TORONTO, April 29, 2016 /CNW/ - Galane Gold Ltd. ("Galane
Gold" or the "Company") (TSX-V: GG) is pleased to announce the
release of its financial results for the year ended December 31, 2015. All amounts are in
United States dollars unless
otherwise indicated.
A copy of the audited consolidated financial statements for the
year ended December 31, 2015 prepared
in accordance with International Financial Reporting Standards and
the corresponding Management's Discussion and Analysis will be
available under the Company's profile on www.sedar.com.
Galane Gold CEO, Nick Brodie
commented: "The financial results for 2015 reflect the challenging
gold price environment that all gold producers faced in 2015.
Despite this, the Galane management team managed three significant
achievements in the year.
Firstly, the commencement of commercial production at Tau
underground in the third quarter of 2015. The work required to
build an underground mine and restructure an operation from an open
pit mine cannot be underestimated. We have now started exploration
from underground of the Tau ore body and are hopeful that this will
form the long term backbone of the Mupane operations.
This was followed closely by our acquisition of Galaxy Gold
Mining Limited and approximately 1.5 million ounces of gold. The
Galaxy Gold mine in South Africa
met all of our acquisition criteria, including that the property is
near term production, cost a fraction of replacement cost, has the
ability to increase production with minimal capital requirements,
has a drill ready plan to potentially increase the resource and is
surrounded by prospective targets. It is our aim to restart
production in 2016 and generate positive operating cash flows from
the operations before the year end.
Lastly, the most significant achievement of Galane Gold's management team was to restructure
the business over the course of 2015 as the price of gold fell.
These efforts by management put the Company in a positive position
in 2016 to take advantage of an increasing gold price.
The Galane management team has committed itself to making 2016
another transformative year for the Company as we look to commence
production at Galaxy."
2015 Highlights
- Commercial production commenced at Tau Underground in Q3 2015.
In 2015, 93,617 tonnes at a head grade of 2.74 grams per tonne
("g/t") were mined.
- Galaxy acquisition completed in Q4 2015 with measured and
indicated mineral resources of 602,696 ounces of gold and an
inferred mineral resource of 886,199 ounces of gold acquired for
approximately $8.50 per
ounce.(1)(4)
- Operating cash cost(2) of $1,039 per ounce (excluding royalties) for the
year and $823 per ounce for Q4
2015.
- Produced 24,321 ounces of gold at the Mupane property.
Production during the year was managed to control operating costs
due to the low gold price environment.
- Closing cash balance of $1.9
million after:
- Operating cash inflow of $2.3
million;
- Repayment of $2.0 million of the
Samsung facility; and
- Capital investment in Tau underground of $5.2 million.
- Loss attributable to Galane shareholders after tax for 2015 of
$8.6 million.
Outlook(3)
Mupane
Property
The Company completed a new five year mine plan for the Mupane
property which will form the guide for the Company's short term
goals and long term strategy. The Company intends to utilize the
following resources during 2016:
- Tau Underground – the Company has previously disclosed its
intention to exploit the reported measured and indicated mineral
resources of approximately 128,600 ounces of gold for Tau through
underground mining.(4)(5) The Company commenced stoping
in August 2015 in the Eastern
mineralised body which will continue for approximately six months.
Development will continue in some instances through reef to reach
the main mineralised body which lies under the current open pit. It
is currently anticipated that the Company will commence stoping on
the main mineralised body in Q3 2016. It is estimated that the
Company will process approximately 200,000 tonnes at an average
grade of 2.4 g/t with the grade increasing when we reach the main
mineralised body. While developing underground the Company intends
to commence exploration to attempt to confirm the extension of the
Tau mineralised body at depth.
- Low Grade Stockpiles – the Company will process approximately
700,000 tonnes of low grade stockpile at an average grade of 0.80
g/t, which is located at the run-of-mine pad at the processing
plant. The stockpiles being used form part of the 1.4 million
tonnes of low grade stockpiles which it reviewed during 2015.
- Tekwane – the Company will continue to selectively strip mine
the high grade areas and will use a screening plant at the mine
site to reduce the tonnage and increase the potential grade to be
delivered to the plant. It is planning to process approximately
23,000 tonnes at an average grade of 2.3 g/t.
The Company's mine plan for Mupane is subject to change
according to the prevailing gold price. The Company will adopt the
appropriate plan for that prevailing gold price environment.
The Mupane processing plant continues to focus on on-going
stabilisation and optimisation of the processing operations. There
are no major plant projects scheduled at the Mupane property for
2016 as the Company believes it has implemented all material
optimisation projects.
