TIDMGAL
RNS Number : 3886G
Galantas Gold Corporation
25 November 2020
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORTS RESULTS FOR THE THREE AND NINE MONTHSED
SEPTEMBER 30, 2020 AND DATE FOR ANNUAL GENERAL AND SPECIAL
MEETING
November 25 2020: Galantas Gold Corporation (the 'Company') is
pleased to announce its financial results for the Three and Nine
months ended September 30, 2020.
Financial Highlights
Highlights of the 2020 third quarter and first nine month's
results, which are expressed in Canadian Dollars, are summarized
below:
All figures denominated in Canadian Dollars (CDN$)
Third Quarter Ended Nine Months Ended
September 30 September 30
2020 2019 2020 2019
Revenue $ 0 $ 5,788 $ 0 $ 5,788
Cost and expenses of operations $ (35,658) $ (37,098) $ (102,733) $ (192,606)
Loss before the undernoted $ (35,658) $ (31,310) $ (102,733) $ (186,818)
Depreciation $ (80,213) $ (93,865) $ (253,331) $ (280,355)
General administrative expenses $ (597,315) $ (606,535) $ (1,904,810) $ (1,855,345)
Foreign exchange (loss) gain / $ (63,770) $ 13,664 $ 11,462 $ (66,908)
Net Loss for the period $ (776,956) $ (718,046) $ (2,249,412) $ (2,389,426)
Working Capital Deficit $ (7,936,041) $ (5,108,181) $ (7,936,041) $(5,108,181)
Cash loss from operating activities before changes in
non-cash working capital $ (359,304) $ (514,132) $ (1,002,785) $ (1,578,613)
Cash at September 30, 2020 $ 638,433 $ 1,356,147 $ 638,433 $ 1,356,147
The Net Loss for the three months ended September 30, 2020
amounted to CDN$ 776,956 (2019 Q3: CDN$ 718,046) and the cash loss
from operating activities before changes in non-cash working
capital for the third quarter of 2020 amounted to CDN$ 359,304
(2019 Q3: CDN$ 514,132). The Net Loss for the nine months ended
September 30, 2020 amounted to CDN $ 2,249,412 (2019: CDN$
2,389,426) and the cash loss from operating activities before
changes in non-cash working capital for the first nine months of
2020 amounted to CDN$ 1,002,785 (2019: CDN$ 1,578,613).
The Company had cash balances of $ 638,433 at September 30, 2020
compared to $ 1,356,147 at September 30, 2019. The working capital
deficit at September 30, 2020 amounted to $ 7,936,041 compared to a
working capital deficit of $ 5,108,181 at September 30, 2019.
Shipments of concentrate under the off-take arrangements
commenced during the second quarter of 2019. Provisional revenues
from concentrate sales during the three and nine months ended
September 30, 2020 totaled approximately US$ 690,000 and US$
876,000 respectively. However, until the mine reaches the
commencement of commercial production, the net proceeds from
concentrate sales will be offset against Development assets.
During the third quarter of 2020 and following the receipt of
TSXV and regulatory approvals Galantas reported the closure of a
fully subscribed brokered private placement of common shares and
amendments to the terms of its loan facility with Ocean Partners UK
Ltd. The private placement included funds raised in both UK and
Canadian currency for the issue of 2,833,132 shares, at an issue
price of $ 0.225 (UKGBP 0.1328) per share for gross proceeds of $
637,454 (UKGBP 376,240). The Company also amended the terms of its
loan facility with Ocean Partners UK Ltd following an increase in
the outstanding loan facility in July 2020. The amount of the loan
facility increased by US$ 200,000 to a total of US$1.8 million. The
interest rate applicable on the loan facility increased from US$ 12
month LIBOR + 8.75% to US$ 12 month LIBOR + 9.9% and the maturity
date was extended from December 30, 2020 to December 31, 2021.
Interest may be rolled into the loan facility until December 31,
2020, at the Company's option. Drawdown of the loan increase took
place on November 12, 2020. The existing second charge debenture
over mine assets will remain in place. Galantas had entered into
the loan facility through a concentrate pre-payment agreement/loan
agreement signed by its subsidiary Flintridge and the Lender in
April 2018 . The proceeds raised by both the private placement and
the additional Ocean Partners loan are to be used to support mine
operations and provide general working capital for the Company.
Production/Mine Development
Certain underground work continued during the first nine months
of 2020, but ore production is suspended until finance is available
to expand the underground operation. The processing plant continued
to operate on a limited basis with feedstock for the plant being
from low grade stock. In the fourth quarter of 2019 there was a
temporary suspension of blasting operations at the mine due mainly
to the blasting arrangement limitations imposed by the PSNI, which
were not sufficient to allow for the expansion of mine operations.
The Company has been working with the PSNI on an ongoing basis to
agree arrangements that would increase blasting availability to
normal levels for an underground mine. During the second quarter
the Company reported that confirmation had been received from PSNI,
regarding their satisfaction of certain secure storage and handling
protocols required for an increase in blasting to a commercial
level subject to financial matters being agreed. The Company
understands that these financial matters have now been mutually
agreed. Specialist safety training of key personnel continues to
ensure a restart is not impaired in regard to safety matters.
The processing plant continued to operate on a limited basis,
following the suspension of blasting operations, initially being
fed from underground stock. In March 2020 and following UK
government guidelines regarding Covid-19, processing operations
temporarily ceased until later in May when the Company announced
that concentrate processing had recommenced. The company carried
out maintenance to the processing plant during the milling
suspension, to minimise future maintenance interruptions. The
restart followed a review of Northern Ireland / UK government
health advice regarding Covid-19, a risk assessment and the
introduction of appropriate modifications to working practices.
