Galantas Gold Corporation
TSX VENTURE : GAL
AIM : GAL

Galantas Gold Corporation

July 28, 2014 09:00 ET

Galantas Increases Gold Resources and Shows Strong Economics at Omagh Gold Mine

TORONTO, ONTARIO--(Marketwired - July 28, 2014) - Galantas Gold Corporation (the Company) (TSX VENTURE:GAL)(AIM:GAL) is pleased to announce a revised estimate of gold resources, economic study, planning and environmental update on its wholly owned, Omagh Gold Mine in Northern Ireland.

RESOURCE REVIEW

The revised estimate of resources is written in compliance with the Pan European Reporting Code (PERC), Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards and Canadian National Instrument (NI) 43-101.

RESOURCE ESTIMATE : GALANTAS 2014 Increase
CUT-OFF 2 g/t Au over
RESOURCE TONNES GRADE Au Ozs GAL 2013
CATEGORY (Au g/t) report
MEASURED 138,241 7.24 32,202 55%
INDICATED 679,992 6.78 147,784 21.4%
INFERRED 1,373,879 7.71 341,123 15.4%
Minerals Resources that are not Mineral Reserves do not have demonstrated economic viability.

Overall there has been a 19% increase in resources since the Galantas 2013 Resource Report (reported 12th June 2013) and a 60% increase in resources since the 2012 Resource Report by ACA Howe International Ltd (reported 3rd July 2012). The increases since 2012 largely relate to the Kearney and Joshua veins, since this is where the drilling program has been concentrated. The drilling program was mainly designed to focus on increasing the quantity of Measured and Indicated resources on these two veins, to support potential bank funding opportunities for the financing of production. The resource estimate for each vein is tabulated below.

RESOURCE ESTIMATE BY VEIN : GALANTAS 2014
MEASURED INDICATED INFERRED
TONNES GRADE Contained Tonnes GRADE Contained Tonnes GRADE Contained
Au (g/t) Au (oz) Au (g/t) Au (oz) Au (g/t) Au (oz)
KEARNEY 76,936 7.48 18,490 383,220 6.66 82,055 909,277 6.61 193,330
JOSHUA 54,457 7.25 12,693 216,211 7.92 55,046 291,204 10.74 100,588
KERR 6,848 4.63 1,019 12,061 4.34 1,683 23,398 3.2 2,405
ELKINS 68,500 4.24 9,000 20,000 5.84 3,800
GORMLEYS 75,000 8.78 21,000
PRINCES 10,000 38.11 13,000
SAMMY'S 27,000 6.07 5,000
KEARNEY NORTH 18,000 3.47 2,000
TOTAL 138,241 7.25 32,202 679,992 6.78 147,784 1,373,879 7.71 341,123

The resources are calculated at a cut-off grade of 2 g/t gold (Au), numbers are rounded, gold grades are capped at 75 g/t gold and a minimum mining width of 0.9m has been applied.

Measured and Indicated resources on Kearney vein have increased to 100,545 ounces of gold (2014) from 69,000 ounces (2012). Measured and Indicated resources on Joshua vein have increased to 67,739 ounces of gold (2014) from 15,800 ounces (2012). The Kearney and Joshua veins are the early targets of underground mining. Combined Measured and Indicated resource category on these two veins are estimated at 168,284 ounces of gold, with 293,918 ounces of gold in the Inferred resource category. Both vein systems are open at depth.

REGULATORY CONTEXT

The economic study includes use of Measured and Indicated resources with a restricted portion of Inferred resources, estimated for two veins (Joshua and Kearney veins). The Inferred resources (which have lower statistical support than Measured or Indicated Resources) are contiguous with Measured or Indicated resources and / or lie within scheduled mining areas. The use of Inferred resources, in a restricted qualifying manner, is permitted by the PERC code in regard to economic studies but is excluded within NI 43-101, except within a "Preliminary Economic Assessment (PEA)". In compliance with the disclosure requirements of NI 43-101, it has been determined that the economic study including associated inferred resources is deemed a Preliminary Economic Assessment. PERC is an approved code is respect of NI 43-101. As part of PERC requirements, a comparative study (Feasibility) is included in the detailed technical report which does not include Inferred resources and also includes studies on sensitivity to gold price.

In compliance with NI 43-101 2.3.3(a) "the preliminary economic assessment is preliminary in nature, that it includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized."

RESULTS OF THE ECONOMIC STUDY

The total of scheduled Measured and Indicated ounces utilised within the mining study is 104,627 ounces. The Inferred resources scheduled in the economic study are estimated at 60,635 ounces. Total Inferred resource estimated on the Joshua and Kearney orebodies is 293,918 ounces of gold. The amount of Inferred resources included in the economic estimate amounts to 20.6% of the total Inferred resources estimated on these veins. Were Inferred resources excluded within the mining plan, approximately 1 year would be removed from the estimate of mine life and annual output would be reduced.

