Mr. Darin Labrenz reports

PURE GOLD REPORTS THIRD QUARTER FINANCIAL AND OPERATING RESULTS

Pure Gold Mining Inc. has released its financial results and company highlights for the fiscal 2016 third quarter ended Dec. 31, 2015, and has provided an update on company activities at the Madsen gold project, located in the Red Lake district, Ontario.

"The sale of non-core mineral claims to Premier Gold Mines Ltd. has provided Pure Gold with the working capital to advance the Madsen gold project, minimizing dilution to shareholders," stated Darin Labrenz, president and chief executive officer of Pure Gold. "We are excited to kick off our winter drill program, which will focus on near-mine targets in the shadow of the existing head frame. We believe that drilling to bolster and expand our near-mine resource, combined with ongoing engineering studies, will allow us to assess the possibility of a mining scenario suitable for the existing infrastructure at Madsen."

Third quarter financial and operational highlights

Completion of partial sale of assets to Premier Gold Mines

On Dec. 30, 2015, the company entered into an asset purchase agreement (APA) with Premier Gold Mines (Premier). Under the terms of the APA, the company is to sell 28 non-core patented mineral claims, of the Madsen gold project, in exchange for $2.5-million in cash and $2.5-million in common shares of Premier, calculated using the 20-day volume-weighted average price of Premier's shares and a 1-per-cent net smelter royalty on substantially all of the claims being sold.

The transaction is to close in two tranches. The first tranche closed on Dec. 30, 2015, with the company receiving cash consideration of $2.0-million, share consideration consisting of 1,001,721 common shares of Premier (classified as an available for sale investment), with a then fair value of $2.6-million, and the NSR, while Premier received the underlying mineral rights of the claims being sold.

The second tranche is expected to be completed by the end of March, 2016, upon receipt of regulatory approval for the severance of the surface rights. On closing of the second tranche, the company will receive the final $500,000, while Premier will receive the surface rights to the claims.

Winter exploration program

The company commenced a 6,000-metre drill program, designed to test and advance new interpretations of near-surface high-grade targets, in close proximity to the historical mine. The company is also continuing engineering studies to assess the existing mining and milling infrastructure, and assess potential development opportunities within the existing resource base and nearby prospects.

Selected financial data

The following selected financial data are derived from the company's 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 Dec. 31, 2015. These documents can be found on the company's website or on SEDAR. All dollar figures are expressed in Canadian dollars.

                             FINANCIAL HIGHLIGHTS

                                  Three months ended       Nine months ended   
                                        Dec. 31,                Dec. 31,      
                                    2015        2014        2015        2014

Net loss for the period        $ 801,315 $ 1,962,672 $ 3,561,611 $ 5,220,952
Total comprehensive loss for                                                
 the period                    $ 811,332 $ 1,962,672 $ 3,571,628 $ 5,220,952
Basic and diluted loss per                                                  
 share                         $    0.01 $      0.02 $      0.03 $      0.05

Net loss for the period totalled $800,000 and $3.6-million for the three and nine months ended Dec. 31, 2015, compared with $2.0-million and $5.2-million for the same periods in the prior year. The most significant contributors to the loss for the three- and nine-month periods ended Dec. 31, 2015, and 2014, were: (i) exploration and evaluation expenditures, (ii) wages, consulting and directors fees, (iii) non-cash share-based compensation expense, (iv) office and rent expenses, and (v) investor relations and communication expenditures.

Exploration and evaluation expenditures totalled $300,000 and $2.3-million for the three and nine months ended Dec. 31, 2015, compared with $1.5-million and $3.1-million for the same period in the prior year. Fiscal 2016 to date has seen smaller exploration programs at the Madsen gold project, compared with the prior year, as a result of the company's efforts to conserve cash in light of difficult capital markets. Given the company's working capital position has improved as a result of the sale of non-core mineral claims to Premier, the company has ramped up exploration at site with an active drill program, which will see higher exploration expenditures in the fourth quarter of fiscal 2016.

