Galantas announces Q3 2012 results
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS INTERIM RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2012
23rd November 2012 : Galantas Gold Corporation (the Company) is pleased to announce its interim results for the nine months ended September 30th 2012 and third quarter results for the three months ended September 30th 2012.
Highlights of the 2012 third quarter’s and first nine months results, which are expressed in Canadian Dollars, are:
All figures denominated in Canadian Dollars (CDN$)
Third Quarter Ended September 30, 2012
Third Quarter Ended September 30, 2011
Nine Months Ended September 30 2012
Nine Months Ended September 30 2011
|Revenue||$ 855,813||$ 2,510,985||$ 3,783,939||$ 6,979,698|
|Cost of Sales||$ 792,386||$ 1,247,229||$ 2,806,197||$ 3,621,382|
|Income before the undernoted||$ 63,427||$ 1,263,756||$ 977,742||$ 3,358,316|
|Amortization||$ 155,078||$ 222,079||$ 526,267||$ 603,939|
|General administrative expenses||$ 372,931||$ 655,568||$ 1,225,445||$ 1,647,918|
|Gain on debt extinguishment||$ 0||$ 0||$ (190,624)||$ 0|
|Foreign exchange/(gain) loss||$ 31,078||$ (59,537)||$ 11,969||$ (58,586)|
|Net Income (Loss) for the period||$ (495,660)||$ 445,646||$ (595,315)||$1,165,045|
Sales revenues for the nine months ended September 30, 2012 amounted to CDN$ 3,783,939 (2011: CDN$ 6,979,698). Sales revenues for the three months ended September 30, 2012 amounted to CDN$ 855,813 (Q3 2011: CDN$ 2,510,985). The reduction in sales revenues in both periods when compared to the corresponding periods of 2011 was due to the lower level of metal produced and shipped during the quarter. The lower production levels were primarily due to the requirement to process lower grade ore from stockpile as a result of difficulties in accessing the lower part of the ore-body in the northern section of the Kearney Open Pit, as a result of the Company being unable to transport surplus rock off-site, following the planning consent being quashed on the grounds of procedural failings by the Planning Service.
Cost of sales for the nine months ended September 30, 2012 amounted to CDN$ 2,806,197 (2011: CDN$ 3,621,382). Cost of sales for the three months ended September 30, 2012 amounted to CDN $ 792,386 (Q3 2011: CDN$ 1,247,229). There was a decrease in various production costs at the Omagh mine during the nine months and third 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 with reductions mainly attributable to the reduced level of mining activity during both periods. There was a non-cash gain of CDN$ 190,624 (2011: CDN$ Nil) during the nine months ended September 30, 2012 following the extinguishment of the Company’s convertible debenture debt during the second quarter.
The Net Loss for the nine months ended September 30, 2012, amounted to CDN$ 595,315 (2011: Net Income CDN$ 1,165,045). The cash generated from operating activities after changes in non-cash working capital for the first nine months of 2012 amounted to CDN$ 688,373 (2011: $ 2,777,908). The cash generated from operating activities continued to contribute towards the cost of the exploration drilling programme at the Omagh mine.
The Net Loss for the three months ended September 30, 2012, amounted to CDN$ 495,660 (2011 Q3: Net Income CDN$ 1,165,045). The cash loss from operating activities after changes in non-cash working capital in the third quarter of 2012 amounted to CDN$ (135,088) which compared with cash generated from operations of CDN$ 1,514,081 for the third quarter of 2011.
The Company had cash balances at September 30, 2012 of CDN$ 2,021,513 compared to CDN$ 4,240,081 at December 31, 2011. The working capital deficit at September 30, 2012 amounted to CDN$ 1,672,628 which compared with a deficit of CDN$ 536,142 at December 31, 2011.
