It’s all systems go at Galantas Gold Corporation (LON:GAL)(CVE:GAL), now that underground development work at the Omagh gold mine has started.
Progress is going well, with the development tunnel advanced by approximately 47m from the underground portal, it said in July.
The Ulster-based miner said plans are in hand to increase the blasting frequency, while a narrow vein of gold shooting off from the Kearney system has also been intercepted, with assays showing grades of up to 11 grams per tonne.
This vein has potential to provide a limited quantity of mineralised material for processing while development to access the main Kearney veins is progressed.
And it's here that the real value will be created
“It’s basically a spiral ramp that we’re building,” says chief executive Roland Phelps. “We’ll mine down in a spiral decline to get under the crown pillar that’s left as a safety pillar.”
The crown pillar lies directly beneath the lowest part of the pit and is typically left unexcavated when a transfer from open pit to underground mining takes place.
After that, says Phelps, the company continues to the mining of the underground gold-bearing veins.
“The Kearney vein should be reached within six months,” he said in March.
Cashflow to start once Kearney is reached
Once the vein is reached though, material will begin to be processed through the mill and cash flow will start.
A recent fundraising means the company can get all the way through to that stage without further recourse to the market, although if it then wants to scale up further funds will be required.
“When we’ve fully installed the system as described in our 43-101 report, it should do 30,000 ounces per year, although the maximum capacity is between 50,000 and 60,000 ounces.”
At the moment, says Phelps, the resource base runs to around half a million ounces, so a full ramp up to the maximum production potential isn’t currently warranted. He’d like to do more drilling around the mineralised area to get into that position though, but all in good time.
First, Galantas needs to mine into the Kearney vein. Then it needs to work out how it will move production up a stage to reach the basic parameters outlined in the 43-101 report.
Cash will be coming in by then, so potential investors or other funding providers will have proof of concept of a sort at their fingertips – the ore can be mined, it can be processed, the gold can be sold and the money delivered into Galantas’s accounts.
Perhaps even more pertinent to those curious about future funding needs is the presence of Canadian mining investment giant Ross Beaty on the register. That is serious no-nonsense money backing the ongoing development work.
Why’s it there?
Simple. In sterling terms, the Galantas project showed an internal rate of return of 72.2% based on a price of £750 per ounce of gold. Now, the price of gold is just shy of £1,000.
-- includes July and August operations updates--