Galane Gold Ltd. Releases Financial and Operating Results for 2019 and Update on COVID-19
TORONTO, ONTARIO – April 29, 2020: Galane Gold Ltd. (“Galane Gold” or the “Company”) (TSX-V: GG; OTCQB: GGGOF) is pleased to announce the release of its financial results for the year ended December 31, 2019. All amounts are in United States dollars unless otherwise indicated.
A copy of the audited consolidated financial statements for the year ended December 31, 2019 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.
- Mupane produced 30,294 ounces of gold at a head grade of 1.72 g/t and a recovery of 74.8% (2018 – 35,527 ounces at a head grade of 1.97 g/t and recovery of 67.4%). Production was constrained in 2019 due to a ball mill transformer failure in Q1 2019 and then a SAG mill drive fault in Q4 2019 which both limited milling capacity. This was offset by management concentrating on improving recovery through increased retention time.
- Mupane’s average sales price achieved for 2019 was $1,378 per ounce (2018 - $1,247) offset by an operating cash cost(1) of $1,090 per ounce (2018 - $928).
- Positive operating cash flow, before working capital adjustments, of $3,834,113 and a net operating loss of $3,823,364.
- Commenced restart of the Galaxy operation in the Republic of South Africa.
- Galaxy produced 2,773 tonnes of concentrate containing 2,905 ounces of gold for gross sales proceeds, on payable ounces of 2,179, of $2,581,458.
- Galane Gold made gross capital expenditures of $6,774,314 into the recommencement of production at Galaxy.
- In 2019, Galane Gold made debt repayments of $3,442,292 (2018 - $683,804).
- The closing cash balance at December 31, 2019 was $2,201,853.
The Company is pleased to announce that Mupane produced 6,818 ounces of gold in Q1 2020 in line with its forecast.
In addition, the Company has been notified by the Republic of Botswana Government that, as a mining operation, Mupane is deemed an essential operation and is allowed to keep operating during the country’s 28 day lockdown which commenced on April 2, 2020. For Mupane to continue in operation it has been working closely with the Department of Mines to agree on protocols to manage the potential for the spread of COVID-19 between its employees and in particular in its underground operations. In the meantime, Mupane production in Q2 2020 has been restricted but the Company is recommencing full production this week and hopes to make up the shortfall in production during the year(2).
On April 23, 2020, the Company was notified that Galaxy had been designated as an essential service and can operate at 50% of its normal capacity. The Company is currently working on a plan that complies with the capacity and enhanced operating requirements, and is expecting to see the recommencement of operations at Galaxy on or about May 4, 2020(2).
Work is continuing on the production of the independent Preliminary Economic Assessment to support the Phase 2 expansion at Galaxy(2).
Galane Gold CEO, Nick Brodie commented: “Firstly I should state that Galane Gold is committed to ensuring it will be a stronger company after the pandemic subsides, by acting in the best long-term interest of all of our stakeholders.
In 2019 Mupane faced operating challenges at the processing plant, but we managed to minimise the financial effect by improving operating efficiencies and make positive operating cash flows. This slight disappointment was offset by the progress made at Galaxy and the operations becoming cash positive on a stand-alone basis towards the end of 2019 ahead of our internal targets.
COVID-19 has brought many challenges in 2020 but fortunately the work we had done historically to restructure our operations to be weighted towards variable costs has meant that we were able to minimise the financial effect on the Company and can sustain our current position for a prolonged length of time. Both operations have now been identified as essential and we are confident that by implementing stringent controls and procedures we will be able to put both operations back into normal production in the not too distant future(2).”
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 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.
- Total operating cash cost 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, 2019, for reconciliation to measures reported in the Company’s financial statements.
- This is forward-looking information and is based on a number of assumptions. See “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. Forward-looking statements may specifically include, without limitation, statements relating to the Company’s ability to conduct operations amid COVID-19 related restrictions; the Company’s ability to put proper controls in place to retain funds and minimize the financial effect of COVID-19; the estimated impact of COVID-19 on the Company’s business and operations; and the ability of the Company to complete its Preliminary Economic Assessment to support the Phase 2 expansion at Galaxy. 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; 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 verified the technical and scientific data disclosed herein and has conducted appropriate verification on the underlying data.
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.