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Share Name Share Symbol Market Type Share ISIN Share Description
Galantas Gold Corporation LSE:GAL London Ordinary Share CA36315W2022 COM SHS NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 4.55p 4.50p 4.60p 4.55p 4.55p 4.55p 194,848 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 0.0 -1.7 -0.6 - 9.00

Galantas Gold Corporation 1st Quarter Results

21/05/2019 7:00am

UK Regulatory (RNS & others)


Galantas Gold (LSE:GAL)
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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

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