TIDMGAL
RNS Number : 8959A
Galantas Gold Corporation
30 May 2023
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORT FINANCIAL RESULTS FOR THE QUARTERED MARCH 31,
2023
May 30, 2023: Galantas Gold Corporation (the 'Company') is
pleased to announce its unaudited financial results for the Quarter
ended March 31, 2023.
Financial Highlights
Highlights of the first quarter 2023 results, which are
expressed in Canadian Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Quarter Ended
March 31
2023 2022
Revenue $ 0 $ 0
Cost and expenses of operations $ (50,215) $ (46,639)
Loss before the undernoted $ (50,215) $ (46,639)
Depreciation $ (126,105) $ (130,531)
General administrative expenses $ (1,242,764) $ (1,171,170)
Foreign exchange gain (loss) $ 25,470 $ (67,472)
Net (Loss) for the quarter $ (1,3 93,614) $ (1 ,415,812)
Working Capital Deficit $ (11,074,990) $ (1,850,980)
Cash loss from operating activities before changes in non-cash working capital $ (475,530) $ (577,604)
Cash at March 31, 2023 $ 2,516,822 $ 2,417,152
Sales revenue for the quarter ended March 31, 2023 amounted to $
Nil compared to revenue of $ Nil for the quarter ended March 31,
2022. Shipments of concentrate commenced during the third quarter
of 2019. Concentrate sales provisional revenues totalled US$
255,000 for the first quarter of 2023 compared to US $ 219,000 for
the first quarter of 2022. 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, 2023 amounted to $
1,393,614 (2021: $ 1,415,812) and the cash outflow from operating
activities before changes in non-cash working capital for the
quarter ended March 31, 2023 amounted to $475,530 (2022:
$577,604).
The Company had a cash balance of $2,516,822 at March 31, 2023
compared to $ 2,417,152 at March 31, 2022. The working capital
deficit at March 31, 2023 amounted to $ 11,074,990 compared to a
working capital deficit of $ 1,850,980 at March 31, 2022. The
increase results from a recategorization of loans from non current
to current.
Safety is a high priority for the Company and we continue 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.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/8959A_1-2023-5-29.pdf
Qualified Person
The financial components of this disclosure have 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' 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.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. 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, Samuel
Littler:
Telephone: +44(0)20 7383 5100
SP Angel Corporate Finance LLP (AIM Broker)
David Hignell, Charlie Bouverat (Corporate Finance)
Grant Barker (Sales and Broking)
Telephone: +44(0)20 3470 0470
GALANTAS GOLD CORPORATION
Condensed Interim Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2023
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,
2023 2022
------------------------------------------------------------ ----------- ------------
ASSETS
Current assets
Cash and cash equivalents $ 2,516,822 $ 1,038,643
Accounts receivable and prepaid expenses (note 4) 1,570,518 1,810,993
Inventories (note 5) 80,285 83,242
------------------------------------------------------------- ----------- ------------
Total current assets 4,167,625 2,932,878
Non-current assets
Property, plant and equipment (note 6) 25,910,707 24,255,849
Long-term deposit (note 8) 501,780 489,660
Exploration and evaluation assets (note 7) 3,660,664 2,665,313
------------------------------------------------------------- ----------- ------------
Total non-current assets 30,073,151 27,410,822
------------------------------------------------------------- ----------- ------------
Total assets $ 34,240,776 $ 30,343,700
--------------------------------------------------------- ----------- ------------
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (notes 9 and 16) $ 4,608,751 $ 4,052,041
Current portion of financing facilities (note 10) 5,252,499 4,836,267
Due to related parties (note 14) 5,381,365 5,072,534
------------------------------------------------------------- ----------- ------------
Total current liabilities 15,242,615 13,960,842
Non-current liabilities
Non-current portion of financing facilities (note 10) 571,910 -
Decommissioning liability (note 8) 599,498 582,441
Other liability (note 14) 1,021,819 1,085,426
------------------------------------------------------------- ----------- ------------
Total non-current liabilities 2,193,227 1,667,867
------------------------------------------------------------- ----------- ------------
Total liabilities 17,435,842 15,628,709
------------------------------------------------------------- ----------- ------------
Equity
Share capital (note 11(a)(b)) 71,104,535 69,664,056
Reserves 17,558,183 15,515,105
Deficit (71,857,784) (70,464,170)
------------------------------------------------------------- ----------- ------------
Total equity 16,804,934 14,714,991
------------------------------------------------------------- ----------- ------------
Total equity and liabilities $ 34,240,776 $ 30,343,700
--------------------------------------------------------- ----------- ------------
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,
2023 2022
------------------------------------------------------------------------------ ----------- ----------
Revenues
