CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
UNAUDITED

Three months ended March 31, 2017 and 2016

TABLE OF CONTENTS

Condensed Consolidated Interim Statements of Financial Position	2
Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)	3
Condensed Consolidated Interim Statements of Changes in Equity	4
Condensed Consolidated Interim Statements of Cash Flow	5
Notes to the Condensed Consolidated Interim Financial Statements	6 - 19

1

ASANKO GOLD INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

AS AT MARCH 31, 2017 AND DECEMBER 31, 2016

(In thousands of United States Dollars)

		March 31, 2017		December 31, 2016
	Note	$		$
Assets
Current assets
Cash and cash equivalents		48,206		59,675
Receivables		12,380		1,468
Inventories	6	33,700		32,374
Prepaid expenses and deposits		1,735		3,320
VAT receivable	7	27,784		22,881
		123,805		119,718
Non-current assets
Reclamation deposit	8	1,750		1,750
Exploration and evaluation assets	9	12,757		12,757
Mineral properties, plant and equipment	9	537,289		528,487
		551,796		542,994
Total assets		675,601		662,712
Liabilities
Current liabilities
Accounts payable and accrued liabilities		46,289		46,934
Current portion of long-term debt	10	698		469
		46,987		47,403
Non-current liabilities
Long-term debt	10	155,171		154,503
Asset retirement provision		25,922		25,374
Deferred income tax liability	5	18,904		19,007
		199,997		198,884
Total liabilities		246,984		246,287
Shareholders’ equity
Share capital	11	561,087		556,256
Equity reserves	12	46,162		46,613
Accumulated deficit		(178,632	)	(186,444	)
Total shareholders' equity		428,617		416,425
Total liabilities and shareholders' equity		675,601		662,712
Commitments and contractual obligations	13
Contingencies	14

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

Approved by the Board of Directors on May 2, 2017:

“Peter Breese”	“Marcel de Groot”
Director	Director

2

ASANKO GOLD INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(In thousands of United States Dollars, except share and dollar per share amounts)

		Three months ended
		March 31,		March 31,
		2017		2016
	Note	$		$
Revenue	4	69,531		-
Royalties	4	(3,477	)	-
Net revenue		66,054		-
Cost of sales
Production costs		(34,196	)	-
Depreciation and depletion	9	(16,733	)	-
Total cost of sales		(50,929	)	-
Income from mine operations		15,125		-
Exploration and evaluation expenditures		(186	)	(628	)
General and administrative expenses		(2,800	)	(3,393	)
Income (loss) from operations		12,139		(4,021	)
Finance income		150		151
Finance expense	16	(4,187	)	(129	)
Foreign exchange gain (loss)		(393	)	580
Gain (loss) on derivatives	10(b)	-		(503	)
Income (loss) before income taxes		7,709		(3,922	)
Income tax recovery	5	103		54
Net income (loss) and comprehensive income (loss) for the period		7,812		(3,868	)
Earnings (loss) per share:
Basic	19	0.04		(0.02	)
Diluted	19	0.04		(0.02	)
Weighted average number of shares outstanding:
Basic	19	202,999,666		196,998,904
Diluted	19	209,840,744		196,998,904

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

3

ASANKO GOLD INC.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(In thousands of United States Dollars, except for number of common shares)

		Number of shares	Share capital	Equity reserves		Accumulated deficit		Total equity
	Note		$	$		$		$
Balance as at December 31, 2015		196,995,607	540,133	47,504		(173,228	)	414,409
Issuance of common shares for:
Exercise of share-based options		37,500	94	(34	)	-		60
Share-based payments	12(a)	-	-	726		-		726
Loss and comprehensive loss for the period		-	-	-		(3,868	)	(3,868	)
Balance as at March 31, 2016		197,033,107	540,227	48,196		(177,096	)	411,327
Balance as at December 31, 2016		201,829,207	556,256	46,613		(186,444	)	416,425
Issuance of common shares for:
Exercise of share-based options	11(b)	1,449,500	4,831	(1,754	)	-		3,077
Share-based payments	12(a)	-	-	1,303		-		1,303
Net income and comprehensive income for the period		-	-	-		7,812		7,812
Balance as at March 31, 2017		203,278,707	561,087	46,162		(178,632	)	428,617

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

4

ASANKO GOLD INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(In thousands of United States Dollars)

