Beacon Securities Ltd.| 66 Wellington Street West Suite 4050, Toronto, Ontario, M5K 1H1 |416.643.3830 |www.beaconsecurities.ca

Orca Gold Inc.

(ORG-V) Block 14 Resource Update

February 6, 2017

Michael Curran, CFA (416) 507-3950

mcurran@beaconsecurities.ca

Orca’s main asset is the Block 14 gold project located

in Sudan, in northeastern Africa. The May 2016 PEA

outlined a robust 1.8MMtpa open pit mine capable of

producing, on average, 73Koz/yr over a 16-year

minelife (+1MMoz in total) at an AISC of US$805/oz, for

an initial capital investment of US$123 million. Orca also

recently added a portfolio of early-staged exploration

ground in Cote d’Ivoire, in West Africa.

Updated Gold Resources: last week, Orca reported an

updated resource estimate for the Block 14 project.

Indicated resources were increased 10%, to 1.8MMoz

(30.6MMt grading 1.82g/t gold). Inferred resources add

a further 0.5MMoz (grading 1.7g/t). We’d expect the

conversion of inferred into indicated to lower the

overall strip ratio in the open pit, thus benefitting

project economics. The updated resources will now be

used in a prefeasibility study (PFS) currently underway

(expected completion later this quarter or in Q2/17).

Longer-term Underground Potential?: several higher

grade intercepts show good potential to support an

underground mine (after open pit mining completed).

Better intercepts at the Wadi Doum (WD) deposit

include: 25m grading 18.4g/t gold, 27m grading 5.5g/t,

30m grading 8.1g/t, 30m grading 5.8g/t, and 14m

grading 13.4g/t.

Similarly at the Galat Sufar South (GSS) deposit,

intercepts with underground potential include: 30m

grading 8g/t, 20m grading 7.2g/t, as well as several

“teens-over-teens” – 10-20m grading 10-20g/t, both at

GSS and Liseiwi (a new target area 15km north of WD).

However, economics for potential underground mining

will not be part of the current PFS.

Resource Update

Previous Close $0.46

12-month Target Price $0.90

Potential Return 97.8%

Dividend Yield 0.0%

Low High

52 Week Price Range $0.14 $0.55

(C$MM, except per unit) FY15 FY16e FY17e FY18e

Revenue $0.0 $0.0 $0.0 $0.0

Net Income -$9.9 -$10.3 -$6.8 -$6.0

Shares O/S (wgt avg) 107 108 140 200

EPS (operating) -$0.09 -$0.09 -$0.04 -$0.03

CFPS -$0.09 -$0.09 -$0.04 -$0.03

P/E neg. neg. neg. neg.

P/CF neg. neg. neg. neg.

NAV $0.66 $0.82 $0.86

P/NAV 0.7x 0.6x 0.5x

Shares Outstanding 113.3 million

Mgt/Insiders 8%

(C$MM)

Market Cap $51.5

LT Debt (corporate) $0.0

Working Capital $10.0

Enterprise Value $41.5

Fiscal Year End December 31

2P Reserves - MMoz

M+I Resources 1.6 MMoz

Total Resources (M+I+I) 2.2 MMoz

(C$/sh) Q1/15 Q2/15 Q3/15 Q4/15

EPS (operating) -$0.02 -$0.02 -$0.02 -$0.03

CFPS -$0.02 -$0.02 -$0.02 -$0.03

Q1/16 Q2/16 Q3/16 Q4/16e

EPS (operating) -$0.01 -$0.02 -$0.02 -$0.03

CFPS -$0.01 -$0.02 -$0.02 -$0.03

Orca Gold is a Canadian public company engaged in the acquisition

and exploration of mineral properties in Africa. The main asset is the Block

14 project in Sudan. All prices in C$ unless otherwise indicated.

Stock Performance

BUY (unch.) $0.90 (unch.)

Annual Estimates

Valuation

Financials

Reserves / Resources

Quarterly Actuals/Estimates

Company at a Glance

February 6, 2017 Page | 2 Michael Curran| 416.507.3950 | mcurran@beaconsecurities.ca

Orca Gold Inc.

Investment Thesis…Re-rating Opportunity As Block 14

Advances (and drills start turning in Cote d’Ivoire)

We consider Orca Gold Mining to be an attractive investment for the

combination of an undervalued emerging junior gold producer with

expansion potential and exploration upside for free. Orca’s Block 14

deposit in northern Sudan could become a 73Koz/yr open pit mine with

AISC ~US$800/oz. We also see good potential to both increase production

closer to the 100Koz/yr level and lower AISC (for moderately higher capital

investment).