Galaxy Property
The Company acquired Galaxy in Q4 2015. For the remainder 2015,
the Company prepared a short term plan to refurbish the existing
plant, construct a new tailings retreatment facility and recommence
underground mining operations at the Galaxy property.
Implementation of the plan is subject to the Company raising
sufficient funds, which the Company is currently targeting to do in
Q2 2016.
- Plant refurbishment – the plant is a standard crush, mill,
float and carbon in leach ("CIL") with a capacity of 15,000 tonnes
per month. To refurbish the whole plant, the Company estimates that
it will take three months and material parts of the refurbishment
will be a new crusher, maintenance of the conveyors, a new ball
mill gearbox, relining tanks, new gearboxes and agitators for the
CIL plant, complete refurbishment of the elution plant and a new
cyanide plant.
- Tailings retreatment facility – the Company plans to build a
CIL plant within the footprint of the existing plant to process
25,000 tonnes per month of tailings material. It is estimated that
the construction of the plant will take four months from
commencement. It will involve the construction of six CIL leach
tanks, a CIL feeding section, carbon recovery plant and the
associated civils.
- Underground – the underground operations have been maintained
to a good standard while under care and maintenance. Operations
underground can be recommenced within a month of commencement with
minor refurbishment to the tramming infrastructure, new hoppers,
increased ventilation, a new compressor and refurbishment of the
electrical cabling. The Company intends to use the same mining
contractor it uses at the Mupane property and the contractor will
provide the necessary underground labour and mining equipment.
The short term plan will process material from three
sources(6):
- Giles and Woodbine – Giles has a measured and indicated mineral
resource of 898,268 tonnes at 3.94 g/t and Woodbine has a measured
and indicated mineral resource of 614,813 tonnes at 3.82 g/t.
Mining will be done using the reef over hand method in stopes that
have already been developed.(4) It is estimated that in
the first year of mining 20,000 tonnes at an average grade of 3.0
g/t can be mined taking into account dilution.
- Princeton – Princeton has a measured and indicated mineral
resource of 1,094,862 tonnes at 4.87 g/t. Mining will be long hole
stoping using trackless mining equipment.(4) It is
estimated that it will take up to five months to undertake the
necessary development to restart operations and annual production
from then on will be approximately 135,000 tonnes at 4.5
g/t based on the Company's internal mine plan.
- Tailings – next to the existing plant are the Hostel East and
West Dumps which contain 1,443,397 tonnes at 0.79 g/t. These will
be sluiced to the plant with feed going to the new tailings
retreatment facility and into the existing plant to fill the plant
as required.
The short term plan estimates that in steady state annual
production will be approximately 17,000 ounces of gold.
Work has already commenced on an expansion plan to take annual
production up to 60,000 ounces of gold over nine years with the
expansion commencing in year three after commencement of the short
term plan. It is currently envisaged that the Company will commence
a desk stop study first, the results of which will then be used to
support a pre-feasibility study to be completed within two
years.
About Galane Gold
Galane Gold is an un-hedged gold
producer and explorer with mining operations and exploration
tenements in Botswana and
South Africa. Galane Gold is a public company and its shares
are quoted on the TSX Venture Exchange and the Botswana Stock
Exchange under the symbol "GG". Galane Gold's management team is comprised of
senior mining professionals with extensive experience in managing
mining and processing operations and large-scale exploration
programmes. Galane Gold is committed to operating at
world-class standards and is focused on the safety of its
employees, respecting the environment, and contributing to the
communities in which it operates.
Notes:
(1)
|
The purchase price
equation for Galaxy in the December 31, 2015 annual financial
statements estimates a preliminary purchase price of $12,526,313
and the technical disclosure regarding mineral resources and
mineral reserves is reported in the technical report in respect of
the Galaxy Gold mine entitled "A Technical Report on the Galaxy
Gold Mine, Mpumalanga Province, South Africa" which was issued
January 4, 2016 with an effective date of September 1, 2015 (the
"Galaxy Technical Report"), and was prepared by Minxcon (Pty) Ltd
and approved by Daniel van Heerden, B Eng (Min.), MCom (Bus.
