AKG Asanko Gold Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC   20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 or 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2015

Commission File No. 001-33580

ASANKO GOLD INC.

(Translation of registrant’s name into English)

Suite 680, 1066 West Hastings Street, Vancouver, British Columbia, V6E 3X2

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under the cover Form 20-F or Form 40-F

Form 20-F o

 Form 40-F  x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   o

SUBMITTED HEREWITH

Exhibit No.

Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ASANKO GOLD INC.
(Registrant)
By:	/s/ Greg McCunn
	Greg McCunn
	Chief Financial Officer
Date:		August 14, 2015

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Three and six months ended  June 30, 2015 and 2014

_______________________

 

1

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ASANKO GOLD INC.

Condensed Interim Consolidated Statements of Financial Position (Unaudited)

Expressed in United States Dollars

		June 30, 2015		December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	229,554,511	$	228,679,552
Receivables		16,846		150,211
Prepaid expenses and deposits		3,607,699		227,645
Foreign currency forward contracts asset (note 19 (d)(i))		57,396		-
		233,236,452		229,057,408
Non-current assets:
Property, plant and equipment (note 4)		163,181,737		65,862,616
Reclamation deposit (note 5)		1,695,664		-
Mineral interests and development assets (note 6)		198,289,735		183,244,562
Deferred debt financing costs (note 8)		-		2,936,146
Investment in associate		1,000		1,000
		363,168,136		252,044,324
Total assets	$	596,404,588	$	481,101,732
Liabilities
Current liabilities:
Accounts payable and accrued liabilities	$	29,058,292	$	15,353,474
		29,058,292		15,353,474
Non-current liabilities:
Long term debt (note 8 and note 19(d)(ii))		124,221,140		57,447,225
Asset retirement provision (note 9)		15,979,317		12,638,318
Deferred income tax liability		12,212,654		12,083,658
		152,413,111		82,169,201
Total liabilities		181,471,403		97,522,675
Shareholders’ Equity
Share capital (note 10)		539,752,629		505,468,841
Equity reserves (note 11)		45,316,981		43,032,396
Accumulated deficit		(170,136,425)		(164,922,180)
Total shareholders’ equity		414,933,185		383,579,057
Total liabilities and shareholders’ equity	$	596,404,588	$	481,101,732

Acquisition (note 3)

Commitments and obligations (note 14)

Contingencies (note 5 and note 15)

SEE ACCOMPANYING NOTES

2

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ASANKO GOLD INC.

Condensed Interim Consolidated Statements of Comprehensive Loss (Unaudited)

         Expressed in United States Dollars

SEE ACCOMPANYING NOTES

3

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ASANKO GOLD INC.

Condensed Interim Consolidated Statements of Changes in Equity (Unaudited)

  Expressed in United States Dollars

SEE ACCOMPANYING NOTES

4

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ASANKO GOLD INC.

Condensed Interim Consolidated Statements of Cash Flows (Unaudited)

Expressed in United States Dollars

Supplemental cash flow information (note 16)

SEE ACCOMPANYING NOTES

5

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

1.

Nature of operations

Asanko Gold Inc. (“Asanko” or the “Company”), changed its name from Keegan Resources Inc. on March 1, 2013. The Company was incorporated on September 23, 1999 under the laws of British Columbia, Canada.  The Company is in the exploration and development stage and is focused on advancing its principal project, the Asanko Gold Mine (“the Project”), to commercial production. In addition to its principal project, the Company holds a portfolio of other Ghanaian gold concessions in various stages of exploration.

On February 6, 2014, the Company completed the acquisition of 100% of the issued and outstanding shares of PMI Gold Corporation (“PMI”) (note 3). PMI is a resource exploration and development company which, through its subsidiaries, holds exploration and mining leases in the Ashanti and Asankrangwa Gold Belts of Ghana, Africa. PMI’s principal project is a gold development project known as the Obotan Gold Project which has been combined with Asanko’s principal project known as the Esaase Gold Project, to form the Asanko Gold Mine (“AGM” or  “the Project”).

The head office, principal address and registered and records office of the Company 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 interim consolidated 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”). The accounting policies followed in these condensed interim consolidated financial statements are the same as those applied in the Company’s most recent audited consolidated financial statements for the year ended December 31, 2014. The condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2014.

These condensed interim consolidated financial statements were authorized for issue and approved by the Board of Directors on August 11, 2015.

(b)

Basis of presentation and consolidation

The financial statements have been prepared on the historical cost basis, with the exception of asset retirement provisions (note 9), forward currency contract liabilities (note 19(d)(i)) and interest rate floor derivative liability (note 19(d)(ii)) which are measured at fair value.

All amounts are expressed in US dollars, unless otherwise stated, and the US dollar is the Company’s functional currency. References to C$ are to Canadian dollars.

6

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

2.

Basis of presentation (continued)

(b)

Basis of presentation and consolidation (continued)

These condensed interim consolidated financial statements incorporate the financial statements 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:

(c)

Significant accounting judgments 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.  Actual results could differ from those estimates.  The condensed interim consolidated financial statements have, in management’s opinion, been properly prepared using careful judgment within the framework of the significant accounting policies summarized in note 3 of the audited consolidated financial statements for the year ended December 31, 2014.

(d)

Comparative figures

Certain comparative figures have been reclassified to conform to the presentation adopted in the current period.

7

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

3.

Acquisition of PMI

On December 17, 2013, the Company and PMI entered into a definitive agreement whereby Asanko agreed to acquire all of the common shares of PMI (“Plan of Arrangement”). On February 6, 2014, Asanko completed the acquisition of PMI pursuant to the terms of the Plan of Arrangement. Under the terms of the Plan of Arrangement, former PMI shareholders received 0.21 of an Asanko common share for each PMI share held. The Company issued 87,149,919 of its common shares to acquire 100% of the issued and outstanding shares of PMI.

With the acquisition of PMI, the Company acquired interest in certain mineral resource concessions described in note 6 as the Obotan Gold Project (note 6 (a)), Kubi (note 6 (b)), and the Diaso concessions (note 6 (b)).

The allocation of the purchase price is as follows:

Purchase price:

87,149,919 common shares of Asanko at C$2.12 per share	$	166,743,940
3,237,491 replacement options		2,318,492
126,000 replacement warrants		23,594
Total consideration	$	169,086,026
Net assets acquired: Cash and cash equivalents	$	82,351,619
Restricted cash		1,098,514
Receivables		132,090
Prepaid expenses		235,286
Property and equipment		9,153,642
Mineral interests and development assets		97,934,748
Accounts payable and accrued liabilities		(5,937,445)
Asset retirement provision		(1,447,277)
Deferred income tax liability		(14,435,151)
Net assets acquired	$	169,086,026

The fair value of the Company’s common shares, replacement options, replacement warrants and equity settled performance rights issued for the acquisition of PMI was determined using the closing market price of the Company’s shares at February 5, 2014 of C$2.12 and a foreign exchange rate of 1 CAD = 0.9025 USD at the same date. The fair value of the replacement options and replacement warrants was calculated using the Black-Scholes option pricing model using the following weighted average assumptions:

	Replacement warrants	Replacement options
Risk free interest rate	1.01%	1.21%
Expected dividend yield	0%	0%
Share price volatility	64.5%	77.41%
Share price at the date of valuation (PMI closing share price at Feb 5, 2014)	C$0.45	C$0.45
Expected life	1.64 year	2.80 years

8

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

3.

