Galane Gold trades heavily, releases Q2 financial results

Galane Gold's Mupane Mine in Botswana. Source: Galane Gold Ltd.

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Heavy trading in Galane Gold Ltd. [GG-TSXV; GGGOF-OTCQB] continued Friday August 16 following the release of the company’s second quarter 2019 financial results.

Galane Gold is an un-hedged gold producer and explorer with mining operations and exploration tenements in Botswana and South Africa.

Its key assets include the Mupane gold mine in northeastern Botswana and Galaxy Gold mine in South Africa. Galaxy ranks as one of the oldest mining operations in South Africa as the initial gold discovery dates back to 1888.

On August 14, 2019, at the request of the Investment Industry Regulatory Organization of Canada (IIROC), Galane issued a statement saying the company is not aware of any corporate developments or other reason for the recent increase in market activity.

It followed that up by releasing its second quarter results after the close of trading on August 15, 2019.  On Friday, Galane shares rose 7.14% or $0.005 to $0.075 on volume of 9.16 million. That made Galane the most actively traded stock on the TSX Venture Exchange.

The company said it produced 8,694 ounces of gold, and sold 8,750 ounces during the second quarter at an average price of US$1,305 an ounce. The company also said it produced positive cash flow from operating activities of $2.9 million during the quarter.

“Given our production results from the second quarter, we are continuing to target production for the year of 32,000 ounces at Mupane,” said Galaxy Gold CEO Nick Brodie. “This is despite a poor start to the second quarter of 2019 due to the failure of the main SAG mill motor in the first quarter of 2019, which was fixed in May, 2019,” he said.

Galane said the Galaxy Project is now in steady state production on the existing refurbished plant, but has not yet reached commercial production. “We have exceeded our internal targets for refurbishing the plant, mining from the Princeton mineralized body and producing concentrate,” the company said.

The company went on to say that it experienced delays in drawing down a loan facility which it said has negatively impacted the pace of underground development to complete the adit needed to access the Galaxy mineralized body. As a result, it has also delayed the completion of the plant upgrade to match the commencement of stoping at Galaxy, which is now planned for April 2020.

“Given the change in pace, we are now targeting 2,300 ounces of payable gold to be produced in 2019 from Galaxy,” the company said. “We continue to target steady state annual production to average 25,000 ounces of gold in the first phase of development at Galaxy at an operating cash cost per ounce of less than US$800.”

Meanwhile, Galane said it has granted an aggregate of 2.4 million deferred share units (DSUs) to certain senior offices of the company in lieu of cash bonuses for 2018 performance. The DSUs will vest in three equal instalments on the first, second and third anniversary of the date of the award.

The company has also granted options to certain officers and directors of the company to purchase 4.0 million common shares. The exercise price of the options is the greater of $0.085 per common share and the closing price of the company’s common shares on the TSX Venture Exchange as at the end of trading on August 16, 2019.  The expiry date of the options is August 15, 2024.

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