TIDMGAL

RNS Number : 9312T

Galantas Gold Corporation

30 November 2021

GALANTAS REPORTS FINANCIAL RESULTS FOR THE QUARTERED SEPTEMBER 30, 2021

November 29, 2021: Galantas Gold Corporation (TSX-V & AIM: GAL; OTCQX: GALKF) ("Galantas" or the "Company") is pleased to announce its unaudited financial results for the quarter ended September 30, 2021.

Financial Highlights

Highlights of the third quarter 2021 results are summarized below. All figures are in Canadian dollars unless otherwise stated.

 
All figures denominated in Canadian Dollars (CDN$) 
                                                                     Quarter Ended                Nine Months Ended 
                                                                      September 30                  September 30 
 
                                                                       2021 2020                      2021 2020 
Revenue                                                         $ 0            $ 0             $ 0            $ 0 
Cost and expenses of operations                             $ (74,462)     $ (35,658)      $ (181,943)    $ (102,733) 
Loss before the undernoted                                  $ (74,462)     $ (35,658)      $ (181,943)    $ (102,733) 
Depreciation                                                $ (89,151)     $ (80,213)      $ (248,304)    $ (253,331) 
General administrative expenses                             $ (914,174)    $ (597,315)     $(4,138,326)  $ (1,904,810) 
Foreign exchange (loss) / gain                              $ (95,489)     $ (63,770)      $ (133,234)    $ (11,462) 
Net Loss for the period                                    $ (1,173,276)   $ (776,956)     $(4,701,807)  $ (2,249,412) 
Working Capital Surplus / (Deficit)                         $ 2,454,581   $ (7,936,041)    $ 2,454,581   $ (7,936,041) 
Cash profit / (loss) from operating activities before 
 changes in non-cash working capital                       $ (1,116,243)   $ (359,304)     $ (612,154)   $ (1,007,785) 
Cash at September 30, 2021                                  $ 3,881,674     $ 638,433      $ 3,881,674     $ 638,433 
 

Sales revenue for the quarter ended September 30, 2021 amounted to $Nil compared to revenue of $Nil for the quarter ended September 30, 2020. Shipments of concentrate commenced during the third quarter of 2019. Concentrate sales provisional revenues totalled US$329,000 for the third quarter of 2021 compared to US$690,000 for the third 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 September 30, 2021 amounted to $ 1,173,276 (2020: $776,956) and the cash inflow from operating activities before changes in non-cash working capital for the quarter ended September 30, 2021 amounted to $(1,116,243 (2020: ($359,304)). The difference in the net loss is mainly due to stock based compensation and additional investor relations costs and marketing activities.

The Company had a cash balance of $3,881,674 at September 30, 2021 compared to $638,433 at September 30, 2020. The working capital surplus at September 30, 2021 amounted to $2,454,581 compared to a working capital deficit of $7,700,406 at June 30, 2020.

Exploration

The Company, during the month of July, began an initial 4,000-metre Phase 1 drill program targeting the Joshua Vein from surface, and targeting the Kearney Vein with underground drilling.

On November 24, 2021, Galantas announced results for the second underground hole in this drilling program. The highlights of this drilling program are detailed in the release and include a significant intercept of 26.7 g/t gold over 2.9 metres on the Kearney vein system. On October 12, 2021, Galantas announced initial drill results which included an intercept of 17.7 g/t gold over 2.5 metres.

Mine Development

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. With the new management and operations team in place, detailed review of mine plans and production profile are ongoing.

Mario Stifano, CEO of Galantas, commented: "The Company has made great strides in advancing the Omagh Project with the commencement of drilling to increase the confidence of resources for mine planning while also looking to expand known resources. Operationally, the Company has secured critical new mining equipment to support mining activities while strengthening the site management and operations team as we commence a phased restart of operations early in the new year."

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/9312T_1-2021-11-29.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 (Chief Operating Officer), 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, Chief Executive Officer

Email: info@galantas.com

Website: www.galantas.com

Telephone: +44 (0)28 8224 1100

Grant Thornton UK LLP (AIM Nomad)

Philip Secrett, Harrison Clarke, George Grainger

Telephone: +44(0)20 7383 5100

Panmure Gordon & Co (AIM Broker & Corporate Adviser)

John Prior, Hugh Rich

Telephone: +44(0)20 7886 2500

GALANTAS GOLD CORPORATION

Condensed Interim Consolidated Financial Statements

(Expressed in Canadian Dollars)

(Unaudited)

Three and Nine Months Ended September 30, 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.

