TIDMGAL
RNS Number : 1130A
Galantas Gold Corporation
28 May 2021
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORT FINANCIAL RESULTS FOR THE QUARTERED MARCH 31,
2021
May 28, 2021: Galantas Gold Corporation (the 'Company') is
pleased to announce its unaudited financial results for the Quarter
ended March 31, 2021.
Financial Highlights
Highlights of the first quarter 2021 results, which are
expressed in Canadian Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Quarter Ended
March 31
2021 2020
Revenue $ 0 $ 0
Cost and expenses of operations $ (46,148) $ (35,836)
Loss before the undernoted $ (46,148) $ (35,836)
Depreciation $ (72,065) $ (88,727)
General administrative expenses $ (505,097) $ (656,768)
Foreign exchange (loss) gain $ (16,653) $ 101,016
Net (Loss) for the quarter $ (639,963) $ (680,315)
Working Capital Deficit $ (8,532,943) $ (7,299,380)
Cash loss from operating activities before changes in non-cash working capital $ (296,161) $ (348,899)
Cash at March 31, 2021 $ 487,193 $ 936,560
Sales revenue for the quarter ended March 31, 2021 amounted to $
Nil compared to revenue of $ Nil for the quarter ended March 31,
2020. Shipments of concentrate commenced during the third quarter
of 2019. Concentrate sales provisional revenues totalled US$
567,000 for the first quarter of 2021 compared to US $ 186,000 for
the first quarter of 2020. Until the mine commences commercial
production, the net proceeds from concentrate sales are being
offset against development assets.
The Net Loss for the quarter ended March 31, 2021 amounted to $
639,963 (2020: $680,315) and the cash outflow from operating
activities before changes in non-cash working capital for the
quarter ended March 31, 2021 amounted to $296,161 (2020:
$348,899).
The Company had a cash balance of $487,193 at March 31, 2021
compared to $ 936,560 at March 31, 2020. The working capital
deficit at March 31, 2021 amounted to $ 8,532,943 compared to a
working capital deficit of $7,299,380 at March 31, 2020.
Production/Mine Development
Certain underground work continued during 2020. The processing
plant operated on a limited basis with feedstock for the plant
being from low grade stock.
In March 2020 and following UK government guidelines regarding
Covid-19, processing operations temporarily ceased until May when
the Company announced that concentrate processing had recommenced.
The company carried out maintenance to the processing plant during
the milling suspension, to minimise future maintenance
interruptions. The restart followed a review of Northern Ireland /
UK government health advice regarding Covid-19, a risk assessment
and the introduction of appropriate modifications to working
practices.
On February 3, 2021 the Company announced that a formal
agreement regarding blasting was reached between the Company's
operating subsidiary and the Police Service of Northern Ireland
(PSNI). The PSNI have responsibilities regarding the supervision of
the use of blasting materials in Northern Ireland.
The agreement provides the potential for a materially improved
economic arrangement for an expansion of underground blasting,
required for full production, to take place at the Omagh Mine. The
agreement has followed a comprehensive review by the PSNI and
regulators.
On March 12, 2021 the Company announced that limited blasting
underground had re-commenced. Development mining of the Kearney
gold vein has re-started on a single shift basis. It is expected to
produce a feed of higher gold grade for the processing plant than
the current feed, which comes from low grade stock.
Total concentrate production is expected to rise, driven by an
expected higher feed grade. During the period of suspension of
blasting operations at the mine, key mining skill sets were
preserved by the incorporation of personnel within process plant
operations.
The limited re-start was being carried out within limited cash
resources, using a single existing equipment suite, which was fully
operational.
On April 16, 2021, the Company provided an operational update
for the operating mine.
Underground blasting (as reported March 12, 2021) continued with
mining on a single shift basis. As expected, development of the
Kearney vein has produced a feed of higher gold grade for the
processing plant than the existing feed, which comes from low grade
stock.
Until the mine reaches the commencement of commercial
production, the net proceeds from concentrate sales will be offset
against development assets.
Financing and New Appointments
On April 21, 2021, the Company announced a Private Placement to
provide sufficient funding to take the mine into full
production.
On May 18, 2021 the Company announced the closing of its
oversubscribed Private Placement to fund the mine to full
production and accelerate exploration plans to expand the
high-grade gold resources.
In connection with closing, Roland Phelps has retired as
Galantas' President and Chief Executive Officer and as a member of
the Board of Directors. His role as CEO has been assumed by Mario
Stifano, an experienced mining executive who has raised significant
capital for a number of mining and resource companies in
exploration, development and production such as Lake Shore Gold
Corp. (now part of Pan American Silver Corp.).
The Company has appointed Brendan Morris as Chief Operating
Officer in a non-board role. Mr. Morris is a chartered mining
engineer with more than 40 years of experience in mining and
quarrying in Ireland, United Kingdom, United Arab Emirates and
Canada. He has more than 25 years of practical experience in
management, in both mining and technical services roles,
supplemented by a degree in Mining Engineering and a MSc in
Business Practice. He is currently Managing Director of Lisheen
Technical and Mining Services, providing consultancy and mining
services.
