sold in FY 2025 were higher than FY 2024 as the Company only consolidated the financial results of the AGM from March 4, 2024 onwards in the comparative year. The average gold sales price for FY 2025, including the effect of realized gold hedging losses, amounted to $3,164/oz.
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Income from mine operations for the year ended December 31, 2025 totaled $66.0 million, compared to $54.9 million in FY 2024. The increase in income from mine operations was due to the increase in revenue, as described above, and the Company only consolidating the financial results of the AGM from March 4, 2024 to December 31, 2024 in the prior year. These factors were partly offset by higher realized gold hedging losses, depreciation and depletion expense and royalties in FY 2025.
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The Company reported a net loss attributable to common shareholders of $29.3 million for the year ended December 31, 2025, compared to net income of $6.1 million in FY 2024. The decrease in net income was primarily driven by higher realized and unrealized losses on gold hedging instruments in FY 2025 and the recording of current and deferred income tax expenses related to the AGM, which were partly offset by higher recorded revenue.
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Reported Adjusted EBITDA1 of $182.2 million during the year ended December 31, 2025, compared to $71.3 million in FY 2024. The increase in Adjusted EBITDA1 was driven by higher average gold sales prices and the Company consolidating a full year of financial results of the AGM in FY 2025. These factors were partly offset by higher realized gold hedging losses and royalties in FY 2025.
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The Company generated $158.0 million of cash flow from operating activities during the year ended December 31, 2025, compared to $55.7 million in FY 2024. The increase in cash flow from operations was driven by higher average gold sales prices and the Company consolidating a full year of financial results of the AGM in 2025.
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This news release should be read in conjunction with Galiano's Management's Discussion and Analysis and the |
1 Non-IFRS Performance Measures
The Company has included certain non-IFRS performance measures in this news release. These non-IFRS performance measures do not have any standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Accordingly, these performance measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Refer to "Non-IFRS Measures" of Galiano's Management's Discussion and Analysis for an explanation of these measures and reconciliations to the Company's reported financial results in accordance with IFRS.
- Total Cash Costs per Gold Ounce Sold
Management of the Company uses total cash costs per gold ounce sold to monitor the operating performance of the AGM. Total cash costs include the cost of production, adjusted for by-product revenue and production royalties per ounce of gold sold.
- AISC per Gold Ounce Sold
The Company has adopted the reporting of "AISC per gold ounce sold". AISC include total cash costs, AGM general and administrative expenses, sustaining capital expenditure, sustaining capitalized stripping costs, reclamation cost accretion and lease payments made on the AGM's mining and other service lease agreements per ounce of gold sold.
- EBITDA and Adjusted EBITDA
Earnings before interest, taxes, depreciation and amortization ("EBITDA") provides an indication of the Company's continuing capacity to generate income from operations before taking into account the Company's financing decisions and costs of amortizing capital assets. Accordingly, EBITDA comprises net income (loss) excluding finance expense, finance income, depreciation and depletion expense, and income taxes. Adjusted EBITDA adjusts EBITDA to exclude non-recurring items and non-cash items ("Adjusted EBITDA") and includes the calculated Adjusted EBITDA of the AGM joint venture for periods prior to the consolidation of its ownership.
- Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Common Share
The Company has included the non-IFRS performance measures of adjusted net income (loss) and adjusted net income (loss) per common share. Neither adjusted net income (loss) nor adjusted net income (loss) per share have any standardized meaning and are therefore unlikely to be comparable to other measures presented by other issuers. Adjusted net income (loss) excludes certain non-cash items or non-recurring items from net income (loss) to provide a measure which helps the Company and investors to evaluate the results of the underlying core operations of the Company and its ability to generate cash flows and is an important indicator of the strength of the Company's operations and performance of its core business.
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- Adjusted Income from Mine Operations
The Company has included the non-IFRS performance measures of adjusted income from mine operations in this news release. Adjusted income from mine operations has no standardized meaning and is therefore unlikely to be comparable to other measures presented by other issuers. Adjusted income from mine operations is calculated by adding back unrealized losses (gains) on the Company's gold hedge derivative instruments to income from mine operations as reported in the Company's Statement of Operations and Comprehensive Income. The Company believes adjusted income from mine operations provides a measure which helps management and investors to evaluate the financial results of the underlying core operations of the Company and its ability to generate cash flows in the current period.
Qualified Person
The exploration information contained in this news release has been reviewed and approved by Mr. Chris Pettman, P.Geo, Vice President Exploration of Galiano.
