Established gold producer Austral Gold Limited (Austral or the Company) (ASX: AGD; TSX-V: AGLD; OTCQB: AGLDF) announces that it has entered into an agreement to issue up to approximately 1.6 million non-transferable unsecured convertible notes, each having a face value of AUD$1, to one arms-length accredited and sophisticated investor for gross proceeds of US$1 million or approximately AUD$1.6 million.

The number of notes will be determined by converting the gross proceeds into equivalent Australian dollars. The notes are to bear interest at a rate of 9% per annum and mature on the second anniversary of the date they are issued. Each note will entitle the holder to convert the notes into ordinary shares of the Company at the holder’s option at a conversion price of AUD$0.059 (approximately C$0.051) per share during the first year and AUD$0.118 (approximately C$0.103) during the second year.

The Company intends to use the proceeds raised from this private placement for working capital and to repay outstanding debt

The transaction is subject to acceptance by the TSX Venture Stock Exchange and the notes and the underlying conversion shares will be subject to a four month hold period as required by applicable Canadian law. The notes will not be listed on any public market. The convertible notes may not be converted until after four months and one day from the date the unsecured convertible notes are issued.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.