Mr. Paul Huet reports

KARORA RESOURCES REPORTS RECORD PRODUCTION, SALES AND REVENUE, STRONG GROWTH IN EARNINGS AND CASH FLOW IN SECOND QUARTER 2023

Karora Resources Inc. has released financial and operating results for the second quarter (Q2 2023) and first six months (YTD (year-to-date) 2023) of 2023. The company's full unaudited condensed interim financial statements and management discussion and analysis (MD&A) are available on SEDAR+ and on the company's website. All dollar amounts are in Canadian dollars, unless otherwise noted.

Record quarterly and YTD gold production:

• Record production of 40,823 ounces in Q2 2023 exceeded target levels and increased 33 per cent from the second quarter of 2022 (Q2 2022) and 3 per cent from 39,827 ounces in the first quarter of 2023 (Q1 2023).
• YTD 2023 production totalled 80,650 ounces, 39 per cent higher than 58,141 ounces in the first six months of 2022 (YTD 2022), with the company ending the second quarter on track to achieve full-year 2023 production guidance of 145,000 to 160,000 ounces.

Improved unit cost performance -- AISC on track to achieve 2023 guidance:

• Cash operating costs and all-in sustaining costs (AISC) per ounce sold averaged $1,068 (U.S.) and $1,160 (U.S.), respectively, in Q2 2023 compared with $1,130 (U.S.) and $1,190 (U.S.), respectively, in Q2 2022 and $1,124 (U.S.) and $1,213 (U.S.) the previous quarter.
• Cash operating costs and AISC per ounce sold for YTD 2023 averaged $1,094 (U.S.) and $1,184 (U.S.), respectively, versus $1,214 (U.S.) and $1,285 (U.S.), respectively, for YTD 2022; YTD 2023 AISC per ounce sold in line with full-year 2023 guidance of $1,100 (U.S.) to $1,250 (U.S.).

Record quarterly and YTD revenue:

• Revenue in Q2 2023 of $110.6-million increased 50 per cent and 14 per cent, respectively, from Q2 2022 and Q1 2023, driven by record quarterly gold ounces sold of 42,172 ounces and a higher average gold price.
• YTD 2023 revenue totalled $207.4-million, 49 per cent higher than $138.9-million in YTD 2022, mainly reflecting a 38-per-cent increase in gold sales to 78,317 ounces.

Solid operating cash flow generation:

• Cash flow provided by operating activities in Q2 2023 of $34.4-million tripled from $11.2-million in Q2 2022 and increased 65 per cent from $20.9-million in Q1 2023.
• YTD 2023 cash flow provided by operating activities of $55.3-million more than doubled from $23.4-million in YTD 2022.

Strong earnings performance:

• Net earnings of $6.6-million (four cents per share) compared with net loss of $300,000 (nil per share) in Q2 2022 and net loss of $2.9-million (two cents per share) in Q1 2023. Adjusted earnings of $13.9-million (eight cents per share) more than doubled from $4.7-million (three cents per share) in Q2 2022 and $4.8-million (three cents per share) the previous quarter.
• Net earnings for YTD 2023 of $3.7-million (two cents per share) compared with net loss of $4-million (three cents per share) for the same period in 2022; adjusted earnings totalled $18.7-million (11 cents per share), more than triple the $5.8-million (four cents per share) reported in YTD 2022.

Continued progress with growth plan:

• Following completion of a second (west) decline and first of three ventilation raises at Beta Hunt during the first quarter of 2023, the second ventilation raise was completed in Q2 2023, with the expansion project remaining on track to support growth to an annualized production rate of two mtpa (million tonnes per annum) during 2024.

Additional exploration success highlights future potential of Beta Hunt:

• Drilling at Beta Hunt continued to extend mineralization with new, high-grade gold intersections being released from the Fletcher shear zone (FSZ), which extended the drill-supported strike potential of the FSZ by 900 metres for a total potential strike length of 1.4 kkilometres; key intersections included 6.5 grams per tonne over 26 metres and 46.5 g/t over seven metres. Additional drill results released on Aug. 7, 2023, included the intersection of strong mineralization in targeted areas, which provided further confidence in the continuity of the FSZ mineralization.