Sales of concentrate (note 13) $ - $ -
Cost and expenses of operations
Cost of sales 50,215 46,639
Depreciation (note 6) 126,105 130,531
------------------------------------------------------------------------------- ----------- ----------
176,320 177,170
------------------------------------------------------------------------------ ----------- ----------
Loss before general administrative and other expenses (176,320) (177,170)
------------------------------------------------------------------------------- ----------- ----------
General administrative expenses
Management and administration wages (note 14) 124,198 117,640
Other operating expenses 94,763 78,788
Accounting and corporate 146,611 152,979
Legal and audit 43,393 63,640
Stock-based compensation (note 11(d)) 183,723 350,539
Shareholder communication and investor relations 162,595 135,787
Transfer agent 6,345 4,015
Director fees (note 14) 35,000 35,000
General office 41,946 21,187
Accretion expenses (notes 8, 10 and 14) 111,132 120,487
Loan interest and bank charges less deposit interest (notes 10 and 14) 293,058 91,108
------------------------------------------------------------------------------- ----------- ----------
1,242,764 1,171,170
Other expenses
Foreign exchange gain (loss) (25,470) 67,472
------------------------------------------------------------------------------- ----------- ----------
(25,470) 67,472
------------------------------------------------------------------------------ ----------- ----------
Net loss for the period $ (1,393,614) $(1,415,812)
--------------------------------------------------------------------------- ----------- ----------
Basic and diluted net loss per share (note 12) $ (0.01) $ (0.02)
--------------------------------------------------------------------------- ----------- ----------
Weighted average number of common shares outstanding - basic and diluted 103,893,399 78,556,743
------------------------------------------------------------------------------- ----------- ----------
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,
2023 2022
------------------------------------------------------------------ ---------- ----------
Net loss for the period $ (1,393,614) $(1,415,812)
Other comprehensive income (loss)
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 453,574 (870,977)
------------------------------------------------------------------- ---------- ----------
Total comprehensive loss $ (940,040) $(2,286,789)
--------------------------------------------------------------- ---------- ----------
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,
2023 2022
---------------------------------------------------------------------------- ---------- ----------
Operating activities
Net loss for the period $ (1,393,614) $(1,415,812)
Adjustment for:
Depreciation (note 6) 126,105 130,531
Stock-based compensation (note 11(d)) 183,723 350,539
Accrued interest (notes 10 and 14) 395,054 171,614
Foreign exchange loss 102,070 93,714
Accretion expenses (notes 8, 10 and 14) 111,132 91,810
Non-cash working capital items:
Accounts receivable and prepaid expenses 251,144 567,842
Inventories 4,896 95,585
Accounts payable and other liabilities 461,212 (82,217)
Due to related parties - (129,249)
----------------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents provided by (used in) operating activities 241,722 (125,643)
----------------------------------------------------------------------------- ---------- ----------
Investing activities
Net purchase of property, plant and equipment (1,187,334) (2,458,074)
Exploration and evaluation assets (921,853) (425,831)
Lease payments - (137,145)
----------------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents used in investing activities (2,109,187) (3,021,050)
----------------------------------------------------------------------------- ---------- ----------
Financing activities
Proceeds of private placements (note 11(b)(i)) 2,963,142 -
Share issue costs (204,993) -
Proceeds from exercise of warrants 5,600 3,135,200
Advances from related parties - 1,380,477
Repayments to related parties (6,500) -
Proceeds from financing facilities (note 10) 580,392 -
----------------------------------------------------------------------------- ---------- ----------
Net cash and cash equivalents provided by financing activities 3,337,641 4,515,677
----------------------------------------------------------------------------- ---------- ----------
Net change in cash and cash equivalents 1,470,176 1,368,984
Effect of exchange rate changes on cash held in foreign currencies 8,003 (21,583)
Cash and cash equivalents, beginning of period 1,038,643 1,069,751
----------------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents, end of period $ 2,516,822 $ 2,417,152
------------------------------------------------------------------------- ---------- ----------
Cash $ 2,516,822 $ 2,417,152
Cash equivalents - -
------------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents $ 2,516,822 $ 2,417,152
------------------------------------------------------------------------- ---------- ----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Changes in
Equity
(Expressed in Canadian Dollars)
(Unaudited)
Reserves
--------------------------------------
Equity
