Ms. Mihaela Iancu reports

LEXAM ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT RESULTS FOR THE OPEN PIT PROJECTS IN TIMMINS

Lexam VG Gold Inc. has released results of a preliminary economic assessment on its open-pit gold projects in Timmins, Ont. The PEA was initiated to assess the potential of Lexam's gold projects, which include the Buffalo Ankerite, Davidson Tisdale, Fuller and Paymaster properties. The study was completed by RPA Inc. of Toronto, and is based on the company's June, 2013, mineral resource estimate.

The focus on the potential for open-pit mining on the properties was driven by the near-surface nature of the gold mineralization and previously released drill results indicating substantial widths of mineralization. In addition, there remains exploration potential to further expand the existing mineral resource at surface and to depth, in particular by expansion of the recently updated underground resource estimate of 650,600 ounces gold measured and indicated from 4.16 million tonnes grading 4.86 grams per tonne gold and 574,500 ounces gold inferred from 4.07 million tonnes grading 4.39 grams per tonne gold. Further exploration by Lexam will focus on increasing the open-pit and underground resources and adding new resource areas.

PEA results are presented on a 100-per-cent ownership basis. The disclosure set forth below is derived from the PEA unless expressly noted.

Highlights of PEA base case, scenario 1A (gold price $1,300 (U.S.) per ounce, exchange rate $1 to 90 U.S. cents):

• After-tax net present value of $33-million (at 7.5-per-cent discount rate), internal rate of return of 32 per cent and 2.1-year payback;
• Average annual gold production of 45,000 ounces gold over a life of mine of 6.5 years with a strip ratio of 9.6:1;
• Cash operating costs over LOM average $865 (U.S.) per ounce gold;
• Initial capital cost to construct the mine is estimated at $58-million with potential to reduce initial costs through project optimization and more advanced studies;
• Base case assumes toll milling for all mineralization and contract mining for a portion of the waste stripping;
• Mining dilution of up to 27.5 per cent is factored depending on the mineralized zone and thickness, along with mining extraction of 95 per cent.

The PEA is preliminary in nature and includes the use of inferred resources, which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Thus, there is no certainty that the results of this PEA will be realized. Actual results may vary, perhaps materially.

Upon completion of the PEA, specific steps recommended by RPA include improving the definition of voids, which have been modelled conservatively by the recent resource estimate, and diamond drilling to upgrade the inferred resource to an indicated category. In management's view, the results of the PEA provide a strong incentive for continued exploration targeting resource expansion and classification upgrading, as well as geotechnical, metallurgical and engineering optimization studies.

   DETAILS OF THE PEA AND SENSITIVITIES ON A 100-PER-CENT OWNERSHIP BASIS     
                                                                    
Description            Units Scenario  Scenario 1B  Scenario 1C   Scenario 2
                                   1A     low gold    high gold   production
                                 base        price        price         rate
                                 case  sensitivity  sensitivity  sensitivity

Gold price          U.S.$/oz    1,300        1,250        1,400        1,400
Exchange rate       C$:U.S.$     0.90         0.90         0.90         0.90
Production                                                                  
profile                                                                   
LOM                    years      6.5          6.5          6.5          9.2
Mineralized                                                               
production        tonnes per                                                
rate                     day    2,000        2,000        2,000        3,500
LOM annual                                                                
production                oz   45,000       45,000       45,000       62,000
Strip ratio        waste:ore      9.6          9.6          9.6          9.9
Cash operating                                                            
cost                U.S.$/oz      865          860          875          944
Processing                                                                  
Grade                 g/t Au     2.23         2.23         2.23         1.74
Recovered Au           oz Au  293,000      293,000      293,000      571,000
Capital costs                                                               
                          C$                                                
Initial capital   (millions)       58           58           58           95
Pretax operating                                                           
performance                                                               
Net pretax                C$                                                
cash flow         (millions)       73           58          103          174
IRR                        %      36%          30%          49%          42%
NPV at a                                                                  
discount rate             C$                                                
of 7.5%           (millions)       41           31           61           91
Payback                years      1.9          2.1          1.5          2.0
Construction           years      1.0          1.0          1.0          1.0
After-tax                                                                   
economic                                                                   
performance                                                                
Net after-tax             C$                                                
cash flow         (millions)       61           50           84          137
IRR                        %      32%          27%          41%          35%
NPV at a                                                                  
discount rate             C$                                                
of 7.5%           (millions)       33           26           49           70
Payback                years      2.1          2.3          1.8          2.4

