Galiano Gold Inc (GAU) 6-K, filed Mar 11, 2021

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 March 2021

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 to 99.2 included with this report are hereby incorporated by reference into the registrant’s registration statement on Form F-10 (File no. 333-239109) (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“Registration Statement”), and to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

Exhibit	Description
99.1	Consolidated financial statements for the years ended December 31, 2020 and 2019
99.2	Management’s Discussion and Analysis for the years ended December 31, 2020 and 2019
99.3	Consent of KPMG LLP
99.4	News release dated March 11, 2021

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/ Fausto Di Trapani
Fausto Di Trapani
Executive Vice President and Chief Financial Officer
Date: March 11, 2021

Galiano Gold Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

GALIANO GOLD INC.

(formerly Asanko Gold Inc.^1^)

CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2020 and 2019

(Expressed in United States dollars, unless otherwise noted)

TABLE OF CONTENTS

Management's Responsibility for Financial Reporting	1
Report of the Independent Auditor	2
Consolidated Statements of Financial Position	3
Consolidated Statements of Operations and Comprehensive Income (Loss)	4
Consolidated Statements of Changes in Equity	5
Consolidated Statements of Cash Flow	6
Notes to the Consolidated Financial Statements	7 - 49

^1^ The Company's name was changed from "Asanko Gold Inc." to "Galiano Gold Inc." effective April 30, 2020

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

Management's Report on Financial Statements

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

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

The consolidated financial statements have been audited by KPMG 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, 2020.

"Greg McCunn"	"Fausto Di Trapani"
_______________________________________________	______________________________________________
Greg McCunn	Fausto Di Trapani
Director and Chief Executive Officer	Executive Vice President and Chief Financial Officer

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Galiano Gold Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Galiano Gold Inc. and its subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for each of the years in the two‑year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for each of the years in the two‑year period ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our 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/ KPMG LLP

Chartered Professional Accountants

Vancouver, Canada March 10, 2021

We have served as the Company’s auditor since 2011.

GALIANO GOLD INC. (formerly Asanko Gold Inc.) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, 2020 AND 2019 (In thousands of United States Dollars)

		December 31, 2020	December 31, 2019
	Note
Assets
Current assets
Cash and cash equivalents		62,151	31,109
Receivables		186	161
Receivable due from related party	6	2,675	4,183
Prepaid expenses and deposits		529	347
		65,541	35,800
Non-current assets
Financial assets	7	78,299	108,025
Investment in Joint Venture	8	59,159	-
Right-of-use asset	9	485	589
Property, plant and equipment		106	90
		138,049	108,704
Total assets		203,590	144,504
Liabilities
Current liabilities
Accounts payable and accrued liabilities		3,524	2,234
Lease liability	9	94	83
		3,618	2,317
Non-current liabilities
Long-term incentive plan liabilities	11(b),11(c)	668	416
Lease liability	9	421	514
		1,089	930
Total liabilities		4,707	3,247
Equity
Share capital	10	578,750	578,385
Equity reserves	11	49,957	50,072
Accumulated deficit		(429,824	(487,200
Total equity		198,883	141,257
Total liabilities and equity		203,590	144,504
Commitments and contingencies		12
Subsequent event		23

All values are in US Dollars.

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

Approved on behalf of the Board of Directors:

"Greg McCunn"	“Marcel de Groot”
__________________________________________________	__________________________________________________
Director	Director

GALIANO GOLD INC. (formerly Asanko Gold Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In thousands of United States Dollars, except dollar per share amounts)

		2020	2019
	Note
Share of net income (loss) related to joint venture	8	59,159	(126,264
Service fee earned as operators of joint venture	6	4,917	4,963
General and administrative expenses	13	(14,757	(11,828
Income (loss) from operations and joint venture		49,319	(133,129
Finance income	14	8,325	871
Finance expense	15	(45	(35,650
Foreign exchange loss		(223	(20
Net income (loss) after tax and comprehensive income (loss) for the year		57,376	(167,928
Net income (loss) per share:
Basic		0.26	(0.74
Diluted		0.26	(0.74
Weighted average number of shares outstanding:
Basic	17	223,655,880	225,867,169
Diluted	17	224,919,474	225,867,169

All values are in US Dollars.

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

GALIANO GOLD INC. (formerly Asanko Gold Inc.) CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In thousands of United States Dollars, except for number of common shares)

	****	Number of shares	****	Share capital	Equity reserves	Accumulateddeficit	Total equity
	Note	****	****
Balance as at December 31, 2018		225,804,614		578,853	49,261	(319,272	308,842
Issuance of common shares on exercise of stock <br> options	11(a)	403,116		490	(158	-	332
Shares repurchased and cancelled under normal <br> course issuer bid	10(c)	(1,108,920	)	(958	-	-	(958
Share-based payments	11(a)	-		-	969	-	969
Net loss and comprehensive loss for the year		-		-	-	(167,928	(167,928
Balance as at December 31, 2019		225,098,810		578,385	50,072	(487,200	141,257
Issuance of common shares on exercise of stock <br> options	11(a)	1,912,775		2,661	(768	-	1,893
Shares repurchased and cancelled under normal <br> course issuer bid	10(c)	(2,758,063	)	(2,296	-	-	(2,296
Share-based payments	11(a)	-		-	653	-	653
Net income and comprehensive income for the <br> year		-		-	-	57,376	57,376
Balance as at December 31, 2020	****	224,253,522	****	578,750	49,957	(429,824	198,883

All values are in US Dollars.

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

GALIANO GOLD INC. (formerly Asanko Gold Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In thousands of United States Dollars)

	****	2020	2019
	Note
Operating activities:
Net income (loss) for the year		57,376	(167,928
Adjustments for:
Share of net (earnings) loss related to joint venture	8	(59,159	126,264
Depreciation		163	98
Share-based payments	11(a),11(b),11(c),13	2,168	1,789
Finance income	14	(8,325	(871
Finance expense	15	35	35,640
Unrealized foreign exchange (gain) loss		(187	20
Operating cash flow before working capital changes		(7,929	(4,988
Change in non-cash working capital	18	1,525	(3,760
Cash used in operating activities		(6,404	(8,748
Investing activities:
Expenditures on property, plant and equipment		(76	(39
Gold Fields investment in joint venture	7(b)	-	20,000
Redemption of preferred shares in joint venture	7(a)	37,500	10,000
Interest received		506	210
Cash provided by investing activities		37,930	30,171
Financing activities:
Shares issued for cash on exercise of stock options	11(a)	1,893	332
Shares repurchased under normal course issuer bid	10(c)	(2,296	(958
Office lease payments	9	(117	(39
Cash used in financing activities		(520	(665
Impact of foreign exchange on cash and cash equivalents		36	(7
Increase in cash and cash equivalents during the year		31,042	20,751
Cash and cash equivalents, beginning of year		31,109	10,358
Cash and cash equivalents, end of year		62,151	31,109
Supplemental cash flow information	18

All values are in US Dollars.

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

GALIANO GOLD INC.(formerly Asanko Gold Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 laws of British Columbia, Canada. The Company changed its name from Asanko Gold Inc. to Galiano Gold Inc. which was approved by the Company's shareholders at its Annual General and Special Meeting on April 30, 2020. 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 2600, Three Bentall Centre, 595 Burrard Street, Vancouver, V7X 1L3. The Company's common shares trade on the Toronto Stock Exchange ("TSX") and NYSE American Exchange ("NYSE American") under the ticker symbol "GAU".

The Company's principal business activity is the operation of the Asanko Gold Mine ("AGM") through a 50:50 joint venture arrangement (the "JV") associated with the Company's 45% economic interest in the AGM (see note 8) and exploration and development of the JV's mineral property interests. The Government of Ghana has a 10% free-carried interest in the AGM. The AGM consists of two neighboring gold projects, the Obotan Project and the Esaase Project, both located in the Amansie West District of the Republic of Ghana ("Ghana"), West Africa.

In addition to its interest in the AGM, the Company's interest in the JV also includes a 50% interest in a portfolio of other Ghanaian gold concessions in various stages of exploration.

2. Basis of presentation

(a) Statement of compliance

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

These consolidated financial statements were authorized for issue and approved by the Board of Directors on March 10, 2021.

(b) Basis of presentation and consolidation

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

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

These consolidated financial statements incorporate the financial information of the Company and its subsidiaries as at December 31, 2020. Subsidiaries are entities controlled by the Company. Control exists when the Company has power, directly or indirectly, to govern the financial and operating policies of an entity as to obtain benefits from its activities. Subsidiaries are included in the consolidated financial statements of the Company from the effective date of acquisition up to the effective date of disposition or loss of control.

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

Certain comparative period information has been restated to conform to the current year presentation.

2. Basis of presentation (continued)

The principal subsidiaries and joint arrangements to which the Company is a party, as well as their geographic locations, were as follows as at December 31, 2020:

Affiliate name	Location	Interest	Classification and accounting method
Galiano Gold South Africa (PTY) Ltd.^2^	South Africa	100%	Consolidated
Galiano International (Barbados) Inc.^2, 3^	Barbados	100%	Consolidated
Galiano Gold (Barbados) Inc.^2, 3^	Barbados	100%	Consolidated
Asanko Gold Ghana Limited	Ghana	45%	Joint venture; equity method
Adansi Gold Company (GH) Limited	Ghana	50%	Joint venture; equity method
Shika Group Finance Limited	Isle of Man	50%	Joint venture; equity method

^2^ Company changed their official names during the year to align with Galiano's change of name. ^3^ Effective February 15, 2021, the Company’s Barbados subsidiaries were migrated to the Isle of Man.

3. Significant accounting policies

The accounts policies described in this section were those applied by the Company and/or the JV (see note 8) during the year ended December 31, 2020 and 2019.

(a) Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the business combination is measured as the aggregate of the fair value at the date of acquisition of the consideration transferred in exchange for the interest in the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date. The acquisition date is the date the Company obtains control over the acquiree, which is generally the date that consideration is transferred and the Company acquires the assets and assumes the liabilities of the acquiree. The Company considers all relevant facts and circumstances in determining the acquisition date.

Acquisition-related costs, other than costs to issue equity securities of the acquirer, including investment banking fees, legal fees, accounting fees, valuation fees and other professional or consulting fees are expensed as incurred. The costs to issue equity securities of the Company as consideration for the acquisition are deducted from share capital as share issue costs.

Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Company's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If, after reassessment, the Company's interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in the consolidated statement of operations and comprehensive income (loss).

(b) Investments in joint arrangements

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

3. Significant accounting policies (continued)

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

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

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

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

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 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.

3. Significant accounting policies (continued)

(d) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and short-term investments with original maturity dates of less than ninety days or that are fully redeemable without penalty or loss of interest.

(e) 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. Production costs include the cost of raw materials, direct labour, mine-site overhead expenses and applicable depreciation and depletion. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and long-term metal prices less estimated future costs to convert the inventories from their respective states into saleable form less estimated costs to sell.

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

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

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

(f) Mineral properties, plant and equipment

(i) Mineral properties

Recognition

Capitalized costs of mining properties include the following:

costs assigned to mining properties acquired in business combinations;
expenditures incurred to develop mineral properties including pre-production stripping costs;
stripping costs in the production phase of a mine if certain criteria have been met (see below);
costs to define and delineate known economic resources and develop the project;
borrowing costs attributable to qualifying mining properties;
costs incurred during testing of the processing facility, net of proceeds from sales, prior to operating in the manner intended by management; and
estimates of reclamation and closure costs.

3. Significant accounting policies (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. 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 mine development costs.

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

Management reviews the estimates of the waste and ore in each identified component of operating open pit mines at the end of each financial year, and when events and circumstances indicate that such a review should be made. Deferred stripping assets are written-down to their recoverable amount when their carrying value is not considered supportable. Changes to the estimated identification of components and the associated waste and ore within each component are accounted for prospectively.

Exploration and evaluation expenditures

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

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

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

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

3. Significant accounting policies (continued)

Borrowing costs

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

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

Depletion

Mining properties in production are depleted on a mine-by-mine basis using the units-of-production method over the mine's estimated proven and probable reserves, with the exception of deferred stripping which is depleted using the unit-of-production method over the reserves that directly benefit from the specific stripping activity and will commence when the mine is capable of operating in the manner intended by management.

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

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

Mining properties in development are not depleted.

(ii) Plant and equipment

Recognition

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

Depreciation

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

3. Significant accounting policies (continued)

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

Asset Class	Estimated Useful Life
Fixed plant & related components and infrastructure	Units of production over life of mine
Mobile and other mine equipment components	3 to 12 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 derecognized. Similarly, overhaul costs associated with major maintenance are capitalized when it is probable that future economic benefits will be available and any remaining carrying amounts of the cost of previous overhauls are derecognized. All other maintenance and repair costs are expensed as incurred.

(iii) Impairment of non-financial assets

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

The carrying amounts of the CGUs are compared to their recoverable amounts where the recoverable amount is the higher of value-in-use ("VIU") and fair value less costs to sell ("FVLCS"). VIU is estimated as the present value of the future cash flows expected to be derived from an asset or CGU. For mining assets, when a binding sale agreement and observable market prices are not readily available, FVLCS is estimated using a discounted cash flow approach for each of the Company's cash generating units (CGUs) to which the individual assets are allocated. The assumptions used in determining the FVLCS for the CGU's include long-term mining plans, long-term commodity prices, discount rates and foreign exchange rates. 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).

Where an impairment loss subsequently reverses, the carrying amount of the asset (CGU) is increased to the revised estimate of its recoverable amount (however, the increased carrying amount shall not exceed the net carrying amount that would have been recognized should no impairment loss have been previously recognized for the asset (or CGU) in prior years).

3. Significant accounting policies (continued)

(iv) Derecognition

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

(g) Leases

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

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

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

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

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

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

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.

3. Significant accounting policies (continued)

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

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.

(h) 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 site reclamation as a liability when the liability is incurred with a corresponding increase in the carrying value of the related assets. Discount rates using a pre-tax, risk-free rate that reflect the time value of money are used to calculate the net present value. The liability is accreted over time to reflect the unwinding of the discount with the accretion expense included in finance costs in the consolidated statement of operations and comprehensive income (loss). Changes in estimates or circumstances include changes in legal or regulatory requirements, increased obligations arising from additional mining and exploration activities, changes to cost estimates, changes to the discount rate and changes to the risk-free interest rates.

(i) 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:

3. Significant accounting policies (continued)

the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;
the Company can identify each party's rights regarding the goods or services to be transferred;
the Company can identify the payment terms for the goods or services to be transferred;
the contract has commercial substance (i.e. the risk, timing or amount of the Company's future cash flows is expected to change as a result of the contract); and
it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Revenue from gold and any by-product metals is generally recorded at the time of physical delivery of the refined gold, which is also the date when control of the gold passes to the customer. Revenue from saleable gold produced during the testing phase of production activities is deducted from capitalized mine development costs.

(j) Royalties and mining taxes

Payments to governments that are based on a measure of income less expense are accounted for in accordance with the Company's income tax accounting policy. Payments to governments which are based on gross amounts such as revenue are classified in accordance with the substance of the transaction. For royalties calculated based on production costs, the royalty is presented as an increase in cost of sales.

(k) Financial instruments

(i) Financial assets

Recognition and measurement

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

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

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

A financial asset is measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income. Fair value changes in financial assets classified as fair value through profit or loss, if any, are recognized in the consolidated Statement of Operations and Comprehensive Income (Loss).

3. Significant accounting policies (continued)

Derecognition

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

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

(ii) Financial liabilities

Recognition and measurement

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

financial liabilities at fair value through profit or loss;
financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies;
financial guarantee contracts;
commitments to provide a loan at a below-market interest rate; and
contingent consideration recognized by an acquirer in a business combination to which IFRS 3, Business combinations, applies.

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

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

3. Significant accounting policies (continued)

(l) Share-based compensation

The Company has a share option plan and share unit plan which are described in note 11. 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. The Company records all share-based compensation for options using the fair value method with graded vesting. Under the fair value method, share-based payments are measured at the fair value of the consideration received or the fair value of the equity instruments issued or liabilities incurred, whichever is more reliably measurable, and are charged over the vesting period to the consolidated statement of operations and comprehensive income (loss). The offset is credited to Equity reserves (within equity in the consolidated statement of financial position) ratably over the vesting period, after adjusting for the number of awards that are expected to vest.

Expenses recognized for 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, including restricted share units ("RSU"), the Company measures the goods or services acquired and the liability incurred at the fair value of the liability. The corresponding share-based compensation expense is recognized over the vesting period of the award. As these awards will be settled in cash, the liability is remeasured at fair value at each reporting period and at the date of settlement, with changes in fair value recognized in the consolidated statement of operations and comprehensive income (loss) in the period incurred.

(m) Income taxes

Income tax on the profit or loss for the periods 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.

3. Significant accounting policies (continued)

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

(n) Income (loss) per share

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. 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 period.

4. Changes in accounting standards

(a) Accounting standards adopted during the year

There were no new standards effective January 1, 2020 that impacted the Company's 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 or the JV, have been issued but are not yet effective as of December 31, 2020:

Amendment to IAS 16

On May 14, 2020, the IASB amended IAS 16 "Property, Plant and Equipment" to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of producing those items, in profit or loss. The amendments are effective for annual periods beginning on or after January 1, 2022 with early adoption permitted. The Company does not expect the amendments to IAS 16 to have a significant impact on its or the JV's accounting policies.

5. Significant accounting judgements and estimates

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 these consolidated financial statements are reasonable, however, actual results could differ from those estimates and could impact future results of operations and cash flows. The accounting judgements and estimates which have the most significant effect on these financial statements and the financial results of the JV are as follows:

Estimates

Equity investment in joint venture and impairment estimates

When facts and circumstances suggest the carrying value of the Company's equity investment in the JV may be impaired, the Company is required to estimate the recoverable amount of its equity investment through a fair value less cost of disposal or value-in-use approach. Estimating the recoverable amount requires management to make significant estimates about the future life of mine cash flows of the AGM which may include, but may not be limited to, changes to the current estimates of in-situ ounces, ore tonnes to be mined in future periods, strip ratios, head grades, recovery rates, gold price assumptions, mining costs, processing costs, trucking costs, capital and closure costs, as well as discount rates.

When facts and circumstances suggest the carrying value of the JV's mineral interests may be impaired, the same policies and set of assumptions as described above are applied.

Reserves and Resources

Estimates of the quantities of proven and probable mineral reserves and mineral resources form the basis for the JV's life-of-mine plans, which are used for a number of key business and accounting purposes, including: the calculation of depreciation expense, the capitalization of stripping costs, the forecasting and timing of cash flows related to the asset retirement provision and impairment assessment, if any. In addition, when required, the life-of-mine plans are used in impairment tests for mineral properties, plant and equipment. To the extent that these estimates of proven and probable mineral reserves and resources varies, there could be changes in depreciation expense, stripping assets, asset retirement provisions and impairment charges recorded.

Depletion of mineral interests

Estimates are made of recoverable ounces in the JV's mining properties which are depleted based on recoverable tonnes contained in proven and probable reserves. To the extent that changes are made to the estimate of proven and probable reserves, the depletion charge may change. In addition, mineral properties, 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 mineral properties, plant or equipment vary, future depreciation charges may change.

Inventory valuation of production costs

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

5. Significant accounting judgements and estimates (continued)

Net realizable value of inventory

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

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

Current and deferred Income taxes

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

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

Deferred stripping

To determine whether stripping costs incurred during the production phase of a mining property relate to reserves and resources that will be mined in a future period and therefore should be capitalized, the JV makes estimates of the stripping activity over the life of the component of reserves and resources which have been made accessible. In addition, judgement is involved when allocating production costs between inventory produced and the stripping asset; the allocation is based on the volume of waste extracted compared with the expected volume, for a given volume of ore production. To the extent that these estimates and judgements change, there could be a change to the amount of production costs which are deferred to the statement of financial position.

Asset retirement provisions

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

5. Significant accounting judgements and estimates (continued)

Preferred shares

The Company holds preferred shares (without a fixed redemption date) in the JV which have been classified as financial assets measured at fair value through profit or loss. Management estimated the fair value of these preference shares by discounting the forecast future cash flows from the AGM. Several estimates were made to determine the forecast future cash flows including, but not limited to, long-term realized gold prices, mineable reserves/resources, mining and processing costs per tonne, ore grades, and metallurgical recoveries. Additionally, judgement was required to determine the appropriate discount rate used to calculate the present value of the forecast future cash flows. Changes in one or more of these assumptions could lead to a materially different fair value estimate of the preferred shares.

Judgements

Impairment indicators of equity investment in joint venture

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

6. Receivable due from related party

Under the terms of the Joint Venture Agreement (the "JVA") that governs the management of the JV (note 8), the Company remains the manager and operator of the JV and receives an arm's length fee for services rendered to the JV of $6.2 million per annum (originally $6.0 million, but adjusted annually for inflation).

During the year ended December 31, 2020, the Company earned a service fee of $4.9 million (year ended December 31, 2019 - $5.0 million). For the year ended December 31, 2020, the service fee was comprised of a gross service fee of $6.1 million less withholding taxes payable in Ghana of $1.2 million (year ended December 31, 2019 - gross service fee of $6.0 million less withholding taxes of $1.0 million). As at December 31, 2020, the Company had a receivable due from the JV in respect of the service fee in the amount of $2.7 million, net of withholding taxes (December 31, 2019 - $4.2 million).

All transactions with related parties have occurred in the normal course of operations and were measured at the exchange amount agreed to by the parties. All amounts are unsecured, non-interest bearing and have no specific terms of settlement.

7. Financial assets

As part of the JV Transaction (note 8), the Company subscribed to 204.9 million non-voting fixed redemption price redeemable preferences shares in Shika Group Finance Limited (the "preference shares"). The preference shares were issued at a par value of $1 per redeemable share, resulting in a face value of the preference shares of $204.9 million, comprising $20.0 million with a determinable redemption date and $184.9 million with no fixed redemption date.

a) Redeemable preference shares with no fixed redemption date

	December 31, 2020	December 31, 2019

Balance, beginning of year	108,025	153,651
Fair value adjustment for the year	7,774	(35,626
Redemption of preferred shares during the year	(37,500	(10,000
Balance, end of year	78,299	108,025

All values are in US Dollars.

As these preference shares have no contractual fixed terms of repayment that arise on specified dates, they are measured at fair value through profit or loss at each reporting period-end.

During the year ended December 31, 2020, the JV redeemed $37.5 million of the preference shares, bringing the Company's holding to 137.4 million preference shares in the JV (December 31, 2019 - 174.9 million preference shares).

