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 July 2020

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“Registration Statement”), and to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

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.

GALIANO GOLD INC.

(formerly Asanko Gold Inc. ¹)

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

UNAUDITED

For the three and six months ended June 30, 2020 and 2019

TABLE OF CONTENTS

^{_______________________________________
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.)
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT JUNE 30, 2020 AND DECEMBER 31, 2019
(In thousands of United States Dollars)

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

Approved on behalf of the Board of Directors:

2

GALIANO GOLD INC.
(formerly Asanko Gold Inc.)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(In thousands of United States Dollars, except dollar per share amounts)

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

GALIANO GOLD INC.
(formerly Asanko Gold Inc.)
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(In thousands of United States Dollars, except for number of common shares)

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

GALIANO GOLD INC.
(formerly Asanko Gold Inc.)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(In thousands of United States Dollars)

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

1. Nature of operations

 Galiano Gold Inc. ("Galiano" or the "Company") 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. 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 and NYSE American Exchange 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 6) and exploration and development of 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 condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 - Interim Financial Reporting, using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). These condensed consolidated interim financial statements do not include all of the necessary annual disclosures in accordance with IFRS and should be read in conjunction with the Company's audited consolidated annual financial statements for the years ended December 31, 2019 and 2018.

The accounting policies followed in these condensed consolidated interim financial statements are the same as those applied in the Company's most recent audited consolidated annual financial statements for the years ended December 31, 2019 and 2018.

These condensed consolidated interim financial statements were authorized for issue and approved by the Board of Directors on July 28, 2020.

(b) Basis of presentation and consolidation

The financial statements have been prepared on the 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 condensed consolidated interim financial statements incorporate the financial information of the Company and its subsidiaries as at June 30, 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.

2. Basis of presentation (continued)

Subsidiaries are included in the consolidated financial results 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.

The principal subsidiaries and joint arrangements to which the Company is a party, as well as their geographic locations, were as follows as at June 30, 2020:

Certain subsidiaries of the Company changed their official names during the period to align with Galiano's change of name.

(c) Accounting standards adopted during the period

There were no new standards effective January 1, 2020 that impacted these condensed consolidated interim financial statements or are expected to have a material effect in the future.

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

There were no accounting standards or amendments to existing standards issued but not yet adopted as of January 1, 2020 that are expected to have a material effect on the Company's financial statements in the future.

3. 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 condensed consolidated interim 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 were presented in note 5 of the audited annual consolidated financial statements for the years ended December 31, 2019 and 2018.

The Company considered the impact of the COVID-19 pandemic on the significant judgments and estimates made in these condensed consolidated interim financial statements and determined that the effects of COVID-19 did not have a material impact on the estimates and judgments applied.

4. Receivable due from related party

During the three and six months ended June 30, 2020, the Company earned a service fee of $1.2 million and $2.4 million, respectively, as operators of the JV (three and six months ended June 30, 2019 - $1.1 million and $2.3 million, respectively).  For the three and six months ended June 30, 2020, the service fee was comprised of a gross service fee of $1.5 million and $3.1 million, respectively, less withholding taxes payable in Ghana of $0.3 million and $0.6 million. For the three and six months ended June 30, 2019, the service fee was comprised of a gross service fee of $1.5 million and $3.0 million, respectively, less withholding taxes payable in Ghana of $0.4 million and $0.7 million. As at June 30, 2020, the Company had a receivable due from the JV in respect of the service fee in the amount of $2.8 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.

5. Financial assets

As part of the JV Transaction (note 6), the Company initially subscribed to 204.9 million non-voting fixed redemption price redeemable preferences shares in JV Finco (the "preference shares"). The preference shares were issued at a par value of $1 per redeemable share.

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

184.9 million of the preference shares initially subscribed for have no fixed redemption date. 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 three and six months ended June 30, 2020, the JV redeemed $15.0 million and $37.5 million, respectively, of the preference shares, bringing the Company's holding to 137.4 million preference shares in the JV as at June 30, 2020 (December 31, 2019 - 174.9 million preference shares).

As at December 31, 2019, the Company re-measured the fair value of the redeemable preference shares to $108.0 million in order to reflect management's latest estimate of the future cash flows of the JV based on the updated Life of Mine plan applying a discount rate of 8.4%.

5. Financial assets (continued)

As at June 30, 2020, the Company re-measured the fair value of the redeemable preference shares to $75.7 million (applying a discount rate of 8.4%) resulting in the recognition of a positive fair value adjustment of $2.5 million and $5.2 million in finance income for the three and six months ended June 30, 2020, respectively (three and six months ended June 30, 2019 - positive fair value adjustment of $2.1 million and $4.5 million, respectively, recognized in finance income). These preference shares are classified as a Level 3 financial asset in the fair value hierarchy.

6. 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 Joint Venture Agreement ("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 $6.1 million per annum (originally $6.0 million, but adjusted annually for inflation).

The JVA established joint control of the JV and 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.

As at June 30, 2020, the Company's 45% interest in the Asanko Gold Mine was accounted for using the equity method.  The following table summarizes the change in the carrying amount of the Company's investment in the joint venture:

The Company's share of the net earnings of the JV was $14.3 million and $34.9 million for the three and six months ended June 30, 2020, respectively (three and six months ended June 30, 2019 - share of net income of $6.1 million and share of net loss of $0.2 million, respectively).

Operating and financial results of the AGM JV for the three and six months ended June 30, 2020 and 2019

Summarized financial information for the Company's investment in the JV, on a 100% basis, is outlined in the table below.

All disclosures in this note 6 are on a 100% JV basis, unless otherwise indicated. The JV applies the same accounting policies as the Company.

6. Investment in Joint Venture (continued)

Three and six months ended June 30, 2020 and 2019

6. Investment in Joint Venture (continued)

The assets and liabilities of the Asanko Gold Mine JV, on a 100% basis, as at June 30, 2020 and December 31, 2019 were as follows:

6. Investment in Joint Venture (continued)

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.

(i) Revenues

In 2013, concurrent with the former debt project financing, AGGL entered into 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 total funds drawn under the Red Kite debt arrangement as well as the amount of gold delivered under the Offtake Agreement at the time of termination.

During the three and six months ended June 30, 2020, the AGM sold 61,357 and 129,177 ounces of gold, respectively, to Red Kite in accordance with the Offtake Agreement (three and six months ended June 30, 2019 - 66,337 ounces and 119,758 ounces, respectively).

Included in revenue of the AGM is $0.2 million and $0.4 million relating to by-product silver sales for the three and six months ended June 30, 2020, respectively (three and six months ended June 30, 2019 - $0.2 million and $0.4 million, respectively). During the six months ended June 30, 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.