Scenario 1A, the base case, and scenarios 1B and 1C are based on gold price sensitivities, all using the same mine design basis and a 2,000-tonne-per-day production rate. Scenario 2, based on production rate sensitivity, employs a mine design basis at $1,400 (U.S.) per ounce gold (resulting in an increased production profile) and 3,500-tonne-per-day production rate. All scenarios assume toll milling of mineralization at an existing facility in the local Timmins area. All cash operating costs consider for royalties.

The PEA contains a cash flow model based upon the geological and engineering work completed to date and technical and cost inputs developed by RPA. The Canadian National Instrument 43-101 technical report summarizing the results of the updated PEA will be filed on SEDAR and made available on the company's website within 45 days of this press release.

The PEA is based on a mineral resource estimate with an effective date of June 1, 2013, presented in the June 20, 2013, technical report titled "Technical Report and Updated Resource Estimate on the Buffalo Ankerite, Fuller, Paymaster, and Davidson Tisdale Gold Deposits," and written by Dr. Wayne Ewert, PGeo, Eugene Puritch, PEng, Tracy Armstrong, PGeo, Yungang Wu, PGeo, Antoine Yassa, PGeo, and Richard Routledge, PGeo, of P&E Mining Consultants Inc., and by Katharine Masun, PGeo, and Tudorel Ciuculescu, PGeo, of RPA. Each of the foregoing is a qualified person and independent of the company in accordance with National Instrument 43-101.

Qualified person

The economic analysis contained in this news release is based upon information prepared by Glen Ehasoo, PEng, senior mining engineer, RPA, 388, 1130 West Pender St., Vancouver, who is a qualified person as defined by National Instrument 43-101. Mr. Ehasoo is independent of Lexam as defined by National Instrument 43-101.

Kenneth W. Guy, PGeo, a consultant to Lexam VG Gold, is the qualified person who supervised the preparation of the technical data in this news release.

Technical information

The technical information contained in this press release has been reviewed and approved by Mr. Guy, who is a qualified person within the meaning of the National Instrument 41-101.

Notes:

1. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
2. The quantity and grade of reported inferred resources in this estimation are uncertain in nature, and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.
3. The mineral resources in this press release were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum, CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines, prepared by the CIM standing committee on reserve definitions and adopted by CIM Council.
4. The measured and indicated resources of the company are distributed as follows: open-pit measured and indicated: 24,300 ounces gold measured from 310,000 tonnes grading 2.44 grams per tonne gold and 737,100 ounces gold indicated from 12.1 million tonnes grading 1.89 grams per tonne gold; underground measured and indicated: 43,600 ounces gold measured from 240,000 tonnes grading 5.55 grams per tonne gold and 607,000 ounces gold indicated from 3.92 million tonnes grading 4.81 grams per tonne gold.
5. The resource estimates contained herein do not constitute a feasibility or prefeasibility study and contain no mineral reserves within the meaning of National Instrument 43-101 or SEC Industry Guide 7. The mineral resource figures referred to in this press release are estimates and therefore insufficient to allow meaningful application of the technical and economic parameters to enable an evaluation of technical or economic viability and no assurances can be given that the indicated levels of gold content will be achieved. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Estimates made at a given time may significantly change when new information becomes available. While the company believes that the resource estimates included in this press release are well established, resource estimates are imprecise by their nature and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. If such estimates are inaccurate or are reduced in the future, this could have a material adverse impact on the company. In addition, this news release includes inferred resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves.

We seek Safe Harbor.