Galane Gold - Turning Around Undervalued Assets to Unlock Shareholder Value

• Galane Gold (GG) owns three assets: one in Botswana (30,000 oz producer Mapani), another in South Africa (43,000 oz production ramp-up), and a newly acquired asset in America called Summit Mine (22,000 oz capacity).
• Mapani experienced a challenging year due to factors like flooding, crashes, and electricity issues, affecting production. Q3 guidance is around 6,000 oz.
• Market sentiment is negatively impacting share price, partly due to Mapani's struggles.
• Strong management team in place to handle issues, aiming for improvements in Q4.
• Plans to enhance performance through preventative maintenance and better preparedness for potential situations.
• Expectations for 2022 are more positive, with hopes for a better year and increased gold production.
• Newly acquired Summit Mine in America holds potential with existing infrastructure, strong underground condition, and permit in place.
• Funding considerations for Summit Mine and second installment payment highlighted.
• Company emphasizes a focus on acquiring MPV positive assets at minimal cost and increasing production.

About Galane Gold

Galane Gold Ltd (TSXV:GG, OTCQB:GGGOF) is a Canadian gold producer and explorer with operations in Botswana and South Africa. The company is focused on acquiring undervalued gold assets and turning them around to increase production and lower costs.

In this recent interview, Galane Gold CEO Nick Brodie provided updates on the company's operations and strategy to create value for shareholders. He acknowledged challenges faced this year but remains confident in the long-term potential of Galane's assets.

Interview with CEO Nick Brodie

Operational Challenges Present Buying Opportunity

Galane's flagship operation is the Mupane mine in Botswana, which has faced multiple setbacks this year including flooding, plant shutdowns, and power supply issues. As a result, production guidance for Q3 2022 was lowered to around 6,000 ounces. However, Brodie believes the worst is behind them.

The company has sent its Chief Operating Officer on-site to oversee improvements. Preventative maintenance and mine planning initiatives aim to turn performance around in 2023 after a difficult 2022. The Galaxy project in South Africa has ramped up production ahead of schedule, demonstrating Galane's ability to optimize underperforming assets.

Despite short-term headwinds, Brodie maintains conviction in Mupane’s long-term potential and ability to extend mine life beyond current expectations. After 10 years of production, ample underground development remains. Recent drilling has uncovered higher than expected grades, providing upside.

Summit Mine Acquisition Offers Production Upside

Earlier this year, Galane acquired the Summit mine and mill complex in New Mexico for just $17 million. An independent report estimated the project's NPV at $100 million, representing substantial upside for a minimal upfront payment.

Summit has existing underground development and permits in place, allowing for a rapid restart of production. Due to travel restrictions, Galane has been unable to mobilize its full technical team to site yet. Once on the ground, the team will conduct additional analysis to refine restart capital and timing estimates.

Brodie aims to release a more detailed plan for Summit before year-end. While unable to commit to a firm timeline, he indicated first production could potentially come online within months given infrastructure already in place. At capacity, the mine could produce around 22,000 ounces per year.

Strong Balance Sheet Provides Flexibility

Despite recent share price pressure, Galane retains a strong balance sheet with approximately $3 million in cash. This provides funding for near-term work at Summit and cushion against remaining acquisition installments.

The company continues to evaluate options to monetize Summit on an expedited timeline, either through an offtake agreement or other creative financing solution. The project offers production upside and optionality without significant upfront costs.

Proven Turnaround Strategy Creates Shareholder Value

Galane Gold has a proven track record of acquiring undervalued assets and successfully turning performance around. In an interview earlier this year, Brodie explained “We target assets that have great infrastructure, permits in place, but have been mismanaged and need an owner/operator to come in, provide capital and realize full potential.”

The Galaxy project was acquired for minimal upfront payment in 2018. Despite early challenges, the mine has been brought back online and the company recently announced a 40% quarter-over-quarter increase in ore production.

This demonstrates Galane’s operational expertise in restarting mothballed mines. Applying similar principles to Summit could rapidly unlock value. While Mupane has faced difficulties in 2022, the long-term growth thesis remains intact.

Conclusion

Brodie acknowledges the company’s recent share price weakness but believes current levels represent a compelling entry point for investors who share Galane’s long-term vision. As the company progresses turnaround initiatives across its portfolio, Brodie sees significant upside potential.

Galane offers investors exposure to a portfolio of de-risked gold assets with operational upside. The experienced leadership team continues to evaluate new opportunities to grow production and extend mine life. Despite turbulence in 2022, the company retains a solid balance sheet and extensive technical capabilities to create shareholder value.