TIDMGAL
RNS Number : 6035Z
Galantas Gold Corporation
21 May 2019
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS REPORTS RESULTS FOR THE QUARTERED MARCH 31, 2019 AND
ANNOUNCES SHAREHOLDERS MEETING
May 21, 2019: Galantas Gold Corporation (the "Company" or
"Galantas") is pleased to announce its financial results for the
Quarter ended March 31, 2019.
Financial Highlights
Highlights of the first quarter 2019 results, which are
expressed in Canadian Dollars, are summarized below:
Quarter Ended March 31
All in CDN$ 2019 2018
Revenue $ 0 $ 0
Cost and expenses of Operations $ (70,026) $ (24,066)
Loss before the items below $ (70,026) $ (24,066)
Amortization $ (87,405) $ (64,249)
General administrative expenses $ (602,429) $ (408,890)
Unrealized gain on fair value of derivative financial liability $ 0 $ 10,000
Foreign exchange (loss) $ (19,657) $( 37,293)
Net (Loss) for the Quarter $ (779,517) $ (524,498)
Working Capital (Deficit) $ (2,702,004) $ (5,123,420)
Cash (loss) generated from operations before changes in non-cash
working capital $ (391,037) $ (332,420)
Cash at March 31, 2019 $ 3,767,187 $ 182,513
The Net Loss for the quarter ended March 31, 2019 amounted to
CDN$ 779,517 (2018: CDN$ 524,498) and the cash outflow from
operating activities before changes in non-cash working capital
items for the quarter ended March 31, 2019 amounted to CDN$ 391,037
(2018: CDN$ 332,420).
The Company had a cash balance of $ 3,767,187 at March 31, 2019
compared to $ 182,513 at March 31, 2018. The working capital
deficit at March 31, 2019 amounted to $ 2,702,004 compared to a
working capital deficit of $ 5,123,420 at March 31, 2018. Until the
mine reaches the commencement of commercial production, which is
expected to be later in 2019, all development expenditures are
capitalised with net proceeds from sales deducted from development
costs.
Production/Mine Development
In the first quarter of 2019 the Omagh gold mine continued
limited production of gold concentrate from feed produced in the
development of the Kearney vein. The plant, which produces a gold
& silver concentrate using a non-toxic, froth-flotation
process, is running on a batch basis from a stockpile of
underground vein material plus additional feed produced from
on-vein development operations.
Underground development of a decline tunnel continued to be
progressed during the first quarter of 2019 with further cross-cuts
allowing access to lower levels of vein development which forms the
development necessary to demarcate production panels. The increased
number of development headings is expected to provide an enhanced
supply of mill feed. During the quarter, on-vein development on the
1084 (second) level continued with 32 metres of vein drive being
completed. Later in the quarter the company reported that the main
decline development tunnel has reached the 1072 (third) level and a
58 metre cross-cut to intersect the Kearney vein was in progress.
The vein on the 1072 (third) was reached early in the second
quarter and on vein development has commenced.
At quarter end the main decline tunnel was 423 metres in length
and the total of all underground drivages exceeded 1136 metres. For
most of the rest of 2019, the increased quantities of processing
feed will be sourced from multiple on-vein development headings.
Mining between levels (stoping) is expected by or before early
2020.
Ground conditions have notably improved as the mine continues
towards deeper levels, a feature ascribed to changes in rock stress
conditions influenced, at higher levels, by the open pit
excavation. The mine employs a robust ground control procedure
using rockbolts, mesh and / or shotcrete to engineered designs.
On March 26, 2019, Galantas reported the expansion of gold
milling operations at the Omagh processing plant. Milling
operations progressed during the first quarter of 2019 on an
extended dayshift basis, as feed became available. As expected, a
second shift was subsequently added early in the second quarter.
Additional milling shifts are planned to be added in the third
quarter, when additional quantities of feed are confirmed. The
processing plant, which was used formerly for open-pit operations,
has had the benefit of a recent upgrade and further upgrades are
planned. Recent analyses suggest that the product from the plant
meets quality criteria and operates at a high efficiency. Shipments
into a concentrate pre-payment / loan facility with Ocean Partners
UK Ltd (announced 12(th) April 2018) commenced early in the second
quarter. Three shipments of approximately seventy five tonnes of
concentrate have been shipped, with a further 25 tonnes expected to
ship shortly. The value of the shipments await assay agreement as
per usual procedures.
Environmental monitoring continues to demonstrate a high level
of regulatory compliance. Safety is a high priority and the zero
lost time accident rate, since the start of underground operations,
continues.
The Annual and Special Meeting of the Company is to be held at
11:00 a.m. (Toronto time) on 27th June 2019 at DSA
Corporate Services Inc., 82 Richmond Street East, Toronto,
Ontario, M5C1P1, Canada.
