Owner to Gain Earn-in Partner on Au-Zn Project in Quebec
Research Report

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Disclosures for Red Cloud Securities, Galway Metals Corp., January 16, 2026

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Galway Metals Inc. (GWM:TSX.V; GAYMF:OTCQB) agreed to allow Dowa Metals & Mining Co. Ltd., a private company, to earn up to a 45% interest in Galway's Estrades gold-zinc project and up to 100% of zinc concentrate offtake rights, Ron Stewart, managing director and mining analyst at Red Cloud Securities, reported in a Jan. 16 research note. Estrades is in northwestern Quebec's Abitibi region.

"We view this agreement positively as it speaks to the quality and upside potential that is still available at the property," Stewart wrote.

No Rating or Target

Red Cloud does not have a rating or target price on Galway yet, noted the analyst, who added that "positive exploration and development updates should drive the stock in the near-term." At the time of Stewart's report, the Ontario-based explorer-developer was trading at about CA$0.84 per share (CA$0.84/share).

Value of the Deal

According to the option agreement between Galway and Dowa, a 100% interest in Estrades is valued at CA$77 million (CA$77M), wrote Stewart. So the project would account for more than 65% of Galway's current CA$94M market cap.

Based on a gold-equivalent resource calculation, Galway's enterprise value:ounce (EV:oz) is about US$20/oz, about 60% lower than the median of peers' EV:oz of US$54/oz.

Terms of the Agreement

The binding option and joint venture term sheet between Galway and Dowa indicates Dowa may earn up to 45% interest in Estrades plus up to 100% zinc concentrate offtake rights, both for a total of US$25M paid in three stages.

In the first stage, Dowa will pay Galway US$5M for a 10% participating interest and 50% of zinc offtake. In July 2026, Galway will commence drilling, which is expected to last about six months.

In the second stage, Dowa will pay Galway US$10M for another 20% participating interest and 75% of zinc offtake. Galway and Dowa will form a joint venture with Galway as the operator. Infill and resource drilling will be done, as will drilling to the west of the Main zone.

In the final stage, Dowa will pay Galway the remaining US$10M for the 15% that will take Dowa's participating interest to 45% and 100% of zinc offtake. The focus at that time will be on feasibility study preparations.

"Dowa is a well-known, integrated metals and mining company with expertise in zinc concentrate processing, technical evaluation and project development and could ultimately help Galway in advancing the Estrades project more efficiently," Stewart wrote.

Estrades Exploration Upside

Stewart reiterated Estrades' current mineral resource estimate and noted the potential for expanding the resource through additional exploration.

In the indicated resource category, Estrades has 1,750,000 tons (1.75 Mt) of 0.97% copper, 0.48% lead, 5.76% zinc, 2.86 grams per ton (2.86 g/t) gold, and 94.4 g/t silver. In the inferred resource category, the project has 2.68 Mt of 0.86% copper, 0.28% lead, 4.75% zinc, 1.81 g/t gold, and 77.4 g/t silver.

Stewart pointed out that all three trends at the project, Estrades, Newiska, and Casa Berardi, offer exploration potential, as does the 26-kilometer (26 km)-long trend along the Casa Berardi Break. Though 100-plus km of historical drilling showed prospectivity there, it remains underexplored and underdrilled.

Co.'s Top Priority

For Galway, its primary focus remains advancing its flagship Clarence Stream project in southern New Brunswick, near its border with Maine. A dozen high-priority targets have been identified there, and three rigs are actively drilling.  

The current Clarence Stream mineral resource estimate consists of 12.4 Mt of 2.31 g/t gold for 900,000 ounces in the Indicated category and 16 Mt of 26 g/t gold for 1,330,000 ounces in the Inferred category. Seventy percent of the resource is from the Southwest deposit. The potential exists to also produce antimony at the project.

On metallurgical testing, recoveries of gold and antimony each were shown to be up to 98%.

What to Watch For

Stewart noted the upcoming potential catalysts for Galway. Regarding Clarence Stream, drill and metallurgical testing results are expected on an ongoing basis. An update to the mineral resource estimate is to follow in midyear.

As for Estrades, joint venture drilling by Galway is slated to begin in July 2026.