Kali Metals Ltd.:

• On May 8, 2023, the company announced an agreement with Kalamazoo Resources Ltd. to create a lithium and critical metals exploration company to be called Kali Metals; the company will own a 45-per-cent interest in Kali, with both Karora and Kalamazoo to vend their lithium exploration projects into the new company with a goal of creating a new, jointly owned but separately run lithium-focused, Australian Securities Exchange-listed exploration company to be led by an experienced board and management team (see news release dated May 8, 2023).

Karora will host a call/webcast on Aug. 14, 2023, at 10 a.m. (Eastern Time) to discuss the second quarter 2023 results. North American callers, please dial: 1-888-664-6383; local and international callers, please dial: 416-764-8650. To join the conference call without operator assistance, you may register and enter your phone number to receive an instant automated call back and be placed into the call.

Paul Andre Huet, chairman and chief executive officer, commented: "I am delighted with our team's performance during the second quarter, which included achieving record gold production, gold ounces sold and revenue, as well as significantly improved earnings performance and strong growth in cash flow. We ended the first half of 2023 well positioned to achieve our full-year guidance for 2023. We also continued to advance our Beta Hunt expansion on schedule and budget, with the second decline and two of three planned ventilation raises completed during the first half of 2023. We will complete the final ventilation raise before the end of the year and remain on track to grow Beta Hunt's annualized production rate to two mtpa during 2024.

"Looking at our operating performance in more detail, Beta Hunt had another excellent quarter, with production growing 34 per cent from Q2 2022 and cash operating costs improving by 10 per cent, to $1,017 (U.S.). For the year to date, both production of 52,286 ounces and cash operating costs per ounce sold of $994 were considerably better than a year ago and outperformed target levels. At HGO, substantial improvement was achieved in the second quarter, with production growing 14 per cent and cash operating costs per ounce sold improving 18 per cent compared to the previous quarter. We commenced production from the Mouse Hollow open pit in the second quarter and will begin mining from the Pioneer pit during the third quarter, both of which will support solid operating performance over the balance of the year.

"Finally, in addition to generating strong results from our gold operations during the first six months of 2023, we also continued to make progress with our plans to significantly increase nickel production at Beta Hunt. Development work to fully integrate key nickel zones into our existing mining infrastructure continues to advance on schedule and we remain on track to grow nickel production to 600 to 800 tonnes by next year. Also, during Q2 2023 we entered into an agreement with Kalamazoo Resources to vend our respective lithium assets into a new company, Kali Metals, that will be self-funding and will be run by an independent and highly experienced management team and board. Our 45-per-cent interest in Kali provides an important new opportunity for value creation. Going forward, Karora Resources will be a highly competitive gold producer with a growing nickel mining operation that also offers exposure to the rapidly growing lithium market."

Consolidated operations

Consolidated gold production in the second quarter of 2023 was a record 40,823 ounces, a 33-per-cent increase from the second quarter of 2022 and 3 per cent higher than 39,827 ounces the previous quarter. The increase from second quarter of 2022 resulted from a 16-per-cent increase in tonnes milled, reflecting the increase in milling capacity following the acquisition Lakewood Mill, and a 13-per-cent improvement in the average grade.

Cash operating costs per ounce sold for the second quarter of 2023 averaged $1,068 (U.S.), a 5-per-cent improvement from both $1,130 for the same period in 2022 and $1,124 the previous quarter. The improvement from the second quarter of 2022 largely reflected the favourable impact of a higher average grade at Beta Hunt, which more than offset the higher costs related to continued cost pressures in such areas as labour, contractors, power and fuel. Lower cash operating costs per ounce sold compared with the first quarter of 2023 related to a higher average grade and a lower-cost production profile at HGO. AISC per ounce sold in the second quarter of 2023 averaged $1,160 compared with $1,190 in the second quarter of 2022 and $1,213 the previous quarter as the favourable impact of lower cash operating costs per ounce sold was offset by higher general and administrative expenses and sustaining capital expenditures.

