Galantas reports results for yr ended Dec 31st 2012
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS REPORTS RESULTS FOR THE YEAR ENDED DECEMBER 31, 2012
April 23rd, 2013: Galantas Gold Corporation (the ‘Company’) is pleased to announce its annual financial results for the Year Ended December 31, 2012.
The Net Loss for the Year Ended December 31, 2012 amounted to $ 593,866 which compared with a Net Income of $ 1,610,990 for the Year Ended December 31, 2011. The cash generated from operating activities before changes in non-cash working capital for 2012 amounted to CDN$ 177,737 (2011: $ 2,885,412). Highlights of the 2012 results, which are expressed in Canadian Dollars, are:
All in CDN$
Year Ended December 31
|Revenue||$ 4,659,330||$ 9,492,157|
|Cost of Sales||$ 3,167,126||$ 4,860,427|
|Income before the under-noted||$ 1,492,204||$ 4,631,730|
|Amortisation||$ 748,711||$ 837,068|
|General administrative expenses||$ 1,604,162||$ 2,264,226|
|Gain on disposal of property, plant and equipment||$ (86,816)||$ (485)|
|Gain on debt extinguishment||$ (190,624)||$ 0|
|Foreign exchange (gain) loss||$ 10,637||$ (80,069)|
|Net Income(Loss) for the year||$ (593,866)||$ 1,610,990|
|Working Capital (Deficit)||$ (2,309,307)||$ (536,142)|
|Cash generated from operating activities before changes in non-cash working capital||$ 177,737||$ 2,885,412|
|Cash at December 31, 2012||$ 1,164,868||$4,240,481|
Sales revenues for the year ended December 31, 2012 amounted to CDN$ 4,659,330 (2011: CDN$ 9,492,157). The reduction in sales revenues when compared to 2011 was due to the lower level of metal produced and shipped during the year. 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 failure by the Planning Service.
Cost of sales for the year ended December 31, 2012 amounted to CDN$ 3,167,126 (2011: CDN$ 4,860,427). There was a decrease in various production costs at the Omagh mine during 2012 including production wages reflecting the reduced number of personnel arising from the rationalization programme, Oil and Fuel costs, Repairs and servicing costs and usage of Consumables which reductions were mainly attributable to the reduced level of mining activity during 2012. There was a non-cash gain of CDN$ 190,624(2011: CDN$ Nil) during 2012 following the extinguishment of the Company’s convertible debenture debt during the second quarter.
The Net Loss for the year ended December 31, 2012, amounted to CDN$ 593,866 (2011: Net Income CDN$ 1,610,990). The cash generated from operating activities before changes in non-cash working capital for 2012 amounted to CDN$ 177,737 (2011: $ 2,885,412). The cash generated from operating activities after changes in non-cash working capital for 2012 amounted to CDN$ 569,610 (2011: $ 3,319,637). The cash generated from operating activities continued to contribute towards the cost of the exploration drilling programme at the Omagh mine.
The Company had cash balances at December 31, 2012 of CDN$ 1,164,868 compared to CDN$ 4,240,081 at December 31, 2011. The working capital deficit at December 31, 2012 amounted to CDN$ 2,309,307 which compared with a deficit of CDN$ 536,142 at December 31, 2011
Production at the Omagh mine for the year ended December 31, 2012 is summarized below:
Year Ended December 31
|Average Grade g/t gold||2.3||4.46|
|Dry Tonnes Concentrate||1,008||2,265|
|Concentrate Gold Grade (g/t)||100.9||88.9|
|Gold Produced - kg (troy ozs)||101.7 kg (3,271oz)||201.5 kg( 6,479oz)|
|Concentrate Silver Grade (g/t)||227.6||234.0|
|Silver Produced kg (troy ozs)||229.5 kg (7,379oz)||531.3 kg (17,082oz)|
|Lead Produced (tonnes)||61.4||280.1|
|Gold Equivalent ( troy.ozs)||3,507||7,308|
Whilst ore milled during year ended December 31, 2012, at 44,112 tonnes, was 6% below ore milled in both concentrate and metal production in the third quarter were significantly lower than the year ended December 31, 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 during 2012. 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 year was mainly from the Kearney and Kerr veins. Production from Kearney, which had been adversely effected by the surplus rock stockpile on the site during the first half of the year became totally restricted in the third quarter when the surplus rock stockpile reached capacity levels. This surplus rock was due to commence being transported from the site during the third 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 was quashed. This ongoing limitation has and will result in low grade material continuing to be worked for the foreseeable future which will have an adverse effect on both the Company’s revenues and its ability to generate cash from operations. Because of adverse impact the current and future production levels would have on future revenues a number of redundancies were made during the fourth quarter to further reduce the workforce.
Mining from the Kerr veins during the year was reasonably successful with one of the veins mined (vein no.4) being of high grade. Kerr produced small quantities of high grade material, which was used to sweeten the grade of material to the processing plant.