Developing Africa-experienced Management Team – a number of the

senior management and Board of Directors of Orca Gold were involved

with Red Back Mining, which built/expanded the Tasiast gold mine in

Mauritania, before being taken over by Kinross Gold. They were also

active explorers in Cote d’Ivoire.

Fig 1 Block 14 Project: Project Ownership (left) and Location Map (right)

Source: Company reports

Fig 2 Economic Parameters: Block 14 Project

Jul-16 Beacon

PEA model

Initial capital US$MM 123 150

Sustaining capital US$MM 31 35

Resource Size MMt 28 28

Throughput - daily t 5,150 6,300

Throughput - annual MMt 1.8 2.2

Minelife years 16.0 13.0

Mined Grade - Gold g/t 1.52 1.50

Gold recovery % 86% 88%

Gold Production - avg annual Koz 73 93

Gold Production - total lom MMoz 1.17 1.20

Op Costs US$/t 778 780

AISC US$/oz 805 877

IRR - after tax % 22%

Payback - after tax years 4

Source: Company report and Beacon Securities estimates

February 6, 2017 Page | 3 Michael Curran| 416.507.3950 | mcurran@beaconsecurities.ca

Orca Gold Inc.

Valuation Methodology

Our favored valuation method for precious metals producers is a price-to-

net-asset-value (P/NAV) multiple based on a discounted cash flow (DCF)

model constructed using our estimates of the parameters of existing or

potential mining operations. We employ long-term assumptions of

US$1,300/oz for gold starting in 2017. Future year cash flows are then

discounted using a base rate of 5%, to which a risk premium is added,

depending on the overall political risk the company’s assets are exposed

to. Orca’s asset exposure to the Sudan is considered medium-high risk (5%

base + 2% premium). Until a prefeasibility study is completed, we also

impose a further 2% premium to our valuation (7% + 2 % premium). For the

newly-acquired exploration portfolio in Cote d’Ivoire, we carry the assets

at the value of ORG shares paid to Kinross.

Fig 3 Net Asset Value Breakdown: Orca Gold Inc.

Discount Rate Ownership Value Per Share (C$/sh)

C$MM FY17e FY18e FY19e

Block 14 (Sudan) 9.0% 70% $140 $0.59 $0.75 $0.79

Other exploration $0 $0.00 $0.00 $0.00

OPERATING ASSETS $140 $0.59 $0.75 $0.79

Cote d'Ivoire properties $4 $0.04 $0.04 $0.04

Working Capital $10 $0.04 $0.03 $0.03

LT Debt (corporate only) $0 $0.00 $0.00 $0.00

CORPORATE ASSETS $14 $0.08 $0.07 $0.07

NET ASSET VALUE $154 $0.66 $0.82 $0.86

Source: Beacon Securities estimates

In Fig. 3 we provide forward-looking NAV/sh estimates to show how the

company’s NAV is forecast to change over the next few years. For junior

gold producers (gold production <250Koz/yr), we employ a target range

of 0.50x-1.50x P/NAV. Using a target P/NAV multiple of 0.8x on our 2017

NAV estimate suggests a fair value of $0.55/sh for Orca Gold.

On a forward-looking P/CF multiple analysis basis, we forecast Orca could

achieve average CFPS of US$0.26/sh in its first year of production (2020).

Discounting back to the present (at 20% per annum) suggests $0.15/sh.

Applying our target multiple of 8.0x P/CF to this estimate, which is towards

the middle of our 5.0x-15.0x target range for junior gold producers,

suggests a fair value of $1.25/sh.

On an adjusted market capitalization per total resource ounce basis

(AMC or EV/oz), we see that Orca Gold trades at a significant discount to

the peer group of non-producing golds with deposits of a similar grade.

February 6, 2017 Page | 4 Michael Curran| 416.507.3950 | mcurran@beaconsecurities.ca

Orca Gold Inc.

Fig 4 AMC/oz For Similar Grade Non-Producers

(M+I) (M+I+I)