For the first six months of 2023, gold production totalled 80,650 ounces, 39 per cent higher than 58,141 ounces in the first six months of 2022, reflecting a 21-per-cent increase in tonnes milled and a 14-per-cent improvement in the average grade. The company ended the first half of 2023 well positioned to achieve full-year 2023 production guidance of 145,000 to 160,000 ounces.

Cash operating costs per ounce sold for the first half of 2023 averaged $1,094 compared with $1,214 for the same period in 2022 with a higher average grade at Beta Hunt largely accounting for the year-over-year improvement. AISC per ounce averaged $1,184 (U.S.) in the first six months of 2023 versus $1,285 a year earlier.

Beta Hunt

During the second quarter of 2023, Beta Hunt mined 297,100 tonnes at an average grade of 2.97 g/t containing 28,416 ounces of gold. The 28,416 contained ounces during the quarter increased 43 per cent from 19,916 contained ounces in the second quarter of 2022 (based on mining 290,000 tonnes at an average grade of 2.14 g/t) and was 5 per cent higher than the 27,100 contained ounces the previous quarter (based on mining 299,900 tonnes at an average grade of 2.81 g/t). The majority of the scheduled mined tonnes during the second quarter came from the A zone and central section of Western Flanks with a 39-per-cent increase in grade compared with the second quarter of 2022 mainly resulting from mining high-grade ore from the A zone 17 Level.

Gold production from Beta Hunt in the second quarter of 2023 totalled 25,709 ounces based on milling 319,500 tonnes at an average grade of 2.62 g/t. Production for the quarter increased 34 per cent from the second quarter of 2022 reflecting a 22-per-cent improvement in the average grade as well as an 8-per-cent increase in tonnes processed. Production during the second quarter of 2023 compared with 26,577 ounces the previous quarter as the impact of higher tonnes processed was offset by a reduction in the average grade quarter-over-quarter consistent with the mine plan for the year.

Cash operating costs per ounce sold at Beta Hunt averaged $1,017 (U.S.) in the second quarter of 2023, a 10-per-cent improvement from the second quarter of 2022 mainly reflecting the favourable impact of a higher average grade compared with the same period a year earlier. Cash operating costs per ounce sold in Q2 2023 compared with $967 (U.S.) the previous quarter, with a reduction in the average grade processed largely accounting for the increase quarter-over-quarter.

For the first six months of 2023, Beta Hunt mined 597,100 tonnes at an average grade of 2.89 g/t containing 55,527 ounces of gold, which compared with 520,100 tonnes mined at an average grade of 2.28 g/t containing 38,095 ounces of gold in the first half of 2022. Year-to-date gold production in 2023 totalled 52,286 ounces, a 44-per-cent increase from production of 36,277 ounces in the first half of 2022, which resulted from a 17-per-cent increase in tonnes processes and a 23-per-cent improvement in the average grade. Cash operating costs per ounce sold averaged $994 (U.S.) versus $1,133 in the first six months of 2022 with the improvement largely due to the favourable impact of a higher average grade.

In addition to gold production, Beta Hunt mined 6,071 tonnes of nickel ore at an estimated nickel grade of 2.47 per cent during the second quarter of 2023 compared with 7,693 tonnes of nickel ore mined at an estimated nickel grade of 1.26 per cent for the same period in 2022 and 7,331 tonnes of nickel ore at an estimated nickel grade of 2.22 per cent the previous quarter. The level of nickel ore mined in the second quarter of 2023 was impacted by temporary restrictions on ventilation in planned mining areas, which had resolved by the end of the quarter. For the first six months of 2023, 13,402 tonnes of nickel ore were mined at an estimated nickel grade of 2.34 per cent, which compared with 12,935 tonnes mined at an estimated average grade of 1.62 per cent a year earlier.

Development of the second ventilation raise was completed during the second quarter of 2023. The raise boring team is on site and the third ventilation raise is expected to be completed before the end of the year. Over all, the Beta Hunt expansion project remained on track to support the mine's growth to an annualized production run-rate of two mtpa during 2024.

