Austral Gold Announces Initial Results from Infill Drill Program at its Gold Silver Amancaya Project

The infill program, which commenced on September 8^th, targeted the Central and Julia veins, which host the gold and silver epithermal inferred resource that is the focus of an ongoing Pre-Feasibility study expected to be completed by the first quarter of 2017. The Amancaya project is located 60 km southwest of the Company's underground gold mine, Guanaco, approximately 250 km from Antofagasta in northern Chile.

Highlights from assays received to date:

• Drilling has expanded high grade zones and has shown there is a good consistency to date within the resource on the Central Vein,

• AM-038: 7.5 metres @ 22.56 g/t gold and 713.7 g/t silver from 12 metres,

• AM-028: 4 metres @ 39.74 g/t gold and 283.3 g/t silver from 72 metres,

• AM-047: 3.4 metres @ 35.13 g/t gold and 76.9 g/t silver from 150.74 meters

• AM-027: 10 metres @ 11.64 g/t gold and 270.4 g/t silver from 24 metres

• AM-036: 4.01 metres @ 25.79 g/t gold and 226.2 g/t silver from 155.96 metres

• AM-017: 3.97 metres @ 23.63 g/t gold and 337.8 g/t silver from 49.55 metres

• AM-047: 3.42 metres @ 35.13 g/t gold and 76.9 g/t silver from 150.74 metres

"We are very pleased with the first assay results from the infill program, where drilling has recently been completed. These initial assays from the Central Vein have confirmed and extended the multiple high grade zones. In general, the width of the vein encountered to date is greater than that previously modelled", stated Stabro Kasaneva, CEO of Austral Gold. "We look forward to receiving the remaining 50% of the assays, and are hopeful that the revised model will see an increase in ounces and grade as we advance the Pre-Feasibility study towards completion during the first quarter of 2017."

The infill program of approximately 13,312 metres was completed on November 30^th. A total of 93 holes were drilled, all of which were initially drilled with reverse circulation collaring and converted to diamond drilling as they approached the vein target areas. This resulted in approximately 87% of the drilled metres being comprised of reverse circulation, and 13% represented as diamond drilling. Assay results for 49 of these holes, all on the Central Vein, have been received and are reported in this news release.

The drill program was designed to test and confirm the presence and consistency of mineralisation within the inferred resource that was previously reported at Amancaya in the amended Technical Report (Amancaya Technical Report) "Guanaco Gold Project, Antofagasta Province, Region II, Chile, NI 43-101 Technical Report", which had an effective date of November 24, 2015 and which was amended June 30 2016, and filed on July 25, 2016 on the Company's profile on www.sedar.com. Most of the historical drilling used to define the inferred resource was reverse circulation drilling.

Summary of significant results from the drilling with assays from 49 holes obtained to date:

*True width is inferred as being 70% of the down-hole intercept, although ranges from 65-89% subject to intersection with sub-vertical veins and drilling dip.

The Central Vein
All the results received and reported to date come from the Central Vein (see Figure 1). Drilling commenced in the northern section of this vein and progressed moving south along the vein, with holes designed and drilled to intersect the vein as close to perpendicular as possible. As seen in Figure 1 the Central Vein strikes NNE in the outcropping northern half of the vein before changing to a more NW trend to the south. This change of strike is the combination of the two mineralized strikes present at the Amancaya project (see inset map in Figure 1), and are assumed to represent tensional syn-mineralisation faulting. The Central Vein is hosted in a lithic-rich andesitic pyriclastic flow unit (Amancaya Breccia), with argillic alteration. The high silver grades (up to 794 g/t Ag) exhibited mainly in the shallower areas of the mineralisation are assumed to have been the result of secondary enrichment during weathering. Figure 2 shows a typical cross section of the vein, showing the thickness and grades continuity at depth, with high grades along a vertical interval of ~300 metres.

Figure 3 shows a grade (g/t gold) by true width (metres) contoured long section of the Central Vein prior to the infill program. Incorporation of the results from the 49 holes reported in this press release shows a significant growth in the size of the high grade areas (see Figure 4). In general, the high grade zone develops from surface to ~200 metres deep, and it has a different plunge for the two different strikes of the vein: almost horizontal in the NNE (north) portion, and close to 45 degrees SE in the NW (south) portion of the vein. The results received to date from the northern half of the Central Vein (Figure 4) have considerably extended the northern high grade zone that was previously intersected by the reverse circulation hole EX-022. Holes AM-015, AM-018, AM-022, AM-044, AM-047 and AM-048 have extended the horizontal strike extent of this zone to approximately 200 m and the vertical extent to 100 metres. A second high grade zone that was previously interpreted to extend from surface to 125 metres below surface immediately to the north of the change in strike of the vein has been considerably extended in horizontal length and vertical depth by these results. This high grade zone, with a central high grade core (AM-028: 4 m at 39.74 g/t gold and 283.3 g/t silver) now has a vertical depth from surface of approximately 175 metres and a horizontal strike length of approximately 250 metres. The northern half section of the Central Vein remains open at depth in the central section and sub horizontal extensions to the north.