		Three months ended
		March 31,		March 31,
		2017		2016
	Note	$		$
Cash provided by (used in):
Operating activities:
Net income (loss) for the period		7,812		(3,868	)
Adjustments for:
Depreciation and depletion	9	16,746		4
Finance expense	10(a), 16	4,187		116
Change in derivatives, net	10(b)	-		503
Deferred income tax recovery	5	(103	)	(54	)
Interest and other income		(150	)	(151	)
Share-based payments	12(a)	1,059		297
Unrealized foreign exchange gain		(790	)	(188	)
Operating cash flow before working capital changes		28,761		(3,341	)
Change in non-cash working capital	15	(14,379	)	(8,947	)
Cash provided by (used in) operating activities		14,382		(12,288	)
Investing activities:
Expenditures on mineral properties, plant and equipment	9	(26,050	)	(35,141	)
Interest received		76		205
Cash used in investing activities		(25,974	)	(34,936	)
Financing activities:
Shares issued for cash, net of share issuance costs	11(b)	3,077		60
Interest paid	10(a)	(2,865	)	-
Cash provided by financing activities		212		60
Impact of foreign exchange on cash and cash equivalents		(89	)	173
Increase (decrease) in cash and cash equivalents for the period		(11,469	)	(46,991	)
Cash and cash equivalents, beginning of period		59,675		114,800
Cash and cash equivalents, end of period		48,206		67,809
Supplemental cash flow information	15

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

5

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

1.	Nature of operations
	Asanko Gold Inc. (“Asanko” or the “Company”) was incorporated on September 23, 1999 under the laws of British Columbia, Canada. The Company’s principal project, the Asanko Gold Mine (“AGM” or “the Project”), which consists of two neighboring gold projects, the Obotan Project and the Esaase Project, both located in the Amansie West District of the Republic of Ghana (“Ghana”), West Africa, is being developed in three distinct phases. January 2016 saw Phase 1 of the AGM produce and pour its first gold and on April 1, 2016, the Company declared that the AGM was in commercial production. A definitive feasibility study is currently being undertaken with respect to Project 5M and Project 10M (formerly described as Phases 2A and 2B, respectively), which together form the development of the Esaase deposit and is expected to be released in Q2 2017.
	In addition to its principal project, the Company holds a portfolio of other Ghanaian gold concessions in various stages of exploration.
	The parent Company is Asanko Gold Inc., whose head office, principal address and registered and records office are located at 1066 West Hastings Street, Suite 680, Vancouver, British Columbia, V6E 3X2, Canada.
2.	Basis of presentation

(a)	Statement of compliance
	These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). These condensed consolidated interim financial statements do not include all of the necessary annual disclosures in accordance with IFRS and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2016.
	The accounting policies followed in these condensed consolidated interim financial statements are the same as those applied in the Company’s most recent audited consolidated financial statements for the year ended December 31, 2016.
	These condensed consolidated interim financial statements were authorized for issue and approved by the Board of Directors on May 2, 2017.
(b)	Basis of presentation and consolidation
	The financial statements have been prepared on the historical cost basis.
	All amounts are expressed in thousands of United States dollars, unless otherwise stated, and the United States dollar is the functional currency of the Company and each of its subsidiaries. References to C$ are to Canadian dollars. Certain prior period numbers have been reclassified in order to conform to current year presentation.

6

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

2. Basis of presentation (continued)

These condensed consolidated interim financial statements incorporate the financial information of the Company and its controlled subsidiaries. Control exists when the Company has power, directly or indirectly, to govern the financial and operating policies of an entity as to obtain benefits from its activities. All significant intercompany amounts and transactions have been eliminated on consolidation.

The consolidated financial statements include the accounts of the Company and the following subsidiaries:

Subsidiary name	Jurisdiction	Ownership
Asanko Gold Ghana Limited (“Asanko Ghana”)	Ghana	90%
Adansi Gold Company (GH) Limited (“Adansi Ghana”)	Ghana	100%
Asanko Gold Exploration Ghana Limited	Ghana	100%
Asanko Gold South Africa (PTY) Ltd.	South Africa	100%
Asanko International (Barbados) Inc.	Barbados	100%
Asanko Gold (Barbados) Inc.	Barbados	100%
PMI Gold Corporation	Canada	100%

