Mr. Robert Hinchcliffe reports

GALWAY RESOURCES LTD. ANNOUNCES PREMIUM CASH OFFER FOR GALWAY SHAREHOLDERS AND THE SPIN OUT OF THE VETAS AND VICTORIO PROJECTS

Galway Resources Ltd. has executed an arrangement agreement with AUX Acquisition 2 SARL and its wholly owned Ontario subsidiary, under which AUX has agreed to acquire all of the outstanding common shares of Galway (other than common shares of Galway held by AUX and its affiliates) by way of a plan of arrangement.

Under the transaction, Galway shareholders will receive $2.05 in cash and 0.9 of a share in a new company to hold the Vetas gold project, and one share in a new company to hold the Victorio tungsten-molybdenum project. The new companies will be well capitalized with $18-million (U.S.) of cash and $12-million (U.S.) of cash, respectively. Upon closing of the transaction, existing Galway shareholders will hold 90 per cent of the Vetas SpinCo and 100 per cent of the Victorio spinco. AUX will have the right to nominate one director for election to the board of directors of the Vetas spinco.

The $2.05-per-share cash consideration represents a premium of approximately 47 per cent over the volume weighted average trading price of $1.39 per Galway share on the TSX Venture Exchange for the 20 trading days ending on Oct. 18, 2012. It is anticipated that the arrangement will close on or before Dec. 31, 2012.

"We are extremely pleased with this transaction, as we believe it represents great value for shareholders. We also look forward to creating ongoing value for Galway shareholders through the advancement of the Vetas and Victorio projects. Both projects have excellent infrastructure and tremendous geological upside," said Robert Hinchcliffe, president and chief executive officer of Galway. "I'd really like to thank Galway's employees in Colombia for all their diligent efforts."

In addition, AUX has entered into lock-up agreements with certain officers and directors of Galway, pursuant to which these shareholders have agreed, subject to certain conditions, to exercise the voting rights attached to their Galway shares in favour of the arrangement.

The board of directors of Galway, based in part on a fairness opinion from National Bank Financial Inc. that the consideration offered in the arrangement is fair from a financial point of view to Galway shareholders other than AUX, has unanimously determined that the completion of the arrangement is in the best interests of Galway shareholders. The board has unanimously resolved to recommend that Galway's shareholders vote in favour of the arrangement.

A summary of the opinion given by National Bank Financial, the factors that were considered by the board in approving the arrangement and other material background information relating to the arrangement will be included in the management information circular to be mailed to Galway's securityholders in connection with a special meeting of Galway, which is expected to be held in early to mid-December, 2012, to approve the arrangement.

Completion of the arrangement is subject to, among other things: i) the affirmative vote at the meeting of at least two-thirds of the votes cast by all Galway shareholders; ii) approval of the Superior Court of Justice of Ontario; and iii) receipt of all required regulatory approvals, including acceptance of the transaction by the TSX-V.

A copy of the arrangement agreement will be filed with Canadian securities regulatory authorities and will be available under Galway's profile on SEDAR. It is currently expected that the management information circular to be prepared in connection with the meeting will be mailed to Galway's securityholders in early November, 2012, and those materials will also be available at SEDAR.

Galway's financial adviser in connection with the arrangement is National Bank Financial and its legal adviser is Stikeman Elliott LLP. AUX's financial adviser is BMO Capital Markets and its legal counsel is Cassels Brock & Blackwell LLP.

California resource estimate

On Sept. 12, 2012, Galway announced the results of its resources estimate at California conducted by SRK Consulting (U.S.) Inc., in accordance with National Instrument 43-101. The California properties host indicated gold resources of 424,000 ounces in 2.39 million tonnes at 5.5 grams per tonne (g/t), plus inferred gold resources of 666,000 ounces in 3.85 million tonnes at 5.4 g/t at a cut-off of two g/t gold (Au).