As at December 31, 2020, the Company re-measured the fair value of the redeemable preference shares with no fixed redemption date to $78.3 million (applying a discount rate of 11.6%) resulting in the recognition of a positive fair value adjustment of $7.8 million in finance income for the year ended December 31, 2020 (year ended December 31, 2019 - $35.6 million downward fair value adjustment recorded in finance expense). These preference shares are classified as a Level 3 financial asset in the fair value hierarchy.

b) Redeemable preference shares with determinable redemption date

These preference shares had a fixed redemption date based on an agreed upon Essase development milestone and were initially recognized at amortized cost based on a discounted cash flow analysis.

During the year ended December 31, 2019, these preference shares were settled as the Company received $20.0 million from Gold Fields and accretion income of $0.5 million was recognized in finance income in the Statement of Operations and Comprehensive Income (Loss).

8. Investment in joint venture

On July 31, 2018, the Company completed a transaction (the "JV Transaction") with a subsidiary of Gold Fields Limited ("Gold Fields"), following which:

the Company and Gold Fields each own a 45% economic interest in Asanko Gold Ghana Limited ("AGGL"), which owns the AGM, with the Government of Ghana retaining a 10% free-carried interest in the AGM;
the Company and Gold Fields each own a 50% interest in Adansi Gold Company (GH) Limited ("Adansi Ghana"), which owns a number of exploration licenses; and
the Company and Gold Fields each acquired a 50% interest in the JV entity, Shika Group Finance Limited ("JV Finco").

Under the terms of the JVA with Gold Fields, the Company remains the manager and operator of the JV and receives an arm's length fee for services rendered to the JV of $6.2 million per annum (originally $6.0 million, but adjusted annually for inflation).

The JVA established joint control of the JV and thus the Company no longer controls the AGM and associated properties. As the JV is structured within the legal entities of AGGL, Adansi Ghana and JV Finco, the JV represents a joint venture as defined under IFRS 11 - Joint Arrangements, and the Company commenced equity accounting for its interest in the JV effective July 31, 2018.

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

	December 31, 2020	December 31, 2019
	$
Balance, beginning of year	-	126,264
Company's share of net income (loss) of the JV for the year	59,159	(126,264
Balance, end of year	59,159	-

All values are in US Dollars.

During the year ended December 31, 2019, the Company's share of the net loss of the JV of $126.3 million was recorded net of the Company's attributable share of an impairment of $130.3 million (or 45% of $289.6 million) that was recognized by the JV (note 8(xi)).

8. Investment in joint venture (continued)

Operating and financial results of the JV for the years ended December 31, 2020 and 2019

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

All disclosures in this note 8 are on a 100% JV basis, unless otherwise indicated. The JV applies the same accounting policies as the Company.

Statement of Income for the years ended December 31, 2020 and 2019

****	Note	2020	2019
Revenues	(i)	418,130	340,969
Production costs	(ii)	(198,347	(199,234
Depreciation and depletion	(vi)	(50,934	(95,418
Royalties	(ii)	(20,907	(17,159
Income from mine operations		147,942	29,158
Exploration and evaluation expenditures		(9,681	(6,092
General and administrative expenses		(7,434	(6,549
Income from operations		130,827	16,517
Impairment	(xi)	-	(289,589
Finance expense	(xii)	(3,165	(8,905
Finance income		285	283
Foreign exchange gain		3,572	1,171
Net income (loss) after tax for the year	****	131,519	(280,523
Company's share of net income (loss) of the JV for the year		59,159	(126,264

All values are in US Dollars.

8. Investment in joint venture (continued)

The assets and liabilities of the Asanko Gold Mine JV, on a 100% basis, as at December 31, 2020 and 2019 were as follows:

	****	December 31, 2020	December 31, 2019
	Note	$	$
Assets	****		****
Current assets	****		****
Cash and cash equivalents	(xiii)	64,254	40,758
Restricted cash		-	3,000
Receivables		10,820	9,516
Inventories	(iii)	81,675	49,968
Prepaid expenses and deposits		4,841	2,031
Financial assets		68	-
VAT receivable		8,911	10,556
		170,569	115,829
Non-current assets	(iii),(iv),(v),(vi)	280,769	238,781
Total assets		451,338	354,610
Liabilties		****
Current liabilities		****
Accounts payable and accrued liabilities		73,102	62,153
Revolving credit facility	(vii)	30,000	-
Lease liability	(viii)	5,608	18,142
Asset retirement provisions	(ix)	1,025	-
		109,735	80,295
Non-current liabilities
Lease liability	(viii)	113	5,063
Long-term incentive plan liability		596	402
Asset retirement provisions	(ix)	71,668	56,148
		72,377	61,613
Total liabilities		182,112	141,908
Equity	(x)	269,226	212,702
Total liabilities and equity	****	451,338	354,610

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

8. Investment in joint venture (continued)

(i) Revenues

AGGL has an offtake agreement with a special purpose vehicle of RK Mine Finance Trust I ("Red Kite") with the following details (the "Offtake Agreement"):

sale of 100% of the future gold production from the AGM up to a maximum of 2.2 million ounces to Red Kite;
Red Kite to pay for 100% of the value of the gold ten business days after shipment;
a provisional payment of 90% of the estimated value will be made one business day after delivery;
the gold sale price will be a spot price selected during a nine-day quotational period following shipment of gold from the mine;
performance obligations of the AGM are satisfied once the refining outturn report is provided to Red Kite; and
should AGGL wish to terminate the Offtake Agreement, a termination fee will be payable according to a schedule dependent upon the amount of gold delivered under the Offtake Agreement at the time of termination.

During the year ended December 31, 2020, the AGM sold 243,807 ounces of gold to Red Kite in accordance with the Offtake Agreement (December 31, 2019 - 248,862 ounces).

As of December 31, 2020, the AGM has delivered 1,083,180 ounces to Red Kite under the Offtake Agreement. The Offtake Agreement was not affected by the JV Transaction and will remain in effect until all contracted ounces have been delivered to Red Kite or AGGL elects to terminate the Offtake Agreement and pay the associated fee.

Included in revenue of the AGM is $0.9 million relating to by-product silver sales for the year ended December 31, 2020 (year ended December 31, 2019 - $0.8 million). During the year ended December 31, 2019, $2.2 million of gold sales related to pre-production activities at Esaase were capitalized to mineral properties, plant and equipment ("MPP&E") of the AGM.

(ii) Production costs and royalties

The following is a summary of production costs by nature, on a 100% basis, incurred during the years ended December 31, 2020 and 2019:

****	December 31, 2020	December 31, 2019
Raw materials and consumables	(54,588	(49,560
Salary and employee benefits	(35,204	(33,015
Contractors (net of deferred stripping costs)	(119,337	(97,443
Change in stockpile, gold-in-process and gold dore inventories	28,970	(3,056
Insurance, government fees, permits and other	(17,161	(15,749
Share-based payments	(1,027	(411
Total production costs	(198,347	(199,234

All values are in US Dollars.

During the year ended December 31, 2020, the AGM recognized a $16.6 million reversal of previously recorded net realizable value adjustments on its stockpile inventory primarily due to an increase in gold prices during the year, of which $7.7 million was credited against production costs and $8.9 million credited against depreciation expense.

8. Investment in joint venture (continued)

During the year ended December 31, 2019, the AGM recognized a $19.1 million downward adjustment to the carrying value of its stockpile inventory to reflect the net realizable value of lower grade ore that had been added to stock during the year, of which $7.9 million was recorded as production costs and $11.2 million as depreciation expense.

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

(iii) Inventories

The following is a summary of inventories held by the AGM, on a 100% basis, as at December 31, 2020 and 2019:

	December 31, 2020	December 31, 2019

Gold dore on hand	8,197	2,804
Gold-in-process	1,814	1,726
Ore stockpiles	54,701	29,410
Materials and spare parts	22,152	18,679
Total inventories	86,864	52,619
Less non-current inventories:
Ore stockpiles	(5,189	(2,651
Total current inventories	81,675	49,968

All values are in US Dollars.

As at December 31, 2019, $29.2 million of the impairment adjustment recognized as part of the AGM's LOM plan update was allocated to long-term stockpiled ore.

(iv) Reclamation deposit

The AGM is required to provide security to the Environmental Protection Agency of Ghana ("EPA") for the performance by the AGM of its reclamation obligations in respect of the Abriem, Abore and Adubea mining leases. The initial security totaled $8.5 million and comprised a reclamation deposit in the amount of $1.7 million and a bank guarantee of $6.8 million. The reclamation deposit accrues interest and is carried at $1.9 million at December 31, 2020 (December 31, 2019 - $1.9 million).

The AGM deposited the reclamation deposit in a Ghanaian Bank in the joint names of the AGM and the EPA. The reclamation deposit matures annually, but the AGM is required to reinstate the deposit until receiving a final reclamation completion certificate from the EPA. The AGM is expected to be released from this requirement 45 days following the third anniversary of the date that the AGM receives a final completion certificate.

During the fourth quarter, the AGM finalized its reclamation bond for the Esaase deposit. The security provided to the EPA totaled $1.1 million and comprised a reclamation deposit of $0.2 million and a bank guarantee of $0.9 million, 50% of which was provided by the Company (note 12). The cash reclamation deposit of $0.2 million is expected to be paid in the first quarter of 2021.

8. Investment in joint venture (continued)

Also, during the fourth quarter, the AGM updated its reclamation bond for the Obotan deposit. Total security expected to be provided to the EPA totals $15.6 million and comprises a reclamation deposit of $4.7 million (including the $1.9 million mentioned above) and a bank guarantee of $10.9 million, 50% of which was provided by the Company (note 12). The additional cash reclamation deposit of $2.8 million is expected to be paid in the first quarter of 2021.

(v) Right-of-use assets

The following table shows the movement in the right-of-use asset related to the service and lease agreements of the AGM for the years ended December 31, 2020 and 2019:

****	December 31, 2020	December 31, 2019

Balance, beginning of year	9,429	-
Initial recognition of right-of-use assets upon adoption of IFRS 16	-	36,616
Recognition of mining contractor services agreements entered into during the year	5,604	10,502
Depreciation expense	(9,407	(17,255
Derecognition associated with termination of contractor services agreement	(2,753	(10,343
Allocation of impairment	-	(10,091
Balance, end of year	2,873	9,429

All values are in US Dollars.

(vi) Mineral properties, plant and equipment

Additions to mineral properties, plant and equipment

During the year ended December 31, 2020, the AGM capitalized $54.1 million in expenditures related to mineral properties, plant and equipment, not including capitalized deferred stripping costs, asset retirement costs and right-of-use assets (year ended December 31, 2019 - $25.0 million).

Of the $54.1 million capitalized to MPP&E during the year ended December 31, 2020, $8.9 million was capitalized property acquisition costs and exploration costs relating to properties with existing defined mineral reserves (year ended December 31, 2019 - $3.3 million of capitalized explorations costs).

Deferred stripping

During the year ended December 31, 2020, the AGM deferred a total of $18.7 million of stripping costs to depletable mineral interests (year ended December 31, 2019 - $34.0 million) while depletion expense of $19.6 million was charged on deferred stripping assets and recorded as depreciation and depletion expense (year ended December 31, 2019 - $39.0 million).

8. Investment in joint venture (continued)

Depreciation and depletion

During the year ended December 31, 2020, the AGM recognized depreciation and depletion expense of $52.7 million (including $19.6 million depreciation and depletion on deferred stripping assets), of which $1.8 million was allocated to the cost of inventories (year ended December 31, 2019 - depreciation and depletion expense of $100.6 million, of which $5.2 million was allocated to the cost of inventories).

(vii) Revolving credit facility

In October 2019, the JV entered into a $30.0 million revolving credit facility (the "RCF") with Rand Merchant Bank ("RMB"). The term of the RCF is three years, maturing in September 2022 and bears interest on a sliding scale of between LIBOR plus a margin of 4% and LIBOR plus a margin of 3.8%, depending on the security granted to RMB. Commitment fees in respect of any undrawn portion of the RCF will accrue on a similar sliding scale of between 1.33% and 1.40%. The JV utilized the full value of the RCF on March 30, 2020 and the balance of the RCF as of December 31, 2020 was $30.0 million (December 31, 2019 - $nil). During the year ended December 31, 2020, the AGM recognized interest expense and other fees associated with the RCF of $1.2 million (year ended December 31, 2019 - interest expense of $nil and other fees of $1.7 million).

(viii) Lease liability

The following table shows the movement in the lease liability related to the service and lease agreements of the AGM for the years ended December 31, 2020 and 2019:

****	December 31, 2020	December 31, 2019

Balance, beginning of year	23,205	-
Initial recognition of lease liability upon adoption of IFRS 16	-	36,616
Recognition of lease agreements entered into during the year	5,604	10,502
Lease payments made during the year	(17,160	(15,386
Interest expense	732	1,817
Derecognition associated with termination of contractor services
agreement	(6,660	(10,344
Total lease liability, end of year	5,721	23,205
Less: current lease liability	(5,608	(18,142
Total non-current lease liability, end of year	113	5,063

All values are in US Dollars.

During the year ended December 31, 2019, the AGM provided a notice of termination to one of its mining contractors and derecognized the lease liability and right-of-use asset associated with this lease agreement. A termination fee was accrued for at December 31, 2019 and was included in production costs during the year ended December 31, 2019.

8. Investment in joint venture (continued)

(ix) Asset retirement provisions

The following table shows the movement in the asset retirement provisions of the AGM as at December 31, 2020 and 2019:

	December 31, 2020	December 31, 2019

Balance, beginning of year	56,148	34,036
Accretion expense	550	903
Change in estimate	16,149	21,309
Reclamation undertaken during the year	(154	(100
Total asset retirement provisions, end of year	72,693	56,148
Less: current portion of asset retirement provisions	(1,025	-
Total non-current portion of asset retirement provisions	71,668	56,148

All values are in US Dollars.

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

As at December 31, 2020, the AGM's reclamation cost estimates were discounted using a long-term risk-free discount rate of 1.0% (December 31, 2019 - 2.0%). The increase in the carrying value of the asset retirement provisions was primarily due to an increase in closure cost estimates during the year as a result of additional disturbances from ongoing mining operations and a decrease in the discount rate.

(x) Preferred shares

The following table shows the movement in the JV partners' preferred share investments in the JV for the years ended December 31, 2020 and 2019:

	December 31, 2020	December 31, 2019

Balance, beginning of year	349,880	369,880
Investment in JV by Gold Fields	-	20,000
Distributions to partners during the year	(75,000	(40,000
Balance, end of year	274,880	349,880

All values are in US Dollars.

Investment in joint venture (continued)

(xi) Impairment

During the year ended December 31, 2019, the Company and its JV partners announced that the scope of the ongoing work associated with the AGM's life of mine (the "AGM LOM") plan would:

target a remaining mine life of 8-10 years with gold production of 225,000 to 250,000 ounces per year;
contemplate resources based on Localized Uniform Conditioning methodology;
be based on NI43-101 standards and consistent with Gold Field's operating practices;
be based on Measured and Indicated Mineral Resources using Datamine Mine Stope Optimization software;
not include any major development capital investments such as further processing plant expansions or Esaase ore transportation infrastructure; and
be based on metallurgical recovery estimates for Esaase fresh ore based on an updated metallurgical model, which would in turn be based on a test-work program currently underway at that time.

The Company previously prepared its Amended and Restated Definitive Feasibility Study related to the AGM on June 5, 2017 (and amended and restated on December 20, 2017, the "12/17 DFS"). The 12/17 DFS previously estimated the AGM's remaining life of mine to be between 14 and 21 years (ending 2030 - 2037) with gold production ranging from 108,000 ounces to 497,000 ounces.

Given that the target mine life and production was expected to result in the extraction of materially less than the total previously estimated reserves and resources of the AGM, the Company considered this to represent an indicator of possible impairment. Accordingly, the Company assessed the recoverable amount of the AGM, which was based on management's estimate of the fair value less cost of disposal of the AGM. The fair value less cost of disposal of the AGM (on a 100% basis) was estimated to be $211.8 million as at December 31, 2019 and included life of mine cash flow projections, on the basis of the updated scope. The projected cash flows were discounted using a post-tax discount rate of 8.4% which represented the weighted-average cost of capital commensurate with the risks associated with the AGM's cash flows. The Company's estimated gold price considered analysts' consensus pricing for the estimated duration of the AGM LOM plan. The gold price assumptions were as follows:

Gold price assumption	2020	2021	2022 to 2024	Long-term	Weighted Average
Gold price (per ounce)	$1,500	$1,425	$1,400	$1,350	$1,373

During the year ended December 31, 2019, the Company determined that an impairment of $289.6 million was required at the AGM based on its estimate of the recoverable amount of the AGM. Management's estimate of the fair value of the AGM was classified as Level 3 in the fair value hierarchy.

As at December 31, 2020, the Company did not identify any further indicators of impairment of the AGM CGU based on information available to management at the time of preparing these audited consolidated financial statements, nor had the indicators of impairment identified in 2019, which gave rise to the above-mentioned impairment, reversed suggesting a possible reversal of previously recorded impairments.

8. Investment in joint venture (continued)

(xii) Finance expense

The following is a summary of finance expense incurred by the JV during the years ended December 31, 2020 and 2019:

	December 31, 2020	December 31, 2019

Realized and unrealized losses on hedging instruments	(366	(4,440
Interest on lease liabilities (note viii)	(732	(1,817
Fees and expenses associated with RCF (note vii)	(1,198	(1,670
Accretion charges on asset retirement provisions (note ix)	(550	(903
Other	(319	(75
Total finance expense	(3,165	(8,905

All values are in US Dollars.

(xiii) The cash flows of the AGM, on a 100% basis, were as follows for the years ended December 31, 2020 and 2019:

	December 31, 2020	December 31, 2019
****
Cash provided by (used in):
Operating cash flow before working capital changes	183,065	109,785
Operating activities	152,322	120,375
Investing activities	(69,108	(62,672
Financing activities	(62,590	(35,272
Impact of foreign exchange on cash and cash equivalents	(128	(321
Increase in cash and cash equivalents during the year	20,496	22,110
Cash and cash equivalents and restricted cash, beginning of year	43,758	21,648
Cash and cash equivalents and restricted cash, end of year	64,254	43,758

All values are in US Dollars.

9. Right-of-use asset and lease liability

During the year ended December 31, 2019, the Company entered into a lease agreement for corporate office space with an effective date of September 1, 2019. Upon obtaining the contractual right to use the new office space, the Company recognized a right-of-use asset and corresponding lease liability for the office space lease agreement in accordance with IFRS 16, amounting to $0.6 million. The following table shows the movement in the right-of-use asset related to a corporate office space lease agreement for the years ended December 31, 2020 and 2019.

****	December 31, 2020	December 31, 2019

Balance, beginning of year	589	-
Recognition of office space lease agreement entered into during the year	-	624
Depreciation expense for the year	(104	(35
Balance, end of year	485	589

All values are in US Dollars.

The following table shows the movement in the lease liability related to a corporate office space lease agreement for the years ended December 31, 2020 and 2019:

****	December 31, 2020	December 31, 2019

Balance, beginning of year	597	-
Recognition of office space lease agreement entered into during the year	-	624
Lease payments made during the year	(117	(39
Interest expense	35	12
Total lease liability	515	597
Less: current lease liability	(94	(83
Total non-current lease liability	421	514

All values are in US Dollars.

10. Share capital

(a) Authorized:

Unlimited common shares without par value or restrictions.

The Company was previously authorized to issue unlimited preferred shares without par value or restrictions. At the Company's Annual General and Special Meeting of Shareholders held on April 30, 2020, the Company's Notice of Articles was updated to remove preferred shares from the Company's capital structure.

(b) Issued and outstanding common shares

	Number of shares		Amount
	****
Balance, December 31, 2018	225,804,614		578,853
Issued pursuant to exercise of share-based options (note 11(a))	403,116		490
Shares repurchased and cancelled under normal course issuer<br> bid (note 10(c))	(1,108,920	)	(958
Balance, December 31, 2019	225,098,810		578,385
Issued pursuant to exercise of share-based options (note 11(a))	1,912,775		2,661
Shares repurchased and cancelled under normal course issuer<br> bid (note 10(c))	(2,758,063	)	(2,296
Balance, December 31, 2020	224,253,522		578,750

All values are in US Dollars.

The Company received approval from the TSX to commence a normal course issuer bid ("NCIB") on November 15, 2019 to purchase up to 11,310,386 common shares, representing 5% of the Company's issued and outstanding common shares. Purchases pursuant to the NCIB are made on the open market through the facilities of the TSX and NYSE American.

All common shares purchased by the Company under the NCIB were purchased at the market price at the time of acquisition in accordance with the rules and policies of the TSX and NYSE American and applicable securities laws. All common shares acquired by the Company under the NCIB were cancelled and purchases were funded out of the Company's working capital. The NCIB had a term of one-year and was terminated on November 14, 2020.

During the year ended December 31, 2020, the Company repurchased for cancellation a total of 2,758,063 common shares under the NCIB program for $2.3 million (year ended December 31, 2019 - repurchased and cancelled 1,108,920 common shares for $1.0 million). For the year ended December 31, 2020, the weighted average acquisition price was $0.83 per share (year ended December 31, 2019 - $0.86 per share). Over the term of the NCIB, the Company repurchased and cancelled a total of 3,866,983 common shares for $3.3 million, at a weighted average price of $0.84 per share.

10. Share capital (continued)

(d) At-the-Market Offering ("ATM")

On June 25, 2020, the Company entered into an ATM agreement with H.C. Wainwright & Co. and Cormark Securities (the "Agents"). Under the ATM agreement, the Company may, at its discretion and from time-to-time during the term of the ATM agreement, sell through the Agents common shares of the Company for aggregate gross proceeds to the Company of up to $50.0 million (the "Offering"). The Company expects to use any net proceeds of the Offering for general corporate and working capital requirements, including, but not limited to, funding ongoing exploration and operations at the Asanko Gold Mine, funding the Company's working capital requirements, repaying indebtedness outstanding from time to time, completing future acquisitions and/or for other corporate purposes.

Sales of common shares will be made through "at-the-market distributions" as defined in the Canadian Securities Administrators' National Instrument 44-102 - Shelf Distributions, including sales made directly on the NYSE American, or any other recognized marketplace upon which the Company's common shares are listed or quoted or where the common shares are traded in the United States. No offers or sales of common shares will be made in Canada on the Toronto Stock Exchange or other trading markets in Canada. The Company will pay the Agents a commission of 3.0% of the aggregate gross proceeds from each sale of common shares. The Company will determine, in its sole discretion, the date, price and number of common shares to be sold under the Offering, if any. Any common shares sold in the Offering will be distributed at market prices or prices related to prevailing market prices from time to time. The Company is not required to sell any common shares under the Offering at any time.