As of June 30, 2020, the AGM has delivered 968,550 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.

6. Investment in Joint Venture (continued)

(ii) Production costs and royalties

The following is a summary of production costs by nature, on a 100% basis, incurred during the three and six months ended June 30, 2020 and 2019:

During the three months ended June 30, 2020, the AGM recognized a $1.7 million downward adjustment to the carrying value of its stockpile inventory to reflect the net realizable value of long-term stockpiled ore, of which $1.2 million was recorded as production costs and $0.5 million recorded as depreciation expense (three months ended June 30, 2019 - $0.6 million reversal of previously recorded net realizable value adjustments on stockpile inventory).

During the six months ended June 30, 2020, the AGM recognized a $14.5 million reversal of previously recorded net realizable value adjustments on its stockpile inventory, of which $6.5 million was credited against production costs and $8.0 million was credited against depreciation expense (six months ended June 30, 2019 - $12.7 million downward adjustment to the carrying value of stockpile inventory, of which $6.7 million was recorded as production costs and $6.0 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.

6. Investment in Joint Venture (continued)

(iii) Inventories

The following is a summary of inventories held by the AGM, on a 100% basis, as at June 30, 2020 and December 31, 2019:

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 Abirem, 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, which was provided by the Company (note 10). The reclamation deposit accrues interest and is carried at $2.0 million as of June 30, 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.

6. Investment in Joint Venture (continued)

(v) Right-of-use assets

The following table shows the movement in the right-of-use asset related to mining contractor services agreements of the AGM for the six months ended June 30, 2020 and year ended December 31, 2019:

As at June 30, 2020, the carrying value of right-of-use assets associated with mining contractor services agreements was $8.5 million (December 31, 2019 - $9.4 million), net of $1.3 million and $3.8 million of depreciation expense recorded for the three and six months ended June 30, 2020, respectively (three and six months ended June 30, 2019 - $3.2 million and $7.1 million of depreciation expense, respectively).

During the three months ended June 30, 2020, one of the AGM's mining contractor services agreements concluded earlier than the expected lease term.  As a result, the carrying values of the right-of-use asset and lease liability associated with this mining contract were derecognized resulting in a gain of $3.7 million, which was recognized as a reduction to production costs during the period.

(vi) Mineral properties, plant and equipment

Additions to mineral properties, plant and equipment

During the three and six months ended June 30, 2020, the AGM capitalized $16.3 million and $22.2 million, respectively, in expenditures related to mineral properties, plant and equipment ("MPP&E"), not including capitalized deferred stripping costs, asset retirement costs and right-of-use assets (three and six months ended June 30, 2019 - additions of $7.3 million and $12.7 million, respectively).

Of the $16.3 million and $22.2 million capitalized to MPP&E during the three and six months ended June 30, 2020, $1.9 million and $2.4 million, respectively, was capitalized exploration costs relating to properties with existing defined mineral reserves.

Deferred stripping

During the three and six months ended June 30, 2020, the AGM deferred a total of $2.7 million and $5.6 million, respectively, of stripping costs to depletable mineral interests (three and six months ended June 30, 2019 - additions of $20.5 million and $23.4 million, respectively).

6. Investment in Joint Venture (continued)

2019 Impairment

During the year ended December 31, 2019, the JV recorded an impairment of $289.6 million based on the estimate of the recoverable amount of the AGM, of which $260.4 million was allocated to MPP&E (refer to note 8 of the audited consolidated financial statements for the years ended December 31, 2019 and 2018 for the assumptions made by the Company in estimating the recoverable amount).

Depreciation and depletion

During the three months ended June 30, 2020, the AGM recognized depreciation and depletion expense of $11.2 million (including $4.0 million depreciation and depletion on deferred stripping assets), while a further $4.5 million of depreciation was expensed that was previously capitalized to the cost of inventories (three months ended June 30, 2019 - depreciation and depletion expense of $16.3 million, which included $4.2 million of depreciation and depletion on deferred stripping assets, while a further $0.4 million of depreciation was expensed that was previously capitalized to the cost of inventories).

During the six months ended June 30, 2020, the AGM recognized depreciation and depletion expense of $30.9 million (including $14.9 million depreciation and depletion on deferred stripping assets), of which $5.2 million was allocated to the cost of inventories (six months ended June 30, 2019 - depreciation and depletion expense of $43.5 million, which included $14.5 million of depreciation and depletion on deferred stripping assets, of which $3.3 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 at the balance sheet date was $30.0 million (December 31, 2019 - $nil).  During the three and six months ended June 30, 2020, the AGM recognized interest expense and other fees associated with the RCF of $0.3 million and $0.4 million, respectively (three and six months ended June 30, 2019 - nil for both periods presented).

6. Investment in Joint Venture (continued)

(viii) Lease liability

The following table shows the movement in the lease liability related to mining contractor services agreements of the AGM for the six months ended June 30, 2020 and year ended December 31, 2019:

(ix) Reclamation provision

The following table shows the movement in the asset retirement obligation of the AGM as at June 30, 2020 and December 31, 2019:

The decommissioning liability consists 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 June 30, 2020, the AGM's reclamation cost estimates were discounted using a long-term risk-free discount rate of 0.71% (December 31, 2019 - 1.98%). The decrease in discount rate during the period resulted in the majority of the increase to the carrying value of the reclamation liability.

6. Investment in Joint Venture (continued)

(x) Finance expense

The following is a summary of finance expenses incurred by the AGM JV during the three and six months ended June 30, 2020 and 2019:

(xi)The cash flows of the AGM, on a 100% basis, were as follows for the three and six months ended June 30, 2020 and 2019:

7. Right-of-use asset and lease liability

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 corporate office space lease agreement for the six months ended June 30, 2020 and year ended December 31, 2019:

The following table shows the movement in the lease liability related to corporate office space lease agreement for the six months ended June 30, 2020 and year ended December 31, 2019:

8. 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.

8. Share capital (continued)

(b) Issued and outstanding common shares

(c) Normal course issuer bid

The Company received approval from the Toronto Stock Exchange ("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 will be made on the open market through the facilities of the TSX and NYSE American Stock Exchange ("NYSE American").

All common shares purchased by the Company under the NCIB will be 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 will be cancelled and purchases will be funded out of the Company' working capital. Although the Company has a present intention to acquire its common shares pursuant to the NCIB, the Company will not be obligated to make any purchases and purchases may be suspended by the Company at any time. The NCIB will terminate on November 14, 2020, or earlier if the maximum number of shares under the NCIB have been purchased. The Company reserves the right to terminate the NCIB earlier if it feels it is appropriate to do so.

