GGGOF - Golconda Gold Announces Closing of Gold Streaming Transaction for Its Galaxy Project | Benzinga
TORONTO, Feb. 27, 2024 (GLOBE NEWSWIRE) -- Golconda Gold Ltd. ("Golconda Gold" or the Company") (TSXV:GG, OTCQB:GGGOF) today announces that further to its November 23, 2023 press release, it has completed the US$5 million stream transaction relating to its Galaxy project in South Africa with Empress Royalty Holding Corp. ("Empress"), a wholly-owned subsidiary of Empress Royalty Corp. ("Empress Royalty") (TSXV:EMPR, OTCQX:EMPYF).
Golconda Gold, its subsidiary Galaxy Gold Reefs (Pty) Ltd., and certain of its affiliates, entered into a metal purchase and sale agreement dated November 21, 2023 (the "Agreement") with Empress for payable gold production from the Galaxy mine in South Africa. Pursuant to the terms of the Agreement, Empress has made an up-front cash payment totalling US$5 million (the "Investment") for payable gold produced from the Galaxy mine. The Investment is based on 3.5% of the payable gold production from the Galaxy mine for an initial 8,000 payable ounces; thereafter, the percentage will reduce to 2.0% of the payable gold production until the earlier of: (i) 20,000 ounces having been paid to Empress; or (ii) 20 years after the first payment was made. The purchase price for the payable gold delivered pursuant to the Agreement is 20% of the gold spot price. The use of proceeds from the transactions contemplated by the Agreement will enhance and expand the production profile at Galaxy moving forward.(1)
"The primary use of the funds will be used to procure new underground mining equipment and cover the working capital costs of underground development. The primary goal of the Investment is to increase underground production at both the Princeton and Galaxy ore bodies, to complete Phase 2 of the Company's expansion plan at the Galaxy mine, and to fill the 35,000 tonnes per month of spare capacity at the plant.
The Investment represents a huge opportunity for Golconda to meet its objectives at Galaxy and I am confident that we have the management team and workforce to execute our expansion plans successfully.
Now that the transactions contemplated under the Agreement are completed, we intend to explore the opportunities available to the Company to complete a non-dilutive financing to recommence production at Summit," said Nick Brodie, Chief Executive Officer of the Company.(1)
The Galaxy Gold Mine(2)
Golconda Gold acquired the Galaxy mine in November 2015. Galaxy is situated 8 km west of the town of Barberton and 45 km west of the provincial capital of Nelspruit in the Mpumalanga Province of South Africa. The property covers 58.6 km2 and is part of the prolific Barberton Greenstone Belt.
Galaxy consists of 22 ore bodies, all of which can be accessed via adits at level 17 and level 22. Galaxy is currently mining at the following two main ore bodies:
- Galaxy ore body – a massive pipe shaped ore body with a thickness of 35m and a strike of around 100m (the "Galaxy Ore Body"); and
- Princeton ore body – a steeply dipping ore body with a thickness of 5m and a strike of 300m (the "Princeton Ore Body").
The current mine plan includes the mining of the Galaxy Ore Body and the Princeton Ore Body using a mechanised cut and fill mining method. There are also extensive tailings around the Galaxy mine site which Golconda Gold intends to use to supplement production.(1) Golconda Gold has already upgraded the crushing circuit, float plant and filtration plant to 50,000 tpm, from the original ...