Whilst the modifications that were made to the flotation and crushing circuits in 2011 and in the first quarter of 2012 proved to be successful, some further changes were completed later in 2012 to increase throughput. Production was hampered during the year by the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled and an increased clay content. Improvements to the milling circuit, which resulted in decreased labour costs were completed in the fourth quarter and will contribute towards the Company’s objective to achieve positive cash flow from operations in 2013.
The major focus of exploration activities in 2012 was the continuation of the successful drilling programme. In total 16,347 metres have been drilled since the programme commenced in March 2011 and significant gold intersects have been reported.
The drilling programme expanded considerably at the commencement of 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. Three rigs remained to the end of the third quarter and one rig by the end of the year. 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 mineralisation for the purpose of the underground mine plan; also, to extend the strike of Joshua to the north and the south, and begin to target deeper sections of the vein. During the year 11,991 metres were drilled with 35 holes targeting the Joshua vein, 14 holes on the Kearney veins and 4 holes on the Kerr veins. Drilling on Kearney was mainly at depth from off-site locations. Several cores yielded more than one mineralised section. The vein appears to pinch and swell at depth, similar to what has been seen in the open pit. Vein intersects ranged in width from 0.2 m to 7.6 m. A number of shorter infill holes targeting Kearney were also drilled from west to east with variable success.
Land to the west of the current Joshua vein exposure was acquired early in the first quarter. This facilitated continued drilling which initially targeted the north and central sections of the Joshua vein. The strike length now extends a total of 208 metres beyond the previously known “RioFinex” limit and the proven depth of mineralisation within this northern section has increased by 40 m to a vertical depth of 115 m. Significant results were also achieved for central and southern Joshua which have improved the understanding of the structure and geometry of the vein in these areas. In the central region, the vein was intersected at a vertical depth of 160.6 m, yielding a 4.5 m wide mineralised section grading 8.4 g/t Au. Drilling and field observations strengthened the view of a westerly dipping vein with high grade mineralisation at depth. In the south, six holes revealed two or more vein intersects, some of these were narrow stringers, and others point towards the presence of a more pervasive secondary structure. A particularly wide and high grade zone was intersected and section drawings indicate that the vein steepens in this area, dipping 85o towards the east.
A desk based study was completed later in the year in order to prioritise new targets within the mine site. Some exploratory targets were drilled to test IP anomalies and auriferous overburden results previously reported around the current stockpile area. A narrow vein was picked up in one drill hole measuring 3.9 g/t Au. Mapping of the Kerr and McCombs veins showed that they fan out towards the north, indicating that there could be a central source towards the south of the property. Five holes were drilled in the Kerr, eastern lagoon and western lagoon regions during the second half of the year with encouraging results from one hole on the western side of the Kerr pit. This hole intersected mineralisation at a vertical depth of 108 m.
Channel sampling was carried out on the northern extension to Kearney in January and September. The Kerr veins were also subject to channel sampling in 2012. Excavations during March revealed that one of the veins sampled in 2011 was widening with depth, and becoming more continuous along strike. Subsequent excavations have increased the strike of this vein to 100 m, although it appears to narrow towards the north.
Assay results released to date from both the drilling and channel sampling programmes have been encouraging with significant gold intersections identified. Particularly positive were the assays from the ten drill holes on Joshua released in January 2013 with thirteen significant mineral intersects. Drilling has continued into 2013 using the company’s own core drilling rig manned by in-house drillers. A further 1600 metres are planned in the short term, extending the programme to 18,000 metres following up the recently reported gold intersects on the Joshua vein.
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 the 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 during the first half of 2013 when the remaining results of the extended 18,000 metre drilling programme are received. This updated report will incorporate all drilling results and analyses received subsequent to June 2012.
Discussions with the regulatory authorities in Northern Ireland continued during the year. The underground mine plan and Environmental Impact Assessment were completed during the first half of 2012 and were then submitted to the Planning Services for planning consent. Discussions with the regulatory authorities continued during the second half of 2012 with regards to the underground mine plan and accompanying Environmental Statement. During the third quarter planning consent was received from the Planning Services for the construction of a lower portal structure and truncated adit for underground mining on the Kearney vein.
Roland Phelps, President & CEO, Galantas Gold Corporation, commented, “Solid results from the drilling program are supporting continued investment in the Omagh Mine. The focus of operations in 2013 is expected to be directed towards achieving all that is necessary to establish an underground operation. Working with local representatives and the Planning Service, we expect to satisfy any issues arising from the upcoming planning application.”
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.
The financial components of this disclosure has been reviewed by Leo O’ Shaughnessy (Chief Financial Officer) and the production, exploration and permitting components by Roland Phelps (President & CEO), qualified persons under the meaning of NI. 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; uncertainties regarding 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.
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 Investor Relations Consultant
Roland Phelps C.Eng – President & CEO Courtenay Heading (Maclir Consulting Ltd)
Email: firstname.lastname@example.org Email : c.heading@Galantas.com
Website: www.galantas.com Telephone : (UK) +44 (0) 7624 424 455
Telephone: +44 (0) 2882 241100
Charles Stanley Securities (AIM Nomad & Broker)
Telephone +44 (0)20 7149 6000