(c)	Changes in accounting standards
	There were no new standards effective January 1, 2017 that had any impact on these condensed consolidated interim financial statements or are expected to have a material effect in the future. The following standards and interpretations have been issued but are not yet effective as of March 31, 2017.
	Revenue recognition
	In May 2014, the IASB issued IFRS 15 – Revenue from Contracts with Customers ("IFRS 15") which supersedes IAS 11 – Construction Contracts; IAS 18 – Revenue; IFRIC 13 – Customer Loyalty Programmes; IFRIC 15 – Agreements for the Construction of Real Estate; IFRIC 18 – Transfers of Assets from Customers; and SIC 31 – Revenue – Barter Transactions involving Advertising Services. IFRS 15 establishes a single five-step model framework for determining the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. On July 22, 2015, the IASB confirmed a one-year deferral of the effective date of IFRS 15 to January 1, 2018. The Company is in the process of evaluating the impact IFRS 15 will have on its consolidated financial statements and expects to provide an update by the third quarter of 2017.
	Financial instruments
	In July 2014, the IASB issued the final version of IFRS 9 – Financial Instruments ("IFRS 9") to replace IAS 39 – Financial Instruments: Recognition and Measurement. IFRS 9 provides a revised model for recognition and measurement of financial instruments and a single, forward-looking 'expected loss' impairment model. IFRS 9 also includes a substantially reformed approach to hedge accounting. The standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company is in the process of evaluating the impact IFRS 9 will have on its consolidated financial statements and expects to provide an update by the third quarter of 2017.

7

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

2. Basis of presentation (continued)

Leases

In January 2016, the IASB issued IFRS 16 – Leases ("IFRS 16") which replaces IAS 17 – Leases and its associated interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting remains similar to current accounting practice. The standard is effective for annual periods beginning on or after January 1, 2019, with early application permitted for entities that apply IFRS 15. The Company is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.

3.	Significant accounting judgements and estimates
	The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Management believes the estimates and assumptions used in these condensed consolidated interim financial statements are reasonable; however, actual results could differ from those estimates and could impact future results of operations and cash flows. The Company’s significant accounting judgments and estimates were presented in Note 5 of the audited annual consolidated financial statements for the year ended December 31, 2016.
4.	Revenue
	The Company sold 57,812 ounces of gold to Red Kite during the three months ended March 31, 2017 in accordance with an Offtake Agreement (Note 10(c)). Sales proceeds earned in the first quarter of 2016, prior to the commencement of commercial production, were recorded as an offset to pre-commercial production costs and included in development costs (Note 9(b)). Sales proceeds earned subsequent the commencement of commercial production on April 1, 2016 are included in revenue in the statement of operations and comprehensive income (loss).
	Included in revenue is $0.2 million relating to by-product silver sales for the three months ended March 31, 2017.
	All of the Company’s concessions are also subject to a 5% gross revenue royalty payable to the Government of Ghana.
5.	Income tax
	The classification of income taxes between current and deferred are as follows for each period presented:

	Three months ended March 31,
	2017	2016
(in thousands of US dollars)	$	$
Current tax (expense) recovery	-	-
Deferred tax (expense) recovery	103	54
Total	103	54

8

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

5. Income tax (continued)

Income taxes are assessed based on annual results and, accordingly, determining the tax expense (recovery) for an interim period involves estimating the likely effective tax rate for the year. Income tax expense (recovery) cannot be exactly calculated until the end of the financial year when all allowances and taxable items are known. Consequently, calculating income taxes on the basis of the results of an interim period, in isolation, could result in recognising a tax expense (recovery) that is inconsistent with the manner in which tax is ultimately borne by the Company. Therefore, the calculation of the effective tax rate has been based on an estimate of the tax expense (recovery) for the current fiscal year expressed as a percentage of the expected accounting profit or loss. This percentage is then applied to net income (loss) for the current interim period, and the resulting tax expense (recovery) is recognised rateably over the year as a whole.

6. Inventories

	March 31, 2017	December 31, 2016
	$	$
Gold dore on hand	5,313	5,968
Gold-in-process	2,517	4,461
Ore stockpiles	15,059	14,361
Materials and spare parts	10,811	7,584
Total Inventories	33,700	32,374

No inventory has been recognized at fair value less cost to sell as at March 31, 2017 or December 31, 2016.

