Financial

• 15% increase in EBITDA to US$5.3m compared to Q1 2011 (US$4.6m)
• US$741/oz cash operating margin at Kalsaka mine (Q1 2011: US$505/oz)
• Strong closing cash balance of US$53.4m (31 December 2011: US$28.9m)

Operations

• Q1 production at Kalsaka in line with management expectations at 12,504oz (Q1 2011: 16,837oz) due to lower grade ore being processed in the period as predicted by the resource model
• 2012 production guidance remains unchanged at 60-70,000oz
• Acquisition of Sega project, 20km north of Kalsaka, providing an immediate extension to the mineral resource base and ensuring strong future cashflow

Exploration and development

• Progress is being made with the Baomahun feasibility study. The infill drilling programme aimed at upgrading the open-pittable inferred resources to the measured and indicated categories was completed in Q1 and an upgraded resource will be announced shortly
• Infrastructure development at Baomahun including upgrade to the site access road and exploration camp facilities is now underway
• Positive results from along strike exploration drilling at Baomahun confirm the presence of mineralisation outside the existing resource area
• Promising sulphide drilling results at the Yaoure project in Côte d’Ivoire following the first phase of drilling announced in January

Corporate

• John McGloin, previously Head of Mining at Collins Stewart, appointed as Executive Chairman

Peter Spivey, Chief Executive of Cluff Gold, commented:

“Our production performance this quarter was as envisaged in Kalsaka’s mine plan, and we continue to generate healthy cash margins to fund our business development. I am excited about the acquisition of the Sega project, which enhances the mine life at Kalsaka and ensures that strong operational cash flow will continue throughout the Baomahun development period.

We have also delivered strong exploration discoveries at Yaoure and along strike at Baomahun in Q1 and I look forward to presenting updates on these programmes in due course, whilst remaining focused on the delivery of the Sega integration plans and Baomahun feasibility study. Most importantly, the Company remains on track to meet its 60-70,000oz gold production target for 2012.”

The Company will be hosting a live and subsequently archived audio webcast of the Q1 results presentation on the homepage of the company’s website, www.cluffgold.com, starting at 9:30am BST later today. An analyst conference call facility will also be available at 9:30am EDT/2:30pm BST for those unable to access the webcast. Dial-in details are as follows:

United Kingdom: +44(0)20 3106 4822

North America: +1 (646) 254-3364

Confirmation Code: 2324771

About Cluff Gold

Cluff Gold is a gold developer-producer with assets in West Africa. The Company generates significant cash flow through its Kalsaka gold mine in Burkina Faso, where the production profile has been enhanced by the recent acquisition of the neighbouring Sega project. The Company remains focused on its objective of becoming a mid-tier producer through the development of its wholly-owned Baomahun project in Sierra Leone, which is expected to contribute an additional 135,000oz of gold per annum, with significant exploration potential along strike. In addition, the Company is also exploring the significant sulphide potential at its Yaoure project in Côte d’Ivoire. With its experience of bringing new mines into production and a project pipeline spanning Burkina Faso, Côte d’Ivoire and Mali, the Company aims to further increase its production profile with its highly prospective exploration work across all assets. For more information, please visit www.cluffgold.com.

Operational Review

Kalsaka, Burkina Faso

In line with management expectations, Kalsaka produced 12,504oz at a cash cost of US$960/oz generating EBITDA of US$7.9m in Q1 2012, 5% higher than in the comparative period in 2011. The performance was primarily driven by the lower grade of material processed, as predicted by our model. This was compounded by stacking of slower leaching material, which will increase production in subsequent quarters. The impact on costs was somewhat ameliorated by a lower strip ratio (5.6 versus 7.6 in the comparative period last year).

Whilst Q1 production was below the anticipated annualised run rate for the year, we maintain our guidance of 60-70,000oz for the full year as we move into higher grades in the second half and gold in circuit is realised. We anticipate that this will build quarter on quarter through the remainder of the year.

The average grade of material mined in Q1 was 1.1g/t, primarily as a result of the phasing of the mine plan. This was below the 1.5g/t average grade of the remaining reserves and the 1.4g/t average grade achieved in Q1 2011. Accordingly, grades are expected to strengthen in subsequent quarters generating a consequent positive impact on production and costs. The inventory valuation has also been affected by a 112kt increase in the stockpile of run of mine ore during the quarter. The majority of this material requires crushing, and work is ongoing to increase the throughput of the crushing circuit to allow a higher proportion of crushed material to be stacked. With higher grades anticipated in the harder material, this is expected to further enhance the production profile in the latter part of 2012.