Acquisition of PMI (continued)

The Company commenced consolidating PMI’s financial position and results of operations effective February 6, 2014.

The Company recognized $162,538 interest income and $3,084,921 net loss related to PMI for the period from February 6, 2014 to March 31, 2014.  Had PMI been consolidated from January 1, 2014, the three months ended March 31, 2014 consolidated statement of  comprehensive loss would include additional interest revenue of  $96,261 and an additional net loss of $(978,838).

4.    Property, plant and equipment

*Work in progress at June 30, 2015 includes borrowing costs of $4.8 million (note 8).

9

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

5.

Reclamation deposit

The Company is required to provide security to the Environmental Protection Agency of Ghana (“EPA”),  as security for the performance by the Company of its reclamation obligations in respect of the Abriem, Abore and Adubea mining leases.  The initial security totals $8.5 million and is made up of a Reclamation Deposit in the amount of $1.7 million and a bank guarantee of $6.8 million.

During the three months ended March 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.

6.

Mineral interests and development assets

(a)

Asanko Gold Mine Project

The Company’s principal mineral project is the Asanko Gold Mine Project, which consists of two neighboring gold projects the Obotan Gold Project (note 3) and the Esaase Gold Project, both located in the Republic of Ghana (“Ghana”), West Africa.

Adansi Ghana owns 100% of the Obotan Gold Project which is located in the Amansie District of the Ashanti Region of Ghana, approximately 250 km northwest of the capital Accra. The Obotan Gold Project consists of the Abore, Abirem and Adubea concessions, all of which have been granted mining leases and cover an area of approximately 88.98 km². These concessions contain five deposits: Nkran, Abore, Adubiaso Asuadai and Dynamite Hill. The Adubea concession is subject to a net smelter return royalty (“NSR”) of 0.5% payable to a third party. During 2014, the Company settled a dispute with Goknet Mining Company Limited (“Goknet”) and thereby eliminated Goknet’s claim of a 2% NSR over these three concessions.

Asanko Ghana owns a 100% interest in the Esaase Gold Project. Like Obotan, Esaase is located in the Amansie West District of Ghana. The property consists of several mining concessions of which the three largest are the Esaase Concession, Jeni River Concession and Sky Gold Concession (“SGM”).  The Esaase Concession covers an area of approximately 42.32 km².  

The Esaase and Jeni River concessions are subject to a 0.5% royalty payable to the Bonte Liquidation Committee and the SGM concession is subject to a 2% NSR payable to Sky Gold Mines Limited.

Asanko Ghana owns a 100% interest in the Asuowin Concession situated contiguous to and directly south of the Esaase Gold property and a 100% interest in the Dawohodo prospecting concession adjacent to the Esaase Gold property.

Free carried interest to the Ghanaian government

The Government of Ghana retains the right to a 10% free carried interest in the Project under Section 8 of the Ghanaian Mining Act. This entitles the Ghanaian government to 10% of declared dividends from the net profit of the Company’s respective subsidiaries at the end of a financial year. As the free carried interest does not result in an obligation on behalf of the Ghanaian government to contribute to the capital nor share in the entity’s losses, a non-controlling interest is not recognized while the respective subsidiaries of the Company are in a net liability position.

The Company’s concessions are also subject to a 5.0% royalty on gold production payable to the Government of Ghana.

10

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

6.

Mineral interests and development assets (continued)

(b)

Exploration projects

Asanko Ghana owns a 100% interest in the Asumura Reconnaissance Concession (“Asumura property”) located in Ghana. The Asumura property is subject to a 3.5% NSR royalty payable to GTE Ventures Limited. (“GTE”), 50% of which may be purchased for $2,000,000 and the remaining 50% which may be purchased for an additional $4,000,000.

Adansi Ghana holds a 100% interest in the Datano, Kaniago, New Obuasi, Gyagyastreso, and Afiefiso concessions located within the Asankrangwa Gold Belt.

During February 2015, Asanko Ghana completed the acquisition of various concessions from Midlands Mineral Corporation for cash consideration of $250,000. The Midland concessions are contiguous to the Company’s other mineral tenements. 

Any of the exploration properties that are converted to a Mining License, in accordance with Ghanaian law, it will become subject to a 5% gross revenue royalty and a 10% free carried interest to the Ghanaian government.   

Pursuant to the Goknet settlement the Company transferred Adansi Ghana’s Diaso concessions (Nkronua Atifi, Diaso, Amuabaka, Juabo, Manhia and Agyaka Manso) and the shares of Kubi Ghana, which holds a 100% interest in the Kubi mining leases to Goknet (note 15).

(c)

Mineral interests and development costs

		Asanko Gold Mine	Other	Total
	Mineral interest
	Balance, December 31, 2014	$  98,560,248	$         326,182	$          98,886,430
	Acquisitions for the period	-	250,000	250,000
	Balance, June 30, 2015	98,560,248	576,182	99,136,430
	Deferred development assets
	Balance, December 31, 2014	84,358,132	-	84,358,132
	Asset retirement costs	3,185,770	-	3,185,770
	Community affairs and environment	123,801		123,801
	Development support costs	1,215,590	-	1,215,590
	Feasibility studies and engineering	42,119	-	42,119
	Permitting	18,167	-	18,167
	Phase 2 feasibility study	698,639	-	698,639
	Share-based payments	862,827	-	862,827
	VAT receivable allowance	8,648,260	-	8,648,260
	Additions for the period	14,795,173	-	14,795,173
	Balance, June 30, 2015	99,153,305	-	99,153,305
	Total mineral interest and deferred development assets, June 30, 2015	$    197,713,553	$    576,182	$ 198,289,735

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

6.

Mineral interests and development assets (continued)

(c)

 Mineral interests and development costs (continued)

Prior to the commencement of construction of the Asanko Gold Mine, development costs were charge to Deferred development Assets. Now that construction is underway most of the development costs are included in Property, Plant and Equipment as Work in Progress.

		Asanko Gold Mine	Kubi	Other	Total
	Mineral interest
	Balance, December 31, 2013	$        4,695,444	$                  -	$         170,043	$       4,865,487
	Fair value on acquisition of PMI	93,471,540	3,963,208	500,000	97,934,748
	Acquisitions for the period	393,264	-	1,250	394,514
	Dispositions for the period	-	(3,963,208)	(345,111)	(4,308,319)
	Balance, December 31, 2014	98,560,248	-	326,182	98,886,430
	Deferred development assets
	Balance, December 31, 2013	56,097,384	-	-	56,097,384
	Asset retirement costs	2,953,356	29,291	-	2,982,647
	Camp operations	2,484,765	-	-	2,484,765
	Development support costs	3,259,184	-	-	3,259,184
	Development drilling and assays	2,087,042	-	-	2,087,042
	EPCM (early works)	9,373,479	-	-	9,373,479
	Feasibly studies  and engineering	475,554	-	-	475,554
	Permitting	769,283	-	-	769,283
	Share-based payments	2,095,273	-	-	2,095,273
	Community affairs and environment	2,652,186	-	-	2,652,186
	VAT receivable allowance	2,110,626	-	-	2,110,626
	Additions for the year	28,260,748	29,291	-	28,290,039
	Dispositions for the year	-	(29,291)	-	(29,291)
	Balance, December 31, 2014	84,358,132	-	-	84,358,132
	Total mineral interest and deferred development assets, December 31, 2014	$    182,918,380	$              -	$    326,182	$ 183,244,562

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

7.

