Mupane Galane Gold in financial predicament
Government deferred payment of royalties from the company
The Canadian miner operating a gold mine near Francistown, Galane Gold, is struggling to generate profit and pay royalties due to government.
This emerged in the company’ report released last week.
For the nine months ending September 2016, the company generated $25,088,136 revenues, compared to $19,471,199 recorded during the nine months ended September 2015. The company recorded financial losses amounting to $3,119,599, after recording another $5,961,495 loss, during the nine months ending September 2015. The company’s foreign exchange losses have increased from $499,973 during the period to $1,384,962 in 2016, according to the report.
The company is struggling to pay its expenses and owes government more than P10 million, as mining royalties. For the nine-month period which ended on September 30, 2016, the company accrued $1,279,567 in royalties. “The Government of Botswana has agreed to defer payment of royalties from the sale of gold. Royalties have been deferred until July and payment to commence in July 2017 over 12 months, with 5 percent interest to be charged from July 1, 2017,” said the company. 5% of the company revenues from domestic production, based on market prices at the date of shipping the mined gold, is paid to government as royalties.
“Our results were affected by two key factors, a non-cash foreign exchange loss of approximately one million dollars and lower production at Tau underground. At Tau in the quarter we concentrated on development of the declines and reef drives for the commencement of our long term stopping plan for the main reef. We continue to remain focused on operating profitably in Botswana while advancing the development at Galaxy,” said the Company CEO, Nick Brodie. Tau underground mine is situated at Mupane Gold Project 30 km South East of Francistown.
He however noted that Galane Gold management was pleased that it had commissioned the first phase of its gold mine in South Africa. The Galaxy Gold mine is located approximately 8 km west of the town of Barberton and 45 km west of the provincial capital of Nelspruit (Mbombela), in the Mpumalanga Province of South Africa and covers an area of 5,863 hactres.