galane gold company presentation
DESCRIPTION
TRANSCRIPT
Company Presentation June 2012
2
Forward Looking Statements
Certain information set forth in this presentation contains “forward-looking statements” and “forward-looking information” under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management’s assessment of Galane Gold‘s future plans and operations and are based on Galane Gold‘s current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Forward-looking statements are provided to allow potential investors the opportunity to consider management’s beliefs and opinions in respect of the future so that they may use such beliefs and opinions as one factor in evaluating an investment in Galane Gold. Some of the forward-looking statements may be identified by words such as “may”, “will”, “estimates”, “intends”, “expects”, “anticipates”, “believes”, “potential”, “projects”, “plans”, and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. In addition, the projections contained herein are based on the assumptions set out in Appendix A. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Galane Gold‘s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: liabilities inherent in mining; technical problems; Galane Gold‘s inability to obtain permits and regulatory approvals required in connection with operations; dependence on third party transportation systems; competition for, among other things, capital, land, inputs and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and regulations related to mining; the effects of competition and pricing pressures in the market; the oversupply of, or lack of demand for, mineral products; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of mining products, including labor stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; and management’s ability to anticipate and manage the foregoing factors and risks. Galane Gold undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Such forward looking statements and forward-looking information in this presentation speak only as of the date of this presentation.
Galane Gold Ltd. Company Presentation
Summary • Owner (100%) of the Mupane gold mine in Botswana, in
production since 2005 • Annual gold production of approximately 57,000 oz • No hedges, no NSRs • Control all prospective ground for gold on the Tati Greenstone
belt in Botswana • Low-risk opportunity for resource expansion from existing
properties through: – Large portfolio of drill-ready targets obtained via soil
sampling and previous drilling – Drilling previously mined open pits where gold
mineralisation is known to be open at depth
Company History • Acquired Mupane Gold Mining (Pty) Ltd. from IAMGOLD Corp.
(effective date: July 1, 2011) • Acquired Northern Lights Exploration (compl. 10 April 2012)
Investment Case • Low Geological Risk – Region has been producing gold for >
1,000 years, large portfolio of low-risk targets • Low Operating Risk – Mupane operation has been mining
and processing since 2005 • Low Financing Risk – Galane Gold can fund its expansion
through internally generated cash-flows
3
Galane Gold Summary
Mupane Gold Mine Mill
Galane Gold Ltd. Company Presentation
Trading Symbol GG:TSX-V
Shares O/S 48,233,000
Shares O/S fully-diluted 78,161,233
Recent Price (Apr 24, 2012) C$0.85
Market Cap C$40,998,050
Working Capital (at Mar 31, 2012) US$27,331,442
Enterprise Value ~C$18,700,000
Institutional Ownership 81.0%
Management & Board 11.8%
4
Management Team • 25 years experience in mining industry, focus on gold and base metals • Former CEO of National Mining Company of Oman, Technical Expert &
Development Specialist for Freeport McMoran Copper & Gold Inc., Engineering Manager for Golden Shamrock (Ashanti Goldfields), Project Engineer and Manager, Engineering Services for Conzinc (Rio Tinto plc)
• B.Eng (Hons), MBA, Member of Australian Institute of Company Directors
• Australian
Lawrence Manjengwa General Manager
• 30 years experience as geologist focused on Archaen gold exploration and mining
• Previously with Phelps Dodge, Falconbridge and Gallery Gold where he led the team that discovered the Mupane Gold Deposit and saw it into production in 2004
• B.Sc. (Hons) Geology, Soils, Geography (University of Natal) • Botswana
Charles Byron Chief Geologist and Director
Philip Condon Chief Executive Officer and Director
• 15 years experience in open cut and underground mining of gold, base metals, platinum and ferrochrome across a diversified spectrum of countries and cultures
• Former Mining Director of Nordgold in Guinea, Mine Manager of National Mining Company in Oman, Production Manager of Anglo Base Metals’ Skorpionzinc Mine in Namibia, Senior Mining Engineer of Zimplats in Zimbabwe and Mine Manager of Maranatha Ferrochrome in Zimbabwe.