Admin.), Pr. Eng., FSAIMM, AMMSA, a Qualified Person as defined by
National Instrument 43-101 ("NI 43-101"). The Galaxy Technical
Report satisfies the requirements to be a pre-feasibility study and
was reviewed by the Directors of Minxcon (Pty) Ltd, specifically,
Daniel van Heerden; Uwe Engelmann, BSc (Zoo. & Bot.), BSc Hons
(Geol.), Pr.Sci.Nat., MGSSA; Dario Clemente, NHD (Ext. Met.), GCC,
BLDP (WBS), MMMA, FSAIMM; and Johan Odendaal, BSc (Geol.), BSc
(Min. Econ.), MSc (Min. Eng.), Pr.Sci.Nat., FSAIMM, MGSSA, all of
whom are Qualified Persons as defined by NI 43-101 and independent
of Galane Gold for the purposes of NI 43-101.
|
(2)
|
Total operating
cash cost excluding royalties is a non-GAAP measure. Refer to
"Supplemental Information to Management's Discussion and Analysis"
in the Company's Management's Discussion and Analysis for the year
ended December 31, 2015 for reconciliation to measures reported in
the Company's financial statements.
|
(3)
|
This is
forward-looking information and is based on a number of
assumptions. See "Cautionary Notes".
|
(4)
|
Mineral resources
are not mineral reserves and do not have demonstrated economic
viability. Inferred mineral resources are estimated on limited
information not sufficient to verify geological and grade
continuity or to allow technical and economic parameters to be
applied. Inferred mineral resources are too speculative
geologically to have economic considerations applied to them to
enable them to be categorized as mineral reserves. There is no
certainty that mineral resources can be upgraded to mineral
reserves through continued exploration.
|
(5)
|
On March 18, 2013,
Galane Gold issued an update to the mineral resources in respect of
the Mupane property with an effective date of December 31,
2012. The full text of the update is available on Galane
Gold's SEDAR profile at www.sedar.com. The following table
summarises the results at Tau:
|
Category
|
|
Measured
|
Indicated
|
Measured and
Indicated
|
Inferred
|
Deposit
|
Cutoff
grade
(g/t)
|
Tons
( 000)
|
Au
(g/t)
|
Au
(000
oz)
|
Tons
( 000)
|
Au
(g/t)
|
Au
(000
oz)
|
Tons
( 000)
|
Au
(g/t)
|
Au
(000
oz)
|
Tons
( 000)
|
Au
(g/t)
|
Au
(000
oz)
|
Tau
|
0.80
|
578
|
3.00
|
55.7
|
824
|
2.75
|
72.8
|
1,402
|
2.85
|
128.6
|
723
|
3.05
|
70.9
|
Note:
|
1.
|
Resource tonnages and
gold grades were reported at a 0.5 g/t Au cut-off grade. Resources
from contiguous portions of the mineralisation outside of the
optimized pit shell, and potentially amenable to underground mining
methods, were reported at a cut-off grade of 0.8 g/t Au. A 0.8 g/t
Au grade shell was used and a gold price of US$1,700 was
used.
|
(6)
|
Certain mineral
resources and mineral reserves for the Galaxy property are
summarised below from the Galaxy Technical Report:
|
|
Measured and
Indicated Mineral Resource
|
Inferred Mineral
Resource
|
|
Tonnes
t
|
Grade Au
g/t
|
Content
Oz
|
Tonnes
t
|
Grade Au
g/t
|
Content
Oz
|
Woodbine
|
614,813
|
3.82
|
75,471
|
1,021,635
|
3.36
|
110,321
|
Giles
|
898,268
|
3.94
|
113,856
|
1,267,906
|
3.86
|
157,273
|
Princeton
|
1,094,862
|
4.87
|
171,522
|
1,249,489
|
6.14
|
246,484
|
Hostel East
Dump
|
958,401
|
0.76
|
23,562
|
164,506
|
0.68
|
3,581
|
Hostel West
Dump
|
484,996
|
0.86
|
13,367
|
107,961
|
0.85
|
2,947
|
Total (underground
and surface)
|
6,226,907
|
3.01
|
602,696
|
8,095,521
|
3.40
|
886,199
|
Note:
|
|
1.
|
Manual mineral
resource estimate from block plans. Mineral resources estimated
from adjacent modelled areas for grade distribution; ore body
volume estimated from digital wireframe. Mineral resource estimate
was carried out by Mr. P. Obermeyer of Minxcon (BSc Hons (Geol.),
Pr.Sci.Nat.) under supervision of and verified by Mr. U. Engelmann,
as qualified person of this Report. The inferred mineral resources
have a large degree of uncertainty as to their existence and
whether they can be mined economically or legally. Only mineral
resources lying within the legal boundaries are reported. Mineral
resources are inclusive of mineral reserves. Mineral resources are
declared at cut-offs shown in the table above. All figures are in
metric tonnes. 9. 1 kg = 32.15076 oz.
