Pasofino Gold Limited Announces Agreement to Acquire an Indirect 49% Interest (Excluding 10% Government Carried Interest) in the Dugbue Gold Project

Toronto, July 9, 2020 - Pasofino Gold Ltd. (TSXV: VEIN) (FSE: N071) ("Pasofino" or the "Company") is pleased to announce that further to its press release dated June 11, 2020, Pasofino has entered into an agreement to acquire all the outstanding shares of ARX Resources Limited ("ARX") (the "Transaction").

Pursuant to the Transaction, Pasofino will issue an aggregate of 132,415,974 shares (the "Consideration Shares") to the shareholders of ARX (the "Vendors"). Upon completion of the Transaction, the Consideration Shares issued to the Vendors will represent 49% of the outstanding shares of Pasofino. No Vendor will hold more than 9.9% of the issued and outstanding common shares of Pasofino following the completion of the Transaction. The Consideration Shares issued to the Vendors will be subject to a contractual lock-up, released in 25% installments every 6 months, with the release of the first 25% of the Consideration Shares to occur 6 months from the closing date of the Transaction. The number of Consideration Shares issued to the Vendors is subject to adjustment in the event the Company issues additional common shares prior to the closing of the Transaction.

ARX Earn-in Agreement

ARX and Hummingbird Resources plc ("Hummingbird") (AIM: HUM) are parties to an earn-in agreement (the "Earn-in") in respect of the Hummingbird's Dugbe Gold Project ("Dugbe" or the "Project"), located in Liberia. The Earn-in entitles ARX to earn up to a 49% interest in the Project (excluding the 10% carried interest of the Government).

The key terms of the Earn-in agreement are:

1. The payment of a non-refundable US$2 million deposit (the "Initial Deposit") by ARX to Hummingbird for a three-month extendable exclusivity period.

2. Subject to ARX demonstrating initial funding of at least US$10 million (including the US$2 million Initial Deposit) within the exclusivity period, ARX has the right to operate the Project under the oversight of a joint management committee and to earn into a 49 per cent economic interest in the Project (net of any interests of the Government of Liberia and Anglo Pacific Group PLC) over a two year period through:

a) Completing a Feasibility Study, under joint management committee oversight, on the Project with the objective of being able to attract funding for the development of the Project;

b) Undertaking a mutually agreed exploration programme (estimated to be US$10 million) with the objective of materially increasing the known resource base of the Project; and

c) Covering the overhead and operating costs associated with the Project during the 2 year earn in period. (together the "Earn-in Conditions").

Subject to meeting the Earn-in Conditions, ARX has the right to be granted the 49 per cent economic interest in the Project.

3. On being granted the 49 per cent economic interest in the Project, the parties undertake to enter into a customary joint venture agreement, as well as both having the right, subject to certain protections and the receipt of all required approvals, to convert Hummingbird's 51 per cent controlling interest in the Project into a 51 per cent controlling interest in ARX or any then listed parent company.

Whilst the Company has confidence in the ability of ARX to meet the funding conditions referred to above, there is no guarantee it will be able to, and therefore no guarantee that the Earn-in Agreement will proceed as intended.

About ARX

ARX Resources Limited is a private BVI incorporated company. ARX was founded by Stephen Dattels, a seasoned senior mining executive and resource financier who has been successful for over 30 years in numerous mining ventures, and Michael Beck, a former partner of N. M. Rothschild & Sons, who formed a partnership in the mid 1990's to jointly fund and develop resource projects in developing countries involving the full suite of mineral resources and oil & gas. Since that time they have both been involved in financings, project development and transactions involving billions of dollars on several continents in a myriad of resources including: gold, nickel, chromite, coal, iron ore, copper, uranium, lithium, cobalt, potash, titanium, industrial minerals and oil & gas.

ARX brings to the Company both a successful mine finance group and a world class operating team. The ARX team consists of Ian Stalker and members of his technical team. Ian has been responsible for developing multiple mines over several decades. He has been involved in bringing into production multiple successful African gold mines and operating same including: the Obuasi expansion for Ashanti Goldfields in Ghana, the Siguri Mine in Guinea, the Bibiani Gold Mine in Ghana and the Geita Gold Mine in Tanzania.

Mr. Stalker is an international mining executive with over forty plus years of "hands on" experience in mine development and operations in Europe, Africa and Australia. Mr. Stalker was a Vice President of Gold Fields Ltd., which at one point was the world's fourth largest gold producer. He has successfully overseen the development of several mineral projects in Africa from defined resources through feasibility study into operational mines and thereafter continued to manage ongoing operations and expansions.

