Galane Gold Provides an Update on Its Galaxy Property and Announces that it has Initiated Phase 2 of Its Galaxy Expansion Plan - Seite 2

The Company’s Phase 1 mine plan (“Phase 1”) involves mining at both the Princeton and Galaxy mineralised zones to feed 10,000 tonnes per month from Princeton, and 20,000 tonnes per month from Galaxy. With the introduction of the new mining fleet, it is envisioned that the Projects will reach their production targets by the fourth quarter of 2021 (“Q4 2021”).⁽³⁾  

Phase 2 Expansion

The Company’s Board of Directors has approved a plan and budget to commence Phase 2 at Galaxy as of January 1, 2021, and to take production to over 43,000 ounces per annum.⁽²⁾⁽³⁾ Galane now forecasts that Phase 2 will be completed by the fourth quarter of 2022.⁽³⁾  

Based on the results of the Technical Report (as defined below), the Company redesigned the mine plan at Galaxy to combine Phase 1 and Phase 2 of the mine plan and, as a result, has accelerated the implementation of Phase 2. As the processing plant is already sized to accommodate the increased production associated with Phase 2, no further work is required to accommodate the acceleration of the implementation of Phase 2. In addition, with the current gold prices, the expansion can be fully funded by Galane’s own cash flows, as well as paying off the debt relating to the re-commencement of the operations.

Production update

Due to various factors in 2020, including the COVID-19 pandemic and the performance of the existing contractor at the Projects, the Company is not as advanced as it had forecast to be. In addition, with the commencement of Phase 2 in January 2021, Galane’s existing fleet is required to do additional development beyond what was originally planned, to ultimately accelerate the completion of Phase 2. To address this issue, the Company will be adding to its mining fleet in 2021.⁽³⁾ However, the completion of Phase 1 will be delayed until the arrival of the new additions to its mining fleet.

Galane’s currently anticipates that Phase 1 will be completed in Q4 2021, in line with mining reaching its production targets.⁽³⁾ This will translate to an annualised production of over 26,000 ounces per year at an all in operating cash cost of less than $900 per ounce.⁽¹⁾⁽³⁾  

PHASE 3⁽³⁾

The Company’s Board of Directors has also approved that work should commence on a Phase 3 expansion plan (“Phase 3”) with an objective to increase production to 60,000 ounces per annum. It is currently envisaged that Phase 3 will take the form of a new CIL plant and a new oxidisation step in the processing plant. This will increase recoveries at the processing plant from 75% to 90%. Management will work on an internal preliminary economic assessment during 2021.