Feedstock for the processing plant is now from low grade stock
until suitable arrangements are in place to recommence development
underground. Concentrate production during the three and nine
months ended September 30,2020 totalled 96 tonnes and 186 tonnes of
concentrate provisionally assessed as grading 90 grams per tonne
(g/t) and 90 g/t respectively. Shipments of concentrate had
commenced during the second quarter of 2019 and until the mine
reaches the commencement of commercial production, the net proceeds
from concentrate sales will be offset against Development
assets.
The Company is seeking strategic alternatives including
reviewing its licenses and operations and considering the
possibility of engaging in a sale, joint venture, partnership or
other options with third parties and alternative financing
structures. The Company is actively engaged in that process.
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.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/3886G_1-2020-11-24.pdf
Annual General Meeting
The Annual and Special Meeting of shareholders of Galantas Gold
Corporation will be held on Wednesday, December 16, 2020 at 11:00
a.m. (Toronto time). Due to Covid restrictions, it will be held via
teleconference. Meeting materials, including proxies and access
arrangements are being mailed to shareholders.
Qualified Person
The financial components of this disclosure has been reviewed by
Alan Buckley (Chief Financial Officer) and the production,
exploration and permitting components by Roland Phelps (President
& CEO), qualified persons under the meaning of NI. 43-101. 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.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Enquiries
Galantas Gold Corporation
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, Harrison Clarke:
Telephone: +44(0)20 7383 5100
Panmure Gordon & Co (AIM Broker & Corporate Adviser)
Nick Lovering, Hugh Rich:
Telephone: +44(0)20 7659 1234
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
September 30, December 31,
2020 2019
------------------------------------------------------ ------------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 638,433 $ 1,913,420
Accounts receivable and prepaid expenses (note 4) 326,219 416,699
Inventories (note 5) 71,290 70,328
------------------------------------------------------ ------------- ------------
Total current assets 1,035,942 2,400,447
Non-current assets
Property, plant and equipment (note 6) 21,373,526 21,159,716
Long-term deposit (note 8) 515,970 515,220
Exploration and evaluation assets (note 7) 758,790 661,726
------------------------------------------------------ ------------- ------------
Total non-current assets 22,648,286 22,336,662
------------------------------------------------------ ------------- ------------
Total assets $ 23,684,228 $ 24,737,109
------------------------------------------------------ ------------- ------------
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (note 9) $ 1,415,791 $ 2,131,715
Current portion of financing facilities (note 10) 487,740 242,280
Due to related parties (note 15) 5,226,486 4,719,058
Convertible debenture (note 11) 1,841,966 1,400,594
------------------------------------------------------ ------------- ------------
Total current liabilities 8,971,983 8,493,647
Non-current liabilities
Non-current portion of financing facilities (note 10) 1,415,151 1,440,185
Decommissioning liability (note 8) 589,295 580,303
------------------------------------------------------ ------------- ------------
Total non-current liabilities 2,004,446 2,020,488
------------------------------------------------------ ------------- ------------
Total liabilities 10,976,429 10,514,135
------------------------------------------------------ ------------- ------------
Equity
Share capital (note 12(a)(b)) 50,706,384 50,123,910
Reserves 9,568,175 9,416,412
Deficit (47,566,760) (45,317,348)
------------------------------------------------------ ------------- ------------
Total equity 12,707,799 14,222,974
------------------------------------------------------ ------------- ------------
Total equity and liabilities $ 23,684,228 $ 24,737,109
------------------------------------------------------ ------------- ------------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Going concern (note 1)
Contingency (note 17)
Event after the reporting period (note 18)
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
---------------------------------------------- ---------- ---------- ---------- ----------
Revenues
Jewellery sales (note 14) $ - $ 5,788 $ - $ 5,788
Cost and expenses of operations
Cost of sales 35,658 37,098 102,733 192,606
Depreciation (note 6) 80,213 93,865 253,331 280,355
---------------------------------------------- ---------- ---------- ---------- ----------
115,871 130,963 356,064 472,961
---------------------------------------------- ---------- ---------- ---------- ----------
Loss before general administrative and other
expenses (115,871) (125,175) (356,064) (467,173)
---------------------------------------------- ---------- ---------- ---------- ----------
General administrative expenses
Management and administration wages (note 15) 141,068 228,339 425,404 675,645
Other operating expenses 37,042 79,617 188,462 161,897
Accounting and corporate 14,319 13,034 43,572 41,647
Legal and audit 21,299 18,018 92,251 59,464
Stock-based compensation (note 12(d)) 6,791 57,631 2,567 269,694
Shareholder communication and investor
relations 42,816 47,917 135,774 158,886
Transfer agent 3,718 1,415 58,192 9,068
Director fees (note 15) 11,250 8,500 26,000 26,000
General office 4,097 2,653 9,586 8,915
Accretion expenses (notes 8, 10 and 11) 170,698 67,288 481,616 186,317
Loan interest and bank charges less deposit
interest (notes 10, 11 and 15) 144,217 82,123 441,386 257,812
---------------------------------------------- ---------- ---------- ---------- ----------
597,315 606,535 1,904,810 1,855,345
Other expenses
Foreign exchange loss (gain) 63,770 (13,664) (11,462) 66,908
---------------------------------------------- ---------- ---------- ---------- ----------
63,770 (13,664) (11,462) 66,908
---------------------------------------------- ---------- ---------- ---------- ----------
Net loss for the period $ (776,956) $ (718,046) $(2,249,412) $(2,389,426)
---------------------------------------------- ---------- ---------- ---------- ----------
Basic and diluted net loss per share (note 13) $ (0.02) $ (0.02) $ (0.07) $ (0.08)
---------------------------------------------- ---------- ---------- ---------- ----------
Weighted average number of common shares
outstanding - basic and diluted (i) 34,675,875 31,011,535 33,099,093 30,313,11
---------------------------------------------- ---------- ---------- ---------- ----------
(i) Adjusted for 10:1 share consolidation effective April 17,
2020 (note 13).