Condensed Interim Consolidated Statements of Financial Position

 
                                                      As at          As at 
                                                    September      December 
                                                       30,            31, 
                                                      2021           2020 
------------------------------------------------   -----------    ----------- 
ASSETS 
 
Current assets 
    Cash and cash equivalents                     $  3,881,674   $    612,094 
    Accounts receivable and prepaid expenses 
     (note 4)                                          997,048        594,960 
    Inventories (note 5)                                83,047         81,169 
------------------------------------------------   -----------    ----------- 
Total current assets                                 4,961,769      1,288,223 
 
Non-current assets 
    Property, plant and equipment (note 6)          23,295,499     21,158,103 
    Long-term deposit (note 8)                         513,690        521,430 
    Exploration and evaluation assets (note 
     7)                                              1,142,300        750,741 
------------------------------------------------   -----------    ----------- 
Total non-current assets                            24,951,489     22,430,274 
------------------------------------------------   -----------    ----------- 
Total assets                                      $ 29,913,258   $ 23,718,497 
------------------------------------------------   -----------    ----------- 
 
EQUITY AND LIABILITIES 
 
Current liabilities 
    Accounts payable and other liabilities 
     (notes 9 and 16)                             $  2,398,887   $  1,350,142 
    Current portion of financing facilities 
     (note 10)                                               -      2,186,272 
    Due to related parties (note 14)                   108,301      5,461,893 
------------------------------------------------   -----------    ----------- 
Total current liabilities                            2,507,188      8,998,307 
 
Non-current liabilities 
    Non-current portion of financing facilities 
     (note 10)                                       4,680,784              - 
    Due to related parties (note 14)                 2,693,097              - 
    Decommissioning liability (note 8)                 597,505        598,275 
------------------------------------------------   -----------    ----------- 
Total non-current liabilities                        7,971,386        598,275 
------------------------------------------------   -----------    ----------- 
Total liabilities                                   10,478,574      9,596,582 
------------------------------------------------   -----------    ----------- 
 
Equity 
   Share capital (note 11(a)(b))                    57,783,570     52,933,594 
   Reserves                                         14,898,721      9,734,121 
   Deficit                                         (53,247,607)   (48,545,800) 
------------------------------------------------   -----------    ----------- 
Total equity                                        19,434,684     14,121,915 
------------------------------------------------   -----------    ----------- 
Total equity and liabilities                      $ 29,913,258   $ 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)

Condensed Interim Consolidated Statements of Loss

 
                                                     Three Months                   Nine Months Ended 
                                                    September 30,                     September 30, 
                                                  2021          2020              2021          2020 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
Revenues 
 
    Sales of concentrate (note 13)            $         -   $         -     $           -   $         - 
 
Cost and expenses of operations 
    Cost of sales                                  74,462        35,658           181,943       102,733 
    Depreciation (note 6)                          89,151        80,213           248,304       253,331 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
                                                  163,613       115,871           430,247       356,064 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
 
    Loss before general administrative and 
     other expenses                              (163,613)     (115,871)         (430,247)     (356,064) 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
 
General administrative expenses 
    Management and administration wages 
     (note 14)                                    112,997       141,068           339,031       425,404 
    Other operating expenses                       65,327        37,042           137,742       188,462 
    Accounting and corporate                       48,891        14,319           137,348        43,572 
    Legal and audit                                32,487        21,299           113,124        92,251 
    Stock-based compensation (note 11(d))         404,064         6,791         1,639,205         2,567 
    Shareholder communication and investor 
     relations                                    133,522        42,816           310,263       135,774 
    Transfer agent                                  3,084         3,718            14,991        58,192 
    Director fees (note 14)                        19,500        11,250            43,500        26,000 
    General office                                  8,648         4,097            19,987         9,586 
    Accretion expenses (notes 8 and 10)             2,742       170,698           135,158       481,616 
         Loan interest and bank charges less 
          deposit interest (notes 10 and 14)       82,912       144,217           243,795       441,386 
    Financing costs (note 10)                           -             -         1,004,182             - 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
                                                  914,174       597,315         4,138,326     1,904,810 
Other expenses 
    Foreign exchange loss (gain)                  102,648        63,770           140,393       (11,462) 
    Gain on disposal of property, plant and 
     equipment                                     (7,159)            -            (7,159)            - 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
                                                   95,489        63,770           133,234       (11,462) 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
 
Net loss for the period                       $(1,173,276)  $  (776,956)  $    (4,701,807)  $(2,249,412) 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
Basic and diluted net loss per share (note 
 12)                                          $     (0.02)  $     (0.02)  $         (0.08)  $     (0.07) 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
 
    Weighted average number of common shares 
     outstanding - basic and diluted           74,488,086    34,675,875        60,565,996    33,099,093 
--------------------------------------------   ----------    ----------   ---  ----------    ---------- 
 

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Condensed Interim Consolidated Statements of Comprehensive Loss

 
                                                        Three Months              Nine Months Ended 
                                                       September 30,                September 30, 
                                                      2021         2020         2021          2020 
------------------------------------------------   ----------    --------    ----------    ---------- 
Net loss for the period                           $(1,173,276)  $(776,956)  $(4,701,807)  $(2,249,412) 
 
