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.
