Galaxy is situated 8km west of the town of Barberton and 45km west of the provincial capital of Nelspruit in the Mpumalanga Province of South Africa
Golconda Gold announces gold streaming transaction for its Galaxy Project. (Credit: istara from Pixabay)
Golconda Gold Ltd. (“Golconda Gold” or the “Company”) (TSXV: GG; OTCQB: GGGOF) today announces that it has entered into a US$5 million stream transaction relating to its Galaxy project in South Africa with Empress Royalty Holding Corp. (“Empress”), a wholly-owned subsidiary of Empress Royalty Corp. (“Empress Royalty”) (TSXV: EMPR | OTCQX:EMPYF).
Golconda Gold, its subsidiary Galaxy Gold Reefs (Pty) Ltd., and certain of its affiliates, have entered into a metal purchase and sale agreement dated November 21, 2023 (the “Agreement”) with Empress for payable gold production from the Galaxy mine in South Africa. Pursuant to the terms of the Agreement, Empress will make an up-front cash payment totalling US$5 million (the “Investment”) for payable gold produced from the Galaxy mine. The Investment is based on 3.5% of the payable gold production from the Galaxy mine for an initial 8,000 payable ounces; thereafter, the percentage will reduce to 2.0% of the payable gold production until the earlier of: (i) 20,000 ounces having been paid to Empress; or (ii) 20 years after the first payment was made. The purchase price for the payable gold delivered pursuant to the Agreement is 20% of the gold spot price. The closing of the transaction and the funding of the Investment is subject to typical conditions precedent.
“We are excited to partner with Empress who, through their due diligence, have understood the true potential of Galaxy. With the proceeds generated from the Investment, we will be fully funded to implement and execute our Phase 1 and 2 expansion plans at the Galaxy mine.
We have faced challenges at Galaxy over the last few years including the effects of COVID-19 in slowing our expansion plans, flooding both at the mine and at our concentrate warehouse in Durban, and production challenges due to a lack of investment in the mining fleet required to meet our production targets. We currently have over 35,000 tonnes per month (“tpm”) of spare capacity in the processing plant. Therefore, the Investment will primarily be used to acquire new underground equipment and cover the working capital costs of underground development to increase underground production and fill the processing plant,” said Nick Brodie, Chief Executive Officer of the Company.
The Galaxy Gold Mine
Golconda Gold acquired the Galaxy mine in November 2015. Galaxy is situated 8 km west of the town of Barberton and 45 km west of the provincial capital of Nelspruit in the Mpumalanga Province of South Africa. The property covers 58.6 km2 and is part of the prolific Barberton Greenstone Belt.
Galaxy consists of 22 ore bodies, all of which can be accessed via adits at level 17 and level 22. Galaxy is currently mining at the following two main ore bodies:
- Galaxy ore body – a massive pipe shaped ore body with a thickness of 35m and a strike of around 100m (the “Galaxy Ore Body”); and
- Princeton ore body – a steeply dipping ore body with a thickness of 5m and a strike of 300m (the “Princeton Ore Body”).
The current mine plan includes the mining of the Galaxy Ore Body and the Princeton Ore Body using a mechanised cut and fill mining method. There are also extensive tailings around the Galaxy mine site which Golconda Gold intends to use to supplement production.(1) Golconda Gold has already upgraded the crushing circuit, float plant and filtration plant to 50,000 tpm, from the original 15,000 tpm plant, which produces a gold concentrate.
Galaxy is currently in Phase 1 of its expansion program taking production to 15,000 tpm and 1,100 recovered gold ounces per month. The proceeds from the Agreement will be used to fund the expansion required in Phase 2 to take production to 48,000 tpm and 2,800 recovered gold ounces per month.
Golconda Gold has completed the Galaxy Technical Report and the PEA for the Galaxy mine, which supports the expansion plans already undertaken and the future plans for expansion. In addition, Golconda Gold has a drill ready plan to expand the resource to over 4 million ounces, which encompasses the other 20 identified ore bodies. Work is already underway to determine how this can support future expansion of Galaxy.
Empress has completed a site visit, and a third-party engineering firm has satisfactorily completed a technical analysis of the Galaxy mine. The use of proceeds from the transactions contemplated by the Agreement will enhance and expand the production profile at Galaxy moving forward.
Source: Company Press Release