Galway Metals suspends drill programs due to market conditions  

Galway Metals (TSXV: GWM; US-OTC: GAYMF) is suspending drilling temporarily at its flagship Clarence Stream gold project in New Brunswick and also at its Estrades polymetallic project in Quebec due to “prevailingly weak market conditions for exploration companies,” and said it is making the move to “conserve capital”.

The decision follows Galway’s decision to cut its fleet of drills at Clarence Stream in September, switching from six rigs operating double shifts to two rigs operating on a single shift.

Clarence Stream is 70 km south of Fredericton, in southwestern New Brunswick, and Estrades is about 95 km north of the town of La Sarre in western Quebec.

Galway ended the third quarter with $7.7 million in cash after spending $2 million on exploration at Clarence Stream in the three months ended Sept. 30.

President and CEO Robert Hinchcliffe put the suspension at Clarence Stream in a positive light, noting that “the hiatus gives us an excellent opportunity to gain a better understanding of the project through a thorough review of all drill data and from findings in the resource update.”

“When markets improve, we will be in an excellent position to make new discoveries from the numerous, large and high-potential targets that have not yet been drill tested.”

A moose near the dormant mill adjacent to Galway Metals’ Clarence Stream gold project in New Brunswick, 70 km from Fredericton. Credit: Galway Metals.

Galway acquired a 100% interest in Clarence Stream in 2016 and has completed 24,468 metres of drilling.

The company updated the resource estimate for Clarence Stream in April, and now the project contains indicated resources of 12.1 million tonnes grading 2.3 grams gold per tonne for 886,000 oz. contained gold and inferred resources of 11.8 million tonnes grading 1.9 grams gold for 731,000 ounces.

Galway acquired its Estrades project in northwestern Quebec in 2016. Estrades is a past-producing polymetallic mine that closed in 1991 due to weak metal prices. The deposit had been mined via a 200-metre-deep ramp with historic production in 1990-1991 of 174,946 tonnes grading 12.9% zinc, 6.4 grams gold per tonne, 1.1% copper and 172.3 grams silver.

The company reported an updated resource estimate for Estrades in September 2018, outlining 1.5 million indicated tonnes grading 3.55 grams gold, 122.9 grams silver, 7.20% zinc, 1.06% copper and 0.60% lead , and 2.20 million inferred tonnes grading 1.93 grams gold, 72.9 grams silver, 4.72% zinc, 1.01% copper and 0.29% lead.

Laurentian Bank Securities’ mining analyst Jacques Wortman called Galway’s decision to halt drilling “prudent”, but noted that a pause in exploration may negatively impact development timelines at Clarence Stream. “Over the next few months, we’ll reassess our key model assumptions of construction conceptually starting in mid-2026 and production starting in 2028,” he wrote in a research note to clients.

But Wortman continues to see “significant upside potential” in the stock, maintaining a $1.45 price target.

News of the suspension sent Galway’s shares down 21% to 22.5¢. Over the last year the company has traded in a range of 24¢ and 68¢ per share.

The junior has about 201.6 million common shares outstanding for a market cap of about $45.4 million.