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International Molybdenum plc

RNS Number:5185A
Galahad Gold Plc
05 July 2004
                                GALAHAD GOLD PLC
                          ("Galahad" or the "Company")
               ANNUAL GENERAL MEETING 2004 - CHAIRMAN'S STATEMENT
At the Company's Annual General Meeting today, all resolutions proposed were
passed, and Ian Watson, Chairman, made the following statement:
"It is my pleasure to address shareholders at the 2004 Annual General Meeting of
Galahad Gold plc.
This statement accompanies the release of the Annual Report and Accounts for
Galahad Gold Plc for the year ended 31 December 2003.
Since the end of the last financial year, we have been very busy developing our
two projects in Alaska and Greenland. I should like to tell you of a number of
Post Balance Sheet events.
Post Balance Sheet Events
First, Northern Dynasty Minerals Limited (NDM), a company quoted on the TSX
Venture Exchange, Toronto, holds the option to develop the Pebble project in
Alaska. Galahad is the largest single shareholder in NDM. On 25 March 2004,
Galahad announced that it had invested a further CDN$11,050,000 (#4.6m) in NDM,
substantially increasing its holding. On 21 June 2004, Galahad announced the
exercise of certain options to acquire further shares in NDM. Galahad's current
shareholding in NDM is 32.7%, which rises to 34.8% on a fully diluted basis.
Second, Galahad successfully completed a #7 million fundraising to finance the
purchase of the additional NDM shares and warrants and fund further drilling and
exploration at its Skaergaard project in Greenland. Institutional investors in
both the United Kingdom and abroad took part in the fundraising and the
directors of Galahad increased their already substantial shareholding by
investing a further #230,000.
Third, on 8 June 2004, Galahad announced that its Skaergaard deposit in
Greenland had been declared an Inferred Mineral Resource, under the Canadian
mineral categorisation system. This followed a detailed appraisal by a leading
firm of independent consultant engineers. This is a very important step in the
development of this project.
I thought that it would be useful for Shareholders to hear more of the progress
at each of our projects.
The Pebble Project
The Pebble project in Alaska is a copper-gold-silver-molybdenum porphyry deposit
with an Inferred Mineral Resource of 26.5m oz of contained gold, 16.5 billion
lbs of contained copper and 1 billion lbs of contained molybdenum.
At a copper equivalent cut-off of 0.3%, the copper equivalent grade is 0.55%
(copper equivalent is the gold, copper and molybdenum all expressed in terms of
the copper price). The gold grade is low at 0.3g/tonne and in isolation would
not be viable. However, the copper alone is approximately twice as important as
the gold in terms of financial contribution.
Included in the resource is a near-surface higher grade resource with a
copper-equivalent grade of over 0.7% and a very low stripping ratio which should
be ideal for a low cost open-pit operation capable of being mined all year
round.
There are other copper-gold porphyry deposits throughout the world which have
operated profitably over the last few years with lower copper-equivalent grades
than 0.55%. At current metals prices, the profits of these operations would be
considerably increased.
Work is presently underway to complete a Bankable Feasibility Study for the
project by mid 2005.
The Skaergaard Deposit
Galahad owns 100% of the Skaergaard deposit in Greenland. At Skaergaard,
although the gold grade throughout the whole deposit is low, the value of the
total recoverable metals and minerals within a 35 meter layer gives it the
potential to be highly economically attractive. The average gold grade in the
Gold Zone at the top of this layer is 1.9g/tonne. The Gold Zone also contains
platinum, palladium and accessory metals and minerals (titanium, magnetite and
vanadium). In addition, the average palladium grade in the Palladium Zone at the
bottom of this layer is 2.19g/tonne. This zone contains gold, platinum and the
same accessory metals and minerals. Mining of the Palladium Zone together with
the Gold Zone should provide a mine life in excess of 20 years. As mentioned
above, this deposit has recently been declared an Inferred Mineral Resource by a
leading firm of independent consulting engineers.
In relation to Skaergaard, it is necessary to understand the importance of the
accessory metals and minerals which could make a contribution to mining revenues
of over US$20/tonne. Several of these metals have also increased in value very
substantially during the last few months.
Metals Prices
Your Board believes that the recent upward trend of metals prices is likely to
continue due to a weakening US dollar, the China factor and few new major mines
coming on stream. The prices of the metals contained within Galahad's projects
have already benefited very substantially since Galahad's initial discussions
regarding the purchase of the projects in June 2003. The uplift in gross
contained value in 100% of the Skaergaard deposit and Galahad's pro rata share
of the Pebble deposit in the period 30 June 2003 to 2 July 2004 was in the
region of US$8 billion. Whereas, the gross current contained value was in the
region of US$29bn.
The increase in the in situ value is dramatic, but there are, of course, a
number of important qualifications to be borne in mind. Losses on recovery need
to be taken in to account and it will take up to 40 years to mine all of the
contained metals, so a substantial discount needs to be applied. In addition, in
order to proceed to production, both projects' inferred mineral resources will
need to be upgraded to reserve status, environmental permitting will need to be
obtained and senior financing arranged. On the other hand only the precious
metals at Skaergaard have been included - there is considerable value contained
in the accessory minerals and metals in this project.
Nevertheless, the scale of the price increases provides a substantial financial
cushion and could obviously have a major impact on the viability of both
projects and potential future revenues. It also illustrates the leverage for
Galahad shareholders with Galahad's high exposure, in relation to its market
capitalisation, to further rises or falls in the prices of precious metals and
other metals and minerals.
Website
The Galahad Gold plc website provides a good method for us to stay in touch with
you. Please register on the website: www.galahadgold.com
I look forward to the continuing success of our strategy in the remainder of
2004 and going forward. I would like to thank you, the shareholders, for your
involvement in Galahad Gold plc."
                      This information is provided by RNS
            The company news service from the London Stock Exchange
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