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Galantas Q3 Results and Update

GALANTAS GOLD CORPORATION

TSXV & AIM : Symbol GAL

 

GALANTAS INTERIM RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013

22nd NOVEMBER 2013: Galantas Gold Corporation (the Company) is pleased to announce its interim results for the nine months ended September 30th 2013 and third quarter results  for the three months ended September 30th 2013.

Financial Highlights

Highlights of the 2013 third quarter’s and first nine months results, which are expressed in Canadian Dollars, are: 

All figures denominated in Canadian Dollars (CDN$)

Third Quarter Ended

 September 30

 

      2013                    2012

Nine Months Ended

 September 30

 

      2013                         2012

Revenue

$   473,668

$ 855,813

$    1,362,200

$ 3,783,939

Cost of Sales

$    437,995

$    792,386

$    1,347,416

$ 2,806,197

Income before the undernoted

$      35,673

$    63,427

$  14,784

$     977,742

Amortization

$    115,105

$     155,078

$   361,935

$    526,267

General administrative expenses 

$    262,189

$     374,078

$   853,969

$  1,241,038

(Gain) on sale of plant and equipment

$    (592)

$    (1,147)

$   (65,123)

$  (15,593)

(Gain) on debt extinguishment

$                0

$  0

$                 0

$(190,624)

Foreign exchange loss

$       22,715

$    31,078

$        25,964

$  11,969

Net (Loss) for the period  

$ ( 363,744)

$     (495,660)

$  (1,161,961)

$  (595,315)

Working Capital (Deficit)

$ (3,477,309)

$ (1.672,628)

$ (3,477,309)

$(1,672,628)

Cash (loss) from operating activities before changes in non-cash working capital

$ (318,599)

$    (289,853)

$ (881,526)

$ (36,850)

Cash at September 30, 2013

$ 216,512

$2,021,513

$ 216,512

$2,021,513

 

The Net Loss for the three months ended September 30, 2013, amounted to CDN$ 363,744 (2012 Q3: Net Loss CDN$ 495,660) and the cash loss from operating activities before changes in non-cash working capital in the third quarter of 2013 amounted to CDN$ 318,599 (2012 Q3:Cash loss CDN$ 289,853). The cash generated from processing low grade material at the Omagh mine was positive on a strict operational basis before the inclusion of administration costs and overheads in the third quarter (Q3), following a reduction in costs.

Sales revenues for the nine months ended September 30, 2013 amounted to CDN$ 1,362,200 (2012: CDN$ 3,783,939) with sales revenues for the three months ended September 30, 2013 amounted to CDN$ 473,668 (Q3 2012: CDN$ 855,813).  This reduction in sales revenues is due to the lower level of metal produced and shipped during both periods primarily due to the requirement to process ore from the low grade stockpile at the Omagh mine as a result of difficulties in accessing ore from the open pits.  The gold price for the third quarter and first nine months of 2013 was below the price that prevailed in 2012 which has also adversely impacted sales revenues.

Cost of sales for the nine months ended September 30, 2013 amounted to CDN$ 1,347,416 (2012: CDN$ 2,806,197).  Cost of sales for the three months ended September 30, 2013 amounted to CDN $ 437,995 (Q3 2012: CDN$ 792,386). There was a decrease in various production costs at the Omagh mine during the third quarter, including production wages reflecting the reduced number of personnel arising from the rationalization programme, Oil and Fuel costs, Repairs and servicing costs, Equipment hire and usage of Consumables which reductions were primarily attributable to the reduced level of open pit mining during both periods when compared with 2012.

The Net Loss for the nine months ended September 30, 2013, amounted to CDN$ 1,161,961 (2012: Net Loss CDN$ 595,315).  The cash loss from operating activities before changes in non-cash working capital for the nine months of 2013 amounted to CDN$ (881,526) (2012: Cash loss $ 36,850).

