Pure Gold Reports Third Quarter 2016 Financial Results

Financial and Operating Highlights Through and Subsequent to December 31, 2016:

• received permission from Ontario's Minister of Northern Development and Mines to re-open the McVeigh Portal to gain access to the existing ramp. The ramp provides access to the top 150 vertical metres of the historic mine workings and extends 1,080 linear metres from surface. Dumas Contracting Ltd. has been awarded the contract to provide services to the portal and has begun to mobilize equipment;

• announced the commencement of its calendar 2017 exploration activity, which is anticipated to be a phased program. In addition to opening of the McVeigh portal and ramp to allow for detailed geological mapping and sampling, Phase I will include up to 70,000 metres of drilling from both surface and underground. Drilling will be focused on expanding the mineral resource with wider step-outs at the McVeigh, Austin and A3 targets guided by an improved geologic understanding. Underground drilling will target near surface mineralization, with a goal of expanding the resource and providing definition of potential mining shapes. The Company plans to update its mineral resource for the Madsen property ("Madsen") by the end of the second half of calendar 2017, incorporating more than 150,000 metres of new drilling completed since the last resource update;

• with receipt of final assays during the quarter, the Company completed its 2016 exploration program having successfully intersected gold mineralization in multiple, related targets with the drilling of approximately 78,800 metres in 237 drill holes during calendar 2016. Importantly, drilling in 2016 led to a breakthrough in geologic understanding, genetically and spatially linking mineralization in multiple settings and demonstrating that intersected gold mineralization remains open for expansion;

• a highlight of the quarter was the discovery of a gold-mineralized zone named A3. This new mineral target lies beyond the southern limits of the historic stopes in the Austin horizon and is interpreted to be a sub-parallel gold-bearing structure that is open to the southwest both up and down plunge. Highlights from drilling at the A3 target include 25.4 g/t gold over 8.0 metres in hole PG16-229 including 41.3 g/t gold over 4.6 metres; and 16.7 g/t gold over 1.0 metre in hole PG16-231;¹

• announced the Company's first drill results from the Starratt target. The historic Starratt-Olsen mine and the Starratt target lie within 100% owned patent claims that form a core part of the Madsen Property. Drilling below stopes off of the North end of the Starratt Mine expanded the mineralization significantly down plunge from the mined zones. Drill hole PG16-198 represents the northernmost high-grade gold intercept to date within the Starratt target and intersected 11.0 metres grading 34.0 g/t gold including 2.0 metres grading 27.3 g/t gold and 3.0 metres grading 104.1 g/t gold with an estimated true thickness of the broader interval of 2.3 metres. An additional highlight from Starratt drilling includes 15.1 g/t gold over 5.4 metres in hole PG16-215²;

• entered into an agreement with a syndicate of underwriters, whereby the underwriters on a bought-deal private placement basis will purchase for their own account or arrange for substituted purchasers to purchase 16,000,000 flow-through common shares (the "Flow-Through Shares") from Pure Gold at a price of $0.75 per Flow-Through Share, for aggregate gross proceeds to Pure Gold of $12 million (the "Offering"). The underwriters shall also have the option (the "Underwriters' Option") to purchase from Pure Gold up to an additional 10% of the number of Flow-Through Shares sold pursuant to the Offering. In consideration for their services, the underwriters will receive a cash commission equal to 6% of the gross proceeds of the Offering, including any proceeds realized on exercise of the Underwriters' Option. It is expected that the closing of the Offering will occur on or about February 22, 2017; and

• the Company currently has approximately $10 million in cash and short-term investments.

¹ See Pure Gold press release dated October 31, 2016 available on the Company's website at www.puregoldmining.ca or under its SEDAR profile at www.sedar.com, for further details of the results obtained from the A3 target drilling.

Selected Financial Data

The following selected financial data is derived from our unaudited condensed interim consolidated financial statements and related notes thereto for the periods indicated, as prepared in accordance with International Financial Reporting Standards. Details of these results are described in the unaudited condensed interim consolidated financial statements and Management's Discussion and Analysis for the three and nine months ended December 31, 2016. These documents can be found on the Company's website (www.puregoldmining.ca) or on SEDAR at www.sedar.com. All dollar figures are expressed in Canadian $.

² See Pure Gold press release dated October 3, 2016 available on the Company's website at www.puregoldmining.ca or under its SEDAR profile at www.sedar.com, for further details of the results obtained from the Starratt target drilling.

