Galantas Gold Corporation

Published : November 27th, 2014

Galantas Reports Results for the Three and Nine Months Ended September 30, 2014

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Galantas Reports Results for the Three and Nine Months Ended September 30, 2014

TORONTO, ONTARIO--(Marketwired - Nov 27, 2014) - Galantas Gold Corporation (the 'Company') (TSX VENTURE:GAL)(GAL.L) is pleased to announce financial results for the three and nine months ended September 30, 2014.

Financial Highlights

Highlights of the 2014 third quarter's and first nine months results, which are expressed in Canadian Dollars, are summarized below:

All figures denominated in Canadian Dollars (CDN$)
Third Quarter Ended
September 30

Nine Months Ended
September 30
2014 2013 2014 2013
Revenue $ 8,376 $ 473,668 $ 8,376 $ 1,362,200
Cost of Sales $ 84,277 $ 437,995 $ 260,957 $ 1,347,416
(Loss) Income before the undernoted $ (75,901 ) $ 35,673 $ (252,581 ) $ 14,784
Depreciation $ 57,654 $ 115,105 $ 184,917 $ 361,935
General administrative expenses $ 253,291 $ 262,189 $ 873,000 $ 853,969
Loss/(Gain) on sale of property, plant and equipment $ 50 $ (592 ) $ (19,810 ) $ (65,123 )
Unrealized (gain) on fair value of derivative financial liability $ 133,000 $ 0 $ (77,000 ) $ 0
Impairment of property, plant and equipment $ 2,921,884 $ 0 $ 2,921,884 $ 0
Foreign exchange loss $ 69,157 $ 22,715 $ 174,068 $ 25,964
Net (Loss) for the period $ ( 3,510,937 ) $ (363,744 ) $ (4,309,640 ) $ (1,161,961 )
Working Capital (Deficit) $ (3,388,864 ) $ (3,477,309 ) $ (3,388,864 ) $ (3,477,309 )
Cash (loss) from operating activities before changes in non-cash working capital $ (641,042 ) $ (318,599 ) $ (1,610,718 ) $ (881,526 )
Cash at September 30, 2014 $ 54,759 $ 216,512 $ 54,759 $ 216,512

The Net Loss for the three months ended September 30, 2014, amounted to CDN$ 3,510,937 (2013 Q3: CDN$ 363,744) and the Net Loss for the nine months ended September 30, 2014, amounted to CDN$ 4,309,640 (2013:CDN$ 1,161,961). Both three and nine months ended September 30, 2014 include an impairment loss on property, plant and equipment which amounted to $ 2,921,884.

Sales revenues for the third quarter and nine months ended September 30, 2014 amounted to CDN$ 8,376 (2013: CDN$ 473,668 and $ 1,362,200 respectively). Following the suspension of production during the fourth quarter of 2013 due primarily to lower concentrate gold grade coupled with falling gold prices, there were no shipments of concentrates sales from the mine during the third quarter and first nine months.

Cost of sales for the third quarter and nine months ended September 30, 2014 amounted to CDN$ 84,277 and $ 260,957 respectively (2013: CDN$ 437,995 and $ 1,347,416). There was a decrease in all production costs at the Omagh mine during both periods following the suspension of production during 2013.

There was an impairment of assets during the third quarter and first nine months of 2014 which amounted to $ 2,921,884 compared to $ Nil for the corresponding periods of 2013. This impairment followed a strategic review by the Company of its business, which process involved a revaluation of the Company's assets which resulted in the aforementioned impairment loss.

The Company had cash balances of $ 54,759 at September 30, 2014 compared to $ 216,512 at September 30, 2013. The working capital deficit at September 30, 2014 amounted to $ 3,388,864 compared to a working capital deficit of $ 3,477,309 at September 30, 2013.

During the second quarter Galantas completed a private placement financing for aggregate gross proceeds of approximately UK£ 516,500. Pursuant to the offering, an aggregate of 10,330,000 units were sold at a price of UK£ 0.05/CDN$0.09375 per common share. Each unit is comprised of one common share and one common share purchase warrant. In addition a shares for debt exchange of 15,125,140 common shares for CDN$ 1,389,150/ UK£ 756,157 of the Company's debt was also completed during the second quarter.

The Company's ongoing viability is dependent on obtaining planning consent for the development of an underground mine at Omagh and is actively seeking additional funding to secure sufficient financing to fund ongoing operational activity and the development of the underground mine.


Production at the Omagh mine remains suspended awaiting planning consent to continue operations underground. Due to continued delays in the planning process, management had to make significant redundancies in the workforce, alongside other cost reduction measures.