Production

Production for comparative periods are summarized below:

 

 Three Months to September 30

2013

Three Months to September 30

2012

 Nine Months to September 30 2013

Nine Months to  September 30 2012

Tonnes Milled

12,180

11,292

35,951

35,748

Average Grade g/t gold

1.37

1.9

1.32

2.4

Concentrate Dry Tonnes

173.3

226.7

463.3

849.7

Concentrate Gold Grade g/t

82.4

95.2

87.2

101.6

Gold Produced (oz)

459

696

1,297.7

2,780

Gold Produced (kg)

14.3

21.6

40.4

86.4

Concentrate Silver Grade g/t

185.7

117.3

169.8

238

Silver Produced (oz)

1,035

856

2,530

6,498

Silver Produced (kg)

32.2

26.6

78.7

202

Lead Produced tonnes

15.5

10.1

37.5

58.4

Gold Equivalent (oz)

500

722

1,380

2,973

Concentrate production at the Omagh mine during the three and nine months ended September 30, 2013 was significantly below production levels of the corresponding periods of 2012 due primarily to the to the requirement to process lower grade ore from the stockpile as a result of difficulties in accessing ore from the open pits. 

The main production focus during the third quarter has been on the processing of ore from the low grade stockpile. Earlier in the year there had been some limited open pit mining on the Kerr vein which ceased later in the first quarter when the pit met its planned design limit. From the second half of 2012 mining from the Kearney pit had become totally restricted as a result of the surplus rock stockpile on the site reaching capacity levels. This surplus rock was due to be transported from the site in 2012 with the Omagh mine having completed construction of public road improvements, at its own cost, to comply with the conditions of the planning consent. However, following a judicial review brought by a private individual on the grounds of procedural failings by Planning Service, the planning consent was quashed with the surplus rock remaining on site. This ongoing limitation will result in future production continuing to be from low grade sources. To generate cash from its operations going forward, the Company continued to improve efficiencies and cut costs during the third quarter.

During the three and nine months ended September 30, 2013  the mill was fed with the lower grade ore and production continued to be hampered by both the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled and the clay content of stocked material. The concentrate gold grade fell during the third quarter and subsequent to September 30, 2013 the gold grade has weakened further. This has resulted in the Company commencing a review regarding the economics of continuing in production. In the meantime, further cost reduction measures are being implemented.

The 2013 production figures and metal contents are provisional and subject to averaging or umpiring provisions under the concentrate off – take agreement detailed in a press release dated October 3, 2007.

Exploration

The major focus of exploration activities in 2012 and the first nine months of 2013 has been the continuation of the successful drilling program. In total, 17,348 metres have been drilled since the program commenced in March 2011 with significant gold intersects being reported.

The drilling programme began in 2011 with the objective of extending the depth and extent of the Joshua vein and providing data for a potential underground operation based upon the Joshua and Kearney veins.  During 2011 and 2012 ninety five holes were drilled totaling 16,704 metres . Channel sampling was also carried out, during this period, on the Joshua, Kearney and Kerr vein systems. On Joshua, a total strike length of 213 metres was sampled. On Kerr, an increase in average vein width and gold grade was identified within depth over a 30 metre strike length.

The exploration programme had expanded considerably in 2012 with six drills operational during the first half of the year. The second half of the year saw the number of rigs progressively reduce with one rig, owned by the Company, remaining in operation by the end of 2012. The two principal objectives of the drilling programme were to complete the deeper holes on Kearney in order to gain a more accurate picture of the zone of mineralization for the purpose of the underground mine plan and to extend the strike of Joshua to the north and the south, and begin to target deeper sections of the vein. Drilling continued at a reduced rate in 2013 but this work has now been suspended, pending the availability of cash for further exploration. Following the scale back of drilling in 2013, more time was dedicated to logging remaining drill cores, the sealing off of all accessible drill holes, updating databases and progressing towards a resource estimate using the Micromine geological modelling computer program. 

Assay results released to date from both the drilling and channel sampling programme have been encouraging with significant gold intersections being identified. The updated resource estimate (Technical Report July 2013) contains all material data related to the program (with the exception of one hole detailed in a disclosure dated 27th August 2013). Results to date have been positive, in particular the assays from the ten drill holes on Joshua released in January 2013 with thirteen significant mineral intersects. During the quarter Galantas reported positive assay results from the first drill hole completed on the Joshua vein during the third quarter. This drill hole is the second deepest intersect yet drilled on Joshua Vein and averaged 12.4 g/t gold, over a true width of vein of 2.8 metres. The top of the mineralised intersect is estimated to be at a vertical depth of 137.2 metres. The hole was terminated at a down-hole length of 171.8 metres (see press release dated August 27, 2013).

