REG - Galantas Gold Corp - 1st Quarter Results
31/05/2022 07:00
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RNS Number : 3106N Galantas Gold Corporation 31 May 2022
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORT FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 2022
May 31, 2022: Galantas Gold Corporation (the 'Company') is pleased to
announce its unaudited financial results for the Quarter ended March 31, 2022.
Financial Highlights
Highlights of the first quarter 2022 results, which are expressed in Canadian
Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Quarter Ended
March 31
2022 2021
Revenue $ 0 $ 0
Cost and expenses of operations $ (46,639) $ (46,148)
Loss before the undernoted $ (46,639) $ (46,148)
Depreciation $ (130,531) $ (72,065)
General administrative expenses $ (1,171,170) $ (505,097)
Foreign exchange (loss) gain $ (67,472) $ (16,653)
Net (Loss) for the quarter $ (1,415,812) $ (639,963)
Working Capital Deficit $ (1,850,980) $ (8,532,943)
Cash loss from operating activities before changes in non-cash working capital $ (577,604) $ (296,161)
Cash at March 31, 2022 $ 2,417,152 $ 487,193
Sales revenue for the quarter ended March 31, 2022 amounted to $ Nil compared
to revenue of $ Nil for the quarter ended March 31, 2021. Shipments of
concentrate commenced during the third quarter of 2019. Concentrate sales
provisional revenues totalled US$ 219,000 for the first quarter of 2022
compared to US $ 567,000 for the first quarter of 2021. 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, 2022 amounted to $ 1,415,812
(2021: $639,963) and the cash outflow from operating activities before changes
in non-cash working capital for the quarter ended March 31, 2022 amounted to
$577,604 (2021: $296,161).
The Company had a cash balance of $2,417,152 at March 31, 2022 compared to $
487,193 at March 31, 2021. The working capital deficit at March 31, 2022
amounted to $ 1,850,980 compared to a working capital deficit of $8,532,943
at March 31, 2021.
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 (http://www.sedar.com) and www.galantas.com
(http://www.galantas.com) and the highlights in this release should be read in
conjunction with the detailed results and MD&A. The MD&A provides an
analysis of comparisons with previous periods, trends affecting the business
and risk factors.
http://www.rns-pdf.londonstockexchange.com/rns/3106N_1-2022-5-30.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3106N_1-2022-5-30.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'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.
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 (mailto:info@galantas.com)
Website: www.galantas.com (http://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
Panmure Gordon & Co (AIM Broker & Corporate Adviser)
Hugh Rich, John Prior:
Telephone: +44(0)20 7886 2500
GALANTAS GOLD CORPORATION
Condensed Interim Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended March 31, 2022
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,
2022 2021
ASSETS
Current assets
Cash and cash equivalents $ 2,417,152 $ 1,069,751
Accounts receivable and prepaid expenses (note 4) 731,709 1,279,935
Inventories (note 5) 13,626 108,788
Total current assets 3,162,487 2,458,474
Non-current assets
Property, plant and equipment (note 6) 27,300,093 25,688,836
Long-term deposit (note 8) 492,510 513,960
Exploration and evaluation assets (note 7) 1,934,312 1,574,183
Total non-current assets 29,726,915 27,776,979
Total assets $ 32,889,402 $ 30,235,453
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (notes 9 and 17) $ 3,026,740 $ 3,013,999
Due to related parties (note 15) 1,440,977 124,317
Leases (note 11) 545,750 416,040
Total current liabilities 5,013,467 3,554,356
Non-current liabilities
Non-current portion of financing facilities (note 10) 4,199,285 4,247,488
Due to related parties (note 15) 2,462,530 2,444,376
Decommissioning liability (note 8) 575,462 600,525
Total non-current liabilities 7,237,277 7,292,389
Total liabilities 12,250,744 10,846,745
Equity
Share capital (note 12(a)(b)) 61,876,670 57,783,570
Reserves 14,008,031 15,435,369
Deficit (55,246,043 ) (53,830,231 )
Total equity 20,638,658 19,388,708
Total equity and liabilities $ 32,889,402 $ 30,235,453
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 17)
Event after the reporting period (note 18)
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2022 2021
Revenues
Sales of concentrate (note 14) $ - $ -
Cost and expenses of operations
Cost of sales 46,639 46,148
Depreciation (note 6) 130,531 72,065
177,170 118,213
Loss before general administrative and other expenses (177,170 ) (118,213 )