Other comprehensive income (loss) 
    Items that will be reclassified subsequently 
    to profit or loss 
         Exchange differences on translating 
          foreign operations                           30,489      96,618      (264,805)     (190,804) 
------------------------------------------------   ----------    --------    ----------    ---------- 
Total comprehensive loss                          $(1,142,787)  $(680,338)  $(4,966,612)  $(2,440,216) 
------------------------------------------------   ----------    --------    ----------    ---------- 
 

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Condensed Interim Consolidated Statements of Cash Flows

 
                                                              Nine Months Ended 
                                                                September 30, 
                                                            2021          2020 
------------------------------------------------------   ----------    ---------- 
Operating activities 
Net loss for the period                                 $(4,701,807)  $(2,249,412) 
Adjustment for: 
    Depreciation (note 6)                                   248,304       253,331 
    Stock-based compensation (note 11(d))                 1,639,205         2,567 
    Accrued interest (notes 10 and 14)                      158,404       360,840 
    Foreign exchange loss                                   407,470       143,273 
    Accretion expenses (notes 8 and 10)                     135,158       481,616 
    Financing costs (note 10)                             1,004,182             - 
    Gain on disposal of property, plant and equipment        (7,159)            - 
Non-cash working capital items: 
    Accounts receivable and prepaid expenses               (415,954)       90,929 
    Inventories                                              (3,129)         (858) 
    Accounts payable and other liabilities                  137,074      (717,760) 
    Due to related parties                                   75,638       334,647 
------------------------------------------------------   ----------    ---------- 
Net cash and cash equivalents used in operating 
 activities                                              (1,322,614)   (1,300,827) 
------------------------------------------------------   ----------    ---------- 
 
Investing activities 
Purchase of property, plant and equipment                (2,696,746)     (436,519) 
Proceeds from sale of property, plant and equipment           8,561             - 
Exploration and evaluation assets                          (402,702)      (95,900) 
------------------------------------------------------   ----------    ---------- 
Net cash and cash equivalents used in investing 
 activities                                              (3,090,887)     (532,419) 
------------------------------------------------------   ----------    ---------- 
 
Financing activities 
Proceeds of private placements (note 11(b)(i)(ii))        7,998,980       637,454 
Share issue costs                                          (775,137)      (54,980) 
Proceeds from exercise of warrants                          495,333             - 
Repayment of financing facilities (note 10)                 (23,802)      (25,023) 
------------------------------------------------------   ----------    ---------- 
Net cash and cash equivalents provided by financing 
 activities                                               7,695,374       557,451 
------------------------------------------------------   ----------    ---------- 
 
Net change in cash and cash equivalents                   3,281,873    (1,275,795) 
 
Effect of exchange rate changes on cash held 
 in foreign currencies                                      (12,293)          808 
 
Cash and cash equivalents, beginning of period              612,094     1,913,420 
 
Cash and cash equivalents, end of period                $ 3,881,674   $   638,433 
------------------------------------------------------   ----------    ---------- 
 
Cash                                                    $ 3,881,674   $   638,433 
Cash equivalents                                                  -             - 
------------------------------------------------------   ----------    ---------- 
Cash and cash equivalents                               $ 3,881,674   $   638,433 
------------------------------------------------------   ----------    ---------- 
 

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Condensed Interim Consolidated Statements of Changes in Equity

 
                                                                  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 
          Shares 
           issued 
           in private 
           placement 
           (note 11(b)(i))       637,454            -              -             -              -             -       637,454 
          Warrants 
           issued 
           (note 10(i))                -      340,000              -             -              -             -       340,000 
          Share issue 
           costs                 (54,980)           -              -             -              -             -       (54,980) 
          Expiry 
           of warrants                 -     (786,000)       786,000             -              -             -             - 
          Stock-based 
           compensation 
           (note 11(d))                -            -          2,567             -              -             -         2,567 
          Exchange 
           differences 
           on translating 
           foreign 
           operations                  -            -              -      (190,804)             -             -      (190,804) 
          Net loss 
           for the 
           period                      -            -              -             -              -    (2,249,412)   (2,249,412) 
---------------------------   ----------    ---------    -----------   -----------    -----------   -----------    ---------- 
Balance, September 
 30, 2020                    $50,706,384   $  340,000   $  8,374,147  $    605,950   $    248,078  $(47,566,760)  $12,707,799 
---------------------------   ----------    ---------    -----------   -----------    -----------   -----------    ---------- 
 