Exploration and evaluation expenditures

Exploration and evaluation expenditures are comprised of expenditures incurred on mineral interests in areas where the technical  feasibility and economic recoverability has not yet been established.

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Exploration support and prospectivity mapping costs	$      495,832	$      74,209	$     920,595	$   132,098
Share-based compensation	61,360	-	182,516	-
	$      557,192	$      74,209	$  1,103,111	$   132,098

8.

Long term debt

On October 24, 2013, the Company entered into a Definitive Senior Facilities Agreement (“DSFA”) with a special purpose vehicle of RK Mine Finance Trust I ("Red Kite"). An amended DSFA was entered into on July 16, 2014 with terms substantially similar to the original DSFA. The debt provided under the amended DSFA will be utilized for developing Phase 1 of the Asanko Gold Mine Project instead of the Esaase Project as previously envisaged.

The DSFA provides for two term loan facilities: a $130 million term loan facility (the "Project Facility") and a $20 million cost overrun facility (the "Overrun Facility"). Performance under the amended agreement is fully secured by the assets of the Company’s subsidiary PMI which includes the assets of Adansi Ghana, certain Asanko bank accounts and is guaranteed by the Company until Project completion.

The first tranche of the loan for gross proceeds of $20.0 million and net cash proceeds of $19.7 million was drawn on July 18, 2014, the second tranche of the loan for gross proceeds of $40.0 million and net cash proceeds of $39.4 million was drawn on December 23, 2014, and the third and final tranche of the loan was drawn on June 1, 2015 for gross proceeds of $70.0 million and net cash proceeds of $69.0 million.

The Project Facility is to be repaid by the end of the first quarter of 2020 with the first repayment date on July 1, 2016. Interest is calculated on a quarterly basis at a rate of LIBOR +6% and payable in advance on the first date of each quarter. There is a  1% minimum LIBOR rate which creates an interest rate floor. Interest accrued on a quarterly basis before the first repayment date is added to the loan principal amount. The loan is carried at amortized costs on the statement of financial position.

As at June 30, 2015 the Company had incurred a total of $7.9 million in deferred debt financing costs (December 31, 2014 - $5.5 million).  Deferred debt financing costs were initially deferred and subsequently reclassified as part of the loan on a pro-rata basis of the loan amount drawn and amortized over the life of the DSFA using the effective interest rate method. At June 30, 2015 the aggregate amount of the deferred debt financing costs and draw down fees of $10.0 million, were recognized as part of the loan. As at December 31, 2014, $3.4 million of the deferred debt financing costs and draw down fees, were recognized as part of the loan.  As at June 30, 2015 an aggregate amount of $4.8 million (December 31, 2014 - $0.8 million) of loan accretion and accrued interest was capitalized to property, plant and equipment at an effective interest rate of approximately 11.21% .

An embedded derivative liability has been recognized for the loan in relation to the interest rate floor. The fair value of the embedded derivatives on draw down was estimated to be $1.3 million (note 19 (d)(ii)). The embedded derivative liability was revalued at June 30, 2015 with the change in fair value recognized in the statement of operations.

13

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

8.

Long term debt (continued)

Long term loan liability	June 30, 2015	December 31, 2014
Gross proceeds	$      130,000,000	$      60,000,000
Accrued interest	3,211,578	670,088
	133,211,578	60,670,088
Deferred financing costs, net of amortization, and fair value of embedded derivative liability at date of drawdowns	(10,059,945)	(3,999,911)
	123,151,633	56,670,177
Fair value of embedded derivative liability	1,069,507	777,048
Long term loan liability	$      124,221,140	$      57,447,225

The Company is not obligated to commence making repayments of the long-term loan and accrued interest until July 1, 2016.

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 from Phase 1 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;

·

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 Project and Overrun Facility as well as the amount of gold delivered under the Offtake Agreement at the time of termination.  

9.

Asset retirement provision

The asset retirement provision relates to current and historical disturbances on the mineral concessions within the area of interest of the Asanko Gold Mine. During the six months ended June 30, 2015, the Company recognized an additional $3.7 million (uninflated and undiscounted) related to the disturbances resulting from the mine construction activities.

The following is a continuity of the asset retirement provision at Asanko Gold Mine:

	June 30, 2015	December 31, 2014
Opening balance	$      12,638,318	$        9,385,102
Additions (reductions), net	3,185,770	2,953,356
Accretion	155,229	299,860
Closing balance	$      15,979,317	$      12,638,318

The present value of this obligation has been recorded as a non-current provision.

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

10.

Share capital

(a)

Authorized

Unlimited common shares without par value; and

Unlimited preferred shares without par value

(b)

Issued and outstanding common shares

	Number of Shares	Amount
Balance, December 31, 2013	85,054,338	$   334,423,542
Issued pursuant to the acquisition of PMI (note 3)	87,149,919	166,743,940
Issued pursuant to settlement agreement (note 15)	1,000,000	2,375,880
Share issuance costs	-	(226,423)
Issued pursuant to exercise of share-based options (note 11(a)):
- at C$ 1.12	12,500	12,792
- at C$ 1.43	5,250	7,002
- at C$ 1.96	164,850	303,124
- at C$ 2.12	112,500	224,166
- at C$ 2.15	420,000	848,414
- at C$ 2.42	156,250	355,400
Transfer from equity reserves on exercise of share-based options	-	401,004
Balance, December 31, 2014	174,075,607	$   505,468,841
Issued pursuant to bought deal financing	22,770,000	36,386,961
Share issuance costs	-	(2,103,173)
Balance, June 30, 2015	196,845,607	$   539,752,629

Six months ended June 30, 2015

On February 11, 2015, the Company closed a bought deal financing of  22,770,000 common shares at C$2.02 for gross proceeds $36.4 million or C$46.0 million. The Company incurred share issuance costs of $2.0 million, of which $1.8 million in fees were paid to the underwriters’.   

Year ended December 31, 2014

On February 6, 2014, the Company issued 87,149,919 of its common shares at a price of C$2.12 per share to acquire 100% of the issued and outstanding shares of PMI (note 3). The fair value of the shares issued was determined using the closing share price of the Company’s shares on the Toronto Stock Exchange on February 5, 2014 and an exchange rate of 1 CAD = 0.9025 USD at the same date, which were the final closing variables before the transaction completion (note 3). The Company incurred share issuance costs of $197,694 in regulatory fees.

On August 19, 2014, the Company issued 1,000,000 of its common shares at a price of C$2.60 per share, pursuant to a settlement agreement (note 15(c)). The fair value of the shares issued was determined using the closing share price of the Company’s shares on the Toronto Stock Exchange on August 19, 2014 and an exchange rate of 1 CAD = 0.9138 USD at the same date. The Company incurred share issuance costs of $28,729 in regulatory fees.

During the year ended December 31, 2014, the Company issued 871,350 common shares for gross proceeds of $1.75 million on exercise of options. In addition, the estimated fair value of these options of $401,004 was reclassified from equity reserves to share capital.

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

11.