LOM Capital Expenditure Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 LOM
Capital Excluding Leasable Equipment £1,679,432 £4,149,604 £422,355 £390,534 £0 £0 £6,641,926
Capital Leasable Equipment £1,273,469 £1,334,177 £0 £0 £0 £0 £2,607,646
Contingency 15% £442,935 £822,567 £63,353 £58,580 £0 £0 £1,387,436
Working Capital* £1,000,000 £0 £0 £0 £0 £0 £1,000,000
GRAND TOTAL (UK£) £4,395,836 £6,306,349 £485,708 £449,115 £0 £0 £11,637,007
CDN$ TOTAL (1.83 CDN/£) $8,053,325 $11,553,294 $889,819 $822,756 $0 $0 $21,320,102
LIFE OF MINE CAPITAL EXPENDITURE SUMMARY
*Working Capital includes payment delay for concentrate, VAT pre-payment and 10% contingency
Gold Price £750/oz Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 LOM
Operating Costs £5,693,338 £10,430,904 £11,964,071 £11,261,136 £10,830,431 £8,459,001 £58,638,882
Revenue £5,354,810 £15,597,318 £20,264,230 £19,238,279 £19,774,130 £11,741,821 £91,970,588
Cash flow (UK£) -£338,528 £5,166,414 £8,300,158 £7,977,143 £8,943,699 £3,282,820 £33,331,706
Cash flow (1.83CDN/£) -$620,312 $9,467,531 $15,210,123 $14,616,519 $16,388,344 $6,015,374 $61,074,685
OPERATING CASH FLOW AT AN AVERAGE GOLD PRICE OF UK£750 PER OUNCE

At a gold price of UK£750 / ounce (USD$1260 at $1.68/UK£), the pre-tax operating surplus after capital expenditure estimates an Internal Rate of Return of 72% and, at an 8% discount rate, a net present value of approximately UK£14.5m (CDN$26.6m) and a cash cost of production of UK£394 per ounce (USD$662 at $1.68/UK£). The study scheduled approximately 36% of the combined resources identified on the Kearney and Joshua veins.

The Technical Report (Galantas 2014) was prepared by the Galantas Gold Corporation Geological and Mining Team under the supervision of R. Phelps C.Eng MIMMM (President & CEO, Galantas Gold Corporation), a Qualified Person for the purposes of NI 43-101 and the AIM Rules, who has reviewed and approved this release. The Company intends to file the complete Technical Report on SEDAR within 45 days of this release, as required by NI 43-101.

PLANNING UPDATE

The permitting process for the underground mine has been detailed and exhaustive but has now reached the final stage. The Company is advised that the final consultation response (from Natural Heritage, Northern Ireland Environment Agency) has been received and is positive. The Company understands a timeline within three months is possible for a final determination but the timing of such is not in the Company's hands.

POSITIVE ENVIRONMENTAL COMPLIANCE UPDATE

The Company has received confirmation from the Northern Ireland Environment Agency that 2013 marked another year of strict environmental compliance with regulatory standards for out-flow water from the Omagh Gold-Mine.

COMMENT

Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "Our detailed geological, mining and economic studies demonstrate the excellent potential of an underground mine at Omagh. With planning permits approaching the final stage of determination, we are looking forward to building a sound business that will provide local jobs within a safe environment. We haven't yet found the limits of most of the veins we have discovered. Taking operations underground allows production from a substantial gold resource that we expect will continue to reveal itself, by underground drilling, as much larger than we have already demonstrated. We are expecting to build the underground operations to an initial target of around 32,000 ounces per year, based on what we already know, increasing as additional resources are identified. Our ownership of an existing processing plant, tailings facility and land package is a considerable advantage in terms of minimising the capital required and we expect to make full use of these assets."

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 resource estimates, economic estimates and technical studies, 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 geological interpretation, 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, including: gold price volatility; discrepancies between actual and estimated production, actual and estimated metal grades and geologically interpreted widths, actual and estimated metallurgical recoveries; actual and estimated costs; mining operational risk; regulatory and permitting 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.

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 Issued and Outstanding Shares total 76,697,156.

Contact Information

  • Galantas Gold Corporation
    L. Jack Gunter P.Eng
    Chairman
    +44 (0) 2882 241100

    Galantas Gold Corporation
    Roland Phelps C.Eng
    President & CEO
    +44 (0) 2882 241100
    info@galantas.com
    www.galantas.com

    Charles Stanley Securities (AIM Nominated Adviser)
    Mark Taylor
    +44 (0)20 7149 6000