Balance, December 
 31, 2020                    $52,933,594   $  340,000   $  8,381,382  $  1,012,739   $          -  $(48,545,800)  $14,121,915 
          Shares 
           issued 
           in private 
           placement 
           (note 11(b)(ii))    7,998,980            -              -             -              -             -     7,998,980 
          Warrants 
           issued 
           (note 11(b)(ii))   (3,258,578)   3,258,578              -             -              -             -             - 
          Warrants 
           issued 
           (note 10(ii))               -      670,000              -             -              -             -       670,000 
          Share issue 
           costs (note 
           11(b)(ii))           (783,920)       8,783              -             -              -             -      (775,137) 
          Warrant 
           extension 
           (note 10(i))                -      251,000              -             -              -             -       251,000 
          Stock-based 
           compensation 
           (note 11(d))                -            -      1,639,205             -              -             -     1,639,205 
          Exercise 
           of warrants           893,494     (398,161)             -             -              -             -       495,333 
          Exchange 
           differences 
           on translating 
           foreign 
           operations                  -            -              -      (264,805)             -             -      (264,805) 
          Net loss 
           for the 
           period                      -            -              -             -              -    (4,701,807)   (4,701,807) 
---------------------------   ----------    ---------    -----------   -----------    -----------   -----------    ---------- 
Balance, September 
 30, 2021                    $57,783,570   $4,130,200   $ 10,020,587  $    747,934   $          -  $(53,247,607)  $19,434,684 
---------------------------   ----------    ---------    -----------   -----------    -----------   -----------    ---------- 
 

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 have progressed positively and the maturity dates for both the G&F Phelps Ltd. ("G&F Phelps") and Ocean Partners loans have now been extended to December 31, 2023. The Company also raised gross proceeds of $8M through the issuance of shares to new and current 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 unaudited condensed interim consolidated financial statements on the going concern basis.

As at September 30, 2021, the Company had a deficit of $53,247,607 (December 31, 2020 - $48,545,800). Comprehensive loss for the nine months ended September 30, 2021 was $4,966,612 (nine months ended September 30, 2020 - $2,440,216). These conditions raise material uncertainties which may cast significant doubt as to whether the Company will be able to continue as a going concern. However, 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. On September 1, 2021, the Company announced that its common shares are now qualified for trading under the symbol GALKF on the OTCQX in the United States. The primary office is located at The Canadian Venture Building, 82 Richmond Street East, Toronto, Ontario, Canada, M5C 1P1.

In March 2020, the World Health Organization declared coronavirus (COVID-19) a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company's business or ability to raise funds.

3. Basis of Preparation

Statement of compliance

The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements.

The policies applied in these unaudited condensed interim consolidated financial statements are based on IFRS issued and outstanding as of November 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 
                                                  September   December 
                                                     30,         31, 
                                                    2021        2020 
-----------------------------------------------   ---------   -------- 
 
Sales tax receivable - Canada                    $    6,086  $   3,987 
Valued added tax receivable - Northern Ireland      197,024     56,422 
Accounts receivable                                 340,527    295,510 
Prepaid expenses                                    453,411    239,041 
-----------------------------------------------   ---------   -------- 
                                                 $  997,048  $ 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 
                             September   December 
                                30,         31, 
                               2021        2020 
--------------------------   ---------   -------- 
 
Less than 3 months          $  290,405  $ 120,085 
3 to 12 months                 244,585    117,615 
More than 12 months              8,647    118,219 
--------------------------   ---------   -------- 
Total accounts receivable   $  543,637  $ 355,919 
--------------------------   ---------   -------- 
 
 

5. Inventories

 
                             As at      As at 
                           September   December 
                              30,         31, 
                             2021        2020 
------------------------   ---------   -------- 
 
Concentrate inventories   $   83,047  $  81,169 
------------------------   ---------   -------- 
 
 

6. Property, Plant and Equipment

 
               Freehold 
               land and     Plant 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              -      467,953        16,181       16,174      2,196,438     2,696,746 
Disposals              -       (6,289)            -            -              -        (6,289) 
Foreign 
 exchange 
 adjustment      (35,597)    (102,680)       (2,413)      (2,841)      (285,659)     (429,190) 
------------   ---------    ---------    ----------    ---------    -----------    ---------- 
Balance, 
 September 
 30, 2021     $2,362,574   $7,310,192   $   176,339   $  204,755   $ 21,256,455   $31,310,315 
------------   ---------    ---------    ----------    ---------    -----------    ---------- 
 
 
                Freehold 
                  land         Plant 
Accumulated        and          and          Motor        Office      Development 
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        4,548       227,978        8,075         7,703              -     248,304 
Disposal                -        (4,801)           -             -              -      (4,801) 
Foreign 
 exchange 
 adjustment       (29,541)      (86,104)      (2,028)       (1,959)             -    (119,632) 
-------------   ---------    ----------    ---------    ----------    -----------   --------- 
Balance, 
 September 
 30, 2021      $1,961,468   $ 5,785,659   $  136,154   $   131,535   $          -  $8,014,816 
-------------   ---------    ----------    ---------    ----------    -----------   --------- 
 
 
                        Freehold      Plant 
                          land 
                           and         and       Motor      Office    Development 
                                                                         assets 
Carrying value          buildings   machinery   vehicles   equipment       (i)        Total 
---------------------   ---------   ---------   --------   ---------   ----------   ---------- 
Balance, December 31, 
 2020                  $  411,710  $1,302,622  $  32,464  $   65,631  $19,345,676  $21,158,103 
---------------------   ---------   ---------   --------   ---------   ----------   ---------- 
Balance, September 
 30, 2021              $  401,106  $1,524,533  $  40,185  $   73,220  $21,256,455  $23,295,499 
---------------------   ---------   ---------   --------   ---------   ----------   ---------- 
 

(i) Development assets are expenditures for the underground mining operations in Omagh.

