Galantas Gold Corporation (the 'Company') (TSX VENTURE:GAL) (AIM:GAL) is pleased
to announce its annual financial results for the Year Ended December 31, 2013.
Financial Highlights
The Net Loss for the Year Ended December 31, 2013 amounted to $ 1,944,355 which
compared with a Net Loss of $ 593,866 for the Year Ended December 31, 2012.
Highlights of the 2013 results, which are expressed in Canadian Dollars, are:
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Year Ended December 31
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All in CDN$ 2013 2012
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Revenue $ 1,531,473 $ 4,659,330
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Cost of Sales $ 1,591,069 $ 3,167,126
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(Loss)Income before the undernoted $ (59,596) $ 1,492,204
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Amortization $ 500,756 $ 748,711
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General administrative expenses $ 1,188,397 $ 1,604,162
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Loss(Gain) on disposal of property, plant and $ (86,816)
equipment $ 105,811
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(Gain) on debt extinguishment $ - $ (190,624)
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Foreign exchange loss $ 89,795 $ 10,637
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Net (Loss) for the year $ (1,944,355) $ ( 593,866)
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Working Capital (Deficit) $ (3,904,304) $ (2,309,307)
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Cash (loss)generated from operations before $ 177,737
changes in non-cash working capital $ (1,396,019)
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Cash at December 31, 2012 $ 166,617 $ 1,164,868
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Sales revenues for the year ended December 31, 2013 amounted to CDN$ 1,531,473
(2012: CDN$ 4,659,330). The reduction in sales revenues when compared to 2012
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 ore from the
open pits. In addition the gold price in 2013 was below the price which
prevailed during 2012 which also adversely impacted sales revenues. Lower
concentrate gold grade during the third and fourth quarters coupled with falling
gold prices resulted in the Company suspending the processing of low grade ore
during the fourth quarter. The Company has commenced pilot tests with regards to
the processing of tailing cells filled during the earlier operation of the mine.
Concentrate grades produced by the pilot study were higher than grades for
flotation concentrate from mined vein material. The Company is presently
reviewing the economics of continuing production through the processing of
tailings cells.
Cost of sales for the year ended December 31, 2013 amounted to CDN$ 1,591,069
(2012: CDN$ 3,167,126). There was a decrease in various production costs at the
Omagh mine during 2013 which reductions were mainly attributable to the reduced
level of open pit activity during 2013.
The Net Loss for the year ended December 31, 2013, amounted to CDN$ 1,944,355
(2012: Net Loss CDN$ 593,866). The cash loss generated from operating activities
before changes in non-cash working capital for 2013 amounted to CDN$ 1,396,019
(2012: $ 177,737 gain). The cash loss generated from operating activities after
changes in non-cash working capital for 2013 amounted to CDN$ 869,781 (2011: $
569,610 gain). The Company had cash balances at December 31, 2013 of CDN$
166,617 compared to CDN$ 1,164,868 at December 31, 2012. The working capital
deficit at December 31, 2013 amounted to CDN$ 3,904,304 which compared with a
deficit of CDN$ 2,309,307 at December 31, 2012.
The Company's auditors (McCarney Greenwood LLP), without qualifying their
opinion, drew attention to the note within the accounts which described that the
Company required additional financing to fund its planned activities and to
continue as a going concern. On 8th April 2014, the Company announced a
consolidation, exchange of shares for debt and a proposed Private Placing for
GBP 500,000, which is still in progress.
Production Highlights
Production at the Omagh mine for the year ended December 31, 2013 is summarized
below:
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Year Ended Year Ended
December 31 December 31
2013 2012
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Tonnes Milled 40,711 44,112
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Average Grade g/t gold 1.0 2.3
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Concentrate Dry Tonnes 499 1,008
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Concentrate Gold Grade g/t 84.1 100.9
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Gold Produced (oz) 1,349 3,271
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Gold Produced (kg) 41.9 101.7
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Concentrate Silver Grade g/t 163.5 227.6
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Silver Produced (oz) 2,622 7,379
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Silver Produced (kg) 81.5 229.5
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Lead Produced tonnes 36.3 61.4
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Gold Equivalent (oz) 1,448 3,507
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Production in 2013 was significantly below 2012 production which was primarily
due to the processing of low grade stockpiled ore during the year. Earlier in
the year there had been some limited open pit mining on the Kerr vein which
ceased during 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
resulted in production continuing to be from low grade sources. To generate cash
from its operations the Company continued to improve efficiencies and cut costs
during 2013.
Due to the mill being fed with the lower grade ore during 2013 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. The concentrate gold grade fell further during the third and fourth
quarter and this coupled with falling gold prices resulted in the Company
suspending the processing of low grade ore during the fourth quarter which
resulted in further cost reduction measures being implemented at the Omagh mine.
