Galantas Gold Regulatory News (GAL)

1 May 2008 07:01

Galantas Gold Corporation01 May 2008 GALANTAS GOLD CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS Year ended December 31, 2007 Dated: 01 May 2008 This document constitutes management's discussion and analysis (MD&A) of thefinancial and operational results of Galantas Gold Corporation (the company) forthe twelve months ended December 31, 2007. This MD&A is to be read inconjunction with the audited financial statements for the same period. The MD&Adoes not form part of these audited financial statements. The Company preparesand files its financial statements in accordance with Canadian GenerallyAccepted Accounting Principles (GAAP). The currency referred to in thisdocument is the Canadian dollar. The MD&A is prepared in conformance withNational Instrument 51-102F1 and was approved by the Company's Audit Committeeon April 30, 2007. This MD&A is dated April 30, 2007. FORWARD LOOKING STATEMENTS The information in the MD&A contains forward looking statements, includingstatements about anticipated operating and financial performance. Suchstatements are not guarantees of future performance which is subject to risksand uncertainties only some of which are within the Company's control, and anyor all of which could cause the Company's performance to be materially differentfrom what directors may believe. Given the uncertainties associated withforward looking statements, readers are cautioned not to place undue reliance onthem. The Company does not undertake to update any forward looking statementscontained herein. OVERVIEW - STRATEGY - DESCRIPTION OF BUSINESS Galantas Gold Corporation is a producing mineral resource issuer and the firstto acquire planning consent to mine gold in Ireland. The Company's wholly ownedOntario holding company, Cavanacaw Corporation, owns all of the shares of twoNorthern Ireland companies - Omagh Minerals Limited, owner of prospecting andmining rights, planning consent plus land, buildings and equipment; and GalantasIrish Gold Limited, owner of rights to work, market and sell the Company's goldproduction as certified Irish gold jewellery. The Company's strategy to increase shareholder value is to: • Increase the production of the open pit mine and processing plant on its Kearney deposit, • Continue to explore and develop extensions to the Kearney and nearby known deposits so as to expand minable reserves and increase gold production in stages, • Explore its 189 square kilometre prospecting licence, focus on the more than 50 gold targets identified to date, and • Promote and expand on a commercial basis the Galantas(R)Irish gold jewellery business now that certified Irish gold from the mine has become available. Reserves and Resources References 1. December, 2005: ACA Howe International Ltd. "Technical Report of theGold Mining and Exploration Interests of the Omagh Gold Project of Galantas GoldCorporation in Counties Tyrone and Farmanagh, Northern Ireland" (the "HoweReport") 2. September 22, 2006: Galantas Gold Corporation Press Release: "GalantasDevelops Omagh Gold Mine..." 3. January 22, 2007: Galantas Gold Corporation Press Release: "OreReserve and Resource Estimate". Ore reserves and mineral resources lie within eight veins in a 5 squarekilometre area at the eastern end of the Company's prospecting licence whichencompasses a 20 by 6 kilometre fault-bounded inlier of Precambrian "Daladrian"rocks. The deposits sub-outcrop beneath a few meters of glacial and recentoverburden and are open to depth and usually along the strike. The steeplydipping Kearney deposit, focus of the initial mine, is some 850 meter long andan average of 4.3 meters wide. It has been drilled with 40 diamond drill holesdown to 137 meters and was intersected in one hole at a depth of 300 meters.Below the average 3 meters of overburden , a 359 meters long section at thesouthern end of the deposit had been 88% stripped and channel sampled in detailin the late 1980's by Rio Tinto (212 meters) and in 1991 by Omagh MineralsLimited (103 meters). Results together with drilling data were used in the HoweReport to calculate reserves and resources. The calculations have not beenupdated with surface sampling and drilling results obtained in 2006 and in 2007.The Company is in the midst of exploration and development involving diamonddrilling, results of which will lead to a new estimate of reserves andresources. This new estimate and accompanying N143-101 technical report hasbeen commissioned and is currently being finalized and reviewed. On the Kearney deposit, which is the initial focus of mine development, theCompany's current resource statement notes: (i) proven ore reserves of 181,480tonnes at a grade of 7.36 grams of gold per tonne; (ii) probable ore reservesof 185,830 tonnes at a grade of 7.68 grams of gold per tonne; plus (iii) anindicated resource of 1,183,680 tonnes at a grade of 7.02 grams of gold pertonne. These reserves and resources