Net losses totaled $6.9 million and $17.0 million for the three and nine months ended December 31, 2016 compared to $0.8 million and $3.6 million for the same periods in the prior year. The most significant contributors to the loss for the three and nine month periods ended December 31, 2016 and 2015, were (i) exploration and evaluation expenditures, (ii) wages, consulting and directors fees (iii) investor relations and communication expenditures (iv) office and rent expenses, (v) professional fees and (vi) non-cash share-based compensation expense. Explanations for material variances are described below:

Exploration and evaluation expenditures increased to $5.6 million and $15.3 million for the three and nine months ended December 31, 2016 compared to $0.3 million and $2.3 million for the same periods in the prior year.

The nine months ended December 31, 2016 saw a significant expansion of exploration activities at Madsen compared to the prior year period. In the prior period, the Company concluded a winter drill program in April 2015 and then reduced exploration activity due to financial constraints. In fiscal 2017 to date, the Company received $19.0 million from the exercise of share purchase warrants, and completed both a $6.2 million flow-through share financing and received funds from the sale of non-core assets to Premier, resulting in a significantly improved financial position allowing the Company to resume an aggressive exploration program at Madsen.

Wages, consulting and director fees increased to $0.4 million and $0.9 million during the three and nine months ended December 31, 2016 compared to $0.2 million and $0.5 million for the same period in the prior year, partially due to the payment of severance costs to the Company's former VP, Exploration totaling $0.1 million and the payment of a year-end bonus to staff in December 2017 totaling $0.3 million, of which $0.1 million is included in exploration and evaluation expenditures, to recognize the significant efforts and achievements in the Company and to ensure key staff retention. No such bonus was paid previously by the Corporation.

Investor relations and communication totaled $0.1 million and $0.4 million during the three and nine months ended December 31, 2016 compared to $7,934 and $0.1 million for the same periods in the prior year. During the three and nine months ended December 31, 2016, the Company increased its marketing activities in conjunction with an increased gold price and renewed investor interest in the gold sector. During the three and nine months ended December 31, 2015, the Company, in light of difficult financing markets, reduced its level of promotional activities, in an effort to conserve cash.

Professional fees increased to $38,514 and $0.1 million during the three and nine months ended December 31, 2016 from $1,968 and $7,394 in the prior period, primarily due to costs related to the closing of the sale of surface rights for the Buffalo claims to Premier, as well as additional tax consulting fees and fees paid for an annual salary compensation survey.

Share-based compensation expense increased for the three and nine months ended December 31, 2016 to $0.7 and $0.7 million compared to $0.2 million and $0.3 million for the same periods in the prior year, primarily due to the issuance of 1.8 million stock options with a fair value of $0.32 per option in December 2016 to the Company's non-executive directors, which vested immediately. 1.7 million stock options with a fair value of $0.07 per option were granted to non-executive directors in December 2015.

For the nine months ended December 30, 2016, the Company included a realized gain of $0.7 million within Other Income on the sale of 1,001,720 shares of Premier, which was considered an available for sale investment. This gain includes $0.5 million previously classified as Other Comprehensive Income, which was reclassified to profit and loss upon disposal of the investment.

Exploration at Madsen

During the nine months ended December 31, 2016, the Company completed a total of 73,570 metres of drilling, with 64,535 metres testing the Austin & McVeigh horizons and 9,035 metres testing the Russett South, Starratt and other targets. The program at Madsen also included ongoing engineering studies, community and First Nations engagement, geologic modeling, aerial surveys and environmental monitoring. During the nine months ended December 31, 2016, the Company spent a total of $15.3 million at Madsen, compared to a budget of $15.4 million.

For calendar 2017, the Company has devised a two phase work program for Madsen. For phase I, a total of approximately 70,000 metres of drilling is planned, primarily at the Austin and McVeigh zones from both surface and underground using four drill rigs. To enable access underground, the Company received approval from Ontario's Minister of Northern Development and Mines in December 2016 to re-open the McVeigh portal.

Clearing of a powerline to connect the McVeigh portal to grid power has commenced and power components as well as ramp ventilation and heating systems have been ordered. Dumas Contracting Ltd. has been awarded the contract to open the portal, secure the underground workings and, if necessary, develop drill bays to allow for underground drilling. It is currently anticipated the McVeigh portal will be opened by the end of February 2017, with underground drilling commencing the end of March 2017.