Later in the fourth quarter the Company commenced pilot tests with regards to
the processing of tailing cells filled during the earlier operation of the mine.
The results confirm pre-existing data that indicated the tailings contain
between 0.5g/t gold and 1 g/t gold and meet European Union standards for
definition as inert material. A low energy cost processing solution, based upon
a Knelson CD12 centrifugal gravity concentrator, which was already utilised in
the gold processing plant in a secondary role, has been successfully pilot
tested as a prime re-treatment component for flotation tailings. The tailings do
not require comminution (crushing and grinding) for re-processing by this
method. Concentrate grades produced by the pilot study were higher than grades
for flotation concentrate from mined vein material. The Company is presently
reviewing the economics of continuing production through the processing of
tailings cells and is evaluating alternative re-processing techniques.
Exploration
The major focus of exploration activities in 2012 and 2013 has been the
continuation of the successful drilling program. In total, 17,348 metres have
been drilled since the program commenced in March 2011 with significant gold
intersects being reported.
The drilling program 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 program 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 program 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 at a
reduced rate in 2013 with four holes being drilled - one in North Kearney and
three in Joshua central. These hole locations were defined with the aim of
upgrading areas of inferred resource to the indicated category. During the first
quarter, assay results were received showing a grade of 9 ppm Au over a vein
width of 1 m for hole OM-DD-12-144. This is a significant result as the location
is 100 m south of where the Joshua vein appears to narrow, suggesting that the
vein continues south of the property. Drilling was suspended during the third
quarter pending the availability of cash for future exploration. 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 revised 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 data related to the programme up to May 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. During the third
quarter Galantas reported positive assay results from the first of two drill
holes completed on the Joshua vein during the third quarter. This drill hole is
the second deepest intersect yet drilled on Joshua vein and averaged 12.4 g/t
gold, over a true width of vein of 2.8 metres. The top of the mineralised
intersect is estimated to be at a vertical depth of 137.2 metres. The hole was
terminated at a down-hole length of 171.8 metres (see press release dated August
27, 2013).
Once additional funding becomes available this drilling programme will continue.
Up to a further 1,000 metres of drilling are planned following up the recently
reported gold intersects on the Joshua vein.
During 2012 ACA Howe International Ltd (Howe UK) completed an Interim Resource
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 of 2013 based on drilling results received to May 5, 2013 (see
press release dated June 12, 2013). The drilling programme, subsequent to June
2012, was targeted to increase the amount of measured and indicated resources
related to the potential development of an underground mine. When compared to
the resource estimate prepared in 2012 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%. Galantas subsequently filed an
updated Technical Report on SEDAR in July 2013. An updated report which includes
data acquired after May 5th 2013 is in preparation.
Three new licence areas in the Republic, covering 121.1 km2, were granted during
2013. These join, and extend south-westwards, our existing four ROI licences.
Geochemical soil sampling, stream sediment 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, into the OML-held ROI
licences, with anomalously high concentrations of gold pathfinder elements. This
data has assisted in the design of a field programme which was carried out
during the third quarter. Earlier in the year Omagh Minerals were awarded a
grant to complete a project to determine the prospectivity potential of the
Tellus border zone as a whole. This research is supported by the EU INTERREG
IVA-funded Tellus Border initiative funded by the EU regional development fund,
was based around the new Tellus Border data. The associated fieldwork was
completed during the third quarter and focussed on four areas with excellent
mineral potential. A prospectivity map and a comprehensive report were submitted
to GSI for publication on the Tellus Border website. Following this exploration
work, an application was submitted for a further two prospecting licences in the
Manorhamilton area of Co. Leitrim, this was acknowledged during the third
quarter and has now been awarded. These areas bring the total number of licences
held by Omagh Minerals to eleven and the total area to 766.5 square kilometres.
Permitting
Discussions continued with the planning services in Northern Ireland during 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. Shareholders may see progress on the public planning portal at
http://epicpublic.planningni.gov.uk/PublicAccess/zd/zdApplication/application_detailview.aspx?caseno=M6QQVVSV30000
Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "The
Company continues to work with Planning Service and consultees to achieve
underground planning consent. The Company has been advised by its consultants
that, due to bureaucratic delays, the time-line for planning determination may
now be in the second quarter 2014, although the date is undefined because it is
in the hands of other parties. A Technical Report is being prepared which will
include drilling results obtained since May 2013. The report will also include
details of a detailed feasibility study. 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 detailed in a press release dated 3rd October
2007.
Qualified Person
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 51,242,016 (post
consolidation 14th April 2014))
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Galantas Gold Corporation
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 Nomad & Broker)
Mark Taylor
+44 (0)20 7149 6000
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