Golconda Gold Ltd. (“Golconda Gold” or the “Company”) (TSX-V: GG;
OTCQB: GGGOF) continued its progression in 2022 to meet its goal of
becoming a long-life and low-cost operation that can produce
positive returns for investors across commodity cycles.
1. Produced 9,979
ounces of gold at Galaxy in
2022(1),
a 20% increase on 2021 production demonstrating the progress made
on unlocking the significant value contained in the Galaxy
resource. Despite the operational challenges encountered during the
year associated with unprecedented rainfall and resultant flooding
and lower than budgeted equipment availabilities, Galaxy still
delivered significant production growth year on year.
2. Completed the sale of Mupane Gold
Mining Proprietary Limited (“Mupane”) to Hawks Mining Company
Proprietary Limited. The completion of the sale removed
US$17.3 million of liabilities from the Company’s balance sheet.
Mupane had been the cornerstone of the Company for the previous 11
years but was at a point where it needed to transition to be a
smaller producer and required significant capital investment. The
sale of Mupane has transformed the Company’s balance sheet and
freed up capital and management time to invest in both Galaxy and
Summit which are expected to provide a greater return on
capital(2).3. Signed and commenced
deliveries under a new offtake agreement for the Galaxy operation
with Ocean Partners UK Limited and an associated unsecured US$3
million revolving finance facility. The new offtake
agreement incorporates a higher payable percentage for the gold
content in the Company’s concentrate. For example, at a production
level of 25,000 ounces per annum at US$1,800 per ounce gold price
generates US$1.4 million more revenue when compared with the
Company’s previous offtake
agreement.4. Repayment of the Barak
US$5 million secured facility. Coupled with the sale of
Mupane this has created a much-improved balance sheet that the
Company can leverage to finance expansion at Galaxy and the restart
of Summit(2).5. Produced an updated
Preliminary Economic Assessment of the Summit Mine and Banner Mill
in New
Mexico(3).
Based on a gold price of US$1,850 and silver price of US$22 per
ounce the assessment showed the following results:
-
A 7-year mine life;
-
Average annual production of:
-
9,500 ounces of gold
-
444,000 ounces of silver
-
14,700 ounces of gold equivalent production;
-
Life-of-mine capital cost of US$13.4 million;
-
Peak funding requirement of US$8.2 million;
-
Project payback in 26 months;
-
Pre-tax NPV (5%) of US$66.4 million; and
-
All-in sustaining cash cost of US$864 per ounce of gold.
6. Mining of the
total footprint of the Galaxy Ore Body at 22 level generated 29%
more ounces than
forecasted(4). It
was expected, from the mine plan included in the Galaxy Technical
Report (as defined below), that the Company would mine 12,342
tonnes to complete the footprint at a grade of 2.66 grams per tonne
(“g/t”), with a cut-off grade of 1.4 g/t, for 1,056
ounces. The Company actually mined 11,874 tonnes at a grade of
3.56 g/t for 1,359 ounces, an increase of 33.8% on grade and 28.7%
in ounces. The total Galaxy measured and indicated
resource according to the Galaxy Technical Report, was
approximately 3.0 million tonnes at 2.64 g/t containing 254,241
ounces as of December 31, 2021.
7. Renamed the
Company to Golconda Gold. The new name more accurately
represents the Company going forward following the disposal of
Mupane and the transformation of the Company’s balance sheet. The
Company believes the new name will make it clear to current and
future stakeholders that the Company is concentrating on
progressing both Galaxy and the Summit Mine and Banner Mill and
unlocking their inherent value.
Nicholas Brodie, CEO of Golconda Gold, commented
“As a Company we have been clear in our overriding goal of becoming
a long-life and low-cost operator and we continue to ensure that
this is core to our decision-making process. We reached the end of
2022 having made some giant strides towards reaching our goals. To
transform our balance sheet, increase our revenue, repay all our
secured debt removing the security over our assets, provide a very
positive economic outlook for Summit and outperform the modelled
resource at Galaxy has given us a tremendous platform to start 2023
on. We intend to keep travelling in the same direction and hope
that 2023 will be as full of important, transformational steps to
achieving our goals(2).”
About Golconda Gold
Golconda Gold is an un-hedged gold producer and
explorer with mining operations and exploration tenements in South
Africa and New Mexico. Golconda Gold is a public company and its
shares are quoted on the TSX Venture Exchange under the symbol “GG”
and the OTCQB under the symbol “GGGOF”. Golconda Gold’s management
team is comprised of senior mining professionals with extensive
experience in managing mining and processing operations and
large-scale exploration programmes. Golconda Gold is committed to
operating at world-class standards and is focused on the safety of
its employees, respecting the environment, and contributing to the
communities in which it operates.