Higginsville mining operations (HGO)

During the second quarter of 2023, HGO mined 178,100 tonnes at an average grade of 2.76 g/t containing 15,806 ounces, which compared with 106,000 tonnes mined at an average grade of 3.28 g/t containing 11,211 ounces in the second quarter of 2022 and 72,200 tonnes at an average grade of 3.85 g/t containing 8,927 ounces the previous quarter. The level of tonnes mined during the second quarter of 2023 largely reflected the commencement of mining at the Mouse Hollow open pit in April, 2023, where a total of 115,300 tonnes were mined during the quarter, with the remaining tonnes mined coming from the Aquarius underground mining operation.

Production at HGO in the second quarter of 2023 totalled 15,114 ounces based on milling 216,900 tonnes at an average grade of 2.31 g/t. Production in the second quarter of 2023 increased 32 per cent from 11,484 ounces in the second quarter of 2022, reflecting a 30-per-cent increase in tonnes processed, and was 14 per cent higher than the previous quarter, with both tonnes processed and the average grade increasing 6 per cent compared with the first quarter of 2023.

Cash operating costs per ounce sold at HGO averaged $1,151 (U.S.) in the second quarter of 2023 versus $1,130 (U.S.) for the same period in 2022, with the increase largely related to a higher-cost production profile compared with the second quarter of 2022 when close to half of tonnes processed were from the Spargos open pit. Cash operating costs per ounce sold in the second quarter of 2023 improved 18 per cent from $1,402 (U.S.) the previous quarter with the improvement mainly reflecting a lower-cost production profile largely due to the commencement of production from the Mouse Hollow open pit in April, 2023, as well as the impact of costs related to stockpiled tonnes processed during the first quarter of 2023.

For the first six months of 2023, HGO mined 250,300 tonnes at an average grade of 3.07 g/t containing 24,733 ounces of gold, which compared with 193,015 tonnes mined at an average grade of three g/t containing 18,656 ounces of gold in the first half of 2022. Year-to-date gold production in 2023 totalled 28,364 ounces resulting from processing 420,400 tonnes at an average grade of 2.25 g/t versus gold production of 21,846 ounces based on processing 328,218 tonnes at an average grade of 2.24 g/t for the same period a year earlier. Cash operating costs per ounce sold averaged $1,265 (U.S.) compared with $1,346 in the first six months of 2022.

During the second quarter of 2023, development activities at Higginsville were concentrated on preparing for initial mining at the Pioneer open pit. Activities included haul road construction, prestripping and sterilization drilling to confirm the location of the planned mining waste storage area.

Processing operations

A total of 326,131 tonnes were milled at the Higginsville mill during the second quarter of 2023 (with 34 per cent of mill feed coming from Beta Hunt and 66 per cent from HGO) at an average grade of 2.93 g/t. Recovered gold totalled 29,095 ounces. Throughput at the Lakewood mill during the second quarter of 2023 totalled 210,300 tonnes (98 per cent from Beta Hunt and 2 per cent from HGO) at an average grade of 1.83 g/t. Recovered gold during the quarter totalled 11,728 ounces.

For the first six months of 2023, 707,000 tonnes were milled at the Higginsville mill (with 43 per cent of mill feed coming from Beta Hunt and 57 per cent from HGO) at an average grade of 2.90 g/t. Recovered gold totalled 62,244 ounces. Throughput at the Lakewood mill totalled 331,200 tonnes (94 per cent from Beta Hunt and 6 per cent from HGO) at an average grade of 1.83 g/t. Recovered gold during the quarter totalled 18,406 ounces.

At the HGO mill, construction of a planned tailings storage facility lift progressed on schedule during the second quarter as part of the overall HGO capital plan which includes scheduled plant maintenance. At the Lakewood processing plant, preparation for the tie-in of the existing Dumford ball mill was advanced. The additional grinding capacity provided by the ball mill is expected to raise the nameplate capacity at Lakewood from approximately 850,000 tpa to approximately 1.2 mtpa beginning in 2024.

