Shares in Galantas Gold (LON:GAL,CVE:GAL) rose strongly after latest drilling at its Omagh project in County Tyrone, Northern Ireland identified the largest accumulation of gold discovered so far as the site moves closer to becoming a producer once more.
A 13 metre intersection at the Joshua vein had gold grades of 9.9 g/t (grams per tonne), 30.3 g/t silver and 0.6% lead, at an estimated vertical depth of 117.2 metres.
And in another encouraging development, the firm found new high grade vein called 'Kestrel' in an under-explored area of the formerly producing property, where mining is temporarily suspended.
The new vein lies 70 metres west of the Joshua vein and also assayed high grades 35.8 g/t gold, 85.8 g/t silver and 4.9% lead over 0.7 metres true width at a depth of around 42.4 metres.
Chief executive Roland Phelps told Proactive the assays had surpassed expectations, saying a 13 metres intercept would be a "magnificent" find at any gold property.
"We have yet to grapple exactly how we're going to mine 13 metres of gold but that's a great problem to have," he said.
Galantas, a mining developer, has one flagship and its project currently boasts around 500,000 ounces of the yellow metal at the project, with around 32,000 in the higher confidence measured category. A previous open pit mine generated about a tonne of gold.
It has active planning consent for an underground mine.
Phelps said today's findings would lead to a resource update and that could come in 2016 (the last was in 2014) while the road to production consists of satisfying some some pre-planning consents and competing a financing deal.
That would consist of a combination of lease financing, equity funding and some debt, he said, adding that although the initial investment to get the underground mine up and running has been put at £10mln, a starter project, which would be cash-flow generating could be started for less.
The property also benefits from already having a tailings facility, ownership of freehold land and a fully functioning processing plant already there, reducing considerably capex requirements and increasing the IRR (internal rate of return).
Phelps notes that strength of the gold price and a weakness in sterling, which the firm deals with, has improved the already robust parameters of the project.
Even at £700 an ounce of gold, the IRR was around 50% and now it's way above that figure now, with gold between £750 and £760 an ounce, he highlights.
Galantas, which was backed to the tune of 14.9% by Ross Beaty, the famous Canadian mining investor, is not travelling alone in trying to forge a mining path in Northern Ireland.
Dalradian Resources (LON:DALR) is trying to unlock its previously explored high grade Curraghinalt project in nearby counties Tyrone and Londonderry, which it reckons hosts 3mln ounces of the precious metal and may be part of a gold mining district.
It looks likely to produce upwards of 162,000 ounces per year over an 18 year mine life.
Galantas's project hit a potential snag at the end of last year when it was informed by the DOENI (Department of Environment Northern Island) that its summer planning consent may be challenged in a judicial review.
But Phelps is unphased, saying the firm doesn't believe any action will be successful, and it's in doubt whether there will be a review.
The company boss said today: "I am delighted with the drilling results so far. They continue to demonstrate why we believe Galantas holds an important high-grade gold property which we expect to be brought into production in the near term.
"The discovery of a new high grade vein within our permitted mining area and the remarkable gold accumulation demonstrated by the recent core on Joshua, is the result of years of hard work by the Galantas geological team, building an ever more detailed picture of the Omagh gold deposits."