7.	VAT receivable
	On April 1, 2016, the Company announced that the AGM was in commercial production and in addition, in April 2016, the Company received a letter from the Ghana Revenue Agency stating that the Company was entitled to a VAT refund to a total of $20.5 million with respect to the period July 2013 to December 2015. The Company considers these two events to be key triggers with respect to the recognition of all VAT receivable on the purchase of goods and services in Ghana. Effective April 1, 2016, with the commencement of commercial production, the Company recognizes a VAT receivable for the total of all VAT returns filed with the Ghana Revenue Agency less associated refunds. Prior to March 31, 2016, the Company had provided a full allowance against the VAT receivable with an offsetting charge to deferred development costs. Since the commencement of commercial production, the Company has received total VAT refunds of $26.0 million as of March 31, 2017 which includes the vast majority VAT claimed by the Company relating to the Phase I development of the AGM up to and including the commencement of commercial production.
	As of March 31, 2017, a total current VAT receivable of $27.8 million has been recognized (December 31, 2016 - $22.9 million).
8.	Reclamation deposit
	The Company is required to provide security to the Environmental Protection Agency of Ghana (“EPA”) for the performance by the Company of its reclamation obligations in respect of the Abriem, Abore and Adubea mining leases. The initial security totaled $8.5 million and was made up of a Reclamation Deposit in the amount of $1.7 million and a bank guarantee of $6.8 million. The reclamation deposit accrues interest and is carried at $1.8 million at March 31, 2017 (December 31, 2016 - $1.8 million).

9

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

8.	Reclamation deposit (continued)
	During the year ended December 31, 2015, the Company deposited the Reclamation Deposit in a Ghanaian Bank in the joint names of the Company and the EPA. The Reclamation Deposit matures annually, but the Company is required to reinstate the deposit until receiving the final completion certificate by the EPA. The Company is expected to be released from this requirement 45 days following the third anniversary of the date the Company receives a final completion certificate.
9.	Mineral properties, plant and equipment

	Mineral interests
	Depletable		Non- depletable		Exploration and evaluation assets	Plant, buildings and equipment		Assets under construction		Corporate assets		Total
	$		$		$	$		$		$		$
Cost
As at December 31, 2015	-		206,706		12,732	4,669		281,500		689		506,296
Additions	36,709		17,720		25	36,755		25,379		34		116,622
Reclassification of VAT recoverable	-		(25,013	)	-	-		-		-		(25,013	)
Write-off of deferred stripping assets	(7,123	)	-		-	-		-		-		(7,123	)
Changes in rehabilitiation provision	5,382		853		-	-		-		-		6,235
Transfers	111,177		(111,177	)	-	299,538		(299,538	)	-		-
As at December 31, 2016	146,145		89,089		12,757	340,962		7,341		723		597,017
Additions	13,071		2,164		-	1,621		7,486		51		24,393
Changes in rehabilitation provision	192		192		-	-		-		-		384
Reclassification of VAT recoverable	-		771		-	-		-		-		771
As at March 31, 2017	159,408		92,216		12,757	342,583		14,827		774		622,565
Accumulated depreciation and depletion
As at December 31, 2015	-		-		-	(2,187	)	-		(556	)	(2,743	)
Depreciation and depletion	(23,405	)	-		-	(29,606	)	-		(19	)	(53,030	)
As at December 31, 2016	(23,405	)	-		-	(31,793	)	-		(575	)	(55,773	)
Depreciation and depletion	(7,157	)	-		-	(9,576	)	-		(13	)	(16,746	)
As at March 31, 2017	(30,562	)	-			(41,369	)	-		(588	)	(72,519	)
Net book value
At December 31, 2016	122,740		89,089		12,757	309,169		7,341		148		541,244
As at March 31, 2017	128,846		92,216		12,757	301,214		14,827		186		550,046

Depreciation and depletion for the three months ended March 31, 2017 includes $13 (March 31, 2016 - $4) of depreciation included in general and administrative expenses. The total asset cost includes capitalized borrowing costs incurred during the three months ended March 31, 2017 of $nil (March 31, 2016 – $4.0 million, capitalized at a rate of 11.38%) .

10

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

9. Mineral properties, plant and equipment (continued)

(a)	Mineral interests and plant, buildings and equipment
	Depletable mineral interests consist of Phase 1 of the AGM, while non-depletable mineral interests primarily consist of Phase 2 of the AGM. Other property, plant and equipment costs related to the construction of Phase 2 of the AGM are classified as Assets under construction until such time the assets are available for and put into use, at which time the assets will be classified as Plant, buildings and equipment and depreciated in accordance with the Company’s accounting policy for the respective asset class.
(b)	Pre-commercial production costs
	During the pre-commercial production period, the Company capitalized the costs incurred for pre-commercial production mining, processing and support operations offset by the revenue from gold sales (net of royalties). A summary of the costs and revenues is provided below. Effective April 1, 2016, all such deferred development costs/assets under construction were transferred to the cost of mineral properties, plant and equipment.