                                       CALIFORNIA RESOURCE ESTIMATE 

Cut-off                           Indicated                                        Inferred                 
Au grade (g/t)     Tonnes  Au (g/t) Ag (g/t) Cu (%) Au ounces      Tonnes  Au (g/t) Ag (g/t) Cu (%) Au ounces

0.25           34,246,800     0.82     4.14  0.062    898,355 114,285,600     0.64     4.01  0.056  2,349,207
0.50            9,315,000     2.05     4.73  0.064    615,371  30,034,800     1.46     4.42  0.060  1,414,263
1.00            5,367,600     3.09     4.96  0.065    533,840  17,069,400     2.08     4.37  0.059  1,142,287
1.25            2,705,400     5.08     6.74  0.071    442,276   4,849,200     4.63     6.44  0.067    721,786 
1.50            2,683,800     5.11     6.78  0.071    441,315   4,703,400     4.73     6.28  0.067    715,260 
2.00            2,386,800     5.53     6.93  0.072    424,385   3,850,200     5.38     6.36  0.067    666,470 
2.25            2,192,400     5.83     7.10  0.072    411,142   3,493,800     5.72     6.54  0.066    642,042 
2.50            1,873,800     6.42     7.25  0.071    387,061   2,953,800     6.32     6.46  0.066    600,654 
3.00            1,436,400     7.55     7.46  0.072    348,712   2,327,400     7.29     6.49  0.066    545,742 
3.50            1,177,200     8.49     7.44  0.073    321,494   1,852,200     8.34     6.74  0.067    496,415 
4.00              939,600     9.69     7.93  0.073    292,634   1,517,400     9.36     6.85  0.068    456,467 
4.50              810,000    10.56     7.83  0.073    274,922   1,333,800    10.05     7.18  0.069    431,192 

Vetas gold-silver project to be spun out into a new company with $18-million (U.S.) cash; aggressive exploration program under way -- mineralization open in all directions

The Vetas property contains the high-grade El Volcan gold-silver mine, the largest gold mine in the Vetas and California gold districts, and has been in production for over 400 years. Galway began drilling at El Volcan in April, 2011, with the focus to test for a continuation of mineralization below the mine, strike and lateral extensions to the mine, as well as to test the six surface anomalies that have been identified. The initial corporate goal was to delineate resources of one million ounces from Vetas by drilling off an area of 500 metres along strike by 500 metres depth below the mine workings. Using an average horizontal mining width of 1.5 metres, a grade of 15 g/t and with a 25-per-cent success ratio over the mine's eight veins would give one million ounces. The actual average horizontal mining width has been exceeded, the success ratio has been exceeded, the depth has been exceeded and the number of veins present is greater than the eight originally thought to exist. As such, Galway intends to issue a robust gold and silver resource estimate for Vetas in the second half of 2013.

There are currently two drills operating underground below the mine and one drill set to resume operations now that Galway has received all necessary pad-construction approvals. Surface drilling is targeting the stockwork intrusive located west of the mine, in the vicinity of CB Gold's significant discoveries, among other gold-rich anomalies. Galway has more than doubled the depth at which gold mineralization has been identified below the Reina de Oro level to nearly 700 metres, or 860 metres below surface. Galway is also considering the ramping up of drilling at Vetas to three underground and two surface rigs, such that a robust resource can quickly be delineated.

Highlights of results from the 52 underground drill holes that have been reported include:

• 1,082.6 g/t Au and 718 g/t silver (Ag) over 1.21 metres, plus 77.1 g/t Au and 51.3 g/t Ag over 1.13 metres, plus 95.6 g/t Au over 1.26 metres, plus 17.8 g/t Au and 77.7 g/t Ag over 2.34 metres from GWY-V021;
• 1,034.3 g/t Au and 300 g/t Ag over 0.91 metre, plus 27.4 g/t Au over 3.38 metres, including 49.4 g/t Au over 1.16 metres from GWY-V027;
• 679.6 g/t Au and 164 g/t Ag over 1.16 metres from GWY-V026;
• 203.4 g/t Au and 1,311 g/t Ag over 1.25 metres from GWY-V029;
• 157.4 g/t Au over 4.15 metres, including 470.2 g/t Au over 1.33 metres from GWY-V036;
• 143.7 g/t Au over 1.17 metres from GWY-V059;
• 82.5 g/t Au and 39.1 g/t Ag over 2.66 metres, including 202 g/t Au and 53.5 g/t Ag over 1.07 metres, plus 21.9 g/t Au and 63 g/t Ag over 6.7 metres, including 69.1 g/t Au and 81.6 g/t Ag over 1.5 metres from GWY-V003;
• 78.2 g/t Au over 3.16 metres, including 248.3 g/t Au and 38 g/t Ag over 0.96 metre from GWY-V016;
• 34.3 g/t Au and 83 g/t Ag over 6.44 metres, including 98.8 g/t Au and 154 g/t Ag over 1.3 metres, plus 18.9 g/t Au over 11.81 metres, including 52.9 g/t Au over 1.32 metres in GWY-V049;
• 15.3 g/t Au and 36.5 g/t Ag over 11.44 metres, including 112.3 g/t Au and 34.2 g/t Ag over 0.92 metre from GWY-V012;
• 8.9 g/t Au and 17.3 g/t Ag over 17 metres, including 19.7 g/t Au and 22 g/t Ag over 1.18 metres, 17.7 g/t Au and 49.9 g/t Ag over 4.81 metres, and 27.2 g/t Au over 1.05 metres from GWY-V056;
• 40.4 g/t Au over 3.47 metres, including 84.9 g/t Au over 1.16 metres, plus 104.4 g/t Au over 1.2 metres, plus 41.9 g/t Au over 1.04 metres from GWY-V015.

Highlights of results from the 16 surface drill holes that have been reported include:

• 26 g/t Au and 26.9 g/t Ag over 4.19 metres, including 105 g/t Au and 76.6 g/t Ag over one metre, plus 29.2 g/t Au over 1.34 metres in GWY-V061;
• 45.9 g/t Au over 1.04 metres in GWY-V054;
• 17.4 g/t Au over 1.38 metres, including 45.2 g/t Au over 0.51 metre, plus four g/t Au over 12.38 metres, including 7.8 g/t Au over 1.58 metres, 12 g/t Au over 0.97 metre and 8.32 g/t Au over 2.3 metres in GWY-V028.

To date, 45 of the 52 underground holes that have been reported on host at least one assay in excess of 10 g/t Au (the average is 2.8 per hole, or 146 times in total), and all holes except hole 25 contain multiple mineralized intersects. In the first 52 underground drill holes, Galway has intersected five g/t Au or more 237 times, 20 g/t Au or more 76 times, 30 g/t Au or more 44 times, 100 g/t Au or more 13 times and 1,000 g/t or more two times.

Galway filed a preliminary NI 43-101 technical report prepared by Roscoe Postle Associates on Aug. 24, 2011. KTTM Geophysics of Medellin, Colombia, completed an induced polarization (IP) and ground magnetic (MAG) survey over the geology grid on the Vetas project. Galway conducted mapping and sampling of the drifts at the El Volcan mine on the two main work levels -- Reina de Oro and Tajo Abierto. A total of 7,345 metres of drifts was mapped, and 3,769 chip channel samples were taken from vein, wall rock and stockwork mineralization between vein sets. The average gold sample grade for the Reina de Oro level is 614.7 metres of 37.9 g/t Au and 60.8 g/t Ag (true width equals 0.99). The average sample grade for the Tajo Abierto level is 563 metres of 21.5 g/t Au and 31.9 g/t Ag (true width equals 1.17). No assay cut was used on channel and chip samples; a lower cut of two g/t Au was used in the Vetas drill program and no upper cut was used. True widths for assays for underground drill holes reported above are 48 per cent to 92 per cent of downhole widths, except hole GWY-V036, which is 32 per cent. True widths for all surface holes have not been established as the zones are of unknown orientations.

