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Author underground mining question
CastNoShadow

Joined: 04/03/2011

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underground mining question
Posted: 05/03/2011 18:05:10
All.

Would really appreciate any information you could giv eme on the following.

I am a investor in Galantas Gold and am trying to establish the likely capex required and operating costs of converting their open cast mine on the Kerney Vein in Omagh to an underground mine.

I contacted the CEO of Galantas recently and got the following response;

"There is a cost difference open pit to underground but not as much as one might think. This is because we are dealing with a steeply dipping vein deposit 1-2 metres thick. Thus stripping ratios are high. Underground mining is more selective and thus much less waste country rock has to be shifted. There are other open pit prospects that we will go for but I would like these satellite pits to add to an underground base load, increasing annual ounces. Looking at a small open pit on Joshua vein at the moment which will add to Kearney underground, plus underground on Joshua later too."

Can anyone with more knowledge of mining give me some idea of the likely inititial costs involved and additional ongoing operational costs per tonne of ore mined (vs. open pit) or at least point me in the right direction so I can increse my understanding?

I'm a mere accountant and any information would be fantastic.

Thanks.
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Ty Gwyn

Joined: 30/10/2009
Location: Lampeter

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underground mining question
Posted: 05/03/2011 19:32:48
Is Galantas up for sale? IP: 86.142.190.194
CastNoShadow

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underground mining question
Posted: 05/03/2011 19:38:23
I hadn't realised that, I thought that it may only be viewed by a fraction of the posters here because I posted it initially in the Northern Ireland section. So apologies for the duplicate thread. IP: 188.220.116.97
CastNoShadow

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underground mining question
Posted: 05/03/2011 19:43:18
No but the shares are traded on the AIM exchange!!!

Galantas have recently increased their throughput from 6 tonnes/hour to 12 tonnes/hour at little extra operational cost and expect to achieve 15 tonnes/hour this month. They also expect to be able to operate 24/7 soon.

An excellent investment for anyone especially with gold prices still heading north and likely to continue to do so over the next several years.
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Morlock

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underground mining question
Posted: 05/03/2011 21:55:17
CastNoShadow wrote:



An excellent investment for anyone especially with gold prices still heading north and likely to continue to do so over the next several years.


Wish you had posted in September 2010. Big Grin
IP: 86.23.42.104
robnorthwales

Joined: 21/05/2008
Location: Denbighshire, North wales

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underground mining question
Posted: 05/03/2011 23:00:18
CastNoShadow wrote:



An excellent investment for anyone especially with gold prices still heading north and likely to continue to do so over the next several years.


Hate to ask this, but are you an accountant or a fortune teller ?
The reason I ask is that your post as quoted seems to be trying to draw in investors.
As an accountant, I'm sure you are very aware of rules regarding this, especially as you have already stated that you are an investor in this company.

Simon, et al: Maybe I'm just being a terrible cynic, but I would recommend asking for Registration number for this 'accountant'

--

Madness takes its toll, please carry exact change
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Ty Gwyn

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underground mining question
Posted: 06/03/2011 00:28:26
I 2nd what Rob mentions,its a total scam.

Just read his posts,they don`t make sense,

Why would anyone want to open underground workings,when the present opencast,
1.Is floated on the shares market,and Not for sale.
2.Is increasing production at the site.

The only time this mine will be more viable to work from underground,is when the overburden on the Steeply inclined seam gets excessive for the machinery they have at hand.
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Manicminer

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underground mining question
Posted: 06/03/2011 08:03:22
It's been exessive for a long time lol.

They have to take 60-70 tonnes of ore to get 1 oz(how much of this is thrown to the side before it mixes in with ore feed needs to be factored in).
This has a lot to do with the hole being wider than the vein etc so dilution is a factor. By going underground, less 'waste' is added to the mill feed since you only take out the vein.

So you can see that at 6t/hour (if all the rock goes in the mill) they were only recovering 1oz per 10 hours, now they have doubled this they get 2oz per 10 hrs. Running 24/7 at 15t/hour they will probably get 5oz/day - 35oz a week. At £900 an oz the mine is not paying.
So I can now go back to an earlier comment that they must be able to throw a lot of the waste 'country rock' on the tip before it goes into the mill.