Plant throughput was in line with the 1.6Mtpa plant capacity. Throughput was partially affected by power shortages in March 2012 affecting the crushing plant availability, a problem that has now been solved following the overhaul of the on-site generators.

Despite the lower total production, EBITDA remained strong due to the high gold price environment. The average gold selling price, at US$1,701/oz, offset by a modest increase in cash costs, allowed a cash margin of US$741/oz to be generated compared to US$505/oz in the comparative quarter in 2011.

Sega

The acquisition of the Sega project, negotiated in Q1, was completed on 23 May 2012. This acquisition is key to the future of the Kalsaka mine, providing an immediate extension to the mineable resource base and ensuring our strong cashflow going forward. The Sega project hosts current NI 43-101 compliant indicated resources totalling 450,366oz (8.3Mt at 1.69 g/t) and inferred resources totalling 147,344oz (2.9Mt at 1.58g/t)(i), of which approximately 52% are in the oxide and upper transitional zones suitable for a heap leach operation. Detailed metallurgical test work completed by Orezone(ii) has indicated recoveries of 85% using a 12.5mm crush size and agglomeration using 5 kg/t of lime and 4 kg/t of cement, which compares favourably to Cluff Gold’s existing operations at Kalsaka.

A preliminary economic assessment is underway setting out the plans to mine and truck the Sega resources for processing using the existing Kalsaka plant, which is expected to be completed within six weeks. The preliminary economic assessment will identify the best way to integrate Sega in the Kalsaka operation and will address the following issues:

• The Sega project is located approximately 20km north of the existing Kalsaka plant. A dedicated haul road will be constructed and a contract haulage fleet will be utilised.
• Upgraded crushing facilities will be required at both the Sega and Kalsaka sites, with an associated upgrade to power and transmission facilities. This will ensure that the plant is able to feed at the full 1.6Mtpa annualised rate through the crushing circuit.
• The permitting of the Sega project is dependent on the preliminary economic assessment and an environmental and social impact assessment (ESIA). Work for the ESIA is underway under the guidance of Digby Wells and is expected to be completed in H2 2012. Once the ESIA is complete, no significant delay is expected in receiving the final permits to enable exploitation to commence in H1 2013.
• The weighted average resource grade of the oxide and transitional material at Sega is 1.5g/t, similar to the Kalsaka mineral reserves. However, it is expected that the grade of material processed from Sega will be higher than that at Kalsaka due to the cut-off grade applied. Therefore, the average cash cost per ounce from Sega is expected to be lower than currently incurred at Kalsaka despite the additional costs of trucking and crushing.

Prior to completion of the acquisition of Sega, a 10,000m RC drilling programme was completed at the property by Orezone covering 11 targets. Initial results received are currently being evaluated, with an initial 5,000m of RC drilling planned to follow up on three targets with the most significant intercepts.

In addition to Sega, exploration continued at the Kalsaka site during Q1, following up on prospective areas defined along strike from the existing mineral reserves. Some additions to the short term oxide life of the mine are anticipated from this work, with full results expected to be available in Q3 2012.

Baomahun, Sierra Leone

The Baomahun project is the Company’s flagship development project in Sierra Leone, where the Company is developing a two-fold strategy: to advance to production by completing a definitive feasibility study based on the currently defined resource areas, whilst continuing to explore and demonstrate the substantial resource potential of the Baomahun area. The Baomahun project currently has 2.1Moz of indicated resources (25.6Mt at 2.5g/t) and a further 0.9Moz of inferred resources (9.6Mt at 2.8g/t).(iii)

During Q1 2012 work progressed at Baomahun in three main areas:

• Progress with the feasibility study, including infill drilling aimed at upgrading the open-pittable inferred resources to the measured and indicated categories.
• Infrastructure development, including an upgrade to the site access road and exploration camp to ensure that the project area is ready for the development stage once the feasibility study is completed.
• Exploration along strike, aimed at defining additional open-pittable resources capable of extending the initial mine life.

The next key milestone for the feasibility study will be the completion of the resource update, expected in June 2012, following results from 11,542m of infill drilling received since the previous resource was announced. The infill drilling was designed to upgrade the near 100,000oz of inferred resources within the envisaged open pit to the measured and indicated categories. This would allow the material to be treated as ore in the mine plan and should provide a beneficial impact on the overall stripping ratio.

