TORONTO, Jan. 10, 2014 /CNW/ - Galway Gold Inc. (TSX V:
GLW) ("Galway Gold", "Galway" or the "Company") announces that
it has exercised its right to acquire the Vetas gold-silver project
in the Vetas-California-Surata gold region of Colombia. The total option exercise price is
approximately US $4.3 million (cash
balance as of September 30, 2013 was
US $13.5 million). Galway Gold has
been advised that the counterparty to the Reina de Oro Option
Contract has rejected the exercise of the option. Galway Gold is
seeking arbitration of this matter pursuant to the terms of the
Option Contract. Management feels confident of a positive outcome
from the arbitration hearing based on the following facts.
- According to contractual provisions, exercise of the Option
required a sole autonomous decision by Galway only and did not
require a justification.
- Cash payments in excess of US$800,000 plus 500,000 shares of Galway
Resources were paid to the owners on a timely basis.
- A total of US $13.5 million was
spent on exploration of the Vetas project, which was performed
according to internationally recognized standards. Galway conducted
extensive surface geochemical sampling, underground channel
sampling, a geophysical survey and surface and underground drilling
programs (46,838 meters in 91 diamond drill holes) over a 4 year
period.
- Galway used internationally recognized drilling companies and
assay labs as well as internationally experienced, well-respected
geologists and staff to carry out the exploration program at
Vetas.
- The Company regularly provided presentations to the owners who
had the ability to review the exploration program on a regular
basis and were entitled to conduct a third-party audit. No
complaints were ever received by Galway over the course of the
exploration program that was conducted on the property.
- The Reina de Oro option
contract cites immediate and automatic transfer upon exercise, as
well as technical and administrative autonomy in the management of
the exploration project.
Contract calls for payment on Measured and Indicated
ounces
Pursuant to the Reina de Oro Option Contract, Galway
Gold can acquire the mining rights for the Reina de Oro License
concession by exercising the option and thereby own a 100% interest
in the Vetas gold-silver project. The option exercise price is that
amount equal to 1.5% of the 30-day average spot prices of gold and
silver in the Measured and Indicated categories.
Galway Gold has calculated the option exercise price based on
229,978 gold equivalent ounces in the Measured and Indicated
categories. The respective average spot prices per ounce of gold
and silver used in this calculation were US $1,246.17 and US $19.96 on the London Metals Exchange for the last
thirty days prior to the effective date of exercise. The total
option exercise price is therefore approximately US $4.3 million. Galway Gold had a cash balance of
US $13.5 million on September 30, 2013.
On November 27, 2013, Galway Gold
announced an initial mineral resource estimate at its Vetas
gold-silver project. The mineral resource estimate was prepared in
accordance with NI 43-101 standards by Roscoe Postle Associates
Inc. (RPA) of Toronto,
Ontario.
TABLE 1: MINERAL RESOURCE ESTIMATE
SUMMARY
Galway Gold Inc. - Vetas Project
Category
|
Tonnes
|
Grade
|
Contained
Ounces
|
|
|
(g/t
Au)
|
(g/t
Ag)
|
(oz
Au)
|
(oz
Ag)
|
Measured
|
23,900
|
7.79
|
12.4
|
6,100
|
9,400
|
Indicated
|
641,000
|
10.62
|
14.9
|
218,800
|
307,700
|
Measured &
Indicated
|
664,900
|
10.52
|
14.8
|
224,900
|
317,100
|
Inferred
|
1,146,000
|
10.30
|
15.3
|
377,000
|
563,000
|
(1)
|
Mineral resources
which are not mineral reserves do not have demonstrated economic
viability. The estimate of mineral resources may be materially
affected by environmental, permitting, legal, title, taxation,
socio-political, marketing, or other relevant
issues.
|
(2)
|
The quantity and
grade of reported Inferred resources in this estimation are
uncertain in nature and there has been insufficient exploration to
define these Inferred resources as an Indicated or Measured mineral
resource and it is uncertain if further exploration will result in
upgrading them to an Indicated or Measured mineral resource
category.
|
(3)
|
The mineral
resources in this press release were estimated using the Canadian
Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards
on Mineral Resources and Reserves, Definitions and Guidelines
prepared by the CIM Standing Committee on Reserve Definitions and
adopted by CIM Council.
|
(4)
|
Grade capping of
50 g/t Au was utilized on raw assays.
|
(5)
|
A bulk density of
2.74 t/m3 was used for all tonnage
estimates.
|
(6)
|
A gold price of
US$1,500/oz and an exchange rate of US$0.95US=C$1.00 was utilized
in the Au cut-off grade calculations of 3.0 g/t Au.
