PNG Gold Corporation Corporate Update

PNG Gold Corporation ("PNG Gold" or the "Company") (TSX VENTURE:PGK) has
embarked on a number of initiatives. These have been taken in response to issues
that, if not corrected, could negatively impact the development of the Imwauna
gold property. The PNG Gold board has determined that: 1) drilling must progress
more rapidly than the approximate 12,000 metres achieved in the previous 15
months; 2) administration and operational costs per metre drilled need to be
reduced; 3) operations and accounting controls need to be less reliant on
contractors; 4) difficult equity markets demand heightened caution in
preservation of capital.


To address these issues, PNG Gold is implementing the following initiatives: 

1) Acquiring two new diamond drills capable of drilling up to depths of over
1000 metres. 


2) Retrofitting the existing drills including new hydraulic systems that suit
the engine's capabilities, and mounting a diamond drill chuck, rotation and foot
clamp assembly. The rigs will be mounted on a skid platform to facilitate moving
the drills. New stiff legs will be provided as well as new control panels and
wire line hoists and most importantly, guarding on all rotating parts. By later
this summer PNG Gold expects all four drills to be fully functional and ready to
drill 10,000 metres per month.


Until now, all of PNG Gold's exploration activities have been accounted for
through a provision of services agreement with New Guinea Gold Corporation
("NGG"). Every employee and all suppliers in Papua New Guinea working on or
supplying PNG Gold's Imwauna project had no direct relationship with Normanby
Mining PNG Limited ("Normanby"), PNG Gold's wholly owned Papua New Guinea
subsidiary. Payroll, purchasing and invoicing were all done through NGG which
weakened operational autonomy and compromised accounting controls. To correct
this situation, the Company is arranging for Imwauna employees to be employed
directly by Normanby and for supplies to be purchased directly by Normanby. This
is expected to reduce costs and result in better accounting controls with a
higher level of operational integrity. 


The focus on managing administrative and operation costs while substantially
increasing drilling is expected to produce a significant reduction in the
overall cost per metre drilled in the next few quarters. Raising capital is
highly dilutive in these markets and therefore PNG Gold plans to be conservative
with its approximate $22 million of cash reserves. Funds will not be employed
unless there is a significant level of certainty that their use will be of
maximum benefit to PNG Gold. 


The Imwanuna Gold Deposit

A series of milestones are already in place for the rapid buildup of drilling
later this summer. These include:




i.  Camp construction is anticipated to be completed by the end of July, at
    which time a total of 128 people can be accommodated. 

ii. Community relations continue to be good. As an example, the Company has
    just completed installation of 9.5 km waterline for the local village.

iii.Acquisition and retrofitting of drilling equipment estimated to take 45
    days. 

iv. Diamond drilling continues on the Imwauna Vein Zone focusing on
    extending the zone to depth.

v.  Construction of access trails and pads is underway for the new drills. 

vi. Planning for an initial 5000 metre drilling program on the untested
    Kela's Prospect. The main road to Kela's Prospect is completed and pads
    are being established. Kela's Prospect is approximately 600 metres
    north-west of the Imwauna Vein and has similar geochemical and structure
    similarities to the Imwauna Vein.



The Imwauna project is located on the north side of Normanby Island,
approximately 80 kilometres northeast of Alotau, the provincial capital of Milne
Bay province, eastern Papua New Guinea. Alotau is serviced by daily flights from
Port Moresby, the national capital, and scheduled coastal freighters. PNG Gold
maintains a logistics base in Alotau to supply the Normanby Island site.


Historic exploration drilling has outlined gold mineralization over a strike
length of at least 900 metres to an average vertical depth of about 100 metres.
Widths range from 0.5 metre to 6.0 metres in the Main Vein. Recent drilling had
confirmed the extension of the Imwauna vein system to depths of 150 metres, with
high-grade intercepts evident at this depth. Drilling is continuing, and is
designed to extend the deposit to depth and along strike.