The detailed results and Management Discussion and Analysis
(MD&A) are available on www.sedar.com and www.galantas.com and
the highlights in this release should be read in conjunction with
the detailed results and MD&A. The MD&A provides an
analysis of comparisons with previous periods, trends affecting the
business and risk factors.
http://www.rns-pdf.londonstockexchange.com/rns/6035Z_1-2019-5-20.pdf
Qualified Person
The financial components of this disclosure has been reviewed by
Leo O' Shaughnessy (Chief Financial Officer) and the production
component by Roland Phelps (President & CEO), qualified persons
under the meaning of NI. 43-101 and AIM requirements. The
information is based upon local production and financial data
prepared under their supervision.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press
release contains forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995
and applicable Canadian securities laws, including revenues and
cost estimates, for the Omagh Gold project. Forward-looking
statements are based on estimates and assumptions made by Galantas
in light of its experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors that Galantas believes are appropriate in the
circumstances. Many factors could cause Galantas' actual results,
the performance or achievements to differ materially from those
expressed or implied by the forward looking statements or strategy,
including: gold price volatility; discrepancies between actual and
estimated production, actual and estimated metallurgical recoveries
and throughputs; mining operational risk, geological uncertainties;
regulatory restrictions, including environmental regulatory
restrictions and liability; risks of sovereign involvement;
speculative nature of gold exploration; dilution; competition; loss
of or availability of key employees; additional funding
requirements; uncertainties regarding planning and other permitting
issues; and defective title to mineral claims or property. These
factors and others that could affect Galantas's forward-looking
statements are discussed in greater detail in the section entitled
"Risk Factors" in Galantas' Management Discussion & Analysis of
the financial statements of Galantas and elsewhere in documents
filed from time to time with the Canadian provincial securities
regulators and other regulatory authorities. These factors should
be considered carefully, and persons reviewing this press release
should not place undue reliance on forward-looking statements.
Galantas has no intention and undertakes no obligation to update or
revise any forward-looking statements in this press release, except
as required by law.
Galantas Gold Corporation
Jack Gunter P.Eng - Chairman, Roland Phelps C.Eng - President
& CEO
Email: info@galantas.com
Website: www.galantas.com
Telephone: +44 (0) 2882 241100
Grant Thornton UK LLP (Nomad)
Philip Secrett, Richard Tonthat
Telephone: +44(0)20 7383 5100
Whitman Howard Ltd (Broker & Corporate Adviser)
Ranald McGregor-Smith, Nick Lovering
Telephone: +44(0)20 7659 1234
GALANTAS GOLD CORPORATION
Condensed Interim Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2019
NOTICE TO READER
The accompanying unaudited condensed interim consolidated
financial statements of Galantas Gold Corporation (the "Company")
have been prepared by and are the responsibility of management. The
unaudited condensed interim consolidated financial statements have
not been reviewed by the Company's auditors.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
(Unaudited)
As at As at
March 31, December 31,
2019 2018
------------------------------------------------------- ----------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 3,767,187 $ 6,188,554
Accounts receivable and prepaid expenses (note 4) 287,920 287,273
Inventories (note 5) 11,322 11,335
------------------------------------------------------- ----------- ------------
Total current assets 4,066,429 6,487,162
Non-current assets
Property, plant and equipment (note 6) 18,330,906 16,487,501
Long-term deposit (note 8) 522,540 523,170
Exploration and evaluation assets (note 7) 759,108 760,023
------------------------------------------------------- ----------- ------------
Total non-current assets 19,612,554 17,770,694
------------------------------------------------------- ----------- ------------
Total assets $ 23,678,983 $ 24,257,856
------------------------------------------------------- ----------- ------------
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (note 9) $ 2,108,258 $ 2,257,329
Current portion of financing facilities (note 10) 380,747 382,974
Due to related parties (note 13) 4,279,428 4,119,642
------------------------------------------------------- ----------- ------------
Total current liabilities 6,768,433 6,759,945
Non-current liabilities
Non-current portion of financing facilities (note 10) 1,140,934 1,081,190
Decommissioning liability (note 8) 580,296 578,242
------------------------------------------------------- ----------- ------------
Total non-current liabilities 1,721,230 1,659,432
------------------------------------------------------- ----------- ------------
Total liabilities 8,489,663 8,419,377
------------------------------------------------------- ----------- ------------
Capital and reserves
Share capital (note 11(a)(b)) 48,628,055 48,628,055
Reserves 9,093,521 8,963,163
Deficit (42,532,256) (41,752,739)
------------------------------------------------------- ----------- ------------
Total equity 15,189,320 15,838,479
------------------------------------------------------- ----------- ------------
Total equity and liabilities $ 23,678,983 $ 24,257,856
------------------------------------------------------- ----------- ------------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Going concern (note 1)
Contingency (note 15)
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2019 2018
----------------------------------------------------------------- ----------- -----------
Revenues
Gold sales $ - $ -
Cost and expenses of operations
Cost of sales 70,026 24,066
Depreciation (note 6) 87,405 64,249
----------------------------------------------------------------- ----------- -----------
157,431 88,315
----------------------------------------------------------------- ----------- -----------
Loss before general administrative and other income (157,431) (88,315)
----------------------------------------------------------------- ----------- -----------
