Galane Gold Ltd. Announces An Update Of The 2014 Preliminary...| MENAFN.COM

Friday, 12 August 2022 05:47 GMT

Galane Gold Ltd. Announces An Update Of The 2014 Preliminary Economic Assessment Of The Summit Mine And Banner Mill


(MENAFN- GlobeNewsWire - Nasdaq)

TORONTO, June 27, 2022 (GLOBE NEWSWIRE) -- Galane Gold Ltd. (“Galane Gold” or the Company”) (TSX-V: GG; OTCQB: GGGOF) announces it has completed an update of the 2014 preliminary economic assessment (“PEA”) on the Summit Mine and Banner Mill (collectively,“Summit”).

Galane has developed a more detailed mine plan for Summit (assisted by a new survey of the underground mine), changed the mining and trucking operations to owner operator, completed a detailed analysis of the plant restart requirements and updated all the operating costs relating to Summit. The key results of the updated PEA based on the current known resources are:1, 2

  • A 7-year mine life;
  • Average annual production of:
    • 9,500 ounces of gold
    • 444,000 ounces of silver
    • 14,700 ounces of gold equivalent production;3
  • Capital cost of US$13.4 million;
  • Peak funding requirement of US$8.2 million;
  • Project payback in 26 months;
  • Pre-tax NPV (5%) of US$66.4 million; and
  • All-in sustaining cash cost of US$864 per ounce of gold.

Nick Brodie, CEO of Galane Gold, commented“Galane Gold's management team, as they did with our Galaxy property, has worked extensively with the information available to it including several site visits, a review of historical paper records, a re-survey of the Summit mine, and a detailed restart review of the Banner Mill, and has identified efficiency improvements to the previous operations. From this, the Company has built a comprehensive mine plan, robust financial model and a short-term path to production for Summit.

To maximize the return to stakeholders, we have moved to an owner operator model for the underground mining and trucking to the plant, and have increased the size of the plant so that it can produce 100% concentrate as the final product. These are steps we already carried out at Galaxy and therefore we have the right management team available to successfully implement this plan.

The PEA results represent a positive outcome with the all-in sustaining cost of US$864 per ounce placing the operation firmly within our objective of building a gold mining company with low cost operations that can generate positive cash flows through commodity cycles.4 The current life of Summit is only constrained by the known resource and, as we have done repeatedly at both Mupane and Galaxy, we expect that as we progress, we will extend life at depth through exploration.4

We are now progressing conversations with debt providers and potential concentrate off-takers to put a financing package together to restart the operations at Summit as soon as possible and will update the market when appropriate on our progress.4”

Notes

1 The PEA is an update of the economic model provided by Waterton Precious Metals Fund II Cayman, the previous owner of Summit, to the Company with an effective date of September 17, 2014, which was included in the 'Technical Report, Preliminary Economic Assessment, Summit Gold-Silver Project, Grant and Hidalgo Counties, New Mexico', prepared by Douglas F. Irving, P.E., Susan C. Bird, P.Eng., and Tracey D. Meintjes, P. Eng. of Chapman, Wood and Griswold, Inc. in Albuquerque, New Mexico (the“Technical Report”). The PEA has been updated by the creation of a new mine plan, updated costings, revised off-take terms and updated metal prices. Please see Appendix 1 and 2 for further details.
2 The updated PEA is preliminary in nature, and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the updated PEA will be realized.
3 Based on US$1,850 per ounce of gold and US$22 per ounce of silver
4 This is forward-looking information and is based on a number of assumptions. See“Cautionary Notes”.

About Galane Gold

Galane Gold is an un-hedged gold producer and explorer with mining operations and exploration tenements South Africa and New Mexico. Galane Gold is a public company and its shares are quoted on the TSX Venture Exchange (“TSXV”) under the symbol“GG” and the OTCQB under the symbol“GGGOF”. 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.

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 being able to implement its plans to bring Summit into production, maximizing shareholder returns, production at and life of Summit, financing available to restart operations at Summit, technical, financial and business prospects of the Company, 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 South Africa and New Mexico; regulatory, consent or permitting delays; risks relating to the Company's exploration, development and mining activities being situated in South Africa and New Mexico; 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; the ability of the communities in which the Company operates to manage and cope with the implications of COVID-19; the economic and financial implications of COVID-19 to the Company; 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.

