Headwater Gold Inc. announced that it has defined multiple high- priority drill targets to extend high-grade mineralization encountered in previous core drilling by the Company at its 100% owned Katey gold project located in southeast Oregon. West Zone Soil Geochemistry: Auger soil sampling completed by Headwater indicates a broad zone of anomalous gold, silver and epithermal pathfinder element geochemistry in the Katey West Zone. Headwater geologists suspect shallow historic samples in the West Zone area were likely compromised by transported material resulting in a subdued and unreliable geochemistry.

A motorized hand auger was used to penetrate shallow alluvial and colluvial cover surrounding the West Zone and sample soil directly above weathered bedrock which results in much higher confidence samples which accurately represent locally derived soil. Headwater collected 184 samples along an approximately 25 m x 50 m spaced grid to a typical depth of 0.5­1.0 metre. Augured holes also allowed for geologic mapping of exposed bedrock beneath the thin alluvial cover that blankets the West Zone.

Nearly all auger soil samples contained detectable gold (93%) and the majority of samples (59%) contained at least 200 ppb silver. Sampling reveals that anomalous gold-silver soil geochemistry extends over nearly a kilometre of strike length to the north and south of the strongly silicified sandstone knob, where historic drilling and sampling has been focused. These soil samples returned individual values up to 2.38 g/t Au and 26.4 g/t Ag.

A broad zone of anomalous epithermal pathfinder elements also occurs coincident with the gold in soil anomaly. Such pathfinders are commonly associated with the upper levels (elevations) of epithermal gold systems and are highly useful in tracking the extent of the system laterally. This zone includes highly anomalous mercury (Hg), arsenic (As), and antimony (Sb) with up to 13.1 ppm Hg, 243 ppm As, and 62.5 ppm Sb.

Detailed Geologic and Alteration Mapping: Detailed geologic and alteration mapping completed by the Company in the Katey West Zone has proven effective for defining the orientation and extent of the main mineralized structure intercepted in KT21-01. The West Zone Fault, interpreted as the principal controlling structure for gold mineralization, was mapped in detail where it cuts across the surface at the West Zone discovery outcrop. Channel samples of this outcrop returned 13.26 g/t Au and 45.2 g/t Ag over 0.69 m and 4.91 g/t Au and 19.0 g/t Ag over 0.74 m, respectively.

This outcrop sits approximately 100 m vertically above the high-grade drill intercept encountered in hole KT21-01 and demonstrates that high-grade mineralization extends to surface. The projection of the West Zone Fault was mapped both to the north and the south by using stratigraphic offset and alteration zonation observed in soil auger holes. Metallic-Screen Gold Assays of KT21-01: The results of metallic-screen gold assays completed on the high-grade intercept in KT21-01 returned 14.54 metres grading 6.34 g/t Au, including 30.73 g/t Au over 1.95 metres, which is a 30% increase from the original assay values.

Metallic-screen assays are often used to test for the presence of coarse gold and better represent true gold grade by using a much larger sample which also incorporates coarse size fractions from a pulp. A 1-kilogram sample is split from the original sample material, crushed, and sieved to create a coarse (+150) and fine (-150) fraction which are then assayed. Nearly all samples from KT21-01 returned metallic-screen gold values greater than the original assays, indicating the presence of coarse gold that was not accurately measured by the original assays.

A sample from 103.6­104.4 metres depth in KT21-01 returned 229.37 g/t Au in the coarse (+150) fraction indicating the presence of a large amount of coarse gold. Metallic-screen assays of the highest-grade sample from KT21-01 returned 40.59 g/t Au over 1.04 metres, a 44% increase from the original assay value. Moving forward, metallic-screen assays will be routinely utilized as a standard practice on the project whenever the presence of coarse gold is suspected.

2023 Drill Targets: Analysis of previous drilling and surface geological and geochemical data have resulted in the following high-priority drill targets for the current year: KT22-01 Offset Target: Diamond core hole KT21-01 was the first hole drilled by Headwater at the Katey project and remains the only hole drilled by the Company in the West Zone. Immediate offsets of the high-grade gold intercept encountered in this hole (14.54 m grading 6.34 g/t Au, including 30.73 g/t Au over 1.95 m) are planned both down dip and along strike in approximate 50 m increments. Northern Extension Target: North of the strongly silicified outcrop where the West Zone Fault outcrops, the main mineralized structure disappears under shallow cover but is traced by strongly anomalous auger soil samples and subsurface mapping.

Auger samples reveal strongly oxidized and silicified sandstone with quartz veining along the NNW trend of the West Zone Fault mapped in outcrop. Anomalous soil geochemistry immediately adjacent to this structure returned up to 2.38 ppm Au and up to 26.4 ppm Ag. Upper Flats Target: Planned holes in this area directly offset KT21-01 to the south and test the along-strike continuity of the main mineralized structure.

Anomalous soil geochemistry extends along the mapped trace of the West Zone Fault and includes up to 135 ppb Au and up to 1890 ppb Ag. Southern Extension Target: Geologic mapping completed with the aid of high-resolution drone imagery and subsurface auger mapping trace the West Zone Fault structural corridor through this area. Planned holes test this known structural corridor and a splay off the West Zone Fault that corresponds to anomalous soil and rock chip geochemistry.

2023 Drill Program: A multi-rig, mixed RC and diamond core drill program has been planned and multiple bids have been received from contractors to commence drilling in early summer 2023. Headwater is authorized to proceed drilling under its existing exploration permit with the State and Bureau of Land Management. Combining RC and core drilling is a cost-effective way to maximize the number of drill intersections and rapidly test the along-strike potential of the alteration system.

Core drilling will be focused in the KT21-01 offset target area while RC will be utilized along the trace of the West Zone Fault where there is no historic drilling information. The program is expected to consist of an initial 3,500 metres with potential to extend the program subject to positive results.