General administrative expenses
Management and administration wages (note 13) 191,688 156,852
Other operating expenses 45,226 47,096
Accounting and corporate 13,895 13,253
Legal and audit 15,574 46,751
Stock-based compensation 135,340 76,083
Shareholder communication and investor relations 48,133 39,318
Transfer agent 1,901 650
Director fees (note 13) 6,250 5,000
General office 2,599 2,381
Accretion expenses (notes 8 and 10) 57,046 2,779
Loan interest and bank charges less deposit interest (note 13) 84,777 18,727
----------------------------------------------------------------- ----------- -----------
602,429 408,890
Other (income) expenses
Unrealized gain on fair value of derivative financial liability - (10,000)
Foreign exchange (gain) loss 19,657 37,293
----------------------------------------------------------------- ----------- -----------
19,657 27,293
----------------------------------------------------------------- ----------- -----------
Net loss for the period $ (779,517) $ (524,498)
----------------------------------------------------------------- ----------- -----------
Basic and diluted net loss per share (note 12) $ (0.00) $ (0.00)
----------------------------------------------------------------- ----------- -----------
Weighted average number of common shares outstanding
- basic and diluted 299,686,805 187,549,186
----------------------------------------------------------------- ----------- -----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Comprehensive (Loss) Income
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2019 2018
--------------------------------------------------------------- --------- ---------
Net loss for the period $ (779,517) $ (524,498)
Other comprehensive (loss) income
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (4,982) 594,642
--------------------------------------------------------------- --------- ---------
Total comprehensive (loss) income $ (784,499) $ 70,144
--------------------------------------------------------------- --------- ---------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2019 2018
------------------------------------------------------------------------- ---------- ----------
Operating activities
Net loss for the period $ (779,517) $ (524,498)
Adjustment for:
Depreciation (note 6) 87,405 64,249
Stock-based compensation 135,340 76,083
Interest expense (note 13) 90,164 17,833
Foreign exchange gain 18,525 41,134
Accretion expenses (notes 8 and 10) 57,046 2,779
Unrealized gain on fair value of derivative financial liability - (10,000)
Non-cash working capital items:
Accounts receivable and prepaid expenses (974) (64,559)
Accounts payable and other liabilities (146,655) 281,546
Due to related parties 74,356 130,927
------------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents (used in) provided by operating activities (464,310) 15,494
------------------------------------------------------------------------- ---------- ----------
Investing activities
Purchase of property, plant and equipment (1,951,052) (180,265)
Exploration and evaluation assets - (844,659)
------------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents used in investing activities (1,951,052) (1,024,924)
------------------------------------------------------------------------- ---------- ----------
Financing activities
Advances from related parties - 399,074
Repayment of financing facilities (note 10) (1,766) (1,539)
------------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents (used in) provided by financing activities (1,766) 397,535
------------------------------------------------------------------------- ---------- ----------
Net change in cash and cash equivalents (2,417,128) (611,895)
Effect of exchange rate changes on cash held in foreign currencies (4,239) 14,650
Cash and cash equivalents, beginning of period 6,188,554 779,758
------------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents, end of period $ 3,767,187 $ 182,513
------------------------------------------------------------------------- ---------- ----------
Cash $ 3,767,187 $ 182,513
Cash equivalents - -
------------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents $ 3,767,187 $ 182,513
------------------------------------------------------------------------- ---------- ----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars)
(Unaudited)
--------------------------------------------------------------
Reserves
------------------------------------
Equity
settled Foreign
share-based currency
Share Warrants payments translation
capital reserve reserve reserve Deficit Total
------------- ----------- -------- ----------- ----------- ----------- -----------
Balance,
December 31,
2017 $ 39,759,172 $ - $ 7,038,978 $ 619,209 $(38,867,302) $ 8,550,057
Stock-based
compensation - - 76,083 - - 76,083
Exchange
differences
on
translating
foreign
operations - - - 594,642 - 594,642
Net loss for
the period - - - - (524,498) (524,498)
------------- ----------- -------- ----------- ----------- ----------- -----------
Balance,
March 31,
2018 $ 39,759,172 $ - $ 7,115,061 $ 1,213,851 $(39,391,800) $ 8,696,284
------------- ----------- -------- ----------- ----------- ----------- -----------
Balance,
December 31,
2018 $ 48,628,055 $ 786,000 $ 7,264,147 $ 913,016 $(41,752,739) $ 15,838,479
Stock-based
compensation - - 135,340 - - 135,340
Exchange
differences
on
translating
foreign
operations - - - (4,982) - (4,982)
Net loss for
the period - - - - (779,517) (779,517)
------------- ----------- -------- ----------- ----------- ----------- -----------
Balance,
March 31,
2019 $ 48,628,055 $ 786,000 $ 7,399,487 $ 908,034 $(42,532,256) $ 15,189,320
------------- ----------- -------- ----------- ----------- ----------- -----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2019
(Expressed in Canadian Dollars)
(Unaudited)
------------------------------------------------------------
1. Going Concern
These unaudited condensed interim consolidated financial
statements have been prepared on a going concern basis which
contemplates that Galantas Gold Corporation (the "Company") will be
able to realize assets and discharge liabilities in the normal
course of business. In assessing whether the going concern
assumption is appropriate, management takes into account all
available information about the future, which is at least, but is
not limited to, twelve months from the end of the reporting period.