	Three months ended
	March 31, 2016
	$
Costs incurred during pre-commercial production	21,222
Revenue during pre-commercial production, net of royalties	(10,048	)
Net costs deferred to development assets	11,174

(c)	Deferred stripping
	During the three months ended March 31, 2017, the Company deferred a total of $12.2 million (March 31, 2016 - $nil) of stripping costs to depletable mineral interests. Depletion expense of $3.8 million (March 31, 2016 - $nil) was charged on this asset during the period and was recorded in cost of sales.
(d)	Non-controlling interest
	The AGM is wholly-owned by Asanko Ghana. The Government of Ghana holds a 10% free carried interest in the subsidiary which owns the AGM (Asanko Ghana). At March 31, 2017, no amount has been recorded as non-controlling interest as Asanko Ghana has a deficit in the pool from which dividends can be paid.
(e)	Asset acquisitions
	During the third quarter of 2016, the Company finalized the acquisition of various mining concessions located approximately 2km from the Nkran pit; the area currently being mined by Asanko. The purchase consideration was a combination of cash and shares for total consideration of $8.6 million and has been recognized as part of non-depletable mineral interests.

11

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

10. Long-term debt

(a) Long-term debt

In 2013, the Company entered into a Definitive Senior Facilities Agreement (“DSFA”) with a special purpose vehicle of RK Mine Finance Trust I (“Red Kite”), which is now fully drawn for a total of $150.0 million. The debt is carried at amortized cost and is presented net of unamortized financing fees of $16.5 million and unpaid interest up to May 2016 (when the loan was modified; see below). Interest on the DSFA is calculated on a quarterly basis at a rate of LIBOR +6% and there is a 1% minimum LIBOR rate which creates an interest rate floor. The Company can elect to repay the DSFA, or a portion thereof, early without penalty. The DSFA is fully secured by shares of the Company’s Ghanaian subsidiaries.

During the second quarter 2016, the DSFA was amended in order to defer the repayment of the principal for two years (being the principal deferral period). The amendment provided that the first principal repayment will now be payable on July 1, 2018 after which the facility will be repaid in nine equal quarterly instalments, with the last repayment on July 1, 2020. The Company will continue to pay quarterly interest on the loan facility during the principal deferral period. There were no other changes to the existing debt facility terms. The amendments were considered to be a modification of the previous DSFA. A deferral fee of 2% of the loan principal, being $3.275 million, was paid in the second quarter of 2016 commensurate with signing the amendment. The deferral fee was deferred to the loan balance and is being amortized with previously deferred debt financing costs over the remaining life of the DSFA based on the revised effective interest rate of 10.5% .

Prior to April 1, 2016, all interest and accretion costs were capitalized to assets under construction. Commensurate with the declaration of commercial production, all interest and accretion costs are now charged to the consolidated statement of operations and comprehensive income (loss). During the three months ended March 31, 2017, $4.0 million (March 31, 2016 - $4.0 million) of loan accretion and accrued interest net of amortized deferred financing fees was recorded at a weighted-average effective interest rate of approximately 10.6% . Of this balance, during the three months ended March 31, 2017 a total of $nil million (March 31, 2016 - $4.0 million) was capitalized to assets under construction.

Additionally, during the three months ended March 31, 2017, the Company paid $2.9 million in accrued interest to Red Kite (March 31, 2016 – $nil).

(b) Embedded derivative

An embedded derivative liability was recognized upon initial recognition for the DSFA loan in relation to the interest rate floor. The total fair value of the embedded derivative on drawdowns was estimated to be $1.4 million. During 2016, the Company changed its accounting policy in respect of its methodology to assess whether an interest rate floor embedded derivative is closely related to the host debt contract by incorporating contractual spread. Based on this change, the Company has determined that the interest rate floor embedded derivative is closely related to the host debt contract and as a result, the embedded derivative previously recognized in respect of the loan was derecognized in fiscal 2016.

