Galantas announces Interim results to 30th June 2012
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
22nd AUGUST 2012 : Galantas Gold Corporation (the Company) is pleased to announce its interim results for the six months ended June 30th 2012 and second quarter results for the three months ended 30 June 2012.
Highlights of the 2012 second quarter’s and first six months results, which are expressed in Canadian Dollars, are:
All figures denominated in Canadian Dollars (CDN$)
|Revenue||$ 1,902,980||$ 3,266,572||$ 2,928,126||$ 4,468,713|
|Cost of Sales||$ 993,304||$ 1,345,291||$ 2,013,811||$ 2,374,153|
|Income before the under-noted||$ 909,676||$ 1,921,281||$ 914,315||$ 2,094,560|
|Amortisation||186,624||$ 241,727||$ 371,189||$ 381,860|
|General administrative expenses||$ 397,052||$ 644,217||$ 852,514||$ 992,350|
|Gain on debt extinguishment||$ (190,624)||$ 0||$ (190,624)||$ 0|
|Foreign exchange/(gain) loss||$ (27,110)||$ (4,047)||$ (19,109)||$ 951|
|Net Income (loss) for the period||$ 543,734||$ 1,039,384||$ (99,655)||$ 719,399|
Sales revenues for the six months ended June 30, 2012 amounted to CDN$ 2,928,126 (2011: CDN$ 4,468,713) with sales revenues for the three months ended June 30, 2012 amounted to CDN$ 1,902,980 (Q2 2011: CDN$ 3,266,572). This reduction in sales revenues due to the lower level of metal produced and shipped during the quarter primarily due to the processing of lower grade ore. Sales revenues increased in Q2 compared with Q1 2012 mainly as a result of first quarter revenues being adversely impacted by lower production in addition to a downward revision on December 2011 revenues arising from an over estimation of concentrate grades on December shipments.
Cost of sales for the six months ended June 30, 2012 amounted to CDN$ 2,013,811 (2011: CDN$ 2,374,153). Cost of sales for the three months ended June 30, 2012 amounted to CDN $ 993,304 (Q2 2011: CDN$ 1,345,291). There was a decrease in various production costs at the Omagh mine during the second quarter including production wages reflecting the reduced number of personnel arising from the rationalisation programme, Oil and Fuel costs, Repairs and servicing costs and usage of Consumables. General administrative costs for the six months ended June 30, 2012 amounted to CDN$ 852,514 (2011: CDN$ 991,350). There was a non-cash gain of CDN$ 190,624 ( 2011: CDN$ Nil) during the second quarter of 2012 following the extinguishment of the Company’s convertible debenture debt.
The Net Loss for the six months ended June 30, 2012, amounted to CDN$ 99,655 (2011: Net Income CDN$ 719,399). The cash generated from operating activities for the first half of 2012 amounted to CDN$ 253,003 (2011: $ 1,208,784). The cash generated from operating activities continued to contribute towards the cost of the exploration drilling programme at the Omagh mine.
The Net Income for the three months ended June 30, 2012, amounted to CDN$ 543,734 (2011 Q2: CDN$ 1,039,384) and the cash generated from operating activities in the second quarter of 2012 amounted to CDN$ 556,321 (2011 Q2: CDN$ 1,358,594).
The Company had cash balances at June 30, 2012 of CDN$ 2,976,819 compared to CDN$ 4,240,081 at December 31, 2011. The working capital deficit at June 30, 2012 amounted to CDN$ 472,142 which compared with a deficit of CDN$ 536,142 at December 31, 2011.
Production for comparative quarters is summarised below :-
Three Months to June 30 2012
Three Months to June 30 2011
|Six Months to June 30 2012||Six Months to June 30 2011|
|Average Grade g/t gold||2.36||5.39||2.65||4.97|
|Concentrate Dry Tonnes||355||754||623||1037|
|Gold Grade (concentrate)||100||103.1||104.0||102.6|
|Gold Produced (oz)||1142||2,500||2,074.5||3,410|
|Gold Produced (kg)||35.5||77.7||64.5||106|
|Silver Produced (oz)||3,360||5,586||5,607||8,034|
|Silver Produced (kg)||104.5||173.8||174.5||249.9|
|Lead Produced tonnes||27||120.6||51.9||170.7|
|Gold Equivalent (oz)||1,245||2,829||2,251||3,892|
Production at the Omagh mine during the three months ended June 30, 2012, while above production levels achieved during both the first quarter of 2012, was significantly below production levels of the second and subsequent quarters of 2011 due primarily to the processing of lower grade ore. As a result of the lower grade ore, gold equivalent production for the six months ended June 30, 2012 was 2,251 ounces (2011: 3,892 ounces).
The main mine production focus during the second quarter has been on the open pit mining of the Kearney and Kerr veins together with the processing of ore from the low grade stockpile. Production from Kearney was restricted due to limitations in the disposal of surplus rock which had been stockpiled over a period of time and has now reached capacity levels which has impacted negatively on production from the Kearney open pit.