Management is aware, in making its assessment, of uncertainties
related to events or conditions that may cast doubt on the
Company's ability to continue as a going concern. The Company's
future viability depends on the consolidated results of the
Company's wholly-owned subsidiary Cavanacaw Corporation
("Cavanacaw"). Cavanacaw has a 100% shareholding in both Flintridge
Resources Limited ("Flintridge") who are engaged in the
acquisition, exploration and development of gold properties, mainly
in Omagh, Northern Ireland and Omagh Minerals Limited ("Omagh") who
are engaged in the exploration of gold properties, mainly in the
Republic of Ireland. The Omagh mine has an open pit mine, which was
in production until 2013 when production was suspended and is
reported as property, plant and equipment and as an underground
mine which having established technical feasibility and commercial
viability in December 2018 has resulted in associated exploration
and evaluation assets being reclassified as an intangible
development asset and reported as property, plant and
equipment.
The going concern assumption is dependent upon forecast cash
flows at the Omagh mine being met together with the continued
support of both Cavanacaw Corporation and Galantas Gold
Corporation. The directors assumptions in relation to future levels
of production, gold prices and mine operating costs are crucial to
forecast cash flows being achieved. Should production be
significantly delayed, revenues fall short of expectations or
operating costs and capital costs increase significantly, there may
be insufficient cash flows to sustain day to day operations without
seeking further finance.
As at March 31, 2019, the Company had a deficit of $42,532,256
(December 31, 2018 - $41,752,739). Comprehensive loss for the year
ended March 31, 2019 was $784,499 (three months ended March 31,
2018 - comprehensive income of $70,144). These losses raise
material uncertainties which cast significant doubt as to whether
the Company will be able to continue as a going concern. Management
is confident that it will continue as a going concern. However,
this is subject to a number of factors including market
conditions.
These unaudited condensed interim consolidated financial
statements do not reflect adjustments to the carrying values of
assets and liabilities, the reported expenses and financial
position classifications used that would be necessary if the going
concern assumption was not appropriate. These adjustments could be
material.
2. Incorporation and Nature of Operations
The Company was formed on September 20, 1996 under the name
Montemor Resources Inc. on the amalgamation of 1169479 Ontario Inc.
and Consolidated Deer Creek Resources Limited. The name was changed
to European Gold Resources Inc. by articles of amendment dated July
25, 1997. On May 5, 2004, the Company changed its name from
European Gold Resources Inc. to Galantas Gold Corporation. The
Company was incorporated to explore for and develop mineral
resource properties, principally in Europe. In 1997, it purchased
all of the shares of Omagh which owns a mineral property in
Northern Ireland, including a delineated gold deposit. Omagh
obtained full planning and environmental consents necessary to
bring its property into production.
The Company entered into an agreement on April 17, 2000,
approved by shareholders on June 26, 2000, whereby Cavanacaw, a
private Ontario corporation, acquired Omagh. Cavanacaw has
established an open pit mine to extract the Company's gold deposit
near Omagh, Northern Ireland. Cavanacaw also has developed a
premium jewellery business founded on the gold produced under the
name Galántas Irish Gold Limited ("Galántas"). As at July 1, 2007,
the Company's Omagh mine began production and in 2013 production
was suspended. On April 1, 2014, Galántas amalgamated its jewelry
business with Omagh.
On April 8, 2014, Cavanacaw acquired Flintridge. Following a
strategic review of its business by the Company during 2014 certain
assets owned by Omagh were acquired by Flintridge.
The Company's operations include the consolidated results of
Cavanacaw, and its wholly-owned subsidiaries Omagh, Galántas and
Flintridge.
The Company's common shares are listed on the TSX Venture
Exchange ("TSXV") and London Stock Exchange AIM under the symbol
GAL. The primary office is located at The Canadian Venture
Building, 82 Richmond Street East, Toronto, Ontario, Canada, M5C
1P1.
3. Basis of Preparation
Statement of compliance
The Company applies International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and interpretations issued by the International Financial
Reporting Interpretations Committee ("IFRIC"). These unaudited
condensed interim consolidated financial statements have been
prepared in accordance with International Accounting Standard 34 -
Interim Financial Reporting. Accordingly, they do not include all
of the information required for full annual financial
statements.
The policies applied in these unaudited condensed interim
consolidated financial statements are based on IFRSs issued and
outstanding as of May 17, 2019 the date the Board of Directors
approved the statements. The same accounting policies and methods
of computation are followed in these unaudited condensed interim
consolidated financial statements as compared with the most recent
annual consolidated financial statements as at and for the year
ended December 31, 2018, except as noted below. Any subsequent
changes to IFRS that are given effect in the Company's annual
consolidated financial statements for the year ending December 31,
2019 could result in restatement of these unaudited condensed
interim consolidated financial statements.
New accounting standards adopted
(i) On June 7, 2017, the IASB issued IFRIC 23 - Uncertainty Over
Income Tax Treatments. The interpretation provides guidance on the
accounting for current and deferred tax liabilities and assets in
circumstances in which there is uncertainty over income tax
treatments. The interpretation is applicable for annual periods
beginning on or after January 1, 2019. At January 1, 2019, the
Company adopted this standard and there was no material impact on
the Company's unaudited condensed interim consolidated financial
statements.