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
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
------------------------------------------------- -------- -------- ---------- ----------
Net loss for the period $(776,956) $(718,046) $(2,249,412) $(2,389,426)
Other comprehensive income (loss)
Items that will be reclassified subsequently to
profit or loss
Exchange differences on translating foreign
operations 96,618 (257,290) (190,804) (852,666)
------------------------------------------------- -------- -------- ---------- ----------
Total comprehensive loss $(680,338) $(975,336) $(2,440,216) $(3,242,092)
------------------------------------------------- -------- -------- ---------- ----------
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)
Nine Months Ended
September 30,
2020 2019
------------------------------------------------------------------- ---------- ----------
Operating activities
Net loss for the period $(2,249,412) $(2,389,426)
Adjustment for:
Depreciation (note 6) 253,331 280,355
Stock-based compensation (note 12(d)) 2,567 269,694
Interest expense (notes 10, 11 and 15) 360,840 264,726
Foreign exchange loss (gain) 143,273 (190,279)
Accretion expenses (notes 8, 10 and 11) 481,616 186,317
Non-cash working capital items:
Accounts receivable and prepaid expenses 90,929 (202,034)
Inventories (858) 11,335
Accounts payable and other liabilities (717,760) 157,997
Due to related parties 334,647 177,501
------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents used in operating activities (1,300,827) (1,433,814)
------------------------------------------------------------------- ---------- ----------
Investing activities
Purchase of property, plant and equipment (436,519) (4,766,426)
Proceeds from sale of property, plant and equipment - 14,215
Exploration and evaluation assets (95,900) (24,197)
------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents used in investing activities (532,419) (4,776,408)
------------------------------------------------------------------- ---------- ----------
Financing activities
Proceeds of private placements (note 12(b)) 637,454 1,600,000
Share issue costs (note 12(b)) (54,980) (93,840)
Repayment of financing facilities (note 10) (25,023) (34,287)
------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents provided by financing activities 557,451 1,471,873
------------------------------------------------------------------- ---------- ----------
Net change in cash and cash equivalents (1,275,795) (4,738,349)
Effect of exchange rate changes on cash held in foreign currencies 808 (94,058)
Cash and cash equivalents, beginning of period 1,913,420 6,188,554
------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents, end of period $ 638,433 $ 1,356,147
------------------------------------------------------------------- ---------- ----------
Cash $ 638,433 $ 1,356,147
Cash equivalents - -
------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents $ 638,433 $ 1,356,147
------------------------------------------------------------------- ---------- ----------
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 Equity
component
share-based currency of
Share Warrants payments translation convertible
capital reserve reserve reserve debenture Deficit Total
------------------ ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, December
31, 2018 $48,628,055 $ 786,000 $ 7,264,147 $ 913,016 $ - $(41,752,739) $15,838,479
Shares issued in
private
placement (note
12(b)(i)) 1,600,000 - - - - - 1,600,000
Share issue costs (93,840) - - - - - (93,840)
Stock-based
compensation
(note 12(d)) - - 269,694 - - - 269,694
Exchange
differences on
translating
foreign
operations - - - (852,666) - - (852,666)
Net loss for the
period - - - - - (2,389,426) (2,389,426)
------------------ ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, September
30, 2019 $50,134,215 $ 786,000 $ 7,533,841 $ 60,350 $ - $(44,142,165) $14,372,241
------------------ ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, December
31, 2019 $50,123,910 $ 786,000 $ 7,585,580 $ 796,754 $ 248,078 $(45,317,348) $14,222,974
Shares issued in
private
placement (note
12(b)(ii)) 637,454 - - - - - 637,454
Warrants issued
(note 10(ii)) - 340,000 - - - - 340,000
Share issue costs (54,980) - - - - - (54,980)
Stock-based
compensation
(note 12(d)) - - 2,567 - - - 2,567
Expiry of
warrants - (786,000) 786,000 - - - -
Exchange
differences on
translating
foreign
operations - - - (190,804) - - (190,804)
Net loss for the
period - - - - - (2,249,412) (2,249,412)
------------------ ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, September
30, 2020 $50,706,384 $ 340,000 $ 8,374,147 $ 605,950 $ 248,078 $(47,566,760) $12,707,799
------------------ ---------- -------- ----------- ----------- ----------- ----------- ----------
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 and Nine Months Ended September 30, 2020
(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 being met, further financing currently being negotiated being
completed and blasting arrangement with the Police Service of
Northern Ireland ("PSNI") being resolved. 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.
Negotiations with current finance providers to extend short-term
loans are progressing satisfactory. The Company is also in advanced
negotiations with potential new investors to meet the financial
requirements of the Company for the foreseeable future. Based on
the five-year period financial projections prepared, the directors
believe it's appropriate to prepare the unaudited condensed interim
consolidated financial statements on the going concern basis.
On April 17, 2020, the Company completed a share consolidation
of its share capital on the basis of ten existing common shares for
one new common share consolidation. All common shares, per common
share amounts, stock options and warrants in these unaudited
condensed interim consolidated financial statements have been
retroactively restated to reflect the share consolidation.