The Offering was made by way of a prospectus supplement dated June 25, 2020 (the "Prospectus Supplement") to the Company's existing U.S. registration statement on Form F-10 (the "Registration Statement") and Canadian short form base shelf prospectus (the "Base Shelf Prospectus") each dated June 11, 2020. The Prospectus Supplement relating to the Offering has been filed with the securities commissions in each of the provinces and territories of Canada (other than Québec) and with the U.S. Securities and Exchange Commission (the "SEC"). The Prospectus Supplement and the Registration Statement are available on the SEC's website and the Prospectus Supplement (together with the related Base Shelf Prospectus) is available on the SEDAR website maintained by the Canadian Securities Administrators.

In addition, in connection with Gold Fields existing pre-emptive right to maintain its 9.9% pro rata ownership interest in the Company, the Company has agreed to sell to Gold Fields, from time to time during the term of the Offering at Gold Fields' election, on a private basis, such number of common shares as represent 9.9% of the common shares issued under the Offering, if any.

During the year ended December 31, 2020, the Company did not issue any common shares under the Offering.

11. Equity reserves

At the Company's Annual General and Special Meeting of shareholders on April 30, 2020, the shareholders approved the Company's amended and restated Share Unit Plan dated April 30, 2020 (the "Share Unit Plan"). Under the Share Unit Plan, the Company is able to issue a combination of equity-settled RSUs, performance share units ("PSUs") and deferred share units ("DSUs") up to 5% of the outstanding common shares of the Company, provided that the total number of stock options and equity-settled RSUs, PSUs and DSUs do not exceed 9% of the Company's outstanding common shares. The Company's Board (at its sole discretion) may designate future grants of RSUs, PSUs and DSUs to be settled in either cash, equity or a combination thereof.

Prior to the approval of the amended and restated Share Unit Plan, the Company had an approved Restricted and Performance Share Unit Cash Plan (the "RSU Plan"). Under the RSU Plan, the Company granted share units from time to time to its directors, officers and employees. RSUs are awards for service which upon vesting and settlement entitled the recipient to receive a cash payment equal to the fair market value of a common share at the vesting date. The Board, at its sole discretion, determined any and all vesting conditions of granted RSUs. All RSUs granted in 2020 were under this RSU Plan.

(a) Stock options

The Company maintains a rolling stock option plan providing for the issuance of stock options to its directors, officers, employees and other service providers. Options granted vest 33% every twelve months following the grant date for a total vesting period of three years.

During the year ended December 31, 2020, the Company recognized share-based payments expense relating to stock options of $0.7 million (year ended December 31, 2019 - share-based payments expense relating to stock options of $1.0 million).

Additionally, during the year ended December 31, 2020, 1,912,775 stock options with a weighted average exercise price of C$1.33 were exercised by directors, officers and/or employees of the Company for total aggregate proceeds of $1.9 million (year ended December 31, 2019 - 403,116 stock options exercised with a weighted average exercise price of C$1.09 for total aggregate proceeds of $0.3 million)

The following table is a reconciliation of the movement in share-based options for the year:

	Number of Options		Weighted average exercise price
	****		C$
Balance, December 31, 2018	13,482,427		2.22
Granted	3,803,700		0.99
Exercised	(403,116	)	1.09
Cancelled/Expired	(4,314,649	)	2.07
Balance, December 31, 2019	12,568,362		1.93
Granted	4,676,000		1.39
Exercised	(1,912,775	)	1.33
Cancelled/Expired/Forfeited	(7,000,767	)	1.88
Balance, December 31, 2020	8,330,820		1.81

The fair value of the share-based options granted is determined using the Black Scholes pricing model. For all grants during the year ended December 31, 2020, the weighted average expected life, dividend yield and forfeiture rate were 3.86 years, nil and 10.68%, respectively. For all grants during the year ended 2019, the weighted average expected life, dividend yield and forfeiture rate were 3.79 years, nil and 3.10%, respectively.

11. Equity reserves (continued)

Other conditions and assumptions used in the Black Scholes models were as follows:

	Number of options granted	Weighted average exercise price	Weighted average volatility	Weighted average Black-Scholes value assigned
		C		C$
Year ended December 31, 2019	3,803,700	0.99	66.93%	0.50
Year ended December 31, 2020	4,676,000	1.39	62.92%	0.59

All values are in US Dollars.

The following table summarizes the share-based options outstanding and exercisable as at December 31, 2020:

	Total options outstanding			Total options exercisable
Range of exercise price	Number	Weighted average contractual life (years)	Weighted average exercise price C$	Number	Weighted average contractual life (years)	Weighted average exercise price C$
C$0.00-C$1.00	1,629,336	3.16	0.96	435,000	3.17	0.95
C$1.01-C$2.00	4,878,484	3.41	1.38	969,632	0.91	1.65
C$2.01-C$3.00	323,000	4.33	2.27	30,000	1.36	3.00
C$3.01-C$4.00	1,430,000	1.16	3.96	1,430,000	1.16	3.96
C$4.01-C$5.00	70,000	0.86	4.77	70,000	0.86	4.77
	8,330,820	2.99	1.81	2,934,632	1.37	2.76

(b) Restricted share units

The following table is a reconciliation of the movement in RSUs for the years presented:

	Number of RSUs
****	December 31, 2020		December 31, 2019
Balance, beginning of year	2,243,255		1,455,180
Granted	2,371,700		2,024,553
Settled in cash	(844,361	)	(481,622	)
Cancelled/Forfeited	(1,349,394	)	(754,856	)
Balance, end of year	2,421,200		2,243,255

For all RSUs granted during the year ended December 31, 2020, the awards vest in three equal tranches over a service period of three years and had an estimated forfeiture rate of 4.22% (December 31, 2019 - 2.56%).

The RSUs granted are cash-settled awards and, therefore, represent a financial liability which is required to be marked-to-market at each reporting period-end with changes in fair value recognized in the Statement of Operations and Comprehensive Income (Loss). For the year ended December 31, 2020, the Company recognized share-based compensation expense in relation to RSUs of $1.5 million (year ended December 31, 2019 - $0.8 million).

11. Equity reserves (continued)

As at December 31, 2020, the Company recognized a financial liability for cash-settled RSUs of $1.7 million (December 31, 2019 - $1.0 million). The financial liability associated with the cash-settled awards is recorded in accounts payable and accrued liabilities, for amounts expected to be settled within one year, and a separate non-current liability for amounts to be settled in excess of one year. The following table is a reconciliation of the movement in the RSU liability for the years presented:

	December 31, 2020	December 31, 2019
****
Balance, beginning of year	1,001	541
Awards vested during the year, net of cancelled/forfeited awards	1,460	819
Settled in cash during the year	(803	(359
Total RSU liability, end of year	1,658	1,001
Less: current portion of RSU liability	(1,046	(585
Total non-current RSU liability, end of year	612	416

All values are in US Dollars.

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

Similar to the Company's RSUs, the phantom share units represent a financial liability, as they will be settled in cash, and will be marked-to-market at each reporting period end and presented in the Statement of Financial Position as a long-term incentive plan liability. For the year ended December 31, 2020, the Company recognized share-based compensation expense of $0.1 million (year ended December 31, 2019 - nil) in relation to the phantom share units and a corresponding liability is included in the long-term incentive plan liability as at December 31, 2020 (December 31, 2019 - nil).

12. Commitments and contingencies

Commitments

As at December 31, 2020, the Company had contractual obligations totaling $4.8 million (December 31, 2019 - $3.5 million).

The following table reflects the Company's contractual obligations as they fall due, excluding commitments and liabilities of the JV, as at December 31, 2020 and 2019:

	Less than<br>1 year	1 - 5 years	Over<br>5 years	At December 31,<br>2020	At December 31, 2019
Accounts payable and accrued liabilities	2,478	-	-	2,478	1,649
Long-term incentive plan (cash-settled awards)	1,046	668	-	1,714	1,001
Corporate office leases	126	501	-	627	823
Total	3,650	1,169	-	4,819	3,473

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

12. Commitments and contingencies (continued)

Contingencies

Due to the nature of its business, the Company 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.

13. General and administrative expenses

The following is a summary of general and administrative expenses incurred by the Company during the years ended December 31, 2020 and 2019. The general and administrative expenses for the period presented include, but are not limited to, those expenses incurred in order to earn the service fee as operators of the JV (note 6).

	Year ended December 31,
****	2020	2019

Wages, benefits and consulting	(9,200	(7,723
Office, rent and administration	(907	(800
Professional and legal	(1,001	(452
Share-based payments	(2,168	(1,789
Travel, marketing, investor relations and regulatory	(1,317	(966
Other	(164	(98
Total	(14,757	(11,828

All values are in US Dollars.

14. Finance income

The following is a summary of finance income earned by the Company during the years ended December 31, 2020 and 2019.

	Year ended December 31,
****	2020	2019
	$	$
Fair value adjustment on redeemable preference shares (note 7(a))	7,774	-
Accretion income on redeemable preference shares (note 7(b))	-	516
Interest income and other	551	355
Total finance income	8,325	871

15. Finance expense

The following is a summary of finance expenses incurred by the Company during the years ended December 31, 2020 and 2019.

	Year ended December 31,
****	2020	2019

Fair value adjustment on redeemable preference shares (note 7(a))	-	(35,626
Interest on lease liability (note 9)	(35	(12
Other	(10	(12
Total finance expense	(45	(35,650

All values are in US Dollars.

16. Income tax

a) Tax expense

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

	Year ended December 31,
	2020	2019

Average statutory tax rate	27%	27%
Income (loss) before income taxes	57,376	(167,928
Expected income tax expense (recovery)	15,492	(45,341
Increase in income tax expense (recovery) resulting from:
Permanent differences:
Share of net (income) loss related to joint venture	(15,974	34,091
Fair value adjustment and accretion on redeemable preferences shares	(2,099	9,480
Share-based payments	176	483
Withholding taxes	-	292
Other	145	(46
True-up prior year balances	261	-
Effect of differences in tax rate in foreign jurisdictions	8	8
Change in unrecognized tax assets	1,984	1,033
Foreign exchange and other	7	-
Income tax expense	-	-

All values are in US Dollars.

16. Income tax (continued)

b) Deferred tax liabilities and assets

The significant components of the Company's deferred tax assets and liabilities were as follows:

	Year ended December 31,
	2020	2019

Lease liability	139	159
Right-of-use asset	(139	(159
Total	-	-

All values are in US Dollars.

As at December 31, 2020, the Company has tax losses of $64.0 million (December 31, 2019 - $55.6 million) in Canada which expire between 2029 and 2040.

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

	Year ended December 31,
	2020	2019
	$	$
Property, plant and equipment	48	66
Share issuance costs	18	26
Investment in associate	275	275
Accounts payable and accrued liabilities	467	4
Lease liability	8	2
Capital losses	2,476	2,476
Non-capital losses carried forward	17,299	15,035
Foreign tax credits	-	724
Total	20,591	18,608

The aggregate amount of deductible temporary differences associated with investments in subsidiaries for which deferred taxes have not been recognized as at December 31, 2020 was $242.1 million (December 31, 2019 - deductible temporary differences of $175.1 million).

17. Income (loss) per share

For the years ended December 31, 2020 and 2019, the calculation of basic and diluted earnings per share is based on the following data:


	2019
Earnings ()
Net income (loss) for the year	(167,928	)
Number of shares
Weighted average number of ordinary shares - basic	225,867,169
Effect of dilutive share options	-
Weighted average number of ordinary shares - diluted	225,867,169

All values are in US Dollars.

For the year ended December 31, 2020, excluded from the calculation of diluted weighted average shares outstanding were 5,978,748 share-based options that were determined to be anti-dilutive.

For the year ended December 31, 2019, the effect of all potentially dilutive securities was anti-dilutive, given that the Company reported a net loss for the year.

18. Supplemental cash flow information

The following table summarizes the changes in non-cash working capital for the years ended December 31, 2020 and 2019:

	Year ended December 31,
	2020	2019

Receivables and receivable due from related party	1,600	(1,864
Prepaid expenses and deposits	(144	(176
Accounts payable and accrued liabilities	69	(1,720
Change in non-cash working capital	1,525	(3,760

All values are in US Dollars.

19. Segmented information

Geographic Information

As at December 31, 2020, the Company has only one reportable operating segment being the corporate function with its head office in Canada. Total assets in Ghana include the Company's 45% interest in the Asanko Gold Mine JV.

Geographic allocation of total assets and liabilities

December 31, 2020	Canada	Ghana	Total
****	$	$	$
Current assets	65,541	-	65,541
Property, plant and equipment and right-of-use assets	591	-	591
Other non-current assets	-	137,458	137,458
Total assets	66,132	137,458	203,590
Current liabilities	3,618	-	3,618
Non-current liabilities	1,089	-	1,089
Total liabilities	4,707	-	4,707
December 31, 2019	Canada	Ghana	Total
---	---	---	---
	$	$	$
Current assets	35,800	-	35,800
Property, plant and equipment and right-of-use assets	679	-	679
Other non-current assets	-	108,025	108,025
Total assets	36,479	108,025	144,504
Current liabilities	2,317	-	2,317
Non-current liabilities	930	-	930
Total liabilities	3,247	-	3,247

19. Segmented information (continued)

Geographic allocation of the Statement of Operations and Comprehensive Income (loss)

For the year ended December 31, 2020:

	Canada	Ghana	Total
		$
Share of net earnings related to joint venture	-	59,159	59,159
Service fee earned as operators of joint venture	4,917	-	4,917
General and administrative expenses	(14,757	-	(14,757
(Loss) income from operations and joint venture	(9,840	59,159	49,319
Finance income	551	7,774	8,325
Finance expense	(45	-	(45
Foreign exchange loss	(223	-	(223
Net (loss) income and comprehensive (loss) income for the year	(9,557	66,933	57,376

All values are in US Dollars.

For the year ended December 31, 2019:

	Canada	Ghana	Total

Share of net loss related to joint venture	-	(126,264	(126,264
Service fee earned as operators of joint venture	4,963	-	4,963
General and administrative expenses	(11,828	-	(11,828
Loss from operations and joint venture	(6,865	(126,264	(133,129
Finance income	355	516	871
Finance expense	(24	(35,626	(35,650
Foreign exchange loss	(20	-	(20
Net loss and comprehensive loss for the year	(6,554	(161,374	(167,928

All values are in US Dollars.

20. Capital management

The Company's objectives in managing capital are to ensure that the Company has the financial capacity to support its operations with sufficient capability to manage unforeseen operational or industry developments, ensure the Company has the capital and capacity to support the long-term growth strategies of the JV, and to provide returns for shareholders and benefits for other stakeholders. The Company defines capital that it manages as total shareholders' equity, being a total of $198.9 million as at December 31, 2020 (December 31, 2019 - $141.3 million).

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

20. Capital management (continued)

The Company manages its capital structure and makes adjustments to it in light of general economic conditions, the risk characteristics of the underlying assets and the Company's working capital requirements associated with ongoing operations and corporate development plans. In order to maintain or adjust its capital structure, the Company entered into an ATM agreement (note 10(d)) under which the Company may, at its discretion and from time-to-time during the term of the ATM agreement, sell through the Agents common shares of the Company for aggregate gross proceeds to the Company of up to $50.0 million. As of December 31, 2020, no common shares have been issued under the Offering. The Company does not currently pay out dividends, however an NCIB program was initiated in November 2019 (see note 10(c)) and was terminated in November 2020. 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.

21. Financial instruments

As at December 31, 2020, the Company's financial instruments consist of cash and cash equivalents, receivable due from related party, preferred shares in the JV, accounts payable and accrued liabilities and long-term incentive plan liabilities. The Company classifies cash and cash equivalents and the related party receivable as financial assets measured at amortized cost, while accounts payable and accrued liabilities are classified as other financial liabilities and measured at amortized cost. The long-term incentive plan liabilities are a financial liability measured at fair value through profit or loss and falls within Level 3 of the fair value hierarchy as discussed below.

Refer to note 7 for the classification and measurement of the preferred share financial assets.

The fair value hierarchy comprises:

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

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

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

The Company's policy for determining when a transfer occurs between levels in the fair value hierarchy is to assess the impact at the date of the event or the change in circumstances that could result in a transfer. There were no transfers between the levels during the years ended December 31, 2020 or 2019.

The fair values of all financial assets and liabilities measured at amortized cost approximate their carrying values given their short-term to maturity.

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

(a) Credit risk

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

21. Financial instruments (continued)

As at December 31, 2020, the Company had a receivable due from the JV of $2.7 million (December 31, 2019 - $4.2 million) and interest receivable of $0.2 million (December 31, 2019 - $0.1 million). Credit risk associated with the related party receivable is considered to be low based on the liquidity of available funds of the JV. Additionally, credit risk associated with the interest receivable is also low given the amount is due from a highly rated banking institution in Canada. The Company expects to receive GST refunds on a regular basis from the Canada Revenue Agency and makes monthly GST filings (as required by law). The Company does not consider there to be a significant credit risk related to the GST receivable balance as at December 31, 2020.

In addition, the Company is exposed to credit risk on its preferred share investments in the JV (note 7). With respect to the 137.4 million preference shares, credit risk is mitigated by monitoring the financial condition of the JV on a regular basis. The Company's maximum exposure to credit risk in relation to the preferred shares at the reporting date is the carrying value of the financial asset totaling $78.3 million.

(b) Liquidity risk

Liquidity risk encompasses the risk that the Company cannot meet its financial obligations as they fall due. The Company manages liquidity risk through a rigorous planning and budgeting process, which is reviewed and updated on a regular basis, to help determine the funding requirements to support current operations, expansion and development plans, and by managing the Company's capital structure (note 20). By managing liquidity risk, the Company aims to ensure that it will have sufficient liquidity to settle obligations and liabilities as they fall due. Subsequent to the JV Transaction, the Company has no current direct sources of revenue and any free cash flows generated by AGM are no longer within the Company's exclusive control as the disposition of cash from the JV is governed by the JVA (note 8). However, through a combination of the Company's cash balance, cash flows from its investment in the JV, and the ongoing management fee receipts from the JV (note 6), the Company believes it is in a position to meet all working capital requirements, contractual obligations and commitments as they fall due. The Company's cash flows, however, and its ability to meet working capital requirements and contractual obligations are significantly influenced by the price of gold and the performance of the AGM. The Company aims to manage its liquidity by ensuring that, even in a low gold price environment, it can manage spending and provide adequate cash flow to meet all commitments.

As at December 31, 2020, the Company had a cash and cash equivalents balance of $62.2 million (December 31, 2019 - $31.1 million) allowing it to settle current liabilities of $3.6 million (December 31, 2019 - $2.3 million) as they become due.

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As disclosed in note 7, the Company holds preferred shares in the JV which are carried at fair value through profit or loss with fair value determined by reference to a discounted cash flow model. Changes in interest rates would impact the discount rate applied to forecast future cash flows and accordingly the fair value of the preferred shares; however, changes in interest rates would not impact the amount or timing of forecast future cash flows.

With other variables, unchanged, a 1% decrease (increase) in the annualized interest rate would have resulted in a $3.6 million increase and $3.4 million decrease, respectively, to the Company's after-tax net income for the year ended December 31, 2020 (year ended December 31, 2019 - $3.9 million increase and $3.6 million decrease, respectively).

21. Financial instruments (continued)

The Company's cash and cash equivalents earn interest income at variable rates and accordingly future interest income is subject to fluctuations in short-term interest rates. A +/-1% change in short-term interest rates would have resulted in a $0.6 million increase or decrease on the Company's interest income for the year ended December 31, 2020 (year ended December 31, 2019 - immaterial change to interest income earned).

(ii) Foreign currency risk

As at December 31, 2020 and 2019, the Company's exposure to foreign currency risk was limited to the following balances:

December 31, 2020	Foreign currency amount		****	Equivalent
****	C (000s)	ZAR (000s)	****
Cash and cash equivalents	280	6,954		696
Receivables	37	43		32
Accounts payable and accrued liabilities	(1,769	(436	)	(1,417
Long-term incentive plan liabilities	(2,187	-		(1,715
Lease liability	(657	-		(515
Net exposure to foreign currency	(4,296	6,561	****	(2,919

All values are in US Dollars.

December 31, 2019	Foreign currency amount		****	Equivalent
****	C (000s)	ZAR (000s)	****
Cash and cash equivalents	195	2,588		330
Receivables	31	34		26
Accounts payable and accrued liabilities	(1,511	(826	)	(1,209
Long-term incentive plan liabilities	(1,315	-		(1,001
Lease liability	(784	-		(597
Net exposure to foreign currency	(3,384	1,796	****	(2,451

All values are in US Dollars.

A +/-10% change in the prevailing exchange rates as at December 31, 2020, with all other variables held constant, would have resulted in a $0.3 million decrease (increase) to the Company's after-tax net income for the year ended December 31, 2020 (year ended December 31, 2019 - $0.2 million decrease (increase) to after-tax net loss).

(iii) Price risk

Price risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from currency risk or interest rate risk. Future cash flows from the JV are expected to be received as redemptions of the Company’s preference shares in the JV (note 7). During the year, the JV entered into hedging programs to manage the AGM’s exposure to gold price risk with an objective of margin protection. The fair value of the preference shares would not be materially impacted by a 10% increase (decrease) in the gold price as there would be no change to the estimated timing of distributions made to the JV partners.

22. Related party transactions

In addition to the service fee earned as operator of the JV (note 6), the Company's related party transactions included compensation paid to key management personnel (being directors and executive officers of the Company), which was as follows for the years presented:

	Year ended December 31,
	2020	2019
	$	$
Salaries and benefits	3,291	3,251
Share-based payments	1,096	1,041
Total compensation	4,387	4,292

Key management personnel consist of directors and officers of the Company.

23. Subsequent event

On March 10, 2021, the Board of Directors approved for granting to directors, officers and employees of the Company a total of 4.5 million stock options, 0.9 million PSUs, 0.8 million DSUs and 0.2 million RSUs.

Galiano Gold Inc.: Exhibit 99.2 - Filed by newsfilecorp.com

GALIANO GOLD INC.

(formerly Asanko Gold Inc.^1^)

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the years ended December 31, 2020 and 2019

(Expressed in United States dollars)

TABLE OF CONTENTS

1. Fourth quarter and full year 2020 highlights	3
2. Business overview	4-6
3. Results of the AGM	6-17
4. Financial results of the Company	18-20
5. Selected quarterly financial data	20
6. Guidance and outlook	21
7. Liquidity and capital resources	22-25
8. Non-GAAP measures	25-30
9. Summary of outstanding share data	30
10. Related party transactions	30-31
11. Critical accounting policies and estimates	31
12. Risks and uncertainties	32
13. Internal control	33
14. Qualified person	34
15. Cautionary statements	34-38

^1^ The Company's name was changed from "Asanko Gold Inc." to "Galiano Gold Inc." effective April 30, 2020.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

This Management's Discussion and Analysis ("MD&A") of Galiano Gold Inc. ("Galiano" or the "Company") has been prepared by management as of March 10, 2021 and should be read in conjunction with the Company's consolidated annual financial statements for the years ended December 31, 2020 and 2019 and the notes related thereto.