In accordance with the rules of the TSX, the maximum daily purchases on the TSX under the NCIB will be 33,499 common shares, which is 25% of the average daily trading volume for the Company's common shares on the TSX for the six months ended October 31, 2019. In addition, maximum daily purchases under the NCIB on the NYSE American will be subject to Rule 10b-18 which specifies that daily purchases may not exceed 25% of average daily trading volume for the four weeks preceding such trading date. These maximum daily limits will apply to purchases on the respective markets, except where such purchases are made in accordance with "block purchases" exemptions under applicable TSX and NYSE American policies.

During the three and six months ended June 30, 2020, the Company repurchased for cancellation a total of 326,654 and 2,758,063 common shares under the NCIB program for $0.3 million and $2.3 million, respectively (three and six months ended June 30, 2019 - nil for both periods).  For the three and six months ended June 30, 2020, the weighted average acquisition price was $0.86 and $0.83 per share, respectively. Since the NCIB has been initiated, the Company has 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.

8. 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 Stock Exchange ("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 in the Offering at any time.

The Offering is being 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 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 represent 9.9% of the common shares issued under the Offering, if any.

During the three months ended June 30, 2020, the Company had not issued any common shares under the Offering.

9. Equity reserves

(a) Share-based options

During the three and six months ended June 30, 2020, the Company granted 536,000 and 4,088,000 stock options with weighted average exercise prices of C$1.53 and C$1.32 per option, respectively, to directors, officers and employees of the Company (three and six months ended June 30, 2019 - 300,000 and 3,581,000 stock options granted with weighted average exercise prices of C$0.86 and C$0.97 per option, respectively).

During the three and six months ended June 30, 2020, 1,130,000 and 4,938,625 stock options were cancelled, expired and/or forfeited with  weighted average exercise prices of C$2.92 and C$1.99 per option, respectively (three and six months ended June 30, 2019 - 925,250 and 3,801,250 stock options cancelled and/or expired with weighted average exercise prices of C$2.09 per option, respectively).

Additionally, during the three and six months ended June 30, 2020, 481,957 stock options with a weighted average exercise price of C$1.06 were exercised by directors, officers and/or employees of the Company for total aggregate proceeds of $0.4 million (three and six months ended June 30, 2019 - nil for both periods).

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

During the three and six months ended June 30, 2020, the Company recognized $0.3 million and $0.2 million of share-based payments expense relating to stock options, respectively (three and six months ended June 30, 2019 - $0.3 million and $0.4 million, respectively).

(b) Restricted Share Units ("RSU")

During the three and six months ended June 30, 2020, the Company granted 219,400 and 2,154,700 RSUs, respectively, to directors, officers and employees of the Company (three and six months ended June 30, 2019 - 200,000 and 1,944,020 RSUs granted, respectively). For all RSUs granted during the period, the awards vest in three equal tranches over a service period of three years. Additionally, 45,000 and 158,334 RSUs were forfeited during the three and six months ended June 30, 2020 (three and six months ended June 30, 2019 - 61,640 RSUs forfeited for both periods presented).

During the three and six months ended June 30, 2020, the Company also settled in cash 95,025 and 808,752 RSU awards, respectively (three and six months ended June 30, 2019 - 11,926 and 468,390 RSUs settled in cash, respectively).

9. Equity reserves (continued)

The following table is a reconciliation of the movement in the number of RSUs outstanding for the six months ended June 30, 2020 and year ended December 31, 2019:

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. For the three and six months ended June 30, 2020, the Company recognized share-based compensation expense in relation to RSUs of $0.4 million and $0.7 million (three and six months ended June 30, 2019 - $0.1 million and $0.4 million, respectively).

As at June 30, 2020, the Company recognized a financial liability for cash-settled RSUs of $1.0 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 six months ended June 30, 2020 and year ended December 31, 2019:

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 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, RSUs, PSUs and DSUs do not exceed 9% of the Company's outstanding common shares. The Company's Board (at its sole discretion) may choose to settle future grants of RSUs, PSUs and DSUs in cash, equity or a combination thereof.

10. Commitments and contingencies

Commitments

As at June 30, 2020, the Company had contractual obligations totaling $3.2 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 June 30, 2020 and December 31, 2019:

In addition to the above commitments, the Company has provided a parent company guarantee on the unfunded portion of the AGM's reclamation bond in the amount of $6.8 million.

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.

11. General and administrative expenses

The following is a summary of general and administrative expenses incurred during the three and six months ended June 30, 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 4).

12. Finance income

The following is a summary of finance income earned during the three and six months ended June 30, 2020 and 2019:

13. Income per share

For the three and six months ended June 30, 2020 and 2019, the calculation of basic and diluted income per share is based on the following data:

For the three and six months ended June 30, 2020, 600,603 and 1,175,658 share-based options outstanding, respectively, were excluded from the calculation of diluted weighted average shares as they were determined to be anti-dilutive.

For the three and six months ended June 30, 2019, 13,262,177 share-based options were excluded from the calculation of diluted weighted average shares as they were determined to be anti-dilutive.

14. Supplemental cash flow information

The following table summarizes the changes in non-cash working capital for the three and six months ended June 30, 2020 and 2019:

15. Segmented information

Geographic Information

As at June 30, 2020, the Company has only one reportable operating segment being the corporate function with its head office in Canada.  However, prior to the JV Transaction, the Company had two reportable segments. Ghana was the Company's only segment with mining operations with Canada acting as a head office function. Total assets in Ghana include the Company's 45% interest in the Asanko Gold Mine JV.

Geographic allocation of total assets and liabilities

15. Segmented information (continued)

Geographic allocation of the Statement of Operations and Comprehensive Income

For the three months ended:

For the six months ended:

GALIANO GOLD INC.

(formerly Asanko Gold Inc.¹ )

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the three and six months ended June 30, 2020 and 2019

(Expressed in United States dollars)

TABLE OF CONTENTS

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

This Management's Discussion and Analysis ("MD&A") of Galiano Gold Inc. ("Galiano" or the "Company") has been prepared by management as of July 28, 2020 and should be read in conjunction with the Company's unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 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.

1. Overview of the business

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 own a 45% economic interest in the AGM JV, with the Government of Ghana owning a 10% free-carried interest.

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 ("NYSE") under the symbol "GAU".

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 capacity of 5.4 million tonnes per annum ("Mtpa").

In conjunction with the Company's filing of a base shelf prospectus in Q2 2020, the Company filed an updated Life of Mine 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.

2. Highlights and key business developments

Q2 2020 business developments include the following operating and financial results of the AGM on a 100% basis (unless otherwise stated).