settled Foreign
share-based currency
Share Warrants payments translation
capital reserve reserve reserve Deficit Total
---------------------- ---------- --------- ----------- ----------- ----------- ----------
Balance, December 31,
2021 $ 57,783,570 $4,130,200 $ 10,417,260 $ 887,909 $(53,830,231) $19,388,708
Warrants issued - 51,000 - - - 51,000
Stock-based
compensation (note
11(d)) - - 350,539 - - 350,539
Exercise of warrants 4,093,100 (957,900) - - - 3,135,200
Exchange differences
on translating
foreign operations - - - (870,977) - (870,977)
Net loss for the
period - - - - (1,415,812) (1,415,812)
-------------------------- ---------- --------- ----------- ----------- ----------- ----------
Balance, March 31,
2022 $ 61,876,670 $3,223,300 $ 10,767,799 $ 16,932 $(55,246,043) $20,638,658
---------------------- ---------- --------- ----------- ----------- ----------- ----------
Balance, December 31,
2022 $ 69,664,056 $3,903,004 $ 11,887,678 $ (275,577) $(70,464,170) $14,714,991
Shares issued in
private placement
(note 11(b)(i)) 2,963,142 - - - - 2,963,142
Warrants issued
(note 11(b)(i)) (1,284,806) 1,284,806 - - - -
Warrants issued
(notes 10(i) and
14(a)(iv)) - 82,511 - - - 82,511
Share issue costs
(note 11(b)(i)) (245,168) 40,175 - - - (204,993)
Stock-based
compensation (note
11(d)) - - 183,723 - - 183,723
Exercise of warrants 7,311 (1,711) - - - 5,600
Warrants expired - (51,000) 51,000 - - -
Exchange differences
on translating
foreign operations - - - 453,574 - 453,574
Net loss for the
period - - - - (1,393,614) (1,393,614)
-------------------------- ---------- --------- ----------- ----------- ----------- ----------
Balance, March 31,
2023 $ 71,104,535 $5,257,785 $ 12,122,401 $ 177,997 $(71,857,784) $16,804,934
---------------------- ---------- --------- ----------- ----------- ----------- ----------
The notes to the unaudited condensed interim consolidated
financial statements are an integral part of these statements.
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2023
(Expressed in Canadian Dollars)
(Unaudited)
-------------------------------------------------------------
1. Going Concern
These unaudited condensed interim consolidated financial
statements have been prepared on a going concern basis which
contemplates that Galantas Gold Corporation (the "Company") will be
able to realize assets and discharge liabilities in the normal
course of business. In assessing whether the going concern
assumption is appropriate, management takes into account all
available information about the future, which is at least, but is
not limited to, twelve months from the end of the reporting period.
Management is aware, in making its assessment, of uncertainties
related to events or conditions that may cast doubt on the
Company's ability to continue as a going concern. The Company's
future viability depends on the consolidated results of the
Company's wholly-owned subsidiary Cavanacaw Corporation
("Cavanacaw"). Cavanacaw has a 100% shareholding in both Flintridge
Resources Limited ("Flintridge") who are engaged in the
acquisition, exploration and development of gold properties, mainly
in Omagh, Northern Ireland and Omagh Minerals Limited ("Omagh") who
are engaged in the exploration of gold properties, mainly in the
Republic of Ireland. The Omagh mine has an open pit mine, which was
in production until 2013 when production was suspended and is
reported as property, plant and equipment and as an underground
mine which having established technical feasibility and commercial
viability in December 2018 has resulted in associated exploration
and evaluation assets being reclassified as an intangible
development asset and reported as property, plant and
equipment.
The going concern assumption is dependent upon forecast cash
flows being met and further financing currently being negotiated.
The management's 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 commenced, are progressing positively and the maturity
dates for both the G&F Phelps Ltd. ("G&F Phelps") and Ocean
Partners UK Ltd. ("Ocean Partners") loans are expected to be
extended beyond March 31, 2023 (see notes 10 and 14).
During the year ended December 31, 2022, the Company raised
gross proceeds of $11M through the issuance of shares to investors
and the exercise of warrants to meet the financial requirements of
the Company for the foreseeable future. During the three months
ended March 31, 2023, the Company raised gross proceeds of $3M
through the issuance of shares to investors. 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 March 31, 2023, the Company had a deficit of $71,857,784
(December 31, 2022 - $70,464,170). Comprehensive loss for the three
months ended March 31, 2023 was $940,040 (three months ended March
31, 2022 - $2,286,789). 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 believes that it will continue as a going concern.
However, this is subject to a number of factors including market
conditions. These unaudited condensed interim consolidated
financial statements do not reflect adjustments to the carrying
values of assets and liabilities, the reported expenses and
financial position classifications used that would be necessary if
the going concern assumption was not appropriate. These adjustments
could be material.