Mr. Eric Chen, P.Geo., Vice President Mineral Resources of Galiano has reviewed and approved the Mineral Resources statement.
All other scientific and technical information contained in this news release, including the Mineral Reserve statement, has been reviewed and approved by Mr. Amri Sinuhaji, P.Eng., Vice President Technical Services of Galiano. Mr. Pettman, Mr. Chen and Mr. Sinuhaji are "Qualified Persons" as defined by National Instrument 43-101, Standards of Disclosure for Mineral Projects.
Conference Call and Webcast
Management will host a conference call and webcast to discuss the results of FY 2025 at 10:30am ET (7:30am PT) on February 13, 2026. Please refer to the details below to join the conference call or the webcast.
| Conference Call Participant Details | |
| RapidConnect URL: | https://emportal.ink/4suhvtC |
| Local: | Toronto: 1-437-900-0527 |
| North American Toll Free: | 1-888-510-2154 |
| Webcast URL | |
| Audience URL: | https://app.webinar.net/Qpwkr5WxG51 |
| Conference Replay | |
| Conference Replay Local: | 1-289-819-1450 |
| Conference Replay North American Toll Free: | 1-888-660-6345 |
| Conference Replay Entry Code: | 68484 # |
| Conference Replay Expiration Date: | February 20, 2026 |
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About Galiano Gold Inc.
Galiano is focused on creating a sustainable business capable of value creation for all stakeholders through production, exploration and disciplined deployment of its financial resources. The Company owns the Asanko Gold Mine, which is located in Ghana, West Africa. Galiano is committed to the highest standards for environmental management, social responsibility, and the health and safety of its employees and neighbouring communities. For more information, please visit www.galianogold.com.
Contact Information
Darshan Sundher
Toll-Free (N. America): 1-855-246-7341
Email: info@galianogold.com
Cautionary Note Regarding Forward-Looking Statements
Certain statements and information contained in this news release constitute "forward-looking statements" within the meaning of applicable U.S. securities laws and "forward-looking information" within the meaning of applicable Canadian securities laws, which we refer to collectively as "forward-looking statements". Forward-looking statements are statements and information regarding possible events, conditions or results of operations that are based upon assumptions about future conditions and courses of action. All statements and information other than statements of historical fact may be forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as "seek", "expect", "anticipate", "budget", "plan", "estimate", "continue", "forecast", "intend", "believe", "predict", "potential", "target", "may", "could", "would", "might", "will" and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook.
Forward-looking statements in this news release include, but are not limited to: statements regarding the Company's operating plans for the AGM and timing thereof; expectations and timing with respect to current and planned drilling programs, including at Abore and Esaase, and the results thereof; the focus of the 2026 exploration programs; expectations and timing with respect to ramping up of mining activities at Nkran; anticipated production and cost guidance; expectations regarding reporting an underground mineral reserve, including the timing thereof; expectations regarding the RCF; expectations regarding cash flows from operations; any additional work programs to be undertaken by the Company; potential exploration opportunities and statements regarding the usefulness and comparability of certain non-IFRS measures; total cash costs and corresponding cost performance relating to the Company's activities; and details of the upcoming conference call and webcast. Such forward-looking statements are based on a number of material factors and assumptions, including, but not limited to: development plans and capital expenditures; the price of gold will not decline significantly or for a protracted period of time; the accuracy of the estimates and assumptions underlying mineral reserve and mineral resource estimates; the Company's ability to raise sufficient funds from future equity financings to support its operations, and general business and economic conditions; the global financial markets and general economic conditions will be stable and prosperous in the future; the AGM will not experience any significant uninsured production disruptions that would materially affect revenues; the ability of the Company to comply with applicable governmental regulations and standards; the mining laws, tax laws and other laws in Ghana applicable to the AGM will not change, and there will be no imposition of additional exchange controls in Ghana; the success of the Company in implementing its development strategies and achieving its business objectives; the Company will have sufficient working capital necessary to sustain its operations on an ongoing basis and the Company will continue to have sufficient working capital to fund its operations; and the key personnel of the Company will continue their employment.