General administrative expenses
Management and administration wages (note 15) 117,640 144,083
Other operating expenses 78,788 32,580
Accounting and corporate 152,979 15,184
Legal and audit 63,640 49,173
Stock-based compensation (note 12(d)) 350,539 4,631
Shareholder communication and investor relations 135,787 59,853
Transfer agent 4,015 2,861
Director fees (note 15) 35,000 8,500
General office 21,187 3,569
Accretion expenses (notes 8, 10 and 15) 120,487 104,560
Loan interest and bank charges less deposit interest (notes 10 and 15) 91,108 80,103
1,171,170 505,097
Other expenses
Foreign exchange loss 67,472 16,653
67,472 16,653
Net loss for the period $ (1,415,812 ) $ (639,963 )
Basic and diluted net loss per share (note 13) $ (0.02 ) $ (0.01 )
Weighted average number of common shares outstanding - basic and diluted 78,556,743 46,565,537
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,
2022 2021
Net loss for the period $ (1,415,812 ) $ (639,963 )
Other comprehensive loss
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (870,977 ) (96,925 )
Total comprehensive loss $ (2,286,789 ) $ (736,888 )
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,
2022 2021
Operating activities
Net loss for the period $ (1,415,812 ) $ (639,963 )
Adjustment for:
Depreciation (note 6) 130,531 72,065
Stock-based compensation (note 12(d)) 350,539 4,631
Accrued interest (notes 10 and 15) 171,614 78,874
Foreign exchange loss 93,714 79,672
Accretion expenses (notes 8, 10 and 15) 91,810 104,560
Non-cash working capital items:
Accounts receivable and prepaid expenses 567,842 260,990
Inventories 95,585 48,145
Accounts payable and other liabilities (82,217 ) 19,284
Due to related parties (129,249 ) 91,762
Net cash and cash equivalents (used in) provided by operating activities (125,643 ) 120,020
Investing activities
Net purchase of property, plant and equipment (2,458,074 ) (172,550 )
Exploration and evaluation assets (425,831 ) (47,366 )
Lease payments (note 11) (137,145 ) -
Net cash and cash equivalents used in investing activities (3,021,050 ) (219,916 )
Financing activities
Proceeds from exercise of warrants 3,135,200 -
Advances from related parties 1,380,477 -
Repayment of financing facilities - (23,802 )
Net cash and cash equivalents provided by (used in) financing activities 4,515,677 (23,802 )
Net change in cash and cash equivalents 1,368,984 (123,698 )
Effect of exchange rate changes on cash held in foreign currencies (21,583 ) (1,203 )
Cash and cash equivalents, beginning of period 1,069,751 612,094
Cash and cash equivalents, end of period $ 2,417,152 $ 487,193
Cash $ 2,417,152 $ 487,193
Cash equivalents - -
Cash and cash equivalents $ 2,417,152 $ 487,193
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
Share Warrants Equity settled Foreign Deficit Total
capital
reserve
share-based
currency
payments
translation
reserve
reserve
Balance, December 31, 2020 $ 52,933,594 $ 340,000 $ 8,381,382 $ 1,012,739 $ (48,545,800 ) $ 14,121,915
Stock-based compensation (note 12(d)) - - 4,631 - - 4,631
Exchange differences on translating - - - (96,925 ) - (96,925 )
foreign operations
Net loss for the period - - - - (639,963 ) (639,963 )
Balance, March 31, 2021 $ 52,933,594 $ 340,000 $ 8,386,013 $ 915,814 $ (49,185,763 ) $ 13,389,658
Balance, December 31, 2021 $ 57,783,570 $ 4,130,200 $ 10,417,260 $ 887,909 $ (53,830,231 ) $ 19,388,708
Warrants issued (note 15(a)(ii)) - 51,000 - - - 51,000
Stock-based compensation (note 12(d)) - - 350,539 - - 350,539
Exercise of warrants 4,093,100 (957,900 ) - - - 3,135,200
Exchange differences on translating - - - (870,977 ) - (870,977 )
foreign operations
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
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, 2022
(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
progressed positively and the maturity dates for both the G&F Phelps Ltd.
("G&F Phelps") and Ocean Partners UK Ltd. ("Ocean Partners") loans have
now been extended to December 31, 2023 (see notes 10 and 15). During the year
ended December 31, 2021, the Company 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. During the three
months ended March 31, 2022, the Company raised gross proceeds of $3M through
the exercise of warrants. 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, 2022, the Company had a deficit of $55,246,043 (December 31,
2021 - $53,830,231). Comprehensive loss for the three months ended March 31,
2022 was $2,286,789 (three months ended March 31, 2021 - $736,888). 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'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.