2. Incorporation and Nature of Operations
The Company was formed on September 20, 1996 under the name
Montemor Resources Inc. on the amalgamation of 1169479 Ontario Inc.
and Consolidated Deer Creek Resources Limited. The name was changed
to European Gold Resources Inc. by articles of amendment dated July
25, 1997. On May 5, 2004, the Company changed its name from
European Gold Resources Inc. to Galantas Gold Corporation. The
Company was incorporated to explore for and develop mineral
resource properties, principally in Europe. In 1997, it purchased
all of the shares of Omagh which owns a mineral property in
Northern Ireland, including a delineated gold deposit. Omagh
obtained full planning and environmental consents necessary to
bring its property into production.
The Company entered into an agreement on April 17, 2000,
approved by shareholders on June 26, 2000, whereby Cavanacaw, a
private Ontario corporation, acquired Omagh. Cavanacaw has
established an open pit mine to extract the Company's gold deposit
near Omagh, Northern Ireland. Cavanacaw also has developed a
premium jewellery business founded on the gold produced under the
name Galántas Irish Gold Limited ("Galántas"). As at July 1, 2007,
the Company's Omagh mine began production and in 2013 production
was suspended. On April 1, 2014, Galántas amalgamated its jewelry
business with Omagh.
On April 8, 2014, Cavanacaw acquired Flintridge. Following a
strategic review of its business by the Company during 2014 certain
assets owned by Omagh were acquired by Flintridge.
The Company's operations include the consolidated results of
Cavanacaw, and its wholly-owned subsidiaries Omagh, Galántas and
Flintridge.
The Company's common shares are listed on the TSX Venture
Exchange ("TSXV") and London Stock Exchange AIM under the symbol
GAL. On September 1, 2021, the Company's common shares started
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.
3. Basis of Preparation
Statement of compliance
The Company applies International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
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 29, 2023 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, 2022. Any subsequent changes to IFRS that are
given effect in the Company's annual consolidated financial
statements for the year ending December 31, 2023 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,
2023 2022
-------------------------------------------------- --------- ------------
Sales tax receivable - Canada $ 38,583 $ 22,971
Valued added tax receivable - Northern Ireland 136,290 281,308
Accounts receivable 154,510 116,374
Prepaid expenses 1,241,135 1,390,340
--------------------------------------------------- --------- ------------
$ 1,570,518 $ 1,810,993
-------------------------------------------------- --------- ------------
Prepaid expenses includes advances for consumables and for
construction of the passing bays in the Omagh mine. Prepaid
expenses includes also $1,000,000 pursuant to services agreement
for the underground development at the Omagh Gold Project.
The following is an aged analysis of receivables:
As at As at
March 31, December 31,
2023 2022
----------------------------- --------- ------------
Less than 3 months $ 210,130 $ 343,381
3 to 12 months 65,392 51,868
More than 12 months 53,861 25,404
------------------------------ --------- ------------
Total accounts receivable $ 329,383 $ 420,653
-------------------------- --------- ------------
5. Inventories
As at As at
March 31, December 31,
2023 2022
--------------------------- --------- ------------
Concentrate inventories $ 80,285 $ 83,242
------------------------ --------- ------------
6. Property, Plant and Equipment
Freehold Plant
land and and Motor Office Development Assets under
machinery
Cost buildings (i) vehicles equipment assets (ii) construction Total
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
December 31,
2021 $2,363,814 $8,108,988 $ 199,217 $ 216,653 $ 22,561,674 $ 556,273 $ 34,006,619
Additions - 464,632 45,599 9,619 11,008,120 - 11,527,970
Disposals - - (14,531) - - - (14,531)
Transfer - 529,972 - - - (529,972) -
Cash receipts
from
concentrate
sales - - - - (823,475) - (823,475)
Impairment - - - - (10,124,920) - (10,124,920)
Foreign
exchange
adjustment (111,761) (381,794) (9,419) (10,243) (1,219,359) (26,301) (1,758,877)
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
December 31,
2022 2,252,053 8,721,798 220,866 216,029 21,402,040 - 32,812,786
Additions - - - - 1,187,334 - 1,187,334
Foreign
exchange
adjustment 55,743 215,044 5,467 5,347 525,221 - 806,822
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
March 31,
2023 $2,307,796 $8,936,842 $ 226,333 $ 221,376 $ 23,114,595 $ - $ 34,806,942
------------- --------- --------- -------- --------- ----------- ------------ -----------
Accumulated
depreciation
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
December 31,
2021 $1,964,309 $6,067,698 $ 147,888 $ 137,888 $ - $ - $ 8,317,783
Depreciation 4,734 587,131 20,676 12,510 - - 625,051
Disposals - - (3,268) - - - (3,268)
Foreign
exchange
adjustment (92,801) (276,816) (6,681) (6,331) - - (382,629)
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
December 31,
2022 1,876,242 6,378,013 158,615 144,067 - - 8,556,937
Depreciation 968 118,046 4,374 2,717 - - 126,105
Foreign
exchange
adjustment 46,457 159,121 4,002 3,613 - - 213,193
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
March 31,
2023 $1,923,667 $6,655,180 $ 166,991 $ 150,397 $ - $ - $ 8,896,235
------------- --------- --------- -------- --------- ----------- ------------ -----------
Carrying
value
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
December 31,
2022 $ 375,811 $2,343,785 $ 62,251 $ 71,962 $ 21,402,040 $ - $ 24,255,849
------------- --------- --------- -------- --------- ----------- ------------ -----------
Balance,
March 31,
2023 $ 384,129 $2,281,662 $ 59,342 $ 70,979 $ 23,114,595 $ - $ 25,910,707
------------- --------- --------- -------- --------- ----------- ------------ -----------
(i) Right-of-use assets of $282,041 is included in additions of
the plant and machinery for the year ended December 31, 2022.