7. Exploration and Evaluation Assets

 
                                Exploration and evaluation assets 
Cost 
----------------------------   ----------------------------------- 
 
Balance, December 31, 2019    $                       661,726 
Additions                                             129,031 
Impairment                                            (47,490) 
Foreign exchange adjustment                             7,474 
----------------------------   ------------------------------  --- 
Balance, December 31, 2020                            750,741 
Additions                                             402,702 
Foreign exchange adjustment                           (11,143) 
----------------------------   ------------------------------ 
Balance, September 30, 2021   $                     1,142,300 
----------------------------   ------------------------------  --- 
 
Carrying value 
 
Balance, December 31, 2020    $                       750,741 
----------------------------   ------------------------------  --- 
Balance, September 30, 2021   $                     1,142,300 
----------------------------   ------------------------------  --- 
 

8. Decommissioning Liability

The Company's decommissioning liability is a result of mining activities at the Omagh mine in Northern Ireland. The Company estimated its decommissioning liability at September 30, 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 September 30, 2021, the estimated fair value of the liability is $597,505 (December 31, 2020 - $598,275). Changes in the provision during the nine months ended September 30, 2021 are as follows:

 
                                                    As at       As at 
                                                  September    December 
                                                     30,          31, 
                                                    2021         2020 
-----------------------------------------------   ---------    -------- 
 
Decommissioning liability, beginning of period   $  598,275   $ 580,303 
Accretion                                             8,209      10,863 
Foreign exchange                                     (8,979)      7,109 
-----------------------------------------------   ---------    -------- 
Decommissioning liability, end of period         $  597,505   $ 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 September 30, 2021 (GBP 300,000 was funded as of December 31, 2020) and reported as long-term deposit of $513,690 (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 
                                                September   December 
                                                   30,         31, 
                                                  2021        2020 
---------------------------------------------   ---------   --------- 
 
Accounts payable                               $  953,249  $  423,630 
Accrued liabilities                             1,445,638     926,512 
---------------------------------------------   ---------   --------- 
Total accounts payable and other liabilities   $2,398,887  $1,350,142 
---------------------------------------------   ---------   --------- 
 

The following is an aged analysis of the accounts payable and other liabilities:

 
                                                  As at       As at 
                                                September   December 
                                                   30,         31, 
                                                  2021        2020 
---------------------------------------------   ---------   --------- 
 
Less than 3 months                             $1,632,845  $  432,946 
3 to 12 months                                     95,642      76,800 
12 to 24 months                                         -     161,327 
More than 24 months                               670,400     679,069 
---------------------------------------------   ---------   --------- 
Total accounts payable and other liabilities   $2,398,887  $1,350,142 
---------------------------------------------   ---------   --------- 
 
 

10. Financing Facilities

Amounts payable on the Company's financial facilities are as follow:

 
                                                        As at         As at 
                                                      September      December 
                                                          30,           31, 
                                                         2021          2020 
---------------------------------------------------   ----------    ---------- 
 
Financing facilities, beginning of period (i)        $ 2,186,272   $ 1,440,185 
Financing facility received (i)                                -       262,460 
Financing facility reallocated from due to related 
 parties (ii)                                          4,578,039             - 
Financing facility reallocated to due to related 
 parties (i)                                          (2,577,137)            - 
Less bonus warrants issued (i)                                 -      (340,000) 
Less current portion                                           -    (2,186,272) 
Repayment of financing facilities (i)                    (23,802)      (49,705) 
Accretion (i)                                            126,949       360,452 
Interest (i)(ii)                                         168,074       214,377 
Foreign exchange adjustment                              222,389       298,503 
---------------------------------------------------   ----------    ---------- 
Financing facilities - long term portion             $ 4,680,784   $         - 
---------------------------------------------------   ----------    ---------- 
 

(i) In April 2018, the Company signed a concentrate pre-payment agreement and loan facility for US$1.6 million with a United Kingdom based company (the "Lender"), with a maturity date of December 31, 2020. The interest was set at US$ 12 month LIBOR + 8.75% and payable monthly. No interest shall be charged for 6 months and repayments commenced 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, 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 could be rolled into the loan facility until December 31, 2021, 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.

2021 activities

On May 14, 2021, the maturity date of the loan facility 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 Bonus Warrants issued have been extended.

The Company recorded the incremental difference of $251,000 as financing costs based on the fair value of these warrants immediately prior to and after the modification. The fair value of the 1,700,000 Bonus Warrants was valued immediately prior to the subsequent extension using the following Black-Scholes option pricing model with the following assumptions: expected dividend yield - 0%, expected volatility - 123.98% to 144.48%, risk-free interest rate - 0.32% and an expected average life of 0.63 to 2.63 years.

