 Irish Gold
Galantas
Bob Moriarty
Archives
Sep 16, 2004
Many moons
ago I came across a fascinating story about Welsh
gold.
British Royal tradition holds that all wedding rings are made
from Welsh gold. Prince Charles and Princess Di's rings came
crafted from Welsh Gold.
Who can forget the
£3,500 wedding band Michael Douglas bought for his bride, Catherine
Zeta Jones, before their marriage in 2000?
It occurred to me that the Welsh had everything. Except gold
of course. They don't produce much gold at all. But it's a great
marketing concept. It would be a brilliant marketing plan if
they actually had Welsh Gold.
So when Ken Shortt of Galantas Gold (and True North Gems to be
sure) called me to talk about Irish Gold and to extend an invitation
for me to visit the Galantas operation in Ireland, I did my Ross
Perot imitation: I was all ears (as I packed my bags).
I'm quite familiar
with True North Gems and CEO Andy Smith. I wrote
about them a
few weeks ago. And Andy's a great companion on a trip.
He related
to me the strange but true saga of how Rio Tinto actually discovered
a gold mine in Ireland. It seems that back in the early 1980s,
someone from the dreaded Inland Revenue in the UK contacted Rio
Tinto to determine what business Rio Tinto was engaged in. The
nice people from Rio Tinto, based in London, responded that they
were in the mining business. Inland Revenue wanted to know just
how many mining properties Rio Tinto actually operated within
the UK. It seemed the Inland Revenue wanted to reclassify Rio
Tinto as a holding company rather than a mining company.
Rio Tinto responded
that they didn't actually run any mines in the UK, all of their
mining operations lay elsewhere. Inland Revenue was not amused.
In a spirit of good will and prudent thinking, top management
at Rio Tinto demanded someone in the company find a mine, any
sort would do, within the UK. A group of prospectors set out
and one of them literally stumbled over what eventually turned
into the first fully permitted gold mine in Ireland.
Between 30,000
and 15,000 years ago, Ireland slept beneath a glacier. When
the glaciers retreated, they left a 10-12 foot deep covering of muck
and gravel. Most mines are discovered through surface outcrops
or at least surface indications of something. With this Irish
property near Omagh in County Tyrone, Ireland, nothing showed
up on the surface, only traces of gold flakes in creeks running
through the gold bearing veins.
 Ten feet of glacial till covered everything.
Including a nice size gold deposit. It was a true find, absolutely
done the old fashioned way, with a pan sample of every creek
and river until some tiny flakes of gold showed up in a pan taken
from a slowly running stream. After much scraping of the surface
muck, Rio realized they made a nice discovery.
After writing
checks for about $4.5 million US on trenching, ground surveys
and drilling, Rio Tinto ended up with a 447,000 ounce gold resource
at an average grade of 6.9 grams with about a million ounces
of silver. The resource can be mined via an open pit which means
lower costs.
Someone at
Rio thought about it and realized they really didn't need what
is essentially a small size deposit. Rio sold the entire project
to the fellow running the project who vended it into what is
now named Galantas
Gold Corporation.
(GAL-V $.165 Canadian, about 90 million shares fully diluted,
market cap of $14.85 Million Canadian GALKF-OTCBB).
 If someone uses the standard business model in
the gold business, a 450,000 ounce resource isn't all that big
a deal. Galantas has come up with figures showing potential production
of 25,000 to 35,000 ounces of gold a year based on a total capital
cost of maybe $10 million US to get into production. But if you
use the $4,000 per ounce of gold - by producing and selling finished
jewelry -- business model of the Welsh Gold, well, you have a
veritable gold mine on your hands.
 For the past two years,
while continuing the mine modeling, Galantas has been hard at
work trying to create an Irish Gold brand name. They did a bulk
sample of 150 tons in 2001/2002 and another bulk sample of 100
tons this last spring. Much to their delight, the average grade
of the first bulk sample proved to be over 53 grams to the ton
which is exceptional for gold which can be mined in a bulk pit.
On my visit I took a random sample and panned it. I came up with
both visible gold and a high amount of sulfides. I suspect that
in the end, Galantas will realize the drill results from Rio
Tinto understate the grade of the gold a lot. That's just my
opinion but test results from this year's sample show 44 grams
to the ton. 7 grams of gold per ton at the surface is nice, 44
grams is gold pig heaven.
 But the model of Irish Gold (in 18kt and 20kt)
selling gold for $4000 per ounce at the retail level works at
almost any level of production. The biggest problem Galantas
has faced over the past two years is a lack of gold. And while
150 ounces from this year's production is nice, for the company
to succeed wildly, they need many thousands of ounces of production
a year.
In the past two years, Galantas have sold over $433,000 in finished
jewelry.
 In April of 2004, the existing management realized
they needed to bring aboard professional management skills. Three
owners control 75% of the stock and while they have the ability
to maintain tight control, management was a weak point. In April
they brought on Andrew Smith as President/CEO and Moe Lavigne
as VP in charge of Exploration and Development. Finally the project
can move forward, Andy is working hard at arranging financing
for production as I write. I know them both and like them both.
They are the right guys for the job.
I like the
business model, it's Irish Gold, high carat and quality with
a gold mine attached. I'd guess that in the end they can get
half of retail price and it's selling for $4000 an ounce now.
They have an online store where their line of 18kt Irish Gold
can be bought and as production begins, they will be doing a
lot more advertising and branching out into more retail outlets.
I believe Andy
told me there are 50 million Irish Americans. That's a lot of
wedding bands.
We own shares
in Galantas. This is neither a recommendation to buy or sell
their stock. We are not paid for our opinion (I'm priceless,
according to Barbara!). We encourage our readers to do their
own due diligence.
By the time you read this (Thursday
Sep 16th) I will be winging my way to China with a stinking head
cold, to visit yet another series of properties.
I am in bad books; it's Barbara's 60th birthday on 17th and (I
quote) she will "spend it alone, weeping in a dark corner,
eating worms, and it's no consolation to be 20 years younger
than some of the gold geezers, thank you very much, matey!"
I'll be back on Wednesday September 29th, so please don't send me email until then.
September 16, 2004
Bob Moriarty
President:
321gold Inc
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