(ii) Development assets are expenditures for the underground
mining operations in Omagh.
7. Exploration and Evaluation Assets
Exploration
and
evaluation
Cost assets
---------------------------- -----------
Balance, December 31, 2021 $ 1,574,183
Additions 1,165,561
Foreign exchange adjustment (74,431)
---------------------------- -----------
Balance, December 31, 2022 2,665,313
Additions 921,853
Foreign exchange adjustment 73,498
---------------------------- -----------
Balance, March 31, 2023 $ 3,660,664
---------------------------- -----------
Carrying value
---------------------------- -----------
Balance, December 31, 2022 $ 2,665,313
---------------------------- -----------
Balance, March 31, 2023 $ 3,660,664
---------------------------- -----------
(i) On January 26, 2023, the Company announced that it entered
into an agreement to acquire a 100% interest and the exclusive
rights to explore and develop the Gairloch Project from the owners
of the Gairloch Estate lands. The Company has acquired exploration
and developments rights for an initial payment of GBP 347,000 and
annual payments of GBP 69,000 beginning in year 6.
The lease agreement will continue for 30 years and will be
renewable at the election of Galantas, upon 90 days' prior written
notice and upon the approval of the lessor, not to be unreasonably
withheld, for a further 20-year period, assuming all conditions of
this agreement have been met satisfactorily according to the
Lessor, acting reasonably, in respect of the Galantas' conduct and
operations. Galantas may terminate the agreement with 18 months'
notice.
Galantas made a payment of $580,392 (GBP 347,000) representing
payment for the first five years of the lease. If the exploration
phase continues past the fifth anniversary of the effective date of
the agreement, Galantas will pay the lessor GBP 69,400 index linked
per lease year for each such lease year following the fifth
anniversary of the effective date, with such payment to be made at
the commencement of each such lease year.
During any mining phase, Galantas will pay the lessor GBP 50,000
index linked per lease year, with such payment to be made at the
commencement of each such lease year. Galantas will grant a 5% net
profits interest royalty (the "NPI"), calculated according to
standard industry terms and practices with the option by the Lessor
to convert the NPI to a 2% net smelter returns royalty, calculated
according to standard industry terms and practices.
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, 2023 based on
a risk-free discount rate of 1% (December 31, 2022 - 1%) and an
inflation rate of 1.50% (December 31, 2022 - 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,
2023, the estimated fair value of the liability is $599,498
(December 31, 2022 - $582,441). Changes in the provision during the
three months ended March 31, 2023 are as follows:
As at As at
March 31, December 31,
2023 2022
-------------------------------------------------- --------- ------------
Decommissioning liability, beginning of period $ 582,441 $ 600,525
Accretion 2,596 10,154
Foreign exchange 14,461 (28,238)
--------------------------------------------------- --------- ------------
Decommissioning liability, end of period $ 599,498 $ 582,441
----------------------------------------------- --------- ------------
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, 2022 - GBP
300,000), of which GBP 300,000 was funded as of March 31, 2023 (GBP
300,000 was funded as of December 31, 2022) and reported as
long-term deposit of $501,780 (December 31, 2022 - $489,660).
