“PRODUCTION AT MUPANE LOOKS SET TO RISE TO 50,000 OUNCES NEXT YEAR” FYI – full article @ minesite/2014/10/01/galane-golds-cash-pile-continues-to-grow-as-production-at-mupane-looks-set-to-rise-to-50000-ounces-next-year/ “The area we’re operating is quite historic in terms of gold production”, says Ravi Sood of Galane Gold, the operator of the Mupane gold mine in Botswana. “The site of the first European-built gold mine in Africa is on our tenements near Francistown. It’s quite a historic property.” Galane’s involvement is by comparison very recent. The company listed on the Toronto stock exchange following its acquisition of the former owner of Mupane, Gallery Gold, from its parent IAMGOLD. IAMGOLD’s original acquisition of Mupane was a deal gone wrong, explains Ravi. “They paid US$240 million in the context of a gold price of between US$650 to US$670 per ounce. But they overpaid, whether it was US$650 gold or today’s gold price. They looked to it to get to 200,000 ounces per year, but the average was actually around 57,000 ounces.” Then, in 2006, IAMGOLD merged with Cambior in a US$1 billion deal. “That turned out to be a spectacular deal for IAMGOLD”, continues Ravi. At a stroke, IAMGOLD became the world’s tenth largest gold producer. But the upshot was that Mupane suddenly looked like an asset out on a limb. “They’d already become a bit sheepish about Mupane”, says Ravi. “They were even more so after the Cambior deal. The tier one team never even made it to this asset.” Fast forward to 2010, and Mupane was producing at a rate of 50,000 ounces per year, with three years of operating life ahead of it. Exploration had been shut down. The clock, it seemed, was ticking. “IAMGOLD contacted me in 2010”, recalls Ravi. And he was immediately interested. As a former investment manager with experience in the resources sector, he knew what he was looking at, and he knew that although the outlook for Mupane might be bleak under IAMGOLD’s ownership, a new, smaller, more nimble owner ought to be able completely to transform the picture. “It wasn’t a question of whether we could add to the mine life”, he says. “It was simply a question of doing the work.” Mupane had other things going for it too. “It’s on grid power”, explains Ravi. “It has excellent access to infrastructure – it’s 25 minutes drive from an international airport.” With the gold price still ticking up, Ravi felt that the choice was clear. “We did a deal with IAMGOLD”, he says. “The deal involved cash and a vendor takeback note which we subsequently paid off. IAMGOLD sold it to us for US$30 million and we went public in August 2011 at C$0.80 per share. And those are the only shares we’ve ever issued.”And so, Galane Gold was born. As per the plan, the first thing the company looked to was the operating life. Now, three years later, Mupane has five years of life ahead of it, with more to come.
Posted on: Wed, 01 Oct 2014 14:57:07 +0000
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