Galane Gold Ltd. Announces an Update of the 2014 Preliminary Economic Assessment of the Summit Mine and Banner Mill

2022-06-27 / @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

¹The 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.
²The 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.
³Based on US$1,850 per ounce of gold and US$22 per ounce of silver
⁴This 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
Nick.Brodie@GalaneGold.com
www.GalaneGold.com

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

Flot Recovery Au

Flot Recovery Ag

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

1,850

2,524,630

12,250,479

16,415,399

19,303,319

18,493,411

26,754,113

23,688,009

119,429,359

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

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

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

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

457,500

3,812,500

Safety& Environmental

13,500

18,000

121,500

Permits

13,500

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

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

500,612

55,177

2,661,094

Plant

547,588

25,000

572,588

Admin

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