ANNOUNCEMENT  

Update  on  KIG  Transaction

26   August   2015:   Brisbane,   Australia   -   Citigold   Corporation   Limited   ("Citigold"   or  "Company")   (ASX:CTO)   hereby   advises   an   update   to   the   announced   agreement  ("Agreement")   and   proposed   joint   venture   ("Joint   Venture")   with   Kingsford  Investment  Groups  Ltd  ("KIG").  

A   revised   structured   approach   to   the   payment   of   the   $72   million   has   been   agreed  between  KIG  and  Citigold.  The  first  $10  million  is  now  scheduled  to  be  paid  by  KIG  to  Citigold   on   or   before   2ndOctober   2015   with   the   balance   of   $62  million   to   be   paid   by  KIG  to  Citigold  on  or  before  30thOctober  2015.    Further,  the  parties  have  agreed  that  this  will  be  the  final  extension  of  dates  for  the  investment  of  funds  by  KIG.      
KIG   and   Citigold   have   agreed   to   further   amend   the   structure   and   timing   of   the  payments  under  the  Agreement,  as  varied,  and  therefore  commencement  of  activities  of  the  Joint  Venture.        
Although   the   process   of   settlement   with   KIG   has   progressed   more   slowly   than   both  parties   initially   desired,   KIG   has   informed   Citigold   that   KIG   remains   committed   to  proceeding  with  the  proposed  Joint  Venture  and  to  providing  funds  to  Citigold  under  the  Agreement,  as  varied,  in  order  to  enable  Citigold  to  further  develop  the  Charters  Towers  Central  gold  mine  business.    KIG  acknowledges  that  Citigold  may  engage  in  discussions   with   other   interested   third   parties.     KIG   and   Citigold   have   agreed   that  Citigold  is  permitted  to  consider  other  offers  and  enter  an  alternative  agreement  for  a  joint   venture   or   otherwise   with   another   party   if   Citigold   receives   a   superior   offer  which   is   recommended   by   Citigold's   Board   of   Directors,   in   which   case   Citigold   may  terminate  the  Agreement,  as  amended,  on  7  days  notice  to  KIG.  
The   Board   considers   that   the   extension   of   time   is   commercially   reasonable   and   the  joint   venture   remains   in   the   best   interests   of   Citigold.    The   Company   has   worked  steadily   and   consistently   to   build   the   relationship   with   KIG.   This   relationship   can  produce  material  benefits  for  Citigold  and  its  stakeholders.  
KIG   remains   confident   it   will   complete   the   funding   in   accordance   with   the   new  schedule   and   look   forwards   to   the   joint   venture   scaling   up   the   important   Charters  Towers  project  into  a  significant  gold  producer.  

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The  gold  mines  that  the  Joint  Venture  will  be  developing  are  planned  as  ongoing  long-­‐‑ term  operations  for  up  to  20  years  and  more.    It  is  intended  that  the  gold  mines  will  be  a   long-­‐‑term   business   relationship.     As   with   all   commercial   relationships,   Citigold   is  keen   to   enhance   that   relationship   in   the   spirit   of   commercial   cooperation   and  understanding  between  the  parties.  
Gold   still   remains   a   desirable   investment   in   the   world   and   with   around   A$1,600   per  ounce  current  gold  prices,  gold  is  still  a  sound  business  to  be  in,  and  a  valuable  asset  to   hold.   The   operating   costs   for   the   gold   project   will   be   largely   Australian   sourced,  which  may  generate  benefits  when  the  A$  is  lower  than  the  US$,  which  may  result  in  relatively  high  A$  gold  prices.  
Citigold   is   continuing   to   advance   planning   and   preparation   for   the   project.    Additional   time   has   been   devoted   by   Citigold   in   progressing   the   design,   assessment  and   implementation   options   for   a   range   of   mining   options   to   improve   operational  efficiencies.    This  additional  time  has  also  identified  further  capital  and  operating  cost  savings  that  will  be  a  benefit  to  the  project.  
It   is   the   Board's   view   that   the   Charters   Tower   Central   gold   mine   business   acquired  over   time   has   a   substantial   value.     Substantial   infrastructure   has   already   been  commissioned  for  this  gold  project  and  Citigold  has  undertaken  trial  mining  and  sales  of   over   100,000   ounces   in   connection   with   the   project.     Some   90%   of   the   surface  infrastructure  is  commissioned  and  ready  for  the  future  operations  in  connection  with  the  project.    It  is  intended  that  the  main  go-­‐‑forward  focus  of  expenditure  through  the  Joint  Venture  will  be  on  expanding  the  underground  system  of  tunnels  into  the  gold  production   areas.     This   should   provide   sufficient   access   tunnels   inside   the   gold  mineralized   areas   with   a   view   to   providing   consistent   high   quality   gold   output   to  sustain  the  planned  throughput  rate  in  the  gold  extraction  plant.    
The   recent   corporate   personnel   changes   at   Citigold   are   another   step   towards   the  
future.  

For further information contact:

Mark Lynch executive chairman [email protected]

Or visit the Company's website - www.citigold.com

Cautionary   Note:This   release   may   contain   forward-­‐‑looking   statements   that   are   based   upon  management's   expectations   and   beliefs   in   regards   to   future   events.   These   statements   are   subjected   to  risk   and   uncertainties   that   might   be   out   of   the   control   of   Citigold   Corporation   Limited   and   may   cause  actual   results   to   differ   from   the   release.   Citigold   Corporation   Limited   takes   no   responsibility   to   make  changes  to  these  statements  to  reflect  change  of  events  or  circumstances  after  the  release.  

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