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 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 30,
2022 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, 2021. Any subsequent changes to IFRS that are given effect in the
Company's annual consolidated financial statements for the year ending
December 31, 2022 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,
2022 2021
Sales tax receivable - Canada $ 9,181 $ 4,471
Valued added tax receivable - Northern Ireland 257,653 239,774
Accounts receivable 293,503 594,071
Prepaid expenses 171,372 281,207
Other debtors - 160,412
$ 731,709 $ 1,279,935
Prepaid expenses includes advances for consumables and for construction of the
passing bays in the Omagh mine.
The following is an aged analysis of receivables:
As at As at
March 31, December 31,
2022 2021
Less than 3 months $ 538,614 $ 884,550
3 to 12 months 13,432 105,526
More than 12 months 8,291 8,652
Total accounts receivable $ 560,337 $ 998,728
5. Inventories
As at As at
March 31, December 31,
2022 2021
Concentrate inventories $ 13,626 $ 108,788
6. Property, Plant and Equipment
Freehold Plant and
land and machinery Motor Office Development Assets under
Cost buildings (i) vehicles equipment assets (ii) construction Total
Balance, December 31, 2020 $ 2,398,171 $ 6,951,208 $ 162,571 $ 191,422 $ 19,345,676 $ - $ 29,049,048
Additions - 1,263,168 38,975 27,973 4,898,703 556,273 6,785,092
Disposals - (6,289 ) - - - - (6,289 )
Cash receipts from concentrate sales - - - - (1,412,329 ) - (1,412,329 )
Foreign exchange adjustment (34,357 ) (99,099 ) (2,329 ) (2,742 ) (270,376 ) - (408,903 )
Balance, December 31, 2021 2,363,814 8,108,988 199,217 216,653 22,561,674 556,273 34,006,619
Additions - 415,434 - 1,212 2,354,523 - 2,771,169
Disposals - - - - - (29,499 ) (29,499 )
Foreign exchange adjustment (98,652 ) (337,016 ) (8,315 ) (9,042 ) (874,573 ) (22,242 ) (1,349,840 )
Balance, March 31, 2022 $ 2,265,162 $ 8,187,406 $ 190,902 $ 208,823 $ 24,041,624 $ 504,532 $ 35,398,449
Freehold Plant
land and and Motor Office Development Assets under
Accumulated depreciation buildings machinery vehicles equipment assets construction Total
Balance, December 31, 2020 $ 1,986,461 $ 5,648,586 $ 130,107 $ 125,791 $ - $ - $ 7,890,945
Depreciation 6,347 507,731 19,776 13,992 - - 547,846
Disposals - (4,801 ) - - - - (4,801 )
Foreign exchange adjustment (28,499 ) (83,818 ) (1,995 ) (1,895 ) - - (116,207 )
Balance, December 31, 2021 1,964,309 6,067,698 147,888 137,888 - - 8,317,783
Depreciation 1,250 122,656 3,650 2,975 - - 130,531
Foreign exchange adjustment (82,021 ) (255,791 ) (6,293 ) (5,853 ) - - (349,958 )
Balance, March 31, 2022 $ 1,883,538 $ 5,934,563 $ 145,245 $ 135,010 $ - $ - $ 8,098,356
Freehold Plant
land and and Motor Office Development Assets under
Carrying value buildings machinery vehicles equipment assets construction Total
Balance, December 31, 2021 $ 399,505 $ 2,041,290 $ 51,329 $ 78,765 $ 22,561,674 $ 556,273 $ 25,688,836
Balance, March 31, 2022 $ 381,624 $ 2,252,843 $ 45,657 $ 73,813 $ 24,041,624 $ 504,532 $ 27,300,093
(i) Right-of-use assets of $680,520 is included in additions of the plant and
machinery for the year ended December 31, 2021. Right-of-use assets of
$283,596 is included in additions of the plant and machinery for the three
months ended March 31, 2022.
(i) Development assets are expenditures for the underground mining operations
in Omagh.
7. Exploration and Evaluation Assets
Exploration
and
evaluation
Cost assets
Balance, December 31, 2020 $ 750,741
Additions 834,193
Foreign exchange adjustment (10,751 )
Balance, December 31, 2021 1,574,183
Additions 425,831
Foreign exchange adjustment (65,702 )
Balance, March 31, 2022 $ 1,934,312
Carrying value
Balance, December 31, 2021 $ 1,574,183
Balance, March 31, 2022 $ 1,934,312
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, 2022 based on a risk-free discount rate of 1% (December
31, 2021 - 1%) and an inflation rate of 1.50% (December 31, 2021 - 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, 2022, the
estimated fair value of the liability is $575,462 (December 31, 2021 -
$600,525). Changes in the provision during the three months ended March 31,
2022 are as follows:
As at As at
March 31, December 31,
2022 2021
Decommissioning liability, beginning of period $ 600,525 $ 598,275
Accretion 2,681 10,892
Foreign exchange (27,744 ) (8,642 )
Decommissioning liability, end of period $ 575,462 $ 600,525
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, 2021 - GBP 300,000), of which GBP 300,000 was funded
as of March 31, 2022 (GBP 300,000 was funded as of December 31, 2021) and
reported as long-term deposit of $492,510 (December 31, 2021 - $513,960).