About the Dugbe Gold Project

The Dugbe Project is located in southern Liberia and situated within 'Birimian' aged rocks which are host to the majority of West African gold deposits. The deposits are located within 4 km of the Dugbe Shear Zone which is thought to have played a role in large scale gold mineralisation in the area. The Dugbe Gold Project comprises an area of 2,355 km². Hummingbird carried out a large amount of exploration in the area between 2006 and 2014 including 74,497 m of diamond coring. 70,700 m of this was at the Dugbe F and Tuzon deposits, discovered by Hummingbird in 2009 and 2011 respectively. To date over $70 million has been spent by Hummingbird on the Project.

A resource estimate for Dugbe F was prepared by Wardell Armstrong International ("WAI") in 2013 and for Tuzon an estimate was prepared by SRK Consulting (UK) Limited ("SRK") in 2014. Work is underway to bring them current; this will require an updated pit optimisation to be carried out and a review of the support data and estimates so that a Technical Report for the project may be completed. In the interim period the resource estimates for these deposits are considered historical estimates as per NI 43-101 and are presented in Table 1. The Qualified Person has not verified the quantum of the historical estimates nor their original classification, but believes they were prepared satisfactorily by reputable mining consultants. The Qualified Person has not done sufficient work to classify the estimates as current mineral resources and so they are considered historical estimates. The Company is not treating the historical estimate as current mineral resources or mineral reserves.

(1) The Tuzon Mineral Resource Estimate ("Tuzon MRE") had an effective date of March 5, 2014 and was prepared by SRK Consulting (UK) Ltd (SRK) as reported in "An Updated Mineral Resource Estimate for the Tuzon Gold Deposit, Liberia. ". The evaluation and classification of Mineral Resources was prepared in accordance with generally accepted CIM Estimation of Mineral Resource and Mineral Reserve Best Practices Guidelines, by the Qualified Person, Mr. Martin Pittuck (CEng, MIMMM). The Tuzon MRE was reported at a cut off grade of 0.5g/t Au within a US$1500 conceptual pit shell. The Tuzon MRE was carried out by creating wire frames enclosing mineralization from which block models were made. SRK used a pit optimizer,Whittle4X, to develop the conceptual open pit shells using the following main optimization assumptions: (i) overall slope angle of 55 degrees; (ii) overall mining costs of US$1.80 per tonne mined; (iii) overall processing and G&A costs of US$17 per tonne of mineralized material; (iv) royalties costs of US$75 per ounce sold; (v) plant recovery of 90%; and (vi) selling prices varying between US$325 and US$3000 per troy ounce of gold. A mean specific gravity of 2.78 t/m³ was applied to the fresh mineralization and 1.56 t/m³ to the oxide mineralization. Prior to grade estimation the samples were composited to 2m, deemed optimal for the sample population. The samples were composited within each of domain. The composite populations in each of the mineralized domains were visually assessed by log probability plots and log histograms to identify outlying grades that do not support the sample distribution. This led to the application of a high-grade cap, varying from 2.5 to 15g/t, applied to 3 of the 8 domains.

(2) The Dugbe F Mineral Resource Estimate ("Dugbe F MRE") had an effective date of March1, 2013. It was updated as part of a Preliminary Economic Assessment by Wardell Armstrong International ("WAI") titled "Dugbe 1 Project, Liberia, Preliminary Economic Assessment.". The Qualified Person was Nick Szebora Principal Resource Geologist employed by WAI. The Dugbe F MRE was carried out by creating a 2D block model for the mineralized layer, using a natural cut-off grade of 0.5g/t. The evaluation and classification of Mineral Resources was prepared in accordance with generally accepted CIM Estimation of Mineral Resource and Mineral Reserve Best Practices Guidelines.

Both deposits outcrop at surface and may be amenable to open-cut mining. A Preliminary Economic Assessment ("PEA") was carried out for the Dugbe F and Tuzon deposits by WAI in 2013 and with metallurgical, geotechnical and hydrological work completed up until July 2014, will provide a foundation for the Feasibility Study.

In addition, there are a number of prospects within the Project, including 'Sackor' where gold mineralisation has been intersected in drill-holes and where additional drilling is planned. No other prospects have been drill-tested to date. At some prospects extensive trenching identified anomalous levels of gold that require drill-testing. An aggressive exploration programme to test the prospects is planned by ARX.

In 2019, Hummingbird signed a 25-year Mineral Development Agreement ("MDA") with the Government of Liberia providing the necessary long-term framework and stabilization of taxes and duties. Under the terms of the MDA, the royalty rate on gold production is 3%, the income tax rate payable is 25% (with credit given for historic exploration expenditures), the fuel duty is reduced by 50% and the Government of Liberia is granted a free carried interest of 10% in the Project.

