Up until two years ago, Galantas Gold was producing a flotation concentrate containing gold, silver and lead from its small open-pit gold mine in northern Ireland, about 150 km west of Belfast and about 32 km from Dalradian Resources’ high-grade Curraghinalt gold deposit.
The concentrate Galantas Gold produced was then shipped, under a life-of-mine off-take agreement, to Glencore Xstrata’s Belle Dunne smelter in New Brunswick. The facility in eastern Canada is a lead smelter with a gold circuit.
But Galantas Gold’s long-term game plan always has been to build an underground mine after exhausting the open pit, and last week, after a three-year permitting effort, it received permission to do just that.
“It will be the first underground gold mine in Ireland,” Roland Phelps, the company’s president and chief executive, says in an interview from his office in Omagh.
“Our strategy was to drill off enough resource to get cracking and build a small mill to generate a bit of cash, and then use that cash to build a larger mill, and to do some more drilling,” Phelps explains. “The future of the mine has always been underground, with the deposit’s steeply dipping veins (70 degrees) that are open at depth. That’s where the majority of the ore body is located.”
Phelps estimates building an underground mine will take about two years and cost about US$16 million. The reason it is so inexpensive, he maintains, is because the company already owns the land, has a dry tailings facility, and a plant that processes 18-20 tonnes per hour.
The mining executive, who holds degrees in mining engineering and geology, says he is reviewing a number of financing proposals, and in all likelihood these will include lease financing. “We’ve had experience with lease finance and been successful and we paid those off to the letter,” he says, “so I’m hopeful lease finance will form a considerable portion of the total debt burden.”
The current mine plan envisions mining the two main veins in the deposit — Joshua and Kearney — but Phelps says the company has identified a total of 14 veins on the property that it intends to further explore.
The Joshua and Kearney veins currently have a measured and indicated resource of 730,824 tonnes, grading 7.16 grams gold per tonne for 168,284 oz. of contained gold. Inferred resources add a further 1.2 million tonnes averaging 7.61 grams gold for 293,918 oz. of contained gold.
Measured and indicated resources discovered so far on the total property stand at 818,233 tonnes averaging 6.86 grams gold for 179,986 oz. of contained gold, with inferred estimated at 1.37million tonnes at 7.71 grams for 341,123 ounces of contained gold.
According to Phelps, at a gold price of £750 per oz. (USD$1,174 per oz.), the pre-tax operating surplus after capital expenditure generates a pre-tax internal rate of return of about 72% at an 8% discount rate, and a net present value of about $26.6 million, based on just 36% of the combined resources of the Joshua and Kearney veins only.
“It’s a small fish, but it’s a tasty one,” he says.
Once the financing is in place, it should take about six months before Galantas will be in development ore, Phelps estimates. “That development ore will go straight into the existing mill, so that should give us early cash flow,” he says. “Midway through the second year, we should be in commercial production, producing about 30,000 oz. gold annually over five years, but we’ve allowed for 15 years of tailings, so that tells you what we think of the potential for finding more resources.”
As a jurisdiction, Northern Ireland is a great place to do mining, he argues. There is excellent transportation and engineering infrastructure, a very well-educated workforce, and clear regulations on mineral ownership.
“It has some very interesting mineral prospects, and once you have identified them, you do have a clear route to getting your permits,” he says. “It’s like any other part of Western Europe — permitting can be tortuous and time consuming — but if you do the right studies and go through the right hoops, you can get your consent.”
On that note, Phelps says Omagh will be Ireland’s first underground gold mine, but not its last.
“Certainly within the next five years there probably will be two or three other underground gold mines,” he says. “And there are lots of other opportunities in Northern Ireland for looking for additional deposits.”
*This story originally published by The Northern Miner. www.northernminer.com.