Mr. Philip Gibbs reports

KILO GOLDMINES ANNOUNCES EXPLORATION UPDATE

Kilo Goldmines Ltd. has provided an update on the exploration program on its Imbo licence (PE9691) within the Ngayu greenstone belt in the northeastern Democratic Republic of the Congo (DRC).

Drilling

The drilling program currently under way on the Imbo licence is designed to test coincident gold-in-soil and magnetic anomalies at the Adumbi South, Adumbi West and Kitenge Extension targets, as detailed in the company's press release on Nov. 2, 2016. The three targets are located within four kilometres of the company's Adumbi prospect, which has an inferred resource of 19.11 million tonnes at 2.2 grams per tonne (g/t) gold for 1,362,000 ounces of gold. To date, 30 holes have been completed for a total of 4,620 metres, as follows.

Adumbi South

The Adumbi South target lies 480 metres to the south of the Adumbi prospect, and is defined by a 1.4-kilometre-long magnetic anomaly that appears to be demagnetized in places and an over-200-part-per-billion gold-in-soil anomaly. To date, a total of nine holes (1,407 metres) on three traverses at a spacing of 160 metres have been completed. The drilling has shown that the linear magnetic feature is caused by magnetite-bearing chlorite schist and supports the interpretation that the lithologies at Adumbi South are similar to those at the Canal prospect, which forms the southeastern extension of the main Adumbi mineralization. Hydrothermal pyrite locally replaces disseminated magnetite in the chlorite schist, which together with a deeper weathering profile, is likely responsible for the weakening of the magnetic response on traverses ALS2 to ALS4. Other hydrothermal alteration comprises zones of foliation-parallel quartz veining up to 11 metres in width (with individual veins under one metre across); pyrite, plus or minus pyrrhotite, plus or minus arsenopyrite occurs locally within the veins and sheared country rock.

Analytical results have been received for six of the nine holes drilled to date, the best intersection being one metre at 3.85 g/t gold in hole ASDD003.

Kitenge Extension

The Kitenge Extension target lies to the northwest of the Kitenge prospect, and is defined by an approximately two-kilometre-long magnetic feature with a coincident gold-in-soil anomaly with values from 50 to 450 parts per billion. The planned program comprised 17 drill holes totalling 2,435 metres on seven traverses at a spacing of 320 metres along strike. To date, a total of 14 holes (2,163 metres) have been completed on six traverses.

The drilling has shown that the linear magnetic feature is caused by magnetite-bearing chlorite schist within a package of quartz-carbonate schist, and the lithological sequence is similar to the Canal prospect southeast of Adumbi. Hydrothermal alteration is associated with strike-parallel shear zones, some of which affect earlier breccia zones containing clasts of vein quartz and country rock, indicating several phases of tectonism and alteration. The hydrothermal activity has caused a general bleaching of the sheared host rock, and quartz veins parallel to the foliation are common. Disseminated sulphides (pyrite, plus or minus pyrrhotite, plus or minus arsenopyrite) are locally associated with the veins and sheared host rock.

Analytical results have been received for the first two drill holes:

• SKDD060 -- 2.9 metres at 1.05 g/t gold from 102 metres; one metre at 0.77 g/t gold from 167 metres;
• SKDD061 -- 1.63 metres at 3.05 g/t gold from 68.4 metres; 1.6 metres at 10.52 g/t gold from 84 metres.

Drilling at Adumbi South and Kitenge Extension has confirmed the presence of the mineralized structures that the program was designed to test, and further drilling at these targets will be subject to assay results from the holes which are not yet available.

Adumbi West

The Adumbi West target is defined by a 1.7-kilometre-long linear magnetic anomaly and a coincident gold-in-soil anomaly with values from 50 to 1,000 parts per billion. This magnetic feature is similar to that which defines the banded ironstone formation (BIF) at the Adumbi prospect. To date, seven holes (1,050 metres) have been completed on traverse AWL2.

Drilling on traverse AWL2 has shown that the strong magnetic anomaly is caused by chlorite schist with abundant disseminated magnetite, rather than the expected BIF. The magnetite-chlorite schist is interpreted as a facies equivalent of the Adumbi BIF, and represents an area where a greater proportion of clastic material was deposited with the chemically precipitated iron oxide.

In drill holes AWDD002 and AWDD004, a 1.4-to-4.3-metre-wide zone of quartz veining and silicification with abundant pyrite was intersected, which is on strike with the Dieu Merci artisanal workings to the northwest. This zone could represent the northwestern strike extension of the Adumbi structure, and indicating that the structure is crosscutting the lithological strike at an acute angle. Whereas at Adumbi the structure is hosted by the chemically reactive BIF, at Adumbi West it is within quartz-carbonate schist in the hangingwall of the iron-rich horizon.

Drilling will now move to traverse AWL5 where four holes will be drilled to further test the interpreted extension of the Adumbi structure and the area of the magnetic anomaly. Drilling at Adumbi West will then be suspended until assay results are available.

Adumbi prospect

Four drill holes totalling approximately 1,900 metres are planned to test the depth extensions of a zone of high-grade mineralization defined by geological and mineralization modelling of the Adumbi drill hole core. This zone of mineralization is associated with alteration and structural deformation that have completely destroyed the primary host lithological characteristics, and is termed Replaced Rock zone (RP zone).

The RP zone has been traced along strike for 840 metres and downdip to 275 metres below surface. The average true width and weighted average grade of all drill hole intersections of the RP zone are 4.91 metres at 5.44 g/t gold. In the central 480-metre portion of the Adumbi prospect, the average is 6.41 metres at 6.25 g/t gold.

The four planned drill holes will target the downplunge extensions of relatively high-grade shoots within the RP zone, with the aim of intersecting the mineralization about 100 metres below the previous deepest drilling. The RP zone is seen to have potential for underground exploitation, and establishing depth continuity could add significantly to the company's resource base.

Other exploration

Exploration will shortly recommence in the eastern part of the Imbo licence area, where stream sediment and rock chip sampling indicate an extension of the Adumbi/Kitenge/Manzako mineralized trend over a strike of about seven kilometres (see press release dated Sept. 23, 2015). The program will entail soil sampling at 40-metre intervals along 160-metre-spaced lines over an area of four kilometres by 1.5 kilometres in the central part of the target. This will be accompanied by geological mapping, rock chip sampling, channel sampling and trenching/augering, with the objective of defining targets for drilling in the third quarter of 2017.

About Kilo Goldmines Ltd.

The company holds about 2,417 square kilometres of prospective Archean Kibalian greenstone in the Kilo-Moto area in the DRC.

Incorporated within these licences is:

• The Somituri project (71.25 per cent owned by Kilo Goldmines), comprising six contiguous licences (361km Superscript 2) held by KGL-Somituri SARL;
• The KGL Isiro SARL joint venture (JV) with Randgold Resources Ltd. (2,056 square kilometres) for gold and associated minerals only. The JV is managed by Randgold and financed by it to a prefeasibility study for a 51-per-cent participation interest. Upon completion of the prefeasibility study, Kilo Goldmines can participate in financing or Randgold will increase its participation to 65 per cent by completing a feasibility study. Areas which may be deemed of no interest to Randgold will be returned to Kilo Goldmines.

Qualified person

Howard Fall, BSc, PhD, MAusIMM, QP (Geo), is the qualified person (as such term is defined under National Instrument 43-101) of Kilo and has reviewed the scientific and technical information contained in this release.

We seek Safe Harbor.