Further information on Hummingbird and Dugbe can be found at https://hummingbirdresources.co.uk/operations-projects/liberia/

Further Details on the Transaction

Completion of the Transaction is subject to a number of conditions. Such conditions include the execution of a definitive agreement; completion of satisfactory due diligence; receipt of requisite shareholder and director approvals, as applicable; and receipt of all required regulatory, corporate and third party approvals, including the approval of the TSX Venture Exchange (the "TSXV") as the proposed Transaction may be a "Reviewable Transaction" under TSXV Policy 5.3 - Acquisitions and Dispositions on Non-Cash Assets. As a result of such conditions, there can be no assurance that the Transaction will be completed as proposed or at all.

Trading in common shares of the Company may be halted by the TSXV until such time as the TSXV has determined that the Transaction will be acceptable based upon the Company's filing of all required documentation.

Closing of the Transaction is expected to occur on or about August 2020, or such other date as the parties may mutually agree. There can be no assurance that the Transaction will be completed as proposed or at all. Trading in the securities of Pasofino should be considered speculative.

Update on the Roger Gold Project

Pasofino is also pleased to announce that a resource update is currently ongoing on its royalty-free Roger gold-copper project optioned from operator SOQUEM. The update of the current resource model will include the results of the 34-holes totalling 7,643 meters that were drilled in the fall of 2018 as part of a Phase 2 drill campaign. The updated resource model will allow the Company to determine the scope of a future drilling campaign designed to further advance the Mop-II deposit at Roger and expand the current resource.

Pasofino Gold's President & CEO, Steve Dunn, comments:

"With the substantial amount of drilling already completed at Roger and the established resource estimate indicative of the deposit's potential, the Company is moving forward with the update of the initial resource and expects to release an updated resource model in the coming months while we continue to investigate other assets."

The Roger gold-copper project is advantageously located just 5 km north of the historic mining center of Chibougamau, Quebec, has all-season road access and is crossed by a power line that serviced the past-producing Troilus Mine. The Mop-II deposit at Roger currently contains an Indicated resource of 333,000 contained gold equivalent ounces (10,900,000 tonnes @ 0.95 g/t AuEq) and an Inferred resource of 202,000 contained gold equivalent ounces (6,569,000 tonnes @ 0.96 g/t AuEq). Details of the mineral resource estimate are provided in the Company's September 18, 2018 press release and technical report filed on SEDAR. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Pasofino is earning a 50% interest in the royalty-free Roger project from SOQUEM. Since the beginning of the option, Pasofino has drilled 10,711 m across 44 holes and has extended one hole from a previous campaign.

SOQUEM, a subsidiary of Investissement Québec, is dedicated to promoting the exploration, discovery and development of mining properties in Quebec. SOQUEM also contributes to maintaining strong local economies. A proud partner and ambassador for the development of Quebec's mineral wealth, SOQUEM relies on innovation, research and strategic minerals to be well-positioned for the future.

Qualified Person

Mr. Andrew Pedley (Pr.Sci.Nat.) is a qualified person ("QP") as defined by NI 43-101 and has reviewed and approved the technical content of this press release as it relates to the Project. The QP has not verified the historical estimates. Mr. Pedley is a full-time employee of ARX, holding the position of VP of Exploration and Resources.

SOQUEM's advanced project manager, Yan Ducharme, PGeo, is a Qualified person as defined by National Instrument 43-101 and has reviewed and approved the content of this press release as it relates to the Roger Gold Project.

About Pasofino Gold Ltd.

Pasofino Gold Ltd. is a Canadian-based mineral exploration company. For further information, please visit www.pasofinogold.com or contact:

Steve Dunn, President & CEO
T: (416) 361-2827
E: dunnsteve@protonmail.com

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

This news release contains "forward-looking statements" that are based on expectations, estimates, projections and interpretations as at the date of this news release. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "seek", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur, and include, without limitation, statements regarding the Company's plans with respect to the proposed transaction with ARX, completion of the transactions described herein, the ability to raise the funds to finance its ongoing business activities including the acquisition of mineral projects and the exploration and development of its projects. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors may include, but are not limited to, the results of exploration activities; the ability of the Company to complete further exploration activities; the ability of the Company to complete transactions on terms announced; timing and availability of external financing on acceptable terms and those risk factors outlined in the Company's Management Discussion and Analysis as filed on SEDAR. The Company does not undertake to update any forward-looking information except in accordance with applicable securities laws.

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