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The gold rush in Ulster

The discovery of gold beneath a soggy layer of peat has turned Co Tyrone into an unlikely player in the multibillion pound international bullion market. Cahal Milmo reports

Sam McKinley always believed that the only benefit offered by Mother Nature on the Cavanacaw bog was the golden glow to the skin from tending sheep on it on a summer's day. Little did he know that the soggy layer of peat in Co Tyrone that has been grazed by his family's flocks for five generations was hiding a far more lustrous prize - the rock formations needed to open the first gold mine in Ireland for three millennia.

Overlooking Omagh, the Cavanacaw gold mine has quietly opened for business as an unlikely competitor on a bullion market dominated by giant mines in locations from Peru to Tanzania. And Omagh - the scene of the Real IRA car bomb killed 29 people in 1998 - is enjoying the prospect of a peace time economic boon.

From core samples painstakingly drilled out of the ancient rock, geologists have worked out that the mine is sitting on verified deposits of about 14 tonnes of Irish gold. Once it enters full production in the coming months, managers aim to produce 30,000 ounces of gold a year, worth some £15m.

Early indications suggest there are further deposits which could sustain production for decades. In the meantime, there are advanced plans to take a slice of the global £3bn gold jewellery business by marketing a range of products fashioned entirely from Cavanacaw's riches. Mr McKinley (60), a former farmer who now works as chief mechanic for Galantas, the Anglo-Canadian company which is operating the mine, said: "It was mostly peat bog that was used to keep sheep. My brother once joked that it would be great if we struck oil under there. We had no idea - it came as a complete surprise when we learnt there was a gold deposit underneath."

In reality, experts have long suspected that Ireland - along with a swath of Great Britain - is sitting on significant gold deposits. A belt of the type of prehistoric rock that is required for the formation of rich ore veins containing large quantities of gold particles runs through northern Canada and across the Atlantic into Scandinavia via Ireland and Scotland.

As a result gold and Ireland have a distinguished history, with the Celts produced some of the most accomplished treasures of the Bronze Age, and researchers declared this year that much of the gold used by the Celtic goldsmiths had not come from abroad, as originally thought, but had been gathered from the Sperrin Mountains, also in Co Tyrone, and other locations around Ireland.

A gold rush in Wicklow in the early 19th century yielded an estimated 400kg of nuggets from the bed of the Aughatinavought River. The largest nugget was melted down to make a snuffbox for George III. But once the easy pickings on river beds were exhausted, the remaining gold remained locked underground and there has not been a functioning mine in Ireland since the diggings of the Celts.

Roland Phelps, the chief executive of Galantas - Gaelic for 'elegant thing' - was in charge of Britain's only gold commercial mine at Gwynfynydd in Snowdonia, Wales, which closed in January. He has now sunk £1m of his own money into the Omagh venture. Standing in the ramshackle portable building that currently passes for Galantas's operational headquarters at the mine, he said: "On the global scale, this is a small mine but it has the potential to be a very sweet one.

"A commercial mine can operate on yields of three grams of gold per tonne of ore.

"Our samples have produced results of 17 grams per tonne.

"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."

The company, which is listed on both AIM alternative investment market in London and the Toronto stock exchange, is hoping to use some of the gold to produce a range of jewellery which will appeal to the 50 million-strong Irish diaspora around the world. Test marketing for the Irish gold made from an initial production run of 101 tonnes of ore has already sold £300,000 of rings, earrings and pendants costing up to £1,200. Negotiations to sell the range in stores owned by the Goldsmiths chain are in the final stages. Mr Phelps said: "We aim to only use about 10% of the gold that comes out of the mine in the jewellery business but that will be plenty. As far as I know there is nowhere else in the world that can offer gold with a specific geographic origin. The last place that could was Wales and that has now shut down."

A few hundred metres beyond the unobtrusive entrance to the Omagh site, which employs 35 people, is an opencast mine, in effect a large quarry stretching over four acres. Two diggers and a fleet of dumper trucks extract the mine's core product - a charcoal black ore ranging in hardness from granite to thick clay which is rich in microscopic particles of gold, silver and lead. The gold deposits, contained in Precambrian rocks formed up to 500 million years ago, were discovered in the early 1980s by prospectors from the global mining conglomerate Rio Tinto, which bought the mineral rights from local farmers, including Mr McKinley's family, over an area measuring 180 square kilometres. The company eventually sold the stake to a consortium headed by a former Rio Tinto executive, Jack Gunter, now the executive president of Galantas.

Mr Gunter won planning permission to open a mine over the Cavanacaw bog in 1995 at the longest public inquiry in Northern Ireland prior to the Bloody Sunday Inquiry. But it was not until the Good Friday Agreement was signed in 1998 that institutional investors were prepared to put forward funds to bring the mine to fruition. The investors, including some of London's leading merchant banks and investment funds, have now financed a £3.5m plant to crush the ore into a fine powder which is bubbled through floatation tanks to separate the metals from sediment. The quarried rock is then filled back in and replanted to restore the bog to its natural state and allow sheep to return. A thick black paste containing the gold particles is shipped in 25-tonne containers to a smelting works in New Brunswick, Canada, to produce the finished bullion.

In Omagh there is growing excitement about the mine.

A spokeswoman for Hazel Allen Jewellers, the only shop in the town to sell Galantas gold, said: "People have come in locally, from across the border in the south and we've had orders on the internet from Brazil. There is great demand for it."

Belfast Telegraph


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