As at September 30, 2020, the Company had a deficit of
$47,566,760 (December 31, 2019 - $45,317,348). Comprehensive loss
for the nine months ended September 30, 2020 was $2,440,216 (nine
months ended September 30, 2019 - $3,242,092). These losses raise
material uncertainties which may 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.
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2020
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
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.
In March 2020, the World Health Organization declared
coronavirus (COVID-19) a global pandemic. This contagious disease
outbreak, which has continued to spread, has adversely affected
workforces, economies, and financial markets globally, leading to
an economic downturn. It is not possible for the Company to predict
the duration or magnitude of the adverse results of the outbreak
and its effects on the Company's business or ability to raise
funds.
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 IFRS issued and
outstanding as of November 23, 2020 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, 2019, 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,
2020 could result in restatement of these unaudited condensed
interim consolidated financial statements.
New accounting standards adopted
IFRS 3, Business Combinations ("IFRS 3")
Amendments to IFRS 3, issued in October 2018, provide
clarification on the definition of a business. The amendments
permit a simplified assessment to determine whether a transaction
should be accounted for as a business combination or as an asset
acquisition.
The amendments are effective for transactions for which the
acquisition date is on or after the beginning of the first annual
reporting period beginning on or after January 1, 2020. The
adoption of the amendments had no impact on the Company's unaudited
condensed interim consolidated financial statements.
IAS 1, Presentation of Financial Statements ("IAS 1")
Amendments to IAS 1, issued in October 2018, provide
clarification on the definition of material and how it should be
applied. The amendments also align the definition of material
across IFRS and other publications.
The amendments are effective for annual periods beginning on or
after January 1, 2020 and are required to be applied prospectively.
The adoption of the amendments had no impact on the Company's
unaudited condensed interim consolidated financial statements.
IAS 8, Accounting Policies, Changes in Accounting Estimates and
Errors ("IAS 8")
Amendments to IAS 8, issued in October 2018, provide
clarification on the definition of material and how it should be
applied. The amendments also align the definition of material
across IFRS and other publications.
The amendments are effective for annual periods beginning on or
after January 1, 2020 and are required to be applied prospectively.
The adoption of the amendments had no impact on the Company's
unaudited condensed interim consolidated financial statements.
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2020
(Expressed in Canadian Dollars)
(Unaudited)
---------------------------------------------------------------
4. Accounts Receivable and Prepaid Expenses
As at As at
September 30, December 31,
2020 2019
----------------------------------------------- ------------- ------------
Sales tax receivable - Canada $ 1,237 $ 2,682
Valued added tax receivable - Northern Ireland 58,807 93,864
Accounts receivable 233,365 250,533
Prepaid expenses 32,810 69,620
----------------------------------------------- ------------- ------------
$ 326,219 $ 416,699
----------------------------------------------- ------------- ------------
Prepaid expenses includes advances for consumables and for
construction of the passing bays in the Omagh mine.
The following is an aged analysis of receivables:
As at As at
September 30, December 31,
2020 2019
-------------------------- ------------- ------------
Less than 3 months $ 151,816 $ 235,934
3 to 12 months 139,118 108,674
More than 12 months 2,475 2,471
-------------------------- ------------- ------------
Total accounts receivable $ 293,409 $ 347,079
-------------------------- ------------- ------------
5. Inventories
As at As at
September 30, December 31,
2020 2019
------------------------ ------------- ------------
Concentrate inventories $ 71,290 $ 70,328
------------------------ ------------- ------------
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2020
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
6. Property, Plant and Equipment
Freehold Plant
land and and Motor Office Development
Cost buildings machinery vehicles equipment assets (i) Total
------------- --------- ---------- -------- --------- ----------- ----------
Balance,
December 31,
2018 $2,406,174 $ 6,188,611 $ 166,362 $ 154,396 $ 14,696,413 $23,611,956
Additions - 1,807,493 30,771 37,092 4,542,274 6,417,630
Disposals - (1,036,502) (33,968) - - (1,070,470)
Foreign
exchange
adjustment (36,564) (93,527) (2,528) (2,346) (221,783) (356,748)
------------- --------- ---------- -------- --------- ----------- ----------
Balance,
December 31,
2019 2,369,610 6,866,075 160,637 189,142 19,016,904 28,602,368
Additions - 2,752 - - 433,767 436,519
Foreign
exchange
adjustment 3,449 9,948 232 275 27,533 41,437
------------- --------- ---------- -------- --------- ----------- ----------
Balance,
September
30, 2020 $2,373,059 $ 6,878,775 $ 160,869 $ 189,417 $ 19,478,204 $29,080,324
------------- --------- ---------- -------- --------- ----------- ----------
Freehold Plant
land and and Motor Office Development
Accumulated
depreciation buildings machinery vehicles equipment assets (i) Total
---------------- --------- --------- -------- --------- ----------- ---------
Balance,
December 31,
2018 $1,975,045 $4,936,580 $ 111,910 $ 100,920 $ - $7,124,455
Depreciation 9,742 414,756 19,351 13,285 - 457,134
Disposals - (45,590) (14,497) - - (60,087)
Foreign exchange
adjustment (29,880) (46,177) (1,439) (1,354) - (78,850)
---------------- --------- --------- -------- --------- ----------- ---------
Balance,
December 31,
2019 1,954,907 5,259,569 115,325 112,851 - 7,442,652
Depreciation 5,641 230,086 9,329 8,275 - 253,331
Foreign exchange
adjustment 2,843 7,639 169 164 - 10,815
---------------- --------- --------- -------- --------- ----------- ---------
Balance,
September 30,
2020 $1,963,391 $5,497,294 $ 124,823 $ 121,290 $ - $7,706,798
---------------- --------- --------- -------- --------- ----------- ---------
Freehold Plant
land and and Motor Office Development
Carrying value buildings machinery vehicles equipment assets (i) Total
-------------------- --------- --------- -------- --------- ----------- ----------
Balance, December
31, 2019 $ 414,703 $1,606,506 $ 45,312 $ 76,291 $ 19,016,904 $21,159,716
-------------------- --------- --------- -------- --------- ----------- ----------
Balance, September
30, 2020 $ 409,668 $1,381,481 $ 36,046 $ 68,127 $ 19,478,204 $21,373,526
-------------------- --------- --------- -------- --------- ----------- ----------
(i) Development assets are expenditures for the underground
mining operations in Omagh. The Company 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. During