In early 2014, the Company commenced pilot tests with regards to the processing of tailing cells filled during the earlier operation of the mine. The results confirmed pre-existing data that indicated the tailings contain between 0.5g/t gold and 1 g/t gold and would meet European Union standards for definition as inert material. A low energy cost processing solution, based upon a Knelson CD12 centrifugal gravity concentrator, which was already utilised in the gold processing plant in a secondary role, was pilot tested as a prime re-treatment component for flotation tailings. The initial testwork was encouraging. The tailings did not require comminution (crushing and grinding) for re-processing by this method. Extended in-house tests with the Knelson concentrator produced a variation in results in terms of grade and recovery. Consequently, alternative gravity oriented test-work was carried out. The results successfully indicate that it is possible to uprate tailings by a low energy consuming, bulk gravity method from 0.5-1.0 g/t to 2-3 g/t gold. The higher feed grade produced in testing has been tested with froth flotation in the Company's in-house laboratory to simulate production flotation in the company's processing plant, followed by an additional gravity scavenging treatment. The results indicate that a finer grind than was previously required may be necessary to enhance the concentrate grade. An investigation of process economics suggests that the operation may best be carried out in conjunction with processing ore from the underground mine.

Reserves and Resources

During the third quarter Galantas reported on the revised updated estimate of gold resources together with a Preliminary Economic Assessment (PEA) update (see press release dated July 28, 2014). The revised estimate of resources is in compliance with the Pan European Reporting Code (PERC), Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards and Canadian National Instrument (NI) 43-101 and is summarized below.

CUT-OFF 2 g/t Au
Increase over
GAL 2013
(Au g/t)
Au Ozs
MEASURED 138,241 7.24 32,202 55%
INDICATED 679,992 6.78 147,784 21.4%
INFERRED 1,373,879 7.71 341,123 15.4%
Minerals Resources that are not Mineral Reserves do not have demonstrated economic viability.

Overall there has been a 19% increase in resources since the Galantas June 2013 Resource Report and a 60% increase in resources since the July 2012 Resource Report by ACA Howe International Ltd The increases since 2012 largely relate to the Kearney and Joshua veins, since this is where the drilling program has been concentrated. The drilling program was mainly designed to focus on increasing the quantity of Measured and Indicated resources on these two veins, to support potential bank funding opportunities for the financing of production. The resource estimate for each vein is tabulated below.

Tonnes Grade
Tonnes Grade
Tonnes Grade
KEARNEY 76,936 7.48 18,490 383,220 6.66 82,055 909,277 6.61 193,330
JOSHUA 54,457 7.25 12,693 216,211 7.92 55,046 291,204 10.74 100,588
KERR 6,848 4.63 1,019 12,061 4.34 1,683 23,398 3.2 2,405
ELKINS 68,500 4.24 9,000 20,000 5.84 3,800
GORMLEYS 75,000 8.78 21,000
PRINCES 10,000 38.11 13,000
SAMMY'S 27,000 6.07 5,000
KEARNEY NORTH 18,000 3.47 2,000
TOTAL 138,241 7.25 32,202 679,992 6.78 147,784 1,373,879 7.71 341,123

The resources are calculated at a cut-off grade of 2 g/t gold (Au), numbers are rounded, gold grades are capped at 75 g/t gold and a minimum mining width of 0.9m has been applied.

Measured and Indicated resources on Kearney vein have increased to 100,545 ounces of gold from 69,000 ounces in 2012. Measured and Indicated resources on Joshua vein have increased to 67,739 ounces of gold from 15,800 ounces in 2012. The Kearney and Joshua veins are the early targets of underground mining. Combined Measured and Indicated resource category on these two veins are estimated at 168,284 ounces of gold, with 293,918 ounces of gold in the Inferred resource category. Both vein systems are open at depth.

With regards to the Preliminary Economic Assessment a restricted portion of Inferred resources for two veins - Joshua and Kearney have been included with the Measured and Indicated resources. The Inferred resources (which have lower statistical support than Measured or Indicated Resources) are contiguous with Measured or Indicated resources and / or lie within scheduled mining areas. The use of Inferred resources, in a restricted qualifying manner, is permitted by the PERC code in regard to economic studies but is excluded within NI 43-101, except within a Preliminary Economic Assessment. PERC is an approved code is respect of NI 43-101. As part of PERC requirements, a comparative Feasibility study will be included in the detailed technical report which will not include Inferred resources and will also include studies on sensitivity to gold price.

The total of scheduled Measured and Indicated ounces utilised within the mining study is 104,627 ounces. The Inferred resources scheduled in the economic study are estimated at 60,635 ounces. Total Inferred resource estimated on the Joshua and Kearney orebodies is 293,918 ounces of gold. The amount of Inferred resources included in the PEA amounts to 20.6% of the total Inferred resources estimated on these veins. Were Inferred resources excluded within the mining plan, approximately 1 year would be removed from the estimate of mine life and annual output would be reduced.

At a gold price of UK£750 ( US$ 1,260 oz at $1.68/UK£), the pre-tax operating surplus after capital expenditure estimates an Internal Rate of Return of 72% and, at an 8% discount rate, a net present value of approximately UK£ 14.5m (CDN$ 26.6m) and a cash cost of production of UK£394 per ounce (USD$ 662 at $1.68/UK£). The study scheduled approximately 36% of the combined resources identified on the Kearney and Joshua veins. The Company notes recent falls in the value of UK£, which are project enhancing and offset recent gold price weakness.