Plan of Arrangement with New Guinea Gold Corporation 

PNG Gold's Plan of Arrangement with NGG remains in abeyance, as certain
conditions precedent to completion of the transaction in favour of PNG Gold have
not been fulfilled. These conditions precedent are designed to ensure that NGG's
main asset, the Sinivit property, has the necessary mining and exploration
licences. Without these licences the Sinivit property is of little value to PNG
Gold. The Papua New Guinea government's renewal of these licenses does not
appear to be following the typical course and therefore PNG is exercising the
necessary degree of caution. Also, until such time as certain other conditions
are met, PNG Gold has no obligation to provide NGG with funding under the Credit
Agreement. Given the degree of uncertainty surrounding the conditions precedent
necessary to complete the arrangement, PNG Gold's board believes it would be
imprudent to lend NGG additional funds at the present time. 


To provide additional background, since signing the Arrangement Agreement and
associated documents with NGG on March 7, 2012, PNG Gold has received or been
made aware of: a) a letter from the Sinivit landowners saying that they will not
enter into a Memorandum of Agreement (which is necessary before the mining and
exploration licenses may be renewed) until they receive significant
compensation; b) a news story in the Papua New Guinea Mining Watch dated April
17, 2012 that the Mining Minister will be engaging an independent consultant to
audit Sinivit, and will be asking the Environment Minister to do an independent
environmental assessment of Sinivit; c) a Management Cease Trade Order issued
against NGG for failing to file audited financial statements; and, d) the
resignation of a majority of NGG independent directors. 


NGG stated in a May 7th news release that PNG Gold should allow it to seek
alternative sources of funding. That suggests that PNG Gold should release its
security in connection with the $1 million demand loan previously made to NGG.
This would allow NGG to offer some security as collateral to a new lender. PNG
Gold is open to this approach and is prepared to entertain a reasonable proposal
from NGG on how to settle the $1 million demand note and free up some of NGG's
assets. 


PNG Gold is well aware that these are difficult markets for junior resource
companies to raise capital without excessive dilution. Fortunately PNG Gold is
in the enviable position of having approximately $22 million of cash in the bank
and some very encouraging drill results at Imwauna. The most recent of these was
published in the Company's news release dated April 13, 2012 titled PNG Gold
Corporation Announces Diamond Drill Hole Results: 112 g/tonne Gold over 6.0
Metres available at www.sedar.com.  These results lead PNG Gold's management to
believe that the Company's funds are best directed at further work on
quantifying the value of the Imwauna gold property. While this is the first
priority, it need not preclude the Company from being open to other promising
opportunities.


Qualified Person

Lorne Warner, P.Geo, Interim Chief Executive Officer of PNG Gold, is a qualified
person in accordance with National Instrument 43-101, and has reviewed and
approved the technical information contained in this news release.


About PNG Gold Corporation

PNG Gold Corporation is an exploration company with an advanced stage drilling
program in Papua New Guinea. PNG Gold holds a 100% interest in the Imwauna and
Sehulea properties on Normanby Island, Milne Bay Province, Papua New Guinea, and
trades on the TSX Venture Exchange under the symbol PGK. PNG Gold's mission is
to become the premier exploration and development company in Papua New Guinea.


Forward-Looking Statements 

Certain information set forth in this news release contains forward-looking
statements that involve substantial known and unknown risks and uncertainties.
These matters are subject to numerous risks and uncertainties, certain of which
are beyond the control of PNG Gold. Such risks and uncertainties also include,
but not limited to, the impact of general economic conditions, industry
conditions, dependence upon regulatory approvals, and the uncertainty of
obtaining additional financing. Readers are cautioned that the assumptions used
in the preparation of such information, although considered reasonable at the
time of preparation, may prove to be incorrect and, as such, undue reliance
should not be placed on forward-looking statements. 


The securities have not been registered under the United States Securities Act
of 1933, as amended, or any state securities laws and may not be offered or sold
in the United States absent registration thereunder or an applicable exemption
from such registration requirements. This press release shall not constitute an
offer to sell or the solicitation of an offer to buy any of the securities in
the United States.
PNG Gold Corporation (TSXV:PGK)
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