Galiano was incorporated on September 23, 1999 under the Business Corporations Act of British Columbia, Canada. The Company changed its name from Asanko Gold Inc. to Galiano Gold Inc., following approval of the name change by the Company's shareholders at its Annual General and Special Meeting on April 30, 2020.

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

Unless otherwise specified, all financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. All dollar amounts herein are expressed in United States dollars ("US dollars") unless stated otherwise. References to $ means US dollars and C$ are to Canadian dollars.

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

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

1. Fourth quarter and full year 2020 Highlights

Highlights of the Asanko Gold Mine (on a 100% basis)

Exceeded annual production guidance: Annual gold production of 249,904 ounces, exceeding the upper end of 2020 production guidance of 225,000 - 245,000 ounces, with 65,571 ounces produced in the fourth quarter.
Record milling performance: The processing plant delivered a record annual milling performance with throughput of 5.9Mt, at an average plant feed grade of 1.4 g/t. The processing facility continued to deliver metallurgical recovery well above design achieving 94% recovery.
Strong financial performance: Reported record net income of $131.5 million and Adjusted EBITDA^2^ of $169.0 million in 2020 compared to adjusted net income^2^ of $9.1 million and Adjusted EBITDA^2^ of $99.4 million in 2019.
Significant cash generation: Generated $152.3 million of cash flows from operating activities (after taking into account unfavourable working capital changes of $30.7 million) and free cash flow^2^ of $66.9 million during 2020.
Return of capital: Returned $75.0m to joint venture participants through cash distributions in 2020.
Consistent cost performance: For the year ended December 31, 2020, total cash costs per ounce^2^ of $889 and all-in sustaining costs^2^ ("AISC") of $1,115/oz, below revised guidance (as of Q3 2020) of $1,150/oz.
Exploration success: Completed a drilling program at the Nkran pit designed to confirm and improve confidence in the Mineral Reserve estimate for the third phase of mining and tested the extent of mineralization below the proposed Cut 3 pit shell with positive results, while initial drilling programs at Akwasiso and Abore demonstrated positive results showing extension of mineralization in both pits.
Safety culture maintained: There were two lost-time injuries ("LTI") and 10 total recordable injuries ("TRI") reported during the year. LTI frequency rate ("LTIFR") and TRI frequency rate ("TRIFR") per million employee hours worked were 0.20 and 1.01, respectively, for the year.
Local recognition: The AGM received the "Best Company in Exploration" award from the Ghana Chamber of Mines for a third year in a row.

Highlights of the Company

Improved liquidity: Received distributions from the Asanko Gold Mine joint venture of $37.5 million during the year.
Stable balance sheet: Cash on hand of $62.2 million and $2.9 million in receivables as at December 31, 2020, while remaining debt free.
Record earnings: Generated net income after tax for the year of $57.4 million or $0.26 per share.
New management: During the year, appointed a new Chair of the Board of Directors (the "Board") and augmented the Vancouver-based management team with the appointment of a Chief Operating Officer and various other senior management positions.

^2^ See "8. Non-GAAP measures"

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

2. Business overview

Galiano holds a 45% economic interest in the Asanko Gold Mine (the "AGM") and gold exploration tenements (collectively the "joint venture" or "JV") on both the Asankrangwa and Sefwi Gold Belts in the Republic of Ghana ("Ghana"), West Africa. Galiano is the operator of the joint venture and receives an annual service fee from the JV. Gold Fields Limited ("Gold Fields") owns a 45% economic interest in the AGM JV, with the Government of Ghana owning a 10% free-carried interest.

In addition to its interest in the AGM, the Company's interest in the JV also includes a 50% interest in a portfolio of other Ghanaian gold concessions in various stages of exploration.

The AGM is a multi-deposit complex, with two main deposits, Nkran and Esaase, multiple satellite deposits and a carbon-in-leach ("CIL") processing plant, with a current nameplate capacity of 5.4 million tonnes per annum ("Mtpa").

Galiano's vision is to build a sustainable business capable of long-term value creation for its stakeholders through a combination of exploration, accretive M&A activities and the disciplined deployment of its financial resources. The Company's shares are listed on the Toronto Stock Exchange ("TSX") and the NYSE American Exchange ("NYSE American") under the symbol "GAU".

Key business developments in 2020

Name change

The Company changed its name from Asanko Gold Inc. to Galiano Gold Inc., following approval of the name change by the Company's shareholders at its Annual General and Special Meeting on April 30, 2020.

Changes to the Board of Directors and Management

During the year, Paul Wright was appointed Chair of the Board and Judith Mosely was appointed to the Board. In addition, the Company completed a corporate restructuring closing its Johannesburg office and centralizing all its corporate and support activities in its Vancouver office. Newly appointed technical and financial personnel include:

Matt Badylak, Executive Vice President and Chief Operating Officer. Mr. Badylak is a seasoned mining professional with 20 years of operations experience including a number of senior management roles with Eldorado Gold. In his most recent role as General Manager Kisladag Mine, Mr. Badylak was responsible for multiple cost saving initiatives and optimization of the heap leaching operations, allowing the company to avoid construction of a capital-intensive milling facility and extend the operation of the heap leach.
Matt Freeman, Senior Vice President Finance. Mr. Freeman will be involved with all aspects of the Company's financial reporting and forecasting. He has over 20 years of experience, most recently with Energold Drilling and SSR mining.
Eric Chen, Vice President Resources. In this role, he will be responsible for mineral resource modelling and geostatistical studies. Mr. Chen has over 30 years of experience most recently with Newmont Goldcorp.
Alberto Chang, Vice President Mining. Alberto will lead the Company's mine planning, production optimization and mine process improvement. Mr. Chang is a mining engineer with over 35 years of hands-on experience in the mining industry through management, design and development in both open pit and underground mining. He has been working as a Mining Consultant for the past several years and before that, he worked in various management and technical positions within Goldcorp Inc., NovaGold Resources Inc., Newmont-Buenaventura JV and Placer Dome Inc., in Canada, Mexico, USA, Peru and Chile.
Greg Collins, Vice President Exploration. In this role, he will lead the Company's exploration efforts on the large land package associated with the AGM. Mr. Collins has over 25 years of experience with companies such as North Limited, Anglogold Ashanti and Eldorado Gold.
Peter Lekich, Vice President Investor Relations. Mr. Lekich will lead the Company's investor outreach and external communications. He has over 10 years of experience, most recently with Eldorado Gold.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Updated Technical Report

In conjunction with the Company's filing of a base shelf prospectus in Q2 2020, the Company filed an updated Life of Mine ("LOM") plan entitled National Instrument 43-101 Technical Report for the Asanko Gold Mine, Ghana (Amended and Restated) dated June 9, 2020 with information as of February 15, 2020 (the "2020 LOM Plan"). The report can be found on SEDAR, www.sedar.com, and on the Company's website at www.galianogold.com.

Normal Course Issuer Bid ("NCIB") and At-the-Market ("ATM") Offering

During the year, the Company repurchased 2.8 million shares for $2.3 million (average acquisition price of $0.83 per share) under the NCIB program that was initiated in 2019. Additionally, the Company entered into an ATM agreement, under which, the Company may, at its discretion and from time-to-time during the term of the ATM agreement, sell through the Agents common shares of the Company for aggregate gross proceeds to the Company of up to $50.0 million (the "Offering"). As of December 31, 2020, the Company had not issued any common shares under the Offering. Refer to section "7. Liquidity and capital resources".

COVID-19 Update

The JV continues to operate in all material respects with strict hygiene, deep cleaning, restriction of personnel movement, ongoing monitoring and physical distancing protocols in place in accordance with the Ghanaian Ministry of Health Guidelines. The AGM has established additional protocols and procedures to manage any confirmed cases of COVID-19, including contact tracing, rapid testing and isolation of affected persons. The AGM has procured a polymerase chain reaction ("PCR") testing machine capable of processing up to 40 samples per day which is in the process of being certified by the Ghana health authorities. Additionally, on-site accommodations have been modified to isolate infected and suspected-to-be-infected individuals, limiting on-site cross contamination and expediting return to work timelines. As a result, though there have been several confirmed cases of COVID-19 among the operational personnel at the AGM (mostly asymptomatic), to date the AGM's operations have been able to continue uninterrupted in all material respects with the majority of confirmed cases cleared and those employees resuming normal duties after completing a two-week regulatory isolation. The Company's offices in Vancouver and Accra are observing local regulations and open with restrictions and protocols in place. The Company's Johannesburg office is in the process of being wound up.

The AGM has stockpiled key reagents, consumables, critical spares and diesel supply. The AGM's primary refiner, based in South Africa, continues to receive shipments and refine gold doré from the AGM.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Financial and operating highlights

	Three months ended December 31,			Year ended December 31,
	2020	2019		2020	2019
Galiano Gold Inc.
Net income (loss) after tax	17,671	(21,205	)	57,376	(167,928	)
Adjusted EBITDA^2^	20,389	12,584		68,313	35,958
Asanko Gold Mine (100% basis)
Financial results
Revenue	111,104	97,075		418,130	340,969
Income from mine operations	46,267	9,062		147,942	29,158
Net income (loss) after tax	41,547	(285,138	)	131,519	(280,523	)
Adjusted EBITDA^2^	48,733	31,755		168,989	99,401
Free cash flow^2^	21,490	28,897		66,870	43,998
AISC margin^2^	39,365	32,783		145,309	65,700
Key mine performance data
Gold produced (ounces)	65,571	66,112		249,904	251,044
Gold sold (ounces)	60,655	66,095		243,807	248,862
Average realized gold price ($/oz)	1,828	1,465		1,711	1,376
Operating cash costs ($ per gold ounce)^2^	801	790		803	776
Total cash costs ($ per gold ounce)^2^	892	863		889	845
All-in sustaining costs ($ per gold ounce)^2^	1,179	969		1,115	1,112

3. Results of the AGM

All results of the AGM in this section are on a 100% basis, unless otherwise noted. The Company's attributable economic interest in the AGM is 45%.

3.1 Operating performance

The following table and subsequent discussion provide a summary of the operating performance of the AGM (on a 100% basis) for the three months and years ended December 31, 2020 and 2019, unless otherwise noted.

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
Key mine performance data of the AGM (100% basis)
Ore tonnes mined (000 t)	1,964	1,405	6,193	5,071
Waste tonnes mined (000 t)	11,773	4,956	38,272	25,719
Total tonnes mined (000 t)	13,737	6,361	44,465	30,790
Strip ratio (W:O)	6.0	3.5	6.2	5.1
Average gold grade mined (g/t)	1.4	1.6	1.5	1.5
Mining cost ($/t mined)^3^	3.20	4.86	3.40	4.52
Ore transportation from Esaase (000 t)	622	357	2,133	1,464
Ore transportation cost ($/t trucked)	7.15	8.62	7.65	8.83
Ore tonnes milled (000 t)	1,438	1,460	5,943	5,498
Average mill head grade (g/t)	1.5	1.5	1.4	1.5
Average recovery rate (%)	95%	94%	94%	94%
Processing cost ($/t treated)	10.46	10.83	10.51	10.91

^3^For the year ended December 31, 2019, mining cost per tonne excludes a provision for a one-time contract termination fee.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

a) Health and Safety

There was one LTI and three TRIs reported during the quarter. The AGM's LTIFR and TRIFR for the three months ended December 31, 2020 were 0.37 and 1.10 per million employee hours worked, respectively.

b) Mining

During Q4 2020, the AGM sourced ore from the Akwasiso and Esaase Main pits, collectively delivering 2.0Mt of ore at an average gold grade of 1.4g/t and a strip ratio of 6.0:1.

Mining activities at Esaase expanded to include night shift operations in April 2020. Esaase material is being trucked to the processing plant at Obotan using 30-tonne road trucks. Esaase ore currently makes up approximately 50% of the mill feed.

In 2021, the mine will source ore primarily from Esaase and Akwasiso, while mill feed will be augmented, where necessary, with run-of-mine stockpile material.

Mining cost per tonne for Q4 2020 was $3.20 compared to $4.86 during Q4 2019, a decrease of 34%. The lower mining cost per tonne in Q4 2020 was predominantly due to volume differences as higher total tonnes were mined during Q4 2020 which had the effect of decreasing certain fixed mining costs on a per unit basis and a reduction in fuel and other supply surcharges from mining contractors. As well, a higher proportion of mined tonnes were sourced from Esaase (as opposed to Nkran in Q4 2019), which attracts a lower relative unit cost for load and haul and drill and blast costs. These factors were offset by an increase in grade control drilling costs in Q4 2020.

At Esaase, intensive grade control drilling was complemented by rigorous pit mapping, drill hole relogging and reprocessing of previous geophysical data in an effort to derive a more nuanced appreciation of the geological controls on mineralization and to better define the higher-grade variability observed in the areas mined during the two years of operations at the Esaase pits. In Q4 2020, the AGM continued to advance a study to refine the structural, geological and mineralization models for Esaase augmented with a targeted infill drilling program. In addition, investigations are underway to examine the modeling methodologies and most appropriate data density required to further understand the grade distribution within the Esaase deposit. This work will continue through H1 2021 with the goal to improve reconciliation between the Mineral Resource Estimate and the grade control model culminating in an updated Mineral Resource and Reserve Estimate with an anticipated effective date of June 30, 2021 which the Company expects to release in Q3 2021 (refer to section "6. Guidance and outlook").

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

c) Processing

The AGM produced 65,571 ounces of gold during Q4 2020, as the processing plant achieved milling throughput of 1.4Mt of ore processed at a grade of 1.5g/t and metallurgical recovery averaging 95%. The gold feed grade processed through the mill was marginally higher than that mined during the quarter as the AGM employs a differential stockpiling and feed arrangement process, in line with the AGM LOM plan.

Processing cost per tonne for Q4 2020 was $10.46 compared to $10.83 during Q4 2019, a decrease of 3%. The decrease in processing cost per tonne from Q4 2019 to Q4 2020 was primarily due to temporary reductions in electricity rates provided by the Government of Ghana in response to the COVID-19 pandemic, which reduced the AGM's per unit power costs for the quarter. Additionally, grinding media and cyanide consumption was lower in Q4 2020 compared to Q4 2019 due to processing a higher blend of oxide ore from Esaase. Partly offsetting these factors were higher maintenance costs and consumables consumption (including replacement of conveyor belt liners).

d) Total cash costs and AISC

For the three months and the year ended December 31, 2020, total cash costs per ounce^2^ was $892/oz and $889/oz, respectively, compared to total cash costs per ounce during the three months and year ended December 31, 2019 of $863/oz and $845/oz, respectively. Total cash costs were 3% higher in Q4 2020 relative to Q4 2019 primarily due to the impact of lower gold sales volumes which had the effect of increasing fixed production costs on a per unit basis and an increase in ore transportation costs associated with trucking ore from Esaase to the process plant as a higher proportion of ore was sourced from Esaase ($26/oz increase for the quarter). Total cash costs per ounce^2^ was also impacted by a higher royalty expense arising from improvement in the gold price during Q4 2020 compared to Q4 2019. Partly offsetting these factors was a positive NRV adjustment to stockpile inventory in Q4 2020, the cash cost component of which represented a decrease in production costs of $7.1 million, compared to a positive NRV adjustment in Q4 2019 where $0.6 million was recorded as a reduction to production costs.

Relative to Q3 2020, total cash costs per ounce^2^ were lower in Q4 2020, decreasing by 28% from $1,244/oz to $892/oz. The decrease in total cash costs per ounce^2^ from Q3 2020 was primarily due to a positive NRV adjustment to stockpile inventory in Q4 2020, of which $7.1 million was credited to production costs, whereas in Q3 2020 a negative NRV adjustment of $5.9 million was recorded in production costs (net $214/oz decrease). Higher gold sales volumes also had the effect of decreasing fixed production costs on a per ounce basis.

For the three months and year ended December 31, 2020, AlSC^2^ for the AGM amounted to $1,179/oz and $1,115/oz, respectively, compared to AISC^2^ of $969/oz and $1,112/oz for the three months and year ended December 31, 2019, respectively. The increase in AlSC^2^ from Q4 2019 to Q4 2020 was predominantly due to a $29/oz increase in total cash costs as discussed above and a $98/oz increase in capitalized stripping costs. Capitalized stripping costs were higher in Q4 2020 due to waste stripping activities on Cut 2 at the Esaase Main pit, while in Q4 2019 stripping costs were relatively lower due to the completion of the Cut 2 pushback at Nkran. AISC^2^ was also higher in Q4 2020 due to $21/oz increase in sustaining capital expenditures (relating to raising the height of the tailings storage facility ("TSF"), and the impact of lower gold sales volumes in Q4 2020 had the effect of increasing fixed costs on a per ounce basis. Payments made on the AGM's service and mining contractor lease agreements were also $64/oz higher in Q4 2020 due to timing of payments.

Relative to Q3 2020, AlSC^2^ for Q4 2020 decreased from $1,488/oz to $1,179/oz, a decrease of 21%. Total cash costs per ounce^2^ were $352/oz lower in Q4 2020, while the AGM's G&A expense decreased by $19/oz and sustaining capital decreased by $26/oz as the raising of the TSF neared completion in Q4 2020. AISC^2^ was also positively impacted by higher gold sales volumes in Q4 2020 which had the effect of decreasing fixed costs on a per ounce basis. Partly offsetting these factors was an $87/oz increase in capitalized stripping costs in Q4 2020 due to the advancement of waste mining activities on Cut 2 at Esaase Main pit.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

For the three months and year ended December 31, 2020, the AGM incurred non-sustaining capital and exploration expenditures of $14.0 million and $48.4 million, respectively, compared to $15.9 million and $25.5 million during the comparative periods in 2019, respectively. Non-sustaining expenditures during Q4 2020 were comprised primarily of $3.2 million of exploration expenditures associated with the AGM's drilling program (refer to section 3.2 "Development and exploration update") and mineral rights fee accruals, as well as $10.7 million of development capital, which included costs associated with the resettlement of the Tetrem village near Esaase.

e) Environmental, Social and Corporate Governance

The Company published its 2019 annual sustainability report on July 17, 2020. This report summarized the JV’s performance highlights in the areas of health and safety, environmental stewardship, climate change adaptation, governance, human rights, contributing to community, our people, and stakeholder engagement. The report outlines the JV’s sustainability goals at the AGM for 2020, some of which were impacted by COVID-19. The report is available on the Company’s website at www.galianogold.com and has also been distributed electronically to local and national stakeholders in Ghana.

The JV supports a number of socio-economic development programs in its stakeholder communities. Some the initiatives undertaken in FY 2020 included:

Completion of training and the development of an operational manual for the Board of Trustees overseeing a local foundation which will complement existing community investment programs.
Completion of a new hospital at Esaase with donations of medicine and supplies.
A proactive approach to support stakeholder communities as the COVID-19 pandemic evolved. This included working closely with the regional health care providers and donating hygiene and personal protective equipment.

The Company has various feedback mechanisms in place at the AGM and the stakeholder communities which enable the JV's workforce, local residents, other groups and individuals to come forward to raise issues of concern. These concerns are then fully investigated by the JV and subsequently addressed.

The AGM became a signatory to the International Cyanide Management Code for the Manufacture, Transport and Use of Cyanide in the Production of Gold during Q2 2020 and expects to complete the external certification process in Q1 2021. The JV has commenced its community plastic recycling program and waste segregation on-site has commenced. A greenhouse gas baseline audit was completed during the year, allowing the JV to continuously strive to improve energy efficiency at the AGM.

3.2 Development and exploration update

The following discussion relates to the AGM's current and planned development activities (on a 100% basis), as well as the exploration work performed during the period on tenements held within the JV's land package.

a) Tetrem Village Relocation

During the quarter, work associated with the resettlement of the Tetrem village continued and the relocation project is expected to be handed over to the community and completed in Q2 2021.

b) Production Geology

Grade control drilling for the Akwasiso pit in Q4 2020 recorded a total of 17,939m from 991 holes using reverse circulation ("RC") rigs yielding 14,835 samples for analysis.

For the Esaase operation, grade control drilling focused on the Main Pit and included 130,374m from 5,210 holes yielding 108,498 samples for analysis. The grade control drilling was complemented by rigorous in-pit mapping.

In support of geological modeling and Resource Estimation, a rigorous mapping program has been undertaken at each of Esaase, Akwasiso and Nkran pits as well as at Miradani North.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

c) Exploration

The JV holds a district-scale land package of 21,300 hectares on the Asankragwa Gold Belt. During Q2 2020, Galiano announced the exploration strategy for the JV that was developed in collaboration with the JV partner with the three main focus objectives being:

i) Near term - to replace depletion from mining activity in 2020 and 2021.

ii) Medium term - to improve the business plan for 2023 to 2026 by delineating Mineral Reserves by the end of 2022 that have superior overall economics to Cut 3 at Nkran.

iii) To advance exploration targets with +1 million ounce potential to be in production to replace Esaase.

The following exploration programs were undertaken during the fiscal year to evaluate the current and potential expanded mineralization of each project to improve the mineral resource estimate and to assess the broader potential of each project.

Abore - located 13km north of the processing plant along the Esaase haul road. Drill holes were designed to upgrade existing resources and extensions to the ore body to the north and south. The JV drilled 5,663 meters of RC drilling and diamond drilling ("DD") over 32 holes during Q2 2020 (refer to the Company's news release dated July 6, 2020 for additional details on the drilling results) and reported the following drilling highlights:
- Hole 029: 28 meters @ 4.9 g/t gold (from 75m to 103m)
- Hole 024: 6 meters @ 24.3 g/t gold (from 70m to 76m)
- Hole 018: 3 meters @ 11.3 g/t gold (from 48m to 51m)
- Hole 005: 9 meters @ 3.6 g/t gold (from 106m to 115m)
- Hole 013: 16 meters @ 1.9 g/t gold (from 84m to 100m)

This drill program appears to have successfully provided infill drilling in the main pit area, targeting an upgrade from Inferred to Indicated categories of Mineral Resources and improved confidence in existing Indicated Mineral Resources. In addition, hole 024 delineated an extension of the mineralization to the north end of the main pit with 6 meters at 24.3 g/t gold intercepted and hole 029 also defined an extension of the mineralization in the north pit with 28 meters at 4.9 g/t gold intercepted. Mineralization is open along strike to the north-east of the north pit and a follow up drill program is currently underway to test for mineralization to the north-east.

Nkran Cut 3 - The Nkran pit is located immediately adjacent to the 5.4Mtpa processing plant and has been the main source of ore at the AGM since commercial production commenced in 2016. Cut 2 of the open pit operations was depleted at the end of Q2 2020 and in-pit drilling commenced in early July. The JV completed a 33-hole in-pit drilling program during Q3 2020. The program was designed to both confirm and improve confidence in the Mineral Reserve Estimate for the third phase of mining at Nkran as well as test the extent of mineralization below the proposed Cut 3 pit shell. In total, 4,649m of RC and DD were completed with key intercepts noted below.

