AMN - BOTSWANA: Mupane mine an ‘essential’ operation

Galane Gold Ltd has been advised by the Republic of Botswana Government that its Mupane Gold Project is an essential operation and can keep operating during the country's lockdown due to the COVID-19 pandemic. South Africa's government has also allowed the Galaxy project to operate at 50% of its normal capacity as it has also been deemed an essential service.

During 2019 Mupane produced 30,294 ounces of gold at a head grade of 1.72 g/t and a recovery of 74.8%. This compares to the 2018 total of 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 US$1,378 per ounce (2018-$1,247) offset by an operating cash cost of US$1,090 per ounce (2018-$928).

The positive operating cash flow, before working capital adjustments, was US$3,834,113 and there was a net operating loss of US$3,823,364.

The company also commenced the restart process for the Galaxy operation in the Republic of South Africa.

During 2019 Galaxy produced 2,773 tonnes of concentrate containing 2,905 ounces of gold for gross sales proceeds, on payable ounces of 2,179, of US$2,581,458.

The company made gross capital expenditures of US$6,774,314 into the recommencement of production at Galaxy.

During the first quarter of 2020, Mupane produced 6,818 ounces of gold, which was in line with its forecast.

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 its underground operations. In the meantime, Mupane production in Q2 2020 has been restricted but the company was expected to recommence full production last week and hopes to make up the shortfall in production during the year.

At Galaxy, the company is working on a plan that complies with the capacity and enhanced operating requirements and was expecting to see the recommencement of operations at Galaxy on or about May 4.

Work is continuing on the production of the independent Preliminary Economic Assessment to support the Phase 2 expansion at Galaxy.

Galane Gold CEO Nick Brodie said: "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."

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