REG - Galantas Gold Corp - 3rd Quarter Results <Origin Href="QuoteRef">GAL.V</Origin> - Part 2
17/11/2017 07:05
- Part 2: For the preceding part double click ID:nRSQ7608Wa
Balance, September 30, 2016 137,800,830 $ 36,331,577
Balance, December 31, 2016 137,800,830 $ 36,331,577
Shares issued in private placement (iii) 33,093,257 2,446,299
Share issue costs - (134,854 )
Balance, September 30, 2017 170,894,087 $ 38,643,022
(i) On June 9, 2016, the Company closed a private placement of 18,619,841
common shares at $0.07875 per common share for gross proceeds of $1,466,312.
The majority of the placement was taken up by Mr. Ross Beaty, who acquired
12,825,397 common shares.
(ii) On June 10, 2016, the Company issued 11,883,835 common shares as
settlement of due to related parties of $935,852. Due to related parties
consisted of an amount owing to Roland Phelps (President and Chief Executive
Officer ("CEO").
(iii) On February 27, 2017, the Company completed the first part of a private
placement. It consisted of 27,371,035 common shares of no par value. United
Kingdom placees have subscribed at a price of GBP 0.045 per common share.
Canadian placees have subscribed at a price of $0.0725 per common share.
Receipts attached to the first part of the placement total $2,021,501.
On March 2, 2017, the Company completed the second part of a private
placement. It consisted of 5,722,222 common shares of no par value for receipt
of $424,798. United Kingdom placees have subscribed at a price of GBP 0.045
per common share. The hold period will expire for the second closing of the
placing on July 3, 2017.
Melquart Ltd, ("Melquart") a UK based investment institution, subscribed for a
total of 22,222,222 common shares and Melquart's staked increased to 13% of
the Company's issued common shares.
Ross Beaty subscribed for 3,326,170 common shares and after closing of the
private placement Ross Beaty owns 32,151,567 common shares of the Company or
approximately 18.8% of the outstanding common shares.
The net proceeds to be raised by the private placement are intended to be used
for working capital purposes and to commence development of an underground
mine on the Omagh property.
c) Warrant reserve
The following table shows the continuity of warrants for the periods
presented:
Weighted
average
Number of exercise
warrants price
Balance, December 31, 2015 30,966,000 $ 0.17
Expired (30,330,000 ) 0.16
Balance, September 30, 2016 636,000 $ 0.08
Balance, December 31, 2016 and September 30, 2017 636,000 $ 0.07
The following table reflects the actual warrants issued and outstanding as of
September 30, 2017:
Fair value
Grant date September 30,
Number fair value Exercise 2017
Expiry date of warrants ($) price ($)
(1 )
February 16, 2018 636,000 32,000 0.045 12,000
(1) Exercise price is in GBP. As a result of the exercise price of the
warrants being denominated in a currency other than the functional currency,
the warrants are considered a derivative financial liability. The warrants are
revalued at each period end with any gain or loss in the fair value being
record in the unaudited condensed interim consolidated statements of loss as
an unrealized gain or loss on fair value of derivative financial liability.
On September 30, 2017, the fair value of the warrants, denominated in a
currency other than the functional currency, was estimated using the
Black-Scholes option pricing model with the following assumptions: expected
dividend yield of 0%; expected volatility of 83%; risk free interest rate of
1.51%; and an expected life of 0.38 years. As a result, the fair value of the
warrants was calculated to be $12,000 and the Company recorded an unrealized
gain on fair value of derivative financial liability for the three and nine
months ended September 30, 2017 of $6,000 and $12,000, respectively (three and
nine months ended September 30, 2016 - unrealized gain of $1,000 and $81,000,
respectively).
d) Stock options
The following table shows the continuity of stock options for the periods
presented:
Weighted
average
Number of exercise
options price
Balance, December 31, 2015 4,440,000 $ 0.17
Expired (740,000 ) 0.50
Balance, September 30, 2016 3,700,000 $ 0.11
Balance, December 31, 2016 3,700,000 $ 0.11
Granted (i) 4,900,000 0.14
Balance, September 30, 2017 8,600,000 $ 0.12
(i) On March 25, 2017, 4,900,000 stock options were granted to directors,
officers, consultants and key employees of the Company to purchase common
shares at a price of $0.135 per share until March 25, 2022. The options will
vest as to one third on March 25 2017 and one third on each of the following
two anniversaries. The fair value attributed to these options was $645,820 and
was expensed in the unaudited condensed interim consolidated statements of
loss and credited to equity settled share-based payments reserve. During the
three and nine months ended September 30, 2017, included in stock-based
compensation is $81,391 and $382,478, respectively (three and nine months
ended September 30, 2016 - $nil) related to the vested portion of these
options.