|
Summarised Galaxy Gold Mine Mineral Reserve Statement as at
August 31, 2015
Mineral Reserve
Category
|
Tonnes
t
|
Grade Au
g/t
|
Content
Oz
|
Probable Mineral
Reserves
|
1,457,322
|
3.37
|
169,586
|
Total Mineral
Reserves
|
1,457,322
|
3.37
|
169,586
|
Note:
|
|
1.
|
Tonnages refer to
tonnes delivered to the metallurgical plant. All figures are in
metric tonnes. 1 kg = 32.15076 oz. Different dilution, recovery and
mine call factor applied to each ore body and tailings storage
facility. Pay limits calculated: USD/oz. = 1,130 and exchange rate
of ZAR11.70/$1.00
|
Cautionary Notes
Certain statements contained in this press release constitute
"forward-looking statements". All statements other than statements
of historical fact contained in this press release, including,
without limitation, those regarding the Company's future financial
position and results of operations, strategy, proposed
acquisitions, plans, objectives, goals and targets, and any
statements preceded by, followed by or that include the words
"believe", "expect", "aim", "intend", "plan", "continue", "will",
"may", "would", "anticipate", "estimate", "forecast", "predict",
"project", "seek", "should" or similar expressions or the negative
thereof, are forward-looking statements. These statements are not
historical facts but instead represent only the Company's
expectations, estimates and projections regarding future events.
These statements are not guarantees of future performance and
involve assumptions, risks and uncertainties that are difficult to
predict. Therefore, actual results may differ materially from what
is expressed, implied or forecasted in such forward-looking
statements.
Additional factors that could cause actual results, performance
or achievements to differ materially include, but are not limited
to: the Company's dependence on two mineral projects; gold price
volatility; risks associated with the conduct of the Company's
mining activities in Botswana and
South Africa; regulatory, consent
or permitting delays; risks relating to the Company's exploration,
development and mining activities being situated in Botswana and South
Africa; risks relating to reliance on the Company's
management team and outside contractors; risks regarding mineral
resources and reserves; the Company's inability to obtain insurance
to cover all risks, on a commercially reasonable basis or at all;
currency fluctuations; risks regarding the failure to generate
sufficient cash flow from operations; risks relating to project
financing and equity issuances; risks arising from the Company's
fair value estimates with respect to the carrying amount of mineral
interests; mining tax regimes; risks arising from holding
derivative instruments; the Company's need to replace reserves
depleted by production; risks and unknowns inherent in all mining
projects, including the inaccuracy of reserves and resources,
metallurgical recoveries and capital and operating costs of such
projects; contests over title to properties, particularly title to
undeveloped properties; laws and regulations governing the
environment, health and safety; operating or technical difficulties
in connection with mining or development activities; lack of
infrastructure; employee relations, labour unrest or
unavailability; health risks in Africa; the Company's interactions with
surrounding communities and artisanal miners; the Company's ability
to successfully integrate acquired assets; risks related to
restarting production; the speculative nature of exploration and
development, including the risks of diminishing quantities or
grades of reserves; development of the Company's exploration
properties into commercially viable mines; stock market volatility;
conflicts of interest among certain directors and officers; lack of
liquidity for shareholders of the Company; risks related to the
market perception of junior gold companies; and litigation risk.
Management provides forward-looking statements because it believes
they provide useful information to investors when considering their
investment objectives and cautions investors not to place undue
reliance on forward-looking information. Consequently, all of the
forward-looking statements made in this press release are qualified
by these cautionary statements and other cautionary statements or
factors contained herein, and there can be no assurance that the
actual results or developments will be realized or, even if
substantially realized, that they will have the expected
consequences to, or effects on, the Company. These forward-looking
statements are made as of the date of this press release and the
Company assumes no obligation to update or revise them to reflect
subsequent information, events or circumstances or otherwise,
except as required by law.
Estimates set out above under "Outlook" in respect of Tau
Underground, Tekwane, Low Grade Stockpiles and Galaxy are
preliminary in nature and include inferred mineral resources. There
is no certainty that such estimates will be realized. Mineral
resources are not mineral reserves and do not have demonstrated
economic viability. Inferred mineral resources are estimated on
limited information not sufficient to verify geological and grade
continuity or to allow technical and economic parameters to be
applied. Inferred mineral resources are too speculative
geologically to have economic considerations applied to them to
enable them to be categorized as mineral reserves. There is no
certainty that mineral resources can be upgraded to mineral
reserves through continued exploration.
Information of a technical and scientific nature that forms
the basis of the disclosure in the press release has been approved
by Charles Byron Pr. Sci. Nat., MAusIMM., MGSSA and Chief Geologist
for Galane Gold, and a "qualified
person" as defined by National Instrument 43-101.
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 Galane Gold Ltd.