Wages, consulting and directors fees totalled $200,000 and $500,000 during the three and nine months ended Dec. 31, 2015, remaining consistent with $200,000 and $600,000 for the same period in the prior year. Compensation that was deferred in the quarter ended Sept. 30, 2015, has now been paid in January, 2016, and the resulting payment was accrued as at Dec. 31, 2015.

Share-based compensation expense increased for the three months ended Dec. 31, 2015, to $200,000 compared with $100,000 in the prior year, and decreased in the nine months ended Dec. 31, 2015, to $300,000, compared with $800,000 for the same period in the prior year. Share-based compensation expense relates to grants from current and previous periods in which stock options were granted to executive directors and employees. In the nine-month period ended Dec. 31, 2015, the company granted 3.5 million stock options with a weighted-average exercise price of 11 cents to directors and new and existing employees. During the same period in 2014, the company granted a total of 4.7 million stock options with a weighted-average exercise price of 35 cents to new directors and new and existing employees. All stock options granted to non-executive directors vested immediately resulting in the immediate recognition of the corresponding share-based compensation expense on the date of grant. Stock options granted to executive directors and employees were subject to vesting restrictions over a three-year period with the corresponding share-based compensation expense being recognized over this period.

Office and rent totalled $100,000 and $200,000 for the three and nine months ended Dec. 31, 2015, consistent with $100,000 and $200,000 for the same periods ended Dec. 31, 2014.

Investor relations and communication totalled $7,934 and $100,000 during the three and nine months ended Dec. 31, 2015, compared with $48,576 and $400,000 for the same period in the prior year. During the three and nine months ended Dec. 31, 2015, the company, in light of difficult financing markets, reduced its level of promotional activities, in an effort to conserve cash.

Total assets decreased by $3.2-million as at Dec. 31, 2015, in comparison with March 31, 2015, primarily due to the reduction of cash on the balance sheet spent on operating activities totalling $3.3-million and a reduction in exploration and evaluation assets as a result of the sale of assets to Premier, offset by the cash and shares received from Premier.

At Dec. 31, 2015, the current liabilities comprise: (i) trade accounts payable and accrued liabilities of $600,000 (March 31, 2015: $800,000); (ii) a flow-through premium liability of $1.0-million (March 31, 2015: $1.0-million); and (iii) other liability of $300,000, which relates to a prepayment of proceeds relating to surface rights to be transferred to Premier. The flow-through premium liability consists of the premium paid by investors for flow-through shares in excess of the market value of the shares without flow-through features, less the amount of premium relating to expenditures that have been renounced to flow-through share purchasers. This premium is recorded as a liability, and upon completion of the qualified expenditures and renouncement by the company of the tax benefits associated with the related expenditures, this liability amount will be reversed and included in the company's statement of loss and comprehensive loss as a deferred tax recovery.

At Dec. 31, 2015, the non-current liabilities consist of a provision for closure and reclamation costs with respect to future reclamation work to be performed on the company's Madsen gold project totalling $2.4-million (March 31, 2015: $2.6-million). The change during the nine-month period ended Dec. 31, 2015, in comparison with March 31, 2015, was due to a combination of a change in estimate relating to the discount rate used in calculating the present value of the future reclamation obligation and accretion as a result of the normal passage of time. Additionally, as the sale of mineral claims to Premier contractually passes -- the responsibility for future closure expenditures related to the Buffalo mine closure plan to Premier -- the company has derecognized this liability of $100,000 at Dec. 31, 2015.

The company currently has approximately $6.8-million in cash, short-term investments and investments classified as available for sale.

Grant of incentive stock options

The company has granted incentive stock options to a consultant to purchase up to 75,000 common shares in the capital of the company until Feb. 18, 2021, at an exercise price of 16 cents per share to First Global Capital, which provides investor relations activities to the company. The incentive stock options were granted in accordance with the company's stock option plan.

Darren O'Brien, PGeo, vice-president, exploration, is the company's designated qualified person for this news release within the meaning of NI 43-101 and has reviewed and validated that the scientific and technical information contained in this release is accurate.

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 Dec. 31, 2015. These documents can be found on the company's website or under the company's profile on SEDAR. Shareholders may receive a printed copy of the audited consolidated financial statements, free of charge, upon request. All dollar figures are expressed in Canadian dollars.

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