For the three months ended June 30, 2023, the company generated revenue of $110.6-million, a $37-million or 50-per-cent increase from the second quarter of 2022. Gold revenue totalled $108.3-million, $35.1-million or 48 per cent higher than the second quarter a year earlier, with $28.4-million of the increase resulting from higher gold sales and $6.8-million relating to rate factors, including the impact of a stronger U.S. dollar compared with the Canadian dollar as well as a 3-per-cent increase in the average realized gold price. Beta Hunt contributed $67.9-million of total gold revenue in the second quarter of 2023, with HGO contributing $40.4-million. During the comparable period in 2022, Beta Hunt contributed $46.1-million of gold revenue, with the remaining $27.1-million coming from HGO.

For the six months ended June 30, 2023, revenue totalled $207.4-million, $68.5-million or 49 per cent higher than $138.9-million for the same period in 2022. Gold revenue for the first half of 2023 totalled $200-million, a $64-million or 47-per-cent increase from a year earlier. Of the increase, $51.9-million related to a 38-per-cent increase in gold ounces sold, with rate factors contributing the remaining $12.1-million of revenue growth mainly due to the impact of a significantly stronger U.S. dollar compared with the Canadian dollar. Beta Hunt contributed $126.1-million of year-to-date gold revenue, with HGO contributing $73.9-million. During the first half of 2022, Beta Hunt contributed $84.7-million of gold revenue, with $51.3-million coming from HGO.

Net earnings for the three months ended June 30, 2023 totalled $6.6-million (four cents per basic share) compared with net loss of $300,000 (nil per basic share) for the three months ended June 30, 2022. The significant improvement in net earnings performance compared with the second quarter of 2022 mainly reflected a 61-per-cent increase in operating margin (revenue less production and processing costs), to $20.5-million, and lower other expenses, net, which more than offset the impact of increased general and administrative, depreciation and amortization and royalty expenses, as well as higher income tax expense.

Net earnings for the six months ended June 30, 2023, was $3.7-million (two cents per basic share) compared with net loss of $4-million (three cents per basic share) in the first half of 2022, with a $40.1-million or 71-per-cent increase in operating margin more than offsetting higher depreciation and amortization, general and administrative and royalty expenses, as well as higher other expenses, net, and increased income tax expense.

Adjusted earnings for the three months ended June 30, 2023, totalled $13.9-million (eight cents per share) versus $4.7-million (three cents per share) in the second quarter of 2022. The difference between net earnings and adjusted earnings in the second quarter of 2023 resulted from the exclusion from adjusted earnings of the after-tax impact of $7.1-million of foreign exchange losses and $1.2-million related to non-cash, share-based payments. The difference between net earnings and adjusted earnings in the second quarter of 2022 largely resulted from the exclusion from adjusted earnings of the after-tax impact of $9.1-million of foreign exchange losses and $1.2-million related to sustainability initiatives, partially offset by $3.8-million of non-cash, share-based payments. The increase in adjusted earnings compared with the second quarter of 2022 mainly reflected the 61-per-cent increase in operating margin, driven by significantly higher revenue in the second quarter of 2023.

For the six months ended June 30, 2023, adjusted earnings totalled $18.7-million (11 cents per share) versus $5.8-million (four cents per share) in the same period in 2022. The difference between net earnings and adjusted earnings1 for year-to-date 2023 reflected the exclusion from adjusted earnings1 of the after-tax impact of $10.9-million of foreign exchange losses and $2.9-million related to non-cash, share-based payments, partially offset by the exclusion from adjusted earnings of a $1-million unrealized loss on the revaluation of marketable securities. The difference between net earnings and adjusted earnings in the first six months of 2022 mainly related to the exclusion from adjusted earnings of the after-tax impact of $6.2-million of foreign exchange losses, $1.9-million of non-cash, share-based payments, a $1.5-million unrealized loss on the revaluation of marketable securities and $1.2-million related to sustainability initiatives. The 71-per-cent improvement in operating margin mainly accounted for the increase in year-to-date adjusted earnings.