• B.Sc.(Hons)Eng, Member of AusIMM • Zimbabwean
Galane Gold Ltd. Company Presentation
5
Board of Directors • Chairman of Feronia Inc., one of Africa’s oldest operating companies
and largest employers • Former CEO of Navina Asset Management a Toronto-based investment
firm • Director of several companies in the Agriculture, Mining, and Oil & Gas
sectors • Canadian
Amar Bhalla Independent Director
• More than 30 years experience in the mining industry • Currently a director of Kenmare Resources plc • Previous experience includes holding senior management positions at BHP,
Utah Mining Australia, Mineral Deposits Ltd and N L Industries Inc., as well as being a director of Ok Tedi Mining Ltd.
• Fellow of the Australian Institute of Mining and Metallurgy (FAusIMM) and a Fellow of the Australian Institute of CPAs (FCPA)
• BEc in Accounting and Law, MEc in Industry Economics • Australian
Ian Egan Independent Director
Ravi Sood Chairman (non-exec)
• President of Capital Investment Corp., an investment management firm focused on private equity and venture capital
• Previously served as CEO of Crescent Logic Inc., a Toronto-based software firm
• Chairman of Ursa Major Minerals, a TSX listed nickel producer and director of several TSX-V listed companies
• Canadian
Galane Gold Ltd. Company Presentation
6
Botswana Overview
Map of Botswana
Operating in a stable and economically sound mining-friendly jurisdiction
• Ranked as best mining country in Africa1
− Ranked 7th best mining country globally − Political Stability and Legal Stability
• Strong GDP growth • AA credit rating • English speaking ¹ Source: Fraser Institute
• Mineral rich and historically underexplored − Largest diamond exporter in world − Gold producer − Nickel producer − Copper producer − Platinum producer − Potential uranium producer − One of world’s largest measured coal resources
Emerging Mining Powerhouse
Atlantic Ocean
Indian Ocean
Stable and Simple Legal System Strong Economic Environment
• Corporate Tax Rate as low as 22% • 5% Royalty on Gold Sales • IFRS Accounting System • English Law • Banking system adheres to international standards
Galane Gold Ltd. Company Presentation
7
Galane Operations – The Mupane gold mine
Type • Conventional open-pit gold mine with mill and carbon-in-leach processing
Location • Northeastern Botswana in southern Africa • 30 km southeast of the town of Francistown (population of
around 100,000)
Ownership • 100% of the Mupane gold deposits and mining operations
Operating History • Commercial production started in January 2005 • Historical production is 545,688 oz Au to end Mar, 2012
Reserves and Resources
As at 31 December 2010 and a $1,200/oz. gold price: • Reserves: 130,000 oz Au • Resource: 356,000 oz Au M&I and 77,000 oz Au Inferred
Annual Production Capacity
• Processing capacity of 1.2 million tonnes per annum of oxide ore and 1.0 million tonnes per annum of sulphide ore
• 50,206 oz of gold production in 2011. • 37,716 oz gold produced from 1 Sept to 31 Mar, 2012
Mine Life • Currently 5+ years, opportunity to significantly extend
Production Forecast
• 50,000 oz Au per annum / $1,100 all-in cash cost (incl. royalties, CAPEX and Exploration)
• Opportunity to improve production and reduce cash costs
Mine Location
Processing Operations
Galane Gold Ltd. Company Presentation
Tenements
Galane Gold Ltd. Company Presentation 8
8
JIM’S LUCK
SIGNAL HILL
TEKWANE
MUPANE
GOLDEN EAGLE
RAINBOW
MATOPI
MOLOMOLO
Greenstone belt outline
Galane Gold Ltd Mining Licences
Galane Gold Ltd Exploration Targets
Francistown
MONARCH
MAP NORA
Regional Soil Sampling Gold
Galane Gold Ltd. Company Presentation 9
9
Simplified Geology of the Tati Greenstone Belt
Galane Gold Ltd. Company Presentation 10
10
Tati Greenstone Belt Geology & AeroMagnetics
Francistown
20 kilometres
Total Field AeroMagnetics Directional Filtered AeroMagnetics Geology
Galane Gold Ltd. Company Presentation 11
11
Galane Gold Ltd. Company Presentation
Southern Tati Schist Belt Faulting
Mupane Geology
Mupane AeroMagnetics Filtered Mupane Radiometrics (Potassium)
20 kilometres
Mupane Au (ppb) in Soils
Mupane AeroMagnetics Unfiltered
12 12
Monarch AeroMagnetics Filtered Monarch Radiometrics (Potassium) Monarch AeroMagnetics Unfiltered
20 kilometres
Monarch Mine
Shashe Mines
City of Francistown
Monarch Geology Monarch Au (ppb) in Soil
Galane Gold Ltd. Company Presentation
Ultramafic Intrusions
Ultramafic Intrusions
Ultramafic Intrusions
Ultramafic Intrusions
Northern Tati Schist Belt Faulting
13 13
Proximity of Key Gold Targets to Mill
Location of existing Mupane processing and tailings
facility
Potential for discovery of numerous large gold deposits located within 20 km of existing processing operations
Galane Gold Ltd. Company Presentation 14 14