2018 the mine commenced limited production of gold concentrate from
feed produced in the development of the Kearney vein and in the
fourth quarter Galantas reported that delivery of the first
consignment of concentrate derived from underground feedstock at
the mine had been made. Underground development of the decline
tunnel continued to be progressed during 2019 with further
crosscuts allowing access to lower levels of vein development which
forms the development necessary to demarcate production panels. By
the end of the third quarter of 2019 some two kilometres of
underground drivages had been developed, with exposure of the main
Kearney vein on four levels with a fifth level is near the point of
intersection. The mine is serviced by a decline tunnel of 1 in 6
gradients, of dimensions approximately 4.5m by 4.5m. However,
during the fourth quarter Galantas announced a temporary suspension
of blasting operations at its Omagh gold mine. Blasting operations
had been limited, since all blasting must be supervised by the
PSNI. The blasting arrangements were not sufficient for the desired
level of operations and were not sufficient to allow for the
expansion of mine operations as envisaged by the Company's existing
mine plan. Until changes were agreed, the present inefficiencies
caused by these blasting arrangements form an increasing financial
burden, which has proved a significant drain on the financial
resources of the Company. Accordingly, in order to reduce costs,
while some mine operations will continue at the Omagh gold mine,
consultation with the workforce has resulted in the numbers
employed at the operation being reduced from 46 to 21. During the
nine months ended September 30, 2020, Galantas reported that
confirmation had been received from PSNI, in regard to their
satisfaction of certain secure storage and handling protocols
required for an increase in blasting to a commercial level subject
to financial matters being agreed. The Company understands that
these financial matters have now been mutually agreed. Ore
production is suspended until finance is available to expand the
underground operation. The processing plant continues to operate on
a limited basis with feedstock for the plant being from low grade
stock.
On October 6, 2020, the Company announced that active
discussions continue with a number of potential partners regarding
funding to provide the investment required for additional mine
development and exploration. On-site inspections have been
restricted by Covid-19 related matters. On November 9, 2020, the
Company announced that an increase in gold concentrate processing
has been achieved at the Company's Omagh mine.
7. Exploration and Evaluation Assets
Exploration
and
evaluation
Cost assets
---------------------------- -----------
Balance, December 31, 2018 $ 760,023
Additions 70,836
Impairment (157,583)
Foreign exchange adjustment (11,550)
---------------------------- -----------
Balance, December 31, 2019 661,726
Additions 95,900
Foreign exchange adjustment 1,164
---------------------------- -----------
Balance, September 30, 2020 $ 758,790
---------------------------- -----------
Carrying value
---------------------------- -----------
Balance, December 31, 2019 $ 661,726
---------------------------- -----------
Balance, September 30, 2020 $ 758,790
---------------------------- -----------
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2020
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
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 September 30, 2020 based
on a risk-free discount rate of 1% (December 31, 2019 - 1%) and an
inflation rate of 1.50% (December 31, 2019 - 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 September 30,
2020, the estimated fair value of the liability is $589,295
(December 31, 2019 - $580,303). Changes in the provision during the
nine months ended September 30, 2020 are as follows:
As at As at
September 30, December 31,
2020 2019
----------------------------------------------- ------------- ------------
Decommissioning liability, beginning of period $ 580,303 $ 578,242
Accretion 8,146 10,702
Foreign exchange 846 (8,641)
----------------------------------------------- ------------- ------------
Decommissioning liability, end of period $ 589,295 $ 580,303
----------------------------------------------- ------------- ------------
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, 2019 - GBP
300,000), of which GBP 300,000 was funded as of September 30, 2020
(GBP 300,000 was funded as of December 31, 2019) and reported as
long-term deposit of $515,970 (December 31, 2019 - $515,220).
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
September 30, December 31,
2020 2019
--------------------------------------------- ------------- ------------
Accounts payable $ 531,515 $ 1,084,574
Accrued liabilities 884,276 1,047,141
--------------------------------------------- ------------- ------------
Total accounts payable and other liabilities $ 1,415,791 $ 2,131,715
--------------------------------------------- ------------- ------------
The following is an aged analysis of the accounts payable and
other liabilities:
As at As at
September 30, December 31,
2020 2019
--------------------------------------------- ------------- ------------
Less than 3 months $ 490,008 $ 1,232,089
3 to 12 months 241,725 221,328
12 to 24 months 12,232 357,073
More than 24 months 671,826 321,225
--------------------------------------------- ------------- ------------
Total accounts payable and other liabilities $ 1,415,791 $ 2,131,715
--------------------------------------------- ------------- ------------
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2020
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
10. Financing Facilities
Amounts payable on the Company's long-term debts are as
follow:
As at As at
September 30, December 31,
2020 2019
-------------------------------------------------- ------------- ------------
Financing facilities, beginning of period (i)(ii) $ 1,440,185 $ 1,081,190
Less current portion (487,740) (242,280)
Repayment of financing facilities (25,023) (56,854)
Accretion (ii) 227,035 248,238
Interest (ii) 151,252 279,151
Foreign exchange adjustment 109,442 130,740
-------------------------------------------------- ------------- ------------
Financing facilities - long term portion $ 1,415,151 $ 1,440,185
-------------------------------------------------- ------------- ------------
(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$1.6 million with a United
Kingdom based company (the "Lender"), with a maturity date of
December 31, 2020. The interest is set at US$ 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 1,500,000 bonus warrants of the Company. Each
bonus warrant is exercisable into one common share of the Company
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 1,500,000 bonus warrants were granted. In the event that
the weighted average closing price per common share of the Company
is more than $2.00 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 1,500,000 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.