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 ½ % every three months thereafter for a total vesting period of 18 months.

Share-based options movement	Number of Options	Weighted average exercise price
Balance, December 31, 2013	6,298,500	C$3.93
Granted	5,801,000	C$2.16
Replacement options granted on the acquisition of PMI	3,237,491	C$4.01
Exercised	(871,350)	C$2.14
Cancelled/Expired	(3,871,350)	C$4.51
Balance, December 31, 2014	10,594,291	C$2.95
Granted	4,771,000	C$2.05
Cancelled/Expired	(778,500)	C$4.35
Balance, June 30, 2015	14,586,791	C$2.58

The following table summarizes the share-based options outstanding and exercisable at June 30, 2015:

During the three months ended June 30, 2015, $0.5 million (three months ended June 30, 2014 - $0.6 million) in share-based payments were recorded in the statement of comprehensive loss, which includes $0.1 million included in exploration and evaluation expenses (three months ended June 30, 2014 – $nil). In addition, during the three months ended June 30, 2015,  share-based payments of $0.4 million were included in mineral interests and development costs (three months ended June 30, 2014 –  $0.7 million).

During the six months ended June 30, 2015, $1.4 million (six months ended June 30, 2014 - $1.6 million) in share-based payments were recorded in the statement of comprehensive loss, which includes $0.2 million included in exploration and evaluation expenses (six months ended June 30, 2014 –$nil). In addition, during the six months ended June 30, 2015,  share-based payments of $0.9 million were included in mineral interests and development costs (six months ended June 30, 2014 –  $1.7 million).

16

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

11.

Equity reserves (continued)

(a)

Share-based options (continued)

The fair value of the share-based options granted during the three months ended June 30, 2015 and 2014 used to calculate compensation expense, has been estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Risk free interest rate	0.78%	1.41%	0.71%	1.38%
Expected dividend yield	-	-	-	-
Share price volatility	52.58%	56.08%	53.26%	59.33%
Forfeiture rate	3.57%	3.47%	3.57%	3.47%
Expected life of options	3.11 years	3.20 years	3.11 years	3.20 years

(b)

Performance rights

In connection with the acquisition of PMI (note 3), the Company entered into an agreement with  employees of PMI, who held PMI performance rights, to issue an aggregate of 117,158 common shares of the Company upon vesting of the performance rights. In April 2014, the performance rights had not vested and were cancelled due to termination of the employment agreements of the performance rights holders.

(c)

Warrants

The continuity of share purchase warrants for the six months ended  June 30, 2015 is as follows:

During the year ended December 31, 2014, the Company issued 126,000 replacement warrants pursuant to the acquisition of PMI (note 3).

The continuity of share purchase warrants for the year ended December 31, 2014 is as follows:

17

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

12.

Restructuring costs

Restructuring charges incurred and/or accrued during the three months ended March 31, 2014 related to the closure of the PMI corporate offices in Canada and Australia as well as employee terminations due to redundancy post the acquisition of PMI. The restructuring was completed during April 2014. No restructuring charges were incurred in the three and six months ended June 30, 2015, therefore no comparative information is provided in the table below: The following table provides a summary of the restructuring charges for the three and six months ended June 30, 2014:

Restructuring costs	Three months ended June 30, 2014	Six month ended June 30, 2014
Employee termination benefits	$95,938	$2,503,986
Contracts termination costs	-	269,149
Write-off of equipment	-	205,695
	$95,938	$2,978,830

13.

Related party balances and transactions

All transactions with related parties have occurred in the normal course of operations and are measured at the exchange amount agreed to by the parties. All amounts are unsecured, non-interest bearing and have no specific terms of settlement.

(a)

Key management compensation

Transactions with key management personnel were as follows:

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Salaries and benefits	$    272,154	$    276,634	$       550,915	$       732,234
Share-based payments	193,127	260,418	612,298	974,204
	$     465,281	$     537,052	$    1,163,214	$    1,706,438

Key management personnel consist of directors and officers of the Company.

(b)

Other related parties balances and transactions

Related party transactions (recoveries):

	Three months ended  June 30,		Six months ended June 30,
	2015	2014	2015	2014
Universal Mineral Services Ltd. (“UMS”) (i)	$     20,560	$    48,952	$    52,226	$ 95,307

Related party balances receivable (payable):

	June 30, 2015	December 31, 2014
UMS (i)	$       (12,544)	$       (8,137)
UMS – prepaid deposit (i)	-	21,550
	$       (12,544)	$        13,413

UMS is a private company with certain key management personnel and directors in common with the Company, and pursuant to an agreement dated March 30, 2012, provided geological, corporate development, administrative and management services to the Company on a cost recovery basis. Effective July 1, 2013, the Company notified UMS that it would no longer require any personnel services but continued to share the cost of UMS’s office tenancy and IT services where required until May 31, 2015.

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

14.

Commitments and contractual obligations

As at June 30, 2015, the Company had contractual obligations totaling $171.6 million, relating to long term debt (December 31, 2014 - $73.7 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. At June 30, 2015 the long term debt had a prepayment value of $133.5 million (December 31, 2014 - $60.7 million).

In addition, the Company has entered into certain construction and engineering contracts relating to the construction of the Asanko Gold Mine Phase 1.

Contractual obligations	Payments due by period
	Total	1 year	2-3 years	4-5 years
Long term debt, including future interest charges	$    171,564,682	$                         -	$       69,744,320	$   101,820,362
Open purchase orders	125,747,000	125,747,000	-	-
	$    297,311,682	$       125,747,000	$       69,744,320	$   101,820,362

15.

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.

Goknet Arbitration

On August 15, 2014, the Company entered into a settlement agreement with Goknet to eliminate Goknets’s claim for a 2% NSR royalty on Phase 1 of the Asanko Gold Mine Project. The settlement involved cash, one million Asanko shares (note 10(b)) and the transfer to Goknet of two exploration projects, Kubi and Diaso (note 6(b)). Included in the agreement, the Company retained a right to match any future offer made to Goknet with respect to a disposal of the Diaso Project concessions.

Godbri Datano Claim

On September 14, 2012, Godbri Mining Limited (“Godbri”) 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 (“Midras”) 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 on January 29, 2013 and in March 2013, both the Company and Adansi Ghana filed further defences. The matter is currently awaiting trial. The Datano concession was acquired in August 2013 from Midras. The Company considers the claim made by Godbri to be spurious and without any merit. Godbri is a private Ghanaian company.

Matisse and Madison Claim

On October 22, 2013, Matisse & Madison Co. Ltd. (“M&M”) lodged a statement of claim in the High Court of Justice, Accra, Ghana, seeking compensatory damages of $20 million plus interest for breach of a verbal contract related to the purchase of the Datano Concessions from Midras. The Company maintains that this is a frivolous lawsuit lacking in merit and will vigorously defend itself.

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

16.

Supplemental cash flow information

17.

Segmented information

Geographic Information

The Company operates in one reportable operating segment, being the exploration and development of resource properties.

