March has indeed come in like a lion for Galactic Resources (TSE). In the space of one week, the company announced a substantial increase in annual earnings, the sale of the bulk of its interest in a huge gold-copper property in the Philippines and the start of construction at a new mine in Nevada. Galactic had owned a 40% interest in Far Southeast Gold Resources which, together with Lepanto Consolidated Mining of the Philippines, owns the rights to mine the Far Southeast bulk tonnage gold-copper property in Benguet Province.
A unit of CRA Ltd. — in turn a 49% owned affiliate of RTZ Corp. — bought 75% of Galactic’s 40% interest in Far Southeast Gold Resources for US$15 million. One of Australia’s largest companies with extensive overseas interests, CRA holds the option to purchase the remaining 25% of Galactic’s interest for US$20 million if it acts before May 1, or for US$25 million thereafter until the end of October.
Closer to home, and along with equal partner Cornucopia Resources (TSE), Galactic is looking to bring on stream the first phase of the Ivanhoe open pit, heap leach mine on Nevada’s Carlin Trend by the fourth quarter of this year. The joint venture’s contractor, Ledcor Industries, has already mobilized equipment on to the mine site.
Capital costs are estimated at $10 million. Financing was guaranteed by Galactic and placed with a European bank as a dollar loan convertible into a gold loan at the joint venture’s option. In order to earn its 50% interest in the Ivanhoe project, Galactic was required to submit a feasibility study and fund the phase one operation.
The mine is expected to produce 60,000-70,000 oz. gold in 1991 at a direct production cost of less than US$220 per oz. The first phase development plan will involve conventional open pit mining of 3.1 million tons grading 0.051 oz. gold per ton and the removal of 11.37 million tons of waste.
The partners project that heap leaching and recovery by standard carbon-in-column adsorption will produce about 100,000 oz. of gold in the 18 months after initial construction.
In the second phase, the joint venture plans to expand production into the northern portion of the deposit, following permitting in order to increase mine life by about 10 years. In the meantime, exploration of the 168-square-mile property is continuing.
Galactic also reported a dramatic turnaround in its 1989 fiscal year. Net income reached US$2.54 million, or US7 cents per share, for the period, compared with a net 1988 loss of US$45.5 million or US$1.42 per share.
The company said the performance of the Ridgeway gold mine in South Carolina, a 48-52% joint venture with RTZ, “was consistently in excess of expectations,” producing 172,505 oz. gold, compared with a budgeted 160,064 oz. gold.
The average production costs during the year were US$140 per oz., also significantly lower than the expected costs of US$167 per oz. This remarkable performance was attributed to high mill throughput, enhanced recoveries and low reagent consumption.
Galactic’s wholly owned Summitville mine in Colorado produced 32,569 oz. of gold in 1989, based on the mining of limited tonnage. Full-scale mining is expected to resume in mid-1990. Galactic Resources (TSE)* Year ended Dec. 31 1989 1988 Revenue (000s) $18,679 $4,089 Net earnings (000s) 2,543 (45,536 ) Net earnings
(per share) 0.7 (1.42 ) *US dollars.003
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