(c) Offtake agreement

In addition to the DSFA, the Company entered into an Offtake Agreement with Red Kite with the following details:

-   Sale of 100% of the future gold production up to a maximum of 2.22 million ounces to Red Kite;

-   Red Kite to pay for 100% of the value of the gold ten business days after shipment;

-   A provisional payment of 90% of the estimated value will be made one business day after delivery;

-   The gold sale price will be a spot price selected during a nine day quotational period following shipment of gold from the mine; and

12

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

10. Long-term debt (continued)

-   Should the Company wish to terminate the Offtake Agreement, a termination fee will be payable according to a schedule dependent upon the total funds drawn under the DSFA as well as the amount of gold delivered under the Offtake Agreement at the time of termination.

As of March 31, 2017, 214,472 ounces have been delivered to Red Kite under the offtake agreement (March 31, 2016 – 8,709 ounces).

11. Share capital

(a) Authorized

Unlimited common shares without par value or restrictions; and
Unlimited preferred shares without par value or restrictions.

(b) Issued and outstanding common shares

	Number of shares	Amount
		$
Balance, December 31, 2015	196,995,607	540,133
Issued pursuant to asset acquisition (note 9(e))	2,000,000	8,395
Issued pursuant to exercise of share-based options (note 12(a))	2,833,600	7,728
Balance, December 31, 2016	201,829,207	556,256
Issued pursuant to exercise of share-based options (note 12(a))	1,449,500	4,831
Balance, March 31, 2017	203,278,707	561,087

12. Equity reserves

(a) Share-based options

The Company maintains a rolling share-based option plan providing for the issuance of share-based options for up to 10% of the Company’s issued and outstanding common shares. The Company may grant options from time to time to its directors, officers, employees and other service providers. The options vest 25% on the date of the grant and 12.5% every three months thereafter for a total vesting period of 18 months.

During the three months ended March 31, 2017, the Company recognized share-based payments expense of $1.3 million (March 31, 2016 - $0.7 million), of which $0.2 million was capitalized to mineral properties (March 31, 2016 - $0.4 million).

13

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

12. Equity reserves (continued)

The following table is a reconciliation of the movement in share-based options during the period:

	Number of Options		Weighted average exercise price
			C$
Balance, December 31, 2015	14,786,791		2.57
Granted	2,915,000		2.18
Exercised	(2,833,600	)	2.39
Cancelled/Expired	(276,441	)	1.89
Balance, December 31, 2016	14,591,750		2.54
Granted	2,884,000		3.98
Exercised	(1,449,500	)	2.83
Cancelled/Expired	(348,750	)	4.23
Balance, March 31, 2017	15,677,500		2.75

The fair value of the share-based options granted is determined using the Black Scholes pricing model. For all grants during fiscal 2016, the assumed life, dividend yield and forfeiture rate were 3.14 years, nil and 2.89%, respectively. For all grants during the three months ended March 31, 2017, the assumed life, dividend yield and forfeiture rate were 3.43 years, nil and 0.83%, respectively. Other conditions and assumptions were as follows:

		Weighted	Weighted
		average	average risk-	Weighted	Weighted average
	Number of	exercise	free interest	average	Black-Scholes value
Period	options	price	rate	volatility	assigned
		C$			$
Year ended December 31, 2016	2,915,000	2.18	0.55%	49.52%	0.50
Three months ended March 31, 2017	2,884,000	3.98	1.54%	64.73%	1.16

The following table summarizes the share-based options outstanding and exercisable at March 31, 2017:

	Total options outstanding			Total options exercisable
Range of exercise price	Number	Weighted average contractual life (years)	Weighted average exercise price C$	Number	Weighted average contractual life (years)	Weighted average exercise price C$
C$1.00-C$2.00	2,417,500	3.71	1.97	1,797,500	3.68	1.97
C$2.01-C$3.00	7,939,250	2.29	2.19	7,818,625	2.27	2.18
C$3.01-C$4.00	5,061,500	2.99	3.90	2,898,500	1.56	3.85
C$4.01-C$5.00	233,000	3.21	4.30	151,750	2.57	4.22
C$6.01-C$7.00	26,250	0.19	6.10	26,250	0.19	6.10
	15,677,500	2.75	2.75	12,692,625	2.3	2.56

14

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

12. Equity reserves (continued)

(b) Warrants

On December 21, 2015, the Company issued 4,000,000 share purchase warrants to Red Kite in conjunction with the drawdown of the final $20.0 million of the loan facility (Note 10(a)). The warrants have an exercise price of $1.83 and expire three years from the date of issuance. All of these warrants remain outstanding as of March 31, 2017.