(ii) On January 13, 2016, the IASB issued IFRS 16 - Leases
("IFRS 16"). The new standard is effective for annual periods
beginning on or after January 1, 2019. IFRS 16 will replace IAS 17
- Leases ("IAS 17"). This standard introduces a single lessee
accounting model and requires a lessee to recognize assets and
liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value. A lessee is required
to recognize a right-of-use asset representing its right to use the
underlying asset and a lease liability representing its obligation
to make lease payments. IFRS 16 substantially carries forward the
lessor accounting requirements of IAS 17, while requiring enhanced
disclosures to be provided by lessors. Other areas of the lease
accounting model have been impacted, including the definition of a
lease. Transitional provisions have been provided. The Company
adopted IFRS 16 in its unaudited condensed interim consolidated
financial statements for the period beginning on January 1, 2019.
As the Company has no material lease contracts that fall under IFRS
16, the adoption of this standard has not resulted in any material
changes in the unaudited condensed interim consolidated financial
statements.
4. Accounts Receivable and Prepaid Expenses
As at As at
March 31, December 31,
2019 2018
----------------------------------------------- --------- ------------
Sales tax receivable - Canada $ 3,184 $ 7,629
Valued added tax receivable - Northern Ireland 194,303 153,948
Accounts receivable 44,595 109,927
Prepaid expenses 45,838 15,769
----------------------------------------------- --------- ------------
$ 287,920 $ 287,273
----------------------------------------------- --------- ------------
The following is an aged analysis of receivables:
As at As at
March 31, December 31,
2019 2018
-------------------------- --------- ------------
Less than 3 months $ 230,518 $ 268,995
3 to 12 months 9,057 -
More than 12 months 2,507 2,509
-------------------------- --------- ------------
Total accounts receivable $ 242,082 $ 271,504
-------------------------- --------- ------------
5. Inventories
As at As at
March 31, December 31,
2019 2018
------------------------ --------- ------------
Concentrate inventories $ 11,322 $ 11,335
------------------------ --------- ------------
6. Property, Plant and Equipment
Freehold Plant Mine
land and and Motor Office development Development
Cost buildings machinery vehicles equipment costs assets Total
----------- ---------- ---------- -------- --------- ----------- ----------- -----------
Balance,
December
31, 2017 $ 2,340,221 $ 5,477,586 $ 141,364 $ 104,456 $ 15,340,722 $ - $ 23,404,349
Additions - 557,607 21,014 46,996 - 4,266,806 4,892,423
Transfer
(1) - - - - (15,340,722) 10,468,410 (4,872,312)
Foreign
exchange
adjustment 65,953 153,418 3,984 2,944 - (38,803) 187,496
----------- ---------- ---------- -------- --------- ----------- ----------- -----------
Balance,
December
31, 2018 2,406,174 6,188,611 166,362 154,396 - 14,696,413 23,611,956
Additions - 335,587 2,257 12,445 - 1,600,763 1,951,052
Foreign
exchange
adjustment (2,897) (7,412) (200) (186) - (17,577) (28,272)
----------- ---------- ---------- -------- --------- ----------- ----------- -----------
Balance,
March 31,
2019 $ 2,403,277 $ 6,516,786 $ 168,419 $ 166,655 $ - $ 16,279,599 $ 25,534,736
----------- ---------- ---------- -------- --------- ----------- ----------- -----------
Freehold Plant Mine
land and and Motor Office development Development
Accumulated
depreciation buildings machinery vehicles equipment costs assets Total
------------- ---------- ---------- -------- --------- ----------- ----------- -----------
Balance,
December 31,
2017 $ 1,908,720 $ 4,496,935 $ 91,189 $ 88,977 $ 8,651,776 $ - $ 15,237,597
Depreciation 12,433 311,201 18,005 9,360 - - 350,999
Transfer (1) - - - - (8,651,776) - (8,651,776)
Foreign
exchange
adjustment 53,892 128,444 2,716 2,583 - - 187,635
------------- ---------- ---------- -------- --------- ----------- ----------- -----------
Balance,
December 31,
2018 1,975,045 4,936,580 111,910 100,920 - - 7,124,455
Depreciation 2,488 78,941 3,520 2,456 - - 87,405
Foreign
exchange
adjustment (2,363) (5,445) (114) (108) - - (8,030)
------------- ---------- ---------- -------- --------- ----------- ----------- -----------
Balance,
March 31,
2019 $ 1,975,170 $ 5,010,076 $ 115,316 $ 103,268 $ - $ - $ 7,203,830
------------- ---------- ---------- -------- --------- ----------- ----------- -----------
Freehold Plant Mine
land and and Motor Office development Development
Carrying
value buildings machinery vehicles equipment costs assets Total
--------- --------- ---------- -------- --------- ----------- ----------- -----------
Balance,
December
31, 2018 $ 431,129 $ 1,252,031 $ 54,452 $ 53,476 $ - $ 14,696,413 $ 16,487,501
--------- --------- ---------- -------- --------- ----------- ----------- -----------
Balance,
March
31, 2019 $ 428,107 $ 1,506,710 $ 53,103 $ 63,387 $ - $ 16,279,599 $ 18,330,906
--------- --------- ---------- -------- --------- ----------- ----------- -----------
(1) During the year ended December 31, 2018, the Company
transferred the cost of its Exploration and evaluation assets (note
7) to Development assets.