2021 activities

This amendment to the loan facility is considered to be a modification of debt, accordingly, the fair value variances originated by the amendment of $83,182 was immediately recorded under financing costs in the unaudited condensed interim consolidated statements of a loss.

During the three and nine months ended September 30, 2021, the Company recorded accretion expense of $nil and $126,949, respectively 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 and nine months ended September 30, 2021, the Company recorded interest expense of $nil and $86,820, respectively 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 and nine months ended September 30, 2021, the Company recorded a repayment of $nil and $23,802, respectively in regards with this loan facility (year ended December 31, 2020 - $49,705).

As at June 30, 2021, the Lender and the Company have a common director. As a result, the balance due to the Lender was reallocated from financing facilities to due to related parties. Total balance reallocated consisted of $2,577,137. Refer to note 14(a)(iii).

(ii) In connection with the closing of the private placement completed on May 14, 2021 (refer to note 11(b)(ii)), Roland Phelps has retired as the Company's President and Chief Executive Officer and as a member of the Board of Directors. As a result, the balance due to G&F Phelps, a company controlled by Roland Phelps was reallocated from due to related parties to financing facilities. Total balance reallocated consisted of $3,163,593 (GBP 1,824,764) amalgamated loans balance and $1,414,446 (GBP 815,854) interest accrued balance. Refer to note 14(a)(ii).

As at September 30, 2021, G&F Phelps had amalgamated loans to the Company of $3,124,560 (GBP 1,824,774) (December 31, 2020 - $3,171,622 - GBP 1,824,764) included with financing liabilities (December 31, 2020 - due to related parties) bearing interest at 2% above UK base rates, repayable on demand and secured by a mortgage debenture on all the Company's assets. In April 2018, the interest increased to 6.75% + US$ 12 month LIBOR. Interest accrued on G&F Phelps loan is included with financing liabilities (December 31, 2020 - included with due to related parties). As at September 30, 2021, the amount of interest accrued is $1,556,224 (GBP 908,850) (December 31, 2020 - $1,339,503 - GBP 770,671).

The maturity date of the G&F Phelps 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.

The fair value of the 1,700,000 warrants was estimated at $670,000 using the following Black-Scholes option pricing model with the following assumptions: expected dividend yield - 0%, expected volatility - 123.98% to 144.48%, risk-free interest rate - 0.32% and an expected average life of 2.63 years. The $670,000 was recorded as financing costs in the unaudited condensed interim consolidated statements of a loss.

During the three and nine months ended September 30, 2021, the Company recorded interest expense of $81,254 in the unaudited condensed interim consolidated statements of loss in regards with this loan facility (year ended December 31, 2020 - $214,377).

11. Share Capital and Reserves

a) Authorized share capital

At September 30, 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 September 30, 2021, the issued share capital amounted to $57,783,570. The continuity of issued share capital for the periods presented is as follows:

 
                                           Number of 
                                             common 
                                             shares       Amount 
----------------------------------------   ----------   ---------- 
 
Balance, December 31, 2019                 32,321,472  $50,123,910 
Shares issued in private placement (i)      2,833,132      637,454 
Share issue costs                                   -      (54,980) 
-----------------------------------------  ----------   ---------- 
Balance, September 30, 2020                35,154,604  $50,706,384 
-----------------------------------------  ----------   ---------- 
 
 
Balance, December 31, 2020                 46,565,537  $52,933,594 
Shares issued in private placement (ii)    26,663,264    7,998,980 
Warrants issued (ii)                                -   (3,258,578) 
Share issue costs (ii)                         41,667     (783,920) 
Exercise of warrants                        1,413,333      893,494 
-----------------------------------------  ----------   ---------- 
Balance, September 30, 2021                74,683,801  $57,783,570 
-----------------------------------------  ----------   ---------- 
 

(i) On July 17, 2020, the Company completed a private placement for 2,833,132 common shares at an issue price of $0.225 (UKGBP0.1328) per share for gross proceeds of $637,454 (GBP 376,240). The net proceeds to be raised by the private placement are intended to be used to support mine operations and provide general working capital of the Company.

The private placement included a subscription by LF Miton UK Smaller Companies Fund, which has subscribed for 527,108 common shares in the private placement and is managed by Premier Fund Managers Ltd ("Premier Miton"). Post-closing, this fund holds 3,222,330 shares, equivalent to 9.17% of the Company's common shares. The total number of shares controlled by Premier Miton post completion of the private placement is 4,848,243, representing 13.89% of the Company's enlarged issued and outstanding common shares.

The private placement also included a subscription from Melquart, for 1,506,024 common shares, which gives rise to an enlarged holding of 9,262,595 common shares post completion of the private placement, or 26.35% of the Company's enlarged issued and outstanding common shares.

Commission payable to brokers in Canada and the United Kingdom in relation to the private placement totals $33,673 (GBP 19,874).

(ii) On May 14, 2021, Galantas completed a private placement 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 private placement. There is a four-month and one day hold period on the trading of securities issued in connection with this private placement.