Exploration Program Target Cost
(US$M) Description
Drill and define resource at Jim’s Luck
US$1.9M
• Definition and in-fill drilling on known mineralized zones to define an NI 43-101 reserve and resource
• Drilling of mineralized zones along strike to add to the resource
Tau and Tholo Pit drilling (existing pits that are open at depth)
US$0.5M • Prove up additional gold ore below and between existing pits • Tau already has one hole from pit base with 52 m at 4.5 g/t Au
including 20 m at 6.5 g/t Au
Drill known gold anomalous targets
US$1.5M • These locations are consistent with previous gold deposits having soil sample anomalies but have not had significant drilling carried out if at all
Golden Eagle pit drilling (open at depth)
US$0.4M • Gold mineralisation known to continue below current mine plan pit depth but not included in reserve/resource
Review of exploration database
US$0.1M • A complete and extensive database has not been utilised in respect of extensive exploration activity
• Also requires review with 2010 technology (currently based on 1995) – especially geophysical data
Targeting increase in reserves and resource to +1 million oz Au at a cost of approximately $4.4 million to end of 2013
Galane Gold Ltd. Company Presentation 15 15
Low Risk Resource Expansion – Tau and Tholo Pits • Recent drilling results at the previously mined Tau pit include a 53 m intersection averaging 4.55 g/t Au
including: – 24 m at 6.57 g/t Au – 15 m at 5.86 g/t Au
• Potential for underground mines at Tau, Golden Eagle, and other locations
Galane Gold Ltd. Company Presentation 16 16
Low Risk Resource Expansion – Jim’s Luck • The Jim’s Luck Project constitutes a 0.5 million oz exploration target • In excess of 7 km of strike of prospective ironstone lithologies
– 830 meters has been drill tested – Known low grade mineralization exists over the balance (6km+)
• Production could commence quickly from the drilled out portion • 140 RC holes (13,170m) and 7 diamond drill holes (1,212m) completed by Gallery Gold (1999 to 2004) and
IAMGOLD (2006) – 77 RC and 7 diamond holes outline the 830m long target zone averaging 6.0m @ 1.87g/t Au, which
‘envelopes’ a higher grade core averaging 3.18m @ 2.77g/t Au – Two wider, higher grade ‘shoots’ have also been identified within the 830m – 30m of strike averaging
6.8m @ 4.65g/t and 50m of strike averaging 6.6m @ 4.28g/t – Drilling to 100m+ has shown the mineralization generally, including the high grade shoots, to be open at
depth with strong down plunge continuity • Preliminary work is in progress on open pit resources and metallurgical testing
Historical Workings Historical Workings
Galane Gold Ltd. Company Presentation 17
17
Jim’s Luck – 7km of Strike
Galane Gold Ltd. Company Presentation 18
18
Jim’s Luck – Detailed Drilling
Galane Gold Ltd. Company Presentation 19
19
Additional Growth Opportunities
• Largest historic gold producer (240,000 oz @ +6 g/t Au) and mined to 200 m below surface • Approximately 500,000 tonnes of fines dump at 1.4 g/t Au (preliminary estimate) • Examine the potential below 200 m where limited drilling by previous workers indicates that the reef continues
with intersections that include 3.20 m @ 3.56 g/t Au and 1.51 m @ 3.62 g/t Au – Design a “deep drilling” program to test this potential – Also examine the Northern extension up to the old Mambo workings, some 1.5 km – There is potential for 250,000 ozs for every 200m vertical depth tranche
• Planning work to be completed by mid 2012
Fines Dump at Monarch Mine
Galane Gold Ltd. Company Presentation
Monarch Mine (Under Application for Prospecting Licence)
20 20
Additional Growth Opportunities
• Historical operation impeded by the refractory nature of the ore
• The Phelps Dodge attempt in late 1980s to early 1990s failed due to metallurgical complexities
• High grade shoots (>10 g/t Au) are continuous down plunge allowing for a potential of 150,000 contained oz Au to depth of 300m vertical depth
• The potential exists for 200,000 oz Au for every 300m vertical depth tranche
• Underground infrastructure, including shaft, headgear and winder, in place and in good order to 340 m vertical depth
• Metallurgy now better understood and a concentrate could be processed at bioleach facilities in South Africa
• Extract a bulk sample from underground for metallurgical test work in late 2012
Headgear at Map Nora Underground Mine
21 Galane Gold Ltd. Company Presentation
MapNora (Shashe Mine)
Additional Growth Opportunities
22 Galane Gold Ltd. Company Presentation
• Virgin discovery by Gallery Gold in 1997 as a coincident gold and arsenic in soil geochemistry anomaly • Preliminary trenching and drilling show a large but low grade and discrete ultramafic unit with uniform mineralization e.g.