Once the updated resource is available, a new optimisation and mine plan is expected to be completed within two months for incorporation in the final feasibility study. The majority of the remaining aspects of the feasibility study are nearing completion including the mine layout, capital and operating cost estimates, environmental and social impact assessment, and the resettlement action plan. As a result of the delay in finalising the resource statement, it is now expected that the final feasibility study will be completed in August 2012.

Following the receipt of the Baomahun environmental permit in April 2012, the mine is now fully permitted. Negotiations for a fiscal stability agreement are ongoing with Sierra Leone Government, and are expected to be finalised prior to the commencement date for the plant earthworks at the end of the current wet season in November 2012. The project therefore remains on track for production to commence in 2014 subject to financing.

With up to 40% of the processing costs of a modern CIL plant associated with power, the importance of a cheap and reliable power supply for Baomahun cannot be overstated. Whilst Baomahun will require an HFO power station to be built, generating power at an estimated US$0.23/kWh, the opportunity for low cost hydro-electric power in Sierra Leone, with operating costs typically less than US$0.01/kWh, would have a significant impact on the economics of the project. Hydro-electric power would also decouple the long term economics of the project from the oil price and deliver a sustainable benefit for Sierra Leone as a whole.

A feasibility study for a 24MW run-of-river hydro-electric project 40km north of the Baomahun project, capable of delivering 72% of the project’s power requirements, has been completed by Knight Piesold in Vancouver. Work is now focusing on permitting and financing for this opportunity using an independent power producer model, whereby the capital costs for the hydro-electric power plant would be recovered from a long-term off-take contract with the mine, and power would be procured at a substantial discount to the anticipated cost of HFO generation. Discussions are ongoing with a number of development agencies interested in providing finance and power companies interested in providing the equity and operating such a facility. With a similar construction period to the mine, it is envisaged that low cost hydro-electric power could be available early in the mine life.

Discussions are ongoing with a number of parties interested in providing debt finance for the Baomahun project as a whole, which will be a crucial step in the development of Cluff Gold. The financing strategy currently consists of maintaining dialogue with all interested parties and understanding the total cost of capital for all financing alternatives. Of crucial importance will be the cash flow that will be generated in Burkina Faso from the Kalsaka-Sega project which, at higher production rates and lower cash costs throughout the anticipated Baomahun construction period, is expected to provide a sound financial base.

To help facilitate a smooth transition from exploration to development in advance of the feasibility study a number of site infrastructure developments have been ongoing during Q1. The existing exploration camp is being upgraded at a total estimated cost of US$1.4m to provide accommodation for the construction phase of the project. Work is also nearing completion on an upgrade to the 17km site access road from Mongeri to Baomahun at a total estimated cost of US$3.7m which will ensure efficient access to site during the construction and operation phases. A total of US$2.5m has been spent on these projects during Q1 2012.

Exploration

Whilst the current resource area is considered sufficient to justify the construction of a CIL plant, the importance of defining additional resources in the Baomahun area to sustain a long term project is well understood. Exploration along strike is now focusing on the area immediately north and east of the existing resource base, where a new structural interpretation suggests the presence of gold could be associated with a major shear zone.

The existing resources are located immediately south of the interpreted shear zone, and drilling is now being conducted to the north in an area named Pujehun South where previously announced drilling results have indicated the presence of gold mineralisation. This area also contains a conductive zone interpreted from the VTEM geophysical survey similar to that seen in the resource area. The previously announced drill results(iv) include multiple intersects in each hole, similar to the resource area, including the following:

• 5m at 2.1g/t from 17m, 10m at 1.5g/t from 37m and 8m at 1.5g/t from 118m.
• 3m at 2.3g/t from 33m, 3m at 2.2g/t from 77m, 5m at 1.5g/t from 84m, 3m at 1.6g/t from 123m and 2m at 1.0g/t from 169m.
• 3m at 1.7g/t from 33m and 5m at 4.1g/t from 53m.

A total of 3,100m over 21 holes has been drilled to date in 2012, and a further 2,900m over 15 holes are anticipated to be drilled by the end of July at which time drilling will cease due to the rains. Results from this drilling campaign will be released once available.

Further work will also be undertaken extending surface sampling along the remainder of the interpreted shear zone to the east of the current resource area. Geological mapping is also being undertaken across the licence area to understand the potential for additional shear zones that may be associated with gold.