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,
2023 2022
------------------------------------------------ --------- ------------
Accounts payable $ 3,292,487 $ 2,528,245
Accrued liabilities 1,316,264 1,523,796
------------------------------------------------- --------- ------------
Total accounts payable and other liabilities $ 4,608,751 $ 4,052,041
--------------------------------------------- --------- ------------
The following is an aged analysis of the accounts payable and
other liabilities:
As at As at
March 31, December 31,
2023 2022
------------------------------------------------ --------- ------------
Less than 3 months $ 3,084,128 $ 2,939,972
3 to 12 months 712,969 412,168
12 to 24 months 157,196 61,247
More than 24 months (see also note 16) 654,458 638,654
------------------------------------------------- --------- ------------
Total accounts payable and other liabilities $ 4,608,751 $ 4,052,041
--------------------------------------------- --------- ------------
10. Financing Facilities
Amounts payable on the Company's financial facilities are as
follow:
As at As at
March 31, December 31,
2023 2022
---------------------------------------------- ---------- ------------
Melquart Limited
Financing facilities, beginning of period $ - $ -
Financing facility received (i) 580,392 -
Less bonus warrants issued (i) (16,984) -
Interest 8,502 -
----------------------------------------------- ---------- ------------
571,910 -
---------------------------------------------- ---------- ------------
G&F Phelps
Financing facility, beginning of period 4,836,267 4,247,488
Accretion 64,839 269,512
Interest 221,389 618,903
Repayment - (24,120)
Foreign exchange adjustment 130,004 (275,516)
----------------------------------------------- ---------- ------------
5,252,499 4,836,267
---------------------------------------------- ---------- ------------
Less current portion (5,252,499) (4,836,267)
----------------------------------------------- ---------- ------------
Financing facilities - non-current portion $ 571,910 $ -
------------------------------------------- ---------- ------------
(i) On February 13, 2023, the Company announced that it entered
into a loan agreement for $580,392 (GBP 347,000) with London-based
family office Melquart Limited ("Melquart"). The loan is to be used
for the initial lease payment for the Gairloch Project in Scotland.
The loan is payable 24 months from the date of the loan agreement
and will bear interest at an annual rate of 12% payable upon
repayment of the loan. As at March 31, 2023, the amount of interest
accrued is $8,502 (GBP 5,083).
As consideration for providing the loan, Melquart received
100,000 warrants of Galantas. Each bonus warrant are exercisable
into one common share of Galantas at an exercise price of $0.41,
with said warrants expiring on February 13, 2025. The fair value of
the 100,000 warrants was estimated at $16,984 using the following
Black-Scholes option pricing model with the following assumptions:
expected dividend yield - 0%, expected volatility - 97.54%,
risk-free interest rate - 3.47% and an expected average life of
1.90 years.
11. Share Capital and Reserves
a) Authorized share capital
At March 31, 2023, 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, 2023, the issued share capital amounted to
$71,104,535. The continuity of issued share capital for the periods
presented is as follows:
Number of
common
shares Amount
--------------------------------------- ----------- ----------
Balance, December 31, 2021 74,683,801 $57,783,570
Exercise of warrants 7,838,000 4,093,100
---------------------------------------- ----------- ----------
Balance, March 31, 2022 82,521,801 $61,876,670
---------------------------------------- ----------- ----------
Balance, December 31, 2022 103,518,509 $69,664,056
Shares issued in private placement (i) 8,230,951 2,963,142
Warrants issued (i) - (1,284,806)
Share issue costs (i) - (245,168)
Exercise of warrants 14,000 7,311
---------------------------------------- ----------- ----------
Balance, March 31, 2023 111,763,460 $71,104,535
---------------------------------------- ----------- ----------
(i) On March 27, 2023, the Company closed a non-brokered private
placement of 8,230,951 units at a price of $0.36 per unit for gross
proceeds of $2,963,142. Each unit consists of one common share of
the Company and one common share purchase warrant, with each
warrant entitling the holder to purchase an additional common share
at a price of $0.55 per share until March 27, 2028. The fair value
of the 8,230,951 warrants was estimated at $1,284,806 using the
Black-Scholes option pricing model with the following assumptions:
expected dividend yield - 0%, expected volatility - 126.22%,
risk-free interest rate - 2.96% and an expected average life of 5
years.
The Company paid the agents a cash commission equal to $130,966
and issued 237,162 non-transferable broker warrants of the Company.
Each broker warrant is exercisable to acquire one common share at
an exercise price of $0.36 until March 27, 2025. The fair value of
the 237,162 warrants was estimated at $40,175 using the
Black-Scholes option pricing model with the following assumptions:
expected dividend yield - 0%, expected volatility - 99.18%,
risk-free interest rate - 3.61% and an expected average life of 2
years.
There is a 4-month hold period on the trading of securities
issued in connection with this offering.
Ocean Partners acquired 691,666 units for consideration of
$249,000 and Brendan Morris, and officer of the Company, acquired
468,416 units for consideration of $168,630.