Once additional funding becomes available this drilling programme will continue. Up to a further 1,000 metres of drilling are planned, following up the recently reported gold intersects on the Joshua vein.

During 2012 the Company ACA Howe International Ltd (Howe UK) completed an Interim Resource Estimate to Canadian National Instrument NI 43-101 compliant mineral resource estimate and a Preliminary Economic Assessment for the Omagh Gold Project (see press release dated July 3, 2012) This report, which was based on drilling results and analyses received to June 8, 2012, identified all resources discovered at that date. The Company subsequently filed a complete Technical Report on SEDAR in August 2012. An updated resource estimate was prepared by the Company during the second quarter based on drilling results received to May 5, 2013 (see press release dated June 12, 2013). The drilling program, subsequent to June 2012, was targeted to increase the amount of measured and indicated resources related to the potential development of an underground mine. There has been an 50% increase in resources classified as measured and indicated from a total of 95,300 troy ounces gold (2012) to 142,533 troy ounces gold  and a 28% increase in Resources classified as inferred, from 231,000 troy ounces gold (2012) to 295,599 troy ounces gold (2013). The overall increase is 34%. Subsequent to June 30, 2013 Galantas filed an updated Technical Report on SEDAR in July 2013.

Limited exploration outside the mine licence area continued during the first half of 2013. With regards to the seven licenses held in the Republic of Ireland, geochemical soil sampling and geophysical data generated by the Tellus Border Project, a cross border initiative funded by the EU regional development fund, was released earlier in the year. The data revealed the continuation of a trend established on licence OM4 with anomalously high concentrations of gold pathfinder elements. This data has assisted in the design of a field programme which was carried out during the third quarter. Earlier in the year Omagh Minerals were awarded a grant to complete a project which will determine the prospectivity potential of the Tellus border zone as a whole. This research is supported by the EU INTERREG IVA-funded Tellus Border project, a cross border initiative financed by the EU regional development fund. It is based around the new Tellus Border data and the associated fieldwork was carried out during the third quarter. Application has been made for a further two prospecting licenses in the Republic of Ireland which were acknowledged during the quarter and are now awaiting a final decision.

Planning

Discussions continued with the planning services in Northern Ireland during the third quarter of 2013 with regards to the planning application for an underground mine plan and accompanying Environmental Statement which were submitted to the Planning Services in 2012. Consultations with statutory consultees continues to progress, with additional information requested now filed with the Planning Service for consideration by consulteees.

Roland Phelps, President & CEO, Galantas Gold Corporation, commented, “The Company continues to work with Planning Service and consultees to achieve underground planning consent.  The Company has been advised by its consultants that the time-line for planning determination will likely now slip into Q1 2014 although the date is undefined because it is in the hands of other parties.   Further cost reductions are being made and we look forward to updating shareholders in due course.”

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 (now Glencore Canada Corporation) detailed in a press release dated 3rd October 2007.

The financial  disclosure has been reviewed by Leo O’ Shaughnessy (Chief Financial Officer) and other disclosure by Roland Phelps (President & CEO), qualified persons under the meaning of NI. 43-101. The information is based upon financial and other 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; mining operational risk; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign involvement; speculative nature of gold exploration; dilution; competition; loss 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 256,210,395.

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.

Enquiries

Galantas Gold Corporation
Jack Gunter P.Eng – Chairman
Roland Phelps C.Eng – President & CEO
Email: info@galantas.com
Website: www.galantas.com
Telephone: +44 (0) 2882 241100




Charles Stanley Securities (Nominated Adviser)

Mark Taylor

Telephone +44 (0)20 7149 6000

 

Share Price

TSX-V (CDN $): 0.09

AIM (£ p): 4.875

Gold Price (oz)

USD : 1,272.50

GBP : 960.99

The figures presented here are for informational purposes of current trends only and should not be considered an exact count

This page and other parts of the website contain statements relating to the intentions of the management to develop mine production and jewellery production. Such statements are forward looking and readers are cautioned that these statements are subject to risk and uncertainties as further detailed in quarterly Management Discussion and Analysis published on www.sedar.com

Approved for website uploading : R.Phelps