Share Shares Market Measured Total Gold AMC/ AMC/

Sym- Price O/S Cap AMC Indicated Resource Grade M+I oz M+I+I oz Area of

Company Exch C$/sh M US$M US$M 000oz 000oz g/t US$/oz US$/oz Major Exploration

Amarillo Gold AGC-V $0.41 80 $25 $25 1,210 1,498 1.62 21 17 Brazil

Atlantic Gold AGB-V $0.97 168 $125 $126 1,158 2,198 1.54 109 57 Nova Scotia

California Gold Mining CGM-V $0.47 32 $12 $12 515 879 1.60 23 13 California

Columbus Gold CGT-T $0.87 143 $96 $89 1,885 2,965 1.49 47 30 French Guyana

Falco Resources FPC-V $0.95 147 $107 $61 4,563 5,616 1.54 13 11 Quebec

Midas Gold Corp. MAX-T $0.90 180 $125 $99 5,464 6,530 1.58 18 15 Idaho

Sarama Resources SWA-V $0.19 121 $18 $17 282 1,202 1.83 59 14 Burkina Faso

Treasury Metals TML-T $0.63 103 $50 $54 1,111 1,441 1.98 49 37 Ontario

West African Resources WAF-V $0.30 409 $94 $79 983 2,026 1.25 81 39 Burkina Faso

Mean 47 26

Orca Gold ORG-V $0.42 113 $37 $27 1,599 2,240 1.78 17 12 Sudan

Orca Gold - 70% of resource ORG-V $0.42 113 $37 $27 1,119 1,568 1.78 24 17 Sudan

Source: Company reports and Thompson Reuters Eikon data

Using a 50/50 blend of fair values generated by NAV and CF analysis,

generates our 12-month target price of $0.90 per ORG share.

Fig 5 Property Location Map: Cote d’Ivoire

Source: Company reports

February 6, 2017 Page | 5 Michael Curran| 416.507.3950 | mcurran@beaconsecurities.ca

Orca Gold Inc.

Appendix: Summary Financials

Orca Gold Inc. Beacon Securities Limited

Symbol ORG-V Share Price $0.46

Stock Rating BUY Shares O/S (MM) 113.3

Price Target $0.90 Mkt Cap ($MM) 52Michael Curran, CFA (416) 507-3950

INCOME STATEMENT FY15 FY16e FY17e FY18e RATIO ANALYSIS FY15 FY16e FY17e FY18e

Revenues C$MM - - - - Dividends Per Share $/sh - - - -

Operating Costs C$MM - - - - Dividend Yield % - - - -

EBITDA C$MM (10.4) (10.5) (6.0) (6.0) LT Debt/(Total Capital) % - - - -

DD&A C$MM - - - - EV/EBITDA x - - - -

EBIT C$MM (10.4) (10.5) (6.0) (6.0) PRICES/EXCHANGE RATES FY15 FY16e FY17e FY18e

Interest Expense C$MM (0.5) (0.2) 0.8 - Gold Price US$/oz $1,166 $1,250 $1,300 $1,300

EBT C$MM (9.5) (9.3) (5.8) (5.0) Realized Gold Price US$/oz - - - -

Taxes/Recovery C$MM - - - - Silver Price US$/oz $15.38 $17.50 $18.00 $19.00

Net Income (reported) C$MM (9.9) (10.3) (6.8) (6.0) Realized Silver Price US$/oz - - - -

Non-Recurring Items/Other C$MM 0.4 1.0 1.0 1.0 US$:C$ 1.28 1.33 1.30 1.27

Net Income (operating) C$MM (9.5) (9.3) (5.8) (5.0) MINE/EQUITY PRODUCTION FY15 FY16e FY17e FY18e

Shares o/s (wgt avg.) MM 107.4 107.5 140.0 200.0 Gold Production 000 oz - - - -

EPS (operating) $/sh ($0.09) ($0.09) ($0.04) ($0.03) Total Cash Costs US$/oz - - - -

P/E Multiple x n.m. n.m. n.m. n.m. All-in Sustaining Costs (AISC) US$/oz - - - -

Cash Flow (operating) C$MM (9.5) (9.3) (5.8) (5.0) Total incl. Cash Costs + royalties AISC incl. sustex, exploration, corpG&A

CFPS $/sh ($0.09) ($0.09) ($0.04) ($0.03)

P/CF Multiple x n.m. n.m. n.m. n.m.

SCFP

Cash Flow from Operations

Net Income C$MM (9.9) (10.3) (6.8) (6.0)

DD&A C$MM 0.5 - - -

Deferred Taxes C$MM - - - -

Other C$MM 0.3 1.2 1.0 1.0

Changes in Working Capital C$MM (0.9) 0.8 - -

(10.0) (8.3) (5.8) (5.0)

Cash Flow From Investing

Capital Expenditure (net) C$MM (4.7) - (5.0) (50.0)

Acquis./Investments C$MM - 2.7 - -

Other C$MM - - - -

(4.7) 2.7 (5.0) (50.0)

Cash Flow From Financing

Equity Issues (net of costs) C$MM - 2.0 15.0 75.0

Net Borrowings C$MM - - - -

Dividends Paid & Other C$MM - - - - RESERVES / RESOURCES

- 2.0 15.0 75.0 Reserves MMoz -

Net Inc/Dec (incl FX) C$MM (14.7) (3.6) 4.2 20.0 AMC/oz* US$/oz -

Cash at End of Year C$MM 10.0 6.4 10.6 30.6 Total Resources MMoz 2.2

BALANCE SHEET AMC/oz** US$/oz 14

Cash & Equivalents C$MM 10.0 6.4 10.6 30.6 * AMC = Adjusted Market Capitalization = Market Cap + LT Debt - working cap