Yaoure, Côte d’Ivoire

Operations at Yaoure in Q1 focused on exploration. The objective is to define a large mineralised sulphide deposit underlying the previously mined oxide resources. The Yaoure project is ideally situated for the development of a low-cost CIL plant, with many local infrastructure benefits including:

• A 150MW hydro-electric power station capable of supplying the mine with low cost power is located within 10km of the project.
• The nearby hydro-electric barrage is associated with a large body of water, which will also be available for use at the mine site.
• The Yaoure project is readily accessible via sealed roads, being located within an hour of the capital of Côte d’Ivoire, Yamoussoukro. The main sealed road between Abidjan and Yamoussoukro is currently being upgraded, which will further reduce the transport time from the port of Abidjan to the mine.

The existing sulphide resource base at Yaoure consists of 169,000oz (3.4Mt at 1.6g/t) in the measured category, 123,000oz (2.2Mt at 1.7g/t) in the indicated category and 25,000oz (0.5Mt at 1.5g/t) in the inferred category.(v) This resource, primarily in the Yaoure Central pit, was defined from drilling down to a depth of approximately 100m and consists of a number of shallow dipping north-south trending ore zones. These are cross-cut by east-west trending veins containing visible gold with bonanza grades possibly associated with the intersections between the east-west and north-south mineralised systems.

Recent exploration has primarily targeted the down dip extension of the shallow dipping north-south trending zones by diamond core drilling down to a vertical depth of approximately 520m. Phase 1 drilling also targeted a number of east-west trending zones to enhance understanding of the overall mineralised zone. A total of 4,605m of diamond drilling has been completed in phases 1 and 2 of this drill programme, with promising results from the first phase announced in January. The remaining results of the first two phases of drilling are expected to be released in June 2012.

A further 24,000m of diamond core drilling is planned for the remainder of 2012 utilising up to four diamond drill rigs. Drilling is currently ongoing on a 200m grid spacing to outline the extent of the open-pittable sulphide resources associated with the Yaoure Central area. This presently covers an area of 1.9km along strike in a north-south direction by up to 0.9 km down dip in an east-west direction. The strategy is to define an initial inferred resource during 2012 which can be upgraded to measured and indicated through subsequent infill drilling.

In addition to the diamond drilling programme, 19,400m of RC drilling has been completed at Yaoure in 2012 to date. This drilling is mainly targeting a potential zone of mineralisation with a strike length of 1.8km between the existing Kongonza and Angovia 2 prospects.

Financial Report

Financial highlights

The Company generated a robust EBITDA compared to the prior period due to the continued strong average realised gold price of US$1,701/oz. Total cash costs per ounce at Kalsaka rose by less than 10% despite a 21% drop in grade, driving a strong cash operating margin of US$741/oz, a very respectable performance financially.

The Company continued to invest heavily in its projects in Q1, with total capital expenditure of US$11m being the highest for any quarter since the construction of Kalsaka. This investment, facilitated by the continuing operational performance of Kalsaka, will allow the Company to ensure that the full value of all assets are realised.

Exploration expenditure totalled US$7.2m, of which US$3.8m was incurred at Baomahun continuing the infill drilling and feasibility study programmes while continuing to explore along strike. At Yaoure, US$2.0m was spent on the sulphide drilling programme, whilst at Kalsaka a total of US$1.3m was spent on oxide targets.

Other capital expenditure totalling US$3.8m was also mainly targeted at Baomahun with US$1.8m incurred on the Mongeri to Baomahun road upgrade and US$0.7m on the exploration camp upgrade. The other major expenditure was incurred at Kalsaka, with US$1m incurred primarily on new leach pads.

In respect of the Sega acquisition, US$5m was paid into an escrow account during Q1 pending completion of the acquisition, which completed on 23 May 2012. To ensure that the acquisition and costs of commissioning at Sega do not reduce the funds available for progress at Baomahun or Yaoure, an equity fundraising totalling US$34.5m after expenses was completed during Q1, with a total of US$53.4m of cash on the balance sheet at the end of the period.

The effective tax rate is inflated due to withholding tax of US$0.9m due on the dividends paid by Kalsaka Mining SA for the 2011 financial year. In addition, US$4.1m was paid to minority partners during Q1 2012 in respect of this dividend.

To view the “Condensed Consolidated Statement of Changes in Equity for the three months ended 31 March 2012 and 2011”, please visit the following link: http://media3.marketwire.com/docs/cluff_equity.pdf

1. Basis of preparation

The interim financial information has been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and implemented in the UK. The accounting policies, methods of computation and presentation used in the preparation of the interim financial information are the same as those used in the Group’s audited financial statements for the year ended 31 December 2011, which this interim consolidated financial information should be read in conjunction with. The financial information has been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting.