The McVeigh portal, established in the late 1990's, is located approximately one kilometer from the mill and provides ramp access to the upper 150 vertical metres of mine workings. Currently, the ramp declines in the footwall of the McVeigh horizon, extending for 1,080 linear metres from surface to just above three level. Opening the portal will provide immediate access to the footwall of the McVeigh and Austin horizons allowing for cost effective underground drilling which is expected to provide sufficient drill density to better define possible mining shapes, as well as allow exploration drilling to continue to expand the resource. It will also allow for a field inspection of the underground headings, including rock mass characterization, as well as detailed underground geological mapping and sampling to refine the structural setting.

The Company also expects to issue a new resource estimate in the second half of 2017, which will incorporate all of the Company's drilling since the acquisition of the Madsen Gold Project.

The cost of Phase I is estimated at approximately $16.2 million. Plans for Phase II will be developed as the results of Phase I are incorporated, but is anticipated to include additional drilling and technical studies to move the project towards operational readiness and may include a deepening of the McVeigh ramp.

During the quarter ended December 31, 2016, the Company identified a new target at Madsen, located within the Austin horizon close to existing infrastructure, named A3. This new mineral target lies beyond the southern limits of the historic mining in the Austin horizon and is interpreted to be a sub-parallel gold-bearing structure that is open in all directions. Drill hole PG16-229, characterized by strong silicification and abundant visible gold, anchors the A3 target at a vertical depth of 400 metres. Limited historic drilling that intersected what is now understood to be the A3 target includes 68.0 g/t gold over 3.1 metres from hole 7-13000 at a vertical depth of 330 metres and 18.3 g/t gold over 10.0 metres from hole 11-14125-NU at a vertical depth of 500 metres³.

Highlights from drilling at the A3 target include 25.4 g/t gold over 8.0 metres in hole PG16-229, including 41.3 g/t gold over 4.6 metres and 16.7 g/t gold over 1.0 metre in hole PG16-231⁴.

The A3 discovery, a direct result of the application of modern geoscience on a data-rich project, has strong alteration and mineralization over a one-kilometre dip extent. New geologic mapping of the surface expression, along with current and historic drilling, support this target model.

The Company also progressed digital geologic mapping at Madsen to the south towards Starratt in 2015 and 2016. This work identified a continuation of the stratigraphic units and alteration zones which host the ores at Madsen and provided support for initial drill targeting at Starratt⁵. Pure Gold's mapping suggested that the historic zones at Starratt are analogous in geologic setting to the Austin and McVeigh zones with mineralization occurring along structures that intersect geologic contacts at low angles.

During the quarter the Company received assay results from drilling that targeted 300 metres below stopes at the north end of the Starratt-Olsen mine. Drill hole PG16-198 lies targeted an untested area and returned 34.0 g/t gold over 11.0 metres. The true thickness for this intercept is estimated at 2.3 metres.

In addition, drill hole PG16-215 intersected high grade mineralization above stopes at the south end of the historic mine. Together these drill holes span an 1,100 metre strike extent, confirming the robust nature of the mineralized system at Starratt⁶. Further testing of the extents and nature of mineralization at Starratt will be conducted during calendar 2017 drilling.

³ Historic drill hole results listed from the A3 target were completed prior to the implementation of National Instrument 43-101. A full discussion and cautionary language regarding historic sampling practices can be found in the NI 43-101 technical report entitled "Technical Report on the Preliminary Economic Assessment For the Madsen Gold Project," prepared by Nordmin Engineering Ltd., with an effective date of April 20, 2016, which can be found on Pure Gold's profile on SEDAR at www.sedar.com.

⁴ For further details, see press release dated October 31, 2016 available on the Company's website at www.puregoldmining.ca or under its Sedar profile at www.sedar.com.

⁵ The proximity and geologic similarities to Madsen does not mean that Pure Gold will obtain similar results at Starratt or other exploration targets on the Madsen Property. Starratt is an early stage exploration project and does not contain any mineral resource estimates as defined by NI 43-101. The potential to define a mineral resource at Starratt or other targets is conceptual in nature and there has been insufficient exploration to define a mineral resource. It is uncertain if further exploration at these or other targets at Madsen will yield a mineral resource.

⁶ See press release dated October 3, 2016 for further details of the drilling at Starratt, available on the Company's website at www.puregoldmining.ca or under the Company's SEDAR profile at www.sedar.com.

This press release should be read in conjunction with Pure Gold's unaudited condensed interim consolidated financial statements and Management's Discussion and Analysis for the three and nine months ended December 31, 2016. In addition, for further information please see Pure Gold's Annual Information Form for the year ended March 31, 2016. These documents can be found on the Company's website (www.puregoldmining.ca) or under the Company's profile on SEDAR at www.sedar.com. Shareholders may receive a printed copy of the audited consolidated financial statements, free of charge, upon request.