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, 2021 28,691,598 $ 0.39
Issued 250,000 0.50
Exercised (7,838,000) 0.40
---------------------------------------------- ---------- --------
Balance, March 31, 2022 21,103,598 $ 0.39
---------------------------------------------- ---------- --------
Balance, December 31, 2022 24,051,900 $ 0.45
Issued (notes 10(i), 11(b)(i) and 14(a)(iv)) 9,068,113 0.54
Exercised (14,000) 0.40
Expired (250,000) 0.50
---------------------------------------------- ---------- --------
Balance, March 31, 2023 32,856,013 $ 0.47
---------------------------------------------- ---------- --------
The following table reflects the actual warrants issued and
outstanding as of March 31, 2023:
Grant date Exercise
Number fair value price
Expiry date of warrants ($) ($)
------------------ ----------- ---------- --------
May 14, 2023 14,396,231 1,763,087 0.40
July 25, 2023 125,000 23,000 0.48
December 31, 2023 780,000 274,883 0.33
August 30, 2024 820,000 144,464 0.45
January 31, 2025 500,000 65,527 0.55
February 13, 2025 100,000 16,984 0.41
February 28, 2025 7,666,669 1,644,859 0.55
March 27, 2025 237,162 40,175 0.36
March 27, 2028 8,230,951 1,284,806 0.55
------------------- ----------- ---------- --------
32,856,013 5,257,785 0.47
------------------ ----------- ---------- --------
11. Share Capital and Reserves (Continued)
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, 2021 4,885,000 $ 0.88
Expired (255,000) 1.35
Cancelled (205,000) 0.96
---------------------------- --------- --------
Balance, March 31, 2022 4,425,000 $ 0.85
---------------------------- --------- --------
Balance, December 31, 2022 6,152,500 $ 0.78
Cancelled (i) (177,500) 0.71
---------------------------- --------- --------
Balance, March 31, 2023 5,975,000 $ 0.78
---------------------------- --------- --------
(i) The portion of the estimated fair value of options granted
in the current and prior years and vested during the three months
ended March 31, 2023, amounted to $183,723 (three months ended
March 31, 2022 - $350,539). In addition, during the three months
ended March 31, 2023, 177,500 options granted in the prior years
were cancelled (three months ended March 31, 2022 - 205,000 options
cancelled).
The following table reflects the actual stock options issued and
outstanding as of March 31, 2023:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
------------------ --------- ---------------- ----------- ------------- ---------
April 19, 2023 1.10 0.05 25,000 25,000 -
February 13, 2024 0.90 0.87 85,000 85,000 -
June 27, 2024 0.90 1.24 100,000 100,000 -
May 19, 2026 0.86 3.14 3,685,000 2,456,667 1,228,333
June 21, 2026 0.73 3.23 425,000 283,333 141,667
August 27, 2026 0.86 3.41 20,000 13,333 6,667
May 3, 2027 0.60 4.09 1,635,000 545,000 1,090,000
------------------ --------- ---------------- ----------- ------------- ---------
0.78 3.33 5,975,000 3,508,333 2,466,667
------------------ --------- ---------------- ----------- ------------- ---------
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the
three months ended March 31, 2023 was based on the loss
attributable to common shareholders of $1,393,614 (three months
ended March 31, 2022 - $1,415,812) and the weighted average number
of common shares outstanding of 103,893,399 (three months ended
March 31, 2022 - 78,556,743) for basic and diluted loss per share.
Diluted loss did not include the effect of 32,856,013 warrants
(three months ended March 31, 2022 - 21,103,598) and 5,975,000
options (three months ended March 31, 2022 - 4,425,000) for the
three months ended March 31, 2023, 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, 2023
totalled approximately US$255,000 (CAD$419,169) (three months ended
March 31, 2022 - US$219,000). 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 pursuant to IFRS 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 exchange amount 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,
2023 2022
---------------------------------------- ---------- -------
Interest on related party loans (i) $ 173,665 $ 74,695
-------------------------------- ---- ---------- -------
(i) Refer to note 14(a)(iii).
(ii) Refer to note 11(b).
(a) The Company entered into the following transactions with
related parties (continued):
(iii) As at March 31, 2023, the Company owes Ocean Partners
$5,189,693 (December 31, 2022 - $4,978,069) which is recorded as
due to related parties on the unaudited condensed interim
consolidated statement of financial position.
March 31, December 31,
2023 2022
------------------------------------------------ ---------- ------------
Balance, beginning of period $ 4,978,069 $ 2,444,376
Loan received - 2,062,693
Less bonus warrants - (74,000)
Share issue costs - (93,444)
Advance - 93,284
Repayment (6,500) (524,255)
Accretion 43,697 391,128
Interest 173,665 554,073
Foreign exchange adjustment 762 124,214
------------------------------------------------- ---------- ------------
Balance, end of period 5,189,693 4,978,069
Less current balance (5,189,693) (4,978,069)
------------------------------------------------- ---------- ------------
Due to related parties - non-current balance $ - $ -
--------------------------------------------- ---------- ------------
(iv) In December 2022, the Company entered into an agreement
(the "Trading Agreement") with Ocean Partners, whereby Ocean
Partners has sold on behalf of Galantas call options on 6,000
ounces of gold at 500 ounces per month from February 2024 to
January 2025 at a strike price of US$1,775 per ounce for proceeds
of US$804,000 to Galantas (an option premium of US$134 per gold
ounce). Proceeds from the sale will be used to fund development of
the underground mining operations at the Omagh Gold Project in
Northern Ireland and working capital.
