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Galane Gold Ltd. Announces Financial and Operating Results for First Quarter 2012

May 25, 2012

TORONTO, May 25, 2012 /CNW/ - Galane Gold Ltd. ("Galane Gold" or the "Company") (TSX VENTURE:GG) is pleased to announce its financial results for the first quarter ended March 31, 2012. All amounts are in United States dollars unless otherwise indicated.

A copy of the unaudited condensed consolidated interim financial statements and the corresponding Management's Discussion and Analysis is available under the Company's profile on

First Quarter Highlights

Operations Summary


Q1 2012

Q4 2011

Q3 2011

(one month)

Q2 2011

Tonnes milled   285,000   281,000   104,000 -   385,000
Gold grade (g/t)   2.18   1.93   1.58 -   1.86
Recovery % of gold   88.10   87.4%   87.8%** -   87.5%
Gold ounces produced   17,523   15,554   4,639** -   20,193
Gold ounces sold   15,155   16,203   650 -   16,853
Gold price realized per ounce $ 1,711 $ 1,674 $ 1,814 - $ 1,697
Total operating cash cost per ounce* $ 690 $ 910 $ 1,086** - $ 951
Total cash cost per ounce* $ 929 $ 1,025 $ 1,086** - $ 1,039
* Excluding royalties. Total cash cost excluding royalties and total operating cash cost excluding royalties are non-GAAP measures. Refer to "Supplemental Information to Management's Discussion and Analysis" in the Company's Management's Discussion and Analysis for the three months ended March 31, 2012 for a reconciliation to measures reported in the Company's financial statements.
** As a result of an internal audit performed by management, the figure presented for "Gold ounces produced" has been adjusted from 4,410 ounces (as reported in the management's discussion and analysis of the Company for the period ended September 30, 2011) to 4,639 ounces. The related figures for "Recovery% of gold" and "Cash cost per ounce" have been adjusted accordingly. Management has deemed such adjustments to be immaterial.

The first phase of the Company's operations improvement program was completed and the second phase commenced in Q1 2012. The second phase focuses on gold production efficiency improvement programs and risk minimisation in the mining and processing operations.



Early benefits of some of these programs have resulted in improved performance as planned for Q1 2012. The combination of average gold ore grade of 2.18 g/t and 88.10% recovery was anticipated and resulted in: (i) a total gold production of 17,523 ounces of fine gold as compared to 15,554 ounces for Q4 2011; and (ii) a total cash cost before royalties of $929 per ounce, inclusive of $239 per ounce in capitalised stripping costs, for Q1 2012.


Exploration activity for Q1 2012 was centred on the ongoing review of previously generated exploration data and associated refinement of the exploration plan across all tenements, including those held within NLE. This will be a continuous process that utilises the data from these previous extensive exploration programs on the tenements and combines such data with ongoing exploration results and the latest technology, thereby providing enhanced interpretation and results.

The planned exploration program for 2012 was finalised and has commenced with site access to all drilling locations on the 2012 drilling program being established:

2012 Outlook

The improvement programs commenced in Q4 2011 were an area of focus for the Company's operation during Q1 2012 and will continue to be going forward. With positive progress being made thus far in the stabilization of operations, organizational restructuring and recruitment of additional quality personnel, the improvement programs are expected to continue building momentum. There remains significant opportunities for further improvement in the mining and processing areas of the business and all employees are increasingly focused on these opportunities.

The transition of mining operations from Signal Hill to Golden Eagle is expected to take place in Q2 2012 and Q3 2012, while the cut-back on the Tholo pit continues. It is anticipated that the Signal Hill mine will be depleted by June or July 2012 based on the current mine plan and mining activity will ramp up at the Golden Eagle mine concurrently to maintain ore tonnage production rates.

Following the completion of the NLE Acquisition, the Company intends to further extend the planned exploration program across all tenements within its portfolio. Q2 2012 and Q3 2012 are expected to be an intensive phase of the initial exploration program, with the main activity being the drilling program across multiple sites both near mine and the additional prospects in the Company's portfolio of tenements.

Galane Gold CEO, Philip Condon commented: "The production achievements in Q1 2012 were an improvement on those of Q4 2011 and are the result of a combination of improved mined grades as anticipated in the mine plan and the focused improvement efforts of all employees across the organisation.