ABOUT MADSEN

The Madsen Mine operated for over 36 years with historic production of 2.5 million ounces at an average grade of 9.9 g/t gold. The Madsen Gold Project hosts a permitted mill and tailings facility, and access to power, water and labour. The Madsen Gold Project has an Indicated Resource of 928,000 ounces gold at 8.93 g/t gold (in 3.24 million tonnes) and an Inferred Resource of 297,000 ounces gold at 11.74 g/t gold (in 0.79 million tonnes)⁷. The mineral resource is based on 13,624 drill holes, evenly dispersed throughout the mineral resource. A robust geologic model based on 27 levels of geological mapping and chip sampling provides a solid understanding of the geology and continuity of mineralization.

In addition to the mineral resource, the Madsen Gold Project hosts a number of prospective new discoveries including the Fork Zone and Russet South targets, as well as, two significant historic underground mines. Pure Gold believes the opportunity exists to advance these targets through the application of modern exploration science and a new understanding of the district.

QA/QC and Core Sampling Protocols

Drill core samples are submitted to ALS Minerals in Thunder Bay, Ontario for sample preparation by crushing to 70% less than 2mm, a rotary split of 1kg, and pulverization of the split to better than 85% passing 75 microns. Sample pulps are shipped to the ALS assay laboratory in North Vancouver, B.C. for gold analysis with a 30g fire assay and AAS finish (code Au-AA23). Samples returning >5 g/t Au are re-assayed with a gravimetric finish (code GRA21). Mineralized zones with visible gold are also analyzed by a 1kg screen fire assay with screening to 100 microns. A duplicate 30g fire assay is conducted on the screen undersize with assaying of the entire oversize fraction (code Au-SCR21). Control samples (accredited standards and non-accredited blanks) were inserted on a regular basis. Results are assessed for precision on an ongoing basis.

Qualified Persons and 43-101 Disclosure

Phil Smerchanski, P. Geo., Vice President, Exploration for the Company, is the designated Qualified Person for this news release within the meaning of National Instrument 43-101 ("NI 43-101") and has reviewed and verified that the technical information contained herein is accurate and approves of the written disclosure of same.

ABOUT PURE GOLD

Our mandate is pure and simple. To dream big. To colour outside the lines. To use smart science and creativity to unlock the next major gold discovery at the Madsen Gold Project in Red Lake, Ontario. And become Canada's next iconic gold company.

Additional information about the Company and its activities may be found on the Company's website at www.puregoldmining.ca and under the Company's profile at www.sedar.com.

⁷ See the National Instrument 43-101 technical report entitled "Technical Report on the Preliminary Economic Assessment For the Madsen Gold Project," prepared by Nordmin Engineering Ltd., dated effective April 20, 2016. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

ON BEHALF OF THE BOARD

Darin Labrenz, President & CEO

All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to Pure Gold within the meaning of applicable securities laws, including, but not limited to statements with respect to those that address potential quantity and/or grade of minerals, potential size and expansion of a mineralized zone, proposed timing of exploration and development plans. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "planned", "expect", "project", "predict", "potential", "targeting", "intends", "believe", "potential", and similar expressions, or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "should", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management at the date the statements are made including, among others, assumptions about future prices of gold and other metal prices, currency exchange rates and interest rates, favourable operating conditions, political stability, obtaining governmental approvals and financing on time, obtaining renewals for existing licences and permits and obtaining required licences and permits, labour stability, stability in market conditions, availability of equipment, accuracy of any mineral resources, successful resolution of disputes and anticipated costs and expenditures. Many assumptions are based on factors and events that are not within the control of Pure Gold and there is no assurance they will prove to be correct.

Such forward-looking information, involves known and unknown risks, which may cause the actual results to be materially different from any future results expressed or implied by such forward-looking information, including, risks related to the interpretation of results at the Madsen Gold Project; changes in project parameters as plans continue to be refined; current economic conditions; future prices of commodities; possible variations in grade or recovery rates; the costs and timing of the development of new deposits; failure of equipment or processes to operate as anticipated; the failure of contracted parties to perform; the timing and success of exploration activities generally; delays in permitting; possible claims against the Company; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, financing or in the completion of exploration as well as those factors discussed in the Annual Information Form of the Company dated June 17, 2016 in the section entitled "Risk Factors", under Pure Gold's SEDAR profile at www.sedar.com.

Although Pure Gold has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Pure Gold disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise unless required by law.



Contact

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Tel: 604-646-8000
info@puregoldmining.ca