Galane Gold, the Canadian group that wholly owns Mupane Gold Mine, earned $14.9 million (P164 million) from the sale of about 8,000 ounces of gold between July and September this year, benefiting from strong prices of the precious metal.
Gold, seen as a safe haven investment in turbulent times, has risen by more than 30% this year, as investors seek it out to secure value and also buffer themselves for the expected rise in inflation later, when the trillions of dollars being pumped in coronavirus (COVID-19) responses by countries push prices up.
According to statements released this week, for the nine months of the year up to September 30, Galane Gold’s pre-tax profits were pegged at $457,000 (P5 million) up from a loss of $1.6 million (P17.6 million) for the corresponding period last year.
Meanwhile, gold production for the nine months to September 2020 was 20,247 ounces compared to 23,455 ounces over the same period in 2019, due to the interruptions caused by the outbreak of the virus.
Although Galane also has operations in South Africa, the gold sold thus far this year came from Mupane Gold, which comprises three mines and two slimes dump, which are processed to recover the precious metal. Galane’s South African operation, Galaxy, was placed on care and maintenance in March and is yet to return to production as the group weighs the COVID-19 limits placed by the government there.
“Despite the higher gold price currently being realised, the company continues to review its near term operating plans and
The directors noted that despite the improved performance due to the gold price, Galane Gold at the end of the third quarter had a working capital deficiency of $9.1 million (P100 million), which represented a decrease of $4.1 million (P45 million) from the end of the second quarter.
The company kept up with its five percent royalty payments to the Government of Botswana during the nine months to September, but still owes previous deferred payments. Galane paid government $1.8 million (P19.8 million) in royalties and $1.2 million (P13.2 million) in part payment of deferred royalties during the period.
“While management projects that the current gold price would allow the company to repay the deferred royalties consistent with the payment schedule agreed with the Government of Botswana in 2018, the company has entered into discussions with government to reschedule the outstanding balance.
“However, with the current focus on COVID-19 shutdown of non-essential services in the country, these discussions have now been put on hold.”
Galane executives expect Mupane Gold to produce about 30,000 ounces of the precious metal this year, down from an initial forecast of 35,000 ounces, due to disruptions caused by COVID-19. Last year, Mupane produced 30,294 ounces.