13. Commitments and contractual obligations

As at March 31, 2017, the Company had contractual obligations totaling $194.9 million, relating to long-term debt (December 31, 2016 – $198.0 million). Contractual obligations related to the long-term debt are subject to changes in the three-month LIBOR rate. Prepayment terms allow the Company to prepay the long-term debt, with no penalty, in whole or in part at any time. As at March 31, 2017 the long-term debt had a face value of $163.9 million (December 31, 2016 – $163.9 million).

In addition, the Company is a party to certain construction and engineering contracts relating to the construction of the commencement of Project 5M.

The following table shows the Company’s contractual obligations as they fall due as at March 31, 2017:

				At March 31,	At December 31,
	Within 1 year	1 - 5 years	Over 5 years	2017	2016
Long-term debt, related interest payments and withholding tax payments	13,309	181,609	-	194,918	198,028
Accounts payable and accrued liabilities	46,289	-	-	46,289	46,934
Decommissioning liability (undiscounted)	-	-	35,337	35,337	34,977
Mine operating/construction and other service contracts, open purchase orders	36,577	636	-	37,213	27,969
Total	96,175	182,245	35,337	313,757	307,908

14. Contingencies

Except as set forth below, there are no material legal proceedings to which the Company is a party or, to the best of the Company's knowledge, to which any of the Company's property is or was subject to.

Godbri Datano Claim

During September 2012, Godbri Mining Limited (“Godbri”), a private Ghanaian company, lodged a statement of claim in the High Court of Justice, Accra, Ghana, seeking a declaration that, among other things, that the sale of the Datano concession to Adansi Ghana is null and void. Godbri claims to be the owner of 38% of the issued share capital of Midras Mining Limited and states that it did not consent to the acquisition of the Datano concession by Adansi Ghana. Adansi Ghana filed a defence on November 12, 2012. Godbri subsequently amended its claim in January 2013 and in March 2013, after which both the Company and Adansi Ghana filed further defences. The matter is currently awaiting trial but the Company considers the claim made by Godbri to be spurious and without any merit. Godbri has taken no further steps in the suit since June 2013.

15

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

15. Supplemental cash flow information

Changes in non-cash working capital consist of the following:

	Three months ended March 31,
	2017		2016
	$		$
Trade and other receivables	(10,830	)	(52	)
VAT receivable	(3,977	)	-
Prepaid expenses	1,587		98
Inventories	(1,326	)	(13,479	)
Trade and other payables	167		4,486
Total	(14,379	)	(8,947	)

16. Finance expense

The following is a summary of finance expenses incurred during the three month periods March 31, 2017 and 2016:

	Three months ended March 31,
	2017		2016
	$		$
Interest charges on Red Kite loan (Note 10(a))	(4,023	)	(13	)
Accretion charges for asset retirement obligation	(164	)	(116	)
Total	(4,187	)	(129	)

17. Segmented information

Geographic Information

The Company has two reportable operating segments determined by geographical location. Ghana is the Company’s only segment with mining operations at present; Canada acts as a head office function. All revenues are derived from the mining and sale of precious metals to Red Kite under an offtake agreement (note 10(c)).

Geographic allocation of total assets and liabilities

March 31, 2017	Canada	Ghana	Total
	$	$	$
Total assets	15,498	660,103	675,601
Total liabilities	756	246,228	246,984

December 31, 2016	Canada	Ghana	Total
	$	$	$
Total assets	17,653	645,059	662,712
Total liabilities	3,008	243,279	246,287

16

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

17. Segmented information (continued)

Geographic allocation of the Statement of Operations and Comprehensive Income (Loss)

	Three months ended March 31, 2017
	Canada		Ghana	Total
	$		$	$
Revenue	-		69,531	69,531
Net income (loss) before tax	(2,500	)	10,209	7,709
Deferred income tax recovery	-		103	103
Net income (loss) after tax	(2,500	)	10,312	7,812

	Three months ended March 31, 2016
	Canada		Ghana		Total
	$		$		$
Revenue	-		-		-
Loss before tax	(3,660	)	(262	)	(3,922	)
Deferred income tax recovery	-		54		54
Loss after tax	(3,660	)	(208	)	(3,868	)