The Board of Galantas has appointed Brent Omland to the Board of
Directors, subject to regulatory approval. Mr. Omland is a Canadian
Chartered Accountant with 15 years' experience in the mining,
metals and trading sectors. He has held roles with Ivernia Inc.,
Enirgi Metals Group and Teck. He is currently Chief Financial
Officer of Ocean Partners. Mario Stifano has also been appointed to
the Board of Directors, subject to regulatory approval.
Ron Alexander has stepped down from the Board following many
years of valued service. The Board and management are grateful for
his contribution.
Roland Phelps commented: "I am pleased to leave Galantas in good
hands. The new capital and leadership will allow the true potential
of this exciting property to be realized. I will continue to
provide consulting services to management and the Board to ensure a
smooth transition."
Safety is a high priority and the company continued to invest in
safety-related training and infrastructure. The zero lost time
accident rate since the start of underground operations continues.
Environmental monitoring demonstrates a high level of regulatory
compliance.
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/1130A_1-2021-5-27.pdf
Qualified Person
The financial components of this disclosure has been reviewed by
Alan Buckley (Chief Financial Officer) and the production and
permitting components by Brendan Morris (COO), 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.
Information communicated within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014 which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
Enquiries
Galantas Gold Corporation
Mario Stifano - CEO
Email: info@galantas.com
Website: www.galantas.com
Telephone: 001 416 453 8433
Grant Thornton UK LLP (Nomad)
Philip Secrett, Harrison Clarke, George Grainger:
Telephone: +44(0)20 7383 5100
Panmure Gordon & Co (AIM Broker & Corporate Adviser)
Nick Lovering, Hugh Rich:
Telephone: +44(0)20 7659 1234
GALANTAS GOLD CORPORATION
Condensed Interim Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2021
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,
2021 2020
------------------------------------------------------ ----------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 487,193 $ 612,094
Accounts receivable and prepaid expenses (note 4) 333,136 594,960
Inventories (note 5) 32,940 81,169
------------------------------------------------------ ----------- ------------
Total current assets 853,269 1,288,223
Non-current assets
Property, plant and equipment (note 6) 21,205,782 21,158,103
Long-term deposit (note 8) 520,110 521,430
Exploration and evaluation assets (note 7) 796,207 750,741
------------------------------------------------------ ----------- ------------
Total non-current assets 22,522,099 22,430,274
------------------------------------------------------ ----------- ------------
Total assets $ 23,375,368 $ 23,718,497
------------------------------------------------------ ----------- ------------
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (note 9) $ 1,366,629 $ 1,350,142
Current portion of financing facilities (note 10) 2,398,673 2,186,272
Due to related parties (note 14) 5,620,910 5,461,893
------------------------------------------------------ ----------- ------------
Total current liabilities 9,386,212 8,998,307
Non-current liabilities
Decommissioning liability (note 8) 599,498 598,275
------------------------------------------------------ ----------- ------------
Total non-current liabilities 599,498 598,275
------------------------------------------------------ ----------- ------------
Total liabilities 9,985,710 9,596,582
------------------------------------------------------ ----------- ------------
Equity
Share capital (note 11(a)(b)) 52,933,594 52,933,594
Reserves 9,641,827 9,734,121
Deficit (49,185,763) (48,545,800)
------------------------------------------------------ ----------- ------------
Total equity 13,389,658 14,121,915
------------------------------------------------------ ----------- ------------
Total equity and liabilities $ 23,375,368 $ 23,718,497
------------------------------------------------------ ----------- ------------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Going concern (note 1)
Incorporation and nature of operations (note 2)
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,
2021 2020
--------------------------------------------------------------------------- ---------- ----------
Revenues
Sales of concentrate (note 13) $ - $ -
Cost and expenses of operations
Cost of sales 46,148 35,836
Depreciation (note 6) 72,065 88,727
--------------------------------------------------------------------------- ---------- ----------
118,213 124,563
--------------------------------------------------------------------------- ---------- ----------
Loss before general administrative and other expenses (118,213) (124,563)
--------------------------------------------------------------------------- ---------- ----------
General administrative expenses
Management and administration wages (note 14) 144,083 141,222
Other operating expenses 32,580 94,060
Accounting and corporate 15,184 14,144
Legal and audit 49,173 42,118
Stock-based compensation (note 11(d)(i)) 4,631 (16,288)
Shareholder communication and investor relations 59,853 47,076
Transfer agent 2,861 27,736
Director fees (note 14) 8,500 6,250
General office 3,569 2,713
Accretion expenses (notes 8 and 10) 104,560 146,121
Loan interest and bank charges less deposit interest (notes 10 and 14) 80,103 151,616
--------------------------------------------------------------------------- ---------- ----------
505,097 656,768
Other expenses
Foreign exchange loss (gain) 16,653 (101,016)
--------------------------------------------------------------------------- ---------- ----------
16,653 (101,016)
--------------------------------------------------------------------------- ---------- ----------
Net loss for the period $ (639,963) $ (680,315)
--------------------------------------------------------------------------- ---------- ----------
Basic and diluted net loss per share (note 12) $ (0.01) $ (0.02)
--------------------------------------------------------------------------- ---------- ----------
Weighted average number of common shares outstanding - basic and diluted 46,565,537 32,321,472