A second drill program consisting of 26 RC drill holes was initiated and completed in Q3 2020. Drilling was designed to test for mineralization in push-back zones, if any, for the proposed Cut 3 waste material, with a potential to improve cash flows during a period of heavy capital investment in the stripping of Cut 3. Minor multi-gram, multi-meter intercepts were encountered in the holes drilled to date. A follow-up drill program is currently being evaluated.

In addition, a geotechnical drilling and engineering campaign has been initiated targeting the proposed new west wall location for Cut 3. Upon completion of the current drilling and geotechnical work, it is expected that the design of Cut 3 will be finalized and a definitive mine plan and capital cost estimate completed in 2021. For additional details on drilling results, refer to the Company's news release dated September 8, 2020.

Highlights of the drilling results for the Nkran in-pit program include:

Drilling highlights:
- Hole 012: 79 meters @ 4.7 g/t gold (from 1m to 80m) and 80 meters @ 3.9 g/t gold (from 84m to 164m)
- Hole 021: 43 meters @ 3.3 g/t gold (from 1m to 44m)

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Hole 022: 44 meters @ 3.2 g/t gold (from 14m to 58m)
Hole 023: 62 meters @ 6.1 g/t gold (from 65m to 127m)
Hole 025: 30 meters @ 21.5 g/t gold (from 128m to 158m)
Hole 026: 27 meters @ 4.9 g/t gold (from 137m to 164m)
Hole 028: 27 meters @ 3.7 g/t gold (from 93m to 120m)
Improved confidence in estimated Indicated Mineral Resources for Cut 3 mine planning.
Identification of mineralization continuing below the currently planned Cut 3 reserve shell.
Akwasiso - located 5km north east of the processing plant and is currently being mined. Drilling has targeted extensions of the ore body to the north and south as well as upgrading of inferred resources. The JV drilled 4,535m of RC drilling and DD which was completed in Q2 2020. For additional details on drilling results, refer to the Company's news release dated June 25, 2020. Results are currently being incorporated into new modeling and resource estimation programs with anticipated completion in H1 2021.

An in-pit drill program consisting of 10 holes and 1,655m RC and DD was completed in Q4 2020 to support and add confidence to the understanding of mineralization at depth and improve resource estimation for further planned mining and Cut 3 development.

Miradani North (formerly referred to as Tontokrom) - this target is located 10km south-west of the processing plant and was drilled in 2019 with no stated resources. Prior small-scale mining operations have left a shallow pit, approximately 400m x 150m with known mineralization extending at depth and along strike. Following resolution of a previously disclosed boundary dispute with a local miner, a Phase 2 12-hole drill program totaling 3,758m of DD and RC drilling commenced in Q3 and Q4 2020. This drill program aimed to provide a nominal 80 x 80m appraisal of potential mineralization along strike and down dip from previous 2019 drilling. For additional details on Phase 2 drilling results, refer to the Company's news release dated November 30, 2020.

Highlights of the drilling results for the Phase 2 program include:

Drilling highlights:
- Hole TTPC20-024 intersected 40m at 2.1 g/t gold (from 86m to 126m)
- Hole TTPC20-026 intersected 9m at 2.5 g/t gold (from 19m to 28m)
- Hole TTPC20-028 intersected 19m at 2.2 g/t gold (from 287m to 306m)

A Phase 3 program consisting of 50-holes of in-fill drilling to a 40 x 40m spacing is currently underway with 33 holes completed consisting of 9,285m of DD and RC drilling. This program has been designed to confirm and expand knowledge of intercepts identified in the 2019 drill program and to provide sufficient information and confidence for undertaking a maiden resource estimate anticipated to be completed in Q3 2021. For additional details on Phase 3 drilling results, refer to the Company's news releases dated February 1, 2021 and February 25, 2021.

Highlights of the drilling results for the Phase 3 program include:

Drilling highlights:
- Hole TTDD20-032 intersected 17m at 6.3 g/t gold (from 342m to 359m)
- Hole TTPC20-034 intersected 16m at 3.0 g/t gold (from 175m to 191m)
- Hole TTPC20-039 intersected 35m at 2.1 g/t gold (from 85m to 120m)
- Hole TTPC20-041 intersected 36m at 1.9 g/t gold (from 71m to 107m)
- Hole TTPC20-044 intersected 22m at 2.3 g/t gold (from 207m to 229m)
- Hole TTDD20-044 intersected 13m at 3.2 g/t gold (from 190m to 202m)

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

3.3 Financial results of the AGM

The following tables present excerpts of the financial results of the JV for the three months and years ended December 31, 2020 and 2019. These results are presented on a 100% basis.

Three months and years ended December 31, 2020 and 2019

	Three months ended December 31,		Year ended December 31,
(in thousands of US dollars)	2020	2019	2020	2019
Revenue	111,104	97,075	418,130	340,969
Cost of sales:
Production costs	(48,833	(52,582	(198,347	(199,234
Depreciation and depletion	(10,448	(30,578	(50,934	(95,418
Royalties	(5,556	(4,853	(20,907	(17,159
Income from mine operations	46,267	9,062	147,942	29,158
Exploration and evaluation expenditures	(3,246	(2,219	(9,681	(6,092
General and administrative expenses	(1,429	(1,411	(7,434	(6,549
Income from operations	41,592	5,432	130,827	16,517
Impairment	-	(289,589	-	(289,589
Finance expense	(1,053	(1,095	(3,165	(8,905
Finance income	62	68	285	283
Foreign exchange gain	946	46	3,572	1,171
Net income (loss) after tax for the period	41,547	(285,138	131,519	(280,523
Adjusted net income (loss) after tax for the period^2^	41,547	4,451	131,519	9,066
Average realized price per gold ounce sold ($)	1,828	1,465	1,711	1,376
Average London PM fix ($)	1,874	1,481	1,770	1,393
All-in sustaining costs ($ per gold ounce)^2^	1,179	969	1,115	1,112
All-in sustaining margin ($ per gold ounce)^2^	649	496	596	264
All-in sustaining margin ($'000)^2^	39,365	32,783	145,309	65,700
^2^ Non-GAAP measure. Adjusted net income (loss) as presented in the table was derived by adjusting net income (loss) of the AGM by the amount of the impairment associated with the AGM LOM plan update in 2019.

All values are in US Dollars.

Revenue

During Q4 2020, the AGM sold 60,655 ounces of gold at an average realized gold price of $1,828/oz for a quarterly record total revenue of $111.1 million (including $0.2 million of by-product silver revenue). During Q4 2019, the AGM sold 66,095 ounces of gold at an average realized gold price of $1,465/oz for total revenue of $97.1 million (including $0.2 million of by-product silver revenue). The increase in revenue quarter-on-quarter was therefore a function of a 25% improvement in average realized gold prices, partly offset by an 8% decrease in sales volumes in Q4 2020.

During the year ended December 31, 2020, the AGM sold 243,807 ounces of gold at an average realized gold price of $1,711/oz for total revenue of $418.1 million (including $0.9 million of by-product silver revenue). In the comparative period of 2019, the AGM sold 248,862 ounces of gold at an average realized gold price of $1,376/oz for total revenue of $341.0 million (including $0.8 million of by-product silver revenue and presented net of $2.2 million of gold sales related to pre-production activities at Esaase that were capitalized to mineral properties, plant and equipment ("MPP&E")). The increase in revenue during 2020 was therefore a function of a 24% improvement in average realized gold prices, partly offset by a 2% decrease in sales volumes.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The AGM continues to sell all the gold it produces to Red Kite under an offtake agreement. The terms of the offtake agreement require the AGM to sell 100% of its gold production up to a maximum of 2.2 million ounces to Red Kite. As of December 31, 2020, 1,083,180 gold ounces have been delivered to Red Kite under the offtake agreement (December 31, 2019 - 839,373 ounces).

Production costs and royalties

During Q4 2020, the AGM incurred production costs of $48.8 million, compared to $52.6 million in Q4 2019. Production costs were lower in Q4 2020 primarily due to the reversal of previously recorded NRV adjustments on stockpile inventory, of which $7.1 million was credited to production costs, and that a higher proportion of mined tonnes were sourced from Esaase (as opposed to Nkran in Q4 2019) which attracts a lower relative unit cost for load and haul and drill and blast costs. This factor was partly offset by lower sales volumes in Q4 2020 and an increase in ore transportation costs associated with trucking ore from Esaase to the process plant as a higher proportion of ore was sourced from Esaase.

During the year ended December 31, 2020, the AGM incurred production costs of $198.3 million, compared to $199.2 million for the year ended December 31, 2019. Production costs in 2020 were largely in line with 2019. Impacting production costs in 2020 relative to 2019 were higher operating cash costs per ounce^2^ resulting from an increase in total tonnes mined and higher labour and doré transportation costs due to COVID-19. Firstly, labour costs increased as the AGM requested employees to stay on-site for the majority of Q2 2020 in an attempt to prevent the spread of COVID-19 through restricted travel, resulting in an increase in overtime pay and pay in lieu of leave. Secondly, the AGM incurred increased costs transporting its bullion to the JV's primary refiner in South Africa during a time that Ghana restricted cross-border commercial travel. These factors were partly offset by the recording of a one-time $3.7 million gain in Q2 2020 on the derecognition of a mining contractor services lease agreement and a reversal of previously recorded net realizable value adjustments on stockpile inventory, of which $7.7 million was credited to production costs. In the comparative period of 2019, a downward net realizable value adjustment on stockpile inventory was recorded, of which $7.9 million was recorded as production costs. Additionally, production costs in 2019 included a one-time contract termination fee accrual relating to one of the JV's mining contractors.

Production costs for the three months and year ended December 31, 2020 were reported net of stripping costs of $4.4 million and $18.7 million (three months and year ended December 31, 2019 - $0.3 million and $34.0 million, respectively). Stripping costs are capitalized to mineral properties in accordance with the AGM's accounting policy for stripping costs. To the extent that excess waste is mined during the period in an identified component of the mine, as compared to the expected waste (based on the component-specific stripping ratio), a portion of costs are deferred to mineral properties.

The Ghanaian government charges a 5% royalty on revenues earned through sales of minerals from the AGM concessions. The AGM's Akwasiso mining concession is also subject to a 2% net smelter return royalty payable to the previous owner of the mineral tenement; additionally, the AGM's Esaase concession is also subject to a 0.5% net smelter return royalty payable to the Bonte Liquidation Committee. Royalties are presented as a component of cost of sales and amounted to $5.6 million and $20.9 million for the three months and year ended December 31, 2020 (three months and year ended December 31, 2019 - $4.9 million and $17.2 million, respectively). Royalty expense was higher in Q4 2020 and FY 2020 due to higher earned revenues.

Depletion and depreciation

Depreciation and depletion expense for Q4 2020 amounted to $12.7 million (including $2.8 million of depletion associated with previously capitalized deferred stripping cost) as a result of 2.0Mt of ore mined during the quarter. Of the total depreciation and depletion expense, $2.3 million was allocated to the cost of inventories. This compares to depreciation and depletion of $30.6 million for Q4 2019 (which included $16.1 million of depletion associated with previously capitalized deferred stripping costs) when 1.4Mt of ore was mined during the comparative period. Depreciation and depletion expense decreased from Q4 2019 to Q4 2020 due to the recording of a $289.6 million impairment as at December 31, 2019 (associated with the AGM's LOM plan update), of which $260.4 million was allocated to MPP&E and had the effect of reducing the depreciable asset cost base. This was partly offset by a reduction in the global gold mineral reserves of the AGM (related to the LOM update that resulted in the 2019 impairment), resulting in a decrease in the total gold mineral reserves over which the MPP&E asset cost base is depreciated. Additionally, the 40% increase in ore tonnes mined from Q4 2019 to Q4 2020 resulted in higher depreciation.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Depreciation and depletion expense for the year ended December 31, 2020 amounted to $52.7 million (including $19.6 million of depletion associated with previously capitalized deferred stripping costs) as a result of 6.2Mt of ore mined during the year. Of the total depreciation and depletion expense, $1.8 million was allocated to the cost of inventories. This compares to depreciation and depletion of $95.4 million for the year ended December 31, 2019 (which included $39.0 million of depletion associated with previously capitalized deferred stripping costs) when 5.1Mt of ore was mined during the comparative year. The decrease in depreciation expense from 2019 to 2020 was primarily due to the recording of the 2019 impairment, partly offset by a reduction in the global gold mineral reserves of the AGM (as discussed above) and a 22% increase in ore tonnes mined from 2019 to 2020 which resulted in higher depreciation.

Exploration and evaluation expenditures

During Q4 2020, the AGM incurred exploration expenditure of $4.0 million, $3.2 million of which was expensed through the P&L as exploration and evaluation ("E&E") expenditures, compared to $2.2 million of E&E expenditures expensed in Q4 2019. For the year ended December 31, 2020, the AGM incurred exploration expenditures of $18.6 million, $9.7 million of which was expensed as E&E expenditures, compared to $6.1 million expensed in the comparative year.

The increase in E&E expenditures for both periods was primarily related to drilling programs in line with the Company's exploration strategy and expanded exploration program (see 3.2 "Development and exploration update").

General and administrative expenses

G&A expenses in Q4 2020 were comparable to Q4 2019, totaling $1.4 million in each period.

For the year ended December 31, 2020, the AGM's G&A expenses were $0.9 million higher than the 2019 comparative year due to higher share-based compensation expense and legal fees, as well as regulatory costs related to registration of the Joint Venture Agreement ("JVA") with Ghanaian tax authorities.

2019 Impairment

During the year ended December 31, 2019, the Company and its JV partners announced that the scope of the ongoing work associated with the AGM's LOM plan would:

target a remaining mine life of 8-10 years with gold production of 225,000 to 250,000 ounces per year;
contemplate resources based on Localized Uniform Conditioning methodology;
be based on NI43-101 standards and consistent with Gold Field's operating practices;
be based on Measured and Indicated Mineral Resources using Datamine Mine Stope Optimization software;
not include any major development capital investments such as further processing plant expansions or Esaase ore transportation infrastructure; and
be based on metallurgical recovery estimates for Esaase fresh ore based on an updated metallurgical model, which would in turn be based on a test-work program currently underway.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Gold price assumption	2020	2021	2022 to 2024	Long-term	Weighted Average
Gold price (per ounce)	$1,500	$1,425	$1,400	$1,350	$1,373

As at December 31, 2020, the Company did not identify any further indicators of impairment of the AGM cash-generating unit based on information available to management at the time of preparing the annual audited consolidated financial statements for the year ended December 31, 2020, nor had the indicators of impairment identified in 2019, which gave rise to the above-mentioned impairment, reversed suggesting a possible reversal of previously recorded impairments.

The Company and its JV partner are completing their work associated with a new LOM plan for the AGM, including an updated Mineral Resource and Reserve Estimate with an expected effective date of June 30, 2021, which is expected to be released in Q3 2021. The results of this ongoing work may impact the projected life of mine cash flows of the AGM.

Finance expense

The following is a summary of finance expense incurred by the AGM JV during the three months and years ended December 31, 2020 and 2019:

	Three months ended December 31,			****	Year ended December 31,			****
(in thousands of US dollars)	2020	****	2019	****	2020	****	2019	****
(Loss) gain on gold hedging instruments	(366	)	1,174		(366	)	(4,440	)
Interest on lease liabilities	(96	)	(307	)	(732	)	(1,817	)
Interest and fees associated with revolving<br> credit facility	(357	)	(1,670	)	(1,198	)	(1,670	)
Accretion charges on asset retirement provisions	(174	)	(272	)	(550	)	(903	)
Other	(60	)	(20	)	(319	)	(75	)
Total finance expense	(1,053	)	(1,095	)	(3,165	)	(8,905	)

Q4 2020 finance expense included a $0.4 million loss ($0.2 million realized and $0.2 million unrealized) on hedging instruments compared to a $1.2 million realized gain in Q4 2019. This was partly offset by a $1.3 million decrease in interest and fees associated with the RCF as the comparative period included legal fees and standby charges associated with entering into the RCF.

For the year ended December 31, 2020, the reduction in finance expense compared to 2019 was primarily due to the 2019 year including a $4.4 million realized loss on gold hedging instruments. Interest expense on lease liabilities also reduced by $1.1 million due to the unwinding of interest over the lease term and accretion charges on asset retirement provisions reduced by $0.4 million due to lower discount rates. Fees associated with the RCF were also lower in 2020 by $0.5 million for the reasons stated above.

The JV continues to manage the AGM's exposure to gold price risk, with an objective of margin protection, by periodically entering into hedging programs.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

3.4 Cash flow results of the AGM

The following table provides a summary of cash flows for the AGM on a 100% basis for the three months and years ended December 31, 2020 and 2019:

	Three months ended December 31,			****	Year ended December 31,			****
AGM 100% Basis (in thousands of US dollars)	2020	****	2019	****	2020	****	2019	****
Cash provided by (used in):
Operating cash flows before working capital changes	53,856	****	33,808		183,065	****	109,785
Operating activities	47,997	****	45,440		152,322	****	120,375
Investing activities	(22,254	)	(12,242	)	(69,108	)	(62,672	)
Financing activities	(4,712	)	(25,866	)	(62,590	)	(35,272	)
Impact of foreign exchange on cash and cash equivalents	(66	)	(142	)	(128	)	(321	)
Increase in cash and cash equivalents during the period	20,965	****	7,190		20,496	****	22,110
Cash and cash equivalents and restricted cash,<br> beginning of period	43,289	****	36,568		43,758	****	21,648
Cash and cash equivalents and restricted cash, end of period	64,254	****	43,758		64,254	****	43,758

Cash flows from operating activities

During Q4 2020, the AGM generated cash flows from operations of $48.0 million, comprising cash inflows before working capital changes of $53.9 million and cash outflows from non-cash working capital changes of $5.9 million. Cash outflows from non-cash working capital changes were primarily the result of a $14.5 million increase in inventories and $3.2 million decrease in accounts payable and accrued liabilities. These factors were partly offset by an $11.3 million decrease in trade and VAT receivables.

The increase in operating cash flows in Q4 2020 compared to Q4 2019 was primarily the result of an increase in the JV's revenues and operating margins.

During the year ended December 31, 2020, the AGM generated cash flows from operations of $152.3 million, comprising cash flows before working capital changes of $183.1 million and outflows from non-cash working capital changes of $30.7 million. Cash outflows from non-cash working capital changes were primarily the result of a $32.6 million increase in inventories and a $2.8 million increase in prepaid expenses and deposits (partly associated with securing supplies of the JV's critical consumables in response to COVID-19). These factors were partly offset by a $2.0 million increase in accounts payable and accrued liabilities and a $2.7 million decrease in trade and VAT receivables.

The increase in operating cash flows for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily a result of an increase in the JV's revenues and operating margins.

Cash used in investing activities

During Q4 2020, the AGM invested $22.3 million in additions to MPP&E. The total cash expenditure on MPP&E during the quarter included $9.1 million relating to the capitalization of deferred stripping costs, $2.4 million in sustaining capital related primarily to raise the height of the TSF and $8.6 million in development capital related primarily to the Tetrem village relocation adjacent to the Esaase deposit and $2.2 million in exploration costs relating to tenements with defined mineral reserves.

The increase in cash flows invested in MPP&E from Q4 2019 to Q4 2020 was primarily due to higher capitalized stripping costs ($5.7 million increase) as Q4 2020 included capitalized stripping costs associated with Esaase Cut 2, higher sustaining capital on raising the TSF ($1.1 million increase) and higher development capital primarily related to the Tetrem village relocation ($3.2 million increase).

During the year ended December 31, 2020, the AGM invested $69.3 million in additions to MPP&E. The total cash expenditure on MPP&E during the year included $16.6 million relating to the capitalization of deferred stripping costs, $14.0 million in sustaining capital, $38.8 million in development capital, property acquisition costs and exploration costs relating to tenements with defined mineral reserves (Nkran, Abore, Adubiaso and Akwasiso). Sustaining capital related primarily to raising the height of the TSF, while development capital related primarily to the Tetrem village relocation near Esaase.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The increase in cash flows invested in MPP&E for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily due to higher development capital primarily related to the Tetrem village relocation ($11.5 million increase), higher sustaining capital expenditures primarily relating to raising the height of the tailings storage facility ($7.6 million increase) and exploration drill programs on Nkran, Abore, Adubiaso and Akwasiso ($5.6 million increase). This was partly offset by lower capitalized stripping costs ($20.5 million decrease) as the western portion of the Cut 2 pushback at Nkran began in Q1 2019 (and completed in Q4 2019).

Cash used in financing activities

During the three months ended December 31, 2020, $4.7 million of cash used in financing activities related primarily to lease payments of $4.3 million on the JV's services and mining contractor lease agreements.

The decrease in cash flows used in financing activities from Q4 2019 to Q4 2020 related to preferred share distributions to the JV partners in Q4 2019 totaling $20.0 million.

During the year ended December 31, 2020, $62.6 million of cash used in financing activities related primarily to distributions totaling $75.0 million to the JV partners and lease payments of $16.3 million on the JV's services and mining contractor lease agreements. Cash used in financing activities was partly offset by the utilization of the $30.0 million RCF.

During the first quarter of 2020, the joint venture undertook the proactive step to drawdown the RCF in light of the economic uncertainty surrounding the COVID-19 pandemic and its effect on US dollar liquidity. While the JV's healthy liquidity position did not necessitate the utilization of the credit facility, the Company determined that this was a prudent step to further strengthen the robust cash position during these uncertain times. During the year ended December 31, 2020, financing activities included cash outflows of $1.2 million relating to the payment of interest and standby fees on the RCF. The JV expects to repay the RCF in full within twelve months of the balance sheet date.

The increase in cash flows used in financing activities during the year ended December 31, 2020 compared to December 31, 2019 related primarily to the preferred share distributions to the JV partners totaling $75.0 million in 2020 (distributions in 2019 totaled $20.0 million), partly offset by the $30.0 million drawdown on the JV's debt facility.

Liquidity position

In October 2019, the JV entered into a $30.0 million RCF with RMB. The term of the RCF is three years, maturing in September 2022 and bears interest on a sliding scale of between LIBOR plus a margin of 4% and LIBOR plus a margin of 3.8%, depending on security granted to RMB. Commitment fees in respect of the undrawn portion of the RCF are on a similar sliding scale of between 1.40% and 1.33%. As at December 31, 2020, the balance drawn under the RCF was $30.0 million (December 31, 2019 - $nil). The JV expects to repay the RCF in full within twelve months of the balance sheet date.

