TORONTO, ONTARIO -- (Marketwired) -- 05/28/13 -- Galantas Gold Corporation (the 'Company') (TSX VENTURE:GAL) (AIM:GAL) is pleased to announce its financial results for the Quarter Ended March 31, 2013.
Financial Highlights
The Net Loss for the Quarter Ended March 31, 2013 amounted to CDN$440,554 (March 31 2012: Net Loss of CDN$643,389). The cash loss generated from operating activities before changes in non-cash working capital for the first quarter of 2013 amounted to CDN$239,907 (2012: CDN$ 303,318). Highlights of the first quarter 2013 results, which are expressed in Canadian Dollars, are:
---------------------------------------------------------------------------- Quarter Ended March 31 ---------------------------------------------------------------------------- All in CDN$ 2013 2012 ---------------------------------------------------------------------------- Revenue $ 364,676 $ 1,025,146 ---------------------------------------------------------------------------- Cost of Sales $ 397,588 $ 1,020,507 ---------------------------------------------------------------------------- Income(Loss) before the undernoted $ (32,912) $ 4,639 ---------------------------------------------------------------------------- Amortization $ 124,606 $ 184,565 ---------------------------------------------------------------------------- General administrative expenses $ 297,059 $ 453,956 ---------------------------------------------------------------------------- Loss on disposal of property, plant and equipment $ 0 $ 1,506 ---------------------------------------------------------------------------- Foreign exchange (gain) loss $ (14,023) $ 8,001 ---------------------------------------------------------------------------- Net Loss for the quarter $ (440,554) $ (643,389) ---------------------------------------------------------------------------- Working Capital (Deficit) $ (2,772,908) $ (2,072,975) ---------------------------------------------------------------------------- Cash loss generated from operating activities before changes in non-cash working capital $ ( 239,907) $ (303,318) ---------------------------------------------------------------------------- Cash at March 31, 2013 $ 823,661 $ 2,924,890 ----------------------------------------------------------------------------
Sales revenues for the quarter ended March 31, 2013 amounted to CDN$ 364,676 (2012: CDN$ 1,025,146). The reduction in sales revenues when compared to 2012 was mainly due to the lower level of metal produced and shipped during the first 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 ore from the open pits.
Cost of sales for the quarter ended March 31, 2013 amounted to CDN$ 397,588 (2012: CDN$ 1,020,507). There was a decrease in various production costs at the Omagh mine during 2013 including Production wages, Oil and Fuel costs, Repairs and maintenance, Equipment hire and Consumables which reductions were primarily attributable to the reduced level of open pit mining activity during the first quarter of 2013 when compared to 2012.
The Net Loss for the quarter ended March 31, 2013, amounted to CDN$ 440,554 (2012: Net Loss CDN$ 643,389). The cash loss generated from operating activities before changes in non-cash working capital amounted to CDN$ 239,907 (2012: $ 303,318).
The Company had cash balances at March 31, 2013 of CDN$ 823,661 (2012:CDN$ 2,924,890). The working capital deficit at March 31, 2013 amounted to CDN$ 2,772,908 (2012: deficit of CDN$ 2,072,975).
Production Highlights
Production at the Omagh mine for the Quarter ended March 31, 2013 is summarized below:
---------------------------------------------------------------------------- Quarter Ended March 31 ---------------------------------------------------------------------------- 2013 2012 ---------------------------------------------------------------------------- Tonnes Milled 11,753 9,420 ---------------------------------------------------------------------------- Average Grade g/t gold 1.05 3.54 ---------------------------------------------------------------------------- Dry Tonnes Concentrate 145 268 ---------------------------------------------------------------------------- Concentrate Gold Grade (g/t) 85.3 108.4 ---------------------------------------------------------------------------- Gold Produced - kg (troy ozs) 12.3 kg (398oz) 29 kg( 933oz) ---------------------------------------------------------------------------- Concentrate Silver Grade (g/t) 111.5 260.7 ---------------------------------------------------------------------------- Silver Produced kg (troy ozs) 16.2 kg (520oz) 69.9 kg (2,247oz) ---------------------------------------------------------------------------- Lead Produced (tonnes) 4.1 24.9 ---------------------------------------------------------------------------- Gold Equivalent ( troy.ozs) 413 1,006 ----------------------------------------------------------------------------
The main production focus during the first quarter has been the on processing of ore from the low grade stockpile together with limited open pit mining on the Kerr vein. Production from Kearney became totally restricted from the second half of 2012 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. Later in the quarter mining ceased on the Kerr vein when the pit met its planned design limit. This ongoing limitation will result in future production being 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 first quarter the mill was fed with a combination of lower grade ore which was blended with a limited amount of ore from the Kerr vein. Production continued to be hampered during the quarter by both the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled and an increased clay content. Production was also hampered by some unplanned downtime in the plant. Despite these difficulties the mill processed nearly 25% more ore in the first quarter of 2013 than the first quarter of 2012.
Good progress had been achieved during 2012 with regards to the on-going reinstatement process of the mine site with two completed rehabilitation paste cells being capped with a layer of till and peat and covered in grass seed during 2012. The reinstatement of the remaining 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 utilization when underground mining at the Omagh mine commences was also completed during the first quarter following the cessation of mining on the Kerr vein. Mining from stockpiles of lower gold grade continues.
Exploration
The major focus of exploration activities in 2012 and the first quarter of 2013 has been the continuation of the successful drilling programme. In total, 16,707 metres have been drilled since the programme commenced in March 2011 and significant gold intersects have been 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 95 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 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. In the first quarter a total, 360 metres were drilled, bringing the total for the current programme up to 16,707 metres. Following the scale back of drilling, 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 Micromine.
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, October 20, 2011, November 28, 2011, January 12, 2012, April 5, 2012, June 11, 2012, October 29, 2012 and January 8, 2013). Assay results from this programme will continue to be announced as and when they are received. 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. Drilling will continue using the company's own core drilling rig manned by in-house drillers. Up to a further 1,250 metres of drilling are planned, following up the recently reported gold intersects on the Joshua vein.
During 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 of 2012 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 will be prepared later in 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.
Limited exploration outside the mine license area continued during the first quarter 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 during the quarter. The data reveals the continuation of a trend established on license OM4 with anomalously high concentrations of gold pathfinder elements. In addition, following a detailed review of this data, application has been made for three new prospecting licenses in the Republic of Ireland which join and extend our existing licenses to the southwest. Subsequent to the quarter end, Omagh Minerals Ltd was awarded a grant to carry out 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. It will be based around new Tellus Border data and will involve significant fieldwork over the summer months.
Permitting
Discussions continued with the planning services in Northern Ireland during the first 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 is working hard for underground planning consent and expects to satisfy any remaining issues. Meanwhile, there is a supply of low grade material available for milling. Further efficiency changes and reductions in manpower have reduced costs during the current quarter. Solid results from the drilling program support continued investment in the Omagh Mine and grant aid, with publicly funded exploration activity, will permit early stage exploration to take place on new licence areas at low financial cost to the company."
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 256,210,395.
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