GALANTAS GOLD CORPORATION
TSX Venture Exchange: GAL
London Stock Exchange AIM: GAL
18th July 2008
GALANTAS REPORTS ESTIMATED PAYBACK 2.7 YEARS
Galantas Gold Corporation (Galantas), which has a 100% interest in Ireland's
only gold mine, today filed a report by independent consultants ACA Howe
International Ltd.(Howe). The report, entitled "Technical Report on the Omagh
Gold Project", is dated 28th May 2008 and will be published on www.sedar.com and
www.galantas.com . Authors are G. White FGS MAusIMM, J. Bennett C.Eng MIMMM and
N. Holloway C.Eng MIMMM.
The operational open pit mine is situated near Omagh, County Tyrone, Northern
Ireland and is engaged in increasing mine ore production to a target of 1400
tonnes per week. The mine produces a flotation concentrate containing gold,
silver and lead, which is exported and sold to a Canadian smelter.
Resource calculations as press released on 12th June 2008 are detailed by the
report. Additional data on production economics are also included. The report
contains the following mine budget details for 2008, which are expressed in UK£
sterling :- "
Howe has reviewed the Galantas Gold budget for 2008. The Galantas budget is
summarised in the following table;
Table 1 - Galantas Budget Summary
Q1 Q2 Q3 Q4 Total
Ore production Tonnes 4,419 10,641 18,200 23,400 56,660
diluted grade(gold) g/t 6.11 7.70 9.54 7.32 8.01
Concentrate
production Tonnes 263 657 1,331 1,184 3,436
grade (gold) g/t 85 105 120 119 119
value £stg 247,548 736,414 1,684,236 1,660,757 4,328,955
Revenues £stg Revenue from Xstrata 323,198 736,414 1,684,236 1,660,757 4,404,605
Other revenues 45,000 45,000 0 0 90,000
Total revenues 368,198 781,414 1,684,236 1,660,757 4,494,605
Operating costs
£stg Salaries 245,490 253,978 265,673 265,673 1,030,815
Cash commitments 524,707 524,707
Finance charges 147,250 162,918 162,918 162,918 636,005
Licences, other fees 16,400 2,400 12,400 28,275 59,475
Administration 34,044 38,602 38,602 38,596 149,844
Mill operations 170,850 170,850 170,850 170,850 683,400
Open pit operations 178,985 52,585 52,585 152,585 436,740
Laboratory 1,000 1,000 1,000 1,000 1,000
Geology 9,958 66,086 66,086 66,086 208,216
Total direct operating
costs £stg 1,328,685 748,419 770,115 885,984 3,733,202
Note:
1. production is stated for February and March 2008 only
2. Revenue and operating costs are for the full quarter in each case
3. Open pit operations include £126,400 for overburden removal by contractor in
Jan 08 and £100,000 for tailings cell development in October 08
4. The following prices have been used by Howe to estimate revenue: gold $900
per oz, silver $14 per oz, lead $1.18 per lb. These give similar values to the
Galantas revenue
ACA Howe notes as follows.
(a) The production of ore is ramped up significantly. This is due to the
ability of Galantas to remove larger quantities of overburden through their
arrangement with the contractor as described. Galantas also plan to commence
operations in the Kerr vein towards the end of the year. Howe believe it is
within the capability of Galantas to produce at these rates, but believe that
the monthly costs will increase as a result, due to higher wear rates on the
equipment.
(b) Ore grade is higher than the block resource model. This is attributed by
Galantas to the higher grade areas that they are planning to mine in the middle
of 2008. It is probable therefore that grades mined in the subsequent periods
will reduce to the overall resource average. Also, if Galantas mine only the
higher grade zones, and stockpile the lower grade zones, there will come a time
when there will be a stockpiled resource of the lower grade material., which may
or may not be economic to process. As the tonnage produced in the pit
increases, therefore, the tonnage through the plant will increase. Additional
processing plant is being acquired to allow this increase in plant throughput,
but Howe note that operating costs per quarter do not change commensurately.
(c) Galantas state that the concentrate grade will improve as a result of plant
improvements. These improvements will need significant management to achieve.
(d) Other revenues include VAT refunds
(e) The increase in geology costs later in the year is as a result of
additional drilling."
Howe's comments regarding pay-back are as follows :-
"The current assets figure, as of 31st March 2008, is reported by Galantas as
C$16.997M. The sterling equivalent of this, using a June 2008 midpoint rate of
C$2.02 = £1, is £8.404M.
Once in full production, the annualised sales, based on the final quarter of
2008, are expected to be £6.643M. The annualised costs, on the same basis, are
expected to be £3.544M. This indicates an annual surplus of £3.099M. On this
basis, the pay-back period is estimated as 2.7 years. "
This disclosure has been authorised by G.White FGS MAusIMM, (Senior Geologist -
Resources) of ACA Howe International Ltd, who is a Qualified Person for this
purpose. Verification detail is as previously disclosed on 12th June 2008.
Galantas Gold Corporation Issued and Outstanding Shares total 175,675,855.
The TSX Venture Exchange has not reviewed and does not accept responsibility for
the adequacy or accuracy of the contents of this news release.
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: statements relating to the estimated reserves and resources at
the Omagh Gold project; anticipated results of drilling programs, feasibility
studies or other analyses; and cost and production 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, performance or achievements to differ materially
from those expressed or implied by the forward looking statements, including:
gold price volatility; impact of any hedging activities, including margin limits
and margin calls; discrepancies between actual and estimated production, between
actual and estimated reserves, and between 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; 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 for the year ended December 31, 2007 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.
Enquiries:
Galantas Gold Corporation
Jack Gunter P.Eng - Chairman
Roland Phelps C.Eng - President and CEO
Email : info@galantas.com
Website : www.galantas.com
Telephone : +44 (0) 2882 241100
Blomfield Corporate Finance Limited
Nick Harriss
Telephone : +44 (0) 207 489 4500
Lewis Charles Securities Limited
Kealan Doyle & Nicholas Nicolaides
Telephone : +44 (0) 207 456 9100