Galane grows Mupane gold count little by little

VANCOUVER – Bigger may be better, but Galane Gold (GG-V) is showing that a small gold operation can keep a company profitable and fund the exploration programs needed to continually add new ounces to its gold resource count.

Galane operates the Mupane gold mine, which taps into a series of small deposits along the Tati greenstone belt in northeastern Botswana. IAMGOLD (IMG-T) put the mine into production in 2005. Galane acquired the operation in 2011 and is currently producing 50,000 oz. gold annually.

By producing gold Galane brings in enough capital to continue exploring its large Tati greenstone belt land package and a new resource estimate just revealed some of the successes of that exploration effort. The updated estimate includes one new deposit, known as Jim’s Luck, as well as a resource for an historic tailings dump that still contains recoverable levels of gold.

Jim’s Luck, which sits 25 km west of the Mupane processing plant, is now home to 2.52 million measured and indicated tonnes grading 1.15 grams gold per tonne plus 1.34 million inferred tonnes averaging 1.08 grams gold, for a total gold count of 139,000 oz. The deposit bears gold mineralization in banded-iron-formation (BIF) rocks that form a positive topographic feature, which means mineralization starts at surface.

The deposit remains open for expansion at depth and along strike. In addition, Galane recently identified a reef that parallels the mineralized reef at Jim’s Luck. The company is currently drilling this new target.

Four other deposits and an historic stockpile contribute to the new Mupane resource. One of those deposits is Golden Eagle, which is 25 km northeast of the Mupane plant and has not been tapped in the current mining operation. The other three have been mined, but this new resource shows all three are open to expansion. Tau and Kwena have been mined to the initial pit limit but offer new resource tonnes at depth. Tholo is currently being mined and also offers new tonnes at depth and laterally.

Together, the five deposits plus the historic Mupane stockpile now contain 8 million measured and indicated tonnes grading 1.63 grams gold and 5.4 million inferred tonnes averaging 1.5 grams gold, for a gold count totaling 677,700 oz.

The new estimate also calculated an initial resource for the Mupane slimes dump, which holds tailings from historic and current mining operations. Old mines across the Tati greenstone belt left behind dozens of old tailings dumps; improved metallurgical processes and a higher gold price mean these tailings now contain renewed gold resources.

Galane started by auger drilling the Mupane dump, since it is right beside the operating process plant, and the effort defined a measured and indicated resource of 7.2 million tonnes grading 0.4 gram gold, for 91,800 contained ounces. Another 14 slimes dumps in the region have now been auger drilled, sampled, and surveyed, and resource calculations are underway. Galane says it will apply for mining licenses for all of the dumps that are found to offer economic potential.

“I am particularly pleased with the addition of Jim’s Luck, which represents an exciting resource that the company is expecting to be a replacement for Golden Eagle when we finish mining that resource,” said Galane CEO Philip Condon in a statement. “The confirmation of the Mupane slimes dump, which is located next to our processing plant, also provides an opportunity to expand our production still further.”

Galane reported the resource at the Mupane slimes dump separately from resource contained in the deposits and stockpile because the slimes could require a different processing methodology.

The processing facility at Mupane can churn through 1.2 million tonnes of oxide ore and 1 million tonnes of sulphide ore each year. Gold is recovered through a carbon-in-leach system. The facility produced 10,562 oz. gold in the third quarter of 2012, achieving an 84% recovery rate.

An average sale price of US$1,686 per oz. and an average total operating cost of US$980 per oz. produced net after-tax earnings of US$7.8 million. Galane is focused on two goals at Mupane: increasing the project’s gold resources in order to extend the mine’s lifespan considerably beyond its current reach of four years and reducing operating costs to increase profits.

News of the updated Mupane resource had little impact on Galane’s share price, which dropped 5¢ to close at 66¢. The company has a 52-week share price range of 64¢ to $1.08 and has 48 million shares outstanding.