Victorio tungsten-molybdenum project to be spun out into a new company with $12-million (U.S.) cash; next step -- prefeasibility study

The Victorio tungsten-molybdenum project is an advanced-stage exploration property secured through an option agreement that when executed will give the Victorio spinco 100-per-cent ownership. The property has excellent infrastructure, such as access by paved road to within a few miles of the site, a nearby railway and a gas pipeline. Victorio is located approximately 20 miles west of Deming, N.M.

Tungsten prices remain near record highs

Record-high tungsten prices, coupled with a steady molybdenum price, have prompted management to begin investing capital in the project again in an effort to create value for shareholders in the new Victorio company. The current combined metal prices of tungsten and molybdenum is almost 22 per cent higher than the combined metal prices used in the SRK Consulting scoping study that is highlighted below. Tight tungsten supply out of China has driven prices to $16 per pound, up from $8 a pound just a few years ago. The molybdenum price has been trading at $12 per pound. Please note that the SRK scoping study noted below used tungsten and molybdenum prices of $8 and $15, respectively.

The company recently initiated an infill drilling program to upgrade the resource that is part of the prefeasibility process recommended by SRK. The project has had extensive work performed by Humble/Exxon, Cominco, Santa Fe, Echo Bay and Gulf Minerals, among others, prior to being acquired by Galway, including a total of 127 drill holes along with extensive geophysical and geochemical studies. The project became dormant in the mid-1980s due to depressed metal prices before being acquired by Galway in 2006, when prices took a strong upswing.

The Victorio project was subject to a positive scoping study completed by SRK, results of which were reported in May, 2008. The study was based on NI 43-101 resource estimates from 109 drill holes comprising a total of 217,000 feet of drilling, of which Galway drilled 18 holes for 38,000 feet. The study included a larger block-caving scenario and a smaller selective-mining scenario.

Supervision, qualified person and quality control

The Vetas project is under the supervision of project manager Alex Cruz of Quito, Ecuador. In compliance with NI 43-101, Mike Sutton, PGeo, and Dale Schultz, PGeo (Manitoba and Saskatchewan), of Buscore Consulting Ltd., are the qualified persons responsible for the accuracy of this news release. Samples from the Vetas project are sent to the Acme Labs preparation facility in Medellin, Colombia, for processing and are analyzed at Acme Labs laboratory in Vancouver, Canada. Surface rock samples are analyzed for Au by a 30-gram fire assay and an atomic absorption spectrometry (AAS)-finish method (Code No. G601), plus a multielement suite with an aqua-regia digestion and ICP-mass spectrometry (MS) finish (Code No. 1F04). Underground samples are analyzed by No. G601 and No. 1F04 methods, and overlimits of Ag greater than 100 parts per million and copper-lead-zinc (Cu-Pb-Zn) of less than 1 per cent by an ore-grade determination with an aqua-regia digestion and analyses by ICP-ES (Code No. 7AR2). If strong mineralization or visible gold is observed, then a screen metallic assay for Au (Code No. G615) is used. Acme Labs is an International Organization for Standardization (ISO) 9001:2008-qualified assayer that performs and makes available internal assaying controls. Quality control protocols by Galway that are in place consist of the insertion of one blank at least every 20 samples, a reject duplicate every 20 samples and one of three different certified reference standard material for every 20 rock samples. Core recovery in the mineralized zones has averaged over 90 per cent. Quarter coring of some select samples will take place. Assays reported in this press release may have screen, and quarter core assays pending will be updated in the table on the website as needed.

Mobile metal ion (MMI) soil samples were sent to SGS Group's (ISO 19011-certified) preparation facility in Medellin, Colombia, for processing and are analyzed in SGS's laboratory in Lima, Peru.

We seek Safe Harbor.