Golconda Gold Ltd. (“Golconda Gold” or the Company”) (TSXV: GG;
OTCQB: GGGOF) today announces that further to its November 23, 2023
press release, it has completed the 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, 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 has made 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 use of
proceeds from the transactions contemplated by the Agreement will
enhance and expand the production profile at Galaxy moving
forward.(1)
“The primary use of the funds will be used to
procure new underground mining equipment and cover the working
capital costs of underground development. The primary goal of the
Investment is to increase underground production at both the
Princeton and Galaxy ore bodies, to complete Phase 2 of the
Company’s expansion plan at the Galaxy mine, and to fill the 35,000
tonnes per month of spare capacity at the plant.
The Investment represents a huge opportunity for
Golconda to meet its objectives at Galaxy and I am confident that
we have the management team and workforce to execute our expansion
plans successfully.
Now that the transactions contemplated under the
Agreement are completed, we intend to explore the opportunities
available to the Company to complete a non-dilutive financing to
recommence production at Summit,” said Nick Brodie, Chief Executive
Officer of the Company.(1)
The Galaxy Gold
Mine(2)
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.(1)
Golconda Gold has completed the Galaxy Technical
Report and the PEA (as such terms are defined below) 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.
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 (“TSXV”) 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. It is committed to
operating at world-class standards, focused on the safety of its
employees, respecting the environment, and contributing to the
communities in which it operates.
About Empress Royalty Corp.
Empress Royalty is a global royalty and
streaming creation company providing investors with a diversified
portfolio of gold and silver investments. Since listing in December
2020, Empress Royalty has built a portfolio of precious metal
investments and is actively investing in mining companies with
development and production stage projects who require additional
non-dilutive capital. Empress Royalty has strategic
partnerships with Endeavour Financial and Terra Capital which allow
Empress Royalty to not only access global investment opportunities
but also bring unique mining finance expertise, deal structuring
and access to capital markets. Empress Royalty is
looking forward to continuously creating value for its shareholders
through the proven royalty and streaming models.
Notes:
(1) This is forward-looking information and is
based on a number of assumptions. See “Cautionary Notes”.
(2) 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 projected plans for expansion and production at the
Galaxy mine, the Company’s use of proceeds from the transactions
contemplated by the Agreement, the achievement of the goals of the
Investment in the future, any projected financings of the Company,
any future transactions contemplated by the Company, the impact of
the transactions contemplated by the Agreement on the Company and
its expansion plans, creation of long term value for stakeholders,
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 any local, regional, national or
international outbreak of a contagious disease; 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 TSXV nor its regulation services
provider (as that term is defined in the policies of the TSXV)
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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