Dixie Gold Inc. Announces Commencement of Drill Program at East Preston Project

VANCOUVER, Feb. 4, 2020 - Dixie Gold Inc. (TSX VENTURE: DG) ("Dixie Gold" or the "Corporation) is pleased to announce that its project optionee, Azincourt Energy Corp. ("Azincourt"), has commenced drilling at the 25,000+ hectare East Preston Uranium Project, located 50 km southeast of Patterson Lake, in the Western Athabasca Basin of northern Saskatchewan, Canada.

Preston Uranium Project Map:
https://www.dixiegold.ca/preston-media

Drilling has begun at pad EP20PADB, which is located along the northern part of the A-Zone conductor corridor. One hole in the abbreviated 2019 drill campaign targeted a nearby parallel conductor. Hole EP19003 successfully intersected a graphite-pyrite bearing shear zone that explains the geophysical conductors determined by previous ground and airborne EM surveys. The 2019 results validate the geophysical interpretation in the Five Island Lakes project area and were paramount in determining the target priority sequence for the 2020 program.

Drill target prioritization for the current campaign is based on a detailed compilation of results from the 2019 winter drill program and 2018 and 2019 ground-based EM and gravity surveys, and property-wide helicopter-borne Versatile Time-Domain Electromagnetic (VTEM™ Max) and magnetic surveys.

The approximately $1.2 million drill program is focused on prospective targets in the Five Island Lakes area with 2000m to 2500m in up to 15 holes of diamond drilling at up to 10 pad locations. The majority of proposed holes will test multiple subparallel EM conductors (A-zone and B-zone conductor corridors), in an area of marked structural disruption. Portions of the A-zone were drilled during the 2019 winter campaign verifying that the conductor hosts significant graphite in strongly deformed (sheared) host rocks that offer both fluid pathways and a reducing host rock conducive to uranium deposition.

2020 Drill Targets – East Preston Project
https://www.dixiegold.ca/preston-media

Initial drilling is also proposed for the Swoosh zone, a 7+ km long east-west structural lineament with strongly anomalous, spatially consistent geochemical anomalies (lake sediments, radon, soil) and coincident magnetic and gravity geophysical anomalies. Two holes are proposed for this area near the upstream terminus of the geochemical anomalies. This zone is located along strike approximately 5 km southwest of the A-zone. The 2020 drill program is being conducted under the guidance and supervision of Azincourt director Ted O'Connor, M.Sc., P.Geo, and Jarrod Brown, M.Sc., P.Geo, Chief Geologist and Project Manager with TerraLogic Exploration Inc.

Option Agreement:

Dixie Gold Inc. and Skyharbour Resources Ltd. ("Skyharbour") entered into an Option Agreement (the "Agreement") with Azincourt whereby Azincourt has an earn-in option to acquire a 70% working interest in a portion of the Preston Uranium Project known as the East Preston Project. Under the Agreement, Azincourt has issued common shares and will contribute cash and exploration expenditure consideration totaling up to CAD $3,500,000 in exchange for up to 70% of the applicable property area over three years. Of the $3,500,000 in project consideration, $1,000,000 will be in cash payments split by Dixie Gold and Skyharbour, as well as $2,500,000 in project exploration expenditures over the three-year period.

Project Location – Western Athabasca Basin, Saskatchewan, Canada
https://www.dixiegold.ca/preston-media

About the East Preston Uranium Project:

Extensive regional exploration work at East Preston was completed in 2013-14, including airborne electromagnetic (VTEM), magnetic and radiometric surveys. Three prospective conductive, low magnetic signature corridors have been discovered on the property. The three distinct corridors have a total strike length of over 25 km, each with multiple EM conductor trends identified. Ground prospecting and sampling work completed to date has identified outcrop, soil, biogeochemical and radon anomalies, which are key pathfinder elements for unconformity uranium deposit discovery.

Azincourt completed a winter geophysical exploration program in January-February 2018 that generated a significant amount of new drill targets within the previously untested corridors while refining additional targets near previous drilling along the Swoosh corridor. Ground-truthing work confirmed the airborne conductive trends and more accurately located the conductor axes for future drill testing. The gravity survey identified areas along the conductors with a gravity low signature, which is often associated with alteration, fault/structural disruption and potentially, uranium mineralization. The combination/stacking of positive features has assisted in prioritizing targets.

The Main Grid shows multiple long linear conductors with flexural changes in orientation and offset breaks in the vicinity of interpreted fault lineaments – classic targets for basement-hosted unconformity uranium deposits. These are not just simple basement conductors; they are clearly upgraded/enhanced prospectivity targets because of the structural complexity.

The targets are basement-hosted unconformity related uranium deposits similar to NexGen's Arrow deposit and Cameco's Eagle Point mine. East Preston is near the southern edge of the western Athabasca Basin, where targets are in a near surface environment without Athabasca sandstone cover – therefore they are relatively shallow targets but can have great depth extent when discovered. The project ground is located along a parallel conductive trend between the PLS-Arrow trend and Cameco's Centennial deposit (Virgin River-Dufferin Lake trend).

In early 2019, Azincourt conducted a small initial diamond drill program totaling 552m. The results confirmed the prospectivity of the East Preston project, as basement lithologies and graphitic structures intersected at East Preston were found to be very similar and appear to be analogous to the Patterson Lake South-Arrow-Hook Lake/Spitfire uranium deposit host rocks and setting.

Qualified Person:

The technical information in this news release has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43-101 and reviewed and approved by Richard Kusmirski, P.Geo., M.Sc., Skyharbour's Head Technical Advisor and a Qualified Person.

About Dixie Gold Inc.

Dixie Gold Inc. (TSXV:DG) is a publicly-traded exploration company involved in a diverse portfolio of exploration projects in Canada. For more information, please visit www.dixiegold.ca.

Signed,

Ryan Kalt, Chairman & Chief Executive Officer

Forward-Looking Statements

This news release contains forward-looking statements. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently expected or forecast in such statements.

Neither the 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.

SOURCE Dixie Gold Inc.