were calculated using a cut-off grade of1.0 gram of gold per tonne and a cut-off width of 0.5 meters. The reserves liewithin the "Kearney Pit" currently being developed. The indicated resourceextends from the bottom of the pit presently planned at 37 meters vertical depthto a depth of 137 meters, below which depth the deposit remains open. Note thatthe reserves and resources outlined above are undergoing review the results ofwhich, nearing completion, will replace the current resource statement and thatreview could affect the quantities and/or grades previously calculated. Additional to the reserves and resources of the Kearney deposit, the Howe Reportnoted indicated and inferred resources in other deposits within the Company'smining licence. At a cut of grade and width of 1.0 gram per tonne gold and .0.5meters, these are: Indicated Resource Grade Contained Gold Inferred Resources Grade Contained Gold(tonnes) (g/t Au) (grams Au) (tonnes) (g/tAu) (grams Au) 329,820 6.72 2,208.53 135,500 4.68 634,643 The estimate in the Howe Report (re-iterated January 22, 2007, press release)was carried out to the standards of the Joint Committee of the AustralasianMining Industry Council Code (JORC). A reconciliation to the mineral resourcesand mineral reserve categories as set out in National Instrument 43-101 wasincluded in the Howe Report. The Howe Report describes in section 12 a mining trial on proven reserves thatproduced four selectively mined samples aggregating 101.4 tonnes grading anaverage of 53.41 grams gold per tonne. The difference between this and thereserve grade is attributed to a) selectivity practiced in the mining trial, b)dilution inbuilt in the original sampling, and c) naturally inhomogeneous golddistribution. The sustainable mining grade will be established through samplingprior to and during the early life of the open pit. Mineralisation is tightlyconstrained in the sulphide veins that make up the Kearney and other deposits,making them amenable to selective mining. The processing plant has beendesigned to accept ore grading up to 20 grams gold per tonne. Channel sampling of 2 vein segments aggregating 150 meters in the southern partof the Kearney deposit was completed independently in 2006 to obtain an estimateof the selective mining grade that could be sustained in that area. Theresults, combined with those from 124 samples taken by the Company, showed aweighted undiluted average grade, at a cut-off grade of 3.0 grams per tonnegold, for individual veins of 16.25 grams per tonne gold. Detail is containedwithin the press release dated September 22, 2006. Exploration Targets The Howe Report describes 53 targets selected from integration of geological,geochemical and geophysical data over the Dalradian inlier. The targets weregrouped on a priority of 1 to 10 to reflect the likelihood of their hostingadditional resources. Eight veins around Kearney were classified as very highpriority resource augmentation targets with scores of 9 and 10. These have highgrade channel and/or drill intercepts and have resources and/or reserves. Eightveins not drilled, or with lower grades, have scores of 5 to 8. The remaining37 targets comprise one scoring 6, six scoring 5, four scoring 4, eleven scoring2 and seven scoring 1. Howe considers targets scoring 3 to 8 to represent excellent opportunities fordiscoveries. Howe considered it likely that exploration will add to thereserves and resources and that veins similar to Kearney may lie undiscovered.Howe considered that relatively high grades and widths and continuity of thedeposits with known reserves and resources indicate the potential forunderground production in the future. Initial Mining Project The project embraces an open pit mine capable of supplying ore to acrushing-grinding-froth flotation plant. The plant is designed to produce agold and silver rich sulphide flotation concentrate for sale to a commercialsmelter. The plant was commissioned as stated in the press release dated June26, 2007. Improvements in terms of production quantity have been made since theend of the last quarter though concentrate quality remains variable.Inconsistencies in terms of production quantity and quality are expected togradually reduce. The year saw infrastructure upgrades including, addition to access and haulroads and process building, completion of the modified paste tailings storagefacility, water containment dam and reticulation and discharge system includinga channel diverting run-off water away from working places. Galantas Irish Gold Limited Galantas Irish Gold has carried out market trials wherein jewellery to the valueof $712,784 has been sold through retailers in Ireland and direct via theCompany's e-commerce enabled website www.galantas.com, $529,546 of the saleshaving been made since the company entered development stage on January 1, 2003.Manufacturing and distribution systems are operating and the retailer networkin Ireland and the UK are in place