Avnel Gold Mining : Files Second Quarter 2016 Financial Statements and MD&A

• Discussions continue with banks and financial institutions on financing the Kalana Main Project

• Kalana Main Project cost optimisation studies continue.

• Appointed Mr Charles Graham as Project Manager and Mr Raymond Deen as Project Controls Manager for the Kalana Main Project

• Appointed ABS Africa to assist Avnel to develop strategies, policies and action plans to meet the requirements of the Environmental and Social Management plan.

  Subsequent to June 30, 2016:

• All Broker warrants and compensation units expiring by July 16, 2016 were exercised for net proceeds of US$235,000. In addition further warrants, issued in 2014, have been exercised for net proceeds of $173,000.

• Appointed Epoch Resources, who completed the Tailings Storage Facility design for the feasibility study, to commence with detailed engineering design to enable tender for construction to be issued by end Q3 2016

• Appointed ESDCO, a Malian Consultant who completed the socio-economic and Resettlement Action Plan for the Feasibility Study, to design and manage the implementation of the Resettlement Action Plan for Kalana Town and other impacted areas

A positive feasibility study for the Kalana Main Project (the "Feasibility Study") has been completed and the related Environmental and Social Impact Assessment ("ESIA") and associated Environmental and Social Management Plan ("ESMP") have been approved by the Malian authorities. The approval of the ESIA was the key government approval required to advance the Kalana Main Project towards construction as the Kalana Exploitation Permit was awarded to Avnel in 2003 with an initial term of 30 years. The only significant government approval required to develop new mines on the permit is an ESIA and the associated ESMP. The ESIA has been prepared to conform to the requirements of the International Finance Corporation's Performance Standards, the World Bank Group's Environmental, Health, and Safety guidelines, and other financial institutions that are signatories to the Equator Principles.

The Company continues to advance the Kalana Main Project towards a construction decision through its 80% ownership in Société d'Exploitation des Mines d'Or de Kalana, S.A. ("SOMIKA"). Discussions continue with banks and other financial institutions to provide financing for the development of the Kalana Main Project. Cost optimisation analysis continued in the period on the construction costs of the Kalana Main Project. The Company anticipates that the Kalana Main Project will be sufficiently advanced to consider a construction decision quarter 4, 2016 / quarter 1, 2017, subject to the availability of adequate financing on a timely basis.

In anticipation of a construction decision Avnel has commenced building the project team to implement the Kalana Main Project. The team includes project dedicated staff, specialist staff and consultants for environmental and RAP implementation, design and construction engineer for the TSF and mining engineering consultants. Avnel is investigating the award of an EPC contract for the gold plant and associated infrastructure in Q4 2016.

With respect to operations at the small, Soviet-era, underground Kalana Mine, gold production in the first half of 2016 was 4,853 ounces. The Company forecasts gold production of 3,800 ounces in the second half of 2016. Although the Kalana Mine was cash flow positive in 2015, the Company does not expect the mine to be cash positive under the prevailing gold price environment and lower mine grades. The Company continues to sustain operations to partially offset the cost of providing underground access to facilitate due diligence activities necessary to secure mine development financing. The continued operation of the mine also helps to maintain socio-economic stability in the local community in compliance with World Bank Equatorial principles and Malian laws the workforce prepares to transition to activities related to the construction and operation of the proposed Kalana Main Mine. The Company intends to sustain operations for as long as economically feasible and safe to do so, without incurring any significant capital expenditures, until such a time as the Company is able to evaluate development options for the Kalana Main Project.

Metal revenues reduced to $6,211,000 in the half year to June 30, 2016 from $6,466,000 in the half year to June 30, 2015. The reduction in revenue was due to a 5% reduction in ounces sold from 5,332 ounces in the half year to June 30, 2015 relative to 5,041 ounces in the half year to June 30, 2016. The reduction in revenue was partly offset by a 2% increase in the realised average sales price of gold from

$1,210 per ounce in the half year to June 30, 2015 to $1,230 per ounce in the half year to June 30, 2016.

Total expenses increased by 4% from $8,081,000 in the half year to June 30, 2015 to $8,376,000 in the half year to June 30, 2016. The increase in expenses is mainly attributed to exploration costs expensed in the half year to June 2016 of $270,000 compared to nil in the first half of 2015. Operating costs per ounce of gold sold for the half year to June 30, 2016 increased from $1,000 per ounce to $1,060 per ounce, which is mainly attributable to lower production in the current period relative to the comparative period.

Avnel recorded a net loss of $3,608,000 ($0.009 attributable loss per share) for the half year ended June 30, 2016 compared to a net loss of $2,406,000 ($0.006 attributable loss per share) in the half year to June 30, 2015. Included in the half year to June 30, 2016 is a loss on the fair value of derivative financial instruments of $1,381,000 compared to a loss of $679,000 in the first half of 2015, arising from a change in the fair value of warrants outstanding. The fair value accounting losses reported have no cash effect on the Company.

As compared to the consolidated statement of financial position as at December 31, 2015, Avnel's cash and cash equivalents as at June 30, 2016 reduced by $3,114,000 from $7,211,000 to $4,097,000 arising from cash used in operating of $2,650,000 together with the cash used in exploration and evaluation asset expenditures of $606,000. The Company had a working capital surplus, excluding derivative financial liabilities of $6,968,000 as at June 30, 2016 compared to a working capital surplus of $8,803,000 as at December 31, 2015. Total assets reduced from $27,958,000 as at December 31, 2015 to

$25,051,000 at June 30, 2016.

Total stockholders' equity reduced to $30,379,000 as at June 30, 2016 from $32,738,000 as at December 31, 2015.

Avnel Gold is a TSX-listed gold mining, exploration and development company with operations in south- western Mali in West Africa. The Company's strategic objective is to develop the Kalana Main Project into an open-pit mining operation through its 80% ownership in SOMIKA. A secondary objective of the

Company is to explore the remainder of the 387 km2 Kalana Exploitation Permit to discover new mineral deposits.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.

This news release includes certain "forward-looking statements". All statements, other than statements of historical fact, included in this release, including the future plans and objectives of Avnel Gold, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that forward-looking statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Avnel Gold's expectations include, among others, risks related to international operations, the actual results of current exploration activities, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of gold and silver, as well as those factors discussed in the section entitled "Risk Factors" in Avnel Gold's most recently completed Annual Information Form, which is available on SEDAR (www.sedar.com). Although Avnel Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Except where indicated, the disclosure contained or incorporated into this news release of an economic, scientific or technical nature, has been summarised or extracted from the National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") compliant technical report titled "NI43-101 Technical Report on Kalana Main Project", dated effective 1 April 2016 (the "Kalana Technical Report"), prepared by Snowden Mining Industry Consultants (Pty) Ltd. ("Snowden"), Denny Jones Ltd ("Denny Jones"), DRA Projects SA (Pty) Ltd ("DRA") and Epoch Resources (Pty) Ltd ("Epoch Resources"). The Kalana Technical Report was prepared under the supervision of Mr. Allan Earl (Executive Consultant - Mining Engineering of Snowden), Mr. Ivor Jones (Executive Consultant - Applied Geosciences of Denny Jones), Mr. Glenn Bezuidenhout (Principal Process Engineer of DRA), Mr. Sybrand van der Spuy (Civil Engineer of DRA), Mr. Guy Wiid (Principal Consultant - Tailings and Waste Rock Facilities of Epoch Resources), and Mr. Stephanus (Fanie) Coetzee (Principal Consultant - Environmental and Social of Epoch Resources), all of whom are independent "Qualified Persons" as such term is defined in NI 43-101.