--------------------------------------------------------------------------- ---------- ----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Comprehensive Loss
(Expressed in Canadian Dollars)
(Unaudited)
----------------------------------------------------------------
Three Months Ended
March 31,
2021 2020
--------------------------------------------------------------- -------- --------
Net loss for the period $(639,963) $(680,315)
Other comprehensive (loss) income
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (96,925) 382,709
--------------------------------------------------------------- -------- --------
Total comprehensive loss $(736,888) $(297,606)
--------------------------------------------------------------- -------- --------
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,
2021 2020
------------------------------------------------------------------------- -------- ---------
Operating activities
Net loss for the period $(639,963) $ (680,315)
Adjustment for:
Depreciation (note 6) 72,065 88,727
Stock-based compensation (note 11(d)) 4,631 (16,288)
Accrued interest (notes 10 and 14) 78,874 151,275
Foreign exchange loss (gain) 79,672 (38,419)
Accretion expenses (notes 8 and 10) 104,560 146,121
Non-cash working capital items:
Accounts receivable and prepaid expenses 260,990 84,588
Inventories 48,145 (6,526)
Accounts payable and other liabilities 19,284 (445,617)
Due to related parties 91,762 92,409
------------------------------------------------------------------------- -------- ---------
Net cash and cash equivalents provided by (used in) operating activities 120,020 (624,045)
------------------------------------------------------------------------- -------- ---------
Investing activities
Purchase of property, plant and equipment (172,550) (325,769)
Exploration and evaluation assets (47,366) (41,424)
------------------------------------------------------------------------- -------- ---------
Net cash and cash equivalents used in investing activities (219,916) (367,193)
------------------------------------------------------------------------- -------- ---------
Financing activities
Repayment of financing facilities (note 10) (23,802) (8,353)
------------------------------------------------------------------------- -------- ---------
Net cash and cash equivalents used in financing activities (23,802) (8,353)
------------------------------------------------------------------------- -------- ---------
Net change in cash and cash equivalents (123,698) (999,591)
Effect of exchange rate changes on cash held in foreign currencies (1,203) 22,731
Cash and cash equivalents, beginning of period 612,094 1,913,420
Cash and cash equivalents, end of period $ 487,193 $ 936,560
------------------------------------------------------------------------- -------- ---------
Cash $ 487,193 $ 936,560
Cash equivalents - -
------------------------------------------------------------------------- -------- ---------
Cash and cash equivalents $ 487,193 $ 936,560
------------------------------------------------------------------------- -------- ---------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Changes in
Equity
(Expressed in Canadian Dollars)
(Unaudited)
Reserves
----------------------------------------------------
Equity
settled Foreign Equity
component
share-based currency of
Share Warrants payments translation convertible
capital reserve reserve reserve debenture Deficit Total
------------------------- ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, December 31,
2019 $50,123,910 $ 786,000 $ 7,585,580 $ 796,754 $ 248,078 $(45,317,348) $14,222,974
Stock-based
compensation
(note 11(d)) - - (16,288) - - - (16,288)
Exchange
differences on
translating
foreign
operations - - - 382,709 - - 382,709
Net loss for the
period - - - - - (680,315) (680,315)
------------------------- ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, March 31, 2020 $50,123,910 $ 786,000 $ 7,569,292 $ 1,179,463 $ 248,078 $(45,997,663) $13,909,080
------------------------- ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, December 31,
2020 $52,933,594 $ 340,000 $ 8,381,382 $ 1,012,739 $ - $(48,545,800) $14,121,915
Stock-based
compensation
(note 11(d)) - - 4,631 - - - 4,631
Exchange
differences on
translating
foreign
operations - - - (96,925) - - (96,925)
Net loss for the
period - - - - - (639,963) (639,963)
------------------------- ---------- -------- ----------- ----------- ----------- ----------- ----------
Balance, March 31, 2021 $52,933,594 $ 340,000 $ 8,386,013 $ 915,814 $ - $(49,185,763) $13,389,658
------------------------- ---------- -------- ----------- ----------- ----------- ----------- ----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
1. Going Concern
These unaudited condensed interim consolidated financial
statements have been prepared on a going concern basis which
contemplates that Galantas Gold Corporation (the "Company") will be
able to realize assets and discharge liabilities in the normal
course of business. In assessing whether the going concern
assumption is appropriate, management takes into account all
available information about the future, which is at least, but is
not limited to, twelve months from the end of the reporting period.
Management is aware, in making its assessment, of uncertainties
related to events or conditions that may cast doubt on the
Company's ability to continue as a going concern. The Company's
future viability depends on the consolidated results of the
Company's wholly-owned subsidiary Cavanacaw Corporation
("Cavanacaw"). Cavanacaw has a 100% shareholding in both Flintridge
Resources Limited ("Flintridge") who are engaged in the
acquisition, exploration and development of gold properties, mainly
in Omagh, Northern Ireland and Omagh Minerals Limited ("Omagh") who
are engaged in the exploration of gold properties, mainly in the
Republic of Ireland. The Omagh mine has an open pit mine, which was
in production until 2013 when production was suspended and is
reported as property, plant and equipment and as an underground
mine which having established technical feasibility and commercial
viability in December 2018 has resulted in associated exploration
and evaluation assets being reclassified as an intangible
development asset and reported as property, plant and
equipment.
The going concern assumption is dependent upon forecast cash
flows being met, further financing currently being negotiated. The
directors assumptions in relation to future levels of production,
gold prices and mine operating and capital costs are crucial to
forecast cash flows being achieved. Should production be
significantly delayed, revenues fall short of expectations or
operating costs and capital costs increase significantly, there may
be insufficient cash flows to sustain day to day operations without
seeking further finance.
Negotiations with current finance providers to extend short-term
loans are progressing satisfactory. The Company is also in advanced
negotiations with potential new investors to meet the financial
requirements of the Company for the foreseeable future. Based on
the financial projections prepared, the directors believe it's
appropriate to prepare the condensed interim consolidated financial
statements on the going concern basis.
As at March 31, 2021, the Company had a deficit of $49,185,763
(December 31, 2020 - $48,545,800). Comprehensive loss for the three
months ended March 31, 2021 was $736,888 (three months ended March
31, 2020 - $297,606). These conditions raise material uncertainties
which may cast significant doubt as to whether the Company will be
able to continue as a going concern. Management is confident that
it will continue as a going concern. However, this is subject to a
number of factors including market conditions.
These unaudited condensed interim consolidated financial
statements do not reflect adjustments to the carrying values of
assets and liabilities, the reported expenses and financial
position classifications used that would be necessary if the going
concern assumption was not appropriate. These adjustments could be
material.
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.
On April 17, 2020, the Company completed a share consolidation
of its share capital on the basis of ten existing common shares for
one new common share consolidation.
The Company's operations include the consolidated results of
Cavanacaw, and its wholly-owned subsidiaries Omagh, Galántas and
Flintridge.
The Company's common shares are listed on the TSX Venture
Exchange ("TSXV") and London Stock Exchange AIM under the symbol
GAL. The primary office is located at The Canadian Venture
Building, 82 Richmond Street East, Toronto, Ontario, Canada, M5C
1P1.
In March 2020, the World Health Organization declared
coronavirus (COVID-19) a global pandemic. This contagious disease
outbreak, which has continued to spread, has adversely affected
workforces, economies, and financial markets globally, leading to
an economic downturn. It is not possible for the Company to predict
the duration or magnitude of the adverse results of the outbreak
and its effects on the Company's business or ability to raise
funds.
3. Basis of Preparation
Statement of compliance
The Company applies International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and interpretations issued by the International Financial
Reporting Interpretations Committee ("IFRIC"). These unaudited
condensed interim consolidated financial statements have been
prepared in accordance with International Accounting Standard 34 -
Interim Financial Reporting. Accordingly, they do not include all
of the information required for full annual financial
statements.
The policies applied in these unaudited condensed interim
consolidated financial statements are based on IFRS issued and
outstanding as of May 26, 2021 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, 2020. Any subsequent changes to IFRS that are
given effect in the Company's annual consolidated financial
statements for the year ending December 31, 2021 could result in
restatement of these unaudited condensed interim consolidated
financial statements.
4. Accounts Receivable and Prepaid Expenses
As at As at
March 31, December 31,
2021 2020
----------------------------------------------- --------- ------------
Sales tax receivable - Canada $ 756 $ 3,987
Valued added tax receivable - Northern Ireland 59,830 56,422
Accounts receivable 256,397 295,510
Prepaid expenses 16,153 239,041
----------------------------------------------- --------- ------------
$ 333,136 $ 594,960
----------------------------------------------- --------- ------------
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,
2021 2020
-------------------------- --------- ------------
Less than 3 months $ 129,933 $ 120,085
3 to 12 months 178,295 117,615
More than 12 months 8,755 118,219
-------------------------- --------- ------------
Total accounts receivable $ 316,983 $ 355,919
-------------------------- --------- ------------
5. Inventories
As at As at
March 31, December 31,
2021 2020
------------------------ --------- ------------
Concentrate inventories $ 32,940 $ 81,169
------------------------ --------- ------------
6. Property, Plant and Equipment
Freehold Plant
land and and Motor Office Development
Cost buildings machinery vehicles equipment assets (i) Total
-------------- --------- --------- -------- --------- ----------- ----------
Balance,
December 31,
2019 $2,369,610 $6,866,075 $ 160,637 $ 189,142 $ 19,016,904 $28,602,368
Additions - 2,781 - - 1,892,995 1,895,776
Cash receipts
from
concentrate
sales - - - - (1,792,209) (1,792,209)
Foreign
exchange
adjustment 28,561 82,352 1,934 2,280 227,986 343,113
-------------- --------- --------- -------- --------- ----------- ----------
Balance,
December 31,
2020 2,398,171 6,951,208 162,571 191,422 19,345,676 29,049,048
Additions - - - - 172,550 172,550
Foreign
exchange
adjustment (6,071) (17,511) (412) (485) (48,717) (73,196)
-------------- --------- --------- -------- --------- ----------- ----------
Balance, March
31, 2021 $2,392,100 $6,933,697 $ 162,159 $ 190,937 $ 19,469,509 $29,148,402
-------------- --------- --------- -------- --------- ----------- ----------
Freehold Plant
land and and Motor Office Development
Accumulated
depreciation buildings machinery vehicles equipment assets (i) Total
---------------- --------- --------- -------- --------- ----------- ---------
Balance,
December 31,
2019 $1,954,907 $5,259,569 $ 115,325 $ 112,851 $ - $7,442,652
Depreciation 7,910 322,574 13,252 11,460 - 355,196
Foreign exchange
adjustment 23,644 66,443 1,530 1,480 - 93,097
---------------- --------- --------- -------- --------- ----------- ---------
Balance,
December 31,
2020 1,986,461 5,648,586 130,107 125,791 - 7,890,945
Depreciation 1,606 65,464 2,523 2,472 - 72,065
Foreign exchange
adjustment (5,040) (14,668) (347) (335) - (20,390)
---------------- --------- --------- -------- --------- ----------- ---------
Balance, March
31, 2021 $1,983,027 $5,699,382 $ 132,283 $ 127,928 $ - $7,942,620
---------------- --------- --------- -------- --------- ----------- ---------
Freehold Plant
land and and Motor Office Development
Carrying value buildings machinery vehicles equipment assets (i) Total
-------------------- --------- --------- -------- --------- ----------- ----------
Balance, December
31, 2020 $ 411,710 $1,302,622 $ 32,464 $ 65,631 $ 19,345,676 $21,158,103
-------------------- --------- --------- -------- --------- ----------- ----------
Balance, March 31,
2021 $ 409,073 $1,234,315 $ 29,876 $ 63,009 $ 19,469,509 $21,205,782
-------------------- --------- --------- -------- --------- ----------- ----------
(i) Development assets are expenditures for the underground
mining operations in Omagh.
7. Exploration and Evaluation Assets
Exploration
and
evaluation
Cost assets
---------------------------- -----------
Balance, December 31, 2019 $ 661,726
Additions 129,031
Impairment (47,490)
Foreign exchange adjustment 7,474
---------------------------- -----------
Balance, December 31, 2020 750,741
Additions 47,366
Foreign exchange adjustment (1,900)
---------------------------- -----------
Balance, March 31, 2021 $ 796,207
---------------------------- -----------
Carrying value
---------------------------- -----------
Balance, December 31, 2020 $ 750,741
Balance, March 31, 2021 $ 796,207
---------------------------- -----------
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, 2021 based on
a risk-free discount rate of 1% (December 31, 2020 - 1%) and an
inflation rate of 1.50% (December 31, 2020 - 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,
2021, the estimated fair value of the liability is $599,498
(December 31, 2020 - $598,275). Changes in the provision during the
three months ended March 31, 2021 are as follows:
As at As at
March 31, December 31,
2021 2020
----------------------------------------------- --------- ------------
Decommissioning liability, beginning of period $ 598,275 $ 580,303
Accretion 2,756 10,863
Foreign exchange (1,533) 7,109
----------------------------------------------- --------- ------------
Decommissioning liability, end of period $ 599,498 $ 598,275
----------------------------------------------- --------- ------------
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, 2020 - GBP
300,000), of which GBP 300,000 was funded as of March 31, 2021 (GBP
300,000 was funded as of December 31, 2020) and reported as
long-term deposit of $520,110 (December 31, 2020 - $521,430).
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,
2021 2020
--------------------------------------------- --------- ------------
Accounts payable $ 390,495 $ 423,630
Accrued liabilities 976,134 926,512
--------------------------------------------- --------- ------------
Total accounts payable and other liabilities $1,366,629 $ 1,350,142
--------------------------------------------- --------- ------------
The following is an aged analysis of the accounts payable and
other liabilities:
As at As at
March 31, December 31,
2021 2020
--------------------------------------------- --------- ------------
Less than 3 months $ 624,033 $ 432,946
3 to 12 months 57,106 76,800
12 to 24 months 8,145 161,327
More than 24 months 677,345 679,069
--------------------------------------------- --------- ------------
Total accounts payable and other liabilities $1,366,629 $ 1,350,142
--------------------------------------------- --------- ------------
10. Financing Facilities
Amounts payable on the Company's financial facilities are as
follow:
As at As at
March 31, December 31,
2021 2020
---------------------------------------------- ---------- ------------
Financing facilities, beginning of period (i) $ 2,186,272 $ 1,440,185
Financing facility received (i) - 262,460
Less bonus warrants issued (i) - (340,000)
Less current portion (2,398,673) (2,186,272)
Repayment of financing facilities (i) (23,802) (49,705)
Accretion (i) 101,804 360,452
Interest (i) 47,160 214,377
Foreign exchange adjustment 87,239 298,503
---------------------------------------------- ---------- ------------
Financing facilities - long term portion $ - $ -
---------------------------------------------- ---------- ------------
(i) In April 2018, the Company signed a concentrate pre-payment
agreement and loan facility for US$1.6 million with a United
Kingdom based company (the "Lender"), with a maturity date of
December 31, 2020. The interest is set at US$ 12 month LIBOR +
8.75% and payable monthly. No interest shall be charged for 6
months and repayments shall commence against deliveries in 2019.
There was a US$25,000 arrangement fee.
In respect of the loan facility, a fixed and floating security,
subordinated to an existing security to G&F Phelps Ltd.
("G&F Phelps"), is being put in place over Flintridge assets.
G&F Phelps has a first charge on Flintridge assets in respect
of its loan facility and the Lender required an intercreditor
agreement between G&F Phelps and the Lender.
As consideration for the loan facility, the United Kingdom based
company received 1,500,000 bonus warrants of the Company. Each
bonus warrant is exercisable into one common share of the Company
and is subject to an initial four months plus one day hold period
from the date of issuance of the bonus warrants. The bonus warrants
have a maximum life of two years (the "Expiry Time"). On April 19,
2018, the 1,500,000 bonus warrants were granted. In the event that
the weighted average closing price per common share of the Company
is more than $2.00 per share for more than five consecutive trading
days, the Company shall be entitled to accelerate the Expiry Time
to a date that is 30 days from the date on which the Company
announces the accelerated Expiry Time by press release.
The fair value of the 1,500,000 bonus warrants was estimated at
$786,000 using the Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected
volatility - 113.55%, risk-free interest rate - 1.91% and an
expected average life of 2 years.
On July 9, 2020, the Company amended the terms of its loan
facility of an increase in the outstanding loan facility. The
amount of the loan facility increased by US$200,000 to a total of
US$1.8 million. On November 12, 2020, the additional US$200,000
loan facility was drawn down by the Company. The interest rate
applicable on the loan facility increased from US$ 12 month LIBOR +
8.75% to US$ 12 month LIBOR + 9.9% and the maturity date was
extended from December 31, 2020 to December 31, 2021. Interest may
be rolled into the loan facility until December 31, 2020, at the
Company's option.
As consideration for amending the terms of the loan facility,
the Lender received on August 14, 2020, 1,700,000 bonus warrants of
Galantas ("Bonus Warrants"). Each Bonus Warrant will be exercisable
for one common share of Galantas (a "Bonus Share") at an exercise
price of $0.33 per Bonus Share. The Bonus Warrants will expire on
December 31, 2021 (the "Expiry Date") and the Bonus Shares will be
subject to an initial four month plus one day hold period from the
date of their issuance. In the event that the weighted average
closing price per common share of the Company is more than $0.4125
per share for more than five consecutive trading days, the Company
shall be entitled to accelerate the Expiry Date to a date that is
30 days from the date on which the Company announces the
accelerated Expiry Date by press release.
The fair value of the 1,700,000 bonus warrants was estimated at
$340,000 using the Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected
volatility - 165.75%, risk-free interest rate - 0.27% and an
expected average life of 1.38 years.
During the three months ended March 31, 2021, the Company
recorded accretion expense of $101,804 in the unaudited condensed
interim consolidated statements of loss in regards with this loan
facility (year ended December 31, 2020 - $360,452).
During the three months ended March 31, 2021, the Company
recorded interest expense of $47,160 in the unaudited condensed
interim consolidated statements of loss in regards with this loan
facility (year ended December 31, 2020 - $214,377).
During the three months ended March 31, 2021, the Company
recorded a repayment of $23,802 in regards with this loan facility
(year ended December 31, 2020 - $49,705).
11. Share Capital and Reserves
a) Authorized share capital
At March 31, 2021, 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, 2021, the issued share capital amounted to
$52,933,594. The continuity of issued share capital for the periods
presented is as follows:
Number of
common
shares Amount
---------------------------------------------- ---------- ----------
Balance, December 31, 2019 and March 31, 2020 32,321,472 $50,123,910
----------------------------------------------- ---------- ----------
Balance, December 31, 2020 and March 31, 2021 46,565,537 $52,933,594
----------------------------------------------- ---------- ----------
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, 2019 and March 31, 2020 1,500,000 $ 1.58
Expired - -
---------------------------------------------- --------- --------
Balance, March 31, 2020 1,500,000 $ 0.16
----------------------------------------------- --------- --------
Balance, December 31, 2020 and March 31, 2021 1,700,000 $ 0.33
----------------------------------------------- --------- --------
The following table reflects the actual warrants issued and
outstanding as of March 31, 2021:
Grant date Exercise
Number fair value price
Expiry date of warrants ($) ($)
------------------ ----------- ---------- --------
December 31, 2021 1,700,000 340,000 0.33
------------------- ----------- ---------- --------
d) Stock options
The following table shows the continuity of stock options for
the periods presented:
Weighted
average
Number of exercise
options price
---------------------------------------------- --------- --------
Balance, December 31, 2019 1,395,000 $ 0.92
Cancelled (i) (515,000) 1.01
----------------------------------------------- --------- --------
Balance, March 31, 2020 880,000 $ 1.12
----------------------------------------------- --------- --------
Balance, December 31, 2020 and March 31, 2021 570,000 $ 1.16
----------------------------------------------- --------- --------
(i) The portion of the estimated fair value of options granted
in the prior years and vested during the three months ended March
31, 2021, amounted to $4,631 (three months ended March 31, 2020 -
$41,222). In addition, during the three months ended March 31,
2021, nil options granted in the prior years were cancelled (three
months ended March 31, 2020 - 515,000 options cancelled) and
therefore, $nil (three months ended March 31, 2020 - $57,510) of
stock-based compensation was reversed related to the unvested
portion of the options cancelled.
The following table reflects the actual stock options issued and
outstanding as of March 31, 2021:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
------------------ --------- ---------------- ----------- ------------- ---------
March 25, 2022 1.35 0.98 320,000 320,000 -
April 19, 2023 1.10 2.05 25,000 25,000 -
February 13, 2024 0.90 2.87 125,000 125,000 -
June 27, 2024 0.90 3.24 100,000 66,667 33,333
------------------ --------- ---------------- ----------- ------------- ---------
1.16 1.84 570,000 536,667 33,333
------------------ --------- ---------------- ----------- ------------- ---------
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the
three months ended March 31, 2021 was based on the loss
attributable to common shareholders of $639,963 (three months ended
March 31, 2020 - $680,315) and the weighted average number of
common shares outstanding of 46,565,537 (three months ended March
31, 2020 - 32,321,472) for basic and diluted loss per share.
Diluted loss did not include the effect of 1,700,000 warrants
(three months ended March 31, 2020 - 1,500,000) and 570,000 options
(three months ended March 31, 2020 - 880,000) for the three months
ended March 31, 2021, as they are anti-dilutive.
13. Revenues
Shipments of concentrate under the off-take arrangements
commenced during the second quarter of 2019. Concentrate sales
provisional revenues during the three months ended March 31, 2021
totaled approximately US$567,000 (three months ended March 31, 2020
- US$186,000). However, until the mine reaches the commencement of
commercial production, the net proceeds from concentrate sales will
be offset against Development assets.
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 2021 2020
-------------------------------- ----- --------- --------
Interest on related party loans (i) $ 78,876 $ 86,533
-------------------------------- ----- --------- --------
(i) G&F Phelps, a company controlled by a director of the
Company, had amalgamated loans to the Company of $3,163,593 (GBP
1,824,764) (December 31, 2020 - $3,171,622 - GBP 1,824,764)
included with due to related parties bearing interest at 2% above
UK base rates, repayable on demand and secured by a mortgage
debenture on all the Company's assets. In April 2018, the interest
increased to 6.75% + US$ 12 month LIBOR. Interest accrued on
related party loans is included with due to related parties. As at
March 31, 2021, the amount of interest accrued is $1,414,446 (GBP
815,854) (December 31, 2020 - $1,339,503 - GBP 770,671).
(b) Remuneration of officer and directors of the Company was as
follows:
Three Months Ended
March 31,
2021 2020
-------------------------- --------- --------
Salaries and benefits (1) $ 117,606 $ 114,499
Stock-based compensation 2,258 9,314
-------------------------- --------- --------
$ 119,864 $ 123,813
-------------------------- --------- --------
(1) Salaries and benefits include director fees. As at March 31,
2021, due to directors for fees amounted to $162,000 (December 31,
2020 - $153,500) and due to officers, mainly for salaries and
benefits accrued amounted to $880,871 (GBP 508,087) (December 31,
2020 - $782,145 - GBP 458,701), and is included with due to related
parties.
(c) As of March 31, 2021, Ross Beaty owns 3,744,747 common
shares of the Company or approximately 8.04% of the outstanding
common shares. Roland Phelps, Chief Executive Officer and director,
owns, directly and indirectly, 4,933,817 common shares of the
Company or approximately 10.60% of the outstanding common shares of
the Company. Premier Miton owns 4,848,243 common shares of the
Company or approximately 10.41%. Melquart owns, directly and
indirectly, 20,673,528 common shares of the Company or
approximately 44.4% of the outstanding common shares of the
Company. The remaining 26.55% 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, 2021 United Kingdom Canada Total
------------------- -------------- ------ ----------
Current assets $ 807,896 $45,373 $ 853,269
Non-current assets $ 22,465,363 $56,736 $22,522,099
Revenues $ - $ - $ -
------------------- -------------- ------ ----------
December 31, 2020 United Kingdom Canada Total
------------------- -------------- ------ ----------
Current assets $ 1,232,744 $55,479 $ 1,288,223
Non-current assets $ 22,373,581 $56,793 $22,430,374
Revenues $ - $ - $ -
------------------- -------------- ------ ----------
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 ("HMRC") in the amount of $527,548 (GBP
304,290) in connection with an aggregate levy arising from the
removal of waste rock from the mine site during 2008 and early
2009. Omagh Minerals believed this claim to be without merit. An
appeal was lodged with the Tax Tribunals Service and the hearing
started at the beginning of March 2017 and following a number of
adjournments was completed in August 2018. During the year ended
December 31, 2019, the Tax Tribunals Service issued their judgement
dismissing the appeal by Omagh in respect of the assessments. A
provision has now been included in the unaudited condensed interim
consolidated financial statements in respect of the aggregates levy
plus interest and penalty.
