Galantas Gold plummets as it halts Irish mine expansion on terrorism fears
Shares in Galantas Gold (TSX, LON:GAL) collapsed in London Monday after the Canadian miner announced it had halted expansion work at its Omagh gold mine as the Police Service of Northern Ireland (PSNI) said it was unable to guarantee it the necessary “anti-terrorism cover” for its blasting operations.
The Toronto-based company, which had begun underground development at Omagh last month, was going to create 130 new jobs due to the expansion, but it now says it was reviewing potential redundancies with recently hired mine staff, and any new recruitment or ongoing investment had been “deferred”.
The Police Service of Northern Ireland told the miner it cannot grant it daily anti-terrorism cover for its blasting operations at the Omagh gold mine.
The stock plummeted on the news and it was down almost 33% to 4.65p at 1:41PM GMT, while it was trading 20% lower in Toronto at 9:38AM.
PSNI told the company that due to resource constraints and competing priorities, it was currently only prepared to provide anti-terrorism cover for a maximum of a two-hour period, two days a week. Such supervision, a regular duty of PSNI, is considered crucial to avoid that the transportation and use of certain rock breaking materials and explosives ends in hand of terrorists, the company said.
Galantas noted the PSNI was also requesting a “cost recovery agreement” for the limited protection and added the offered time was insufficient to sustain the development or operation of the mine.
The President and chief executive, Roland Phelps, also said the PSNI’s stance was a blow to the proposed mine development and to the livelihoods of its employees. However, he said the company was prepared to enter into a costs recovery agreement, provided supervision was granted for a two-hour period, five days per week.
The PSNI decision may jeopardize the future of other projects currently being developed in the area, including Canada’s Dalradian Resources (TSX:DNA) (LON:DALR), which has been working on its proposed gold mine in Tyrone, North Ireland, since early 2010.
The Toronto-based junior owns the mineral rights to more than 80,000 hectares in Northern Ireland, which includes its flagship Curraghinalt gold project outside Gortin, identified as one of the top ten undeveloped gold deposits by grade in the world.
While the London-listed shares seemed unaffected today — they were up 1.34% to 75.50p at 10:35 am GMT— the Canadian ones were down 0.83% to Cdn$1.20 at 9:30AM.
Northern Ireland holds the world’s seventh richest undeveloped seam of gold, but political violence kept most investors away for about three decades.