On July 9, 2020, the Company amended the terms of its loan
facility of an increase in the outstanding loan facility. The
amount of the loan facility increased by US$200,000 to a total of
US$1.8 million. As at September 30, 2020, the additional US$200,000
loan facility has not yet been drawn down by the Company. The
interest rate applicable on the loan facility increased from US$ 12
month LIBOR + 8.75% to US$ 12 month LIBOR + 9.9% and the maturity
date was extended from December 30, 2020 to December 31, 2021.
Interest may be rolled into the loan facility until December 31,
2020, at the Company's option.
As consideration for amending the terms of the loan facility,
the Lender received on August 14, 2020, 1,700,000 bonus warrants of
Galantas ("Bonus Warrants"). Each Bonus Warrant will be exercisable
for one common share of Galantas (a "Bonus Share") at an exercise
price of $0.33 per Bonus Share. The Bonus Warrants will expire on
December 31, 2021 (the "Expiry Date") and the Bonus Shares will be
subject to an initial four month plus one day hold period from the
date of their issuance. In the event that the weighted average
closing price per common share of the Company is more than $0.4125
per share for more than five consecutive trading days, the Company
shall be entitled to accelerate the Expiry Date to a date that is
30 days from the date on which the Company announces the
accelerated Expiry Date by press release.
The fair value of the 1,700,000 bonus warrants was estimated at
$340,000 using the Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected
volatility - 165.75%, risk-free interest rate - 0.27% and an
expected average life of 1.38 years.
During the three and nine months ended September 30, 2020, the
Company recorded accretion expense of $152,293 and $227,035,
respectively in the unaudited condensed interim consolidated
statements of loss in regards with this loan facility (year ended
December 31, 2019 - $248,238).
During the three and nine months ended September 30, 2020, the
Company recorded interest expense of $93,257 and $151,252,
respectively in the unaudited condensed interim consolidated
statements of loss in regards with this loan facility (year ended
December 31, 2019 - $279,151).
11. Convertible Debenture
On December 17, 2019, the Company closed a $1,731,190 (GBP
1,000,000) convertible debenture. The convertible debenture is
unsecured, is for a term of one year commencing on the date that it
is issued, carries a coupon of 15% per annum and is convertible
into common shares of the Company. The conversion price is a 25%
discount to the closing price of the common shares of the Company
on the day prior to announcement.
The convertible debenture has been fully subscribed by Melquart
Limited ("Melquart"), an insider and control person of the Company
(as defined by the TSXV). Melquart are under no obligation to
convert the convertible debenture and should Melquart choose not to
convert, the Company will need to raise further funds to repay the
convertible debenture within 12 months. As at December 31, 2019,
Melquart held 7,756,572 common shares equivalent to 24% of the
Company. As September 30, 2020, Melquart held 9,262,565 common
shares equivalent to 26.35% of the Company (refer to note
15(c)).
The share issued pursuant to the convertible debenture will rank
pari passu with the existing common shares issued by the
Company.
Commission payable to Whitman Howard Ltd. for acting as the
broker in relation to the convertible debenture offering total
$86,308 (GBP 50,000).
The debentures consist of the liability component and equity
component. The fair value of the liability was recorded at
$1,467,110, discounted at an effective interest rate of 18%. The
residual value of the debentures is allocated to the conversion
feature. The value of the conversion feature was $264,080. The
Company incurred transaction costs of $104,903 which was allocated
pro-rata on the value of the conversion feature and the liability
component.
During the three and nine months ended September 30, 2020, the
Company recorded accretion expense of $65,454 and $194,937,
respectively (year ended December 31, 2019 - $12,425) and interest
expense of $96,393 and $246,435, respectively (year ended December
31, 2019 - $9,960) as loan interest and bank charges less deposit
interest in the unaudited condensed interim consolidated statement
of loss.
Balance, December 31, 2018 $ -
Principal amount 1,731,190
Equity allocation - conversion feature (264,080)
Transaction costs (104,903)
Transaction costs allocated to equity 16,002
Interest expense 9,960
Accretion expense 12,425
--------------------------------------- ---------
Balance, December 31, 2019 1,400,594
Interest expense 194,937
Accretion expense 246,435
--------------------------------------- ---------
Balance, September 30, 2020 $1,841,966
--------------------------------------- ---------
12. Share Capital and Reserves
a) Authorized share capital
At September 30, 2020, the authorized share capital consisted of
an unlimited number of common and preference shares issuable in
Series.
On April 17, 2020, the Company completed a share consolidation
of its share capital on the basis of ten then existing common
shares for one new common share consolidation. All common shares,
per common share amounts, stock options and warrants in these
unaudited condensed interim consolidated financial statements have
been retroactively restated to reflect the share consolidation.
