Galane Gold completes acquisition of Galaxy Gold
Isaac Pinielo | Thursday November 26, 2015 16:36
Galane Gold, which owns the Mupane Gold Mine, located approximately 50 kilometres from Francistown in northeastern Botswana, said it will make an offer to all other shareholders of Galaxy to acquire the remaining shares on economically equivalent terms.
Chief executive officer, Nick Brodie said they are pleased to have completed the acquisition noting it added what they believe is a significant asset to the company’s portfolio.
“Our experienced management team looks forward to taking an underperforming asset and returning it to full and profitable production within the next 12 months,” he said.
He added the team can draw from the experience gained in revitalising Mupane and an in-depth knowledge of mining and processing in the greenstone belt, including in Barberton itself.
Barberton gold is an area in South Africa with 26 high-grade gold deposits on one property. “From our due diligence we have confidence that the potential of the Galaxy asset will assist Galane in being able to operate in any realistic gold price environment,” said Brodie.
To support that confidence, he said, they are currently in the process of completing a National Instrument 43-101 technical report and commencement of a pre-feasibility study to support the expansion of Galaxy’s operations up to 50,000 ounces per annum.
According to the CEO, Galaxy has been operating with a working capital deficiency, which has led to disputes with critical suppliers and contractors. As a result, Galaxy has also not met all of its statutory requirements.
Brodie said this has required an extended review of the business to satisfy themselves that Galaxy can be resurrected to its historic production levels.
“This represents the first step in our strategic plan to build a mid-tier gold company through the acquisition of near term production assets, with existing mine and processing facilities which will present us with the ability to increase both resource and production in easy manageable steps,” he said.
Galane, which has a dual listing on the Botswana Stock Exchange (BSE) and the TSX Venture Exchange, entered into share purchase agreements with certain majority shareholders of Galaxy.
Pursuant to that, a wholly-owned subsidiary of the company agreed to acquire approximately 74 percent of the issued and outstanding Galaxy shares in, exchange for 18,334,492 common shares in the capital of the company, with an aggregate value of approximately Cdn.$2.3 million, based on a deemed price of Cdn.$0.125 per common share, and common share purchase warrants exercisable to acquire an aggregate of up to 4,076,599 common shares for a period of two years at Cdn.$0.175 per common share.
Galane acquired 66 percent of the outstanding Galaxy shares with the remaining eight percent of the Galaxy shares held by the majority shareholders of Galaxy expected to close within the next two weeks.