35 m @ 0.85g/t Au (including 4 m @ 2.25g/t Au) and 41 m @ 0.86 g/t Au (including 16 m @ 1.85 g/t Au) • Additional work planned for early 2012 to better understand this significant anomaly and to test for better mineralization
possibly missed by the previous work
• Favourably located geologically and physically, between Jim’s Luck and Matopi and close to Signal Hill • An historic underground mine exploiting narrow high grade ‘shoots’ with the potential for larger, lower grade mineralized
‘halos’ • Access to site needs to be repaired before work can commence – planned for Q2 2012, after the rain season
• A string of subtle gold in soil geochemical anomalies sporadically developed over a strike length of 20 km and coincident with a strong linear aeromagnetic geophysical anomaly typical of a significant fault system
• This group of anomalies potentially constitutes a classic case of gold ‘leakage’ up and along a structural system and could be indicative of significant gold mineralization at depth
• More detailed magnetic surveys are planned with drilling of any targets generated in late 2012
• This manifests itself as a “standout” gold in soil geochemical anomaly some 4.5 km2 in size and caused by an auriferous quartz rubble horizon in the soil profile
• Origin of the quartz rubble needs to be established –theory is it could originate from an as yet undiscovered underlying “stockwork” system associated with existing favourable lithologies
• A systemic and extensive, but phased, pitting exercise commences in late 2011
Tekwane
Orapa Road Anomalies
Rainbow
Matopi
23
Milestones
Galane Gold Ltd. Company Presentation
2011 Complete Review of Org Structure and skills requirements
Implement Organisational Restructuring
Complete Exploration Plan
Carryout Initial Mine Plan Review
Identify impediments to performance above plan
2012 Complete Acquisition of Northern Lights Exploration
Resource Expansion – commence drilling programme
Resolution of dilution, fragmentation, mine geology and productivity issues
Complete optimised ore tonnage throughput and gold recovery
Complete Mine Geology and Resource Review
Complete revised mining plan
Botswana Stock Exchange Listing
Capital Expenditures – complete full 2 year capital plan
24
Investment Highlights
Immediate Leverage to Spot Gold
• Unhedged gold producer • Free cash flow from current 2016
plan in excess of $100 million at $1,700/oz gold price and over $200 million at $2,000/oz
Compelling Valuation on Current Production Alone
Exploration Upside
• Control all prospective ground on the Tati Greenstone belt
• Substantial data set and portfolio of drill-ready targets
• Likelihood of underground expansion of existing pits
Experienced Operating Management
• Strong operators with the ability to optimize and expand the mine
• Ability to leverage African relationships with accretive external growth
Current Valuation Extended Mine Life
Valuation Re-Rating
Galane Gold Ltd. Company Presentation
25
The Galane Gold logo was designed by an
employee in a company-wide contest. The blue and black bars in the official colours of Botswana represent the hands of Batswana protecting the country’s resources for the betterment of the country and its people.
Galane Gold Ltd. Company Presentation
26
Contacts
Philip Condon Chief Executive Officer [email protected] Mobile: +267 72 338 331 Ravi Sood Chairman (non-executive) [email protected] Mobile: +1 647 987 7663 Investor Relations [email protected] Phone: +1 416 907 2027
Galane Gold Ltd. Company Presentation