Underground mining costs were assumed at US$75/t, with process
costs of US$25/t and G&A of US$20/t. Process recovery was
assumed at 90%.The government royalty was taken as the 4%
NSR.
|
(7)
|
Values in the
table may differ due to rounding.
|
(8)
|
The measured area of
influence was 12.5m, indicated was 25m, and the inferred was
50m
|
(9)
|
A minimum 1.52m (5')
horizontal mining width was used.
|
Supervision, Qualified Person and Quality Control
The
Vetas Project is under the supervision of Project Manager
Alex Cruz, of Quito, Ecuador. In compliance with National
Instrument 43-101, Mr. Mike Sutton,
P.Geo. is the Qualified Person responsible for the accuracy of this
news release. Samples from the Vetas Project are sent to the Acme
Labs preparation facility in Medellin,
Colombia, for processing and are analyzed at Acme Labs
laboratory in Vancouver, Canada.
There is no relationship between the assay laboratory and Galway
Gold. Surface rock samples are analyzed for Au by a 30g fire assay
and AAS finish method (code G601) plus a multi-element suite with
an aqua regia digestion and ICP-MS finish (code 1F04). Underground
samples are analyzed by G601 and 1F04 methods and over limits of Ag
>100ppm and Cu-Pb-Zn >1% by an ore grade determination with
an aqua regia digestion and analysis by ICP-ES (Code 7AR2). If
strong mineralization or visible gold is observed, then a screen
metallic assay for Au (code G615) is used. Acme Labs is an ISO
9001:2008 qualified assayer that performs and makes available
internal assaying controls. Quality control protocols by Galway
that are in place consist of the insertion of one blank at least
every 20 samples, a reject duplicate every 20 samples, and one of
three different certified reference standard material for every 20
rock samples. Core recovery in the mineralized zones has averaged
over 90%. Quarter coring of some select samples will take place.
Assays reported in this press release may have screen and quarter
core assays pending and will be updated in the table on the website
as needed.
Neither the TSX-V nor its Regulation Services Provider (as that
term is defined in the policies of the TSX-V) accepts
responsibility for the adequacy of this release. No stock exchange,
securities commission or other regulatory authority has approved or
disapproved the information contained herein.
CAUTIONARY STATEMENT: This news release contains forward-looking
information which is not comprised of historical facts.
Forward-looking information involves risks, uncertainties and other
factors that could cause actual events, results, performance,
prospects and opportunities to differ materially from those
expressed or implied by such forward-looking information. Forward
looking information in this news release includes, but is not
limited to, Galway Gold's objectives, goals or future plans,
statements regarding the estimation of mineral resources,
exploration results, potential mineralization, exploration and mine
development plans, timing of the commencement of operations, the
status of the exercise of the Reina de Oro Option Contract and
estimates of market conditions. Factors that could cause actual
results to differ materially from such forward-looking information
include, but are not limited to, failure to convert estimated
mineral resources to reserves, capital and operating costs varying
significantly from estimates, the preliminary nature of
metallurgical test results, an inability to resolve the dispute
with the counterparty to the Reina de Oro Option agreement whereby
Galway Gold cannot complete the purchase of a 100% interest in the
Vetas Project, delays in obtaining or failures to obtain required
governmental, environmental or other project approvals, political
risks, uncertainties relating to the availability and costs of
financing needed in the future, changes in equity markets,
inflation, changes in exchange rates, fluctuations in commodity
prices, delays in the development of projects and the other risks
involved in the mineral exploration and development industry, and
those risks set out in Galway Gold's public documents filed on
SEDAR. Although Galway Gold believes that the assumptions and
factors used in preparing the forward-looking information in this
news release are reasonable, undue reliance should not be placed on
such information, which only applies as of the date of this news
release, and no assurance can be given that such events will occur
in the disclosed time frames or at all. Galway Gold disclaims any
intention or obligation to update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, other than as required by law.
SOURCE Galway Gold Inc