Galantas Q2 2013 Results and Activity Summary
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
29th AUGUST 2013 : Galantas Gold Corporation (the Company) is pleased to announce its interim results for the six months ended June 30th 2013 and second quarter results for the three months ended 30 June 2013.
Highlights of the 2013 second quarter’s and first six months results, which are expressed in Canadian Dollars, are:
All figures denominated in Canadian Dollars (CDN$)
|Second Quarter ended June 30th 2013||Second Quarter ended June 30th 2012||Six Month Ended June 30th 2013||Six Month Ended June 30th 2012|
|Revenue||$ 523,856||$ 1,902,980||$ 888,532||$ 2,928,126|
|Cost of Sales||$ 511,833||$ 993,304||$ 909,421||$ 2,013,811|
|Income(loss) before the undernoted||$ 12,023||$ 909,676||$ (20,889)||$ 914,315|
|Amortization||$ 122,224||$ 186,624||$ 246,830||$ 371,189|
|General administrative expenses||$ 294,721||$ 413,004||$ 591,780||$ 866,960|
|(Gain) on sale of plant and equipment||$ (64,531)||$ (15,952)||$ (64,531)||$ (14,446)|
|Gain on debt extinguishment||$ 0||$ (190,624)||$ 0||$(190,624)|
|Foreign exchange/(gain) loss||$ 17,272||$ (27,110)||$ 3,249||$(19,109)|
|Net (Loss) Income for the period||$ ( 357,663)||$ 543,734||$ (798,217)||$ (99,655)|
|Working Capital (Deficit)||$ (3,037,837)||$ (472,142)||$ (3,037,837)||$(472,142)|
|Cash (loss) generated from operating activities before changes in non-cash working capital||$ (323,010)||$ 556,321||$ (562,917)||$ 253,003|
|Cash at June 30, 2013||$ 476,581||$2,976,819||$ 476,581||$2,976,819|
The Net Loss for the three months ended June 30, 2013, amounted to CDN$ 357,663 (2012 Q2: Net Income CDN$ 543,734) and the cash loss generated from operating activities before changes in non-cash working capital in the second quarter of 2012 amounted to CDN$ 323,010 (2012 Q2:Cash gain CDN$ 556,321). The cash generated from processing low grade material was positive on a strict operational basis before the inclusion of administration costs and overheads in the second quarter (Q2), following a reduction in costs.
Sales revenues for the six months ended June 30, 2013 amounted to CDN$ 888,532 (2012: CDN$ 2,928,126) with sales revenues for the three months ended June 30, 2013 amounted to CDN$ 523,856 (Q2 2012: CDN$ 1,902,980). 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 from stockpile ore at the Omagh mine as a result of difficulties in accessing ore from the open pits.
Cost of sales for the six months ended June 30, 2013 amounted to CDN$ 909,421 (2012: CDN$ 2,013,811). Cost of sales for the three months ended June 30, 2013 amounted to CDN $ 511,833 (Q2 2012: CDN$ 993,304). 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 which reductions were primarily attributable to the reduced level of open pit mining during both periods when compared with 2012. General administrative costs for the six months ended June 30, 2013 amounted to CDN$ 591,780(2012: CDN$ 866,960). General administrative costs for the three months ended June 30, 2013 amounted to CDN$ 294,721(2012: CDN$ 413,004).
The Net Loss for the six months ended June 30, 2013, amounted to CDN$ 798,217 (2012: Net Loss CDN$ 99,655). The cash loss generated from operating activities before changes in non-cash working capital for the first half of 2013 amounted to CDN$ (562,917) (2012: Cash gain $ 253,003).
The Company had cash balances at June 30, 2013 of CDN$ 476,581compared to CDN$ 2,976,819 at June 30, 2012. The working capital deficit at June 30, 2013 amounted to CDN$ 3,037,837 which compared to a deficit of CDN$ 472,142 at December 31, 2011.
Production for comparative quarters is summarised below:
Three Months to June 30th 2013
Three Months to June 30th 2012
|Six Months to June 30th 2013||Six Months to June 30th 2012|
|Average Grade g/t gold||1.34||2.36||1.3||2.65|
|Concentrate Dry Tonnes||145||355||290||623|
|Gold Grade (concentrate)||94.4||100||90.6||104|
|Gold Produced (oz)||441||1,152||838.7||2,084|
|Gold Produced (kg)||13.7||35.8||26.1||64.8|
|Silver Produced (oz)||975||3,395||1,495||5,642|
|Silver Produced (kg)||30.3||105.5||46.5||174.5|
|Lead Produced tonnes||6.9||23.4||11||48.3|
|Gold Equivalent (oz)||467||1,245||880||2,251|
Concentrate production at the Omagh mine during the three and six months ended June 30, 2013 was significantly below production levels of the corresponding periods of 2012 due primarily to the processing of lower grade ore.
The main production focus during the second 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 the low grade stockpile. To generate cash from its operations going forward, the Company is continuing to improve efficiencies and cut costs during the second quarter.
During the three and six months ended June 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. Production was also hampered by some unplanned downtime in the plant.
The reinstatement of a third paste cell was completed during the first quarter. Work, which had commenced in early 2012, on the development of a number of paste cells already permitted, in preparation for their future utilisation when underground mining at the Omagh mine commences was also progressed earlier in 2013 following the cessation of mining on the Kerr vein.
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.
The major focus of exploration activities in 2012 and the first half of 2013 has been the continuation of the successful drilling program. In total, 16,879 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 totalling 16,347 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 in to the first quarter of 2013 when two further holes targeting north Kearney and central Joshua were completed and a further drill hole commenced in the second quarter. 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. Once additional funding becomes available this drilling programme will continue using the company’s own core drilling rig manned by in-house drillers. Up to a further 1,000 metres of drilling are planned, following up the recently reported gold intersects on the Joshua vein. One hole has been completed in the program, with a positive result (press release 27th August 2013).
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 four licences 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 summer field programme. In addition, following a detailed review of this data, application was made for three new prospecting licences in the Republic of Ireland which were granted during the second quarter. These licences join and extend our existing licences to the southwest. During the second quarter 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 has progressed over the summer months.
Discussions continued with the planning services in Northern Ireland during the second 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 continue to progress, with a number now confirming that they are satisfied. Consultations with the remainder are well advanced and the Company believes it can address outstanding matters raised by the consultees.
Roland Phelps, President & CEO, Galantas Gold Corporation, commented, “The Company continues to work with Planning Service and consultees to achieve underground planning consent. The time-line for this is undefined because it is the hands of other parties. The company has a reasonable expectation that it will be achieved before the end of the year but this remains uncertain. Meanwhile, there is a supply of low grade material available for milling. Further efficiency changes and reductions in manpower have continued to reduce costs and further cost reductions are planned. 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.
Galantas Gold Corporation
Jack Gunter P.Eng – Chairman
Roland Phelps C.Eng – President & CEO
Telephone: +44 (0) 2882 241100
Charles Stanley Securities (Nominated Adviser)
Telephone +44 (0)20 7149 6000