7. Exploration and Evaluation Assets
Exploration and evaluation assets are expenditures for the
underground mining operations in Omagh. Galantas had announced in
December 2016 that it would commence the first phase of underground
development and re-start concentrate shipments at its Omagh mine.
Underground development of a decline tunnel, located at the base of
the existing open pit, commenced in the first quarter 2017.
The granting of planning consent during the second quarter of
2015 for an underground operation at the Omagh site permits the
continuation and expansion of gold mining. This planning consent
was appealed by a third party in a judicial review hearing which
commenced in September 2016 and was then adjourned to and completed
in February 2017. Judgement was received in September 2017 whereby
the third party's request for the quashing of the planning consent
was denied. However, in November, Galantas reported that it had
received notice of an application by the third party to the Court
of Appeal in relation to the positive judicial review judgment.
This appeal was completed in February 2018. In November 2018, the
Company announced that the Court of Appeal has delivered its
judgement in regard to an appeal against the Company's planning
consent. The Court has determined that the appeal has failed and
thus the planning consent is confirmed.
Exploration
and
evaluation
Cost assets
---------------------------- -----------
Balance, December 31, 2017 $ 3,948,452
Additions 254,140
Transfer (i) (3,624,624)
Foreign exchange adjustment 182,055
---------------------------- -----------
Balance, December 31, 2018 760,023
Foreign exchange adjustment (915)
---------------------------- -----------
Balance, March 31, 2019 $ 759,108
---------------------------- -----------
Exploration
and
evaluation
Carrying value assets
--------------------------- -----------
Balance, December 31, 2018 $ 760,023
--------------------------- -----------
Balance, March 31, 2019 $ 759,108
--------------------------- -----------
(i) During the year ended December 31, 2018, the Company
transferred the cost of its Exploration and evaluation assets (note
6) to Development assets.
8. Decommissioning Liability
The Company's decommissioning liability is a result of mining
activities at the Omagh mine in Northern Ireland. The Company
estimated its decommissioning liability at March 31, 2019 based on
a risk-free discount rate of 1% (December 31, 2018 - 1%) and an
inflation rate of 1.50% (December 31, 2018 - 1.50%) . The expected
undiscounted future obligations allowing for inflation are GBP
330,000 and based on management's best estimate the decommissioning
is expected to occur over the next 5 to 10 years. On March 31,
2019, the estimated fair value of the liability is $580,296
(December 31, 2018 - $578,242). Changes in the provision during the
three months ended March 31, 2019 are as follows:
As at As at
March 31, December 31,
2019 2018
----------------------------------------------- --------- ------------
Decommissioning liability, beginning of period $ 578,242 $ 551,680
Accretion 2,734 10,925
Foreign exchange (680) 15,637
----------------------------------------------- --------- ------------
Decommissioning liability, end of period $ 580,296 $ 578,242
----------------------------------------------- --------- ------------
As required by the Crown in Northern Ireland, the Company is
required to provide a bond for reclamation related to the Omagh
mine in the amount of GBP 300,000 (December 31, 2018 - GBP
300,000), of which GBP 300,000 was funded as of March 31, 2019 (GBP
300,000 was funded as of December 31, 2018) and reported as
long-term deposit of $522,540 (December 31, 2018 - $523,170).
9. Accounts Payable and Other Liabilities
Accounts payable and other liabilities of the Company are
principally comprised of amounts outstanding for purchases relating
to exploration costs on exploration and evaluation assets, general
operating activities and professional fees activities.
As at As at
March 31, December 31,
2019 2018
--------------------------------------------- ---------- ------------
Accounts payable $ 1,193,461 $ 1,017,939
Accrued liabilities 914,797 1,239,390
--------------------------------------------- ---------- ------------
Total accounts payable and other liabilities $ 2,108,258 $ 2,257,329
--------------------------------------------- ---------- ------------
The following is an aged analysis of the accounts payable and
other liabilities:
As at As at
March 31, December 31,
2019 2018
--------------------------------------------- ---------- ------------
Less than 3 months $ 1,114,882 $ 1,066,881
3 to 12 months 644,773 775,693
12 to 24 months - 71,394
More than 24 months 348,603 343,361
--------------------------------------------- ---------- ------------
Total accounts payable and other liabilities $ 2,108,258 $ 2,257,329
--------------------------------------------- ---------- ------------
10. Financing Facilities
Amounts payable on the long-term debts are as follow:
As at As at
March 31, December 31,
2019 2018
------------------------------------------------ ---------- ------------
Financing facilities, beginning of period $ 1,464,164 $ 19,689
Financing facility received (US$1,600,000) (ii) - 2,021,280
Less bonus warrants issued (ii) - (786,000)
Less financing costs (ii) - (41,674)
Less current portion (380,747) (382,974)
Repayment of financing facilities (1,766) (6,357)
Accretion 54,312 240,621
Foreign exchange adjustment 4,971 16,605
------------------------------------------------ ---------- ------------
Financing facilities - long term portion $ 1,140,934 $ 1,081,190
------------------------------------------------ ---------- ------------
(i) In June 2015, the Company obtained financing in the amount
of GBP 19,900 for the purchase of a vehicle. The financing is for
three years at interest of 6.79% per annum with monthly principal
and interest payments of GBP 377 together with a final payment in
August 2019 of GBP 9,540. The financing was secured on the
vehicle.