Information of a technical and scientific nature that forms the basis of the disclosure in the press release has been prepared and approved by Kevin Crossling Pr. Sci. Nat., MAusIMM. and Business Development Manager for Galane Gold, and a“qualified person” as defined by NI 43-101. Mr. Crossling has relied on information included in the Technical Report, which was prepared by an advisory company that offers a wide range of exploration, mining, management, valuation, financing and advisory services (the 'Author'). The Technical Report relies on historical drilling and sampling. The Author used information relating to operational methods and expectations provided to it by various sources. The Technical Report provides that: (a) the historical mineral resource model is based on available sampling data collected over the history of the project area; (b) the grade models were verified using visual and statistical methods and deemed to be globally unbiased; (c) the blocks were classified into historical mineral resource categories based on the variogam parameters and restrictions on the number of composites and drill holes used in each pass of the interpolation; (d) only the historical mineral resources lying within the legal boundaries are reported; and (e) no modifying factors were applied to the historical in-situ mineral resources.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

For further information please contact:
Nick Brodie
CEO, Galane Gold Ltd.
+ 44 7905 089878


Appendix 1: Detailed summary of annual production numbers

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 LOM
TOTAL
US measurements
Total Primary development Ft 675 2,715 3,500 3,960 2,900 - - 13,750
Total Secondary development Ft 459 702 909 747 1,419 1,100 644 5,980
Total Primary Waste development Ft 260 1,550 2,160 2,760 1,440 - - 8,170
Total Primary Waste development t 4,680 27,900 38,880 49,680 25,920 - - 147,060
Total Secondary Waste development Ft - - 210 75 320 - - 605
Total Secondary Waste development t - - 1,145 409 654 - - 2,207
Total Primary Reef development Ft 415 1,165 1,340 1,200 1,460 - - 5,580
Total Primary Reef development t 7,470 20,970 24,120 21,600 26,280 - - 100,440
Total Primary Reef development grade Au Oz/dst 0.05 0.09 0.08 0.10 0.12 0.00 0.00 0.09
Total Primary Reef development grade Ag Oz/dst 3.78 4.32 3.66 6.39 5.31 0.00 0.00 4.83
Total Secondary Reef development Ft 459.0 702.0 699.0 672.0 1,099.0 1,100.0 644.0 5,375
Total Secondary Reef development t 2,502 3,826 3,810 3,662 5,990 5,995 3,510 29,294
Total Primary Reef development grade Au Oz/dst 0.08 0.09 0.13 0.11 0.09 0.14 0.13 0.11
Total Primary Reef development grade Ag Oz/dst 4.66 4.70 4.20 3.68 4.57 6.46 3.97 4.75
Total Stoping t 16,194 70,988 93,476 101,899 105,028 129,813 128,235 645,635
Total Primary Reef development grade Au Oz/dst 0.08 0.09 0.10 0.11 0.09 0.14 0.13 0.11
Total Primary Reef development grade Ag Oz/dst 4.03 4.64 4.39 3.93 3.47 8.40 5.46 5.21
Total Reef t 26,166 95,784 121,406 127,162 137,297 135,808 131,745 775,368
Total Reef grade Au Oz/dst 0.07 0.09 0.10 0.11 0.10 0.14 0.13 0.11
Total Reef grade Ag Oz/dst 4.02 4.57 4.24 4.34 3.87 8.31 5.42 5.14
Total Reef Ounces Au Oz 1,804 8,752 11,728 13,791 13,212 19,114 16,924 85,324
Total Reef Ounces Ag Oz 105,082 438,105 514,339 552,205 531,929 1,128,677 714,466 3,984,804
Total Reef Ounces Recovered Au Oz 1,407 6,827 9,148 10,757 10,306 14,909 13,200 66,553
Total Reef Ounces Recovered Ag Oz 81,964 341,722 401,185 430,720 414,905 880,368 557,284 3,108,147


Appendix 2: Detailed cash flow model with key assumptions
All pricing is based on actual quotes or current costs with the assumption on usage based on historic actual production.

Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 LOM
TOTAL
Revenue
Mass Pull 1 %
Flot Recovery Au 78 %
Flot Recovery Ag 78 %
Conc Tons 262 958 1,214 1,272 1,373 1,358 1,317 7,754
Conc Grade Au 5.38 7.13 7.53 8.46 7.51 10.98 10.02 8.58
Conc Grade Au 167 222 234 263 233 341 312 267.0
Conc Grade Ag 2,960.55 4,311.67 4,500.51 4,737.51 4,733.85 7,117.26 4,967.00 5,042.99
Conc Au Oz 1,407 6,827 9,148 10,757 10,306 14,909 13,200 66,553
Conc Ag Oz 81,964 341,722 401,185 430,720 414,905 880,368 557,284 3,108,147
-
Metal
Price
Concentrate
payable
-
Au 1,850 97 % 2,524,630 12,250,479 16,415,399 19,303,319 18,493,411 26,754,113 23,688,009 119,429,359
Ag 22 97 % 1,749,108 7,292,348 8,561,282 9,191,567 8,854,066 18,787,056 11,892,437 66,327,865
Total Revenue 4,273,738 19,542,827 24,976,681 28,494,886 27,347,477 45,541,169 35,580,446 185,757,224
Mining Cost
Mining Contractor/Owner 1,314,409 4,017,040 4,570,800 4,760,217 4,308,826 1,580,160 1,375,800 21,927,251
Fuel 131,410 444,440 563,324 590,030 637,060 630,148 611,298 3,607,709
Labour 592,500 790,000 790,000 790,000 790,000 790,000 790,000 5,332,500
Safety 26,951 98,658 125,048 130,976 141,416 139,882 135,698 798,629
Consultants Monthly 160,000 240,000 240,000 240,000 240,000 240,000 240,000 1,600,000
Plant Cost
Power 133,617 379,306 480,768 503,560 543,697 537,799 521,711 3,100,458
Fuel 15,176 55,555 70,416 73,754 79,632 78,769 76,412 449,714
Trucking 553,005 1,792,704 2,197,609 2,288,565 2,448,743 2,425,204 2,361,003 14,066,833
Labour 300,026 763,732 910,000 910,000 910,000 910,000 900,182 5,603,940
Reagents Etc 570,535 1,973,158 2,500,964 2,619,528 2,828,325 2,797,641 2,713,953 16,004,104
Conc treatment Charge 275.00 Per t 71,956 263,407 333,867 349,694 377,568 373,472 362,300 2,132,263
Refining Charge Gold 10.00 Per t 13,647 66,219 88,732 104,342 99,964 144,617 128,043 645,564
Refining Charge Silver 1.25 Per t 99,381 414,338 486,436 522,248 503,072 1,067,446 675,707 3,768,629
Admin
Labour 305,000 610,000 610,000 610,000 610,000 610,000 457,500 3,812,500
Safety& Environmental 13,500 18,000 18,000 18,000 18,000 18,000 18,000 121,500
Permits 13,500 18,000 18,000 18,000 18,000 18,000 18,000 121,500
Total Cost 4,314,613 11,944,556 14,003,964 14,528,914 14,554,303 12,361,138 11,385,607 83,093,095
Operating Cash Flow (40,875 ) 7,598,270 10,972,717 13,965,972 12,793,175 33,180,031 24,194,839 102,664,129
NM severence tax 0.20 % 8,152 37,605 48,067 54,991 52,562 88,881 69,050 359,306
NSR Royalty 0.50 % 20,379 94,011 120,166 137,477 131,405 222,202 172,625 898,265
Carson 0.18 % 7,337 33,844 43,260 49,492 47,306 79,993 62,145 323,376
Summit royalty after cap 5.0 % 203,794 940,114 981,092 - - - - 2,125,000
Total royalties 239,662 1,105,574 1,192,584 241,959 231,272 391,076 303,819 3,705,947
FCF after Royalties (280,537 ) 6,492,696 9,780,133 13,724,013 12,561,902 32,788,955 23,891,020 98,958,182
CAPEX
Mining - standard 1,095,650 24,150 24,150 24,150 24,150 - 204,150 1,396,400
Mining - owner 5,261,250 - - 1,315,313 - 1,052,250 - 7,628,813
Exploration 79,016 333,742 548,290 572,129 572,129 500,612 55,177 2,661,094
Plant 547,588 25,000 - - - - - 572,588
Admin 55,000 - - - - - - 55,000
Rehab - - - - - - - -
Trucking 489,000 326,000 - 150,000 - 100,000 - 1,065,000
Total CAPEX 7,527,504 708,892 572,440 2,061,591 596,279 1,652,862 259,327 13,378,895
FCF after CAPEX (7,808,042 ) 5,783,804 9,207,693 11,662,422 11,965,624 31,136,093 23,631,693 85,579,287
Au equivalent payable 2,310 10,564 13,501 15,403 14,782 24,617 19,233 100,409
AISC 1,971 1,235 1,126 959 1,000 518 608 864




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