The fair value of the 26,663,264 warrants was estimated at $3,258,578 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield - 0%, expected volatility - 155.08%, risk-free interest rate - 0.32% and an expected average life of 2 years.

Ocean Partners acquired 1,666,667 units of the private 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.

The 41,667 units paid as a finder's fee were valued at $20,417. The fair value of the 41,667 warrants was estimated at $8,783 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield - 0%, expected volatility - 155.08%, risk-free interest rate - 0.32% and an expected average life of 2 years.

Roland Phelps, the Company's retired President and Chief Executive Officer, acquired 166,667 units for consideration of $50,000, increasing his holding to 5,100,484 common shares or 6.9% of the Company's issued and outstanding common shares on a non-diluted basis.

In respect of an under-writing by Ocean Partners, the Company paid a commitment fee of $112,500 in cash.

c) Warrant reserve

The following table shows the continuity of warrants for the periods presented:

 
                                                                 Weighted 
                                                              average exercise 
                                       Number of warrants          price 
 
Balance, December 31, 2019                      1,500,000   $             1.58 
Issued (note 10(i))                             1,700,000                 0.33 
Expired                                        (1,500,000)                1.58 
-------------------------------------  ------------------    ----------------- 
Balance, September 30, 2020                     1,700,000   $             0.33 
-------------------------------------  ------------------    ----------------- 
 
 
Balance, December 31, 2020                      1,700,000   $             0.33 
Issued (notes 10(ii) and 11(b)(ii))            28,404,931                 0.40 
Exercised                                      (1,413,333)                0.35 
-------------------------------------  ------------------    ----------------- 
Balance, September 30, 2021                    28,691,598   $             0.39 
-------------------------------------  ------------------    ----------------- 
 

The following table reflects the actual warrants issued and outstanding as of September 30, 2021:

 
                                   Grant 
                       Number     date fair  Exercise 
                         of         value      price 
Expiry date           warrants      ($)        ($) 
------------------   ----------  ----------  -------- 
May 14, 2023         26,291,598   3,216,847      0.40 
December 31, 2023     2,400,000     913,353      0.33 
-------------------  ----------  ----------  -------- 
                     28,691,598   4,130,200      0.39 
 ------------------  ----------  ----------  -------- 
 

d) Stock options

The following table shows the continuity of stock options for the periods presented:

 
                                                Weighted 
                               Number of     average exercise 
                                options           Price 
----------------------------   ---------    ----------------- 
 
Balance, December 31, 2019     1,395,000   $             0.92 
Expired                         (285,000)                1.05 
Cancelled (iv)                  (540,000)                1.01 
-----------------------------  ---------    ----------------- 
Balance, September 30, 2020      570,000   $             1.16 
-----------------------------  ---------    ----------------- 
 
 
Balance, December 31, 2020       570,000   $             1.16 
Granted (i)(ii)(iii)           4,360,000                 0.85 
-----------------------------  ---------    ----------------- 
Balance, September 30, 2021    4,930,000   $             0.88 
-----------------------------  ---------    ----------------- 
 

(i) On May 19, 2021, the Company granted 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. The fair value attributed to these options was $2,907,000 and was expensed in the unaudited condensed interim consolidated statements of loss and credited to equity settled share-based payments reserve. During the three and nine months ended September 30, 2021, included in stock-based compensation is $366,362 and $1,502,614, respectively related to the vested portion of these options.

(ii) On June 21, 2021, the Company granted 425,000 stock options to consultants and officers of the Company to purchase common shares at $0.73 per share until June 21, 2026. The options will vest as to one third immediately and one third on each of June 21, 2022 and June 21, 2023. The fair value attributed to these options was $266,000 and was expensed in the unaudited condensed interim consolidated statements of loss and credited to equity settled share-based payments reserve. During the three and nine months ended September 30, 2021, included in stock-based compensation is $33,523 and $125,469, respectively related to the vested portion of these options.

(iii) On August 27, 2021, the Company granted 20,000 stock options to an employee of the Company to purchase common shares at $0.86 per share until August 27, 2026. The options will vest as to one third immediately and one third on each of August 27, 2022 and August 27, 2023. The fair value attributed to these options was $11,000 and was expensed in the unaudited condensed interim consolidated statements of loss and credited to equity settled share-based payments reserve. During the three and nine months ended September 30, 2021, included in stock-based compensation is $4,179 related to the vested portion of these options.

(iv) The portion of the estimated fair value of options granted in the prior years and vested during the three and nine months ended September 30, 2021, amounted to $nil and $6,943, respectively (three and nine months ended September 30, 2020 - $7,235 and $60,521, respectively). In addition, during the three and nine months ended September 30, 2021, nil options granted in the prior years were cancelled (three and nine months ended September 30, 2020 - 25,000 and 540,000 options cancelled) and therefore, $nil (three and nine months ended September 30, 2020 - $444 and $57,954, respectively) of stock-based compensation was reversed related to the unvested portion of the options cancelled.