So mr accountant - what is the grade of the ore going in the mill? How much 'waste' is thrown on the tip? Is it 50t-60t per hour and 12t ore for the mill? Would this make the recovery about 1oz per hour, 10oz per 10 hours =£9000 now doubled to 2oz/hour = £18,000 per 10 hours. It now pays to mine.

By going underground and digging less waste, they only need 360 tonne per 24 hours compared to 1440-1780 tonnes per 24 hours opencast (24/7 max production).

--

Gold is where you find it
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barkley

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underground mining question
Posted: 06/03/2011 09:26:30
If you cant get the finacial infomation that you need from the CEO then i wouldnt bother investing !

also it doesnt matter if they increase to 100 tons an hour,it all depends on the gold content.

sounds abit like a fund raiser to me Surrender
IP: 86.155.61.135 Edited: 06/03/2011 09:31:33 by barkley
CastNoShadow

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underground mining question
Posted: 06/03/2011 15:00:34
Guys.

Thanks for the responses, the reason I posted this question here is that I am an investor in Galantas and have a consideable amount of money tied up in this company. Therefore it is sensible to do as much research as possible. I have already done this which is why I recently bought shares in Galantas, but the one area I was unsure on was this issue of underground mining costs on the Kearney vein.

You seem to be implying I have some ulterior motive here. I have none; I work for a company called Atkins and as such am allowed to share any research or knowledge I have on Galantas. The restrictions you talk about are only relevant if you are in a high up position in a publicaly traded company company and have access to proce sensitive information. Companies are obliged to share price sensitive information through the Regulatory News Service (RNS). RNS transmits regulatory and non-regulatory information published by companies and organisations allowing them to comply with local market transparency legislation.

Anyway, I have nothing to gain by sharing this 'tip' with you fellas. Yes if more people buy the shares the price goes up and I would benefit but it would take a huge amount of buying pressure to have any effect on the share price.

Since you seem to question my motives, I'm happy to share my research with you and explain why I believe the current share price of 4p ish will be over 10p by the end of this year:

The upgrades to their machinery are due for completion in March (see latest operational update on this page):

http://www.iii.co.uk/investment/detail?code=cotn:GAL.L&display=news&it=le

The ore processing rate becomes 15 tonnes an hour. They aim to work 24/7 in a quarter would mean being able to process 32400 tonnes.

8375 tonnes of ore produced 309 tonnes of concentrate and $1.76m in revenues (see above link and check out the quarterly results published on the 25/11/2010).

Production after upgrades could produce 20,000 to 30,000 tonnes of ore processed yielding 738 to 1060 tonnes of concentrate and revenues for the 3rd quarter in 2011 of $4.2m to $6, and add in a 10% rise in the gold price since then means revenues in the region of $4.6m to $6.5m.

Profits of $2.5 million is on the cards (after deductions comparative to last 3rd quarter results), so for a year could easily mean estimated profits of $9m to $12, or £5.5m to £7.5m.

A further uplift could be achieved by milling better grades, as the above estimate has assumed the recent grades of 4.75 g/t compared to 6 and above in their resource list quoted in the ACA Howe Report 2008 (top link on the following page):

http://www.galantas.com/corporate/s/SedarLink.html

This independant report quotes grades of up to 9g/t on the Kearney vein.

Investors use what's called a "price earning ratio" (PER) to calculate market capitalisation of mining companies. A very low PER is 4 which is used if the life of the mine is say 5 - 10 years.

Applying a PER of 4 to predicted profits of £6.5 million gives a market capitalisation of £24 million. There are 236 million shares in issue so that gives a share price of 24m/236m = £0.1 or 10p a share.

They are carrying out further exploritory drilling this year so expect them to prove assets of upwards of 300,000 oz which would give us a mine life of over 10 years so a PER of 6 is more appropriate giving a share price of 15p.

Add to the fact the fact that I've been fairly prudent with forecast profits and ore milled so a share price next year of 20p+ isn't out of the question. I also haven't factored in the silver they are also mining which is probably worth an exrta couple of pence on the current share price especially with silver prices expected to rise to over $50/ounce this year!!

http://silver-shortage.blogspot.com/2011/02/david-morgan-silver-market-analysis.html

Anyway do what you will with this information. I think it's a screaming buy at the moment which is why I'm invested and why i'm continuing to buy more shares as I free up more money.