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 September 30, 2020, the issued share capital amounted to
$50,706,384. The change in issued share capital for the periods
presented is as follows:
Number of
common
shares Amount
---------------------------------------- ---------- ----------
Balance, December 31, 2018 29,968,531 $48,628,055
Shares issued in private placement (i) 2,352,941 1,600,000
Share issue costs - (93,840)
----------------------------------------- ---------- ----------
Balance, September 30, 2019 32,321,472 $50,134,215
----------------------------------------- ---------- ----------
Balance, December 31, 2019 32,321,472 $50,123,910
Shares issued in private placement (ii) 2,833,132 637,454
Share issue costs - (54,980)
----------------------------------------- ---------- ----------
Balance, September 30, 2020 35,154,604 $50,706,384
----------------------------------------- ---------- ----------
(i) On August 21, 2019, the Company closed a private placement
of 2,352,941 common shares for gross proceeds of GBP 1,000,000
($1,600,000) at an issue price of GBP 0.425 (CAD$0.68) per
share.
Miton subscribed for a total of 376,471 common shares and
Miton's staked increased to 16.63% of the Company's issued common
shares.
Melquart subscribed for a total of 1,534,117 common shares and
Melquart's staked increased to 24.00% of the Company's issued
common shares.
(ii) On July 17, 2020, the Company completed a private placement
for 2,833,132 common shares at an issue price of $0.225
(UKGBP0.1328) per share for gross proceeds of $637,454 (GBP
376,240). The net proceeds to be raised by the private placement
are intended to be used to support mine operations and provide
general working capital of the Company.
The private placement included a subscription by LF Miton UK
Smaller Companies Fund, which has subscribed for 527,108 common
shares in the private placement and is managed by Premier Fund
Managers Ltd ("Premier Miton"). Post-closing, this fund holds
3,222,330 shares, equivalent to 9.17% of the Company's common
shares. The total number of shares controlled by Premier Miton post
completion of the private Placement is 4,884,243, representing
13.89% of the Company's enlarged issued and outstanding common
shares.
The private placement also included a subscription from
Melquart, for 1,506,024 common shares, which gives rise to an
enlarged holding of 9,262,595 common shares post completion of the
private placement, or 26.35% of the Company's enlarged issued and
outstanding common shares.
A four month hold period will apply to the common shares of the
private placement. The hold period will expire on November 18,
2020. The shares issued pursuant to the private placement will rank
pari passu with the existing common shares in issue of the
Company.
Commission payable to brokers in Canada and the United Kingdom
in relation to the private placement totals $33,673 (GBP
19,874).
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, 2018 and September 30, 2019 1,500,000 $ 1.58
--------------------------------------------------- ---------- --------
Balance, December 31, 2019 1,500,000 $ 1.58
Issued (note 10(ii)) 1,700,000 0.33
Expired (1,500,000) 1.58
--------------------------------------------------- ---------- --------
Balance, September 30, 2020 1,700,000 $ 0.33
--------------------------------------------------- ---------- --------
The following table reflects the actual warrants issued and
outstanding as of September 30, 2020:
Grant date Exercise
Number fair value price
Expiry date of warrants ($) ($)
------------------ ----------- ---------- --------
December 31, 2021 1,700,000 340,000 0.33
------------------- ----------- ---------- --------
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, 2018 885,000 $ 1.20
Granted (i)(ii) 570,000 0.90
Expired (60,000) 1.10
----------------------------- --------- --------
Balance, September 30, 2019 1,395,000 $ 0.92
----------------------------- --------- --------
Balance, December 31, 2019 1,395,000 $ 0.92
Expired (285,000) 1.05
Cancelled (i)(ii)(iii) (540,000) 1.01
----------------------------- --------- --------
Balance, September 30, 2020 570,000 $ 1.16
----------------------------- --------- --------
(i) On February 13, 2019, 320,000 stock options were granted to
directors, officers, consultants and employees of the Company to
purchase common shares at a price of $0.90 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 and nine months ended September 30, 2020,
included in stock-based compensation is $4,790 and $28,562,
respectively (three and nine months ended September 30, 2019 -
$29,226 and $155,200, respectively) related to the vested portion
of these options. During the three and nine months ended September
30, 2020, 25,000 and 175,000 stock options, respectively were
cancelled and therefore, $444 and $22,257, respectively of
stock-based compensation was reversed related to the unvested
portion of the options cancelled.
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.
(ii) On June 27, 2019, 250,000 stock options were granted to
directors and employees of the Company to purchase common shares at
a price of $0.90 per share until June 27, 2024. The options will
vest as to one third on June 27, 2019 and one third on each of the
following two anniversaries. The fair value attributed to these
options was $145,500 and was expensed in the unaudited condensed
interim consolidated statements of loss and credited to equity
settled share-based payments reserve. During the three and nine
months ended September 30, 2020, included in stock-based
compensation is $2,445 and $27,625, respectively (three and nine
months ended September 30, 2019 - $24,229 and $67,435,
respectively) related to the vested portion of these options.
During the three and nine months ended September 30, 2020, nil and
150,000 stock options, respectively were cancelled and therefore,
$nil and $33,246, respectively of stock-based compensation was
reversed related to the unvested portion of the options
cancelled.
The fair value of the options was estimated using the
Black-Scholes option pricing model with the following assumptions:
dividend yield - 0%; volatility - 128%; risk-free interest rate -
1.37% and an expected life of 5 years.
(iii) The portion of the estimated fair value of options granted
in the prior years and vested during the three and nine months
ended September 30, 2020, amounted to $nil and $4,334, respectively
(three and nine months ended September 30, 2019 - $4,176 and
$47,059, respectively). In addition, during the three and nine
months ended September 30, 2020, nil and 215,000 options granted in
the prior years were cancelled and therefore, $nil and $2,451,
respectively of stock-based compensation was reversed related to
the unvested portion of the options cancelled.
