Galactic adds new blood, Friedland steps back

After a decade as the driving force behind Galactic Resources (TSE), Robert Friedland has stepped aside as president and chief executive officer to turn over the helm of the company to a management team. Friedland, now vice-chairman, made the announcement at the company’s recent annual meeting where he introduced Peter Guest as the new president and chief executive officer and James Foreman as chairman.

Guest, a 20-year mining industry veteran with an MBA and a doctorate in mechanical engineering, was involved in a number of large projects including Galactic’s 48% owned Ridgeway gold mine in South Carolina. Foreman, a Galactic director since 1989, is a former chairman and president of Pegasus Gold.

In his new role, Friedland will be responsible for corporate development activities which will include direction of a venture capital fund to finance exploration projects worldwide. 0600,0000 “My commitment to Galactic is stronger than ever,” Friedland assured shareholders. “I will be focusing my talents on what I do best, and that is to help with the financial affairs of the company.”

Calling the management changes “the best news in many years,” Friedland went on to unveil a new blueprint for Galactic’s future based on a recent review of the company’s mission and growth strategies by a special committee.

“The 2-year bull market in gold has forced indepth strategic planning to put this company on solid ground,” Friedland explained. “We’ve carried out a disciplined review of what we can do, and what we can’t do in this market.”

Shareholders were told that Galactic has new goals and priorities, a refined strategic direction, and a commitment to improve cash flow and the balance sheet.

Mining analysts are still digesting the changes, but those contacted by The Northern Miner agreed the initiatives should make Galactic “a more attractive investment,” particularly when gold prices rebound from the current slump.

Galactic took a beating from analysts after its wholly owned Summitville heap leach gold mine in Colorado failed to live up to expectations. However the company’s fall from grace was cushioned by the flawless start of its second mining venture, Ridgeway, which is producing above its budgeted gold ounces and operating below projected costs. The mine is operated by joint venture partner, RTZ Corp.

Because of current market conditions, Friedland said Galactic would defer its large projects with high capital costs in favor of smaller projects with low costs and good prospects for cash flow.

Among the projects being put on the back burner is the Wellgreen nickel-platinum group metals project in the Yukon whose price tag for capital cost is about $250 million. Galactic holds a 59% interest in All-North Resources (VSE) which owns 100% of the project.

“This is not the kind of project Galactic should be developing in a bear market,” Friedland said, although he expressed confidence it would eventually be developed should power become available from a proposed gas pipeline in the district.

Galactic recently sold 75% of its 40% interest in a large gold-copper project in the Philippines for $15 million which Friedland said leaves the company “well positioned” to back its North American development projects.

The company has already started building its next mine, the Hollister, at the 50% owned Ivanhoe property on Nevada’s Carlin Trend. The project is slated to be a modest-sized heap leach operation in its first phase, with cash flow used to develop larger reserves in a second phase.

“The beauty of Ivanhoe is that capital costs will be low, at $10-15 million,” Friedland emphasized.

Beyond Ivanhoe, Galactic is eyeing production at its Bodie gold project in California where environmental studies and a reserve development drill program are planned for this year.

Through equity holdings in various companies, Galactic will also have exposure with minimal risk to a number of exploration projects in North America.

These include properties near its Summitville mine which, if rationalized with the existing operation, appear to have potential to extend the mine’s life and improve its economics.