Figure 1: Central Vein Drilling Plan and Reported Results

To view an enhanced version of Figure 1, please visit: http://orders.newsfilecorp.com/files/690/24089_a1481756813560_42.jpg

Figure 2: Cross Section Central Vein: 7172175N

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Figure 3: Long section of Central Vein Prior to Infill Drill Program: Gold (g/t) x metres Contours

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Figure 4: Long section of Central Vein Including Infill Drill Program: Gold (g/t) x metres Contours

To view an enhanced version of Figure 4, please visit: http://orders.newsfilecorp.com/files/690/24089_a1481756815232_46.jpg

Quality Assurance
For reverse circulation drilling two samples were collected following passing through a cyclone and riffle splitter. Chip samples were collected and bagged with a unique identifier number. For diamond drill holes, sample intervals were marked and the core was split with a mechanical splitter. One half of the core was placed in plastic bags and tagged with a unique sample number. The other half of the core was returned to the core box and securely stored. During the sampling processes, as per the QA/QC protocols, blanks and standards were submitted into the sample stream at regular intervals. Drill samples were sent to the Actlabs laboratory in Coquimbo, Chile, where they were crushed and prepared. Gold assays were done using 1A2-30 code FA-AAS procedure on a 30g sample. Base metal assaying was done by multi-element 5AAS-07 AR-AAS 2g/100ml ICP-MS analysis. Samples over limit in silver, lead, zinc, and/or copper are reanalysed by a high detection limit ICP-ES analysis (7AR procedure). Activation Laboratories Ltd.is an ISO 17025 certified full-service commercial laboratory, with its head office located in Ancaster, Ontario, Canada.

Qualified Persons
The scientific and technical content of this news release has been prepared by, or under the supervision of Michael Brown, MAIG, and has been reviewed and approved by him. Mr Brown is a Geologist and Member of Australian Institute of GeoScientists and an employee of Austral Gold Ltd.. Mr Brown is a "qualified person" for the purposes of National Instrument 43-101, Standards of Disclosure for Mineral Projects.

About Austral Gold

Austral Gold Ltd. is a growing precious metals mining, development and exploration company building a portfolio of quality assets in Chile and Argentina. The Company's flagship Guanaco project in Chile is a low-cost gold and silver producing mine with further exploration upside. The Company is also operator of the underground silver-gold Casposo mine in San Juan, Argentina. With an experienced local technical team and highly regarded major shareholder, Austral's goal is to continue to strengthen its asset base through acquisition and discovery. Austral Gold Ltd. is listed on the TSX Venture Exchange (TSXV: AGLD), and the Australian Securities Exchange (ASX: AGD). For more information, please consult the company's website www.australgold.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

On behalf of Austral Gold Ltd.:

"Stabro Kasaneva"

President and CEO

Further information please contact:

Forward Looking Statements
Statements in this news release that are not historical facts are forward-looking statements. Forward-looking statements are statements that are not historical, and consist primarily of projections - statements regarding future plans, expectations and developments. Words such as "expects", "intends", "plans", "may", "could", "potential", "should", "anticipates", "likely", "believes" and words of similar import tend to identify forward-looking statements. Forward-looking statements in this news release include; are hopeful that the revised model will see an increase in ounces and grade, expectations that the Pre-Feasibility study will advance and be completed by the first quarter of 2017. All of these forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, business integration risks; uncertainty of production, development plans and cost estimates, commodity price fluctuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets, uncertainty in the measurement of mineral reserves and resource estimates, Austral's ability to attract and retain qualified personnel and management, potential labour unrest, reclamation and closure requirements for mineral properties; unpredictable risks and hazards related to the development and operation of a mine or mineral property that are beyond the Company's control, the availability of capital to fund all of the Company's projects and other risks and uncertainties identified under the heading "Risk Factors" in the Company's continuous disclosure documents filed on SEDAR. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Austral cannot assure you that actual events, performance or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. Austral's forward-looking statements reflect current expectations regarding future events and operating performance and speak only as of the date hereof and Austral does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements.