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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Galantas Gold Corporation | LSE:GAL | London | Ordinary Share | CA36315W3012 | COM SHS NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 12.50 | 11.50 | 13.50 | 12.50 | 12.50 | 12.50 | 10,000 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gold Ores | 0 | -16.63M | -0.1448 | -1.31 | 21.82M |
From Apr 2019 to Apr 2024
TIDMGAL
RNS Number : 2896G
Galantas Gold Corporation
26 May 2017
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS REPORTS RESULTS FOR THE QUARTERED MARCH 31, 2017
May 26, 2017: Galantas Gold Corporation (the "Company") is pleased to announce its financial results for the Quarter ended March 31, 2017.
Financial Highlights
Highlights of the first quarter 2017 results, which are expressed in Canadian Dollars, are summarized below:
Hot Features
Premium
Quarter Ended March 31
---------------------------------------------------------------------------- ----------------------------------------
All in CDN$ 2017 2016
---------------------------------------------------------------------------- ------------------------- -------------
Revenue $ 2,734 $ 28,073
---------------------------------------------------------------------------- ------------------------- -------------
Cost of Sales $ (63,416) $ (121,531)
---------------------------------------------------------------------------- ------------------------- -------------
Loss before the items below $ (60,682) $ (93,458)
---------------------------------------------------------------------------- ------------------------- -------------
Amortization $ (40,055) $ (47,551)
---------------------------------------------------------------------------- ------------------------- -------------
General administrative expenses $ (502,116) $ (336,111)
---------------------------------------------------------------------------- ------------------------- -------------
Unrealized (loss) / gain on fair value of derivative financial liability $ (22,000) $ 79,000
---------------------------------------------------------------------------- ------------------------- -------------
Foreign exchange (loss) / gain $ (59,381) $ 24,775
---------------------------------------------------------------------------- ------------------------- -------------
Net (Loss) for the quarter $ (684,234) $ (373.345)
---------------------------------------------------------------------------- ------------------------- -------------
Working Capital (Deficit) $ (1,395,866) $ (4,012,704)
---------------------------------------------------------------------------- ------------------------- -------------
Cash (loss) generated from operations before changes in non-cash working
capital $ (394,599) $ (373,142)
---------------------------------------------------------------------------- ------------------------- -------------
Cash at March 31, 2016 $ 2,310,653 $ 568,284
---------------------------------------------------------------------------- ------------------------- -------------
The Net Loss for the quarter ended March 31, 2017 amounted to CDN$ 684,234 (2016: CDN$ 373,345) and the cash outflow from operating activities before changes in non-cash working capital items for the quarter ended March 31, 2017 amounted to CDN$ 394,599 (2016: CDN$ 373,142).
Sales revenues for the quarter ended March 31, 2017 consisted of jewelry sales and amounted to CDN$ 2,734 (2016: CDN $ 28,073). Following the suspension of production during the fourth quarter of 2013 there have not been any shipments of concentrates from the mine.
Cost of sales, which includes production costs and inventory movement, for the quarter ended March 31, 2017 amounted to CDN$ 63,416 (2016: CDN$ 121,531). Production costs were mainly in connection with ongoing care, maintenance and restoration costs at the Omagh mine site.
General administration expenses, which includes stock-based compensation costs of $ 220,581 (2016: CDN$ Nil) in connection with the granting of stock options during the quarter, amounted to CDN$ 502,116 (2016: CDN$ 336,111).
The Company had a cash balance of $ 2,310,653 at March 31, 2017 compared to $ 568,284 at March 31, 2016. The working capital deficit at March 31, 2017 amounted to $ 1,395,866 compared to a working capital deficit of $ 4,012,704 at March 31, 2016.
During the first quarter Galantas completed a part brokered private placement in two parts for aggregate gross proceeds of $ 2,446,299 (approximately UKGBP1,482,875). The placement comprised of the issue of 33,093,258 common shares. UK placees subscribed for a total of 27,087,778 shares at a price of UKGBP0.045 per share. Canadian placees subscribed for a total of 6,005,480 shares at a price of $0.0725 per shares. The net proceeds raised by the placing are intended to be used for working capital purposes and to commence development of the underground mine on the Omagh property. Melquart Ltd, a UK based investment institution, subscribed for 22,222,222 Common Shares, which has resulted in a holding of 13% of the Company's issued common shares. In addition Mr. Ross Beaty subscribed for an additional 3,326,170 common shares in the placing and now has an interest in 32,151,567 common shares or 18.8% of the Company's issued common shares.
Production
Production at the Omagh mine remains suspended. However the granting of planning consent during the second quarter of 2015 for an underground operation at the Omagh site, was subject to a judicial review hearing which commenced in September 2016 and was adjourned to February 2017. The hearing has taken place and the company awaits the outcome, for which no date has been set. The underground mine will utilize the same processing methods and will be the first underground gold mine, of any scale, in Ireland. The strategy is to establish the underground mine as soon as additional finance is available and look for further expansion of gold resources on the property, which has many undrilled targets.
Galantas announced in December 2016 that subject to suitable financing, it intended to commence the first phase of underground development and re-start concentrate shipments at its Omagh mine. The Company, under the planning consent which it can implement, has been carrying out pre-conditions attaching to the planning consent and is ready for the next phase of implementation. On the basis of legal advice received, the Board of Directors decided to press ahead with immediate implementation of underground mining, to a plan as outlined in a NI 43-101 economic study. It is anticipated that a phased start-up of that plan will deliver early positive cash flow for a relatively modest capital expenditure. The phased arrangement, in terms of mine access dimensions, will allow for rapid expansion of production as additional capital becomes available. The mill has now been re-commissioned in anticipation of a restarting of concentrate shipments, subject to suitable financing. A budget of GBP 2,000,000 (excluding lease finance) for the first phase of underground mining has been estimated. The Company is at an advanced stage of negotiation with a provider of lease finance, which will provide funding for additional mine equipment. During the first quarter of 2017 and following the closure of a part-brokered private placement for aggregate gross proceeds of $ 2,446,299 (approximately UKGBP 1,482,875) the Company announced that underground development has commenced on the Omagh gold property. The initial works were for the formation of a portal (initial tunnel entry area) in the western side wall at the base of the Kearney open pit. The portal works were completed in mid-April 2017, the underground development will continue in order to access ore beneath a crown pillar retained in the base of the open pit, though is subject to the ongoing arrangements with the Police Service of Northern Ireland ("PSNI").
The Company subsequently reported on May 15, 2017 that underground mine development operations were shortly expected to commence at the Omagh gold mine. This followed notification that the Police Service Of Northern Ireland (PSNI) had been able to increase availability of its required anti-terrorism cover in regard to blasting operations, sufficient for underground mine development to start. Whilst insufficient to sustain the development or operation of the Omagh Gold Mine on more than a short term basis, it will form the basis for the PSNI and the Company to review matters after a period of operation. The current project investment program is being cautiously re-opened pending a review of available PSNI cover after a period of operation (see press release dated May 15, 2017).
Exploration
An exploration programme carried out between 2011 and 2013 included the drilling of 17,348 metres of core and channel sampling on the Joshua, Kearney and Kerr vein systems. Assay results from both the drilling and channel sampling programmes were encouraging with significant gold intersections encountered. A new programme commenced in September 2015 to target the Joshua vein at depth. In total, 3,602 metres were drilled by March 2016. In early 2016 Galantas reported the assay results for three holes completed in 2015. Most notable was hole OML-DD-15-155 which intersected a wide zone (13 m true width) of the Joshua vein at a vertical depth of 117 m grading 9.9 g/t Au. This drilling programme also identified a new vein, Kestrel, running 70 m west of Joshua. An initial shallow (42.4 m) intersect returned 35.8 g/t Au over 0.7 m true width. A further drill hole targeted the Kestrel vein 80 metres north and hit mineralisation at a vertical depth of 73 m (3.2 g/t Au over 1.2 m true width). Two 155 m deep water monitoring holes were drilled at the beginning of 2017, these were located according to planning specifications, not with the aim of mineral recovery. However, the PQ drill core provided insight to key lithological changes with depth, north and south of the site. This information was incorporated into the site mapping project instigated last summer.
Following approval of exploration plans by Department for the Economy (Northern Ireland), two soil grids were completed in a central area of licence OM4 during September 2016. A total of 102 soil samples were collected. This extends the original (2013) grid 1.2 km to the west and 400 m to the east, incorporating two major NE-SW trending faults within Southern Highland and Argyll group lithologies. Geochemical results for the OM4 2016 samples were finalised during the first quarter of 2017. These show minor Ag anomalies (0.2, 0.3 and 0.8 g/t) in clustered soils within 200 m of the Derg Fault, the central soil also contains raised Pb (2210 g/t), Zn (192 g/t) and trace Au (0.03 g/t). Raised Zinc is common throughout the gridded area with seven samples yielding >150 g/t and peaks of 637 g/t and 1030 g/t recorded for sites <100 m apart. Raised zinc was also reported historically by Amax for Lower Limestone localitites to the east and south, close to Crawfordstown and Ederny. In these areas vein, disseminated and fault/joint associated accumulations of galena, sphalerite, fluorite and pyrite were recorded but deemed uneconomic at the time (Woodham, 1987). The raised Zn and Pb reported within this Magheranageerah grid are, however, associated with older Dalradian lithologies, lying approximately 8 km west of the closest historic finds. We are currently investigating the hypothesis that these Carboniferous mineral occurrences are re-worked from underlying Dalradian host rocks.
At the end of 2016 geologists examined an area of PL 3135 associated with strong magnetic and conductivity signals. Earlier work in the vicinity showed high Cr and Ni values associated with a possible ultramafic intrusion (see press release 5(th) November, 2015). New results for sediments and heavy mineral concentrates extracted from nearby streams indicate low level Mo (0.2-3.1 g/t) and As (<238 g/t) with an important gold component (0.01 - 2.13 g/t). Gold in stream sediments was previously reported for samples in close proximity to a similar, but larger, ultramafic intrusion in bordering licence 4034. The centralisation of all our exploration data to a single GIS master project was completed during Q1. Follow up fieldwork in Republic of Ireland PL areas 3234, 4034 and 3135, is planned for the second quarter 2017.
A presentation summarizing the exploration potential within Galantas-held licence areas was given at the 2017 PDAC convention. An exploration report was submitted to the Department for the Economy (DfE) towards the end of the first quarter, this summarized all exploration activities carried out within the OM4 licence over a two year period beginning January 2015. The OM4 exploration licence, which expired in December 2016, awaits renewal by DfE. All relevant application paperwork was completed and submitted to the Department in August 2016. Galantas continues to hold a current option for the exploration of precious metals in OM4, as issued by the Crown Estate Commissioners.
Permitting
In June 2015 the Company reported that the Minister of Environment, Northern Ireland had granted planning consent for an underground gold mine at the Omagh site. The planning consent will permit the continuation and expansion of gold mining and is expected to create hundreds of jobs locally. The positive decision is the result of 3 years of examination of environmental and other factors regarding the application. Included were environmental studies by NIEA (Northern Ireland Environment Agency) and independent specialists. The consent includes operating and environmental conditions, which the Company has reviewed. A number of conditions precedent to development are required to be satisfied and the Company is carrying those out.
During the first quarter of 2016 Galantas reported that a third party had obtained leave from Belfast High Court to bring a judicial review challenging the actions of the DOENI in granting planning permission for underground mining beneath the existing open pit. The judicial review hearing commenced in late September when the Company was notified of an extension for the time required for the hearing beyond the September listing dates. The hearing was subsequently listed for February 2017. Most of the Applicant's evidence was heard during the September listing dates. The judicial review hearing was completed in February and Galantas is presently awaiting judgement for which no date has been advised.
Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "Good progress has been made this quarter with the focus being on developing an underground mine at Omagh. I expect the rate of progress to accelerate as we go forward".
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/2896G_-2017-5-25.pdf
Qualified Person
The financial components of this disclosure has been reviewed by Leo O' Shaughnessy (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
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
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,
2017 2016
----------------------------------------------------- ----------- ------------
ASSETS
Current assets
Cash $ 2,310,653 $ 557,005
Accounts receivable and prepaid expenses (note 4) 73,962 106,732
Inventories (note 5) 22,378 23,852
----------------------------------------------------- ----------- ------------
Total current assets 2,406,993 687,589
Non-current assets
Property, plant and equipment (note 6) 7,573,651 7,449,991
Long-term deposit (note 8) 501,000 496,920
Exploration and evaluation assets (note 7) 2,399,025 2,294,254
----------------------------------------------------- ----------- ------------
Total non-current assets 10,473,676 10,241,165
----------------------------------------------------- ----------- ------------
Total assets $ 12,880,669 $ 10,928,754
----------------------------------------------------- ----------- ------------
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (note 9) $ 799,971 $ 893,570
Current portion of financing facility (note 10) 5,269 4,956
Due to related parties (note 14) 2,997,619 2,884,187
----------------------------------------------------- ----------- ------------
Total current liabilities 3,802,859 3,782,713
Non-current liabilities
Non-current portion of financing facility (note 10) 24,053 25,265
Decommissioning liability (note 8) 535,280 528,305
Derivative financial liability (note 11(c)) 46,000 24,000
----------------------------------------------------- ----------- ------------
Total non-current liabilities 605,333 577,570
----------------------------------------------------- ----------- ------------
Total liabilities 4,408,192 4,360,283
----------------------------------------------------- ----------- ------------
Capital and reserves
Share capital (note 11(a)(b)) 38,642,531 36,331,577
Reserves 7,303,343 7,026,057
Deficit (37,473,397) (36,789,163)
----------------------------------------------------- ----------- ------------
Total equity 8,472,477 6,568,471
----------------------------------------------------- ----------- ------------
Total equity and liabilities $ 12,880,669 $ 10,928,754
----------------------------------------------------- ----------- ------------
The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.
Going concern (note 1)
Contingency (note 16)
Events after the reporting period (note 17)
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2017 2016
-------------------------------------------------------------------------------- ----------- -----------
Revenues
Gold sales $ 2,734 $ 28,073
Cost and expenses of operations
Cost of sales (note 13) 63,416 121,531
Depreciation (note 6) 40,055 47,551
-------------------------------------------------------------------------------- ----------- -----------
103,471 169,082
-------------------------------------------------------------------------------- ----------- -----------
Loss before general administrative and other (incomes) expenses (100,737) (141,009)
-------------------------------------------------------------------------------- ----------- -----------
General administrative expenses
Management and administration wages (note 14) 146,728 177,943
Other operating expenses 23,014 21,557
Accounting and corporate 13,899 15,465
Legal and audit 33,286 50,402
Stock-based compensation (note 11(d)(i)) 220,581 -
Shareholder communication and investor relations 38,181 39,080
Transfer agent 1,975 1,623
Director fees (note 14) 5,000 5,000
General office 1,961 1,949
Accretion expenses (note 8) 2,590 3,102
Loan interest and bank charges (note 14) 14,901 19,990
-------------------------------------------------------------------------------- ----------- -----------
502,116 336,111
Other (incomes) expenses
Unrealized loss (gain) on fair value of derivative financial liability (note
11(c)) 22,000 (79,000)
Foreign exchange loss (gain) 59,381 (24,775)
-------------------------------------------------------------------------------- ----------- -----------
81,381 (103,775)
-------------------------------------------------------------------------------- ----------- -----------
Net loss for the period $ (684,234) $ (373,345)
-------------------------------------------------------------------------------- ----------- -----------
Basic and diluted net loss per share (note 12) $ (0.00) $ (0.00)
-------------------------------------------------------------------------------- ----------- -----------
Weighted average number of common shares outstanding
- basic and diluted 150,254,355 107,297,154
-------------------------------------------------------------------------------- ----------- -----------
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 Other Comprehensive Income (Loss)
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2017 2016
--------------------------------------------------------------- --------- -----------
Net loss for the period $ (684,234) $ (373,345)
Other comprehensive income (loss)
Items that will be reclassified subsequently to profit or loss
Foreign currency translation differences 56,705 (635,873)
--------------------------------------------------------------- --------- -----------
Total comprehensive loss $ (627,529) $ (1,009,218)
--------------------------------------------------------------- --------- -----------
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,
2017 2016
----------------------------------------------------------------------------------- ---------- ---------
Operating activities
Net loss for the period $ (684,234) $ (373,345)
Adjustment for:
Depreciation 40,055 47,551
Stock-based compensation (note 11(d)(i)) 220,581 -
Interest expense 13,593 9,920
Foreign exchange (gain) loss (9,184) 18,630
Accretion expenses (note 8) 2,590 3,102
Unrealized loss (gain) on fair value of derivative financial liability (note
11(c)) 22,000 (79,000)
Non-cash working capital items:
Accounts receivable and prepaid expenses 33,273 102,434
Inventories 1,656 14,489
Accounts payable and other liabilities (102,086) (367,483)
Due to related parties 79,183 33,845
----------------------------------------------------------------------------------- ---------- ---------
Net cash used in operating activities (382,573) (589,857)
----------------------------------------------------------------------------------- ---------- ---------
Investing activities
Purchase of property, plant and equipment (103,273) (295,050)
Exploration and evaluation assets (86,428) (11,191)
----------------------------------------------------------------------------------- ---------- ---------
Net cash used in investing activities (189,701) (306,241)
----------------------------------------------------------------------------------- ---------- ---------
Financing activities
Proceeds of private placement 2,446,299 -
Share issue costs (135,345) -
Repayment of financing facility (899) (1,140)
----------------------------------------------------------------------------------- ---------- ---------
Net cash provided by (used in) financing activities 2,310,055 (1,140)
----------------------------------------------------------------------------------- ---------- ---------
Net change in cash 1,737,781 (897,238)
Effect of exchange rate changes on cash held in foreign currencies 15,867 (52,810)
Cash, beginning of period 557,005 1,518,332
Cash, end of period $ 2,310,653 $ 568,284
----------------------------------------------------------------------------------- ---------- ---------
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 payments Warrant translation
capital reserve reserve reserve Deficit Total
----------------- ----------- ----------- -------- ----------- ------------ ----------
Balance, December
31, 2015 $ 33,960,190 $ 5,809,109 $ 766,000 $ 1,903,837 $ (35,175,865) $ 7,263,271
Net loss and
other
comprehensive
loss for the
period - - - (635,873) (373,345) (1,009,218)
----------------- ----------- ----------- -------- ----------- ------------ ----------
Balance, March
31, 2016 $ 33,960,190 $ 5,809,109 $ 766,000 $ 1,267,964 $ (35,549,210) $ 6,254,053
----------------- ----------- ----------- -------- ----------- ------------ ----------
Balance, December
31, 2016 $ 36,331,577 $ 6,575,109 $ - $ 450,948 $ (36,789,163) $ 6,568,471
Shares issued in
private
placement (note
11(b)(i)) 2,446,299 - - - - 2,446,299
Share issue
costs (135,345) - - - - (135,345)
Stock-based
compensation
(note 11(d)(i)) - 220,581 - - - 220,581
Net loss and
other
comprehensive
income for the
period - - - 56,705 (684,234) (627,529)
----------------- ----------- ----------- -------- ----------- ------------ ----------
Balance, March
31, 2017 $ 38,642,531 $ 6,795,690 $ - $ 507,653 $ (37,473,397) $ 8,472,477
----------------- ----------- ----------- -------- ----------- ------------ ----------
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, 2017 (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 material uncertainties related to events or conditions that may cast significant 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 Omagh Minerals Limited ("Omagh") and Flintridge Resources Limited ("Flintridge") who are engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland. The Omagh mine has an open pit mine, which was in production and is reported as property, plant and equipment and an underground mine which is in the development stage and reported as exploration and evaluation assets. The production at the open pit mine was suspended in 2013.
The going concern assumption is dependent upon the ability of the Company to obtain the following:
a. Securing sufficient financing to fund ongoing operational activity and the development of
the underground mine.
b. Obtaining consent for an underground mine which is currently subject to a judicial review
process.
Should the Company be unsuccessful in securing the above, there would be significant uncertainty over the Company's ability to continue as a going concern. The Company is currently in discussions with a number of potential financiers.
As at March 31, 2017, the Company had a deficit of $37,473,397 (December 31, 2016 - $36,789,163). Management is confident that it will be able to secure the required financing to enable the Company to continue as a going concern. However, this is subject to a number of factors including market conditions. Refer to note 11(b)(i) for private placement completed during the three months ended March 31, 2017.
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. 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 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. Significant Accounting Policies
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. 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 24, 2017 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, 2016. Any subsequent changes to IFRS that are given effect in the Company's annual consolidated financial statements for the year ending December 31, 2016 could result in restatement of these unaudited condensed interim consolidated financial statements.
Recent accounting pronouncements
(i) IFRS 9 - Financial Instruments ("IFRS 9") was issued by the IASB in October 2010 and will replace IAS 39 -Financial Instruments: Recognition and Measurement ("IAS 39"). IFRS 9 uses an incurred loss approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the expected loss approach in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. In July 2014, the IASB issued the final version of IFRS 9. The final amendments made in the new version include guidance for the classification and measurement of financial assets and a third measurement category for financial assets, fair value through other comprehensive income. The standard also contains a new expected loss impairment model for debt instruments measured at amortized cost or fair value through other comprehensive income, lease receivables, contract assets and certain written loan commitments and financial guarantee contracts. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. IFRS 9 will be effective for accounting periods beginning January 1, 2018. The Company is currently assessing the impact of this pronouncement.
(ii) In May 2014, the IASB issued IFRS 15 - Revenue from Contracts with Customers ("IFRS 15") to replace IAS 18 -Revenue and IAS 11 - Construction Contracts and the related interpretations on revenue recognition. The new revenue standard introduces a single, principles based, five-step model for the recognition of revenue when control of a good or service is transferred to the customer. The five steps are identify the contract(s) with the customer, identify the performance obligations in the contract, determine transaction price, allocate the transaction price and recognize revenue when the performance obligation is satisfied. IFRS 15 also requires enhanced disclosures about revenue to help investors better understand the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers and improves the comparability of revenue from contracts with customers. IFRS 15 will be effective for annual periods beginning on or after January 1, 2018, with early adoption permitted.
(iii) IFRS 16 - Leases ("IFRS 16") was issued on January 13, 2016 to require lessees to recognize assets and liabilities for most leases. For lessors, there is little change to the existing accounting in IAS 17 - Leases.
The IASB issued its standard as part of a joint project with the Financial Accounting Standards Board ("FASB"). The FASB has not yet issued its new standard, but it is also expected to require lessees to recognize most leases on their statement of financial position.
The new standard will be effective for annual periods beginning on or after January 1, 2019. Early application is permitted, provided the new revenue standard, IFRS 15, has been applied, or is applied at the same date as IFRS 16.
4. Accounts Receivable and Prepaid Expenses
As at As at
March 31, December 31,
2017 2016
----------------------------------------------- --------- ------------
Sales tax receivable - Canada $ 6,499 $ 1,480
Valued added tax receivable - Northern Ireland 37,507 76,536
Accounts receivable 2,403 13,206
Prepaid expenses 27,553 15,510
----------------------------------------------- --------- ------------
$ 73,962 $ 106,732
----------------------------------------------- --------- ------------
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
March 31, December 31,
2017 2016
-------------------------- --------- ------------
Less than 3 months $ 44,006 $ 88,838
More than 12 months 2,403 2,384
-------------------------- --------- ------------
Total accounts receivable $ 46,409 $ 91,222
-------------------------- --------- ------------
5. Inventories
As at As at
March 31, December 31,
2017 2016
------------------------ --------- ------------
Concentrate inventories $ 10,855 $ 10,767
Finished goods 11,523 13,085
------------------------ --------- ------------
$ 22,378 $ 23,852
------------------------ --------- ------------
Refer to note 13 for inventory movement.
6. Property, Plant and Equipment
Freehold Plant Mine
land and and Motor Office development
Cost buildings machinery vehicles equipment costs Total
----------- ---------- ---------- -------- --------- ----------- -----------
Balance,
December
31, 2015 $ 2,755,995 $ 5,833,381 $ 136,644 $ 125,679 $ 17,730,606 $ 26,582,305
Additions 46,407 111,298 32,762 - 634,010 824,477
Disposals - - (34,075) - - (34,075)
Foreign
exchange
adjustment (519,002) (1,093,260) (25,733) (23,668) (3,580,988) (5,242,651)
----------- ---------- ---------- -------- --------- ----------- -----------
Balance,
December
31, 2016 2,283,400 4,851,419 109,598 102,011 14,783,628 22,130,056
Additions 2,059 50,018 - - 51,196 103,273
Foreign
exchange
adjustment 18,748 39,603 900 838 121,383 181,472
----------- ---------- ---------- -------- --------- ----------- -----------
Balance,
March 31,
2017 $ 2,304,207 $ 4,941,040 $ 110,498 $ 102,849 $ 14,956,207 $ 22,414,801
----------- ---------- ---------- -------- --------- ----------- -----------
Freehold Plant Mine
land and and Motor Office development
Accumulated
depreciation buildings machinery vehicles equipment costs Total
------------- ---------- ---------- -------- --------- ----------- -----------
Balance,
December 31,
2015 $ 2,259,312 $ 5,033,767 $ 92,354 $ 100,394 $ 10,409,576 $ 17,895,403
Depreciation 18,046 137,341 10,195 3,154 - 168,736
Disposals - - (5,866) - - (5,866)
Foreign
exchange
adjustment (426,872) (953,435) (18,441) (19,151) (1,960,309) (3,378,208)
------------- ---------- ---------- -------- --------- ----------- -----------
Balance,
December 31,
2016 1,850,486 4,217,673 78,242 84,397 8,449,267 14,680,065
Depreciation 3,619 33,842 1,940 654 - 40,055
Foreign
exchange
adjustment 15,259 35,015 677 705 69,374 121,030
------------- ---------- ---------- -------- --------- ----------- -----------
Balance,
March 31,
2017 $ 1,869,364 $ 4,286,530 $ 80,859 $ 85,756 $ 8,518,641 $ 14,841,150
------------- ---------- ---------- -------- --------- ----------- -----------
Freehold Plant Mine
land and and Motor Office development
Carrying value buildings machinery vehicles equipment costs Total
-------------------- --------- --------- -------- --------- ----------- ----------
Balance, December
31, 2016 $ 432,914 $ 633,746 $ 31,356 $ 17,614 $ 6,334,361 $ 7,449,991
-------------------- --------- --------- -------- --------- ----------- ----------
Balance, March 31,
2017 $ 434,843 $ 654,510 $ 29,639 $ 17,093 $ 6,437,566 $ 7,573,651
-------------------- --------- --------- -------- --------- ----------- ----------
7. Exploration and Evaluation Assets
Exploration and evaluation assets are expenditures for the underground mining operations in Omagh. The proposed underground mine is dependent on the ability of the Company to obtain the necessary planning permission. On June 11, 2015, the Company announced that it had obtain planning consent for an underground gold mine at the Omagh site. In February 2017, the planning permission was subject to a judicial review and the Company is awaiting judgement. The consent includes operating and environmental conditions. On March 13, 2017, the Company announced that underground development had commenced on the Omagh mine and on April 24, 2017, the Company announced that the underground development has been put on hold (refer to note 17).
Exploration
and
evaluation
Cost assets
---------------------------- -----------
Balance, December 31, 2015 $ 2,371,328
Additions 367,893
Foreign exchange adjustment (444,967)
---------------------------- -----------
Balance, December 31, 2016 2,294,254
Additions 86,428
Foreign exchange adjustment 18,343
---------------------------- -----------
Balance, March 31, 2017 $ 2,399,025
---------------------------- -----------
Exploration
and
evaluation
Carrying value assets
--------------------------- -----------
Balance, December 31, 2016 $ 2,294,254
--------------------------- -----------
Balance, March 31, 2017 $ 2,399,025
--------------------------- -----------
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, 2017 based on a risk-free discount rate of 1% (December 31, 2016 - 1%) and an inflation rate of 1.50% (December 31, 2016 - 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, 2017, the estimated fair value of the liability is $535,280 (December 31, 2016 - $528,305). Changes in the provision during the three months ended March 31, 2017 are as follows:
As at As at
March 31, December 31,
2017 2016
----------------------------------------------- --------- ------------
Decommissioning liability, beginning of period $ 528,305 $ 637,988
Accretion 2,590 11,345
Foreign exchange 4,385 (121,028)
----------------------------------------------- --------- ------------
Decommissioning liability, end of period $ 535,280 $ 528,305
----------------------------------------------- --------- ------------
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, 2016 - GBP 300,000), of which GBP 300,000 was funded as of March 31, 2017 (GBP 300,000 was funded as of December 31, 2016) and reported as long-term deposit of $501,000 (December 31, 2016 - $496,920).
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, amounts payable for financing activities and professional fees activities.
As at As at
March 31, December 31,
2017 2016
--------------------------------------------- --------- ------------
Accounts payable $ 295,629 $ 336,121
Accrued liabilities 504,342 557,449
--------------------------------------------- --------- ------------
Total accounts payable and other liabilities $ 799,971 $ 893,570
--------------------------------------------- --------- ------------
The following is an aged analysis of the accounts payable and other liabilities:
As at As at
March 31, December 31,
2017 2016
--------------------------------------------- --------- ------------
Less than 3 months $ 330,676 $ 365,448
3 to 12 months 93,264 154,456
12 to 24 months 79,796 54,992
More than 24 months 296,235 318,674
--------------------------------------------- --------- ------------
Total accounts payable and other liabilities $ 799,971 $ 893,570
--------------------------------------------- --------- ------------
10. Financing Facility
Amounts payable on the long-term debt are as follow:
As at As at
March 31, December 31,
Interest 2017 2016
---------------------------------------- --------- ------------
Financing facility, beginning of period $ 25,265 $ 38,069
Less current portion (5,269) (4,956)
Repayment of financing facility (899) (4,007)
Foreign exchange adjustment 4,956 (3,841)
---------------------------------------- --------- ------------
Financing facility - long term portion $ 24,053 $ 25,265
---------------------------------------- --------- ------------
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 June 2018 of GBP 9,383. The financing was secured on the vehicle.
11. Share Capital and Reserves a) Authorized share capital
At March 31, 2017, 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, 2017, the issued share capital amounted to $38,642,531. The change in issued share capital for the periods presented is as follows:
Number of
common
shares Amount
---------------------------------------------- ----------- -----------
Balance, December 31, 2015 and March 31, 2016 107,297,154 $ 33,960,190
----------------------------------------------- ----------- -----------
Balance, December 31, 2016 137,800,830 $ 36,331,577
Shares issued in private placement (i) 33,093,257 2,446,299
Share issue costs - (135,345)
----------------------------------------------- ----------- -----------
Balance, March 31, 2017 170,894,087 $ 38,642,531
----------------------------------------------- ----------- -----------
(i) On February 27, 2017, the Company completed the first part of a private placement. It consisted of 27,371,035 common shares of no par value. United Kingdom placees have subscribed at a price of GPB 0.045 per common share. Canadian placees have subscribed at a price of $0.0725 per common share. Receipts attached to the first part of the placement total $2,021,501. The hold period will expire for the first closing of the placing on June 25, 2017.
On March 2, 2017, the Company completed the second part of a private placement. It consisted of 5,722,222 common shares of no par value for receipt of $424,798. United Kingdom placees have subscribed at a price of GPB 0.045 per common share. The hold period will expire for the second closing of the placing on July 3, 2017.
Melquart Ltd, ("Melquart") a UK based investment institution, subscribed for a total of 22,222,222 common shares and Melquart's staked increased to 13% of the Company's issued common shares.
Ross Beaty subscribed for 3,326,170 common shares and after closing of the private placement Ross Beaty owns 32,151,567 common shares of the Company or approximately 18.8% of the outstanding common shares.
The net proceeds to be raised by the private placement are intended to be used for working capital purposes and to commence development of an underground mine on the Omagh property.
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, 2015 and March 31, 2016 30,966,000 $ 0.17
----------------------------------------------- ---------- --------
Balance, December 31, 2016 and March 31, 2017 636,000 $ 0.07
----------------------------------------------- ---------- --------
The following table reflects the actual warrants issued and outstanding as of March 31, 2017:
Fair value
Grant date March 31,
Number fair value Exercise 2017
Expiry date of warrants ($) price ($)
------------------ ----------- ---------- -------- --- ----------
February 16, 2018 636,000 32,000 0.045 (1) 46,000
------------------- ----------- ---------- -------- --- ----------
(1) Exercise price is in GBP. As a result of the exercise price of the warrants being denominated in a currency other than the functional currency, the warrants are considered a derivative financial liability. The warrants are revalued at each period end with any gain or loss in the fair value being record in the unaudited condensed interim consolidated statements of loss as an unrealized gain or loss on fair value of derivative financial liability.
On March 31, 2017, the fair value of the warrants, denominated in a currency other than the functional currency, was estimated using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 106%; risk free interest rate of 0.75%; and an expected life of 0.88 years. As a result, the fair value of the warrants was calculated to be $46,000 and the Company recorded an unrealized loss on fair value of derivative financial liability for the three months ended March 31, 2017 of $22,000 (three months ended March 31, 2016 - unrealized gain of $79,000).
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, 2015 4,440,000 $ 0.17
Expired (50,000) 0.50
---------------------------- --------- --------
Balance, March 31, 2016 4,390,000 $ 0.17
---------------------------- --------- --------
Balance, December 31, 2016 3,700,000 $ 0.11
Granted (i) 4,900,000 0.14
---------------------------- --------- --------
Balance, March 31, 2017 8,600,000 $ 0.12
---------------------------- --------- --------
(i) On March 25, 2017, 4,900,000 stock options were granted to directors, officers, consultants and key employees of the Company to purchase common shares at a price of $0.135 per share until March 25, 2022. The options will vest as to one third on March 25 2017 and one third on each of the following two anniversaries. The fair value attributed to these options was $645,820 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, 2017, included in stock-based compensation is $220,581 (three months ended March 31, 2016 - $nil) related to the vested portion of these options.
The fair value of the options was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield - 0%; volatility - 201%; risk-free interest rate - 1.12% and an expected life of 5 years.
The following table reflects the actual stock options issued and outstanding as of March 31, 2017:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
--------------- --------- ---------------- ----------- ------------- ---------
June 1, 2020 0.105 3.17 3,550,000 3,550,000 -
June 12, 2020 0.105 3.21 150,000 150,000 -
March 25, 2022 0.135 4.99 4,900,000 1,633,333 3,266,667
---------------- --------- ---------------- ----------- ------------- ---------
0.122 4.21 8,600,000 5,333,333 3,266,667
--------------- --------- ---------------- ----------- ------------- ---------
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the three months ended March 31, 2017 was based on the loss attributable to common shareholders of $684,234 (three months ended March 31, 2016 - $373,345) and the weighted average number of common shares outstanding of 150,254,355 (three months ended March 31, 2016 - 107,297,154) for basic and diluted loss per share. Diluted loss did not include the effect of 636,000 warrants (three months ended March 31, 2016 - 30,966,000) and 8,600,000 options (three months ended March 31, 2016 - 4,390,000) for the three months ended March 31, 2017, as they are anti-dilutive.
13. Cost of Sales Three Months Ended March 31, 2017 2016 ----------------------------- ------- -------- Production wages $ 2,921 $ 60,480 Oil and fuel 20,222 18,269 Repairs and servicing 15,855 15,398 Equipment hire 3,215 - Environment monitoring 6,968 6,936 Royalties 4,101 4,912 Other costs 8,494 1,586 ----------------------------- ------- -------- Production costs 61,776 107,581 Inventory movement 1,640 13,950 ----------------------------- ------- -------- Cost of sales $ 63,416 $ 121,531 ----------------------------- ------- -------- 14. 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 2017 2016
-------------------------------- ----- ----------- -------
Interest on related party loans (i) $ 13,593 $ 18,113
--------------------------------- ------ ----------- -------
(i) G&F Phelps Limited, a company controlled by a director of the Company, had amalgamated loans to the Company of $2,201,651 (GBP 1,318,354) (December 31, 2016 - $2,183,722 - GBP 1,318,354) 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. Interest accrued on related party loans is included with due to related parties. As at March 31, 2017, the amount of interest accrued is $334,828 (GBP 200,496) (December 31, 2016 - $318,375 - GBP 192,209).
(ii) See note 11(b)(i).
(b) Remuneration of key management of the Company was as follows:
Three Months Ended
March 31,
2017 2016
-------------------------- ---------- -------
Salaries and benefits (1) $ 105,265 $121,486
Stock-based compensation 54,020 -
-------------------------- ---------- -------
$ 159,285 $121,486
-------------------------- ---------- -------
(1) Salaries and benefits include director fees. As at March 31, 2017, due to directors for fees amounted to $115,250 (December 31, 2016 - $110,250) and due to key management, mainly for salaries and benefits accrued amounted to $345,890 (GBP 207,120) (December 31, 2016 - $271,840 - GBP 164,115), and is included with due to related parties.
(c) As of March 31, 2017, Ross Beaty owns 32,151,567 common shares of the Company or approximately 18.81% of the outstanding common shares. Roland Phelps, Chief Executive Officer and director, owns, directly and indirectly, 33,356,750 common shares of the Company or approximately 19.52% of the outstanding common shares of the Company. Melquart owns, directly and indirectly, 22,222,222 common shares of the Company or approximately 13.00% of the outstanding common shares of the Company. The remaining 48.67% 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.
15. 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, 2017 United Kingdom Canada Total ------------------- -------------- ---------- ---------- Current assets $ 197,927 $ 2,209,066 $ 2,406,993 Non-current assets 10,413,279 60,397 10,473,676 ------------------- -------------- ---------- ---------- Revenues $ 2,734 $ - $ 2,734 ------------------- -------------- ---------- ---------- December 31, 2016 United Kingdom Canada Total ------------------- -------------- -------- ---------- Current assets $ 283,773 $ 403,816 $ 687,589 Non-current assets 10,180,747 60,418 10,241,165 ------------------- -------------- -------- ---------- 16. Contingency
During the year ended December 31, 2010, the Company's subsidiary Omagh received a payment demand from Her Majesty's Revenue and Customs in the amount of $508,164 (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. The Company believes this claim is without merit. An appeal has been lodged and the Company's subsidiary Omagh intends to vigorously defend itself against this claim. The hearing started at the beginning of March 2017 but a further two days hearing is to be scheduled but dates have not yet been determined. No provision has been made for the claim in the unaudited condensed interim consolidated financial statements.
17. Events After the Reporting Period
(i) On April 24, 2017, the Company announced that the underground development at the Omagh gold mine has been put on hold following the receipt of notification that the Police Service of Northern Ireland ("PSNI") will not provide its required anti-terrorism cover in regard to blasting operations required for mine development. The Company has been told that, due to PSNI resource constraints and competing priorities, PSNI is currently only prepared to provide anti-terrorism cover for a maximum of 2 hours period, 2 days per week, which is insufficient to sustain the development or operation of the mine. PSNI will also require a cost recovery agreement. The Company has sought to discuss the issue at the highest levels of command in PSNI and the Northern Ireland Office, but the engagement has been denied. The Company has been given no alternative other than pursuing its legal options, which may include substantial compensation for the costs of delays.
(ii) On May 15, 2017, the Company announced that underground mine development operations are shortly expected to commence at the Omagh gold mine. This follows notification that the PSNI had been able to increase availability of its required anti-terrorism cover in regard to blasting operations, sufficient for underground mine development to start.
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFOKPDDABKDDPB
(END) Dow Jones Newswires
May 26, 2017 02:00 ET (06:00 GMT)
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