The following table reflects the actual stock options issued and outstanding as of September 30, 2021:

 
                                   Weighted average 
                                       remaining          Number of   Number of options  Number of 
                     Exercise         contractual          options         vested         options 
Expiry date          price ($)       life (years)        outstanding    (exercisable)    unvested 
------------------   ---------  -----------------------  -----------  -----------------  --------- 
March 25, 2022            1.35                     0.48      320,000            320,000          - 
April 19, 2023            1.10                     1.55       25,000             25,000          - 
February 13, 2024         0.90                     2.37      125,000            125,000          - 
June 27, 2024             0.90                     2.74      100,000            100,000          - 
May 19, 2026              0.86                     4.64    3,915,000          1,305,000  2,610,000 
June 21, 2026             0.73                     4.73      425,000            141,667    283,333 
August 27, 2026           0.86                     4.91       20,000              6,667     13,333 
-------------------  ---------  -----------------------  -----------  -----------------  --------- 
                          0.88                     4.26    4,930,000          2,023,334  2,906,666 
 ------------------  ---------  -----------------------  -----------  -----------------  --------- 
 

12. Net Loss per Common Share

The calculation of basic and diluted loss per share for the three and nine months ended September 30, 2021 was based on the loss attributable to common shareholders of $1,173,276 and $4,701,807, respectively (three and nine months ended September 30, 2020 - $776,956 and $2,249,412, respectively) and the weighted average number of common shares outstanding of 74,488,086 and 60,565,996, respectively (three and nine months ended September 30, 2020 - 34,675,875 and 33,099,093, respectively) for basic and diluted loss per share. Diluted loss did not include the effect of 28,691,598 warrants (three and nine months ended September 30, 2020 - 1,700,000) and 4,930,000 options (three and nine months ended September 30, 2020 - 570,000) for the three and nine months ended September 30, 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 and nine months ended September 30, 2021 totaled approximately US$329,000 and US$1,114,000, respectively (three and nine months ended September 30, 2020 - US$690,000 and US$876,000, respectively). However, until the mine reaches the commencement of commercial production, the net proceeds from concentrate sales will be offset against Development assets.

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 
                                                                        Nine Months Ended 
                                                    September 30,         September 30, 
                                        Note         2021        2020      2021       2020 
-------------------------------------   -----    --------  ----------  --------  --------- 
     Interest on related party loans      (i)    $  40,861    $ 77,614   159,397  $ 244,019 
--------------------------------------   ------   --------  ----------  --------  --------- 
 

(i) Refer to note 10(i)(ii).

(ii) Refer to note 11(b)(i)(ii).

(iii) As at September 30, 2021, the Lender and the Company have a common director. As a result, the balance due to the Lender was reallocated from financing facilities to due to related parties. Total balance reallocated consisted of $2,577,137. Refer to note 10(i).

As at September 30, 2021, financial liabilities due to the Lender and recorded as due to related parties on the unaudited condensed interest consolidated statement of financial position is $2,693,097.

(b) Remuneration of officer and directors of the Company was as follows:

 
                              Three Months Ended     Nine Months Ended 
                                September 30,          September 30, 
                               2021        2020       2021       2020 
--------------------------   ---------   --------   ---------   ------- 
Salaries and benefits (1)   $   93,305  $ 120,899  $  261,291  $352,626 
Stock-based compensation       267,570      4,389   1,098,008    20,115 
--------------------------   ---------   --------   ---------   ------- 
                            $  360,875  $ 125,288  $1,359,299  $372,741 
--------------------------   ---------   --------   ---------   ------- 
 

(1) Salaries and benefits include director fees. As at September 30, 2021, due to directors for fees amounted to $83,750 (December 31, 2020 - $126,536) and due to officers, mainly for salaries and benefits accrued amounted to $24,551 (December 31, 2020 - $782,145 - GBP 458,701), and is included with due to related parties.

(c) As of September 30, 2021, Ross Beaty owns 3,744,747 common shares of the Company or approximately 5.01% of the outstanding common shares. Roland Phelps, former Chief Executive Officer and former director, owns, directly and indirectly, 5,100,484 common shares of the Company or approximately 6.83% of the outstanding common shares of the Company. Premier Miton owns 4,848,243 common shares of the Company or approximately 6.49%. Melquart owns, directly and indirectly, 23,073,528 common shares of the Company or approximately 30.89% of the outstanding common shares of the Company. Eric Sprott owns 6,333,333 common shares of the Company or approximately 8.48%. Mike Gentile owns 4,000,000 common shares of the Company or approximately 5.36%. The remaining 36.94% 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:

 
September 31, 2020    United Kingdom     Canada       Total 
-------------------  ----------------   ---------   ---------- 
 
Current assets       $      1,683,030  $3,278,739  $ 4,961,769 
Non-current assets   $     24,894,466  $   57,023  $24,951,489 
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 $521,036 (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.

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November 30, 2021 02:00 ET (07:00 GMT)

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