Good luck all.

ps please don't ban me.
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CastNoShadow

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underground mining question
Posted: 06/03/2011 15:50:34
Will open at 3.75p ish. This share is very much unloved at the moment and is not on the radar of many investors and the istitutions... yet. Thst's why it's such a bargain at current prices.

Expect news confirming the 15 tonnes/hour later this month via an RNS and also confirmation of the rig on site currently carrying drilling to improve their JORC complaint resources.

We may see an increse in the share price once this news comes out but I would expect the real uplift in the price to come later in the year...

Three months is the maximum time it would take to carry out the analysis from the drilling currently underway, so potentially three months inclusive of the time to carry out the drilling itself. So RNS detailing drilling results potentially published beginning of June.

The real benefits from the recent machinery upgrades should be seen from the RNS release relating to the Q2 operational update/half year results as they will hopefully have been be operating at 15 tonnes/hour for most of this period and obviously with fairer weather. The half yearly report is usually published around late August.

I would therefore expect the real share price enhancing news to be out between June and August end.

AIM shars are very volatile and obviously impossible to predict but the negative sentiment surrounding this company suggests that material upward movments in the share price will only happen when concrete news relating to increases in ounces drilled and/or improvements in quantified resources are published. All in my opinion of course.
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Manicminer

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underground mining question
Posted: 06/03/2011 20:23:52
The mine may be good, but I know the history of the operator lol. People got burned by him in the 1990's.

--

Gold is where you find it
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Morlock

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underground mining question
Posted: 06/03/2011 22:19:34
Wormster wrote:

Get the pitchforks and the pyre ready I feel a lynching approaching.



Still think a lynching is a trifle premature.

http://www.advfn.com/p.php?pid=qkchart&symbol=LSE%3Agal
IP: 86.31.11.17
derrickman

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underground mining question
Posted: 06/03/2011 23:29:36
that, or the shares are being pushed while they are at a peak....

--

He knew the magic monotony of existence between sky and water: the criticism of men, the exactions of the sea, the prosaic severity of the daily task, because there is nothing more enticing, disenchanting, and enslaving than the life at sea.
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Peter Burgess

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underground mining question
Posted: 07/03/2011 07:46:26
At the top of the page it says:

"Mine exploration, photographs and mining history for mine explorers, industrial archaeologists, researchers and historians"

Virtually all of us are primarily amateur enthusiasts. Would you go to a plane-spotting group for advice on how to run an airline?

--

Hé ! Ki kapcsolva le a villanyt ?
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staffordshirechina

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underground mining question
Posted: 07/03/2011 08:49:02
Correct Peter.
But it might be a good place to find people with a mining interest whose wishful thinking about supporting the industry might overule common sense on the purse-strings front...........
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Vanoord

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underground mining question
Posted: 07/03/2011 10:51:37
Moderation: Gents,

I've trimmed the thread slightly to remove some of the sniping.

I'm not sure what the OP is wishing to achieve by posting here, but I'd make the point that I would strongly advise anyone from investing in something unless they are very sure what they're doing.

Similarly, if it turns out that the purpose of any post is to promote investment in a commercial endeavour or anything similar, then it will be removed along with the poster, unless they have an extremely good excuse.


--

Filling space until a new signature comes along...
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CastNoShadow

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underground mining question
Posted: 07/03/2011 13:01:33
Well I actually got some decent replies on the other thread i opened up rather than petty sniping. So it was worthwhile posting here.

I posted my research into this company only vbecause of some of the ridiculous alogations made by some of the posters here.

If you actually read through my research you'd realise what a great opportunity it is and should be thanking me for bringing some a decent investment opportunity to your attention.

Each to their own. I won't be posting any more... except later in the year when the price has doubled. Until then...

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Vanoord

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underground mining question
Posted: 07/03/2011 13:15:39
Indeed: it wasn't you that was sniping Wink

--

Filling space until a new signature comes along...
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Aditaddict

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underground mining question
Posted: 07/03/2011 22:34:58
You removed my post for "sniping " yet the third paragraph of this post should have said it all to you !
But no 1
i dont know why i bother
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