Production for the third quarter and first nine months of 2012 are summarised below :-
|Three Months to September 30, 2012||Three Months to September 30, 2011||Nine Months to September 30, 2012||Nine Months to September 30, 2011|
|Average Grade g/t gold||1.9||4.34||2.4||4.73|
|Concentrate Dry Tonnes||226.7||545||849.7||1,582|
|Gold Grade (concentrate)||95.2||91.2||101.6||98.3|
|Gold Produced (oz)||696||1,597||2,780||5,007|
|Gold Produced (kg)||21.6||49.6||86.4||155.6|
|Silver Produced (oz)||856||4,142||6,498||12,176|
|Silver Produced (kg)||26.6||128.8||202||378.7|
|Lead Produced tonnes||10.1||56.3||58.4||227|
|Gold Equivalent (oz)||722||1,766||2,973||5,658|
Whilst ore milled during the third quarter of 2012, at 11,292 tonnes, was 18% below ore milled in the third quarter of 2011 both concentrate and metal production in the third quarter were significantly lower than the third quarter of 2011 which was primarily due to the low grade of the ore milled. These low grades are directly attributable to the processing of low grade material which accounted for 80% of ore milled. The high level of low grade material processed was due to the increasing lack of available ore from the Kearney open pit. Mine production during the quarter was mainly from the Kerr vein. Production from Kearney was totally restricted in the third quarter by the surplus rock stockpile on the site which reached capacity levels. This surplus rock was due to commence being transported from the site during the current quarter with the Omagh mine having completed construction of public road improvements at its own cost to comply with the conditions of the recent planning consent. However, following a judicial review brought by a private individual on the grounds of procedural failings by Planning Service, the planning consent has now been quashed. This ongoing limitation has and will result in low grade material continuing to be processed for the immediate future. To generate cash from its operations going forward, the Company has continued to cut costs. Because of adverse impact on current and future production levels it is unlikely that sufficient ore will be available to maintain current employment on the mine site until the underground mine is permitted. This resulted in the mine commencing a redundancy programme during the third quarter to further reduce the workforce.
Mining from the Kerr veins during the quarter was reasonably successful with one of the veins mined (vein no.4) being of high grade. For the short term, Kerr is expected to produce small quantities of high grade material, which will be used to sweeten the grade of material to the processing plant.
During the third quarter the mill was mainly fed with lower grade. Whilst the modifications that were made to the flotation and crushing circuits in 2011 and in the first quarter of 2012 have proven to be successful, some further changes are being completed to increase throughput. Production was hampered during the quarter by the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled and an increased clay content. Planned improvements to the milling circuit, which will result in decreased labour costs, are expected to be completed in November and will contribute towards the Company’s objective to achieve positive cash flow from operations for the remainder of the operating year.
The 2012 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 successful drilling programme, with 14,016 metres having being drilled since the programme commenced in March 2011 and with significant gold intersects reported.
The drilling program continued into the third quarter of 2012 with the number of drills rigs in operation being reduced to three rigs by the end of the third quarter. During the third quarter 3,177 metres were drilled with fifteen holes targeting the Joshua vein, two holes on the Kearney vein and four holes on the Kerr vein. The main objective of the third quarter drilling programme was to continue to extend the known strike of the Joshua vein to the south, to hone in on areas of the Joshua vein which require further infill drilling to increase the indicated resource category, to complete the long hole drilling programme on the Kearney vein and to explore new targets at the eastern Lagoon and Kerr veins.
Most of the drilling on the Joshua vein during the third quarter has been concentrated on the central and southern regions of the Joshua vein. Earlier, section drawings of logged core and wireframe construction using Micromine, revealed that this portion of the vein dips steeply to the west, in contrast to the northern stretch which dips to the east. A series of new drill hole locations were developed with this model in mind, and recent drilling has continued to intersect the westerly dipping vein between vertical depths of 31 and 104 m. Further drilling will continue to target the vein southwards in the fourth quarter. A review to prioritise new targets within the mine site, and in particular the mapping of the Kerr veins which showed that the veins fan out towards the north, has indicated that there could be a target towards the south of the property. Three holes have been drilled with an additional hole in progress at the end of the quarter and some significant intercepts have been identified at depth.
Further phases of channel sampling continued on the Kearney, Joshua and Kerr veins during the third quarter. Assay results released to date from both the drilling and channel sampling programme have been encouraging with significant gold intersections being identified (see press releases dated September 15, 2011, September 20, 2011, October 4, 2011 and October 20, 2011, November 28, 2011, January 12, 2012 April 5, 2012, June 11, 2012 and September 25, 2012). Assay results from this programme will continue to be announced as and when they are received.
In March 2012 the Company appointed ACA Howe International Ltd (Howe UK) to prepare an Interim Resource for the Omagh Gold Project to Canadian National Instrument NI 43-101 standard. During the third quarter Galantas reported that it had received initial data from ACA Howe related to it’s preparation of an NI 43-101 compliant mineral resource estimate and a Preliminary Economic Assessment (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. A further updated report is expected to be prepared early in 2013 on completion of the 15,000 metre drilling programme incorporating drilling results and analyses received subsequent to June 2012.
Planning consent was received from the Planning Services during the third quarter for the application for the construction of a lower portal structure and truncated adit for underground mining on the Kearney vein. Planning consent is still awaited on applications in connection with the drilling of boreholes to determine mineralization at depth on the Kearney and Joshua veins. Discussions with the regulatory authorities continued during the quarter with regards to the underground mine plan and accompanying Environmental Statement which were submitted to the Planning Services during the second quarter.
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