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, isolating affected persons, rapid testing of personnel and transportation of infected personnel to Government run isolation facilities; additionally, on-site accommodations have been modified to isolate infected and suspected to be infected individuals limiting cross contamination. 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 all confirmed cases cleared and those employees resuming normal duties after completing two-week regulatory isolation. The Company’s Johannesburg office is currently closed and staff are working remotely as a number of personnel have tested positive for COVID-19, with some staff experiencing symptoms and, in one case, requiring hospitalization. The Company’s offices in Vancouver and Accra are observing local regulations and, along with the Johannesburg team, continue to support the AGM’s operations.

The AGM has continued to build its supply chain and 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.

Operating highlights of the AGM (on a 100% basis)

• There were no lost-time injuries ("LTI") and one total recordable injury ("TRI") reported during the quarter. LTI frequency rate ("LTIFR") and TRI frequency rate ("TRIFR") per million employee hours worked were nil and 0.41, respectively, for the quarter.

• Record quarterly gold production of 69,026 ounces.

• Ore mined during Q2 2020 totaled 1.4Mt, at an average mined grade of 1.4 grams per tonne ("g/t") and a total strip ratio of 6.0.

• Mining at Nkran Cut 2 was completed during the quarter.

• Completed the initial drilling programs at Akwasiso and Abore with positive results showing extension of mineralization in both pits (see 3.4 "Development and exploration update").

• The processing plant delivered a record quarterly milling performance with throughput of 1.6Mt, at an average plant feed grade of 1.4 g/t. During Q2 2020, in order to align with a recent change in Gold Fields' production calendar, the period-end close was moved from the eighth calendar day prior to the quarter-end to a calendar period-end cut-off. As a result, Q2 2020 included an additional eight days of production. This is a once-off timing adjustment.

• Gold recovery of 94% continued to exceed design. 

• The AGM incurred operating cash costs per ounce¹ of $725, total cash costs per ounce¹ of $807 and all-in sustaining cost¹ ("AISC") of $1,067 per ounce in Q2 2020. The increase in total cash costs per ounce¹ and AISC¹ from Q1 2020 was primarily due to higher sustaining capital cost associated with raising the height of the AGM's tailings storage facility, while production costs in Q2 2020 did not benefit from the same positive net realizable value adjustments as did occur in Q1 2020. In addition, the AGM recorded lower gold sales volumes in Q2 2020 which had the effect of increasing fixed production costs on a per unit basis. AISC¹ was also higher in Q2 2020 due to higher royalty expense as a result of elevated gold prices and the impact of COVID-19, which impact was two-fold. Firstly, labour cost 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 cost transporting its bullion to the JV's primary refiner in South Africa during a time that Ghana restricted cross-border commercial travel.

^{______________________________________
1} See "8. Non-GAAP measures"

• The AGM year-to-date AISC¹ of $929 per ounce is well below the bottom end of full year guidance of $1,000 - $1,100 per ounce. The Company expects Q3 2020 cost performance to be significantly higher than the top end of the Company's full year guidance driven by a ramp-up in sustaining capital expenditures associated with the raise of the AGM's tailings storage facility, as well as ongoing stripping costs at Esaase Main and Akwasiso as the AGM transitions to a production mix excluding the higher-grade Nkran material. The company maintains full year production and cost guidance of 225,000 and 245,000 ounces at AISC¹ of $1,000 to $1,100 per ounce.

Financial highlights of the AGM (on a 100% basis)

The following financial information includes the operating and financial results of the AGM on a 100% basis (unless otherwise stated).

• Q2 2020 gold sales of 61,357 ounces generated $101.3 million of gold sales proceeds at an average realized gold price of $1,651 per ounce, an increase of $15.7 million from Q2 2019. The gold sales volume for Q2 2020 represented an 8% decrease relative to Q2 2019 due to one less shipment in Q2 2020. Revenue for Q2 2020 amounted to $101.5 million and included by-product sales of $0.2 million.

• Total cost of sales (including depreciation and depletion and royalties) amounted to $65.7 million in Q2 2020, an increase of $0.7 million from Q2 2019. The increase in cost of sales was primarily due to higher operating cash costs (refer to discussion in section 3.1(d)) and royalties expense arising from improvement in the gold price during Q2 2020 compared to Q2 2019.  These factors were partly offset by a decrease in gold ounces sold in Q2 2020 compared to Q2 2019, a reduction in depreciation and depletion expense following the impairment recorded in Q4 2019 , and the recording of a $3.6 million net gain on the derecognition of a lease liability and associated right-of-use asset upon the early conclusion of a mining contractor services agreement.

• Income from mine operations amounted to $35.9 million in Q2 2020, compared to $20.8 million in Q2 2019. The improvement in income from mine operations was due to an increase in realized gold prices from $1,290/oz to $1,651/oz and a reduction in depreciation expense, partially offset by the impact of higher operating cash costs and lower gold sales volumes.

• The JV's income from operations amounted to $32.0 million for the quarter, compared to $18.4 million in Q2 2019. The improvement in income from operations was due to an increase in mine operating income, partly offset by increased exploration and evaluation expenditures and general and administrative expenses in Q2 2020.

• Net income after tax for the quarter totaled $31.9 million compared to $13.6 million in Q2 2019. The improvement in net income was due to the above mentioned increase in income from operations and the fact that in Q2 2019 the AGM recognized a $2.5 million mark-to-market loss on gold hedging instruments.

• The AGM reported Adjusted EBITDA¹ of $44.5 million in Q2 2020 compared to $31.2 million in Q2 2019. The increase in Adjusted EBITDA¹ was primarily driven by an increase in realized gold prices. This was partially offset by an increase in total cash costs¹ from $724/oz in Q2 2019 to $807oz in Q2 2020, the impact of lower gold sales volumes and higher exploration and evaluation expenditures. 

• The AGM generated $48.8 million of cash flows from operating activities (after taking into account favorable working capital changes of $4.6 million) and free cash flow¹ of $22.6 million during Q2 2020. This compares to $20.5 million of cash flows from operating activities and $2.6 million of free cash flow¹ during Q2 2019. The improvement in free cash flow¹ was the result of a $14.1 million increase in income from operations (excluding depreciation and depletion) and a $19.4 million favorable decrease in cash invested in non-cash working capital when comparing Q2 2020 to Q2 2019. These factors were partly offset by an $8.7 million increase in cash flows associated with capital expenditure from Q2 2019 to Q2 2020 relating to the raise of the tailings storage facility as well as the Tetrem village relocation project.

• During Q2 2020, the JV continued returning invested capital to the JV partners, with distributions totaling $30.0 million ($15.0 million to the Company's benefit). The JV has distributed $95.0 million to the JV partners ($47.5 million to the Company) since it commenced distributions in Q4 2019.