Ore mined from Kearney north during the quarter produced lower than expected grades due to both lower grade of ore mined and narrower than expected widths which led to excessive dilution of the mined ore. Mining from the Kerr veins during the quarter was reasonably successful with two of the veins mined being of high grade with the remaining two being more problematical.
During the second quarter the mill was fed with a combination of lower grade ore which was blended with ore from Kearney and Kerr. However production was hampered by the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled. Production was also hampered during the quarter by unplanned downtime in the plant which continued to be problematical.
The 2011 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. 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.
The major focus of exploration activities in 2012 has been the 15,000 metre drilling programme with approximately 10,500 metres having being drilled since the programme commenced in 2011.
The drilling program, with six drills operational, continued during the second quarter of 2012 when nineteen additional holes were drilled covering 3,852 metres of exploration drilling mainly on the Kearney and Joshua veins with significant intersects being identified at depth. There were four holes drilled on the Kearney vein, thirteen on the Joshua vein and two holes were drilled north of Kerr to target induced polarization anomalies. Drilling at Kearney is being carried out with the objective of gaining a more accurate picture of the zone of mineralization for the purpose of underground development. Drilling on Kearney during the quarter was mainly at depth from off-site locations. Drilling on Joshua focused on the North and Central Joshua veins during the second quarter. On the North vein the strike has been further increased by 70 m during the second quarter and the proven depth of mineralisation on the northern section has increased by 40 m to a vertical depth of 115 m. The northern boundary of the site has now been reached and the rig has now moved onto south Joshua to target the vein at depth. Drilling on the Central Joshua vein was also successful and strengthened the view of a westerly dipping vein in this region with high grade mineralisation at depth.
Further phases of channel sampling continued on the Kearney, Joshua and Kerr veins during the quarter. Assay results released to date from both the drilling and channel sampling programme have been encouraging with significant gold intersections being identified as previously announced. Assay results from this programme will continue to be announced as and when they are received. The encouraging exploration results to date, has enabled a further expansion of the program to receive active ongoing consideration.
An independent, National Instrument 43-101 compliant, Mineral Resource Estimate and Preliminary Economic Assessment for Galantas Gold Corporation's Omagh gold deposit in Northern Ireland, prepared by ACA Howe International Ltd, has been filed with SEDAR and is available on the Company’s website. The study was summarised in a press release dated 3rd July 2012. A further assessment is scheduled after the 15,000 metre drilling program is complete.
Discussions with the regulatory authorities in Northern Ireland continued during the second quarter of 2012. While permission is still awaited regarding three of the four planning applications submitted to the planning service authorities in 2011 progress was made during the second quarter with permission expected to be granted in the near future. Two of the applications are in connection with proposals to drill boreholes to determine mineralization at depth on the Kearney and Joshua veins. The fourth application is in connection with the construction of a lower portal structure and truncated adit for underground mining on the Kearney vein. Permission has already been granted for the renovation and construction of passing bays for the removal of surplus rock in order to make additional ore available for mining.
A permitting application for an underground mine, with accompanying Environmental Impact Assessment (EIA), was lodged with the Planning Service, Department of Environment Northern Ireland (DOENI) on Friday 6th June 2012. The EIA builds on some 13 years of detailed monitoring that has taken place on the Omagh site. Nine independent consultants have studied their areas of specialism related to the proposal and their reports form the body of the Assessment. The EIA covers Air Quality and Dust, Cultural Heritage, Flora and Fauna, Flood Risk and Drainage, Geology, Hydrogeology and Hydrology, Geotechnical, Landscape and Visual Amenity, Noise and Vibration, Socio-economic, Transportation and Traffic, which were the areas for study identified in guidance from the Planning Service (DOENI).
Roland Phelps, President & CEO, Galantas Gold Corporation commented, “The Preliminary Economic Assessment carried out by ACA Howe, which shows high Internal Rates of Return and low cash cost of production, in a politically stable jurisdiction, confirms our confidence in the Omagh property. We expect to continue to further invest in drilling and infra-structure, moving to a more detailed feasibility with the goal of establishing an underground operation around a target production of 50,000 ounces per year of gold in concentrate. Discussions have already been initiated with potential lenders to gauge interest in development loan finance opportunities, with encouraging results.”
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.
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.
Galantas Gold Corporation
Jack Gunter P.Eng – Chairman
Roland Phelps C.Eng – President & CEO
Telephone: +44 (0) 2882 241100
Investor Relations Consultant
Courtenay Heading (Maclir Consulting Ltd)
Email : c.heading@Galantas.com
Telephone : (UK) +44 (0) 7624 424 455
Charles Stanley Securities (Nominated Adviser)
Telephone +44 (0)20 7149 6000