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,
2022 2021
Accounts payable $ 1,760,640 $ 1,463,316
Accrued liabilities 1,266,100 1,550,683
Total accounts payable and other liabilities $ 3,026,740 $ 3,013,999
The following is an aged analysis of the accounts payable and other
liabilities:
As at As at
March 31, December 31,
2022 2021
Less than 3 months $ 2,292,383 $ 2,246,440
3 to 12 months 93,132 98,415
More than 24 months 641,225 669,144
Total accounts payable and other liabilities $ 3,026,740 $ 3,013,999
10. Financing Facilities
Amounts payable on the Company's financial facilities are as follow:
As at As at
March 31, December 31,
2022 2021
Ocean Partners
Financing facilities, beginning of period $ - $ 2,186,272
Repayment of financing facilities - (23,802 )
Accretion - 126,949
Interest - 86,820
Foreign exchange adjustment - 200,898
Financing facility reallocated to due to related parties - (2,577,137 )
- -
G&F Phelps
Financing facility reallocated from due to related parties 4,247,488 4,578,039
Less bonus warrants issued - (670,000 )
Accretion 64,839 151,290
Interest 85,874 164,197
Foreign exchange adjustment (198,916 ) 23,962
4,199,285 4,247,488
Financing facilities - non-current portion $ 4,199,285 $ 4,247,488
11. Leases
Balance, December 31, 2020 $ -
Addition (i) 680,520
Interest expense 36,706
Lease payments (297,450 )
Foreign exchange (3,736 )
Balance, December 31, 2021 416,040
Addition (ii) 283,596
Interest expense 13,513
Lease payments (137,145 )
Foreign exchange (30,254 )
Balance, March 31, 2022 $ 545,750
(i) During the year ended 2021, the Company entered into lease agreements in
respect to rent of equipments which will expire between February 2022 to July
2022.
(ii) During the three months ended 2022, the Company entered into lease
agreements in respect to rent of equipments which will expire June 2022.
12. Share Capital and Reserves
a) Authorized share capital
At March 31, 2022, 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, 2022, the issued share capital amounted to $61,876,670. The
continuity of issued share capital for the periods presented is as follows:
Number of
common
shares Amount
Balance, December 31, 2020 and March 31, 2021 46,565,537 $ 52,933,594
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
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, 2020 and March 31, 2021 1,700,000 $ 0.33
Balance, December 31, 2021 28,691,598 $ 0.39
Issued (notes 15(a)(ii)) 250,000 0.50
Exercised (7,838,000 ) 0.40
Balance, March 31, 2022 21,103,598 $ 0.39
The following table reflects the actual warrants issued and outstanding as of
March 31, 2022:
Grant date Exercise
Number fair value price
Expiry date of warrants ($) ($)
February 3, 2023 250,000 51,000 0.50
May 14, 2023 18,453,598 2,258,947 0.40
December 31, 2023 2,400,000 913,353 0.33
21,103,598 3,223,300 0.39
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, 2020 and March 31, 2021 570,000 $ 1.16
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
The portion of the estimated fair value of options granted in the prior years
and vested during the three months ended March 31, 2022, amounted to $350,539
(three months ended March 31, 2021 - $4,631).
The following table reflects the actual stock options issued and outstanding
as of March 31, 2022:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
April 19, 2023 1.10 1.05 25,000 25,000 -
February 13, 2024 0.90 1.87 85,000 85,000 -
June 27, 2024 0.90 2.24 100,000 100,000 -
May 19, 2026 0.86 4.14 3,770,000 1,256,667 2,513,333
June 21, 2026 0.73 4.23 425,000 141,667 283,333
August 27, 2026 0.86 4.41 20,000 6,667 13,333
0.85 4.04 4,425,000 1,615,001 2,809,999
13. Net Loss per Common Share
The calculation of basic and diluted loss per share for the three months ended
March 31, 2022 was based on the loss attributable to common shareholders of
$1,415,812 (three months ended March 31, 2021 - $639,963) and the weighted
average number of common shares outstanding of 78,556,743 (three months ended
March 31, 2021 - 46,565,537) for basic and diluted loss per share. Diluted
loss did not include the effect of 21,103,598 warrants (three months ended
March 31, 2021 - 1,700,000) and 4,425,000 options (three months ended March
31, 2021 - 570,000) for the three months ended March 31, 2022, as they are
anti-dilutive.