The financial information in this statement does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006. The financial information for the three months ended 31 March 2012 and 31 March 2011 is unaudited, and has not been reviewed by the auditors.

After review of the Group’s operations, financial position and forecasts, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the unaudited interim financial information

2. Segmental reporting

An analysis of the consolidated income statement by operating segment, presented on the same basis as that set out in the 2011 annual report, is set out below:

A reconciliation of segmental revenue to that reported in the interim financial statements is as follows:

A reconciliation of segmental EBITDA to the profit/(loss) before tax reported in the interim financial statements is as follows:

3. (Loss)/earnings per share

The calculation of basic and diluted (loss)/earnings per ordinary share is based on the following data:

At 31 March 2012 and 2011 the Company recorded a consolidated loss. Accordingly, the effect of share options in issue (totalling 1,846,000 and 2,839,000 respectively) were not dilutive and the diluted loss per share is the same as the basic loss per share.

4. Intangible assets

5. Property, plant and equipment

6. Inventories

7. Provisions

8. Share capital

Shares issued

During the period 25,150,000 ordinary shares were issued as follows:

• On 8 March 2012 150,000 ordinary shares of 1p were issued at 74p in respect of the exercise of share options.
• On 22 March 2012, by way of placing, 25,000,000 ordinary shares of 1p were issued at 92p.

9. Contingent liabilities

As stated in note 21 of the Annual report and accounts for the year ended 31 December 2011, the Company received a proposal for additional costs sustained by the mining contractor at the Yaoure Mine totalling US$9.2m in February 2011.

An updated claim was made in June 2011 totalling a further US$5.4m. Whilst the situation remains unresolved the Company has received external advice that confirms that the current provision of US$1.0m is, in the opinion of the Directors, the maximum payable under the terms of the contract.

The terms of the contract clearly state that the rates set out therein shall apply regardless of the difficulty in performing the works under the contract, such that the majority of the additional costs claimed cannot be recovered under the contract.

10. Other commitments

On 3 February 2012 the Company entered into a legally binding, conditional sale and purchase agreement with Orezone Gold Corporation for the acquisition of the licences and associated property comprising Orezone’s Sega Gold Project in Burkina Faso. Consideration comprises 11 million new ordinary shares in the Company and US$15m cash. Completion was finalised on 23 May 2012 following approval from the Burkinabe Government and standard closing conditions.

This report includes certain “forward-looking information” within the meaning of applicable Canadian securities legislation.

All statements other than statements of historical fact included in this report, including, without limitation, the positioning of the Company for future success, anticipated production at Kalsaka and cash flow from Kalsaka, expected grade of material processed from Sega, the finalisation of a fiscal stability agreement with the Sierra Leone Government, commencement of production at Baomahun, statements regarding the exploration, drilling results and potential future production at Yaoure, Kalsaka and Baomahun, the timing of the feasibility study for Baomahun, and future capital plans and objectives of Cluff Gold, are forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Cluff Gold’s expectations include, among others, risks related to international operations, the actual results of current exploration and drilling activities, changes in project parameters as plans continue to be refined as well as future price of gold. Although Cluff Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Cluff Gold does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.

Non IFRS Measures – EBITDA (Earnings Before Interest, Income Taxes, Depreciation and Amortization), cash cost per ounce, cash operating margin and average realised gold price are financial measures used by many investors to compare mining companies on the basis of operating results, asset value and the ability to incur and service debt. EBITDA is used because Cluff Gold’s net income alone does not give an accurate picture of its cash generating potential. Management believes that EBITDA is an important measure in evaluating the Company’s financial performance, ability to fund future capital expenditures and repay any future project financing, and in determining whether to invest in Cluff Gold. Similarly, cash cost per ounce and average realised gold price are measures that are considered key measures by Cluff Gold in evaluating the Company’s operating performance. However, EBITDA, cash cost per ounce sold and average realised gold price are not measures of financial performance, nor do they have a standardized meaning prescribed by IFRS, and may not be comparable to similar measures presented by other companies.

Investors are cautioned that EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as an indicator of Cluff Gold’s performance or to cash flows from operating, investing and financing activities of liquidity and cash flows. These measures have been described and presented in this document in order to provide shareholders and potential investors with additional information regarding the Company’s operational performance, liquidity and its ability generate funds to finance its operations.

Peter Brown is a “Qualified Person” within the definition of National Instrument 43-101 and has reviewed and approved the information contained within this announcement. Mr Brown (MIMMM) is the Group Exploration Manager.