Austral Gold Completes Connection To National Grid And Commences Ramp Up Testing Of New Plant

Austral Gold Limited ('the Company') is pleased to announce that on 6 June 2017 the 35km long 33kv transmission line from the mine to the northern Chile National grid (SING) was energized, following final approval from the national grid operator CEN (Coordinador Eléctrico Nacional).

Connection to the grid should provide lower cost electricity, secured through a purchase agreement with the Almeyda Solar, a subsidiary of Enel Green Power Group. Since recommencement of operations at Guanaco in 2010 all electricity has been produced using diesel generators at the company's own onsite powerhouse.

The electrification of the line enables the company to commence ramp up testing of the recently of the agitation leach plant prior to going fully operational. The company expects to commence full operation by end of the month.

Once the plant is operational trucking and processing of mineralized material that is currently being stockpiled at Amancaya is expected to commence at the new plant.

"The approval for the energization of the transmission line is a significant step in the transformation at Guanaco. Not only do we expect a reduction of our electrical input costs, but it also allows us to commence ramp up testing of the new 1500tpd mill and agitation leach, Merrill-Crowe circuit," stated Stabro Kasaneva, CEO of Austral Gold. "We are very excited about this transition to a high recovery operation that should benefit our production and provide a platform for potential long term operations at Guanaco."

The transmission line connects the mine's substation to the northern grid at the Taltal Wind farm substation. The Chilean national grid is in the process of interconnecting the central grid (SIC) with the northern grid (SING), with the interconnecting transmission line under construction. The Company's existing diesel generators will provide back-up power to the mine in the event of disruption of supply from the grid.

Agitation Leach, Merrill-Crowe Plant
The new plant has been completed, with all elements of the plants fully tested. Ramp up testing is underway, with the complete circuit being tested at varying feed rates. It is expected that full operation will commence by the end of the month.