There is a contingent liability in respect of potential
additional interest which may be applied in respect of the
aggregates levy dispute. Omagh is unable to make a reliable
estimate of the amount of the potential additional interest that
may be applied by HMRC.
17. Events After the Reporting Period
(i) On April 19, 2021, the Company announced a private placement
that will provide for the financing to bring the Omagh mine into
full production. Highlights of the private placement are summarized
below.
The private placements consists of a minimum of 17 to 22 million
units at $0.30 per unit, where each unit comprises one common share
and one warrant. The minimum gross proceeds expected to be raised
are $5,100,000 with maximum gross proceeds of $6,600,000. Each
warrant will be exercisable into one additional share at an
exercise price of $0.40 for 24 months from the closing date of the
placement. There will be a four-month hold period on the trading of
securities issued in connection with this offering. Further details
are contained in the press release issued on the above date.
(ii) On April 21, 2021, Galantas announced an increase in the
maximum size of its proposed private placement due to strong demand
and to accelerate its exploration program.
Strong demand has been received for the private placement, which
was detailed in a press release dated April 19, 2021 and this has
resulted in a potential over-subscription. The private placement
maximum (previously a maximum of 22 million units at $0.30 per
unit, where each unit comprises one common share and one warrant,
has been increased to a maximum of 26,666,667 units. The minimum
gross proceeds expected to be raised remain as $5,100,000, with
maximum gross proceeds of $8,000,000 (previously $6,600,000). Each
warrant will be exercisable into one additional share at an
exercise price of $0.40 for 24 months from the closing date of the
placement. There will be a four-month hold period on the trading of
securities issued in connection with this offering.
The net funds raised will be mainly used for bringing the Omagh
mine into full commercial production and for exploration to expand
the high-grade gold resources. An increase in the maximum gross
proceeds will permit the planned exploration program to be
accelerated.
(iii) On May 18, 2021, Galantas announced the closing of its
oversubscribed private placement (the "Placement") previously
announced on April 21, 2021, to fund the Omagh mine to full
production and accelerate exploration plans to expand the
high-grade gold resources.
The Placement resulted in the issuance of 26,663,264 units at a
price of $0.30 per unit for aggregate gross proceeds of $7,998,980.
Each unit comprises one common share and one common share purchase
warrant. Each warrant will be exercisable into one additional
common share at an exercise price of $0.40 for 24 months from the
closing date of the Placement. There is a four-month and one day
hold period on the trading of securities issued in connection with
this Placement.
Ocean Partners acquired 1,666,667 units of the Placement, for
consideration of $500,000 and the Company paid a finder's fee of
41,667 units to Ocean Partners resulting in the issuance of
1,708,334 common shares or 2.3% of the Company's issued and
outstanding common shares on a non-diluted basis.
Roland Phelps, the Company's retiring President and Chief
Executive Officer, acquired 166,667 units for consideration of
$50,000, increasing his holding to 5,100,484 common shares or 7.0%
of the Company's issued and outstanding common shares on a
non-diluted basis.
In connection with closing, Roland Phelps has retired as the
Company's President and Chief Executive Officer and as a member of
the Board of Directors. His role as Chief Executive Officer has
been assumed by Mario Stifano.
The Company has appointed Brendan Morris as Chief Operating
Officer in a non-board role and has appointed Brent Omland to the
Board of Directors, subject to regulatory approval.
In respect of an under-writing by Ocean Partners, the Company
paid a commitment fee of $112,500 in cash.
The maturity date of the Ocean Partners loan due on December 31,
2021 has been extended to December 31, 2023. Interest may be
deferred and added to the balance outstanding until March 31, 2022,
at which point interest will be paid monthly. The 1,700,000 Ocean
Partners warrants currently issued have been extended, subject to
regulatory approval, by 24 months to December 31, 2023.
(iii) (continued) The maturity date of the G&F Phelps loan
(the "G&F Loan") has been extended to December 31, 2023.
Interest may be deferred and added to the balance outstanding until
March 31, 2022, at which point interest will be paid monthly. In
consideration for extending the G&F Loan and deferring
interest, G&F Phelps has received, subject to regulatory
approval, 1,700,000 warrants exercisable into one common share at
an exercise price of $0.33, with said warrants expiring on December
31, 2023.
An application was filed for admittance of 26,704,931 additional
shares to AIM ("Admission") with Admission occurring on May 21,
2021. Following Admission, the Company's issued and outstanding
common shares totalled 73,270,468.
(iv) On May 19, 2021, the Company announced it awarded 3,915,000
stock options to directors, employees and consultants of the
Company to purchase common shares at $0.86 per share until May 19,
2026. The options will vest as to one third immediately and one
third on each of May 19, 2022 and May 19, 2023.
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