Geographic allocation of non-current assets

June 30, 2015	Canada	Ghana	Total
Property, plant and equipment	$        65,193	$        163,116,544	$        163,181,737
Reclamation deposit	-	1,695,664	1,695,664
Mineral interest and development assets	-	198,289,735	198,289,735
Investment in associate	1,000	-	1,000
	$        66,193	$      363,101,943	$      363,168,136

December 31, 2014	Canada	Ghana	Total
Property, plant and equipment	$        60,120	$        65,802,496	$        65,862,616
Deferred debt financing costs	-	2,936,146	2,936,146
Mineral interest and development assets	-	183,244,562	183,244,562
Investment in associate	1,000	-	1,000
	$        61,120	$      251,983,204	$      252,044,324

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

17.

Segmented information (continued)

Geographic allocation of loss (income)

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Canada	$     881,342	$   (1,119,276)	$     5,512,391	$     8,353,915
Ghana	(125,503)	603,840	(298,146)	2,047,977
Total	$     759,839	$      (515,436)	$     5,214,245	$   10,401,892

18.

Loss (earnings ) per share

Basic loss (earnings) per share amounts are calculated by dividing the net loss (income) for the period by the weighted average number of ordinary shares outstanding during the period.  

Weighted average number of common shares are calculated as follows:

		Three months ended June 30,		Six months ended June 30,
		2015	2014	2015	2014
Issued common shares, beginning of period		196,845,607	172,216,757	174,075,607	85,054,338
Effect of shares issued on:
Acquisition of PMI		-	-	-	69,816,233
Bough deal financing		-	-	17,612,155
Exercise of share-based options		-	2,976	-	13,030
Weighted average number of common shares basic, end of period		196,845,607	172,219,733	191,687,762	154,883,601
Dilutive effect of share-based options		-	331,142	-	-
Weighted average number of common shares diluted, end of period		196,845,607	172,550,875	191,687,762	154,883,601

Basic and diluted loss per share amounts are the same as there are no instruments that have a dilutive effect on loss.

19.

 Financial instruments

As at June 30, 2015 the Company’s financial instruments consist of cash and cash equivalents, receivables, reclamation bond, accounts payable and accrued liabilities, long term debt and an embedded derivative in relation to an interest rate floor, and foreign currency forward contracts.

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:

21

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

19.

 Financial instruments (continued)

 (a)

Credit risk

Credit risk is the risk of an unexpected loss if a customer or 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 and Ghana. The majority of the Company’s cash is held in Canadian based banking institutions, authorized under the Bank Act (Canada) to accept deposits. As at June 30, 2015, the Company had receivables related refundable sales tax and interest receivable of $nil (December 31, 2014 - $0.07 million).

 (b)

Liquidity risk

The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due. As at June 30, 2015 the Company had a cash and cash equivalents balance of $229.6 million (December 31, 2014 – $228.7 million) to settle current accounts payable and accrued liabilities of $29.0 million (December 31, 2014 - $15.3 million) that are considered short term and expected to be settled within 30 days. The Company is not obligated to commence making repayments of the long term loan balance and accrued interest of $133.2 million, until July 1, 2016. The Company also has a $20.0 million cost overrun facility available.

(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 loan agreement with Red Kite (note 8) provides for interest at LIBOR plus 6% with a minimum LIBOR of 1%.

The Company’s sensitivity to a 1% decrease or increase in market rates of interest would have an immaterial effect on the Company’s interest expense/income for the six months ended June 30, 2015.

 (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 (CAD) and South African rand (ZAR) could have an effect on the Company’s results of operations, financial position and cash flows.  As at June 30, 2015, the Company had entered into a series of forward contracts to purchase a total of ZAR233 million in exchange for Canadian and US dollars at specified exchange rates. These forward contracts have settlement terms that range from one month to eleven months. As at June 30, 2015, the Company had a CAD cash balance of $9.8 million (December 31, 2014 – $30.8 million) and ZAR balance of $16.3 million (December 31, 2014 - $0.4 million) expressed in US dollar equivalent.

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ASANKO GOLD INC.

Notes to Condensed Interim Consolidated Financial Statements (Unaudited)

Three and six months ended June 30, 2015 and 2014

Expressed in United States Dollars

19.

 Financial instruments (continued)

(c)

Market risk (continued)

(iii)

Other price risk

Other 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. As at June 30, 2015 and December 31, 2014, the Company had no financial instruments exposed to other price risk.

(d)

Fair values

(i)

Foreign currency forward contracts derivative

During the six months ended June 30, 2015, the Company entered into a series of forward contracts to purchase ZAR in exchange for Canadian  and US dollars at specified exchange rates. These forward contracts have settlement terms that range from one month to eleven months.

During the three months ended June 30, 2015, the Company settled several currency forward contracts and realized a foreign exchange loss of $0.1 million. During the six months ended June 30, 2015, the Company realized a foreign exchange gain of $0.3 million on settlement of currency forward contracts.

The fair values of outstanding foreign currency forward contracts are determined using the forward rates at the measurement date, with the resulting value discounted back to present value and are categorized within level 2 of the fair value hierarchy.

(ii)

Embedded derivative

The embedded derivative liability associated with the interest rate floor of the long term loan is categorized within level 2 of the fair value hierarchy. The fair value of the embedded derivative was estimated using the three-month LIBOR forward rates to 2020 ranging from 0.28% to 2.70%  using an option pricing model.

(iii)

Other

The carrying values of cash and cash equivalents, receivables and accounts payable and accrued liabilities approximate their respective fair values due to the short-term nature of these instruments. The fair value of the long term debt approximates its carrying value due to the floating rate nature of the debt instrument.

(e)

Items of income, expense, gains or losses arising from financial instruments

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Interest income from loans and receivable	$     185,068	$   356,116	$     457,990	$     732,333
Realized foreign exchange gain (loss) from currency forward contracts	(87,817)	-	276,237	-
Realized and unrealized net foreign exchange gain (loss) from other financial instruments	1,048,048	2,765,317	(950,016)	2,613,089

23

MANAGEMENT’S DISCUSSION AND ANALYSIS

Three and six months ended June 30, 2015 and 2014

_______________________

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

This Management’s Discussion and Analysis (“MD&A”) of Asanko Gold Inc. (“Asanko” or the “Company”) has been prepared by management as of August 12, 2015 and should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2015 and 2014 and the related notes thereto. All financial information has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. All dollar amounts herein are expressed in United States dollars unless stated otherwise. References to C$ are to Canadian dollars.

This MD&A contains Forward Looking Information. Please read the Cautionary Statements on page 29 carefully.

Description of the Business

The Company was incorporated on September 23, 1999 under the laws of British Columbia. The Company’s shares trade on the Toronto Stock Exchange and NYSE MKT Equities Exchange under the symbol “AKG”.  The Company’s primary asset is its Asanko Gold Mine Project (the “Project”) located on the Asankrangwa gold belt in Ghana.

Asanko’s vision is to become a low cost, mid-tier gold producer.  Asanko’s vision will be achieved through the phased development of the Asanko Gold Mine.  Phase 1 of the Project is fully funded and under construction with over 60% complete. The first gold pour is expected in Q1 2016.  It is envisioned in a current pre-feasibility study that the Project will be expanded from approximately 200,000 ounces per year to over 400,000 ounces per year by 2018 as Phase 2.

