Mr. William Yeomans of Damara reports

DAMARA OPTIONS KINASKAN-CASTLE CU-AU PROJECT IN THE GOLDEN TRIANGLE

Damara Gold Corp. and Colorado Resources Ltd. have entered into a letter agreement whereby Damara can acquire a 100-per-cent interest (subject to its back-in right (as defined below)) in Colorado's Kinaskan-Castle project (K-C property) located in the Liard mining division within the Golden Triangle area of northwestern British Columbia. Completion of the transaction is subject to the receipt of all required approvals, including the approval of Damara's shareholders and the approval of the exchange (as defined below).

The property

The K-C property comprises 49 mineral claims (17,839 hectares), and is located approximately 195 kilometres north of the town of Stewart and 75 kilometres south of Dease Lake. The Golden Triangle area is a district which hosts several significant gold-copper mines (1), including Imperial Metals' Red Chris (1), and mine development and mineral occurrences, including GJ (1), Quash (1), Hank (1), GT Gold (1) and Spectrum (1).

Historical (2) exploration

Previous work at the K-C property focused on the western side of the property and included the completion of 21 diamond drill holes (4,805 metres) between 1988 and 2013. The mineralization at the K-C property is associated with an east-west-striking structural and intrusive corridor that is spatially related to a 150-metre-by-1,500-metre-long copper and gold soil anomaly, a coincident magnetic anomaly and IP chargeability high.

Gold-copper mineralization noted to date includes both broad porphyry-style and higher-grade vein styles as illustrated by two intercepts in historic (2) holes:

• DDH CA 13-01 with 274 metres of 0.102 per cent Cu and 0.283 gram per tonne Au;
• DDH CA 13-03 with four m of 2.14 per cent Cu, 4.88 g/t Au and 73.2 g/t Ag contained within a 174 m interval of 0.106 per cent Cu and 0.466 g/t Au (3).

The historic data (2) suggest that the gold-copper mineralization on the K-C property is open to the east and it occurs in an alteration zone that has been traced over a distance of 4.4 km to the eastern property boundary. This area has seen the lowest density of historical drill testing.

Recent exploration

Colorado recently initiated a preliminary exploration program which included the collection of 859 soil and 201 rock samples, 10 square km of geological mapping, an 11 line km induced polarization survey, and a 150 line km airborne magnetic survey. Damara, as part of the consideration, will bear the cost of this initial program.

Transaction and concurrent financing rationale:

• The transaction will provide Damara the opportunity to become an active explorer in the Golden Triangle;
• The concurrent financing will broaden Damara's shareholder investor base, and finance the exploration programs and provide working capital for the next 12 months;
• The transaction will allow for the combined exploration expertise of Colorado's and Damara's board and management to advance the K-C property;
• Increased market capitalization along with the improved capital markets are expected to boost Damara's trading activity and liquidity.

William Yeomans, director of Damara, stated, "The collaboration of Damara and Colorado is a unique opportunity for Damara shareholders as it positions the company favourably to advance the K-C property and become an explorer in the prolific Golden Triangle area."

Lawrence Nagy, chairman of Colorado, stated, "The transaction will give Colorado, which currently holds a 15.7-per-cent interest in Damara, the opportunity to focus its attention on its core assets, KSP and North ROK, while providing an opportunity to share in any future success at the K-C property."

Transaction overview

Consideration for the transaction includes an aggregate $250,000 in cash payments and the issuance of 10.25 million common shares in the capital of Damara to Colorado, and $8-million in exploration expenditures (which includes $300,000 reimbursement of the initial program within five business days of receipt of the approval of the TSX Venture Exchange for the transaction) over a three-year period. Colorado will have the exclusive right, within 45 days from the option exercise date, to elect to exercise its back-in right wherein Colorado can acquire a 51-per-cent interest upon incurring $8-million in exploration expenditures over a two-year period with a minimum $2-million in year one. In the event the back-in right is exercised and the terms thereof fulfilled, the parties have agreed to form a joint venture in which Damara will hold a 49-per-cent interest and Colorado will hold a 51-per-cent interest. In the event the back-in right is not exercised, Colorado will be granted a 1-per-cent net smelter return royalty.

The transaction is a non-arm's-length transaction pursuant to Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions.

In accordance with exchange policies, the company will seek minority shareholder approval of the transaction, including the issuance of the consideration shares. Further information regarding the transaction will be contained in a management information circular that Damara will prepare and file in due course in connection with an annual general and special meeting of Damara shareholders, which is expected to be held on Dec. 29, 2017. Closing of the transaction is expected to occur shortly thereafter.

Damara's independent directors have determined that the proposed transaction is fair and in the best interests of the company, and will recommend that disinterested shareholders vote in favour of resolutions supporting the transaction. The board will seek to engage a financial adviser to provide the required valuation of MI 61-101, subject to limitations and assumptions contained therein, and confirm that the aggregate consideration as described in the agreement to be paid by Damara in connection with the transaction is fair, from a financial point of view, to Damara's shareholders.

For Colorado, the transaction would qualify as an exempt transaction pursuant to the policies of the exchange, except for the fact that the transaction involves non-arm's-length parties and therefore is subject to exchange approval. Colorado is exempt from the valuation and minority shareholder approval requirements of MI 61-101.

Concurrent financing

The company also announces it is arranging a concurrent financing wherein it intends to issue units at a price of 15 cents per unit and flow-through common shares (FTS) at a price of 20 cents per FTS. Each unit will consist of one common share (issued on a non-flow-though basis) and one-half of one share purchase warrant. Each warrant will entitle the holder to purchase an additional common share at 30 cents per share for a period of 24 months. Completion of the minimum concurrent financing is a condition of the transaction.

Qualified person

William Yeomans, PGeo, a director of the company, is the qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects who reviewed the preparation of the technical data in this news release for each of Damara and Colorado.

About Damara Gold Corp.

Damara Gold is a TSX Venture Exchange-listed Canadian public company with a board of directors seasoned in the mineral exploration industry and with a record of mineral deposit discovery worldwide.

(1) This news release contains information about adjacent properties on which neither Damara nor Colorado has a right to explore or mine. Readers are cautioned that mineral deposits on adjacent properties are not indicative of mineral deposits on the company's or Colorado's properties.

(2) Historical information contained in this news release, maps or figures regarding the company's or Colorado's projects or adjacent properties are reported for historical reference only and cannot be relied upon as neither the company's QP nor Colorado's QP, as defined under NI 43-101, has not prepared nor verified the historical information.

(3) All drill intercepts are drill indicated lengths. Insufficient technical information exists to demonstrate the true widths of these intersections.

We seek Safe Harbor.