As at December 31, 2020, the JV held cash and cash equivalents of $64.3 million (including the above-mentioned $30.0 million fully drawn RCF), $10.9 million in receivables from gold sales and $8.2 million in gold on hand. This compares to December 31, 2019 when the JV held $43.8 million in cash and cash equivalents ($3.0 million of which was restricted in favour of a gold hedging counterparty and released on January 3, 2020), $9.1 million in receivables from gold sales and $2.8 million in gold on hand.

The Company does not control the funds of the JV. The liquidity of the Company is further discussed in section "7. Liquidity and capital resources".

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

4. Financial results of the Company

The following table is a summary of the Consolidated Statements of Operations and Comprehensive Income (Loss) of the Company for the three months ended December 31, 2020 and 2019 and the years ended December 31, 2020, 2019 and 2018. Note that the table below includes 100% of the results for the AGM for the periods January 1, 2018 to July 31, 2018, being the period during which the Company controlled the AGM. For the three months and years ended December 31, 2020 and 2019 and the period from August 1, 2018 to December 31, 2018, the Company has recognized its share of the net income (loss) of the JV. As a result, most of the variances from 2018 in the table below are attributable to the deconsolidation of the AGM due to the closing of the JV Transaction.

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019	2018
(in thousands of US dollars, except per share amounts)
Revenue	-	-	-	-	161,918
Cost of sales:
Production costs	-	-	-	-	(79,008
Depreciation and depletion	-	-	-	-	(41,944
Royalties	-	-	-	-	(8,096
Total cost of sales	-	-	-	-	(129,048
Income from mine operations	-	-	-	-	32,870
Share of net earnings (loss) related to joint venture	18,691	-	59,159	(126,264	(1,050
Service fee earned as operators of joint venture	1,240	1,223	4,917	4,963	1,892
Exploration and evaluation expenditures	-	-	-	-	(2,333
General and administrative expenses	(3,342	(2,368	(14,757	(11,828	(11,660
Income (loss) from operations and joint venture	16,589	(1,145	49,319	(133,129	19,719
Loss due to loss of control of subsidiaries	-	-	-	-	(143,261
Finance income	1,263	135	8,325	871	5,555
Finance expense	(10	(20,180	(45	(35,650	(10,737
Foreign exchange (loss) gain	(171	(15	(223	(20	20
Income (loss) before income taxes	17,671	(21,205	57,376	(167,928	(128,704
Current income tax expense	-	-	-	-	(1,079
Deferred income tax expense	-	-	-	-	(11,430
Net income (loss) and comprehensive income (loss) for the period	17,671	(21,205	57,376	(167,928	(141,213
Net income (loss) attributable to:
Common shareholders of the Company	17,671	(21,205	57,376	(167,928	(141,372
Non-controlling interest	-	-	-	-	159
	17,671	(21,205	57,376	(167,928	(141,213
Income (loss) per share attributable to common shareholders:
Basic	0.08	(0.09	0.26	(0.74	(0.64
Diluted	0.08	(0.09	0.26	(0.74	(0.64
Weighted average number of shares outstanding:
Basic	224,197,308	225,948,601	223,655,880	225,867,169	220,108,770
Diluted	225,216,468	225,948,601	224,919,474	225,867,169	220,108,770

All values are in US Dollars.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Share of net earnings (loss) related to joint venture

As the Company equity accounts for its interest in the JV, the Company recognized its 45% interest in the net earnings of the JV in the amounts of $18.7 million and $59.2 million for the three months and year ended December 31, 2020, respectively (three months ended and year ended December 31, 2019 - share of net earnings of $nil and share of net loss of $126.3 million, respectively, with the 2019 year including the Company's share of the 2019 impairment recorded by the JV).

Service fee earned as operators of the joint venture

In accordance with the JVA, the Company is the operator of the AGM and, in consideration for managing the operations of the mine, receives a gross annual service fee from the JV of $6.2 million (originally $6.0 million per annum, but adjusted annually for inflation). For the three months and year ended December 31, 2020, the Company earned a gross service fee of $1.5 million (less withholding taxes of $0.3 million) and $6.1 million (less withholding taxes of $1.2 million), respectively.

During the three months and year ended December 31, 2019, the Company earned a gross service fee of $1.5 million (less withholding taxes of $0.2 million) and $6.0 million (less withholding taxes of $1.0 million), respectively.

General and administrative expenses

G&A expenses for the three months and years ended December 31, 2020 and 2019 comprised:

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
(in thousands of US dollars)
Wages, benefits and consulting	(1,652	(1,249	(9,200	(7,723
Office, rent and administration	(350	(238	(907	(800
Professional and legal	(166	(123	(1,001	(452
Share-based payments	(692	(506	(2,168	(1,789
Travel, marketing, investor relations and regulatory	(441	(212	(1,317	(966
Other	(41	(40	(164	(98
Total G&A expense	(3,342	(2,368	(14,757	(11,828

All values are in US Dollars.

G&A expenses in Q4 2020 were $1.0 million higher than Q4 2019 primarily due to costs associated with the transition of a technical services management team from the Company's Johannesburg office to the corporate head office. In addition, share-based compensation expense was $0.2 million higher due to appreciation of the Company's share price, while travel, marketing, investor relations and regulatory costs also increased by $0.2 million and office, rent and administration costs increased by $0.1 million.

G&A expenses for the year ended December 31, 2020 were $2.9 million higher than the during the year ended December 31, 2019, predominantly due to non-recurring costs associated with the intended closure of Company's Johannesburg office. In addition, legal and professional fees were $0.5 million higher in 2020 due to costs associated with filing the Base Shelf Prospectus and ATM offering in Q2 2020 (see section "7. Liquidity and capital resources"), while share-based payments expense ($0.4 million increase) was higher due to the reason stated above. Marketing and investor relations costs ($0.4 million increase) were also higher in 2020 compared to 2019.

Finance income

Finance income includes changes in the fair value of the Company's preferred share investment in the JV (which has no fixed redemption date) and interest earned on cash balances. For the three months and year ended December 31, 2020, the Company recognized a positive fair value adjustment of $1.2 million and $7.8 million, respectively, on changes in the fair value of the Company's preferred share investment in the JV.

During the three months and year ended December 31, 2019, the Company recognized $0.1 million and $0.5 million of finance income, respectively, which was primarily related to changes in carrying values of the Company's preferred share investments in the JV.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Finance expense

Finance expense for the three months and year ended December 31, 2020 includes interest on lease liabilities and banking fees.

During the three months and year ended December 31, 2019, the Company recognized a downward fair value adjustment of $20.1 million and $35.6 million in finance expense, respectively, on changes in the fair value of the Company's preferred share investment in the JV. The downward fair value adjustment was a result of a change in the estimated amount and timing of the cash flows expected to be distributed by JV associated with the AGM LOM plan update. There was no change to the face value of the preferred shares.

5. Selected quarterly financial data

The following table provides summary unaudited financial data for the last eight quarters. Except for basic and diluted income (loss) per share and adjusted basic and diluted income (loss) per share^1^, the totals in the following table are presented in thousands of US dollars.

	2020				2019
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1

Share of net earnings (loss) related to joint venture	18,691	5,587	14,347	20,534	-	(126,047	6,135	(6,352
Service fee earned as operators of joint venture	1,240	1,234	1,221	1,222	1,223	1,488	1,126	1,126
General and administrative expenses	(3,342	(5,183	(3,558	(2,674	(2,368	(3,199	(3,456	(2,805
Income (loss) from operations and joint venture	16,589	1,638	12,010	19,082	(1,145	(127,758	3,805	(8,031
Other income (expenses)	1,082	1,567	2,684	2,724	(20,060	(19,758	2,302	2,717
Net income (loss) for the period	17,671	3,205	14,694	21,806	(21,205	(147,516	6,107	(5,314
Basic and diluted income (loss) per share	0.08	0.01	0.07	0.10	(0.09	(0.65	0.03	(0.02
Adjusted net income (loss) for the period^2^	17,671	3,205	14,694	21,806	941	793	6,107	(5,314
Adjusted basic and diluted income (loss) per share^2^	0.08	0.01	0.07	0.10	0.00	0.00	0.03	(0.02
EBITDA^2^	16,458	1,686	12,069	19,046	(1,200	(127,777	3,847	(8,049
Adjusted EBITDA^2^	20,389	7,552	18,489	21,883	12,584	9,441	12,357	1,244

All values are in US Dollars.

Since Q1 2019, other income has included fair value adjustments on the Company's preferred share investments in the JV.

In Q3 2019, the Company recognized an impairment on its equity investment in the AGM JV totaling $128.3 million which was presented as part of the Company's share of the net loss related to the JV. Additionally, in Q3 2019, the Company recognized a $20.0 million downward fair value adjustment on its preferred share investment in the JV which was presented as finance expense.

In Q4 2019, the Company recognized a $20.1 million downward fair value adjustment on its preferred share investment in the JV resulting from the finalization of its work over the AGM LOM plan which was presented as finance expense.

The increase in net earnings related to the JV during 2020 was primarily due to higher realized gold prices.

The increase in EBITDA and Adjusted EBITDA^2^ during 2020 was primarily a result of the increase in the Company's interest in the AGM's net income.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

6. Guidance and outlook

2020 Production and cost guidance (100% basis)

In 2020, the AGM produced 249,904 ounces of gold, exceeding the upper end of its production guidance, while AISC^2^ for the year was $1,115/oz which was below revised guidance (as of Q3 2020) of $1,150/oz. During 2020, certain factors put pressure on costs performance including higher royalty expense associated with higher realized gold prices, higher sustaining capital expenditures associated with design changes to the raise of the tailings dam as well as additional costs associated with the JV's COVID‐19 mitigation measures.

Budgeted sustaining capital for 2020 was estimated at $11.0 million with actual spend of $14.0 million. The higher-than-budget expenditure on sustaining capital was due to the above-mentioned design changes associated with raising the height of the TSF.

Budgeted development capital for 2020 was estimated at $24.0 million with actual spend of $31.0 million. The higher-than-budget expenditure on development capital was primarily due to advancing the Tetrem village relocation, which was 97% complete as of December 31, 2020.

The AGM expanded its exploration program in 2020, mainly around the underexplored Miradani mineralized trend, and incurred $18.6 million in exploration expenditures (budget of $17.1 million). Exploration spend was higher than budget due to expanding the drilling programs at Abore and Miradani.

2021 Guidance for the Asanko Gold Mine (100% basis)

In 2021, the AGM is targeting 225,000 to 245,000 ounces of gold production at AISC^2^ of $1,100 to $1,300/oz. AISC^2^ includes budgeted sustaining capital expenditures of $20 million, with approximately $13 million for a TSF lift.

The mine plan for 2021 plans to source ore primarily from Akwasiso and Esaase. These ore sources are expected to be augmented where necessary with run‐of‐mine stockpile material. Accordingly, budgeted AISC^2^ for 2021 includes approximately $60 to $80/oz of non-cash charges associated with processing stockpiled ore.

Development capital is forecast at $18 million, primarily for completion of the Tetrem village relocation and work on the Obotan and Esaase water treatment plants. In addition, $20 million is budgeted for exploration, mainly around the Miradani mineralized trend.

Mineral Resource and Reserve Update

An updated Mineral Resource and Reserve Estimate with an anticipated effective date of June 30, 2021 is expected to be released in Q3 2021 for the AGM. The Mineral Resource and Reserve Estimate is expected to incorporate new exploration and infill drilling, reduced operational costs, higher commodity price assumptions, in-pit mapping information and refined grade estimations which the Company believes will result in a further improvement of the understanding of the ore bodies within the AGM's mineral concessions. The resulting Mineral Resource and Reserve Estimate will reflect the ongoing efforts by the Company and its JV partner to achieve the best value from the AGM in the context of the current operating and metal price environment.

___________________________

^2^^^See "8. Non-GAAP measures"

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

7. Liquidity and capital resources

A key financial objective of the Company is to actively manage its own cash balance and liquidity in order to meet the Company's strategic plans, as well as those of the JV in accordance with the JV agreement. The Company shares control of the JV and aims to manage the JV in such a manner as to generate positive cash flows from the AGM's operating activities in order to fund its operating, capital and project development requirements. A summary of the Company's net assets and key financial ratios related to liquidity are as follows. Note that the December 31, 2020 and December 31, 2019 balances below, unless otherwise noted, do not include any assets or liabilities of the JV.

	December 31, 2020	December 31, 2019
(in thousands of US dollars, except outstanding shares and options)	$	$
Cash and cash equivalents	62,151	31,109
Other current assets	3,390	4,691
Non-current assets	138,049	108,704
Total assets	203,590	144,504
Current liabilities	3,618	2,317
Non-current liabilities	1,089	930
Total liabilities	4,707	3,247
Working capital	61,923	33,483
Total equity	198,883	141,257
Total common shares outstanding	224,253,522	225,098,810
Total options outstanding	8,330,820	12,568,362
Key financial ratios	****
Current ratio	18.12	15.45
Total liabilities-to-equity	0.02	0.02

The Company held cash and cash equivalents of $62.2 million and $2.9 million in receivables as at December 31, 2020.

Subsequent to the JV transaction with Gold Fields ("JV Transaction"), other than the JV service fee, the Company has no current direct sources of revenue and any free cash flows generated by the AGM are no longer within the Company's exclusive control as the disposition of cash from the JV is governed by the JVA. The JVA provides that "Distributable Cash" will be calculated and distributed quarterly, if available. Further information regarding the definition of "Distributable Cash" is included in section "8.3 EBITDA and Adjusted EBITDA". However, given the Company's cash balance and ongoing service fee receipts from the JV, the Company believes it is in a position to meet all working capital requirements, contractual obligations and commitments as they fall due (see "Commitments" below) during the next 24 months.

Normal course issuer bid

On November 12, 2019, the Company received approval from the TSX to commence the NCIB on November 15, 2019 to purchase up to 11,310,386 common shares, representing 5% of the Company's issued and outstanding common shares on that date. Purchases pursuant to the NCIB are made on the open market through the facilities of the TSX and NYSE American.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

During the three months ended December 31, 2020, the Company did not repurchase any common shares under the NCIB program. During the year ended December 31, 2020, the Company repurchased and cancelled a total of 2,758,063 common shares under the NCIB program for $2.3 million (average acquisition price of $0.83 per share). Since inception of the NCIB in Q3 2019, the Company has repurchased and cancelled a total of 3,866,983 common shares for $3.3 million (average acquisition price of $0.84 per share).

ATM Offering

On June 25, 2020, the Company entered into an ATM agreement with H.C. Wainwright & Co. and Cormark Securities (the "Agents"). Under the ATM agreement, the Company may, at its discretion and from time-to-time during the term of the ATM agreement, sell through the Agents common shares of the Company for aggregate gross proceeds to the Company of up to $50.0 million. The Company expects to use any net proceeds of the Offering for general corporate and working capital requirements, including, but not limited to, funding ongoing exploration and operations at the Asanko Gold Mine, funding the Company's working capital requirements, repaying indebtedness outstanding from time to time, completing future acquisitions and/or for other corporate purposes.

No offers or sales of common shares will be made in Canada on the TSX or other trading markets in Canada. The Company will pay the Agents a commission of 3.0% of the aggregate gross proceeds from each sale of common shares. The Company will determine, in its sole discretion, the date, price and number of common shares to be sold under the Offering, if any. Any common shares sold in the Offering will be distributed at market prices or prices related to prevailing market prices from time to time.

The Offering was made by way of a prospectus supplement dated June 25, 2020 (the "Prospectus Supplement") to the Company's existing U.S. registration statement on Form F-10 (the "Registration Statement") and Canadian short form base shelf prospectus (the "Base Shelf Prospectus") each dated June 11, 2020. The Prospectus Supplement and the Registration Statement are available on the SEC's website and the Prospectus Supplement (together with the related Base Shelf Prospectus) is available on the SEDAR website maintained by the Canadian Securities Administrators.

In addition, in connection with the Gold Fields Limited's ("GF") existing pre-emptive right to maintain its 9.9% pro rata ownership interest in the Company, the Company has agreed to sell to GF, from time to time during the term of the Offering at GF's election, on a private basis, such number of common shares as to represent 9.9% of the common shares issued under the Offering, if any.

As of December 31, 2020, the Company had not issued any common shares under the Offering.

Equity

The Company is financially stable with a total liabilities-to-equity ratio of 0.02 as at December 31, 2020.

Commitments

The following table summarizes the Company's contractual obligations as at December 31, 2020 and December 31, 2019. Note the following table excludes commitments and liabilities of the JV for both years presented.

(in thousands of US dollars)	Less than 1 year	1 -3 years	4 -5 years	Over 5 years	Total<br>December 31, 2020	Total<br>December 31, 2019
Accounts payable and accrued liabilities	2,478	-	-	-	2,478	1,649
Long-term incentive plan (cash-settled<br> awards)	1,046	668	-	-	1,714	1,001
Corporate office leases	126	267	234	-	627	823
Total	3,650	935	234	-	4,819	3,473

In addition to the above commitments, the Company has provided various parent company guarantees related to the unfunded portion of the AGM's reclamation bonds in the amount of $5.9 million.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Contingencies

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.

Cash flows

The following table provides a summary of cash flows for the three months and year ended December 31, 2020 and 2019:

	Three months ended December 31,			****	Year ended December 31,
(in thousands of US dollars)	2020	****	2019	****	2020	****	2019
Cash provided by (used in):
Operating cash flows before working capital <br> changes	(1,645	)	(560	)	(7,929	)	(4,988	)
Operating activities	(1,559	)	(1,589	)	(6,404	)	(8,748	)
Investing activities	28	****	20,061		37,930	****	30,171
Financing activities	130	****	(987	)	(520	)	(665	)
Impact of foreign exchange on cash and cash <br> equivalents	63	****	(11	)	36	****	(7	)
(Decrease) increase in cash and cash equivalents during<br> the period	(1,338	)	17,474		31,042	****	20,751
Cash and cash equivalents, beginning of period	63,489	****	13,635		31,109	****	10,358
Cash and cash equivalents, end of period	62,151	****	31,109	****	62,151	****	31,109

Cash provided by operating activities

During Q4 2020, the Company utilized cash flows in operations of $1.6 million, net of cash inflows in working capital of $0.1 million (Q4 2019 - utilized cash flows in operations of $1.6 million, net of cash outflows in working capital of $1.0 million).

During the year ended December 31, 2020, the Company utilized cash flows from operations of $6.4 million, net of cash inflows in working capital of $1.5 million (year ended December 31, 2019 - operating cash flows utilized of $8.7 million, net of cash outflows in working capital of $3.8 million). For the year ended December 31, 2020, cash inflows of $1.5 million from non-cash working capital were primarily the result of a $1.6 million decrease in receivables, partly offset by a $0.1 million increase in prepaid expenses.

The change in cash flows used in operating activities from 2019 to 2020 was primarily due to a reduction in the receivable due from the JV related to the Company's service fee earned as operators of the JV, partly offset by an increase in corporate G&A expenses.

Cash from (used in) investing activities

During the three months ended December 31, 2020, cash flows from investing activities related to interest earned on cash balances.

During Q4 2019, the Company generated cash of $20.1 million as a result of a $10.0 million payment received from Gold Fields in connection with the JV Transaction, a $10.0 million preferred share redemption payment from the JV and $0.1 million of interest earned on cash balances.

During the year ended December 31, 2020, the Company generated cash of $37.9 million through investing activities as the Company received $37.5 million in distributions from the JV in the form of preference share redemptions while earning $0.5 million of interest on cash balances. The cash generated through investing activities was partially offset by property, plant and equipment additions of $0.1 million.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

During the year ended December 31, 2019, the Company generated cash of $30.2 million as a result of $20.0 million in payments received from Gold Fields in connection with the JV Transaction, a $10.0 million preferred share redemption payment from the JV and $0.2 million in interest earned on cash balances.

Cash used in financing activities

During Q4 2020, cash provided by financing activities of $0.1 million related to proceeds received upon exercise of share-based options which was partly offset by lease payments on corporate office space. Whereas during Q4 2019, cash used in investing activities related to share repurchases under the NCIB of $1.0 million and office lease payments.

During the year ended December 31, 2020, cash used in financing activities of $0.5 million related to $2.3 million of share repurchases under the NCIB and $0.1 million in lease payments on corporate office space. These factors were partly offset by $1.9 million of proceeds received upon exercise of share-based options. During the 2019, cash used in investing activities related to share repurchases under the NCIB totaling $1.0 million and office lease payments, which were partly offset by proceeds received upon exercise of share-based options of $0.3 million.

8. Non-GAAP measures

The Company has included certain non-GAAP 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 GAAP, certain investors and other stakeholders use this information to evaluate the Company's operating and financial performance; however, as explained elsewhere herein, these non-GAAP 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 GAAP.

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

8.1 Operating cash costs per ounce and total cash costs per ounce

The Company has included the non-GAAP performance measures of operating cash costs per ounce and total cash costs per ounce on a by-product basis throughout this MD&A. In the gold mining industry, this is a common performance measure but does not have any standardized meaning. The Company follows the recommendations of the Gold Institute Production Cost Standard. The Gold Institute, which ceased operations in 2002, was a non-regulatory body and represented a global group of suppliers of gold and gold products. The production cost standard developed by the Gold Institute remains the generally accepted standard of reporting cash costs of production by many gold mining companies. Management uses operating cash costs per ounce and total cash costs per ounce to monitor the operating performance of the JV. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, some investors use this information to evaluate the Company's performance and ability to generate cash flow. Other companies may calculate operating cash costs and total cash costs per ounce differently.

The following tables provide reconciliations of operating and total cash costs per gold ounce of the AGM to production costs of the AGM on a 100% basis (the nearest GAAP measure) as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2020 and 2019.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
(in thousands of US dollars, except per ounce amounts)
Production costs^345^	49,014	52,582	197,706	194,476
Share-based payment expense included in production costs	(198	(152	(1,027	(411
By-product revenue	(244	(239	(930	(832
Total operating cash costs	48,572	52,191	195,749	193,233
Royalties and production taxes	5,556	4,853	20,907	17,159
Total cash costs	54,128	57,044	216,656	210,392
Gold ounces sold	60,655	66,095	243,807	248,862
Operating cash costs per gold ounce sold ($/ounce)	801	790	803	776
Total cash costs per gold ounce sold ($/ounce)	892	863	889	845
^3^ For the year ended December 31, 2019, total production costs exclude a provision for a one-time contract termination fee.
^4^ For the year ended December 31, 2020, total production costs include a gain recognized on the derecognition of a mining <br>contractor services agreement.
^5^ For the year ended December 31, 2020, total production costs exclude one-time severance charges.

All values are in US Dollars.