Overall Performance

Financial Performance

The Company does not expect to generate revenues until the commencement of production at the Asanko Gold Mine in Q1 2016.  As such, during the three months ended June 30, 2015 (“Q2 2015”) Asanko had a net loss of $0.8 million or a loss of $0.00 per share compared to net income of $0.5 million or $0.00 per share during the three months ended June 30, 2014 (“Q2 2014”). The main drivers for the increase in net loss in Q2 2015 were a decrease in foreign exchange gain by $1.8 million and increase in exploration and evaluation expenditures by $0.5 million. These increases were partially offset by a decrease in corporate overhead by $0.6 million.

Phase 1 Construction

As at June 30, 2015, construction of Phase 1 is advancing according to schedule, with over 60% of Phase 1 of the Project complete and on track for first gold production in Q1 2016.  

The primary crusher foundations were completed in June 2015 and the structural, mechanical and plate work installation has commenced. The installation of the crusher is underway.  The concrete work for the run-of-mine tip wall at the primary crusher, as well as the reinforced earth wall is still under construction and due for completion by the end of Q3 2015.  The primary tip bin erection has commenced and will be completed in parallel.

Earthworks for the overland conveyor from the primary crusher to the stockpile tunnel were completed in June 2015 and the concrete precast sleeper foundations are being placed. The conveyor installation is expected to commence this month. Concrete work on the stockpile tunnel has been completed and installation of the apron feeder and other mechanical equipment has commenced.

The foundations for the SAG and Ball Mills were completed in early June 2015 and installation of the mills has commenced with a planned completion date of November. Both the SAG and Ball Mills are on site, along with all the major ancillary pieces of equipment.

All seven CIL tanks and the cyanide detoxification tank have been fully erected, painted and welded. Interconnecting steel and plate work is underway and due for completion by the end of Q3 2015.  The mechanical installation of the agitators and

2

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

inter-stage carbon screens will follow.  Electrical and Instrumentation (“E&I”) and Piping contractors are now working in this area.

Steelwork on the pre-leach thickener has been completed and welding and plate work are in the final stages, with completion expected in the next few weeks. The thickener bridge arrived on site mid-July and erection planned to be complete by the end of August.

The reagents building and store room are progressing well, all the steel work is erected and most of the tanks have been installed.  Plate work is over 90% complete and installation of the pipe and cable racks has commenced.  The sheeting for the buildings is expected to arrive on site in July and be installed at that time.

The Gold Room plate work is over half way towards completion and is expected to be fully complete in October 2015.

The Tailings Storage Facility (“TSF”) continues to progress well, with over 67% of earthworks complete and over 60% of the HDPE liner installed.  The northern portion is complete and work is now focusing on the southern portion of the facility. The TSF is on track for completion during Q4 2015.  The tailings pipeline trench construction is expected to commence in early August and is scheduled to be completed in November.

The E&I work has commenced in the Reagents area and on the pipe gantries.  All remaining major equipment, such as elution heating, emergency generator, transformers, medium voltage switchgear, gravity concentrator and remaining structural steel is expected to arrive by mid-August, ahead of the final stages of installation.  Terracing, drains and buried services for the entire plant site, including the footprint for the Phase 2 expansion project, are scheduled to be completed by the end of July.  All other ancillary services, such as change house, workshop, raw water dam and pollution control dam, are on schedule.

Power

In June 2015 Asanko signed a life of mine Power Purchase Agreement (“PPA”) with the independent power producer Genser Energy Ghana Limited (“Genser”) which has considerably de-risked the supply of long term power to the mine.  Genser will build and operate a 19.2 megawatts (“MW”) liquid fuel power plant adjacent to the AGM site and supply 17MW of nominal power to Phase 1 on a fixed-price, life-of-mine contract. Until the on-site power plant is completed, which is expected by April 2016, Genser will provide interim power via temporary generating facilities.  Bush clearing for the Genser power plant has been completed and construction of the terrace is underway and due for completion by the end of Q3 2015.

The Company is also installing a 161kV power line to connect to the grid.  Under the PPA, Genser will have the ability to utilize the power line to sell excess power into the grid or to supply power through the grid from their coal-fired power plant at the Chirano mine site (owned by Kinross Gold).  Foundation work for the 82 towers along the 30km long power line is underway, with 65 tower foundations excavated and 55 tower foundations completed.  12 towers have already been erected and the remaining tower erection is due for completion in October 2015. The medium voltage substation is well advanced and nearing completion.

Mining

Pre-stripping of the Nkran Pit, the main mineral resource for Phase 1 continues to advance according to schedule.  PW Ghana have now mobilized the entire mining fleet, consisting of four production shovels, 18 CAT 777, 8 CAT 773 trucks as well as seven drill rigs in readiness for drill and blast operations, which are due to commence during Q3 2015.  Mining activities are operating 24 hours a day and production levels have reached 100,000 tonnes per day, which is approximately 10% above the planned mining rates.

The contractor has mined 7.9 million tonnes (“Mt”) from the pit as at the end of June, representing 36% of the planned pre-strip.  Approximately 20,803 tonnes of ore at a grade of 1.87 g/t have been mined during the pre-strip and have been placed on the run-of-mine pad.  Prior to milling operations commencing in Q1 2016, it is planned to have 423,000 tonnes of ore grading 2.09 g/t on the stockpiles.

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

Pit dewatering has continued to advance ahead of the mining operations with 3.36 million cubic metres of the expected 6 million cubic metres of water now pumped from the Nkran pit (approximately 56%).  Since the start of dewatering in December 2014, the water level has dropped by approximately 24.3 metres.

Health and Safety

On June 24, 2015 an accident occurred at the Project which resulted in the death of a contractor engaged in mining activities.  Following the fatal accident, all employees and contractors have undergone health and safety re-inductions. In addition, Asanko has investigated the accident and completed a full review of all of its safety and health procedures and processes. Appropriate remedial action plans have been fully implemented.

The EPCM portion of the Project recently achieved a milestone of over 2 million man-hours completed on the project to date without a lost time incident.

Partial Relocation of Nkran Village

The partial relocation of the Nkran village (88 building structures) continues to progress on schedule. Local contractors are undertaking the construction of the new buildings, with approximately 450 local villagers being employed on the project. The construction of the housing terraces is complete and 51 house structures have already been built, with 80% of these houses currently being fitted with plumbing and electrics. An additional 37 houses are between foundation and lintel level.  Asanko is also building a community center, a school and a football field. The relocation remains on track for completion by the end of Q3 2015.

Key Milestones

An update on the key milestones that the Company is working towards are, as follows:

Original Guidance

Current Status

Commence early works

Q2 2014

Complete

Near mine resource definition drilling at Dynamite Hill

Q2 2014

Complete

Finalize revisions to the Red Kite financing arrangements

Q2 2014

Complete

Investment Decision for Phase 1

Q3 2014

Complete

Definitive Project Plan including updated MRE

Q4 2014

Complete

Commence Project Construction

Q3 2014

Complete

Phase 2 Pre-Feasibility Study

Q1 2015

Complete

Commence Commissioning and Ramp-up

Q1 2016

Q1 2016

Steady State Commercial Production

Q2 2016

Q2 2016

Phase 2 Definitive Feasibility Study

Q2 2016

Q3 2016

Phase 1 Development Expenditures

The capital cost budget for the Project as approved by the board of directors is $295 million with the Project commencing July 1, 2014.  Phase 1 development expenditures as at June 30, 2015 were recorded through Property, Plant and Equipment at $138.3 million, as follows:

		Asanko Gold Mine Totals
Cost of Property, Plant and Equipment		$ millions
	As at June 30, 2015	165.7
	Less: costs incurred prior to July 1, 2014 (pre-construction decision)	(13.8)
	Less: costs acquired through the acquisition of  PMI	(9.2)
	Less:Capitalized interest	(4.4)
	Total Phase 1 Development Expenditures	138.3

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

Of the $138.3 million, approximately $24.1 million of Phase 1 development expenditures were in payables as at June 30, 2015.