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The foregoing list of assumptions cannot be considered exhaustive.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in such forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and you are cautioned not to place undue reliance on forward-looking statements contained herein. Some of the risks and other factors which could cause actual results to differ materially from those expressed in the forward-looking statements contained in this news release, include, but are not limited to: the mineral reserve and mineral resource estimates may change and may prove to be inaccurate; life of mine estimates are based on a number of factors and assumptions and may prove to be incorrect; actual production, costs, returns and other economic and financial performance may vary from the Company's estimates in response to a variety of factors, many of which are not within the Company's control; inflationary pressures and the effects thereof; sustained increases in costs, or decreases in the availability, of commodities consumed or otherwise used by the Company may adversely affect the Company; adverse geotechnical and geological conditions (including geotechnical failures) may result in operating delays and lower throughput or recovery, closures or damage to mine infrastructure; the ability of the Company to treat the number of tonnes planned, recover valuable materials, remove deleterious materials and process gold as planned is dependent on a number of factors and assumptions which may not be present or occur as expected; risks related to artisanal and illegal mining activities at or near the AGM, including that the Company's mineral properties may experience a loss of ore, and the Company may experience lack of access to its mineral properties and other issues, due to illegal mining activities; the Company's operations may encounter delays in or losses of production due to equipment delays or the availability of equipment; the ability of the Company to manage procurement risks, including securing timely and cost-effective equipment and services, and mitigate risks related to supplier performance, fraud, collusion, bribery, kickbacks and unethical procurement practices; outbreaks of infectious diseases may have a negative impact on global financial conditions, demand for commodities and supply chains and could adversely affect the Company's business, financial condition and results of operations and the market price of the common shares of the Company; the Company's operations are subject to continuously evolving legislation, compliance with which may be difficult, uneconomic or require significant expenditures; the Company may be unsuccessful in attracting and retaining key personnel; labour disruptions could adversely affect the Company's operations; metallurgical recoveries may not be economically viable or recoveries may be lower in the future and have a negative impact on the Company's gold production and financial results; the Company's business is subject to risks associated with operating in a foreign country; risks related to the Company's use of mining and other contractors; the hazards and risks normally encountered in the exploration, development and production of gold; the Company's operations are subject to environmental hazards and compliance with applicable environmental laws and regulations; the effects of climate change or extreme weather events may cause prolonged disruption to the delivery of essential commodities which could negatively affect production efficiency; the Company's operations and workforce are exposed to health and safety risks; unexpected costs and delays related to, or the failure of the Company to obtain, necessary permits could impede the Company's operations; the Company's title to exploration, development and mining interests can be uncertain and may be contested; geotechnical risks associated with the design and operation of a mine and related civil structures; the Company's properties may be subject to claims by various community stakeholders; risks related to limited access to infrastructure and water; risks associated with establishing new mining operations; the Company's revenues are dependent on the market prices for gold, which have recently experienced significant fluctuations; the Company may not be able to secure additional financing when needed or on acceptable terms; the Company's shareholders may be subject to future dilution; risks related to changes in interest rates and foreign currency exchange rates; changes to taxation laws applicable to the Company may affect the Company's profitability and ability to repatriate funds; risks related to the Company's internal controls over financial reporting and compliance with applicable accounting regulations and securities laws; risks related to information systems security threats; non-compliance with public disclosure obligations could have an adverse effect on the Company's share price; the carrying value of the Company's assets may change and these assets may be subject to impairment charges; risks associated with changes in reporting standards; the Company may be liable for uninsured or partially insured losses; the Company may be subject to litigation; damage to the Company's reputation could result in decreased investor confidence and increased challenges in developing and maintaining community relations which may have adverse effects on the business, results of operations and financial conditions of the Company and the Company's share price; the Company may be unsuccessful in identifying targets for acquisition or completing suitable corporate transactions, and any such transactions may not be beneficial to the Company or its shareholders; the Company must compete with other mining companies and individuals for mining interests; the Company's growth, future profitability and ability to obtain financing may be impacted by global financial conditions; the Company's common shares may experience price and trading volume volatility; the Company has never paid dividends and does not expect to do so in the foreseeable future; the Company's shareholders may be unable to sell significant quantities of the Company's common shares into the public trading markets without a significant reduction in the price of its common shares, or at all; and any such other risk factors described under the heading "Risk Factors" in the Company's Annual Information Form.
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Although the Company has attempted to identify important factors that could cause actual results or events to differ materially from those described in the forward-looking statements, you are cautioned that this list is not exhaustive and there may be other factors that the Company has not identified. Furthermore, the Company undertakes no obligation to update or revise any forward-looking statements included in, or incorporated by reference in, this news release if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.
Neither the Toronto Stock Exchange nor the Canadian Investment Regulatory Organization accepts responsibility for the adequacy or accuracy of this news release.
Source: Galiano Gold Inc.
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