For the three months ended June 30, 2023, cash provided by operating activities, prior to changes in working capital, totalled $39-million compared with $21.7-million for the same period in 2022. The increase compared with the second quarter of 2022 largely reflected significantly higher operating margin, driven by strong revenue growth, partially offset by increased general and administrative and royalty expenses. Changes in working capital represented a net use of cash totalling $4.5-million during the three months ended June 30, 2023, reflecting a $5.1-million reduction in accounts payable and accrued liabilities, partially offset by the impact of lower inventories and prepaid expenses.

For the six months ended June 30, 2023, cash provided by operating activities, prior to changes in working capital, was $67.6-million compared with $33.9-million for the same period in 2022, with the increase mainly reflecting higher revenue and improved operating margin in the first half of 2023. Changes in working capital used $12.3-million of cash during the six months ended June 30, 2023, reflecting a $14-million reduction in accounts payable and accrued liabilities and a $1.5-million increase in inventories, partially offset by lower trade and other receivables and prepaid expenses. Changes in working capital in the first half of 2022 used $9.7-million of cash as a $12.5-million reduction in accounts payable and accrued liabilities was only partially offset by lower levels of trade and other receivables, inventories and prepaid expenses.

The company had cash of $70.8-million at June 30, 2023, compared with $65.9-million at March 31, 2023, and $68.8-million at Dec. 31, 2022. During the second quarter of 2023, the company paid a one-time stamp duty totalling $4-million ($4.5-million (Australian)) related to the acquisition of the Lakewood mill in 2022.

Outlook

Two-year guidance (2023 to 2024)

The company is maintaining its 2023 and 2024 production and cost guidance. The targets included in the company's outlook relate only to the 2023 to 2024 period. This outlook includes forward-looking information about the company's operations and financial expectations and is based on management's expectations and outlook as of the date of this MD&A. This outlook, including expected results and targets, is subject to various risks, uncertainties and assumptions, which may impact future performance and the company's ability to achieve the results and targets discussed in this section. The company may update its outlook depending on changes in metal prices and other factors.

Conference call/webcast

Karora will be hosting a conference call and webcast today, Aug. 14, 2023, beginning at 10 a.m. (Eastern Time). The accompanying presentation can be found on Karora's website.

Live conference call and webcast access information

North American callers, please dial: 1-888-664-6383:

Local and international callers, please dial: 416-764-8650

A live webcast of the call will be available through Cision's website.

A recording of the conference call will be available for replay for a one-week period beginning at approximately 1 p.m. (Eastern Time) on Aug. 14, 2023, through the following dial in numbers:

North American callers, please dial: 1-888-390-0541; pass code: 331851 followed by pound key

Local and international callers, please dial: 416-764-8677; pass code: 331851 followed by pound key

Compliance statement (JORC 2012 and National Instrument 43-101)

The technical and scientific information contained in this MD&A has been reviewed and approved by Steve Devlin, group geologist, Karora Resources, and a qualified person for the purposes of National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.

About Karora Resources Inc.

Karora is focused on increasing gold production to a targeted range of 170,000 to 195,000 ounces by 2024 at its integrated Beta Hunt gold mine and Higginsville gold operations (HGO) in Western Australia. The Higginsville treatment facility is a low-cost 1.6 mtpa processing plant, which is fed at capacity from Karora's underground Beta Hunt mine and Higginsville mines. In July, 2022, Karora acquired the one mtpa Lakewood mill in Western Australia. At Beta Hunt, a robust gold mineral resource and reserve are hosted in multiple gold shears, with gold intersections along a four-kilometre strike length remaining open in multiple directions. HGO has a substantial gold mineral resource and reserve and prospective land package totalling approximately 1,900 square kilometres. The company also owns the high-grade Spargos Reward project, which came into production in 2021. Karora has a strong board and management team focused on delivering shareholder value and responsible mining, as demonstrated by Karora's commitment to reducing emissions across its operations.

We seek Safe Harbor.