Galane Gold Ltd. (TSX-V: GG) (OTCQB: GGGOF) is pleased to announce that it has entered into a binding offer to acquire, through a wholly-owned subsidiary, the Summit Mine and the infrastructure constituting the Banner Mill in New Mexico from Pyramid Peak Mining, LLC, a wholly-owned subsidiary of Waterton Precious Metals Fund II Cayman, LP.

The aggregate consideration to be paid for the Assets is US$17.0 million, consisting of (i) cash consideration of US$6.0 million on closing of the Acquisition; (ii) issuance to the Seller on Closing of 16 million common shares of Galane at a deemed issuance price of C$0.22 per share and warrants to purchase up to 16 million common shares of Galane exercisable at an exercise price of C$0.30 per share for a period of three years from Closing; and (iii) cash consideration of US$8.2 million upon commencement of production at the Mine.

The Company is also pleased to announce that it has entered into an engagement letter with Canaccord Genuity Corp. in respect of a C$9.0 million private placement of subscription receipts of the Company to fund the Initial Cash Consideration, with a lead order from Palisades Goldcorp Ltd.

Acquisition Highlights⁽¹⁾⁽²⁾

• Located in New Mexico, USA, a low-risk mining jurisdiction with a long history of support for gold and silver mines
• A National Instrument 43-101 – Standards of Disclosure for Mineral Projects compliant historical mineral resource estimate, with a 4.35 g/t cut-off grade, of:

• Existing infrastructure in place of:
  • 15,000 feet of underground workings; and
  • a 240 ton per day permitted crush, mill and flotation plant
• A 2014 Technical Report (as defined below) showing:
  • a six-year mine life producing over 1 million ounces of silver and 16,000 ounces of gold per year;
  • an all-in sustaining cost of US$578 per gold equivalent ounce; and
  • capital cost of US$4.2 million to restart operations
• Exploration upside with mining leases covering over 4,000 acres of prospective land as well as extension of the Mine at depth and near surface
• All key permits in place to restart the operations

Nick Brodie, CEO of Galane commented, “Our goal at Galane is to acquire near term production assets, which we consider to be highly accretive for our shareholders, and to leverage the strengths of our existing management team to put such assets back into production. This new venture is a perfect example of this approach. It represents an opportunity to increase Galane’s production, lower its operating costs and reduce its country risk. Galane’s plan is to update the economic plan for the Mine and target production as quickly as possible.

We are delighted that Palisades have also recognised the opportunity that this represents and have put themselves forward as the cornerstone of the Offering. We take this as a strong vote of confidence in our future plans for both Galane and the Summit Mine.”⁽²⁾

Description of the Assets⁽¹⁾

The Mine is located in the Steeple Rock Mining District, within Grant County, New Mexico, USA. It consists of approximately 4,000 acres of patented and unpatented mining claims and mining leases. The Mine is past producing and currently on care and maintenance, but is fully permitted to resume operating activities.

The Assets are comprised of:

• an underground operation at the Mine which has a 12 foot by 13 foot decline accessing 15,000 feet of existing operations. The workings are in the 50 to 100 foot wide Summit fault zone which dips 70 to 80 degrees to the North East. The deposit extends over a 2,000 foot strike, 10 to 15 foot width and a known depth of 1,000 feet; and
• the 240 ton per day Banner crush, mill and flotation plant, located 57 miles from the Mine.

Historical Estimate⁽¹⁾

The Historical Estimate was disclosed in a report provided by the Seller to the Company with an effective date of September 17, 2014, entitled “Technical Report, Preliminary Economic Assessment, Summit Gold-Silver Project, Grant and Hidalgo Counties, New Mexico”, prepared by Douglas F. Irving, P.E., Susan C. Bird, P.Eng., and Tracey D. Meintjes, P. Eng. of Chapman, Wood and Griswold, Inc. in Albuquerque, New Mexico. The Historical Estimate complies with the CIM Definition Standards on Mineral Resources and Mineral Reserves as required by NI 43-101 on the date the Technical Report was prepared. A qualified person has not done sufficient work to classify the Historical Estimate as a current mineral resource in accordance with NI 43-101. The Company is not treating the Historical Estimate as a current mineral resource and the historical estimate should not be relied on.

The Technical Report was prepared by an advisory company that offers a wide range of exploration, mining, management, valuation, financing and advisory services (the “Author”). The Technical Report relies on historical drilling and sampling. The Author used information relating to operational methods and expectations provided to it by various sources. The report provides that: (a) the historical mineral resource model is based on available sampling data collected over the history of the project area; (b) the grade models were verified using visual and statistical methods and deemed to be globally unbiased; (c) the blocks were classified into historical mineral resource categories based on the variogam parameters and restrictions on the number of composites and drill holes used in each pass of the interpolation; (d) only the historical mineral resources lying within the legal boundaries are reported; and (e) no modifying factors were applied to the historical in-situ mineral resources, however the diluted mineral resource contains a 15% dilution factor and a mining loss of 10% to account for pillars.