The ramp up of mining operations at the Golden Eagle mine and the transition from the Signal Hill mine to the Golden Eagle mine is scheduled to occur throughout Q2 2012 and Q3 2012. During this period, ongoing stripping will be carried out at the Golden Eagle mine and access to the main ore bodies is expected to be achieved in-line with the mine plan. The mine plan anticipates that mined grades and stripping ratios will fluctuate during this period. The Company expects that the Tholo mine will concurrently supplement both mine tonnes and grade throughout this phase and into 2013. After the Signal Hill mine plan is completed, approximately 50% of the mined ore is expected to come from each of the Golden Eagle and Tholo mines throughout the remainder of 2012.

An exciting phase of the exploration program is planned for Q2 2012 and Q3 2012 with an extensive drilling campaign on a number of the Company's tenements being implemented. The intensive review of previous exploration data and associated updated interpretations of this data contributed significantly to a carefully planned exploration program that will be carried out on both near-mine and additional prospects. This program will initially focus on the Tau Deeps, Jim's Luck and Matopi projects which have been identified as high priority targets.

All efforts in Q2 2012 and beyond will continue to be focused on gold production efficiency improvement and resource development, with the ultimate aim of optimised performance, mine-life extension and business risk minimisation. If the current gold price environment continues or improves, it is anticipated that working capital will continue to build and ensure sufficient funding for our current business development program."

Financial Discussion:

A. Results for the First Quarter Ended March 31, 2012

(In thousands of dollars)

Three Months ended

March 31, 2012
Three Months ended

December 31, 2011
Mining Revenue: $ 25,936 $ 27,125
Mining Costs:   (15,094)   (19,937)
Earnings from mining operations   10,842   7,188
Corporate general and administration:        
  Cash   (257)   (790)
  Share-based compensation   -   271
    (257)   (519)
Earnings from operations   10,585   6,669
Other income (expenses) (1)   862   (992)
Net earnings $ 11,447 $ 5,677
Per share        
  Basic   0.254   0.126
  Fully diluted   0.254   0.126
(1) Other income (expenses) include:        
  Exploration costs   (73)   (35)
  Foreign exchange gain (loss)   (104)   720
  Movement in fair value of warrants   1,236   (1,444)
  Non-cash acquisition expenses   -   -
  Accretion   (127)   (174)
  Interest on long term debt   (58)   (60)
  Other   (12)   1
    862   (992)


The first quarter reflects the second full quarter of mining operations for the Company, generating earnings from mining operations of $10.8 million from the sale of 15,155 ounces of gold, with earnings from mining operations of $692 per ounce.

Total operating cash costs in Q1 2012 reflect the positive effect of two factors:

  1. Higher grade ore (2.18 vs 1.93 g/t) was mined in the period; and
  2. Low stripping costs were experienced on one of the pits mined in Q1 2012 ("Signal Hill") as it is nearing the end of its economic life.

In future quarters either lower grades or higher stripping costs may lead to higher cash costs.

Corporate general and administration costs maintained a level consistent with prior periods at $257,000 for the quarter. Further, as a result of the movement of fair value of warrants, the Company recorded financing income of $1.24 million.

B. Financial Position

Selected Consolidated Financial Position Data

(In thousands of dollars) March 31,


December 31,


Total current assets 32,734 26,431
Total current liabilities 5,402 7,197
Working capital 27,332 19,234
Mining assets 28,828 26,603
Non-current liabilities 12,351 13,476
Total shareholders' equity 43,809 32,361


Working capital:    
  Mining operations:    
  Working capital generated $ 12,500
  Capital expenditures   (4,403)
  Net from mining operations   8,097
Total working capital generated $ 8,097
  March 31,

December 31,

Cash $ 10,669 $ 6,531
  Trade Receivable   8,181   6,264
  Inventory (at average cost)   6,269   5,837
Total Gold   14,450   12,101
Other receivables   3,002   2,077
Supplies inventory   4,613   5,722
Accounts payable   (5,402)   (7,197)
  $ 27,332 $ 19,234

About Galane Gold

Galane Gold is an un-hedged gold producer and explorer with mining operations and exploration tenements in Botswana. Galane Gold is a public company and its shares are quoted on the TSX Venture 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.

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 a single mineral project; gold price volatility; risks associated with the conduct of the Company's mining activities in Botswana; regulatory, consent or permitting delays; risks relating to the Company's exploration, development and mining activities being situated in a single country; 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; 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; 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; 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.

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.

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