Commitments and Contractual Obligations

As at June 30, 2015, the Company had incurred capital costs and has contractual obligations and open purchase orders totaling $264 million relating to the construction of the Asanko Gold Mine Phase 1.  Approximately $138.3 million has been paid or invoiced, with the balance of $126 million due to be paid within 1 year as work is completed on Phase 1.  Procurement is now 90% complete and proceeding on schedule. Equipment and materials deliveries, none of which are on the project critical path, remain on schedule.  Nearly all of the capital expenditure has now been committed and the Project is expected to be completed within the US$295 million capital expenditure budget.

as at 30-June-15	$ Million
Phase 1 Development Expenditures paid	114.2
Invoiced amounts in Payables	24.1
Further commitments made	126.0
Estimated additional to complete	27.7
Remaining contingency	3.0
Total Estimated Cost	295

Deferred Development Costs

During the six months 2015 $10.7 million was spent on deferred development costs, not including asset retirement costs or share-based payments, compared to $10.8 million during the six months ended June 30, 2014. Deferred development costs for the current period include $8.6 of VAT receivable allowance related to VAT paid on costs capitalized to property, plant and equipment and work in progress.

	Six months ended June 30,
	2015	2014
Development support costs	$       1,215,590	$      2,224,428
Development drilling and assays	-	1,069,465
Feasibility studies and engineering	42,119	6,170,843
Permitting	18,167	355,544
Phase 2 feasibility	698,639	-
Community affairs and environment	123,801	1,003,975
VAT receivable allowance	8,648,260	-
	10,746,576	10,824,255
Asset retirement costs	3,185,770	467,825
Share-based payments	862,827	1,647,151
	$     14,795,173	$    12,939,231

5

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

Exploration and Evaluation

During the period, the Company continued an exploration program focused on high priority targets that have the potential to add oxide resources to the Asanko Gold Mine using systematic and low-cost exploration methods. This follows positive results from an extensive regional prospectivity mapping exercise undertaken in 2014 by external consultants.

The Asankrangwa Gold Belt and wider Kumasi Basin in Ghana are well endowed and contain a number of large economic gold systems such as Nkran, Esaase and Edikan. Significant potential exists for Asanko to generate further value on its ground holdings as demonstrated with the recent discovery of the Dynamite Hill deposit.

The study concluded that only 7% of Asanko’s highly prospective concession area had been historically explored effectively. The study has provided a better understanding of the controls on the location of gold deposit formation and the expression of these controls in exploration data and a significant number of new exploration targets have been generated. The identified targets provide a clear opportunity for the exploration team and offer the potential for rapid delineation of new deposits and resource areas.

The 2015 exploration programme has been designed to provide a cost effective validation of the prospectivity targets, as well as establish a level of parity to the data coverage. To this end, an airborne geophysical survey was conducted during the period in order to infill areas not flown already, and importantly lay the foundation for contiguous geological and structural modelling of targets. Near surface oxide targets are being prioritized for investigation during the 2015 programme, and will be ear-marked for initial drill testing during 2016.  It is anticipated that the integration of the airborne geophysical survey results and current structural modelling will yield further near mine targets. The budget for the 2015 program is approximately $2 million, of which approximately $1.1 million was spent during the six months ended June 30, 2015, as follows:

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Exploration support and        prospectivity mapping costs	$      495,832	$      74,209	$     920,595	$   132,098
Share-based compensation	61,360	-	182,516	-
	$      557,192	$      74,209	$  1,103,111	$   132,098

Expenditures during the six-month period ended June 30, 2015 were predominantly related to a prospectivity mapping exercise undertaken by Corporate Geoscience Group (“CGSG”), a respected consulting company based in Australia.  The scope of the exercise was to undertake a detailed geological framework, prospectivity and targeting study of Asanko’s concession packages in the Asankrangwa Gold Belt, Kumasi Basin and the broader region. The objective of this study was for CGSG to deliver new knowledge, new concepts and new targets for resource expansion and acquisition that would enable Asanko to rapidly grow the resource inventory of the Asanko Gold Mine. The process followed by CGSG included:

·

Re-processing and filtering all geophysical datasets available covering the AKG concession package;

·

Applying Algorithm-driven structure detection to magnetic, EM and SRTM grids delivered new, detailed structural information promoting better geological understanding; and

·

Utilising data driven Weights of Evidence (WoE) and knowledge driven Fuzzy Inference System (FIS) prospectivity analyses to generate a significant number of new exploration targets.  

The outcomes of their study include:

·

Identifying 13 high priority exploration targets within Asanko’s existing tenement package;

·

The development of a new, more detailed geological framework, mineral systems model and exploration guide for gold systems in the Asankrangwa Gold Belt and Kumasi Basin; and

·

The provision of a detailed set of recommendations providing a framework for the development of future brownfields and greenfields exploration programmes.

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

Corporate Overhead

During the six-month period ended June 30, 2015, $2.5 million was incurred in corporate overhead, including wages, consulting fees, professional fees, office rents and investor relations activity, as follows:

	Three months ended June 30,		Six months ended June 30,
	2015	2014	2015	2014
Wages and Consulting Fees	$      419,342	$    812,950	$     776,565	$     1,625,894
Office Rent and Administration	454,935	400,981	648,943	1,052,719
Professional Fees	132,219	293,774	431,966	454,200
Regulatory Fees	111,038	94,627	139,439	235,662
Travel, promotion and Investor Relations	307,010	193,847	493,642	478,945
Total Corporate Overhead	$  1,424,544	$  1,796,179	$    2,490,555	$    3,847,420

A significant reduction in corporate overhead was achieved during the period in relation to the same period in 2014 by rationalizing management and offices following the February 2014 merger with PMI Gold Corporation.

Funding

The Company strengthened its balance sheet in February 2015, by raising C$46 million through a bought-deal financing completed at C$2.02/share.  Net proceeds of the fund raising were converted to approximately $34.7 million US dollars and will be used to complete Phase 1 of the Project and for working capital and general corporate purposes, including the completion of a Definitive Feasibility Study on Phase 2.

In June, 2015, the Company drew-down the third and final tranche of the project debt facility of $130.0 million in aggregate. The third tranche was for gross proceeds of $70.0 million and net cash proceeds of $69.0 million.

The Company believes it is fully funded through to commencement of production of Phase 1 of the AGM with $229.6 million in cash on-hand as at June 30, 2015 (December 31, 2014 - $228.8 million) and an undrawn $20 million cost-overrun facility for total available funding of approximately $249.6 million. The Company expects to generate positive cash flows commencing in Q2 2016. The remaining use of funds is $210.9 million (below) creates a current funding buffer of approximately $40 million.

