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Galane Gold (TSXV:GG) reported its financial and operating results for 2014. Highlights included an improved operating cash cost from the previous year and net earnings after tax of $1,876,608. The company also released a new five year mine plan.
Highlights of the company’s financial results included:
- Operating cash cost(1) of $965 per ounce (excluding royalties). This was an improvement on the 2013 operating cash cost(1) of $1,214 per ounce (excluding royalties).
- Closing cash balance of $9.7m. A reduction of $1.5m on the balance at the end of 2013, but reflecting that the Company invested over $4.3m in the development of Tau underground. Tau underground is expected to be in commercial production in Q3 2015.(2)
- Produced 30,791 ounces of gold. Production during the year was affected by the failure of the SAG mill motor which has now been resolved. The Company was covered for the failure under its business interruption insurance and has agreed to a final claim with its insurers for $1.8m after deductible ($0.8m had been paid at the year-end).
- Total ore mined of 594,649 tonnes at an average grade of 1.76 grams per tonne.
- Total ore milled of 745,195 tonnes at a head grade of 1.69 grams per tonne. The Company installed a screening plant during the year which has given it access to previously mined low grade stockpiles that was used to supplement plant feed during 2014 (please see press release dated August 5, 2014).
- Net earnings after tax for 2014 of $1,876,608.
Galane Gold CEO, Nick Brodie, said:
The annual results show that Galane has the flexibility and the management team to deliver against its two key objectives of maximising cash-flow and extending the operating life of our mine. This is despite the challenge of the SAG mill motor failing in May 2014 and the depressed gold price. We have completed a new five-year mine plan based on a gold price of $1,200 per ounce which has provided us with a sustainable path forward while retaining flexibility. A key component of that plan is the completion of the development of Tau underground. We therefore expect that our cash position will decline in the next two quarters as we fund this development, but based on our current mine plan we expect to be cash flow positive in 2015.
Highlights of the five year mine plan include:
- Tau Underground – the Company has previously disclosed its intention to exploit the reported measured and indicated mineral resources of approximately 128,600 ounces of gold for Tau through underground mining. The Company expects to commence stoping in Q3 2015. Development will in some instances be through ore and it is expected that Tau will provide ore to the plant between now and the commencement of stoping. During the underground development phase the Company intends to commence exploration from underground to attempt to confirm the extension of the Tau ore body at depth.
- Golden Eagle – due to the continued weakness of gold price, the Company has decided to redesign the pit shell based on a $1,000 gold price. Mining on the $1,400 pit shell was stopped in Q4 2014 when the Company reached 935 metre mining level. The Company has commenced extensive grade-control drilling to further confirm the ore body and the new pit design. It is envisaged that the Company will commence mining again in Q2 2015 and that the mine will provide ore to the end of Q3 2015. The Company has also commenced a study on the economics of continuing to mine at Golden Eagle as an underground operation.
- Low Grade Stockpiles – the Company has commenced screening the 702,259 tonnes of low grade stockpile at an average grade of 0.97 g/t, which is located at the run-of-mine pad at the processing plant. The Company is screening the ore using a 40mm screen deck which increases 38% of the stockpile grade by 65%. The screening process is expected to produce an additional 266,858 tonnes of ore at an average grade of 1.60 g/t to feed the processing plant during 2015. The Company is also reviewing a further 1.4 million tonnes of low grade stockpiles which it hopes to use to supplement feed during 2015 and in future years.
- Tekwane – in 2013, the Company announced an indicated mineral resource of 12,735 ounces and 11,443 ounces of inferred mineral resource at Tekwane. The gold mineralisation is in a flat-lying quartz rubble bed within the soil profile, close to surface. The Company has completed work on the mining and processing methodology which will be strip mining and gravity separation respectively. The mining licence has been issued by the Department of Mines and the Company expects to commence mining in Q2 2015. The Company plans to selectively mine the high grade areas in Q3 and Q4 2015.
- Tholo Pit – mining of the original pit plan has been completed. The Company has identified an opportunity to reclaim ore left behind in the access roads on the side wall of the pit and this will be mined during Q1 2015. Exploration will be carried out in 2015 to confirm if the Tholo ore body continues at depth.
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