June 16th, 2011: Galantas Gold Corporation (the ‘Company’) results for the three months ended March 31st, 2011 have been published. These financial results, together with the comparatives for the three months ended March 31st, 2010, are being reported for the first time under International Financial Reporting Standards (“IFRS”) which replaces Canadian General Accounting Policies effective January 1, 2010 for all publically accountable enterprises in Canada.
The net loss for the three months ended March 31, 2011 amounted to CDN$ 319,985 compared to a Net Income of CDN$ 486,141 for the three months ended March 31, 2010. The loss for the first quarter of 2011 was mainly attributable to reduced production at the Omagh mine. The lower production is attributed to the specific circumstances that prevailed during the quarter, including the upgrade of the flotation plant which resulted in production interruptions for periods of time. When the net income/loss is adjusted for non cash items (before changes in non-cash working capital), cash generated from operating activities amounted to CDN$ (149,810) for the three months ended March 31, 2011 compared to CDN$ 728,890 for the three months ended March 31, 2010. Cash generated from operating activities after changes in non-cash working capital for the first quarter of 2011 amounted to CDN$ (578) compared to CDN$ 24,903 for the corresponding period of 2010.
Highlights of the Company’s reported figures for the first quarter of 2011, which are expressed in Canadian Dollars, are as follows:
|Three Months Ended March 31|
|Average Grade (g/t gold)||4.0||8.6|
|Concentrate Dry Tonnes||282.5||594.9|
|Concentrate Gold Grade (g/t)||100.3||109.6|
|Gold Produced - kg (troy ozs)||28.3 kg (910oz)||65.2 kg (2,096oz)|
|Concentrate Silver Grade (g/t)||269.4||347.6|
|Silver Produced kg (troy ozs)||76.1 kg (2,446oz)||206.6 kg (6,6420z)|
|Lead Produced (tonnes)||50.1||94.2|
|Gold Equivalent (troy.ozs)||1,063||2,386|
The detailed results and Management Discussion and Analysis (MD&A) are available on www.sedar.com and www.galantas.com 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. Some of the production and metal figures are provisional and subject to averaging or umpiring provisions under the concentrate off-take contract with Xstrata Corporation detailed in a press release dated 3rd October 2007.
Omagh Minerals Ltd (OML), the Company’s 100% owned, main operating subsidiary, is disappointed to announce that it will be consulting with employees regarding some potential redundancies at its Omagh Gold Mine site. Redundancies are potentially required to deliver continued viability of the mining and processing operation, though OML will examine a range of options with employees. The potential redundancies are related to delays in the planning process relating to surplus rock, which is heaped in seeded stockpiles (now full) and which OML planned to integrate into the local aggregate market. Although OML is required under its planning permission to dispose of the surplus rock from the site, it is currently prevented by the Planning Service of Department of Environment Northern Ireland (DOENI) from doing so until that consent is confirmed. The Company notes that the Planning Service of DOENI, who through a Management Committee, is the usual final arbiter, is on record as recommending the Company’s application for approval.
The open pit on the Kearney Vein, which generates the surplus rock, has been backfilled as far as it is safe to do so, consistent with permitted extraction. Safety is the Company’s number one priority. The Company considers (in conjunction with specialist advice) that a portion of the surplus rock stock pile is required to be disposed before routine operations in the Kearney open pit continue.
Production at the mine site will continue through working of the Kerr Vein, which although narrow, was recently reported (21st April 2011) as containing gold grades expected to be economic and this material will be blended with available lower grade material. The Kerr Vein is a smaller structure than the Kearney Vein and is permitted to carry only a relatively small open pit. The Kerr open pit is designed to form part of the permanent tailings storage arrangement at the mine.
Improvements to the processing plant were largely completed during the last quarter of 2010 and the first quarter of 2011, despite very difficult weather conditions. Outstanding items include the commissioning of a larger primary crusher and some electrical work. A plant throughput test has indicated a capacity of up to 21.9 tonnes per hour, depending on ore type, though this should not be assumed to be the ongoing routine operating rate.
Gold Concentrate production has increased markedly in April and May 2011. Production so far in the second quarter has improved, with approximately 173 wet tonnes of concentrate produced in April and approximately 282 wet tonnes of concentrate produced during May. The Mill, which operates on a 24 hour / 7 day week basis, shut for planned maintenance for 4 days in early May, to allow the main ball mill to be re-lined, feed bins re-plated and other maintenance work. The total invoiced values of shipped containers produced during April and May are estimated to exceed US$ 1.8m.
The Company is engaged in an active exploration program. A contractor’s drill rig is operating and delivery is expected shortly of a second contractor’s rig. A new drilling rig has been purchased, delivered and commissioning is anticipated within the next 14 days. Another rig, purchased in the knowledge that it required a refurbishment and adaption, has received its initial assessment and quotations for the work are expected in the near term.
The Company is working towards an Environmental Impact Assessment and Planning Application relating to the establishment of an underground mine on the Kearney Veins and other veins. Underground mining operations generally do not generate the same quantities of rock that an open pit generates and the underground mine would likely employ a backfill system to dispose of a substantial portion of surplus rock that it does create.
This financial components of this disclosure has been reviewed by Leo O’ Shaughnessy (Chief Financial Officer) and the production components by Richard Crew (General Manager), qualified persons under the meaning of N.I 43-101. The information is based upon local production and financial data prepared under their supervision.
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; 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.
Galantas Gold Corporation Issued and Outstanding Shares total 235,650,055
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