The business of mining and mineral exploration, development and production by their nature contain significant operational risks. The business depends upon, amongst other things, successful prospecting programmes and competent management. Profitability and asset values can be affected by unforeseen changes in operating circumstances and technical issues. Factors such as political and industrial disruption, currency fluctuation and interest rates could have an impact on future operations, and potential revenue streams can also be affected by these factors. The majority of these factors are, and will be, beyond the control of any operating entity.

More recent estimates or data is not available. Work required to upgrade or verify the Historical Estimates as current mineral resources will be based on recommendations in the Technical Report.

Terms of the Acquisition

Pursuant to the terms of the Offer, Galane will pay the Initial Cash Consideration and issue the Consideration Shares and the Consideration Warrants on Closing. The Subsequent Cash Consideration is payable once production commences at the Mine. The common shares of Galane to be issued to the Seller will represent approximately 5.13% of the Company’s common shares without the exercise of the Consideration Warrants by the Seller, or 9.76% of the Company’s common shares assuming full exercise of the Consideration Warrants by the Seller, after giving effect to the Offering.

The parties will negotiate the terms of the purchase agreement relating to the Acquisition and the terms of the lease for the land on which the infrastructure constituting the Banner Mill is situated, both of which will be on customary terms for agreements of this nature.

Closing of the Acquisition is expected to occur on or about May 16, 2021, and is subject to certain conditions including, but not limited to, the execution of the Purchase Agreement and the Lease, legal due diligence on the Assets, completion of the Offering, and approval of governmental and regulatory authorities, including the TSX Venture Exchange (“TSXV”). Red Cloud Securities Inc. is acting as financial advisor to the Seller.

Concurrent Private Placement

In connection with the Acquisition, Galane has engaged Canaccord Genuity, on behalf of a syndicate of agents, including Mackie Research Capital Corporation, to offer the Subscription Receipts for sale on a best efforts agency basis.  The Offering shall consist of the issuance of up to 40,909,090 Subscription Receipts at a price of C$0.22 per Subscription Receipt for aggregate gross proceeds of up to C$9.0 million. Palisades has committed to place a lead order, subject to pricing constraints.

The Agents shall have the option exercisable until the closing of the Offering, to sell up to an additional 6,136,364 Subscription Receipts at the Issue Price for additional gross proceeds to the Company of up to C$1.35 million.

Each Subscription Receipt will entitle the holder thereof to receive one common share of Galane, and one common share purchase warrant of Galane, without any further action on the part of the holder and without payment of additional consideration, upon satisfaction of the escrow release conditions including the satisfaction of all conditions precedent to completing the Acquisition. Each SR Warrant will entitle the holder thereof to purchase one common share of Galane at a price to be determined in the context of the market, for a period of three years following the Closing of the Acquisition.

The aggregate gross proceeds of the Offering, less 50% of the Agents’ commission and certain expenses of the Offering, will be held in escrow pending closing of the Acquisition. In the event that the Acquisition is not completed within 60 days after of the closing of the Offering, the escrow agent shall return to the holders of the Subscription Receipts an amount equal to the aggregate purchase price paid for the Subscription Receipts held by each holder.

The net proceeds of the Offering will be used to fund the Initial Cash Consideration payable in connection with the Acquisition. The Offering is expected to close on or about April 8, 2021, and is subject to customary regulatory and stock exchange approvals, including approval of the TSXV.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Galane Gold

Galane Gold is an un-hedged gold producer and explorer with mining operations and exploration tenements in Botswana and South Africa. Galane Gold is a public company and its shares are quoted on the TSXV under the symbol “GG” and the OTCQB under the symbol “GGGOF”. Galane Gold’s management team is comprised of senior mining professionals with extensive experience in managing mining and processing operations and large-scale exploration programmes. Galane Gold is committed to operating at world-class standards and is focused on the safety of its employees, respecting the environment, and contributing to the communities in which it operates.

About Palisades Goldcorp Ltd.

Palisades Goldcorp is Canada’s resource focused merchant bank. Palisades’ management team has a demonstrated track record of making money and is backed by many of the industry’s most notable financiers. With junior resource equities valued at generational lows, management believes the sector is on the cusp of a major bull market move. Palisades is positioning itself with significant stakes in undervalued companies and assets with the goal of generating superior returns.

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