(ii) In April 2018, the Company signed a concentrate pre-payment
agreement and loan facility for US$1.6 million with a United
Kingdom based company (the "Lender"), with a maturity date of
December 31, 2020. The interest is set at USD 12 month LIBOR +
8.75% and payable monthly. No interest shall be charged for 6
months and repayments shall commence against deliveries in 2019.
There was a US$25,000 arrangement fee.
In respect of the loan facility, a fixed and floating security,
subordinated to an existing security to G&F Phelps Ltd.
("G&F Phelps"), is being put in place over Flintridge assets.
G&F Phelps has a first charge on Flintridge assets in respect
of its loan facility and the Lender required an intercreditor
agreement between G&F Phelps and the Lender.
As consideration for the loan facility, the United Kingdom based
company received 15,000,000 bonus warrants of Galantas. Each bonus
warrant is exercisable into one common share of Galantas and is
subject to an initial four months plus one day hold period from the
date of issuance of the bonus warrants. The bonus warrants have a
maximum life of two years (the "Expiry Time"). On April 19, 2018,
the 15,000,000 bonus warrants were granted. In the event that the
weighted average closing price per common share of the Company is
more than $0.20 per share for more than five consecutive trading
days, the Company shall be entitled to accelerate the Expiry Time
to a date that is 30 days from the date on which the Company
announces the accelerated Expiry Time by press release.
The fair value of the 15,000,000 bonus warrants was estimated at
$786,000 using the Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected
volatility - 113.55%, risk-free interest rate - 1.91% and an
expected average life of 2 years.
During the three months ended March 31, 2019, the Company
recorded accretion expense of $54,312 in the consolidated
statements of loss in regards with this loan facility (year ended
December 31, 2018 - $240,621).
11. Share Capital and Reserves
a) Authorized share capital
At March 31, 2019, the authorized share capital consisted of an
unlimited number of common and preference shares issuable in
Series.
The common shares do not have a par value. All issued shares are
fully paid.
No preference shares have been issued. The preference shares do
not have a par value.
b) Common shares issued
At March 31, 2019, the issued share capital amounted to
$48,628,055. The change in issued share capital for the periods
presented is as follows:
Number of
common
shares Amount
---------------------------------------------- ----------- -----------
Balance, December 31, 2017 and March 31, 2018 187,549,186 $ 39,759,172
----------------------------------------------- ----------- -----------
Balance, December 31, 2018 and March 31, 2019 299,686,805 $ 48,628,055
----------------------------------------------- ----------- -----------
c) Warrant reserve
The following table shows the continuity of warrants for the
periods presented:
Weighted
average
Number of exercise
warrants price
---------------------------------------------- ---------- --------
Balance, December 31, 2017 636,000 $ 0.07
Expired (636,000) 0.07
----------------------------------------------- ---------- --------
Balance, March 31, 2018 - $ -
---------------------------------------------- ---------- --------
Balance, December 31, 2018 and March 31, 2019 15,000,000 $ 0.16
----------------------------------------------- ---------- --------
The following table reflects the actual warrants issued and
outstanding as of March 31, 2019:
Grant date
Number fair value Exercise
Expiry date of warrants ($) price
--------------- ----------- ---------- --------
April 19, 2020 15,000,000 786,000 0.1575
---------------- ----------- ---------- --------
d) Stock options
The following table shows the continuity of stock options for
the periods presented:
Weighted
average
Number of exercise
options price
---------------------------------------------- ---------- --------
Balance, December 31, 2017 and March 31, 2018 8,600,000 $ 0.12
----------------------------------------------- ---------- --------
Balance, December 31, 2018 8,850,000 $ 0.12
Granted (i) 3,200,000 0.09
----------------------------------------------- ---------- --------
Balance, March 31, 2019 12,050,000 $ 0.11
----------------------------------------------- ---------- --------
(i) On February 13, 2019, 3,200,000 stock options were granted
to directors, officers, consultants and employees of the Company to
purchase common shares at a price of $0.09 per share until February
13, 2024. The options will vest as to one third on February 13,
2019 and one third on each of the following two anniversaries. The
fair value attributed to these options was $247,360 and was
expensed in the unaudited condensed interim consolidated statements
of loss and credited to equity settled share-based payments
reserve. During the three months ended March 31, 2019, included in
stock-based compensation is $98,040 related to the vested portion
of these options.
The fair value of the options was estimated using the
Black-Scholes option pricing model with the following assumptions:
dividend yield - 0%; volatility - 129%; risk-free interest rate -
1.84% and an expected life of 5 years.
The following table reflects the actual stock options issued and
outstanding as of March 31, 2019:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
------------------ --------- ---------------- ----------- ------------- ---------
June 1, 2020 0.105 1.17 3,550,000 3,550,000 -
June 12, 2020 0.105 1.21 150,000 150,000 -
March 25, 2022 0.135 2.99 4,150,000 4,150,000 -
April 19, 2023 0.110 4.05 1,000,000 333,333 666,667
February 13, 2024 0.090 4.88 3,200,000 1,066,667 2,133,333
------------------ --------- ---------------- ----------- ------------- ---------
0.112 3.02 12,050,000 9,250,000 2,800,000
------------------ --------- ---------------- ----------- ------------- ---------
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the
three months ended March 31, 2019 was based on the loss
attributable to common shareholders of $779,517 (three months ended
March 31, 2018 - $524,498) and the weighted average number of
common shares outstanding of 299,686,805 (three months ended March
31, 2018 - 187,549,186) for basic and diluted loss per share.