^{______________________________________
1} See "8. Non-GAAP measures"

• As at June 30, 2020, the JV had cash on hand of $47.8 million and $10.0 million in gold on hand with the RMB revolving credit facility of $30.0 million fully drawn.

Key consolidated financial information of the Company

The following financial information comprises the consolidated results of the Company for Q2 2020:

• The Company reported net income after tax of $14.7 million in Q2 2020 compared to net income of $6.1 million in Q2 2019. The improvement in earnings during Q2 2020 was predominantly the result of an increase in the Company's 45% interest in the net earnings of the JV which totaled $14.3 million for the quarter.

• Adjusted EBITDA¹ for Q2 2020 amounted to $18.5 million, compared to $12.4 million in Q2 2019. The increase in Adjusted EBITDA¹ was primarily a result of the increase in the Company's interest in the AGM's net earnings.

• The Company continued to return capital to shareholders through its normal course issuer bid ("NCIB") program. During Q2 2020, the Company repurchased and cancelled a total of 326,654 common shares under the NCIB program for $0.3 million (average acquisition price of $0.86 per share).

• During the quarter, the Company received $15.0 million in distributions from the JV. These payments were recorded as redemptions of the previously recognized preference shares.

• Cash used in operating activities in Q2 2020 was $1.0 million, compared to $2.1 million in Q2 2019. The decrease in cash used in operations was due to cash inflows associated with working capital changes during Q2 2020.

• The Company's balance sheet continued to strengthen with cash on hand of $64.9 million and $3.0 million in receivables, while the Company remains debt-free.

• On June 25, 2020, the Company entered into an At-the-Market ("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 "ATM Offering").  The ATM Offering is an additional tool to augment the Company's capital needs as and when required, providing added financial flexibility to continue to build a sustainable business that creates value for all stakeholders.  During the three months ended June 30, 2020, the Company had not issued any common shares under the Offering.

• The Company published its 2019 Sustainability Report on July 17, 2020.

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 and six months ended June 30, 2020 and 2019, unless otherwise noted. Q2 2020 results include an extra eight days of production due to a change in the AGM's period-end calendar in order to align with a recent change in Gold Fields' reporting calendar. The AGM's period-end calendar now coincides with the final day of the quarter-end month.

² For the six months ended June 30, 2019, mining cost per tonne excluded a provision for a one-time contract termination fee.

a) Health and Safety

There were no LTIs and one TRI reported during the quarter. The AGM's LTIFR and TRIFR for the three months ended June 30, 2020 amounted to nil and 0.41 per million employee hours worked, respectively.

b) Community Engagement and Environment

The JV supports a number of socio-economic development programs in its stakeholder communities. Current efforts in 2020 has seen the 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. In addition, a needs assessment and project solicitation process  has been conducted in the JV's stakeholder communities, identifying needs related to a community center, electrical supply, teacher's quarters etc. The JV  is also supporting the development of a new hospital at Esaase and construction is 70% complete. Collaboration is underway with an international nonprofit organization to support the supply of hospital beds and equipment, while a donation of medicines and supplies is underway through a continued partnership with Health Partners International of Canada and a list of needs from the various beneficiary local medical facilities has been organized. As the COVID-19 situation in the stakeholder communities continues to evolve, the Company has undertaken a proactive approach to support these communities. This includes working closely with the regional health care providers and donating hygiene and personal protective equipment for 22 senior and junior high schools. This is being done to help prevent the spread of the virus for those students attending classes so they can complete their respective academic activities for the year.   

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 concerns. 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 will be undertaking an external certification audit. The JV has commenced its community plastic recycling program and waste segregation on-site has commenced. An Environmental Protection Agency-licensed plastic waste recycling company has been selected to coordinate pick-ups at the AGM and stakeholder communities. A greenhouse gas baseline audit was completed earlier this year, allowing the JV to continuously strive to improve energy efficiency at the AGM.

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 may be 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.

c) Mining

During the quarter, the AGM sourced ore from the Nkran, Akwasiso and Esaase pits, as well as run-of-mine ("ROM") stockpiles. During the quarter, 0.5Mt of ore and 0.3Mt of waste were mined from the Nkran pit at a gold grade of 1.4g/t. Cut 2 at Nkran has been depleted and the mining contractor has demobilized. Infill drilling has since commenced at the Nkran pit to infill the resource model for Cut 3 and beyond with very promising initial results.

In Q2 2020 the Esaase pits (Main and South) collectively delivered 0.6Mt of ore at a gold grade of 1.4g/t and a strip ratio of 8.8:1. Operations at Esaase will continue to mine oxides with the goal of achieving an optimal fresh to oxide ore blend delivered to the SAG mill.

Operations on Cut 2 at Akwasiso continued during the quarter with mining activities focused on waste stripping (a total of 2.3Mt waste tonnes mined). Akwasiso contributed 0.2Mt of ore during the quarter at a gold grade of 1.4 g/t and is expected to contribute approximately 30% of the planned ore tonnes for the remainder of 2020.

Going forward, the mine plan for the balance of 2020 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 Q2 2020 was $3.59 compared to $4.36 during Q2 2019, a decrease of 18%. The lower mining cost per tonne in Q2 2020 was predominantly due to volume differences as higher total tonnes mined during Q2 2020 had the effect of decreasing fixed mining cost on a per unit basis. As well, a higher proportion of mined tonnes were sourced from Esaase (as opposed to Nkran in Q2 2019), which attracts a lower relative unit cost. The lower mining cost per tonne in Q2 2020 was also due to a reduction in fuel and other supply surcharges from mining contractors.

d) Processing

The AGM produced a record 69,026 ounces of gold during the second quarter of 2020, as the processing plant achieved a record quarterly milling throughput of 1.6Mt ore processed at a grade of 1.4g/t and metallurgical recovery averaging 94%.