The following table reflects the actual stock options issued and
outstanding as of September 30, 2020:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
------------------ --------- ---------------- ----------- ------------- ---------
March 25, 2022 1.35 1.48 320,000 320,000 -
April 19, 2023 1.10 2.55 25,000 25,000 -
February 13, 2024 0.90 3.37 125,000 83,333 41,667
June 27, 2024 0.90 3.74 100,000 66,667 33,333
------------------ --------- ---------------- ----------- ------------- ---------
1.16 2.34 570,000 495,000 75,000
------------------ --------- ---------------- ----------- ------------- ---------
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2020
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
13. Net Loss per Common Share
The calculation of basic and diluted loss per share for the
three and nine months ended September 30, 2020 was based on the
loss attributable to common shareholders of $776,956 and
$2,249,412, respectively (three and nine months ended September 30,
2019 - $718,046 and $2,389,426, respectively) and the weighted
average number of common shares outstanding of 34,675,875 and
33,099,093, respectively (three and nine months ended September 30,
2019 - 31,011,535 and 30,313,118, respectively) for basic and
diluted loss per share. Diluted loss did not include the effect of
1,700,000 warrants (three and nine months ended September 30, 2019
- 1,500,000) and 570,000 options (three and nine months ended
September 30, 2019 - 1,395,000) for the three and nine months ended
September 30, 2020, as they are anti-dilutive. The calculation of
basic and diluted loss per share is adjusted for 10:1 share
consolidation effective April 17, 2020.
14. Revenues
Shipments of concentrate under the off-take arrangements
commenced during the second quarter of 2019. Concentrate sales
provisional revenues during the three and nine months ended
September 30, 2020 totaled approximately US$690,000 and US$876,000,
respectively (three and nine months ended September 30, 2019 -
US$519,000 and US$978,000, respectively). However, until the mine
reaches the commencement of commercial production, the net proceeds
from concentrate sales will be offset against Development
assets.
15. 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 Nine Months Ended
September 30, September 30,
Note 2020 2019 2020 2019
-------------------------------- ----- --------- -------- -------- -------
Interest on related party loans (i) $ 77,614 $ 84,009 $ 244,019 $ 264,726
-------------------------------- ----- --------- -------- -------- -------
(i) G&F Phelps, a company controlled by a director of the
Company, had amalgamated loans to the Company of $3,138,412 (GBP
1,824,764) (December 31, 2019 - $3,133,850 - GBP 1,824,764)
included with due to related parties bearing interest at 2% above
UK base rates, repayable on demand and secured by a mortgage
debenture on all the Company's assets. In April 2018, the interest
increased to 6.75% + US$ 12 month LIBOR. Interest accrued on
related party loans is included with due to related parties. As at
September 30, 2020, the amount of interest accrued is $1,247,894
(GBP 725,562) (December 31, 2019 - $1,002,388 - GBP 583,666).
(ii) See note 11.
(iii) See note 12(b)(ii).
(b) Remuneration of officer and directors of the Company was as
follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
-------------------------- --------- -------- -------- -------
Salaries and benefits (1) $ 120,899 $ 110,909 $ 352,626 $ 338,784
Stock-based compensation 4,389 8,292 20,115 65,675
-------------------------- --------- -------- -------- -------
$ 125,288 $ 119,201 $ 372,741 $ 404,459
-------------------------- --------- -------- -------- -------
(1) Salaries and benefits include director fees. As at September
30, 2020, due to directors for fees amounted to $144,500 (December
31, 2019 - $118,500) and due to officers, mainly for salaries and
benefits accrued amounted to $695,680 (GBP 404,489) (December 31,
2019 - $464,320 - GBP 270,362), and is included with due to related
parties.
(c) As of September 30, 2020, Ross Beaty owns 3,744,747 common
shares of the Company or approximately 10.65% of the outstanding
common shares. Roland Phelps, Chief Executive Officer and director,
owns, directly and indirectly, 4,933,817 common shares of the
Company or approximately 14.03% of the outstanding common shares of
the Company. Premier Miton owns 4,848,243 common shares of the
Company or approximately 13.79%. Melquart owns, directly and
indirectly, 9,262,595 common shares of the Company or approximately
26.35% of the outstanding common shares of the Company. The
remaining 35.18% 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.
16. 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:
September 30, 2020 United Kingdom Canada Total
------------------- -------------- --------- ----------
Current assets $ 926,569 $ 109,373 $ 1,035,942
Non-current assets 22,591,084 57,202 22,648,286
------------------- -------------- --------- ----------
Revenues $ - $ - $ -
------------------- -------------- --------- ----------
December 31, 2019 United Kingdom Canada Total
------------------- -------------- --------- ----------
Current assets $ 891,210 $1,509,237 $ 2,400,447
Non-current assets 22,286,304 50,358 22,336,662
------------------- -------------- --------- ----------
Revenues $ 5,788 $ - $ 5,788
------------------- -------------- --------- ----------
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three and Nine Months Ended September 30, 2020
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
17. Contingency
During the year ended December 31, 2010, the Company's
subsidiary Omagh received a payment demand from Her Majesty's
Revenue and Customs ("HMRC") in the amount of $523,348 (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 year ended
December 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 is unable to make a reliable
estimate of the amount of the potential additional interest that
may be applied by HMRC.
18. Event After the Reporting Period
On October 6, 2020, the Company announced that pursuant to the
acquisition of Whitman Howard Limited by Panmure Gordon & Co
("Panmure Gordon"), it appointed Panmure Gordon as its AIM
Broker.
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END
QRTKZMZMNDLGGZM
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November 25, 2020 02:00 ET (07:00 GMT)
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