The Company filed the complete Technical Report on SEDAR during the third quarter, as required by NI 43-101.


Following the receipt of two new licences in the Republic of Ireland earlier in 2014, Omagh Minerals Limited now holds a total of 11 exploration licenses with a total coverage of 766.5 km2. Exploration during 2014 has been restricted to conserve cash funds. Exploration reports and publications relating to the geology and known mineralisation of the two new licences referred to above were reviewed earlier in 2014. Following this, some reconnaissance fieldwork was carried out in order to identify the areas which will be prioritised for exploration over the summer. Four broad exploration targets were established, based on the potential for mineralisation with consideration given to land accessibility and suitable exposure. During the third quarter exploration work, which included detailed mapping and sampling, focused on these target areas.

In addition detailed sampling took place in an area close to the mine site where, thirty years ago, initial exploration carried out by RioFinex uncovered visible vein outcrops ('Discovery' and 'Sharkey') in the banks of a neighbouring burn. Attention and resources were subsequently diverted towards drilling the Kearney vein, following its discovery in the late 1980's. However, recent resource modelling and underground mine planning activities prompted a re-investigation of the burn veins during the third quarter, when water levels were unusually low. Two in-situ quartz veins were identified 18 m west and 35 m west of the Rio 'Discovery' vein, grab samples of quartz containing pyrite and galena measured 13.5 g/t and 0.4 g/t gold, respectively. A completely isolated zone of sulphide rich clay gouge was also uncovered 70 m east of 'Discovery', two samples were collected and analysed, yielding 23.6 and 9 g/t gold. In addition to these outcrops, several high grade boulders (float) were discovered over 40 metres from the Rio 'Sharkey vein', including those analysed at 30.4 g/t, 34.4 g/t, 39.4g/t and 44.3 g/t gold (see press release dated October 6, 2014). These boulders are comparatively large in size and are likely to be derived from a local source (see press release dated October 6, 2014). The presence of these strong gold anomalies found near to the southern boundary of the recently operating Omagh Gold Mine site has instigated a detailed investigation of new and a re-evaluation of existing targets.


Discussions continued with the planning services in Northern Ireland during 2014 with regards to the planning application for an underground mine plan and accompanying Environmental Statement which were submitted to the Planning Services in 2012. The Company understands the Planning Officer's report is well advanced and it has been advised that a determination is possible within the fourth quarter of 2014. It should be noted that the timeline for delivery of the determination is not within the control of the Company. Shareholders may see progress on the public planning portal at:-

Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "The robust results of the recent economic study, with the upcoming planning determination, which we expect to be positive, lead us to be confident about the establishment of a sound business based on the Omagh gold property."

Qualified Person

The financial components of this disclosure has been reviewed by Leo O' Shaughnessy (Chief Financial Officer) and the production, exploration and permitting components by Roland Phelps (President & CEO), qualified persons under the meaning of NI. 43-101. The information is based upon local production and financial data prepared under their supervision.

The detailed results and Management Discussion and Analysis (MD&A) are available on and and the highlights in this release should be read in conjunction with the detailed results and MD&A. The MD&A provides an analysis of comparisons with previous periods, trends affecting the business and risk factors.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including revenues and cost estimates, for the Omagh Gold project. Forward-looking statements are based on estimates and assumptions made by Galantas in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Galantas believes are appropriate in the circumstances. Many factors could cause Galantas' actual results, the performance or achievements to differ materially from those expressed or implied by the forward looking statements or strategy, including: gold price volatility; discrepancies between actual and estimated production, actual and estimated metallurgical recoveries and throughputs; mining operational risk, geological uncertainties; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign involvement; speculative nature of gold exploration; dilution; competition; loss of or availability of key employees; additional funding requirements; uncertainties regarding planning and other permitting issues; and defective title to mineral claims or property. These factors and others that could affect Galantas's forward-looking statements are discussed in greater detail in the section entitled "Risk Factors" in Galantas' Management Discussion & Analysis of the financial statements of Galantas and elsewhere in documents filed from time to time with the Canadian provincial securities regulators and other regulatory authorities. These factors should be considered carefully, and persons reviewing this press release should not place undue reliance on forward-looking statements. Galantas has no intention and undertakes no obligation to update or revise any forward-looking statements in this press release, except as required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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Galantas Gold Corporation

CUSIP : 298773
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Galantas is a gold development stage company based in Canada.

Galantas holds various exploration projects in Ireland and in Portugal.

Its main exploration properties are OMAGH - KEARNEY and OMAGH - OTHER DEPOSITS in Ireland and MONTEMOR in Portugal.

Galantas is listed in Canada, in United Kingdom and in United States of America. Its market capitalisation is CA$ 82.0 millions as of today (US$ 65.6 millions, € 57.5 millions).

Its stock quote reached its lowest recent point on April 03, 2020 at CA$ 0.01, and its highest recent level on May 28, 2021 at CA$ 0.89.

Galantas has 170 890 000 shares outstanding.

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