Forecast Cash Uses 30-Jun-15 to 1-Apr-16	$ Million
Invoiced amounts in Payables	24.1
Further commitments made	126.0
Estimated additional to complete	27.7
Remaining contingency	3.0
Total Remaining Project Spend	180.8
VAT Expenditures (later Receivable)	10.8
Working Capital & Pre-Production Op. Costs	22.7
Less:  Pre-Production Revenue	(9.6)
Corporate Overhead and other	6.2
Total Cash Uses	210.9

The Company is currently completing an updated short-term commissioning and ramp-up plan to refine working capital and pre-production operating costs and revenues for the next 12 months.  The revised plan is expected to be complete during the third quarter of 2015 as the construction of Phase 1 nears completion.

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

Phase 2 Pre-Feasibility Study

The Company completed a Pre-Feasibility Study on the Project in May 2015 (the “May 2015 AGM PFS”) outlining the expansion of the processing facilities and bringing the Esaase pit into the mine plan as Phase 2 of the Asanko Gold Mine construction.  The Phase 2 expansion envisions one large, multi-pit mine, including the Phase 1 pits, producing an average of 411,000 ounces of gold annually over a 10.5 year Life of Mine (“LoM”) from 2018.  The Esaase ore would be mined and crushed at Esaase and then conveyed to a central processing facility at Obotan. The Obotan facility would be expanded with a 5 Mtpa flotation plant to be built alongside the 3 Mtpa Carbon-in-Leach (“CIL”) plant currently under construction for Phase 1.  In addition the annual throughput of the Phase 1 CIL plant would be upgraded and increased to 3.8Mtpa by adding 2 extra CIL tanks to allow for the blending of oxide ores from Esaase into the feed from the current Phase 1 pits. Highlights of the May 2015 AGM PFS are, as follows:

·

Life of Mine gold production of 4.7 million ounces over a 12.5 year mine life (Phase 1 and 2).

·

Lowest quartile All-In Sustaining Costs of US$798/oz including corporate overhead and interest on debt.

·

Robust project economics with strong cash flow generation even in a weak gold price environment:

Total AGM Economics	NPV (5%)* US$ (millions)	IRR* (%)	2018 - 2021 After-Tax FCF (US$ millions)
Spot - US$1,150/oz	476	20	702
Study Basis - US$1,300/oz	770	27	848
Upside Case - US$1,500/oz	1,149	36	1,043

* After-tax project NPV & IRR over Life of Mine basis 1 July 2014

As a result of the positive project economic outcomes of the May 2015 AGM PFS, a portion of the Esaase Mineral Resources have been upgraded to Mineral Reserves with total AGM mineral reserves, as follows:

Total AGM Mineral Reserves	Tonnage (Mt)	Grade (g/t)	Ounces (millions)
Proven	38.0	1.75	2.14
Probable	58.9	1.64	3.11
Total	97.0	1.68	5.25

The Board of Directors has approved the commencement of a Definitive Feasibility Study (“DFS”) for Phase 2, which will include optimization of the mine plan, further metallurgical test work and more detailed engineering. The DFS is expected to be complete in Q2 2016. Completing a successful DFS, arranging financing for the $270 million capital cost, and obtaining permitting for Phase 2 will be required for the Board of directors to make an investment decision.

Discussion of Operations

Asanko Gold Mine Project

The acquisition of PMI in early 2014 has created a flagship project in Ghana and the foundation on which to build a mid-tier gold mining Company. The flagship project was created by combining both the Obotan and Esaase Projects into one mine now referred to as the “Asanko Gold Mine”. The Asanko Gold Mine (“AGM” or the “Project”) consists of six known open pit deposits over a 25km trend and is located in Ghana, West Africa (below figure).

The Government of Ghana has a 10% free carried interest in the AGM in accordance with Ghanaian Law.  Section 43.1 of the Ghanaian Minerals and Mining Act of 2006, (Government Participation in Mining Lease) provides:  Where a mineral right

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

is for mining or exploitation, the Government shall acquire a ten percent free carried interest in the rights and obligations of the mineral operations in respect of which financial contribution shall not be paid by Government.

In order to achieve this legislative objective, 10% of the common shares of the Company’s Ghanaian subsidiary, Keegan Resources (Ghana) Limited, which owns the Esaase concession have been issued into the name of the Government of Ghana with a goal of settling the obligation. The government has a nominee on the board of this subsidiary. There is no shareholders’ agreement between the Company as the 90% shareholder and the Government of Ghana as the 10% shareholder. The Ghanaian Government is entitled to 10% of declared dividends from the net profits of Asanko Ghana but does not have to contribute to its capital investment.

The Company’s Ghanaian subsidiary which owns the Abore, Abirem and Adubea mining leases has neither issued 10% of the Company’s shares to the Government of Ghana nor appointed a government representative to the board of the subsidiary.  The Company has initiated a corporate restructuring for housekeeping purposes following the PMI acquisition.  The Company intends to transfer all mining leases and concessions held by Adansi Gold Company (GH) Limited to Keegan Resources Ghana Ltd.  In addition, Keegan Resources Ghana Ltd will transfer the Asumura exploration concessions to a new subsidiary, Asanko Gold Exploration Ltd.  Asanko Gold Exploration Ltd. will become the Company’s exploration vehicle in Ghana and continue to be owned 100% by Asanko Gold Barbados Inc.

Following the re-organization, Keegan Resources Ghana Ltd will be renamed Asanko Gold Ghana Ltd and will be the Company’s operating entity in Ghana, holding all of the assets of the Asanko Gold Mine.  Asanko Gold Ghana Ltd will be 90% owned by Asanko Gold Barbados Inc. and the Government of Ghana will have a 10% free-carried interest.  

In the future, the Company intends on winding up Adansi Gold Limited and PMI Gold Corp.

Development Strategy

The Company envisions developing the Asanko Gold Mine in two phases.  Phase 1 is based on the November 2014 Definitive Project Plan and is fully financed, fully permitted and under construction.  Phase 1 is targeting steady-state production averaging 190,000 ounces per year by Q2 2016, mining ore from the main pit at Nkran, along with feed from satellite pits at Adubiaso, Abore, Asuadai and Dynamite Hill, and processed via a 3Mtpa CIL plant.  

The Company has completed a Pre-Feasibility Study (the “May 2015 AGM PFS”) outlining the expansion of the processing facilities to include a 5Mtpa flotation plant and bringing the Esaase pit into the mine plan as Phase 2 of the Asanko Gold Mine construction.  The Phase 2 expansion envisions one large, multi-pit mine producing an average of 411,000 ounces of gold annually over a 10.5 year Life of Mine (“LoM”) from 2018.   

The Company engaged DRA Mineral Projects (“DRA”) to manage the May 2015 AGM PFS. DRA are currently building Phase 1 of the Project on an EPCM basis.  

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ASANKO GOLD INC.

Management’s Discussion & Analysis

Three and six months ended June 30, 2015 and 2014

Mineral Resources

The AGM Mineral Resources are divided between the Obotan deposits (Nkran, Adubiaso, Abore, Dynamite Hill & Asuadai deposits) for which a 0.8 g/t cut-off was used, and the Esaase deposit for which a 0.6 g/t cut-off was used. The estimation for all the deposits forming the AGM were compiled by Charles J. Muller, of CJM Consulting. The Obotan deposit estimation was completed in September 2014 whilst the Esaase estimation was completed in September 2012.

Asanko Gold Mine Global Resource Estimate