TORONTO, ONTARIO -- (Marketwired) -- 08/27/13 -- Galane Gold Ltd. ("Galane Gold" or the "Company") (TSX VENTURE: GG) is pleased to announce the release of its financial results for the three and six months ended June 30, 2013. All amounts are in United States dollars unless otherwise indicated.
A copy of the unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2013 prepared in accordance with International Financial Reporting Standards and the corresponding Management's Discussion and Analysis will be available under the Company's profile on www.sedar.com.
Second Quarter Highlights
-- Produced 9,530 ounces of gold an increase of 2,100 ounces compared to Q1 2013.-- Total ore mined of 223,410 tonnes at an average grade of 1.84 grams per tonne. -- 137,451 tonnes of ore at a grade of 2.11 grams per tonne were mined at Tholo (Q1 2013 - 84,435 tonnes of ore at 2.30 grams per tonne). As anticipated the stripping ratio has declined from 20.34 in Q1 2013 to 9.85 in Q2 2013. -- Mining at Golden Eagle was suspended as a response to the fall in gold price. Before mining at Golden Eagle was suspended 85,959 tonnes of ore were mined during the quarter with an average grade of 1.41 grams per tonne.-- Total ore milled of 229,221 tonnes at a head grade of 1.65 grams per tonne.-- Recovery rate at the processing plant of 78.0%. The rate was mainly affected by the switch to processing predominantly Tholo ore which is known to display sulphide characteristics. Sulphide ore bodies are less amenable to cyanidation and as such recovery is reduced.-- Net loss after tax of $26,083,598 after charging: -- an impairment of $16,867,329 against mining and exploration properties; -- a reduction of $955,264 in the carrying value of inventory to its net realisable value; and -- a reversal of a previously recognised $1,809,000 deferred tax asset.-- All-in operating cash cost of $1,449 per ounce (excluding royalties)(1)
As at June 30, 2013, the carrying value of the net assets of the Company exceeded its market capitalisation and in addition, prior to the close of Q2 2013, the gold price declined significantly. Both were indictors of a potential impairment of the Company's net assets. Therefore the Company recalculated the fair value of its one cash generating unit using an estimated gold price of $1,400 per ounce, a discount rate of 6.25% and a market valuation of its in-situ ounces. The recalculation of the fair value indicated that the Company was required to make an impairment charge of $16,867,329 against the carrying value of the mining and exploration properties.
The mine and processing plan is constantly reviewed in relation to gold price to optimize pit design and plant feed. Given the recent declines and volatility in the gold price, the Company completed an exercise in Q2 2013 to identify optimum plans at different long term gold prices. The Company has determined that the reduction in gold price will require it to utilize the following resources for the remainder of 2013 and 2014:
-- Tholo Pit - it is anticipated that it will be providing the majority of the ore feed requirements for the mill in Q3 2013. This ore is of a higher grade than other high volume ore sources available to the Company at this time and thus will have the effect of increasing the process plant head grade. Mining activity from the Tholo pit is anticipated to finish in the first quarter of 2014 but due to the high volumes of ore mined, at the end of the pit life, it is expected that some of the ore mined will be stockpiled for feed throughout 2014.-- High Grade Small Deposits- the Company historically had identified several high grade small deposits that were intended to be included in the mine plan in the future when we had spare capacity both in mining and at the plant. The change in the mine plan has created an opportunity for us to exploit these resources and as such we have incorporated them into our plans for 2013 and 2014. The deposits are within the Company's current mining licenses and we intend to utilize the deposits to supplement the feed to the plant to increase the head grade. We have commenced the work of producing relevant mine plans and it is anticipated that the deposits will start providing ore during Q4 2013.