8.2 All-in sustaining costs per gold ounce

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

All-in sustaining costs adjust "Total cash costs" for G&A expenses, reclamation cost accretion, sustaining capitalized stripping costs (excludes operating pits which have not achieved steady-state operations) and sustaining capital expenditures. Sustaining capital expenditures, capitalized stripping costs and reclamation cost accretion are not line items on the AGM's financial statements. Sustaining capital expenditures are defined as those capital expenditures which do not materially benefit annual or life of mine gold ounce production at a mine site. A material benefit to a mine site is considered to be at least a 10% increase in annual or life of mine production, net present value, or reserves compared to the remaining life of mine of the operation. As such, sustaining costs exclude all expenditures at the AGM's 'new projects' and certain expenditures at the AGM's operating sites which are deemed expansionary in nature. Capitalized stripping costs represent costs incurred at steady-state operations during the period; these costs are not considered expansionary in nature as they relate to currently identified reserves and resources. Reclamation cost accretion represents the growth in the AGM's decommissioning provision due to the passage of time. This amount does not reflect cash outflows, but it is considered to be representative of the periodic costs of reclamation and remediation. Reclamation cost accretion is included in finance expense in the AGM's results as disclosed in the consolidated annual financial statements of the Company for the years ended December 31, 2020 and 2019.

The following table provides a reconciliation of AISC of the AGM to production costs and various operating expenses of the AGM on a 100% basis (the nearest GAAP measure), as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2020 and 2019.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
(in thousands of US dollars except per ounce amounts)	$	$	$	$
Total cash costs (as reconciled above)	54,128	57,044	216,656	210,392
General and administrative expenses - JV	1,345	1,333	7,072	6,341
Sustaining capital expenditures	2,427	1,253	13,971	6,442
Sustaining capitalized stripping costs	9,091	3,405	16,546	37,075
Reclamation cost accretion	174	272	550	903
Sustaining lease payments	4,253	436	16,344	13,705
Interest on lease liabilities	96	307	732	1,817
All-in sustaining cost	71,514	64,050	271,871	276,675
Gold ounces sold	60,655	66,095	243,807	248,862
All-in sustaining cost per gold ounce sold ($/ounce) - JV	1,179	969	1,115	1,112
Average realized price per gold ounce sold ($/ounce)	1,828	1,465	1,711	1,376
All-in sustaining margin ($/ounce)	649	496	596	264
All-in sustaining margin	39,365	32,783	145,309	65,700

Excluded from the G&A costs of the AGM is non-cash share-based compensation expense of $0.1 million and $0.4 million for the three months and year ended December 31, 2020, respectively (three months and year ended December 31, 2019 - $0.1 million and $0.2 million, respectively).

For the three months and year ended December 31, 2020, the Company incurred corporate G&A expenses, net of the JV service fee, of $1.4 million and $5.3 million, respectively, which exclude non-cash share-based compensation expense, depreciation expense and one-time severance charges totaling $0.7 million and $4.6 million, respectively (three months and year ended December 31, 2019 - G&A expenses, net of the JV service fee, of $0.5 million and $4.8 million which exclude non‐cash share‐based compensation expense of $0.5 million and $1.8 million, respectively).

The Company's attributable gold ounces sold for the three months and year ended December 31, 2020 was 27,295 and 109,713, respectively (three months and year ended December 31, 2019 - 29,743 and 111,988 ounces, respectively), resulting in additional all-in sustaining cost for the Company of $50/oz and $48/oz for these periods, respectively, in addition to the AGM's all-in sustaining cost presented in the above table (three months and year ended December 31, 2019 - $15/oz and $43/oz, respectively).

The following table reconciles sustaining capital expenditures on a 100% basis for the AGM to the total capital expenditures of the AGM, as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2020 and 2019.

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
(in thousands of US dollars)
Investing cash flows of the AGM	22,254	12,242	69,108	62,672
Less:
Sustaining capitalized stripping costs	(9,091	(3,405	(16,546	(37,075
Non-sustaining capital expenditures	(11,680	(5,160	(40,140	(18,528
Change in AP related to capital expenditures<br> not included in AISC	945	(2,493	1,336	(912
Interest income received	(1	69	213	285
Total sustaining capital expenditures	2,427	1,253	13,971	6,442

All values are in US Dollars.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The majority of the non-sustaining capital expenditures during the three months and year ended December 31, 2020 related to the relocation of a village near the Esaase deposit and E&E expenditures on the Abore, Adubiaso and Akwasiso tenements.

8.3 Adjusted Net Income (Loss)

The Company has included the non-GAAP performance measures of adjusted net income and adjusted net income per share throughout this MD&A. Neither adjusted net income nor adjusted net income per share have any standardized meaning and are therefore unlikely to be comparable to other measures presented by other issuers. Adjusted net income excludes certain non-cash items from net income or net loss to provide a measure which helps the Company and investors to evaluate the results of the underlying core operations of the Company and its ability to generate cash flows. The Company believes that the presentation of adjusted net income is appropriate to provide additional information to investors regarding items that we do 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. The Company further believes that its presentation of this non-GAAP financial measure provides information that is useful to investors because it is an important indicator of the strength of our operations and the performance of our core business. The following table provides a reconciliation of adjusted net income to net income (loss) (the nearest GAAP measure) per the consolidated annual financial statements for the years ended December 31, 2020 and 2019. All adjustments are shown net of estimated tax.

		Three months ended December 31,		****	Year ended December 31,
		2020	2019	****	2020	2019
(in thousands of US dollars, except per share amounts)				****
Net income (loss) for the period		17,671	(21,205		57,376	(167,928
Interest in impairment of AGM		-	1,977		-	130,315
Change in fair value of preferred shares related to updated<br> 2019 LOM plan		-	20,169		-	40,140
Adjusted net income for the period		17,671	941		57,376	2,527
Basic weighted average number of common share outstanding		224,197,308	225,948,601		223,655,880	225,867,169
Diluted weighted average number of common share outstanding		225,216,468	225,948,601		224,919,474	225,867,169
Adjusted net income per share - basic and diluted	$	0.08	0.00	$	0.26	0.01

All values are in US Dollars.

8.4 EBITDA and Adjusted EBITDA

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

The following table provides a reconciliation of EBITDA and Adjusted EBITDA attributable to the Company based on its economic interest in the JV to net income (loss) (the nearest GAAP measure) of the Company and the JV, respectively, per the consolidated annual financial statements of the Company for the years ended December 31, 2020 and 2019. All adjustments are shown net of estimated income tax.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
(in thousands of US dollars )
Net income (loss) for the period	17,671	(21,205	57,376	(167,928
Add back:
Depreciation and depletion	40	(40	163	(98
Finance income	(1,263	(135	(8,325	(871
Finance expense	10	20,180	45	35,650
EBITDA for the period	16,458	(1,200	49,259	(133,247
Add back (deduct):
Non-cash share based compensation	692	(506	2,168	(1,789
Share of net (earnings) loss related to joint venture	(18,691	-	(59,159	126,264
Galiano's attributable interest in JV Adjusted EBITDA (below)	21,930	14,290	76,045	44,730
Adjusted EBITDA for the period	20,389	12,584	68,313	35,958

All values are in US Dollars.

The following table reconciles the JV's EBITDA and Adjusted EBITDA for the three months and years ended December 31, 2020 and 2019 to the results of the JV as disclosed in note 8 to the Company's consolidated annual financial statements for the years ended December 31, 2020 and 2019.

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
(in thousands of US dollars)
JV net income (loss) for the period	41,547	(285,138	131,519	(280,523
Add back:
JV depreciation and depletion	10,448	30,578	50,934	95,418
JV Finance income	(62	(68	(285	(283
JV Finance expense	1,053	1,095	3,165	8,905
JV EBITDA for the period	52,986	(253,533	185,333	(176,483
Add back (deduct):
Impairment associated with AGM LOM plan	-	289,589	-	289,589
JV Mining contractor lease payments (capitalized leases)	(4,253	(4,301	(16,344	(13,705
JV Adjusted EBITDA for the period	48,733	31,755	168,989	99,401
Galiano's attributable interest in JV Adjusted EBITDA for the period	21,930	14,290	76,045	44,730

All values are in US Dollars.

While the above figure reflects an estimate of the Company's "attributable interest" in Adjusted EBITDA generated from the AGM, these funds are not within the Company's exclusive control as the disposition of cash from the JV is governed by the JVA. The JVA provides that "Distributable Cash" will be calculated and distributed quarterly, if available. "Distributable Cash" means an amount to be calculated at each calendar quarter-end, as being the lesser of (i) cash and cash equivalents which are projected at that time to be surplus to all the JV companies taken together, after providing for all amounts anticipated to be required to be paid during a period of at least the ensuing two calendar quarters in order to pay the net obligations (net of anticipated revenues during such two subsequent quarters) which will arise out of the operations contemplated by the current approved program and budget while also providing for retention of a reasonable amount of cash and cash equivalents for working capital, contingencies and reserves, all of which factors shall be considered by the management committee; and (ii) the maximum amount permissible for distributions to shareholders of a particular JV company at that time in accordance with applicable law and the terms of any third party loan or other agreement in effect which limits distributions from the JV companies. Distributable cash is to be paid out by the JV in certain priority generally to interest and principal of loans, redemption of the preferred shares issued by Shika Group Finance (of which shares each partner holds 137.4 million preferred shares as at December 31, 2020, after redemptions paid by the JV in 2019 and 2020) and finally as dividends on common shares of the JV companies (which the JV partners own 45% each with the Government of Ghana holding 10%).

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

8.5 Free Cash Flow

The Company uses the financial measure Free Cash Flow, which is a non-GAAP financial measure, to supplement information in its consolidated annual financial statements. Free Cash Flow does not have any standardized meaning prescribed under IFRS, and therefore it may not be comparable to similar measures employed by other companies. The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the JV's performance with respect to its operating cash flow capacity to meet non-discretionary outflows of cash. The presentation of Free Cash Flow is not meant to be a substitute for the cash flow information presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Free Cash Flow is calculated as cash flows from operating activities of the JV adjusted for cash flows associated with sustaining and non-sustaining capital expenditures and payments made to mining contractors for leases capitalized under IFRS 16.

The following table provides a reconciliation of Free Cash Flow of the AGM to its cash flows from operating activities on a 100% basis (the nearest GAAP measures), as presented in the notes to the consolidated annual financial statements of the Company for the years ended December 31, 2020 and 2019.

	Three months ended December 31,		Year ended December 31,
	2020	2019	2020	2019
(in thousands of US dollars )
Cash flows from operating activities before working capital <br> changes	53,856	33,808	183,065	109,785
Net change in working capital	(5,859	11,632	(30,743	10,590
Cash flows from operating activtities	47,997	45,440	152,322	120,375
Less:
Cash flows used in investing activities	(22,254	(12,242	(69,108	(62,672
Mining contractor lease payments (capitalized leases)	(4,253	(4,301	(16,344	(13,705
Free Cash Flow for the period	21,490	28,897	66,870	43,998

All values are in US Dollars.

9. Summary of outstanding share data

As of the date of this MD&A, there were 224,405,222 common shares of the Company issued and outstanding and 7,434,535 share purchase options outstanding (with exercise prices ranging between C$0.86 and C$4.77 per share). The fully diluted outstanding share count at the date of this MD&A is 231,839,757.

During the Q4 2020, the Company granted 1,000,000 cash-settled phantom share units to the Chair of the Board. The units will vest three years from the grant date, but will only become payable upon the Chair’s departure from the Board or upon a change of control of the Company, in an amount equal to the value of 1,000,000 common shares (in $C) as at the Chair’s departure date or date of change of control.

10. Related party transactions

As at December 31, 2020, the Company's related parties are its subsidiaries and the JV, its JV partners, and key management personnel (being directors and executive officers of the Company). During normal course of operations, the Company enters into transactions with its related parties. During the three months and year ended December 31, 2020, all related party transactions were in the normal course of business including compensation payments to key management personnel.

As at December 31, 2020, the Company had a $2.7 million receivable owing from the JV in relation to the Company's service fee earned for being the operator of the JV (December 31, 2019 - $4.2 million).

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

In addition to the service fee earned as operator of the JV, the Company's related party transactions included compensation paid to key management personnel, which was as follows for the years presented:

	Year ended December 31,
	2020	2019
	$	$
Salaries and benefits	3,291	3,251
Share-based payments	1,096	1,041
Total compensation	4,387	4,292

11. Critical accounting policies and estimates

11.1 Estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Management believes the estimates and assumptions used in the consolidated annual financial statements are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows. The Company's significant accounting judgments and estimates are presented in note 5 of the consolidated annual financial statements for the years ended December 31, 2020 and 2019.

The Company considered the impact of the COVID-19 pandemic on the significant judgments and estimates made in the consolidated annual financial statements for the years ended December 31, 2020 and 2019 and determined that the effects of COVID-19 did not have a material impact on the estimates and judgments applied.

11.2 Changes in Accounting Policies including Initial Adoption

(a) Accounting standards adopted January 1, 2020

There were no new standards effective January 1, 2020 that had an impact on the consolidated annual financial statements or are expected to have a material effect in the future.

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

The following standards and interpretations, which may be applicable to the Company or the JV, have been issued but are not yet effective as of December 31, 2020:

Amendment to IAS 16

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

12. Risks and uncertainties

12.1 Financial instruments & 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, which can be found under the Company's corporate profile on SEDAR at www.sedar.com, and the Company's most recently filed Form 40-F Annual Report, which can be found on EDGAR at www.sec.gov.

Other than as disclosed below, management is not aware of any significant changes to the risks identified in the Company's most recently filed AIF nor has the Company's mitigation of those risks changed significantly during the year ended December 31, 2020. These risks, and the risk factors disclosed below, could materially affect the Company's business, operations, prospects and share price and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. 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.

Mine Plan

The Company and its JV partner are currently in the process of preparing a new LOM plan and undertaking other technical work at the AGM, which it expects will be included in an updated Mineral Resource and Reserve Estimate with an anticipated effective date of June 30, 2021. The JV has not yet finalized this technical work or the new LOM plan and, once finalized, the LOM plan (and the updated Mineral Resource and Reserve Estimate) may include changes to the assumptions, estimates, parameters and plans reflected in the AGM's current LOM plan including, but not limited to, changes to the current estimates of in‐situ ounces, ore tonnes to be mined in future periods, strip ratios, head grades, recovery rates, gold price assumptions, mining costs, processing costs, trucking costs, capital and closure costs, as well as discount rates. Changes to any of these factors may result in negative impacts on the project economics of the AGM, which may impact the Company’s equity investment in the JV and the valuation of its preferred shares in the JV. Changes in the new LOM plan from the current LOM plan in a manner that reduces the economic benefit to the Company of its interest in the AGM, including reductions in net present values and internal rates of return, could materially impact the Company’s future financial performance.

Financial instruments

The credit risk, liquidity risk and market risk associated with the Company's financial instruments are disclosed in note 21 of the consolidated annual financial statements for the years ended December 31, 2020 and 2019.

Coronavirus

The recent outbreak of COVID-19 has had a negative impact on global financial conditions. COVID-19 emerged in Wuhan, China and has spread globally, including Canada and the US. These markets are a significant source of global demand for commodities, including gold. A sustained slowdown in economic growth or demand in these markets, in either case, that is not offset by reduced supply or increased demand from other regions, could have an adverse effect on the price and/or demand for gold.

In addition, outbreaks or the threat of outbreaks of viruses or other infectious diseases or similar health threats, such as COVID-19, could also cause operational and supply chain delays and disruptions (including as a result of governmental regulation and prevention measures), labour shortages and shutdowns or the inability to sell precious metals. On March 22, 2020, Ghana closed all borders for travel by all persons, and on March 27, 2020, announced restricted movements of people within the major centers of Accra and Kumasi. On August 30, 2020, the President of Ghana announced the reopening of the Kotoka International Airport to passenger travel effective September 1, 2020. To date, mining, power supply and fuel supply operators were exempted from the lockdown and the AGM's operations have not been materially impacted. **** In the event that the prevalence and impacts of COVID-19 continue to increase, governments, including Ghana's government, may increase regulations and restrictions regarding the flow of labour or products, and the Company's and the JV's operations, suppliers, customers and distribution channels could be severely impacted.

At this time, the Company cannot accurately predict what effects COVID-19 will have on mining operations or financial results, including as a result of uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of the travel restrictions and business closures that have been or may be imposed by the governments of impacted countries. The widespread health crisis caused by COVID-19, and its adverse economic and financial impacts, could adversely affect the Company's business, financial condition and results of operations and the market price of the Company's common shares.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

13. Internal control

13.1 Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), on a timely basis so that appropriate decisions can be made regarding public disclosure. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management of the Company, with the participation of the CEO and the CFO, have evaluated the design and operating effectiveness of the Company's disclosure controls and procedures and the design as required by Canadian and United States securities legislation, and have concluded that, as of December 31, 2020, such disclosure controls and procedures were effective.

13.2 Internal Control over Financial Reporting

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

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

The Company's management, with the participation of its CEO and CFO, assessed the effectiveness of the Company's internal control over financial reporting. In making this assessment, management used the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management and the CEO and CFO have concluded that, as of December 31, 2020, the Company's internal control over financial reporting was effective.

13.3 Changes in Internal Control over Financial Reporting

There has been no change in the Company's internal control over financial reporting during the three months ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

13.4 Limitations of controls and procedures

The Company's management, including the CEO and CFO, believes that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments 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.

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

14. Qualified person

The exploration information in this MD&A has been reviewed and approved by Dr. Paul Klipfel, CPG, Senior Vice President Exploration of Galiano Gold Inc. For further information regarding the exploration information in this MD&A, including the Quality Control and Quality Assurance and data verification measures taken with respect to such exploration information, please see the Company’s news releases dated June 25, 2020, July 6, 2020, September 8, 2020, November 30, 2020, February 1, 2021 and February 25, 2021, and filed on the Company’s SEDAR profile at www.sedar.com. All other technical content in this MD&A has been approved by Mr. Mike Begg, Pr.Sci.Nat., former Senior Vice President Technical Services of Galiano Gold Inc. Both Dr. Klipfel and Mr. Begg are “Qualified Persons” as defined by Canadian National Instrument 43-101 (Standards of Mineral Disclosure).

15. Cautionary statements

15.1 Cautionary statement on forward-looking information

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

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

the future price of gold;
the operating plans for the AGM under the JV between the Company and Gold Fields;
the estimation of Mineral Reserves (as defined below) and Mineral Resources (as defined below);
the realization of Mineral Reserve estimates;
the timing and amount of estimated future production from the AGM, including production rates and gold recovery;
operating costs with respect to the operation of the AGM;
capital expenditures that are required to sustain and expand mining activities;
the timing, costs and project economics associated with the JV's development plans for the AGM;
the availability of capital to fund the JV's expansion plans and to fund the Company's contributions to the JV's development plans;
estimates regarding the AGM's consumption of key reagents, consumables, critical spares and diesel fuel; the ability of the AGM to maintain current inventory levels;
the ability of the AGM to continue to operate during the COVID-19 pandemic;
gold production and other activities and that they will not be curtailed as a result of the COVID-19 pandemic;
the AGM's ability to continue to ship doré from the AGM site to be refined; that the doré produced by the AGM will continue to be able to be refined at similar rates and costs to the AGM, or at all;
the other current or potential future effects of the COVID-19 pandemic on the Company's business, operations and financial position, including restrictions on the movement of persons (and in particular, the AGM's workforce), restrictions on business activities, including access to the AGM, restrictions on the transport of goods, trade restrictions, increases in the cost of necessary inputs, reductions in the availability of necessary inputs and productivity and operational constraints, will not impact its 2021 production and cost guidance;

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

the Company's continued work to advance a study to refine the structural, geological and mineralization models for Esaase augmented with a targeted infill drilling program and the further investigations to examine the modeling methodologies and data density;
the Company's and the AGM's responses to the COVID-19 pandemic and that it will be effective in continuing their operations in the ordinary course;
the timing of the development of new deposits;
success of exploration activities;
permitting timelines;
hedging practices;
currency exchange rate fluctuations;
requirements for additional capital;
government regulation of mining operations;
environmental risks and remediation measures;
unanticipated reclamation expenses;
title disputes or claims; and
limitations on insurance coverage.

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

the recent outbreak of COVID-19 has had 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 Company's common shares;
the mineral reserve and 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;
AGM has a limited operating history and is subject to risks associated with establishing new mining operations;
sustained increases in costs, or decreases in the availability, of commodities consumed or otherwise used by the Company may adversely affect the Company;
adverse geotechnical and geological conditions (including geotechnical failures) may result in operating delays and lower throughput or recovery, closures or damage to mine infrastructure;
the ability of the Company to treat the number of tonnes planned, recover valuable materials, remove deleterious materials and process ore, concentrate and tailings as planned is dependent on a number of factors and assumptions which may not be present or occur as expected;
the Company's operations may encounter delays in or losses of production due to equipment delays or the availability of equipment;
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;
the Company's business is subject to risks associated with operating in a foreign country;
risks related to the Company's use of contractors;
the hazards and risks normally encountered in the exploration, development and production of gold;
the Company's operations are subject to environmental hazards and compliance with applicable environmental laws and regulations;

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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;
the Company's exploration programs may not successfully expand its current mineral reserves or replace them with new reserves;
risks associated with establishing new mining operations;
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 growth, future profitability and ability to obtain financing may be impacted by global financial conditions;
there may be adverse Canadian tax consequences for a foreign controlled Canadian company that acquires the securities of the Company;
the Company may be a "passive foreign investment company" in its current and future tax years, which may have adverse U.S. federal income tax consequences for U.S. investors;
as a foreign private issuer, the Company is subject to different U.S. securities laws and rules than a U.S. domestic issuer, which may limit the information publicly available to U.S. investors;
the Company may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses to the Company;
shareholders of the Company 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 their common shares, or at all;
the exercise of stock options or the settlement of the share units and the subsequent resale of such common shares in the public market could adversely affect the prevailing market price and the Company's ability to raise equity capital in the future at a time and price which it deems appropriate;
the Company's revenues are dependent on the market prices for gold, which have experienced significant recent fluctuations;
the Company may not be able to secure additional financing when needed or on acceptable terms;
Company shareholders may be subject to future dilution;
risks related to the control of AGM cashflows and operation through a joint venture;
the results of the Company's ongoing work on the new LOM plan for the AGM may have an impact on the projected life of mine cash flows of the AGM;
risks related to the market price of common shares;
risks related to changes in interest rates and foreign currency exchange rates;
risks relating to credit rating downgrades;
changes to taxation laws applicable to the Company may affect the Company's profitability and ability to repatriate funds;
risks related to the Company's internal controls over financial reporting and compliance with applicable accounting regulations and securities laws;
the carrying value of the Company's assets may change and these assets may be subject to impairment charges;
non-compliance with public disclosure obligations could have an adverse effect on the Company's stock price;
risks associated with changes in reporting standards;
the Company's primary asset is held through a joint venture, which exposes the Company to risks inherent to joint ventures, including disagreements with joint venture partners and similar risks;
the Company may be liable for uninsured or partially insured losses;
the Company may be subject to litigation;
damage to Galiano's reputation could result in decreased investor confidence and increased challenges in developing and maintaining community relations which may have adverse effects on the business, results of operations and financial conditions of the joint venture and the Company and the Company's share price;

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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;
risks related to information systems security threats;
it may not be possible to enforce actions against certain directors and officers of the Company or the experts named in this prospectus under U.S. federal securities laws; and
the risk factors described under the heading "Risk Factors" in the Company's annual information form.