Total Current Assets C$MM 17.9 11.9 16.1 36.1 ** Total Resources include measured, indicated, and inferred

PP&E & Mining Interests C$MM 5.2 5.5 10.5 60.5 ESTIMATED NET ASSET VALUE (NAV)/SHARE - 2017

Other C$MM - - - - Status Own'ship $MM $/Sh %NAV

Total Assets C$MM 23.1 17.4 26.6 96.6 Block 14 devo. 100% $140 $0.59 93%

Current Liabilities C$MM 1.2 2.0 2.0 2.0 Other $0 $0.00 0%

Long Term Debt C$MM - - - - Total Operating $140 $0.59

Other LT Liabilities C$MM - - - - Working capital $10 $0.04 7%

Total Liabilities C$MM 1.2 2.0 2.0 2.0 LT Debt $0 $0.00 0%

S/Holder Equity C$MM 21.9 15.4 24.6 94.6 NAV $150 $0.63

Total Liab. & S/Holder Equity C$MM 23.1 17.4 26.6 96.6 Current P/NAV 0.7x

Working Capital C$MM 16.7 9.9 14.1 34.1 Source: Company reports, Beacon estimates

$0

$250

$500

$750

$1,000

0

50

100

150

200

2015 2016e 2017e 2018e 2019e 2020e 2021e

Gold Prod'n (000oz) Cash Costs (US$/oz)

Beacon Securities Ltd.| 66 Wellington Street West Suite 4050, Toronto, Ontario, M5K 1H1 |416.643.3830 |www.beaconsecurities.ca

Disclosure Requirements

Does Beacon, or its affiliates or analysts collectively, beneficially own 1% or more of any class of the issuer's equity securities? Yes No

Does the analyst who prepared this research report have a position, either long or short, in any of the issuer’s securities? Yes No

Does Beacon Securities beneficially own more than 1% of equity securities of the issuer? Yes No

Has any director, partner, or officer of Beacon Securities, or the analyst involved in the preparation of the research report, received remuneration for

any services provided to the securities issuer during the preceding 12 months?

Yes No

Has Beacon Securities performed investment banking services in the past 12 months and received compensation for investment banking services for

this issuer in the past 12 months? Yes No

Was the analyst who prepared this research report compensated from revenues generated solely by the Beacon Securities Investment Banking

Department? Yes No

Does any director, officer, or employee of Beacon Securities serve as a director, officer, or in any advisory capacity to the issuer? Yes No

Are there any material conflicts of interest with Beacon Securities or the analyst who prepared the report and the issuer? Yes No

Is Beacon Securities a market maker in the equity of the issuer? Yes No

Has the analyst visited the head office of the issuer and viewed its operations in a limited context? Yes No

Did the issuer pay for or reimburse the analyst for the travel expenses? Yes No

All information contained herein has been collected and compiled by Beacon Securities Limited, an independently owned and operated member of

the Investment Industry Regulatory Organization of Canada (IIROC). All facts and statistical data have been obtained or ascertained from sources,

which we believe to be reliable, but are not warranted as accurate or complete.

All projections and estimates are the expressed opinion of Beacon Securities Limited, and are subject to change without notice. Beacon Securities

Limited takes no responsibility for any errors or omissions contained herein, and accepts no legal responsibility from any losses resulting from investment

decisions based on the content of this report.

This report is provided for informational purposes only and does not constitute an offer or solicitation to buy or sell securities discussed herein. Based on

their volatility, income structure, or eligibility for sale, the securities mentioned herein may not be suitable or available for all investors in all countries.

As at January 31, 2017 # Stocks Distribution

Buy 70 81% Buy Total 12-month return expected to be >15%

Speculat ive BUY 8 9% Speculat ive Buy Potential total 12-month return is high (>15%) but given elevated risk, investment could result in a material loss

Hold 3 3% Hold Total 12-month return expected to be between 0% and 15%

Sell 0 0% Sell Total 12-month return expected to be negative

Under Review 5 6% Under Review No current rat ing/target

Tender 0 0% Tender Clients are advised to tender their shares to takeover bid or similar offer

Total 86 100%

Dissemination

Beacon Securities distributes its research products simultaneously, via email, to its authorized client base. All research is then available on

www.beaconsecurities.ca via login and password.

Analyst Certification

The Beacon Securities Analyst named on the report hereby certifies that the recommendations and/or opinions expressed herein accurately

reflect such research analyst’s personal views about the company and securities that are the subject of the report; or any other companies

mentioned in the report that are also covered by the named analyst. In addition, no part of the research analyst’s compensation is, or will

be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.