18.	Financial instruments
	As at March 31, 2017, the Company’s financial instruments consist of cash and cash equivalents, receivables, VAT receivable, reclamation bond, accounts payable and accrued liabilities, and long-term debt. The Company classifies cash and cash equivalents, receivables, VAT receivable and the reclamation bond as loans and receivables, and classifies accounts payable and accrued liabilities and long-term debt as other financial liabilities. All financial assets and liabilities are carried at amortized cost.
	The fair value of these financial instruments approximates their carrying value, unless otherwise noted.
	The risk exposure arising from these financial instruments is summarized as follows:

(a) Credit risk

Credit risk is the risk of an unexpected loss if a customer or the issuer of a financial instrument fails to meet its contractual obligations. The Company is subject to credit risk on the cash and cash equivalent balances held at banks in each of Canada, Ghana and South Africa. The majority of the Company’s cash is held in highly-rated Canadian-based banking institutions, authorized under the Bank Act (Canada) to accept deposits. The risk of loss associated with cash investments is considered to be low. As at March 31, 2017, the Company had interest receivable of $nil (December 31, 2016 - $nil). In addition, the Company is subject to credit risk in relation the receivable balances relating to the sale of gold. The Company currently sells all of the gold it produces to Red Kite under an offtake agreement (note 10(c)). Payments are routine, scheduled and received within a contractually-agreed time frame. Total receivables from precious metal sales as at March 31, 2017 is $11.5 million (December 31, 2016 - $0.6 million). The risk associated with receivables from Red Kite as at March 31, 2017 is considered to be negligible.

The Company expects to receive VAT refunds on a regular basis from the Government of Ghana and makes monthly VAT filings (as required by law). The Company does not consider there to be a significant risk related to the VAT receivable balance as at March 31, 2017.

17

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

18. Financial instruments (continued)

(b) Liquidity risk

The Company manages liquidity risk through a rigorous planning and budgeting process, which is reviewed and updated on a regular basis, to help determine the funding requirements to support current operations, expansion and development plans, and by managing the Company’s capital structure. By managing liquidity risk, the Company aims to ensure that it will have sufficient liquidity to settle obligations and liabilities as they fall due. As at March 31, 2017, the Company had a cash and cash equivalents balance of $48.2 million (December 31, 2016 – $59.7 million) and is generating positive cash flows from operations, allowing it to settle current accounts payable and accrued liabilities of $46.3 million (December 31, 2016 - $46.9 million) and current debt of $0.7 million (December 31, 2016 - $0.5 million) (note 10(a)).

(c) Market risk

(i)	Interest rate risk
	Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to interest rate risk is limited to its loan agreement with Red Kite (Note 10), which is subject to an interest rate of LIBOR plus 6% with a minimum LIBOR of 1%.
	With other variables unchanged, a 1% change in the annualized interest rate would not result in a material change in the Company’s interest expense for the period ended March 31, 2017.
(ii)	Foreign currency risk
	The Company is exposed to foreign currency risk through its foreign currency monetary assets and liabilities. A significant change in the currency exchange rate between the US dollar and Canadian dollar (C$) and South African rand (ZAR) could have an effect on the Company’s results of operations, financial position and cash flows. The Company at present has not entered into any derivative instruments or forward contracts to reduce its exposure to currency risk; however, management monitors differing currency needs and seeks to reduce exposure to currency risks through exchanging currencies at what are considered to be optimal times.
(iii)	Price risk
	Price risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market prices, other than those arising from currency risk or interest rate risk. The Company’s future cash flows will fluctuate due to changes in gold and silver prices. The Company has not hedged any precious metal sales as part of the Company’s overall strategy.
	A 10% increase or decrease in the gold price as at March 31, 2017, with all other variables held constant, would have resulted in a $4.3 million increase (decrease) to after-tax net income (loss) (March 31, 2016 - $nil).

19. Earnings (loss) per share

For the three months ended March 31, 2017, the calculation of basic and diluted earnings per share is based on the following data:

18

ASANKO GOLD INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

Expressed in Thousands of United States Dollars unless otherwise stated

19. Earnings (loss) per share (continued)

	Three months ended
	March 31, 2017
Earnings ($)
Net income for the purpose of basic and diluted earnings per share	7,812
Number of shares
Weighted average number of ordinary shares - basic	202,999,666
Effect of dilutive share options and warrants	6,841,078
Weighted average number of ordinary shares - diluted	209,840,744

Excluded from the calculation of diluted weighted average shares outstanding for the three months ended March 31, 2017 are 2,812,642 share-based options that were determined to be anti-dilutive.

For the three months ended March 31, 2016, the effect of dilutive securities was anti-dilutive given the Company realized a net loss.

19