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 ability of the AGM to continue to operate, produce and ship doré from the AGM site to be refined during the COVID-19 pandemic;
that the other current or potential future effects of the COVID-19 pandemic on the Company's business, operations and financial position, including restrictions on the movement of persons (and in particular, the AGM's workforce), restrictions on business activities, including access to the AGM, restrictions on the transport of goods, trade restrictions, increases in the cost of necessary inputs, reductions in the availability of necessary inputs and productivity and operational constraints, will not impact its 2020 production and cost guidance;
the Company and Gold Fields will agree on the manner in which the JV will operate the AGM, including agreement on development plans and capital expenditures;
the price of gold will not decline significantly or for a protracted period of time;
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 JV and the Company to comply with applicable governmental regulations and standards;
the mining laws, tax laws and other laws in Ghana applicable to the AGM and the JV will not change, and there will be no imposition of additional exchange controls in Ghana;
the success of the JV and the Company in implementing its development strategies and achieving its business objectives;
the JV will have sufficient working capital necessary to sustain its operations on an ongoing basis and the Company will continue to have sufficient working capital to fund its operations and contributions to the JV; and
the key personnel of the Company and the JV will continue their employment.

The foregoing list of assumptions cannot be considered exhaustive.

Although the Company has attempted to identify important factors that could cause actual results or events to differ materially from those described in the forward-looking statements, you are cautioned that this list is not exhaustive and there may be other factors that the Company has not identified. Furthermore, the Company undertakes no obligation to update or revise any forward-looking statements included in, or incorporated by reference in, this MD&A if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.

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

GALIANO GOLD INC.

(formerly Asanko Gold Inc.)

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

15.2 Cautionary note for United States investors

As a British Columbia corporation and a "reporting issuer" under Canadian securities laws, the Company is required to provide disclosure regarding its mineral properties, including the AGM, in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101"). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. In accordance with NI 43-101, the Company uses the terms mineral reserves and resources as they are defined in accordance with the CIM Definition Standards on mineral reserves and resources (the "CIM Definition Standards") adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM Council").

The SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the United States Securities and Exchange Commission (the "SEC") under the U.S. Exchange Act. All SEC reporting companies, other than those who file under the Canada-U.S. Multijurisdictional Disclosure System ("MJDS"), will be required to comply with the new rules for their first fiscal year beginning on or after January 1, 2021 (the "SEC Modernization Rules"). The SEC Modernization Rules will replace the historical property disclosure requirements for mining registrants that were included in SEC Industry Guide 7 ("Guide 7"), which will be rescinded. The Company is not required to provide disclosure on its mineral properties, including the AGM, under the SEC Modernization Rules as the Company is presently a "foreign private issuer" under the U.S. Exchange Act that files annual reports or registration statements with the SEC under the MJDS Disclosure System between Canada and the United States.

The SEC Modernization Rules include the adoption of terms describing mineral reserves and mineral resources that are "substantially similar" to the corresponding terms under the CIM Definition Standards. As a result of the adoption of the SEC Modernization Rules, SEC will now recognize estimates of "measured mineral resources", "indicated mineral resources" and "inferred mineral resources". In addition, the SEC has amended its definitions of "proven mineral reserves" and "probable mineral reserves" to be "substantially similar" to the corresponding CIM Definitions.

United States investors are cautioned that while the above terms are "substantially similar" to CIM Definitions, there are differences in the definitions under the SEC Modernization Rules and the CIM Definition Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as "proven reserves", "probable reserves", "measured mineral resources", "indicated mineral resources" and "inferred mineral resources" under NI 43-101 would be the same had the Company prepared the reserve or resource estimates under the standards adopted under the SEC Modernization Rules.

United States investors are also cautioned that while the SEC will now recognize "measured mineral resources", "indicated mineral resources" and "inferred mineral resources", investors should not assume that any part or all of the mineralization in these categories will ever be converted into a higher category of mineral resources or into mineral reserves. Mineralization described using these terms has a greater amount of uncertainty as to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to assume that any "measured mineral resources", "indicated mineral resources", or "inferred mineral resources" that the Company reports are or will be economically or legally mineable. Further, "inferred resources" have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also cautioned not to assume that all or any part of the inferred resources exist. In accordance with Canadian rules, estimates of "inferred mineral resources" cannot form the basis of feasibility or other economic studies, except in limited circumstances where permitted under NI 43-101.

United States investors are also cautioned that disclosure of exploration potential is conceptual in nature by definition and there is no assurance that exploration of the mineral potential identified will result in any category of NI 43-101 mineral resources being identified.

Galiano Gold Inc.: Exhibit 99.3 - Filed by newsfilecorp.com

KPMG LLP<br><br> <br>Chartered Professional Accountants<br><br> <br>PO Box 10426 777 Dunsmuir Street<br><br> <br>Vancouver BC V7Y 1K3<br><br> <br>Canada	Telephone (604) 691-3000<br><br> <br>Fax (604) 691-3031<br><br> <br>Internet www.kpmg.ca

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference of our report dated March 10, 2021, with respect to the consolidated financial statements of Galiano Gold Inc. (the "Company") in the Company's registration statement on Form F-10 (File no. 333-239109), which report has been included in Exhibit 99.1 to the Company's current report on Form 6-K dated March 11, 2021 furnished to the United States Securities and Exchange Commission.

KPMG LLP

/s/ KPMG LLP

Chartered Professional Accountants

March 11, 2021

Vancouver, Canada

Galiano Gold Inc.: Exhibit 99.4 - Filed by newsfilecorp.com

(All dollar amounts are United States dollars unless otherwise stated)

GALIANO GOLD REPORTS Q4 AND FULL YEAR 2020 RESULTS

Vancouver, British Columbia, March 11, 2021 - Galiano Gold Inc. ("Galiano" or the "Company") (TSX, NYSE American: GAU) reports fourth quarter ("Q4") 2020 operating and financial results for Company and for the Asanko Gold Mine ("AGM"), located in Ghana, West Africa. The AGM is a 50:50 joint venture ("JV") with Gold Fields Ltd (JSE, NYSE: GFI), which is managed and operated by Galiano.

Highlights of the Asanko Gold Mine (on a 100% basis)

Exceeded annual production guidance: Annual gold production of 249,904 ounces, exceeding the upper end of 2020 production guidance of 225,000-245,000 ounces, with 65,571 ounces produced in the fourth quarter.
Strong cash generation: Generated $152.3 million of cash flows from operating activities (after taking into account unfavourable working capital changes of $30.7 million) and free cash flow^1^ of $66.9 million during 2020.
Return of capital: Returned $75.0m to joint venture participants through cash distributions in 2020.
Consistent cost performance: For the year ended December 31, 2020, total cash costs per ounce^1^ of $889 and all-in sustaining costs^1^ ("AISC") of $1,115/oz, below revised guidance (as of Q3 2020) of $1,150/oz.

Highlights of the Company

Record earnings: Generated net income after tax for the year of $57.4 million or $0.26 per share.
Stable balance sheet: Cash on hand of $62.2 million and $2.9 million in receivables at December 31, 2020, while remaining debt free.
Refreshed Board and Vancouver based management team: During the year, appointed Paul Wright as Chair of the Board of Directors, formed a new Sustainability sub-committee of the Board under the leadership of Chair of the Sustainability Committee Judith Mosely and augmented the Vancouver-based management team with the appointment of a Chief Operating Officer and various other senior management positions.

"2020 was a strong operational year at the Asanko Gold Mine, despite the challenges presented by COVID-19" said Greg McCunn, Chief Executive Officer. "The AGM exceeded annual production guidance for a second consecutive year, generated record operating cash flows, and executed on a number of exploration programs with promising results at Nkran, Akwasiso and Miradani North. At the corporate level, we delivered record earnings in 2020 and have strengthened our balance sheet with corporate treasury growing to in excess of $62m."

Asanko Gold Mine - Summary of FY 2020 and Q4 2020 Operational and Financial Results (100% basis)

****	Three months ended December 31		Year ended<br><br> <br>December 31
Asanko Gold Mine (100% basis)	2020	2019	2020	2019
Ore mined ('000t)	1,964	1,405	6,193	5,071
Waste mined ('000t)	11,773	4,956	38,272	25,719
Total mined ('000t)	13,737	6,361	44,465	30,790
Strip ratio (W:O)	6.0	3.5	6.2	5.1
Average gold grade mined (g/t)	1.4	1.6	1.5	1.5
Mining cost ($/t mined)	3.20	4.86	3.40	4.52
Ore transportation from Esaase ('000 t)	622	357	2,133	1,464
Ore transportation cost ($/t trucked)	7.15	8.62	7.65	8.83
Ore milled ('000t)	1,438	1,460	5,943	5,498
Average mill head grade (g/t)	1.5	1.5	1.4	1.5
Average recovery rate (%)	95	94	94	94
Processing cost ($/t treated)	10.46	10.83	10.51	10.91
Gold production (oz)	65,571	66,112	249,904	251,044
Gold sales (oz)	60,655	66,095	243,807	248,862
Average realized gold price ($/oz)	1,828	1,465	1,711	1,376
Operating cash costs^1^ ($/oz)	801	790	803	776
Total cash costs^1^ ($/oz)	892	863	889	845
All-in sustaining costs^1^ ($/oz)	1,179	969	1,115	1,112
All-in sustaining margin^1^ ($/oz)	649	496	596	264
All-in sustaining margin^1^($m)	39.4	32.8	145.3	65.7
Revenue ($m)	111.1	97.1	418.1	341.0
Income from mine operations ($m)	46.3	9.1	147.9	29.2
Cash provided by operating activities ($m)	48.0	45.4	152.3	120.4
Free cash flow^1^ ($m)	21.5	28.9	66.9	44.0

There was one Lost Time Injury ("LTI") and three Total Recordable Injuries ("TRI") reported during the quarter. The AGM's LTI and TRI frequency rates for the three months ended December 31, 2020 were 0.37 and 1.10 per million employee hours worked, respectively.
Produced 65,571 and 249,904 ounces of gold in Q4 2020 and FY 2020, respectively, exceeding the upper-end of 2020 production guidance of 225,000-245,000 ounces.
Sold 60,655 ounces of gold in Q4 2020 at an average realized gold price of $1,828/oz for record total gold sales proceeds of $110.9 million, an increase of $14.0 million from Q4 2019. The increase in revenue quarter-on-quarter was a function of a 25% improvement in average realized gold prices, partly offset by an 8% decrease in sales volumes in Q4 2020.
The AGM incurred operating cash costs per ounce^1^, total cash costs per ounce^1^ and AISC^1^ per ounce of $801, $892 and $1,179, respectively, in Q4 2020.
Total cost of sales (including depreciation and depletion and royalties) amounted to $64.8 million in Q4 2020, a decrease of $23.2 million from Q4 2019. The decrease in cost of sales was primarily due to lower depreciation and depletion expense associated with a lower depreciable asset cost base in the current quarter. This factor was partly offset by a higher royalty expense arising from improvement in the gold price during Q4 2020 compared to Q4 2019.
Net income for Q4 2020 totaled $41.5 million compared to a net loss of $285.1 million in Q4 2019. The Q4 2019 net loss was due to an impairment recognized on the AGM's non-current assets associated with an updated LOM plan. The remaining improvement in net income during the current quarter was due to higher realized gold prices and the above-mentioned reduction in depreciation and depletion expense.
The AGM generated $48.0 million of cash flows from operating activities (after taking into account unfavorable working capital changes of $5.9 million) and free cash flow^1^ of $21.5 million during Q4 2020. This compares to $45.4 million of cash flows from operating activities (after taking into account favorable working capital changes of $11.6 million) and $28.9 million of free cash flow^1^ during Q4 2019. The reduction in free cash flow^1^ was the result of a $17.5 million unfavorable increase in cash invested in non-cash working capital when comparing Q4 2020 to Q4 2019 and a $10.0 million increase in cash flows associated with capital expenditures during Q4 2020. These factors were partly offset by a $17.0 million increase in the AGM's Adjusted EBITDA^1^.
AISC^1^ for the FY 2020 was $1,115/oz, below revised guidance (as of Q3 2020) of $1,150/oz, and was in line with FY 2019 AISC^1^ of $1,112/oz.
Reported Adjusted EBITDA^1^ of $169.0 million in FY 2020 compared to $99.4 million in FY 2019.
For FY 2020, the JV generated $152.3 million in operating cash flow and free cash flow^1^ of $66.9 million.
As at December 31, 2020, the JV held cash and cash equivalents of $64.3 million (including $30.0 million fully drawn on the AGM's revolving credit facility), $10.9 million in receivables from gold sales and $8.2 million in gold on hand.

Galiano Gold Inc. - Summary FY 2020 and Q4 2020 Financial Results

****	Three months ended December 31		Year endedDecember 31
Galiano Gold Inc. (consolidated)	2020	2019	2020	2019
Net income (loss) after tax ($m)	17.7	(21.2)	57.4	(167.9)
Net income (loss) after tax per share	$0.08	($0.09)	$0.26	($0.74)
Adjusted net income (loss)^1^ ($m)	17.7	0.9	57.4	2.5
Adjusted net income (loss) per share^1^	$0.08	$0.00	$0.26	$0.01
Adjusted EBITDA^1^ ($m)	20.4	12.6	68.3	36.0

The Company reported net income after tax of $17.7 million in Q4 2020 compared to a net loss after tax of $21.2 million in Q4 2019. The improvement in earnings during Q4 2020 was predominantly due to the fact that the Q4 2019 net loss included a $20.2 million downward fair value adjustment on the Company's redeemable preference shares in the JV associated with an update to the AGM LOM plan. Additionally, the improvement in earnings in Q4 2020 was also partly due to an increase in the Company's 45% interest in the net earnings of the JV which totaled $18.7 million for the quarter.
Reported Adjusted EBITDA^1^ of $20.4 million for Q4 2020, compared to $12.6 million in Q4 2019. The increase in Adjusted EBITDA^1^ was primarily a result of the increase in the Company's interest in the AGM's net earnings.
For FY 2020, the Company reported net income after tax of $57.4 million compared to a net loss of $167.9 million in FY 2019. The improvement in earnings in FY 2020 was due to an increase in the Company's 45% interest in the net earnings of the JV which totaled $59.2 million for the year, while FY 2019 including impairment charges associated with an update to the AGM's LOM plan.
Reported Adjusted EBITDA^1^ of $68.3 million for FY 2020 compared to $36.0 million in FY 2019. The improvement in Adjusted EBITDA^1^ was primarily a result of an increase in the Company's interest in the AGM's net earnings.
The Company held cash and cash equivalents of $62.2 million and $2.9 million in receivables as at December 31, 2020, while remaining debt-free.

2021 Outlook

In 2021, the AGM is targeting 225,000 to 245,000 ounces of gold production at AISC^1^ of $1,100 to $1,300 per ounce. AISC^1^ includes budgeted sustaining capital expenditures of $20 million, with approximately $13 million for a tailings storage facility lift.

The mine plan for 2021 plans to source ore primarily from Akwasiso and Esaase. These ore sources are expected to be augmented where necessary with run‐of‐mine stockpile material. Accordingly, budgeted AISC^1^ for 2021 includes approximately $60 to $80 per ounce of non-cash charges associated with processing stockpiled ore.

This news release should be read in conjunction with Galiano's Management's Discussion and Analysis and the Consolidated Annual Financial Statements for the years ended December 31, 2020 and 2019, which are available at www.galianogold.com and filed on SEDAR.

^1^ Non-GAAP Performance Measures

The Company has included certain non-GAAP performance measures in this press release. These non-GAAP performance measures do not have any standardized meaning. 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 GAAP. Refer to the Non-GAAP Measures section of Galiano's Management Discussion and Analysis for an explanation of these measures and reconciliations to the Company's and the JV's reported financial results in accordance with IFRS.

Operating Cash Costs per ounce and Total Cash Costs per ounce

Operating cash costs are reflective of the cost of production, adjusted for share-based payments and by-product revenue per ounce of gold sold. Total cash costs include production royalties of 5%. Excluded from operating cash costs are one-time severance charges.

All-in Sustaining Costs Per Gold Ounce

The Company has adopted the reporting of "all-in sustaining costs per gold ounce" ("AISC") as per the World Gold Council's guidance. AISC include total cash costs, corporate overhead expenses, sustaining capital expenditure, capitalized stripping costs and reclamation cost accretion per ounce of gold sold.

Adjusted EBITDA

EBITDA provides an indication of the Company's continuing capacity to generate income from operations before taking into account the Company's financing decisions and costs of amortizing capital assets. Accordingly, EBITDA comprises net income (loss) excluding interest expense, interest income, amortization and depletion, and income taxes. Adjusted EBITDA adjusts EBITDA to exclude non-recurring items and to include the Company's interest in the adjusted EBITDA of the JV. Other companies and JV partners may calculate EBITDA and Adjusted EBITDA differently.

Free cash flow

The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use free cash flow to evaluate the JV's performance with respect to its operating cash flow capacity to meet non-discretionary outflows of cash. The presentation of free cash flow is not meant to be a substitute for the cash flow information presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Free cash flow is calculated as cash flows from operating activities of the JV adjusted for cash flows associated with sustaining and non-sustaining capital expenditures and payments made to mining contractors for leases capitalized under IFRS 16.

Enquiries:

Peter Lekich

VP Investor Relations

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

Telephone: 1-778-729-0608

Email: peter.lekich@galianogold.com

About Galiano Gold Inc.

Galiano is focused on creating **** a sustainable business capable of long-term value creation for its stakeholders through exploration and disciplined deployment of its financial resources. The company currently operates and manages the Asanko Gold Mine, located in Ghana, West Africa which is jointly owned with Gold Fields Ltd. The Company is strongly committed to the highest standards for environmental management, social responsibility, and health and safety for its employees and neighbouring communities. For more information, please visit www.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: estimates regarding the value of the gold currently held at the AGM; expectations with respect to the Company's exploration program, including the expected results therefrom and the associated impact on the AGM's mineral reserve and resource estimates, the timelines associated therewith, additional follow-on exploration programs, the ability of the exploration program to replace depletion from mining operations and the expected cost of the exploration program; statements with respect to future sales pursuant to the Company's at-the-market offering; statements with respect to planned mining and development operations at the AGM for 2021; expectations regarding development capital; expected gold production; and cost estimates. Such forward-looking statements are based on a number of material factors and assumptions, including, but not limited to: the ability of the AGM to continue to operate during the COVID-19 pandemic; that gold production and other activities will not be curtailed as a result of the COVID-19 pandemic; that the AGM will be able to continue to ship doré from the AGM site to be refined; that the doré produced by the AGM will continue to be able to be refined at similar rates and costs to the AGM, or at all; that the other current or potential future effects of the COVID-19 pandemic on the Company's business, operations and financial position, including restrictions on the movement of persons (and in particular, the AGM's workforce), restrictions on business activities, including access to the AGM, restrictions on the transport of goods, trade restrictions, increases in the cost of necessary inputs, reductions in the availability of necessary inputs and productivity and operational constraints, will not impact its 2021 production and cost guidance; that the Company's and the AGM's responses to the COVID-19 pandemic will be effective in continuing its operations in the ordinary course; the accuracy of the estimates and assumptions underlying the Mineral Resource and Mineral Reserve estimates, including future gold prices, cut-off grades and production and processing estimates; the successful completion of development and exploration projects, planned expansions or other projects within the timelines anticipated and at anticipated production levels; that mineral resources can be developed as planned; that the Company's relationship with joint venture partners will continue to be positive and beneficial to the Company; interest and exchange rates; that required financing and permits will be obtained; general economic conditions; that labour disputes or disruptions, flooding, ground instability, geotechnical failure, fire, failure of plant, equipment or processes to operate are as anticipated and other risks of the mining industry will not be encountered; that contracted parties provide goods or services in a timely manner; that there is no material adverse change in the price of gold or other metals; competitive conditions in the mining industry; title to mineral properties; costs; taxes; the retention of the Company's key personnel; and changes in laws, rules and regulations applicable to Galiano.

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 Company's and/or the AGM's operations may be curtailed or halted entirely as a result of the COVID-19 pandemic, whether as a result of governmental or regulatory law or pronouncement, or otherwise; that the doré produced at the AGM may not be able to be refined at expected levels, on expected terms or at all; that the Company and/or the AGM will experience increased operating costs as a result of the COVID-19 pandemic; that the AGM may not be able to source necessary inputs on commercially reasonable terms, or at all; the Company's and the AGM's responses to the COVID-19 pandemic may not be successful in continuing its operations in the ordinary course; mineral reserve and 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; AGM has a limited operating history and is subject to risks associated with establishing new mining operations; sustained increases in costs, or decreases in the availability, of commodities consumed or otherwise used by the Company may adversely affect the Company; 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; adverse geotechnical and geological conditions (including geotechnical failures) may result in operating delays and lower throughput or recovery, closures or damage to mine infrastructure; the ability of the Company to treat the number of tonnes planned, recover valuable materials, remove deleterious materials and process ore, concentrate and tailings as planned is dependent on a number of factors and assumptions which may not be present or occur as expected; the Company's operations may encounter delays in or losses of production due to equipment delays or the availability of equipment; 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; the Company's business is subject to risks associated with operating in a foreign country; risks related to the Company's use of contractors; the hazards and risks normally encountered in the exploration, development and production of gold; the Company's operations are subject to environmental hazards and compliance with applicable environmental laws and regulations; the 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; the Company's properties may be subject to claims by various community stakeholders; risks related to limited access to infrastructure and water; the Company's exploration programs may not successfully expand its current mineral reserves or replace them with new reserves; the Company's common shares may experience price and trading volume volatility; the Company's revenues are dependent on the market prices for gold, which have experienced significant recent fluctuations; the Company may not be able to secure additional financing when needed or on acceptable terms; Company 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; the Company's primary asset is held through a joint venture, which exposes the Company to risks inherent to joint ventures, including disagreements with joint venture partners and similar risks; risks related to the Company's internal controls over financial reporting and compliance with applicable accounting regulations and securities laws; the carrying value of the Company's assets may change and these assets may be subject to impairment charges; the Company may be liable for uninsured or partially insured losses; the Company may be subject to litigation; 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; and risks related to information systems security threats.

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 Toronto Stock Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Source: Galiano Gold Inc.

Galiano Gold Inc 6-K, filed Mar 11, 2021

About this 6-K