It may not glisten, but it's certainly gold, writes Claire Shoesmithon a visit to the Galantas mine

There's gold in them thar hills might be a well-used expression, but for Roland Phelps, president of Galantas Gold, it's one that rings true.

On a 180-square-kilometre greenfield site just outside of Omagh in Co Tyrone, Galantas has opened Ireland's only gold mine.

"What we have here is a small mine, but a very sweet one," says Phelps of the four-square kilometre area that Galantas has recently started mining. While typical grades of gold found in mines around the world vary from 1 to 3 grams per tonne (and can make money at 1 gram), in Omagh, the average is 17 grams per tonne.

"You could almost make a living picking up the boulders around the site," he laughs.

That doesn't mean though that the place is littered with glistening metal and, on the glamour front, the whole site leaves much to be desired.

Basically a muddy field with a few portable buildings posing as offices, the mine looks more like the early stages of a large construction project, and a rather slow-moving one at that.

Unlike the traditional image of a mine, where the raw material is buried deep within the earth's surface, the Omagh site is an open-pit operation, meaning that, for the time being, all the work is being done above ground.

Currently just two diggers are excavating rock from the ground, transferring it on to large dumper trucks, which then drive the material a few hundred metres to the on-site processing plant.

Here the rock is passed through at least three sets of crushers, floated in several tanks of frothy water, and eventually the gold concentrate is passed over with the froth into another set of tanks.

Even then, though, once the water has been pressed out and the material bagged, the shiny metallic substance we associate with gold is nowhere to be seen.

In fact, the end product that has been coming out of the plant (albeit rather irregularly) since the end of December is actually a grey, mud-like substance known as gold concentrate.

Galantas this week reached an agreement to deliver at least 90 per cent of the concentrate to Falconbridge, a unit of Xstrata, for smelting.

The fact that the Omagh site is rich in mineralisation - it also contains large quantities of silver and lead - is not news.

Mining giant Rio Tinto examined the deposit back in the late 1980s, but deemed it not large enough to pursue.

Jack Gunter, then Rio Tinto's director of exploration and now executive chairman of Galantas, bought the site from the company and has been seeking to exploit it ever since.

Phelps, who has an 18 per cent stake in Galantas, came on board in the early 1990s and helped get the project off the ground with £1 million (€1.5 million) of his own money. Since then the group, which is listed on the Toronto Stock Exchange as well as London's AIM market, has raised about €4.6 million in two share placings.

Having piggybacked on information gleaned by the site's original owner, Galantas - Irish for elegant thing - is currently working on one particular area known as the Kearney vein.

While this has the potential to sustain the site for at least the next seven years - measured and indicated reserves currently stand at 427,049 ounces with inferred reserves estimated to be about 20,387 - it is also exploring other parts of the prospect for more veins.

Some success has already been had and Phelps admits it is unlikely that this will be the only producing area on the site.

In addition, the potential exists to dig downwards.

As things stand, Galantas aims to produce 30,000 ounces of gold a year, though it will take at least three months for production to settle down.

At the current gold price of around €500 per ounce, this equates to an income of more than €15 million a year for Galantas. Unlike many of its rivals, Galantas isn't solely concerned with mining.

Phelps and his co-directors, Gunter and vice-president Maurice Lavigne, have also set up a jewellery company targeting people with Irish heritage, a market Phelps estimates is worth about €3 billion.

While a small proportion of the concentrate (under the Falconbridge agreement up to 10 per cent) is being siphoned off for this purpose, the majority of the gold being used for the jewellery comes from what Phelps calls free gold.

That's extract found in pieces of rock lying around the site.

The material is collected, separated using the traditional shaking method, and then shipped to Italy where it's made into high-end 18-carat jewellery to be sold by top-quality jewellers around the world.

An initial trial run of 101 tonnes of rock produced more than 53 grams of gold a tonne and was made into about €430,000 worth of jewellery, including a shamrock lapel pin given to Bill Clinton by Taoiseach Bertie Ahern.

According to Phelps, who in a previous incarnation owned the Gwynfynydd mine in Wales which specialised in Welsh jewellery, the Irish range received a "tremendous" reaction from Irish retailers.

So with no sign of the recent rises in the gold price abating - it rose 30 per cent last year - and only 2 per cent of the Omagh prospect currently explored, it seems the luck of the Irish may well have befallen the Canadians.