Patagonia Gold : Operations Update

21 February 2018

Patagonia Gold Plc

('Patagonia Gold' or the 'Company')

Operations Update

Patagonia Gold Plc, the mining company with gold and silver projects in the southern Patagonia region of Argentina, Chile and Uruguay, is pleased to provide an update on Operations.

Summary

· Production:

- Total production for 2017 was 26,005 oz AuEq (2016: 25,800 oz AuEq, 2015: 21,521 oz AuEq)

- Monthly production continues to ramp up at Cap Oeste and in January 2018, 3,646 oz AuEq were produced with February on schedule to exceed 4,200 AuEq

- Cash costs in January were USD 711 per oz AuEq

- Production guidance for 2018 is estimated at 59,000 ozs AuEq

· Following the update of the Cap-Oeste resource model the Company continues to evaluate alternatives to extract value from the 295,000 oz AuEq COSE style ore situated below the existing pit design

· A resource update of Calcatreu at current metal prices is underway and is expected to be complete by 31 March 2018

Production

Gold production at Cap Oeste continues to ramp up with January 2018 production reaching 3,646 oz AuEq, andFebruary production is on target to exceed 4,200 oz AuEq. Although production for 2017 was below expectations due to a series of issues including importation delays, equipment downtime and industrial action the Company is now confident the circuit is running well and that 2018 production guidance will be achieved. The circuit is now fully commissioned and operating with an 85% plus availability. A better understanding of the leaching kinetics of the Cap-Oeste deposit combined with improvements made in the operating efficiencies of the circuit, higher grade mine feed as the pit deepens, and changes made to the leaching cycles has led to higher production and reductions in cash operating costs.

Engineering design and the acquisition of a second crushing and mixing circuit is now well underway with all major components purchased and in transit or currently under refurbishment. This circuit will be installed in Cap-Oeste in late Q2 with the objective of retreating approximately 800,000T of ore previously stacked before the agglomeration circuit was installed and operational. Due to the high moisture content and considerable clay content, a specialised roll crusher circuit has been sourced to enable this wet material to be treated without blocking the crushing equipment.

A trial re-crushing and leaching programme is due to start at Lomada during the second quarter; a trial of approximately 100,000T of higher grade previously stacked and leached ROM material will be mixed and crushed and then restacked with the objective of recovering any metal not leached from the uncrushed material. No estimate of anticipated production will be given at this point however management is positive the exercise will generate positive cashflow, and the operating cash cost is estimated at approximately $4/T of material re-crushed. Further updates will be provided as the programme gets underway.

Cap-Oeste resource update

On 3 November 2017, the Company announced an update of the Cap Oeste resource model, which confirmed a JORC compliant resource model of Measured and Indicated resources containing 10,555,741T @ at an average grade of 2.07 g/t Au and 62.85 g/t Ag for 1,009,000 oz AuEq reported below the existing final pit design currently being mined. A portion of this resource is made up of high grade COSE style non refractory mineralisation which totals 472,426T @ 12.63 g/t Au and 469.96 g/t Ag for 294,596 Oz AuEq contained metal at a grade of 19.4g/t AuEq. The Company is currently evaluating the best means by which to realise value from this resource, including mining the resource and treating at its existing facility.

The Resource remaining as at 31 December 2017 are tabled below:

Gold equivalent (Au_equ) values are calculated at a ratio of 69.4:1 Au/Ag.

Rounding errors for averages and totals may occur

Resources were calculated at Au price of $1250/oz and Ag price of $18/oz

Calcatreu

Following the purchase of the Calcatreu project announced on 1 February 2018, the Company has engaged the services of CUBE Consulting to update the Calcatreu resource model at current metal prices. The current resource model was prepared by MICON International in February 2008 using prevailing metal prices of $650/oz Au and $12.50/oz Ag. The global resource reported contained 780,000 Oz AuEq @ 3.04 g/t in the Indicated category and a further 255,000 oz AuEq at 2.33 g/t in Inferred category. The new 43-101 complaint resource model is scheduled to be completed and released by 31 March 2018.

Exploration work will commence this month at Calcatreu with a Geophysics crew starting an Induced Polarisation programme on the extension of existing mineralisation where historic anomalies already exist. No exploration drilling has been completed on the Calcatreu project for the last 10 years and previously only exposed vein systems were tested, leaving in excess of 8km of strike potential completely untested with modern exploration techniques. The company remains very optimistic that further mineralisation will be encountered within the tenement package. Further updates will be provided in due course.

Glossary of technical terms

Matthew Boyes, (BSC. Geology, Fellow AusIMM) Chief Operating Officer for the Company and a qualified person as defined in Canadian National Instrument 43-101, has reviewed and verified all scientific or technical mining disclosure contained in this announcement.

- Ends -

About Patagonia Gold

Patagonia Gold Plc is a mining company that seeks to grow shareholder value through exploration, development and production of gold and silver projects in the southern Patagonia region of Argentina. The Company is primarily focused on three projects: the flagship Cap-Oeste project, the La Manchuria project and the Lomada heap leach project. Patagonia Gold, indirectly through its subsidiaries or under option agreements, has mineral rights to over 220 properties in several provinces of Argentina, Chile and Uruguay and is one of the largest landholders in the province of Santa Cruz.

For more information, please contact:

Christopher van Tienhoven, Chief Executive Officer

Patagonia Gold Plc

Tel: +54 11 5278 6950

Angela Hallett and Richard Tulloch

Strand Hanson Limited (Nominated Adviser and Broker)

Tel: +44 (0)20 7409 3494

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR').