Science Spin July 2008

Tyrone gold mine opens: Ireland's first in 2,000 years

By Marie-Catherine Mousseau

Irish gold has a history spanning over two thousand years, back to the ancient Celtic Kings, with gold artefacts in the National Museum covering the period 2,000 BC to 400 BC. But what has happened since the Celts and what is the current interest in gold in modern Ireland?

For the many years that followed, nothing much has happened. It looks like the Irish luck ran out a bit since those ancient times, as if the source and skills had been lost. This is not completely true though; in the late 18th, early 19th century a gold rush in Wicklow yielded some 400kg of nuggets from river beds. But, these were just easy pickings. So far there hasn't been any identifiable purpose-built gold mine in Ireland.

Tyrone gold

That was until last year. In January 2007, after modern prospecting techniques discovered recoverable gold at Cavanacaw near Omagh in Co Tyrone, the first modern gold mine came into production. "This is Ireland's first for two millennia", announced Galantas, the Canadian company who owns and operates it.

Back then the media grabbed the story eagerly, displaying titles such as" Irish gold 'yields local prosperity', "Ulster's Gold Rush", or sentences such as "The discovery of gold in Ireland's County Tyrone is heralding an "economic boom" for the area", and "Omagh's fortunes have been turned around by the mine."

The BBC also cast an excited eye on what was happening there. It announced that Galantas expected to produce 30,000 ounces of gold a year - which alone would net close to 15 million pounds. Deposits were claimed to hold 14 tonnes of Irish gold. And, last but not least, what the company had planned to do with the gold excited the imagination even more. While most was to be sold as gold concentrate, a small part of what the company billed as "rare Irish gold" was to be used to make a range of branded 18-carat jewellery - Galantas Irish gold jewellery.

"The gold forms an enduring link between our past and present", stated the company. Galantas is actually the Gaelic for "elegant thing". Chief Executive Roland Phelps told the Independent at the time: "By being the only mine in Ireland, we will have a de-facto monopoly on Irish gold and in those circumstances, a monopoly is a beautiful thing." "We employ local people, we source as much of our material as possible locally and we are here for the long term."

In September 2007, an international meeting of geologists was held in Dublin by a society that promotes the science of mineral deposits geology (SGA). Back then I spoke to the president of the SGA (Society for Geology Applied to Mineral Deposits) who organised the meeting. Professor Hartwig Frimmel, a German geologist who spent many years in South Africa and has an expertise in gold mines was to take advantage of his trip to Ireland to go and have a look at the Northern Ireland Gold mine.

His comments at the time were a bit less enthusiastic: "The gold mine at Cavanacaw, which I visited -- the only gold mine in Ireland at the moment -- is an incredibly small operation. It is hard to believe that they make money there."

Nine months later

So what's the story now, nine months later? Was the Irish gold just a gigantic hype or is there really something potentially lucrative? And how is the Irish gold jewellery doing?

Considering the figures, it looks as if Prof Frimmel might have been quite realistic. The most recent figures, for the three months to 31 March 2008, show revenue of $621,787 as opposed to operating costs of $720,228. The maths are simple, costs are greater than income; obviously not much money made so far.

However, Roland Phelps does not seem to be worried. On the contrary, he sees the current evolution as perfectly normal: "We are still in the process of ramping up to full production; this is not unusual for a mining company, particularly when it is going in an area where there is no history of mining, and where everybody has to be trained to deal with processes that they are not used to dealing with. We had to start from scratch, to deal with start up issues as any start up business; we had a successful public enquiry and all the environmental safeguards in place."

In that Roland Phelps states he's happy with the investments he has made so far. "We don't use cyanide, we don't use mercury, we use a very safe extraction method to separate the metallic particles which is called froth flotation.". And he is also proud of the other side of his business which he is developing - Irish gold jewellery. Rightly so it seems. After a successful pilot study and market tests, Galantas Irish Gold launched its product line earlier this year in 10 Goldsmiths around the country and in the UK and also fulfilled an order with Weir's in Dublin.

Irish heritage

A company that does both mining and manufacturing is very unusual. "Most mining companies, and all the big ones, don't care about the manufacturing; they just want to produce the gold and sell it," says Prof Frimmel. But, this obviously doesn't apply to the Omagh mine where around 10 per cent of the gold produced is used to manufacture the jewellery. "It makes perfect sense for Ireland to market it that way," said Prof Frimmel.

Roland Phelps explains how this idea came about. "I started to do the same for another gold mine I used to operate in Wales". According to him, the Welsh, like the Irish, are proud of their heritage and are thrilled to be able to own a piece of jewellery crafted with gold from their own land.

The Welsh gold mine is closed now, and there is no other gold mine in the UK; that's why Roland Phelps turned his skills to Ireland. And as he points out, more than 40 million people in North America consider themselves of Irish extraction -- 40 million people that might feel that a jewel crafted in this rare Irish gold would strengthen their Irish connection. "And it is not just the gold," Roland Phelps is keen to stress. "It is also well designed and marketed." A large part of the Galantas 18-carat Irish gold jewellery is in fact manufactured in Italy -- the main production centre for top-end quality.

Northern promises

So far Roland Phelps has been very excited by his move to Ireland. "Ireland has a very interesting gold history and it is amazing from a mineral perspective," he says. "Up to now there hasn't been much prospecting for gold in Ireland, and there is a real reason for that." The problem is that there is very limited bed rock exposure. This is because of the glaciation, which left many areas being covered with glacial tills (sand gravels). "And when it's not covered by glacial tills it is covered by bog!", Roland notes.

However, about two years ago his company brought in from the US a special method to explore gold under the bog and gravels. "It's like a big metal detector on a hoop", he says. "And it gave us very exciting signatures." Indeed, they were able to detect what they call "coincidence anomalies," that are signatures pointing to something unusual in the ground. These anomalies turned out to be associated with a significant likelihood of finding gold in related veins. On the basis of that information, they first bought a license in an area including 14 promising veins. "And at the moment we are only mining one of the veins," he said.

The method they brought in was so successful that the Geological Survey of Northern Ireland (GSNI) convinced the government to use it over the whole of Northern Ireland. As a result, their knowledge of what is underground has improved dramatically and Galantas have now just tripled their zone of exploration which now covers an area of more than 600 km². Within this area, they have focussed on more than 50 identifiable gold bearing targets. "We detected tremendous anomalies so we're very excited about all the opportunities for gold in Northern Ireland -- it might be big," Roland Phelps said.

"I would be surprised if in the next five years we don't end up with a major discovery. Northern Ireland is only just becoming known," Roland Phelps adds. He acknowledges the key contribution of the Geological Survey which played a major part in adding to this knowledge, and said: "Maybe I'm dreaming, but there might well be half a dozen gold mines in Ireland in ten years time -- and we hope to operate some of them!"

Roland Phelps believes in it, as shown by all the money -- his own money -- that he has put into the venture. "There is a risk, but potentially high rewards," he commented, adding that a business that contains most risks can give the highest rewards, which no doubt applies to the mining business in general.

However, let's be realistic. For now with less than 14 tonnes in the Omagh-based Cavanacaw gold mine, Ireland is still very far from becoming a major gold producer in a global context. "If you consider that the global annual gold production in 2007 was 2450 tonnes of gold, you get a feeling for the significance of the Irish deposit," remarked Prof Frimmel. That's right, but wouldn't this very rarity make the Irish gold all the more attractive? Roland Phelps told me a recent story from the jewellery shop in Omagh. A woman entered admitting she didn't have the money to buy a piece of Irish Gold jewellery; "but please could I just touch it, you know, for luck?" she asked.

The fact is, Irish gold has lost none of the fascination it used to generate. Leprechauns beware, your worries may well be just beginning!

Bigger Picture

Cavanacaw near Omagh may contain the only operating gold mine in Ireland, but outside this area there are other deposits containing gold that might be of interest for mining companies in the future. Hartwig Frimmel, professor in Geodynamics & Geomaterials Research in the University of Würzburg, gives us the Irish picture in terms of gold prospects as compared to the worldwide picture.

In addition to the Omagh gold mine, there are at least three other projects that are being explored.

1 mine and 3 Irish gold projects
Cavanacaw (Omagh) mine
2008 figures
- Actual grade around 7g/t
- Cut off grade ? (open pit)
- Ore resource: 1.6 MT
v 7x1.6M ≈ 11 tonnes of gold

Ore reserve (what is actually proven as opposed to just expected): around 370,000T (0.37MT)

Clontibret project
2007 figures
- Actual grade: 2.4g/tonne
- Cut off grade: 1g/tonne
- Ore resource: 8.7 MT
v 2.4x8.7≈ 20 tonnes of gold

Prof Frimmel's opinion: The cut off grade is very low (which means it would not be costly to mine it). So it should be economic. It has come back into the news with the announcement that mining could begin within the next two years.

Curraghinalt project
2005 figures
- Actual grade: 15.45 g/t gold.
- Cut-off grade: 6 g/t (underground)
- Ore resource: 500,000 tonnes
v 15.45x0.5 ≈ 8 tonnes of gold

Prof Frimmel's opinion: 15 g/t is a very impressive figure, clearly above the cut-off grade threshold - even in a global comparison that is a very high gold grade. However, the total ore resource is very small. Thus, for now it looks like they could make some money out of this, but only for a very short time.

Cregganbaun project
2003 figures
- Grade: 6g/t
- No cut off grade determined (underground)
- Ore resource: 500,000 tonnes
v 06x0.5 =3 tonnes of gold

Prof Frimmel's opinion: Very small and underground. Not a very promising prospect at this stage.

The Irish gold jewellery business
To manufacture the Irish Gold Jewellery, Galantas goes through the same steps as any jewellery retailer, except they have the extra step of producing the gold.

Extracting the Gold
In the Omagh mine the ore is graded around 7g/tonne. This means you get 7 grams of gold out of one tonne of rock. In fact Roland Phelps points out that you need to move far more than one tonne of rock to get those 7 grams. The gold in the ore is actually not visible to the naked eye (like in most gold deposits, gold starting to be visible only when the grade reaches 30g/t). A good thing in relation to the Omagh mine is that it is close to the surface, so to extract the ore they use open pit techniques. This means that the extractions costs are reasonable and the cut off grade - the grade at which it is financially worth mining that ore - is relatively low.