Mr. Vishal Gupta reports

CALIFORNIA GOLD ANNOUNCES EXECUTION OF TOLL-PROCESSING AGREEMENT, COMPLETION OF HARVEST AND COMMENCEMENT OF CANNABINOID EXTRACTION

California Gold Mining Inc. has provided the following updates regarding its operations:

• The company anticipates realizing its first-ever operating profit in Q1 2020;
• Toll-extraction agreement with an industry-leading, North Carolina-based extraction and processing company has been executed;
• Harvest and postharvest treatment of the high-cannabidiol hemp crop from its 100-per-cent-owned Grove Road farm in Kendall county, Illinois, have been successfully completed;
• Additional high-CBD hemp biomass has been purchased from farmers in Virginia and North Carolina;
• Processing of the company's wholly owned hemp biomass into winterized and decarboxylated crude oil with 60 to 65 per cent total cannabinoid content has commenced;
• The company projects production of 2,200 to 2,500 litres of crude oil by year-end; current wholesale prices for crude oil range from $900 (U.S.) to $1,250 (U.S.) per litre;
• California Gold is finalizing a second toll-extraction agreement with an Arizona-based extraction company to produce distillate with 70 to 80 per cent total cannabinoid content;
• The company projects production of 600 to 700 litres of distillate in Q1 2020 in addition to its crude oil; current wholesale prices for distillate range from $2,600 (U.S.) to $3,250 (U.S.) per litre.

Further details on each of the discussed items are set forth in this press release.

California Gold's president and chief executive officer, Vishal Gupta, stated: "We are delighted that despite our recent entry into the high-CBD hemp space and the prevalent industry-wide price compression, CGM is well positioned to post a healthy operating profit in Q1 2020. The completion of our crop harvest in Illinois and partnership with an industry-leading cannabinoid extraction company in North Carolina are important operational milestones for the company. Even more significant are the relationships that the company has recently formed with several farming families in Virginia and North Carolina that have the potential to transform a one-time revenue-generation event resulting from the sale of cannabinoid-rich finished products extracted from our hemp biomass harvested in Illinois, into a continuous revenue stream due to the availability of several hundred thousand pounds of unsold, high-quality hemp biomass in these farming communities."

Toll-extraction services secured

After investigating more than a dozen different extraction companies over the course of three months, California Gold executed a toll-extraction agreement with a North Carolina-based company to produce finished cannabinoid-rich oils and isolates. California Gold retained an industry-renowned expert in extraction technologies to conduct due diligence on its extraction partner and the following boxes were checked:

1. High-efficiency, ethanol- and heptane-based extraction technology;
2. High-quality end products;
3. Significant operating capacity to produce finished hemp-CBD products in bulk;
4. Competitive pricing for toll extraction;
5. Willingness to schedule California Gold's biomass extraction ahead of others;
6. Ability to create a variety of end products as per California Gold's specifications.

The toll-processing agreement was signed on Oct. 24, 2019.

Illinois harvest and postharvest treatment

California Gold completed the harvest of its hemp crop at the Grove Road farm in Illinois on Oct. 25, 2019. The company also executed a contract for turnkey, postharvest processing of the harvested crop in Illinois with a private, multifaceted, hemp-CBD corporation that recently customized a 64,000-square-foot warehouse in Oglesby, Ill., for postharvest treatment of its plants.

Postharvest treatment involves air drying of hemp plants to bring total moisture content under 10 per cent by weight and removal of stems, branches and leaves. The remaining dried flower content is the biomass that is eventually used in the extraction process. The postharvest treatment of California Gold's crop was completed on Nov. 27, 2019, with total biomass yield of 11,117 pounds and an average CBD content of approximately 10 per cent.

This yield is significantly lower than what the company had projected at the beginning of the project and can be directly attributed to the "one in 30 years" rainfall experienced in the U.S. Midwest during the 2019 cultivation season. Despite this shortfall in yield, the Illinois biomass is expected to produce an operating profit for California Gold.

While California Gold's Grove Road farm in Illinois was experiencing excessive rains this cultivation season, the weather patterns in Virginia and North Carolina were much more favourable to hemp cultivation. This is where the company's management team found an opportunity to offset the diminished yields in Illinois.

Identification and purchase of additional biomass in Virginia and North Carolina

During the course of negotiating the toll-processing agreement with its new extraction partner, California Gold's management team learned of dozens of farming families in southern Virginia and northern North Carolina cultivating high-CBD hemp crops in 2019. Preliminary discussions with these farmers revealed that hundreds of thousands of pounds of hemp biomass are available for purchase at very reasonable terms.

An initial batch of 35,242 pounds of biomass was purchased on Nov. 27, 2019. Approximately 65 per cent of this initial batch has now been processed into crude oil. Processing of the remaining 35 per cent is expected to be completed by year-end.

Total crude oil production from the initial batch is expected to be between 2,200 and 2,500 litres by year-end. Wholesale prices for crude oil are currently ranging between $900 (U.S.) and $1,250 (U.S.) per litre.

California Gold's board of directors is currently evaluating the purchase of successive batches of biomass from the farmers upon completing the sale of crude oil from the initial batch. At present time, there are several hundred thousand additional pounds of unsold, high-quality hemp biomass available for purchase by California Gold.

Second toll-extraction agreement and off-take agreements being negotiated

The company is currently negotiating a second toll-extraction agreement with an Arizona-based extraction company to produce high-margin distillate.

The company is also currently in discussions with several interested purchasers, which have requested samples of its crude oil in order to conduct their own testing of the product before placing purchase orders. Management expects the company to start generating revenue from the sale of its finished extraction products in January, 2020.

As a result of the company's current focus on the production of finished extraction products and management's projections for relatively quick revenue realization from this endeavour, California Gold's board of directors has decided to temporarily defer the company's plans to construct a greenhouse for hemp seed propagation on its Grove Road farm in Illinois.

About California Gold Mining Inc.

California Gold is focused on continued development of a high-quality gold resource on its 100-per-cent-owned Fremont property in Mariposa county, California. The Fremont property consists of an entirely private and patented land package totalling 3,351 acres of historically producing gold mines, with a state highway, PG&E electric substation and abundant water present on the property itself. The Fremont property lies within California's prolific Mother Lode gold belt that has produced over 50 million ounces of gold.

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