Processing cost per tonne for Q2 2020 was $9.77 compared to $10.60 during Q2 2019, a decrease of 8%. The improvement in processing cost per tonne was predominantly due to the positive volume variance as the higher throughput during Q2 2020 had the effect of decreasing fixed processing costs on a per unit basis. The higher throughput during Q2 2020 relative to Q2 2019 was partly due to the increase in oxide tonnes within the plant's feed blend, following the ramp-up in mining at Esaase after Q1 2019, and also due to the reporting period including eight additional processing days due to the change to a calendar month-end cut-off date. Additionally, during Q2 2020, the Government of Ghana provided rate reductions on electricity in response to the COVID-19 pandemic, which reduced the AGM's power costs for the quarter. These factors were partly offset by an increase during Q2 2020 in cyanide prices.

e) Total cash costs and AISC (for the AGM on a 100% basis)

For the three months ended June 30, 2020, total cash costs per ounce¹ was $807/oz, compared to total cash costs per ounce during the three months ended June 30, 2019 of $724/oz. Total cash costs were higher in Q2 2020 relative to Q2 2019 due to the impact of lower gold sales volumes (13 shipments in Q2 2020 compared to 14 shipments in Q2 2019) 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 ($20/oz increase for the quarter). In addition, total cash cost per ounce¹ was impacted by an NRV adjustment to long-term stockpile inventory recorded in Q2 2020, the cash cost component of which represented an increase in production costs of $1.2 million; whereas, in Q2 2019, a reversal of previously recognized NRV adjustments was recorded with $1.3 million credited to production costs.  Total cash costs per ounce¹ was also higher due to the impact of COVID-19. Firstly, labour cost 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 cost transporting its bullion to the JV's primary refiner in South Africa during a time that Ghana restricted cross-border commercial travel. Total cash costs per ounce¹ was also impacted by a higher royalty expense arising from improvement in the gold price during Q2 2020 compared to Q2 2019. These factors were partly offset by a one-time $3.7 million net gain recorded in Q2 2020 on the derecognition of the lease liability and associated right-of-use asset upon the early conclusion of the Nkran mining contractor's agreement coinciding with the depletion of Nkran Cut 2.

Relative to Q1 2020, total cash costs per ounce¹ were higher in Q2 2020, increasing by 19% from $676 to $807. The increase in total cash costs per ounce¹ from Q1 2020 was primarily due to the impact of lower gold sales volumes (13 shipments in Q2 2020 compared to 14 shipments in Q1 2020) which had the effect of increasing fixed production costs on a per unit basis.  Additionally, an NRV adjustment on long-term stockpiled inventory in Q2 2020 resulted in an increase to production costs of $1.2 million ($20/oz increase) whereas, in Q1 2020, the AGM recognized a $7.7 million reduction to production costs associated with the reversal of previously recognized NRV adjustments on stockpile inventory ($113/oz decrease). During Q2 2020, the JV also incurred incremental cash costs associated with the COVID-19 pandemic as described earlier. These factors were partly offset by the impact of the one-time $3.7 million net gain recorded in Q2 2020 on the derecognition of the lease liability and associated right-of-use asset upon the early conclusion of the Nkran mining contractor's agreement.

For the three and six months ended June 30, 2020, AlSC¹ for the AGM amounted to $1,067/oz and $929/oz, respectively, compared to AISC¹ of $1,180/oz and $1,155/oz for the three and six months ended June 30, 2019, respectively. The decrease in AlSC¹ from Q2 2019 to Q2 2020 was predominantly due to a $258/oz decrease in deferred stripping costs. This was partly offset by a $54/oz increase in sustaining capital expenditures (relating to raising the height of the tailings storage facility), the impact of lower gold sales volumes in Q2 2020 which had the effect of increasing fixed costs on a per unit basis and the previously described higher total cash costs per ounce¹ in Q2 2020 (increase of $83/oz).

Relative to Q1 2020, AlSC¹ for Q2 2020 increased from $805/oz to $1,067/oz, an increase of 33%. Total cash costs per ounce¹ were $131/oz higher in Q2 2020, while sustaining capital expenditures increased by $101/oz as the AGM raised the height of the its tailings storage facility and the impact of capitalized stripping costs increased by $37/oz in Q2 2020 due to the sequencing of operations. AISC¹ was also negatively impacted by lower gold sales volumes in Q2 2020 which had the effect of increasing fixed costs on a per unit basis.

For the three and six months ended June 30, 2020, the AGM incurred non-sustaining capital and exploration expenditures of $14.6 million and $19.8 million, respectively, compared to $4.4 million and $9.6 million during the comparative periods in 2019, respectively. Non-sustaining expenditures during Q2 2020 were comprised primarily of $2.1 million of exploration expense predominately associated with a drilling program at Abore and mineral rights fee accruals, as well as $12.5 million of development capital, which included costs associated with the resettlement of the Tetrem village near Esaase.

^{______________________________________
1} See "8. Non-GAAP measures"

3.2 Selected financial results of the AGM

The following tables present excerpts of the financial results of the JV for the three and six months ended June 30, 2020 and 2019. These results are presented on a 100% basis. For a complete income statement of the JV, refer to note 6 of the Company's unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2020 and 2019.

Three and six months ended June 30, 2020 and 2019

Revenue

During Q2 2020, the AGM sold 61,357 ounces of gold at an average realized gold price of $1,651/oz for total revenue of $101.5 million (including $0.2 million of by-product revenue). During Q2 2019, the AGM sold 66,337 ounces of gold at an average realized gold price of $1,290/oz for total revenue of $85.7 million (including $0.2 million of by-product revenue). The increase in revenues quarter-on-quarter was therefore a function of the 28% improvement in average realized gold prices, partly offset by an 8% decrease  in sales volumes in Q2 2020.

During the six months ended June 30, 2020, the AGM sold 129,117 ounces of gold at an average realized gold price of $1,594/oz for total proceeds of $206.3 million (including $0.4 million of by-product revenue). In the comparative period of 2019, the AGM sold 119,758 ounces of gold at an average realized gold price of $1,291/oz for total revenue of $154.6 million (including $0.4 million of by-product revenue and presented net of $2.2 million of gold sales related to pre-production activities that were capitalized to mineral properties, plant and equipment ("MPP&E")). The increase in revenues during 2020 was therefore a function of a 23% improvement in average realized gold prices and 8% increase in sales volumes.

^{______________________________________
1} See "8. Non-GAAP measures"

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 June 30, 2020, 968,550 ounces have been delivered to Red Kite under the offtake agreement (December 31, 2019 - 839,373 ounces).

Production costs and royalties

During Q2 2020, the AGM incurred production costs of $44.9 million, compared to $44.0 million in Q2 2019. Production costs were higher in Q2 2020 due to higher total cash costs per ounce¹, which included an NRV adjustment to long-term stockpile inventory which resulted in $1.2 million being charged to production costs; whereas, in Q2 2019, a $7.7 million credit was recorded to production costs due to a reversal of previously recognized NRV adjustments on stockpile inventory. During Q2 2020, the JV also incurred incremental labour costs due to due to the impact of COVID-19 as previously described in this MD&A. These factors were partly offset by lower sales volumes in Q2 2020 and the recording of a one-time $3.7 million gain in Q2 2020 on the derecognition of a mining contractor services lease agreement.

During the six months ended June 30, 2020, the AGM incurred production costs of $86.1 million, compared to $95.9 million for the six months ended June 30, 2019. Production costs in 2020 were lower than 2019 due lower total cast costs per ounce¹ and the recording of the above mentioned gain on derecognition of a mining contractor services lease agreement.  These factors were  partly offset by higher sales volumes in 2020 and increased labour and bullion transportation costs due to COVID-19 as discussed previously.