with the initial delivery of jewellery havingtaken place early in 2008. Production of Irish gold has been scheduled into theoperating plan to support regular commercial activity. At the date of this MD&A, Goldsmith group has purchased Galantas(R) jewellerywhich has been distributed via certain shops in its large UK retail chain.Replenishment orders from the initial shipment have begun. Management and Staff Overall management is exercised by two Executive Directors along with a GeneralManager who is in charge of operations in Omagh where the mine, plant andadministration employs 27 people. During the year the company welcomed NicholasHardie as General Manager, Chris Attwood as Production Manager and BrentRoutledge as CFO. Key Performance Driver The achievement of production and cash flow from profitably mining the depositsat Omagh. 1.2 OVERALL PERFORMANCE After commencing site preparation in 2005 and completing the major part of plantconstruction and site works in 2006, the year of 2007 saw production comeonline. Ramp up challenges in the early stages of production have beenmitigated but a consistent ore supply continues to be the focus of attention.The plant was commissioned as noted in the press release dated June 26, 2007with work continuing on streamlining the process with a re-grind circuit tofurther increase the value of concentrate. Work also continues on general siteenhancements around the plant. During the year a total of 996.4 dry tonnes of concentrate were produced with330.4 tonnes in the first quarter of 2008. Exploration Diamond drilling continued throughout the year with the primary focus continuingon detailing the Kearney deposit and exploring the parallel Elkin deposit lying500 meters to the east. A total of 4,830 metres were drilled in 35 holes in2007, details as tabulated: Kearney Elkins Kerr Total Holes Drilled 2007 29 6 0 35 Meters 4,377.0 453.0 0.0 4,830.0 Drilling statistics for the year are in the table below: Hole ID Location NI-GRID N NI-GRID E NI-GRID RL Depth (m) Start Finish OM-DD-07-15 Kearney 371041.658 240133.834 172.335 90.00 04/01/2007 18/01/2007 OM-DD-07-16 Kearney 371038.987 240171.424 164.641 120.00 23/01/2007 08/02/2007 OM-DD-07-17 Kearney 371039.436 240209.819 156.025 167.30 09/02/2007 26/02/2007 OM-DD-07-18 Kearney 371090.813 240176.967 165.296 154.60 27/02/2007 07/03/2007 OM-DD-07-19 Kearney 370830.247 240201.226 160.405 135.00 08/03/2007 20/03/2007 OM-DD-07-20 Elkin's 371126 240657 121 48.00 07/03/2007 14/03/2007 OM-DD-07-21 Elkin's 371163 240669 121 50.00 15/03/2007 22/03/2007 OM-DD-07-22 Kearney 370799.427 240171.287 163.101 102.00 21/03/2007 27/03/2007 OM-DD-07-23 Elkin's 371219 240665 120 51.00 23/03/2007 02/04/2007 OM-DD-07-24 Kearney 370748.620 240186.756 164.396 130.00 28/03/2007 11/04/2007 OM-DD-07-25 Elkin's 371274 240662 121 117.00 03/04/2007 16/04/2007 OM-DD-07-26 Kearney 370725.597 240200.950 165.404 164.20 12/04/2007 19/04/2007 OM-DD-07-27 Elkin's 371162 240688 123 76.00 17/04/2007 23/04/2007 OM-DD-07-28 Kearney 370674.430 240187.658 162.245 101.40 19/04/2007 25/04/2007 OM-DD-07-29 Elkin's 371219 240700 121 111.00 25/04/2007 16/05/2007 OM-DD-07-30 Kearney 370624.015 240186.843 160.502 116.20 23/05/2007 02/05/2007 OM-DD-07-31 Kearney 370848.309 240200.277 160.283 143.40 03/05/2007 11/05/2007 OM-DD-07-32 Kearney 370849.082 240149.896 162.804 110.00 15/05/2007 22/05/2007 OM-DD-07-33 Kearney 371322.425 240114.333 159.197 120.00 18/05/2007 31/05/2007 OM-DD-07-34 Kearney 370873.752 240175.568 160.504 167.00 23/05/2007 31/05/2007 OM-DD-07-35 Kearney 371208.940 240168.465 162.239 153.00 01/06/2007 18/06/2007 OM-DD-07-36 Kearney 370897.742 240170.826 160.786 140.00 31/05/2007 11/06/2007 OM-DD-07-37 Kearney 370924.581 240172.106 161.764 131.50 12/06/2007 19/06/2007 OM-DD-07-38 Kearney 370920.818 240117.268 166.763 104.00 20/06/2007 26/06/2007 OM-DD-07-39 Kearney 371140.723 240110.717 174.640 99.00 26/06/2007 06/07/2007 OM-DD-07-40 Kearney 370972.451 240172.084 163.093 125.00 26/06/2007 03/07/2007 OM-DD-07-41 Kearney 371121.548 240220.805 158.321 281.80 04/07/2007 23/07/2007 OM-DD-07-42 Kearney 370946.379 240135.962 165.745 68.00 10/07/2007 19/07/2007 OM-DD-07-43 Kearney 371175 240125 177 102.00 19/07/2007 13/08/2007 OM-DD-07-44 Kearney 371071.961 240171.770 166.883 125.00 24/07/2007 16/08/2007 OM-DD-07-45 Kearney 370677.006 240224.458 161.361 144.15 15/08/2007 04/09/2007 OM-DD-07-46 Kearney 371174.353 240240.587 152.793 329.00 17/08/2007 12/09/2007 OM-DD-07-47 Kearney 371093.183 240205.683 159.934 243.00 05/09/2007 15/10/2007 OM-DD-07-48 Kearney 371216.621 240229.354 153.194 258.50 13/09/2007 04/10/2007 OM-DD-07-49 Kearney 371275 240250 165 252.00 16/10/2007 19/11/2007 Results of the drilling is outlined in the table following: KEARNEY VEIN - CORE DRILLING RESULTS, DECEMBER, 2007 Hole ID From (m) To (m) True Width Grade Grade (g/t Grade (m) (g/t gold) silver) (% lead) OM-DD-07-26 93.40 93.70 0.30 11.28 12.06 0.03and 113.40 114.95 1.55 2.40