Notes:
(1) All information herein is subject to
change based on the reported audited annual financial results,
expected to be reported no later than May 1, 2023.(2) This is
forward-looking information and is based on a number of
assumptions. See “Cautionary Notes”.(3) The PEA is an update
of the economic model provided by Waterton Precious Metals Fund II
Cayman, the previous owner of Summit, to the Company with an
effective date of September 17, 2014, which was included in
the "Technical Report, Preliminary Economic Assessment, Summit
Gold-Silver Project, Grant and Hidalgo Counties, New Mexico",
prepared by Douglas F. Irving, P.E., Susan C. Bird, P.Eng., and
Tracey D. Meintjes, P. Eng. of Chapman, Wood and Griswold, Inc. in
Albuquerque, New Mexico. The PEA has been updated by the creation
of a new mine plan, updated costings, revised off-take terms and
updated metal prices. The updated PEA is preliminary in nature, and
includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves. There is no certainty that the updated PEA will be
realized. Please see the Company’s press release dated June 27,
2022 for further details.(4) The deposits at the Galaxy mine
are supported by a technical report entitled “NI 43-101 Technical
Report on the Galaxy Gold Mine, South Africa” which was issued on
July 3, 2020 (the “Galaxy Technical Report”), with an effective
date of June 29, 2020, a copy of which is available under the
Company’s profile on www.sedar.com. The Galaxy Technical Report was
prepared by Minxcon (Pty) Ltd and approved by Mr. Uwe Engelmann,
BSc (Zoo. & Bot.), BSc Hons (Geol.) Pr.Sci.Nat., MGSSA, and Mr.
Daniel (Daan) van Heerden, B Eng (Min.), MCom (Bus. Admin.), MMC,
Pr.Eng., FSAIMM, AMMSA, both “qualified persons” as defined by
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”), and independent of the Company for the
purposes of NI 43-101. The preliminary economic assessment (“PEA”)
supported by the Galaxy Technical Report is preliminary in nature
as the resources included in the PEA are comprised 54% of inferred
mineral resources. Inferred mineral resources are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves. There is no certainty that the PEA will be realized.
Cautionary Notes
Certain statements contained in this press
release constitute “forward-looking statements”. All statements
other than statements of historical fact contained in this press
release, including, without limitation, those regarding the
Company’s ability to provide a greater return on capital at Galaxy
and Summit, the Company’s ability to finance an expansion at Galaxy
and the restart of Summit, and the Company’s future financial
position and results of operations, strategy, proposed
acquisitions, plans, objectives, goals and targets, and any
statements preceded by, followed by or that include the words
“believe”, “expect”, “aim”, “intend”, “plan”, “continue”, “will”,
“may”, “would”, “anticipate”, “estimate”, “forecast”, “predict”,
“project”, “seek”, “should” or similar expressions or the negative
thereof, are forward-looking statements. These statements are not
historical facts but instead represent only the Company’s
expectations, estimates and projections regarding future events.
These statements are not guarantees of future performance and
involve assumptions, risks and uncertainties that are difficult to
predict. Therefore, actual results may differ materially from what
is expressed, implied or forecasted in such forward-looking
statements.
Additional factors that could cause actual
results, performance or achievements to differ materially include,
but are not limited to: the Company’s dependence on two mineral
projects; gold price volatility; risks associated with the conduct
of the Company’s mining activities in South Africa and New Mexico;
regulatory, consent or permitting delays; risks relating to the
Company’s exploration, development and mining activities being
situated in South Africa and New Mexico; risks relating to reliance
on the Company’s management team and outside contractors; risks
regarding mineral resources and reserves; the Company’s inability
to obtain insurance to cover all risks, on a commercially
reasonable basis or at all; currency fluctuations; risks regarding
the failure to generate sufficient cash flow from operations; risks
relating to project financing and equity issuances; risks arising
from the Company’s fair value estimates with respect to the
carrying amount of mineral interests; mining tax regimes; risks
arising from holding derivative instruments; the Company’s need to
replace reserves depleted by production; risks and unknowns
inherent in all mining projects, including the inaccuracy of
reserves and resources, metallurgical recoveries and capital and
operating costs of such projects; contests over title to
properties, particularly title to undeveloped properties; laws and
regulations governing the environment, health and safety; the
ability of the communities in which the Company operates to manage
and cope with the implications of COVID-19; the economic and
financial implications of COVID-19 to the Company; operating or
technical difficulties in connection with mining or development
activities; lack of infrastructure; employee relations, labour
unrest or unavailability; health risks in Africa; the Company’s
interactions with surrounding communities and artisanal miners; the
Company’s ability to successfully integrate acquired assets; risks
related to restarting production; the speculative nature of
exploration and development, including the risks of diminishing
quantities or grades of reserves; development of the Company’s
exploration properties into commercially viable mines; stock market
volatility; conflicts of interest among certain directors and
officers; lack of liquidity for shareholders of the Company; risks
related to the market perception of junior gold companies; and
litigation risk. Management provides forward-looking statements
because it believes they provide useful information to investors
when considering their investment objectives and cautions investors
not to place undue reliance on forward-looking information.
Consequently, all of the forward-looking statements made in this
press release are qualified by these cautionary statements and
other cautionary statements or factors contained herein, and there
can be no assurance that the actual results or developments will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, the Company. These
forward-looking statements are made as of the date of this press
release and the Company assumes no obligation to update or revise
them to reflect subsequent information, events or circumstances or
otherwise, except as required by law.
Information of a technical and scientific nature
that forms the basis of the disclosure in the press release has
been prepared and approved by Kevin Crossling Pr. Sci. Nat.,
MAusIMM. and former Business Development Manager for Golconda Gold,
and a “qualified person” as defined by NI 43-101. Mr. Crossling has
verified the technical and scientific data disclosed herein and has
conducted appropriate verification on the underlying data.
Neither the TSX Venture Exchange nor its
regulation services provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
For further information please
contact:Nick BrodieCEO, Golconda Gold Ltd.+ 44 7905
089878Nick.Brodie@GolcondaGold.comwww.GolcondaGold.com
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