Production costs for the three and six months ended June 30, 2020 were reported net of stripping costs of $2.7 million and $5.6 million (three and six months ended June 30, 2019 - $20.5 million and $23.4 million, respectively). Stripping costs are deferred 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 $5.1 million and $10.3 million for the three and six months ended June 30, 2020 (three and six months ended June 30, 2019 - $4.3 million and $7.7 million, respectively). Royalty expense was higher in 2020 due to higher earned revenues.

Depletion and depreciation

Depreciation and depletion expense for Q2 2020 amounted to $15.7 million (including $4.0 million of depletion associated with previously capitalized deferred stripping cost) as a result of 1.4Mt of ore mined during the quarter, including $4.5 million of depreciation that was previously capitalized to the cost of stockpiled inventories but expensed during the period as the AGM drew down on it stockpiles. This compares to depreciation and depletion of $16.7 million for Q2 2019 (including $4.2 million of depletion associated with previously capitalized deferred stripping costs) when 1.1Mt of ore was mined during the comparative period, including $0.4 million of depreciation that was expensed in Q2 2019 after it was previously capitalized to the cost of inventories. Depreciation and depletion expense decreased from Q2 2019 to Q2 2020 due to the recording of a $289.6 million impairment as at December 31, 2019 (associated with the AGM's Life of Mine 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 (associated with the 2020 LOM Plan), resulting in a decrease in the total gold mineral reserves over which the MPP&E asset cost base is depreciated, as well as the 29% increase in ore tonnes mined from Q2 2019 to Q2 2020.

Depreciation and depletion expense for the six months ended June 30, 2020 amounted to $30.9 million, including $14.9 million of depletion associated with previously capitalized deferred stripping cost, as a result of 3.3Mt of ore mined during the period. Of this total depreciation and depletion expense, $5.2 million was allocated to the cost of inventories. This compares to depreciation and depletion of $43.5 million for the six months ended June 30, 2019, which included $14.5 million of depletion associated with previously capitalized deferred stripping cost and was based on 2.6Mt of ore mined during the comparative period, while $3.3 million of depreciation expense was allocated to the cost of inventories.  The decrease in depreciation expense from 2019 to 2020 was primarily due to the recording of a $289.6 million impairment as at December 31, 2019, partly offset by a reduction in the global gold mineral reserves of the AGM (as discussed above) and a 28% increase in ore tonnes mined from 2019 to 2020.

Exploration and evaluation expenditures

During Q2 2020, the AGM incurred $2.1 million on exploration and evaluation ("E&E") expenditures compared to $0.9 million in Q2 2019.  For the six months ended June 30, 2020, the AGM incurred E&E expenditures of $3.8 million compared to $1.4 million in the comparative period of 2019.

The increase in E&E expenditures for both periods was primarily related to drilling programs in line with the Company's exploration strategy (see 3.4 "Development and exploration update").

Finance expense

The following is a summary of finance expenses incurred by the AGM JV during the three and six months ended June 30, 2020 and 2019:

Finance expense in Q2 2020 decreased by $2.5 million compared to Q2 2019 because Q2 2019 included a $2.5 million mark-to-market adjustment on gold hedging instruments.  All of the AGM's gold hedges matured at the end of 2019 and as a result no mark-to-market adjustments were recorded in 2020. There was also a decrease in interest expense on IFRS 16 mining contractor lease liabilities due to the unwinding of interest over the lease term ($0.2 million decrease). This was partly offset by a $0.3 million of costs associated with the AGM's $30.0 million Revolving Credit Facility ("RCF") that was fully drawn at the end of Q1 2020.

For the six months ended June 30, 2020, finance expense decreased by $2.7 million compared to the comparative period in 2019.  The reduction in finance expense was primarily due to the fact that the 2019 period included the mark-to-market adjustment on gold hedging instruments. Interest expense on lease liabilities also reduced by $0.4 million. This was partly offset by a $0.4 million increase in interest expense and standby charges associated with the AGM's RCF.

3.3 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 and six months ended June 30, 2020 and 2019:

Cash flows from operating activities

During Q2 2020, the AGM generated cash flows from operations of $48.8 million, comprising cash inflows before working capital changes of $44.3 million and additional inflows from non-cash working capital changes of $4.6 million. Cash inflows from non-cash working capital changes of $4.6 million were primarily the result of a $16.3 million decrease in trade and VAT receivables and $0.2 million increase in accounts payable and accrued liabilities. These factors were partly offset by a $9.4 million increase in inventories and $2.5 million increase in prepaid expenses and deposits.

The increase in operating cash flows in Q2 2020 compared to Q2 2019 was primarily a result of higher mine operating earnings (excluding depreciation expense) and an improvement in non-cash working capital relating to the collection of trade and VAT receivables.

During the six months ended June 30, 2020, the AGM generated cash flows from operations of $85.8 million, comprising cash inflows before working capital changes of $100.8 million, partly offset by cash outflows from non-cash working capital changes of $15.0 million. Cash outflows from non-cash working capital changes of $15.0 million were primarily the result of a $22.9 million increase in inventories and $7.9 million increase in prepaid expenses and deposits (associated with securing 6-months' supply of the JV's critical consumables in response to COVID-19). These factors were partly offset by a $9.8 million decrease in trade and VAT receivables and $6.0 increase in accounts payable and accrued liabilities.

The increase in operating cash flows for the six months ended June 30, 2020 compared to the same period in 2019 was primarily a result of higher mine operating earnings (excluding depreciation expense) and the collection of trade and VAT receivables, which were partly offset by cash absorbed in inventories and prepaid expenses (associated with securing 6-months' supply of the JV's critical consumables in response to COVID-19).

Cash used in investing activities

During Q2 2020, the AGM invested $22.7 million in additions to MPP&E. The total cash expenditure on MPP&E during the quarter included $3.1 million relating to the capitalization of deferred stripping costs ($2.7  million in deferred stripping additions plus a $0.4 million decrease in payables associated with stripping costs), $7.0 million in sustaining capital, $10.7 million in development capital and $1.9 million in exploration costs relating to tenements with defined mineral reserves (Abore and Akwasiso). Sustaining capital related primarily to raising the height of the tailings storage facility, while development capital related primarily to the Tetrem village relocation near Esaase.

The increase in cash flows invested in MPP&E from Q2 2019 to Q2 2020 was primarily due to higher development capital related to the Tetrem village relocation ($8.1 million increase), higher sustaining capital expenditures relating to raising the height of the tailings storage facility ($3.4 million increase) and exploration drill programs on Abore and Akwasiso. These factors were partly offset by lower capitalized stripping costs ($5.5 million decrease).