Diluted loss did not include the effect of 15,000,000 warrants
(three months ended March 31, 2018 - nil) and 12,050,000 options
(three months ended March 31, 2018 - 8,600,000) for the three
months ended March 31, 2019, as they are anti-dilutive.
13. Related Party Disclosures
Related parties include the Board of Directors, close family
members, other key management individuals and enterprises that are
controlled by these individuals as well as certain persons
performing similar functions.
Related party transactions conducted in the normal course of
operations are measured at the fair value and approved by the Board
of Directors in strict adherence to conflict of interest laws and
regulations.
(a) The Company entered into the following transactions with
related parties:
Three Months Ended
March 31,
Note 2019 2018
---------------------------------------------------------------------------------------- --------- -------
Interest on related party loans (i) $ 90,164 $ 17,335
---------------------------------------------------------------------------------------- --------- -------
(i) G&F Phelps, a company controlled by a director of the
Company, had amalgamated loans to the Company of $3,178,374 (GBP
1,824,764) (December 31, 2018 - $3,182,205 - GBP 1,824,764)
included with due to related parties bearing interest at 2% above
UK base rates, repayable on demand and secured by a mortgage
debenture on all the Company's assets. In April 2018, the interest
increased to 6.75% + USD 12 month LIBOR. Interest accrued on
related party loans is included with due to related parties. As at
March 31, 2019, the amount of interest accrued is $748,241 (GBP
429,579) (December 31, 2018 - $658,338 - GBP 377,509).
(b) Remuneration of officer and directors of the Company was as
follows:
Three Months Ended
March 31,
2019 2018
---------------------------- ---------- -------
Salaries and benefits (1) $ 111,699 $112,110
Stock-based compensation 39,767 18,633
---------------------------- ---------- -------
$ 151,466 $130,743
---------------------------- ---------- -------
(1) Salaries and benefits include director fees. As at March 31,
2019, due to directors for fees amounted to $172,250 (December 31,
2018 - $166,000) and due to officers, mainly for salaries and
benefits accrued amounted to $180,563 (GBP 103,665) (December 31,
2018 - $113,099 - GBP 64,854), and is included with due to related
parties.
(c) As of March 31, 2019, Ross Beaty owns 37,447,478 common
shares of the Company or approximately 12.50% of the outstanding
common shares. Roland Phelps, CEO and director, owns, directly and
indirectly, 49,338,167 common shares of the Company or
approximately 16.46% of the outstanding common shares of the
Company. Miton owns 50,000,000 common shares of the Company or
approximately 16.68% . Melquart owns, directly and indirectly,
62,224,545 common shares of the Company or approximately 20.76% of
the outstanding common shares of the Company. The remaining 33.60%
of the shares are widely held, which includes various small
holdings which are owned by directors of the Company. These
holdings can change at anytime at the discretion of the owner.
The Company is not aware of any arrangements that may at a
subsequent date result in a change in control of the Company.
14. Segment Disclosure
The Company has determined that it has one reportable segment.
The Company's operations are substantially all related to its
investment in Cavanacaw and its subsidiaries, Omagh and Flintridge.
Substantially all of the Company's revenues, costs and assets of
the business that support these operations are derived or located
in Northern Ireland. Segmented information on a geographic basis is
as follows:
March 31, 2019 United Kingdom Canada Total
------------------- -------------- ---------- ----------
Current assets $ 563,429 $ 3,502,999 $ 4,066,428
Non-current assets 19,556,653 55,901 19,612,554
------------------- -------------- ---------- ----------
December 31, 2018 United Kingdom Canada Total
------------------- -------------- ---------- ----------
Current assets $ 794,772 $ 5,692,390 $ 6,487,162
Non-current assets 17,706,643 64,051 17,770,694
------------------- -------------- ---------- ----------
15. Contingency
During the year ended December 31, 2010, the Company's
subsidiary Omagh Minerals Limited received a payment demand from
Her Majesty's Revenue and Customs in the amount of $530,012 (GBP
304,290) in connection with an aggregate levy arising from the
removal of waste rock from the mine site during 2008 and early
2009. Omagh Minerals believed this claim to be without merit. An
appeal was lodged with the tax Tribunals Service and the hearing
started at the beginning of March 2017 and following a number of
adjournments was completed in August 2018. During the three months
ended March 31, 2019, the Tax Tribunals Service issued their
judgement dismissing the appeal by Omagh in respect of the
assessments. A provision has now been included in the unaudited
condensed interim consolidated financial statements in respect of
the aggregates levy plus interest and penalty.
There is a contingent liability in respect of potential
additional interest which may be applied in respect of the
aggregates levy dispute. Omagh Minerals Limited is unable to make a
reliable estimate of the amount of the potential additional
interest that may be applied by HMRC.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFMMGZKKGFGLZM
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