Galantas eyes allure of certified Irish gold (December 25, 2006)

Vancouver — Hoping to draw on the allure of certified Irish gold, the Canadian operator of Northern Ireland’s first modern-day gold mine plans to earn a premium on prevailing market prices by branding its production and selling it to high-end jewelry stores.

It is a strategy that has enabled Canadian diamond producers to set themselves apart from the competition, and as it works to bring its Omagh, Tyrone Cty., mine into production, Galantas Gold (GAL-V, GALKF-O) sees no reason why it can’t be applied to precious metals.

“Wherever there are Irish, there is going to be a market for this product,” says Jack Gunter, chairman of Toronto-based Galantas.

The company has already achieved some success with its branding strategy by selling US$650,000 worth of 18-karat gold jewelry through retailers in Belfast and Dublin. Gunter says Galantas is currently in talks with a U.K. retail firm, which he declined to name, that is interested in its product.

The ultimate goal, Gunter says, is to have the Galantas brand displayed in carriage trade jewellers like Birks and Cartier, and available to people who are attracted by the sentiment or cachet of owning certifiable Irish gold.

“People will pay a premium if you can create the aura of something special,” says Gunter, a 68-year-old mining geologist whose previous employers include Rio Tinto (RTP-N, RIO-L), the company that owned the site for a spell in the 1980s.

If the plan succeeds, it will mark a substantial win for Galantas, which seems to have overcome a series of setbacks as it moves to bring Northern Ireland’s first commercial gold mine into production next year.

They include a legal dispute from a former partner, opposition from local residents and a lack of available financing following the Bre-X Minerals gold mining scandal in 1997.

Only about 5% of the Omagh gold will be sold to high-end jewelry retailers. The balance will be processed to produce a flotation sulphide concentrate and offered for sale to smelters around the world.

Galantas CEO Roland Phelps described the jewelry side of the business as the “icing on the cake.” It is designed in part to replace product from a centuries-old mine in Wales, which fetches a premium to market prices, and has wound up in the wedding rings of British Royal family members such as Prince Charles.

The Gwynfynydd mine, which dates back to the year 1198, is expected to close after remaining stockpiles are processed in about six months.

Meanwhile, as exploration continues in advance of a formal production startup, the Omagh site has managed to establish about 90,000 ounces of proven reserves, making it a small mine by global standards, Gunter says.

Two months ago, the company said it had completed the internal floors and partitions in the processing plant. But recently, Galantas said its plans to begin concentrate sales could be delayed by possible startup difficulties.

With plans to produce about 30,000 oz. annually, the company continues to extract channel samples from a high-grade vein system that it believes can sustain the operation during its initial stages.

Galantas, with nearly 158 million shares outstanding, was trading at 29 recently on the TSX Venture Exchange.