Mr. Dick Whittington reports

PNG GOLD CORPORATION PROVIDES EXPLORATION AND PROJECT DEVELOPMENT UPDATE ON IMWAUNA GOLD PROJECT

PNG Gold Corp. has provided exploration and project development updates for the Imwauna gold project and nearby Sehulea property, both located on Normanby Island, Milne Bay province, eastern Papua New Guinea, with highlights as follows:

• Renewal of exploration licences EL 1091 and EL 1069 anticipated in normal course of business;

• Drill hole assay results from Imwauna drill program expected by February, 2012;

• Drill program on previously undrilled Kela's prospect to commence in first quarter 2012;

• Design and fabrication contract awarded for on-site operations, offices and staff quarters, and site construction under way;

• NI 43-101-complaint mineral resource estimate on track for second quarter 2012;

• Open pit mining potential in conjunction with U/G mining now being reviewed and reassessed as part of the preliminary feasibility study.

Exploration program update

Exploration licences

PNG Gold owns 100 per cent of the 68-square-kilometre exploration licence (EL) 1091, which encompasses the Imwauna project as well as the nearby 30-square-kilometre Sehulea property, exploration licence 1069 (see PNG Gold news release, Oct. 31, 2011). The company has submitted an application to the Mineral Resource Authority, the government agency responsible for mineral rights and mining in Papua New Guinea, to have the full ownership of the licences transferred to PNG Gold's local operating subsidiary, Normanby Mining PNG Ltd. Requisite renewal applications have also been submitted to extend the exploration licences on both properties for a further two years. The company anticipates that both licences will be renewed in the ordinary course of such applications.

Exploration update -- Imwauna gold project

During the 2011 calendar year, the company completed 12,089 metres in 71 drill holes. The holes were designed to provide additional information in shallow depths of the mineralized zone and to explore the extension of the vein system at depths below 100 m from surface. Assays have previously been released for 38 drill holes (see PNG Gold news releases, Oct. 13, 2011, and Nov. 17, 2011) and another 33 drill holes totalling 6,531 m have been sampled. Samples cut from holes IMH217 to IMH237 (21 holes) are currently at ALS Chemex in Townsville, Queensland, awaiting sample prep and analysis. The lab experienced a larger-than-expected influx of samples at year-end but expects to have the backlog processed by the end of January. The remaining samples, cut from holes IMH238 to IMH251 (12 holes), are currently en route to ALS Chemex.

In addition to further drilling on the Imwauna deposit, approximately 5,000 m of drilling is planned for the first phase of drilling on the Kela's vein system commencing in first quarter 2012. The Kela's vein system is subparallel to and approximately 650 m west of the Imwauna deposit, and no previous drilling has been done on the prospect. Prior to PNG Gold's acquisition of the property, Kela's was explored by New Guinea Gold primarily using soil and rock geochemistry, and surface trenching. Previous results demonstrated the presence of gold mineralized veins in float and bedrock in the trenches all within an extensive gold-in-soil anomaly. The Kela's veins occur over a strike length of at least one kilometre and appear to trace an arcuate outcrop pattern which joins the southern extension of the Imwauna vein system.

Exploration update -- Sehulea property

The company also completed three holes of a planned four-hole program on the Sehulea property (EL) 1069, approximately 10 km northeast of Imwauna. The holes were targeted on strong IP anomalies on Lataona Hill and adjacent the previously drilled Weioko gold prospect. Sampling completed has been sent for analysis. Once the four-hole drill program has concluded, the drill will be returned to the Imwauna property to continue drilling on the Imwauna and Kela's prospects.

Exploration update -- site construction

In December, 2011, the company executed a contract with PNG Forest Products Ltd. to supply prefabricated accommodations and kitchen/dining buildings for the Imwauna project. The buildings will provide improved dwelling and support facilities for project personnel and visitors. All design and fabrication of the structures will be carried out in the supplier's manufacturing facility in Bulolo, Papua New Guinea. This is in line with the company's desire to significantly enhance the on-site facilities in preparation for future underground exploration and mine development activities.

On Jan. 16, 2012, the Civil Aviation Authority of Papua New Guinea completed an inspection of the Sehulea Aerodrome, located on Normanby Island, and declared it be in satisfactory condition for aircraft operations. Availability of the Sehulea airstrip will now increase the transportation options open to PNG Gold and improve logistical efficiency of the transport of both personnel and supplies to and from the Imwauna gold project and Sehulea property.

Project development update

Project development update -- Imwauna gold project

While the timeline outlines specific dates and activities that may change over time, it does provide target dates that management is working toward. The first key date is for the release of an NI 43-101-compliant mineral resource in second quarter. The company is on track to meet that target.

Preliminary engineering analysis by PNG Gold's engineering consultant has highlighted the potential for an open pit along the strike of the Imwauna vein system in conjunction with or preceding underground development. In order to better understand the development trade-offs, the company is deferring its plans to immediately develop underground workings pending the results of the NI 43-101 mineral resource work.

Given the potential economic benefits of an open pit versus commencing operations underground, the company wishes to fully evaluate the size, scope and location of an open pit relative to any underground workings and to do so prior to initiating any underground development work. This will be reassessed as part of the preliminary feasibility study which will incorporate the NI 43-101 mineral resource estimate expected in second quarter.

Conference

PNG Gold will host a booth at the Vancouver Cambridge Investment Conference, Jan. 22 and Jan. 23, 2012. All shareholders and investors are cordially invited to visit the company's booth and to meet with management and its investor relations manager.

Qualified person

Colin McKenzie, PGeo, chief operating officer of PNG Gold, is a qualified person in accordance with National Instrument 43-101 and has reviewed and approved the technical information contained in this news release.

About the Imwauna gold project

The Imwauna exploration licence covers an area located on the north side of Normanby Island approximately 80 km northeast of Alotau, the provincial capital of Milne Bay province, Papua New Guinea. Alotau is serviced by daily flights from Port Moresby, the national capital and scheduled coastal freighters. PNG Gold maintains a logistics base in Alotau to supply the Normanby Island site.

The Imwauna prospect is an epithermal, low sulphidation quartz vein system comprising two principal veins, the thicker, more continuous Main vein and the East vein. The mineralized veins consist of finely crystalline quartz, white to grey in colour and display typical epithermal textures such as vugs, dog tooth crystals and fine, chalcedonic layering. Sulphides are rare to absent although some deeper intersections contain a few per cent of fine pyrite. Vein margins are often brecciated and resealed with silica.

Historic exploration drilling in 178 drill holes (see PNG Gold technical report, Nov. 30, 2010, on SEDAR) has outlined a narrow zone of gold mineralization over a strike length of at least 900 m to an average vertical depth of about 100 m. Widths are usually one to three m in the Main vein but less in the East vein. The drilling program is designed to extend the deposit to depth and obtain sufficient information to support an initial NI 43-101-compliant mineral resource estimate, now scheduled for the second quarter 2012.

We seek Safe Harbor.