Galantas Gold losses widen as it presses on with development

The AIM-traded firm said the cash outflow from operating activities before changes in non-cash working capital items for the quarter totalled CAD 0.39m, growing slightly from CAD 0.33m.

It said it had a cash balance of CAD 3.77m as at 31 March, compared to CAD 0.18m a year earlier.

The working capital deficit at period end amounted to CAD 2,7m, compared to CAD 5.12m in the prior period.

Galantas explained that, until the mine reached the start of commercial production, which was expected to be later in 2019, all development expenditures were capitalised with net proceeds from sales deducted from development costs.

On the production front, Galantas said that In the first quarter the Omagh gold mine continued limited production of gold concentrate from feed produced in the development of the Kearney vein.

The plant, which produced a gold and silver concentrate using a non-toxic, froth-flotation process, was running on a batch basis from a stockpile of underground vein material plus additional feed produced from on-vein development operations.

Underground development of a decline tunnel continued to be progressed during the first quarter, the company said, with further cross-cuts allowing access to lower levels of vein development which formed the development necessary to demarcate production panels.

“The increased number of development headings is expected to provide an enhanced supply of mill feed,” the board explained in its statement.

“During the quarter, on-vein development on the 1084 - second - level continued with 32 metres of vein drive being completed.

“Later in the quarter the company reported that the main decline development tunnel has reached the 1072 - third - level and a 58 metre cross-cut to intersect the Kearney vein was in progress.”

Galantas said the vein on the 1072 was reached early in the second quarter, with on-vein development now having commenced.

At quarter end, the main decline tunnel was 423 metres in length and the total of all underground drivages exceeded 1136 metres.

For most of the rest of 2019, the increased quantities of processing feed would be sourced from multiple on-vein development headings, with mining between levels - stoping - expected by or before early 2020.

“Ground conditions have notably improved as the mine continues towards deeper levels, a feature ascribed to changes in rock stress conditions influenced, at higher levels, by the open pit excavation.

“The mine employs a robust ground control procedure using rock bolts, mesh and shotcrete to engineered designs.”

On 26 March, Galantas reported the expansion of gold milling operations at the Omagh processing plant, with the board saying on Tuesday that milling operations progressed during the first quarter on an extended day shift basis, as feed became available.

As expected, a second shift was subsequently added early in the second quarter.

“Additional milling shifts are planned to be added in the third quarter, when additional quantities of feed are confirmed.

“The processing plant, which was used formerly for open-pit operations, has had the benefit of a recent upgrade and further upgrades are planned.

“Recent analyses suggest that the product from the plant meets quality criteria and operates at a high efficiency.”

The company said shipments into a concentrate pre-payment or loan facility with Ocean Partners UK, as announced on 12 April 2018, began early in the second quarter.

Three shipments of around 75 tonnes of concentrate had been shipped, with a further 25 tonnes expected to ship shortly.

The value of the shipments awaited assay agreement, as per usual procedures.

“Environmental monitoring continues to demonstrate a high level of regulatory compliance,” Galantas added.

“Safety is a high priority and the zero lost time accident rate, since the start of underground operations, continues.”