During the six months ended June 30, 2020, the AGM invested $27.9 million in additions to MPP&E. The total cash expenditure on MPP&E during the quarter included $4.1 million relating to the capitalization of deferred stripping costs ($5.6 million in deferred stripping additions less a $1.5 million increase in payables relating to stripping costs), $8.0 million in sustaining capital, $13.4 million in development capital and $2.4 million in exploration costs relating to tenements with defined mineral reserves (Abore and Akwasiso).  Sustaining capital related primarily to raising the height of the tailings storage facility, while development capital related primarily to the Tetrem village relocation near Esaase.

The increase in cash flows invested in MPP&E for the six months ended June 30, 2020 was primarily due to higher development capital related to the Tetrem village relocation ($9.3 million increase), higher sustaining capital expenditures relating to raising the height of the tailings storage facility ($2.8 million increase) and exploration drill programs on Abore and Akwasiso. These factors were partly offset by lower capitalized stripping costs ($7.4 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 and six months ended June 30, 2020, $33.9 million and $53.7 million of cash used in financing activities related primarily to distributions totaling $75.0 million to the JV partners ($22.5 million distributed in Q1 2020 and $15.0 million distributed in Q2 2020 to each JV partner), which was partly offset by the utilization of the $30.0 million RCF in Q1 2020.

During the first quarter of 2020, the joint venture undertook the proactive step to drawdown the RCF in light of the current economic uncertainty surrounding the COVID-19 pandemic. 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 take to further strengthen the robust financial position during these uncertain times. The JV expects to repay the RCF in full within twelve months of the balance sheet date.  During the three and six months ended June 30, 2020, financing activities included cash outflows of $0.3 million for both periods relating to the payment of interest and standby fees on the RCF.

Financing activities also included $3.7 million and $8.4 million in cash outflows for the three and six months ended June 30, 2020 relating to the JV's mining contractors which are required to be presented within financing activities as principal and interest payments associated with leases contained within the JV's mining contractor services agreements. Note that as of June 30, 2020, there were $2.9 million in payables relating to the JV's aforementioned mining contractors (December 31, 2019 - $3.7 million).

The increase in cash flows used in financing activities from Q2 2019 to Q2 2020 related to the preferred share distributions to the JV partners totaling $30.0 million.

The increase in cash flows used in financing activities from the 2019 period to 2020 period related to the preferred share distributions to the JV partners totaling $75.0 million, partly offset by the $30.0 million drawdown on the JV's debt facility.

Liquidity position

As at June 30, 2020, the JV held cash and cash equivalents of $47.8 million and $10.0 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.

In October 2019, the JV entered into a $30.0 million 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 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 June 30, 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.

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."

3.4 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.

Mining activities at Esaase expanded to 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 40% of the mill feed.

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 during Q4 2020 and completed in Q1 2021.

b) Production Geology

During Q2 2020, mining geology continued to underpin the in-pit mining operations, including a grade control drilling program. Grade control drilling for the Nkran and Akwasiso pits in Q2 2020 recorded a total of 12,539m from 605 holes using two reverse circulation ("RC") rigs yielding 10,823 samples for analysis.

For the Esaase operation, grade control drilling focused on the South Pit and included 78,744m from 2,925 holes yielding 67,307 samples for analysis. This 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.

The JV, in collaboration with the JV partners, also advanced a study to refine the structural, geological and mineralization models for the Esaase deposit.  Exploration drill holes were relogged in order to better constrain stratigraphy, lithology, faulting, folding, vein density and vein orientations. Detailed pit mapping in both Esaase South and Main pits allowed the identification of distinct mineralized vein set arrays confined between major shears within discrete structural blocks. Estimation methodologies are being modified to reflect the JV's refined understanding of grade distribution.

c) Exploration

The JV holds a large land package of 21,300 hectares on the Asankragwa Gold Belt. During the quarter, Galiano announced the exploration strategy for the JV that was developed in collaboration with the JV partner. The three main focus objectives are:

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 economics (return on invested capital) to Cut 3 at Nkran. 

iii) To advance exploration targets with +1 million ounce potential to be in production by 2027 to replace Esaase.

Initial Drilling Programs

An initial drill program targeted at replacing depletion and improving the five-year business plan has been initiated with five drill rigs planning to drill approximately 36,000 meters of diamond drilling ("DD") and RC drilling during Q2 2020 and Q3 2020. Nine high priority targets will be tested including the highly prospective Miradani trend on the Company's South Camp mining concessions as well as the recently acquired Central West Camp concessions (located immediately adjacent to the Company's Obotan Mining Camp and the 5.4 million tonne per annum processing plant).

Near Term: Replacing Depletion 2021 - 2022

Five advanced targets have been identified with potential to replace depletion in 2020-2021 and drilling began in Q2 2020 and will continue through Q3 2020 in order to allow results to be included into the AGM's planned annual mineral reserve update as at December 31, 2020.  The initial drill program consists of a planned 18,250 meters targeted at replacing depletion, split approximately one-third DD and two-thirds RC.

• Nkran South - located 1.3km south of the Nkran pit, previously mined, targeting extensions to mineralization identified in soil and Versatile Time Domain Electromagnetic geochemistry anomalies.  The JV completed 3,142m of RC drilling during Q2 2020 and is currently evaluating a further follow-up drill program.

• Akwasiso - located 5km north east of the processing plant, currently being mined, targeting extensions of the ore body to the north and south as well as upgrading of inferred resources.  The JV planned 4,600m of RC drilling and DD which was completed in Q2 2020.

Highlights of the drilling and results of the Akwasiso open pit include:

• Third phase of mineralization has been delineated and is expected to be mined in 2021.

• Drilling highlights (see Table 1 for details):

  • Hole 186:  22 meters @ 2.8 g/t gold (from 155m to 174m)

  • Hole 185: 13 meters @ 4.1 g/t gold (from 39m to 52m)

  • Hole 179: 13 meters @ 2.7 g/t gold (from 34m to 47m)

  • Hole 191: 2 meters @ 15.3 g/t gold (from 90m to 92m)

• Western domain open at depth and along strike for potential follow-up drill program.

• Initial drilling program at Akwasiso complete with 4,560 meters consisting of 2,816 meters of RC and 1,744 meters of DD.

• Core logging complete with 80% of samples submitted for analysis and 71% of samples received.

• The current drilling program has delineated a third phase of mining (Cut 3) which sits outside the current Mineral Resource Estimate.

Table 1. Key intercepts in Current Akwasiso Drill Holes