14. 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, 2022 totaled approximately US$219,000 (three
months ended March 31, 2021 - US$567,000). However, until the mine reaches the
commencement of commercial production, the net proceeds from concentrate sales
will be offset against Development assets.
15. 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 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,
2022 2021
Interest on related party loans (i) $ 74,695 $ 78,876
(i) Refer to note 10(i)(ii).
(ii) On February 3, 2022, the Company announced the closing of the loan
agreement for US$1.06 million with Ocean Partners. Ocean Partners and the
Company have a common director. Terms of the loan agreement are:
· The loan matures on July 31, 2022 (the "Maturity Date").
· The loan will bear interest at an annual rate of 10% compounded
monthly payable upon repayment of the loan.
· US$20,000 structuring fee has been paid to Ocean Partners.
· US$40,000 consulting fee will be paid to Ocean Partners, to be
invoiced separately by Ocean Partners.
· 250,000 warrants have been granted to Ocean Partners, which will
be exercisable for a period of 12 months at an exercise price of $0.50. The
bonus warrants are subject to a hold period under applicable securities laws
and the rules of the TSXV, expiring on June 4, 2022. The fair value of the
250,000 warrants was valued at $51,000 using the following Black-Scholes
option pricing model with the following assumptions: expected dividend yield -
0%, expected volatility - 107%, risk-free interest rate - 1.22% and an
expected average life of 1 year.
· US$40,000 extension fee will be paid to Ocean Partners if the
Company elects to extend the loan for a further six months from the Maturity
Date.
Proceeds from the loan will be used for further development of the Omagh mine
in Northern Ireland and working capital.
As at March 31, 2022, financial liabilities due to the Lender and recorded as
due to related parties on the unaudited condensed interim consolidated
statement of financial position is $3,826,322 (December 31, 2021 -
$2,444,376).
March 31, December 31,
2022 2021
Balance, beginning of period $ 2,444,376 $ -
Financing facility reallocated to due to related parties - 2,577,137
Loan received 1,380,477 -
Less bonus warrants (51,000 ) (251,000 )
Repayment (5,979 ) -
Accretion 24,290 57,338
Interest 72,227 27,506
Foreign exchange adjustment (38,069 ) 33,395
Balance, end of period 3,826,322 2,444,376
Less current balance (1,363,792 ) -
Due to related parties - non-current balance $ 2,462,530 $ 2,444,376
(b) Remuneration of officer and directors of the Company was as follows:
Three Months Ended
March 31,
2022 2021
Salaries and benefits ((1)) $ 107,583 $ 117,606
Stock-based compensation 250,310 2,258
$ 357,893 $ 119,864
((1)) Salaries and benefits include director fees. As at March 31, 2022, due
to directors for fees amounted to $55,500 (December 31, 2021 - $102,917) and
due to officers, mainly for salaries and benefits accrued amounted to $21,685
(December 31, 2021 - $21,400), and is included with due to related parties.
(c) As at March 31, 2022, Ross Beaty owns 3,744,747 common shares of the
Company or approximately 4.54% of the outstanding common shares. Premier Miton
owns 4,848,243 common shares of the Company or approximately 5.88%. Melquart
owns, directly and indirectly, 24,273,528 common shares of the Company or
approximately 29.41% of the outstanding common shares of the Company. Eric
Sprott owns 8,833,333 common shares of the Company or approximately 10.70%.
Mike Gentile owns 5,600,000 common shares of the Company or approximately
6.79%. The remaining 42.68% 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.
16. 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, 2022 United Kingdom Canada Total
Current assets $ 1,029,940 $ 2,132,547 $ 3,162,487
Non-current assets $ 29,600,351 $ 126,564 $ 29,726,915
Revenues $ - $ - $ -
December 31, 2021 United Kingdom Canada Total
Current assets $ 1,379,742 $ 1,078,732 $ 2,458,474
Non-current assets $ 27,714,667 $ 62,312 $ 27,776,979
Revenues $ - $ - $ -
17. 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 $499,553 (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.
18. Event After the Reporting Period
On May 3, 2022, the Company granted 1,742,500 stock options to directors,
officers, employees and consultants of the Company to purchase common shares
at $0.60 per share until May 3, 2027. The options will vest as to one third
immediately and one third on each of May 3, 2023 and May 3, 2024.
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