If the gold price during February 2024 to January 2025 is at or
below US$1,775 per ounce, Galantas will receive the price of gold
at the time for the sale of its gold produced. If the gold price is
above US$1,775 per ounce, Galantas will receive US$1,775 per ounce
in revenue for the sale of its gold.
Pursuant to the Trading Agreement, and in return for Ocean
Partners facilitating the call option sale and agreeing to maintain
all margin requirements on Galantas' behalf, which Galantas has
determined has a value of at least $150,000, Galantas has agreed to
grant 500,000 warrants to Ocean Partners at an exercise price of
$0.55 expiring on January 31, 2025. The warrants are subject to a
hold period under applicable securities laws and the rules of the
TSXV. The fair value of the 500,000 warrants was valued at $65,527
using the following Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected
volatility - 97.85%, risk-free interest rate - 3.73% and an
expected average life of 1.9 year.
As at March 31, 2023, balance related to the Trading Agreement
is recorded as other liability on the unaudited condensed interim
consolidated statement of financial position is $1,021,819
(December 31, 2022 - $1,085,426).
(b) Remuneration of officer and directors of the Company was as
follows:
Three Months Ended
March 31,
2023 2022
----------------------------- --------- --------
Salaries and benefits (1) $ 113,334 $ 107,583
Stock-based compensation 141,231 250,310
------------------------------ --------- --------
$ 254,565 $ 357,893
----------------------------- --------- --------
(1) Salaries and benefits include director fees. As at March 31,
2023, due to directors for fees amounted to $105,000 (December 31,
2022 - $70,000) and due to officers, mainly for salaries and
benefits accrued amounted to $86,672 (December 31, 2022 - $24,465),
and is included with due to related parties.
(c) As at March 31, 2023, Ross Beaty owns 3,744,748 common
shares of the Company or approximately 3.4% of the outstanding
common shares. Premier Miton owns 4,848,243 common shares of the
Company or approximately 4.3%. Melquart owns, directly and
indirectly, 28,140,195 common shares of the Company or
approximately 25.2% of the outstanding common shares of the
Company. G&F Phelps owns 5,353,818 common shares of the Company
or approximately 4.8%. Eric Sprott owns 10,166,667 common shares of
the Company or approximately 9.1%. Mike Gentile owns 6,217,222
common shares of the Company or approximately 5.6%. The remaining
47.6% 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, 2023 United Kingdom Canada Total
------------------- -------------- --------- ----------
Current assets $ 853,269 $3,314,356 $ 4,167,625
Non-current assets $ 29,189,571 $ 883,580 $30,073,151
Revenues $ - $ - $ -
------------------- -------------- --------- ----------
December 31, 2022 United Kingdom Canada Total
------------------- -------------- --------- ----------
Current assets $ 1,659,045 $1,273,833 $ 2,932,878
Non-current assets $ 27,271,081 $ 139,741 $27,410,822
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 $508,955 (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 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) The Company has entered into an agreement to acquire the
historical Gairloch drill and exploration database for (i) a
payment of $420,000 (approximately GBP 252,153), to be satisfied
through the issuance of common shares of the Company based on the
5-day volume weighted average price at the time of signing (subject
to the approval of the TSXV) and (ii) GBP 50,000 in cash. On April
13, 2023, the Company issued 933,334 common shares per terms of the
agreement.
(ii) On April 19, 2023, 25,000 stock options with exercise price
of $1.10 expired unexercised.
(iii) On April 26, 2023, the Company agreed to the terms of a
proposed shares-for-debt transaction with several additional arm's
length creditors of the Company and agreed to settle a total of
approximately $749,020 of indebtedness through the issuance of an
aggregate of 2,080,609 units a deemed price of $0.36 per unit. Each
unit consists of one common share of the Company and one common
share purchase warrant, with each warrant entitling the holder to
purchase an additional common share at a price of $0.55 per share
until April 26, 2028. The securities pursuant to the debt
settlement will be subject to a four-month hold period under
applicable Canadian securities laws.
(iv) On May 14, 2023, 14,332,231 warrants with an exercise price
of $0.40 expired unexercised.
(v) Subsequent to March 31, 2023, 64,000 warrants were exercised
for gross proceeds of $25,600.
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END
QRFNKCBQFBKDOPB
(END) Dow Jones Newswires
May 30, 2023 02:00 ET (06:00 GMT)
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