The fair value of the options was estimated using the Black-Scholes option
pricing model with the following assumptions: dividend yield - 0%; volatility
- 201%; risk-free interest rate - 1.12% and an expected life of 5 years.
The following table reflects the actual stock options issued and outstanding
as of September 30, 2017:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
June 1, 2020 0.105 2.67 3,550,000 3,550,000 -
June 12, 2020 0.105 2.70 150,000 150,000 -
March 25, 2022 0.135 4.48 4,900,000 1,633,333 3,266,667
0.122 3.71 8,600,000 5,333,333 3,266,667
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the three and nine
months ended September 30, 2017 was based on the loss attributable to common
shareholders of $452,756 and $1,648,866, respectively (three and nine months
ended September 30, 2016 - $257,214 and $1,276,388, respectively) and the
weighted average number of common shares outstanding of 170,894,087 and
164,077,122, respectively (three and nine months ended September 30, 2016 -
137,800,830 and 119,868,175, respectively) for basic and diluted loss per
share. Diluted loss did not include the effect of 636,000 warrants (three and
nine months ended September 30, 2016 - 636,000) and 8,600,000 options (three
and nine months ended September 30, 2016 - 3,700,000) for the three and nine
months ended September 30, 2017, as they are anti-dilutive.
13. Cost of Sales
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Wages $ 21,199 $ 1,026 $ 39,066 $ 98,456
Oil and fuel - 6,864 45,529 40,214
Repairs and servicing - 16,962 51,544 43,312
Equipment hire - 4,557 21,231 4,557
Environment monitoring 9,246 5,298 23,925 19,038
Royalties 4,100 4,280 12,502 13,809
Other costs 4,450 7,250 10,220 23,424
Costs 38,995 46,237 204,017 242,810
Inventory movement (80 ) (457 ) 9,919 13,073
Cost of sales $ 38,915 $ 45,780 $ 213,936 $ 255,883
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 2017 2016 2017 2016
Interest on related party loans (i) $ 14,094 $ 14,875 $ 42,378 $ 50,125
(i) G&F Phelps Limited, a company controlled by a director of the Company, had
amalgamated loans to the Company of $2,203,761 (GBP 1,318,354) (December 31,
2016 - $2,183,722 - GBP 1,318,354) included with due to related parties
bearing interest at 2% above UK base rates, repayable on demand and secured by
a mortgage debenture on all the Company's assets. Interest accrued on related
party loans is included with due to related parties. As at September 30, 2017,
the amount of interest accrued is $363,792 (GBP 217,631) (December 31, 2016 -
$318,375 -GBP 192,209).
(ii) See note 11(b)(i)(ii)(iii).
(b) Remuneration of key management of the Company was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Salaries and benefits (1) $ 107,110 $ 110,049 $ 326,426 $ 350,109
Stock-based compensation 19,932 - 93,668 -
$ 127,042 $ 110,049 $ 420,094 $ 350,109
(1) Salaries and benefits include director fees. As at September 30, 2017,
due to directors for fees amounted to $130,250 (December 31, 2016 - $110,250)
and due to key management, mainly for salaries and benefits accrued amounted
to $513,599 (GBP 307,250) (December 31, 2016 - $271,840 - GBP 164,115), and is
included with due to related parties.
(c) As of September 30, 2017, Ross Beaty owns 32,151,567 common shares of the
Company or approximately 18.81% of the outstanding common shares. Roland
Phelps, Chief Executive Officer and director, owns, directly and indirectly,
33,356,750 common shares of the Company or approximately 19.52% of the
outstanding common shares of the Company. Melquart owns, directly and
indirectly, 22,222,222 common shares of the Company or approximately 13.00% of
the outstanding common shares of the Company. The remaining 48.67% of the
shares are widely held, which includes various small holdings which are owned
by directors of the Company. These holdings can change at anytime at the
discretion of the owner.
The Company is not aware of any arrangements that may at a subsequent date
result in a change in control of the Company.
15. Segment Disclosure
The Company has determined that it has one reportable segment. The Company's
operations are substantially all related to its investment in Cavanacaw and
its subsidiaries, Omagh and Flintridge. Substantially all of the Company's
revenues, costs and assets of the business that support these operations are
derived or located in Northern Ireland. Segmented information on a geographic
basis is as follows:
September 30, 2017 United Kingdom Canada Total
Current assets $ 349,811 $ 628,982 $ 978,793
Non-current assets 11,438,613 65,963 11,504,576
Revenues $ 35,202 $ - $ 35,202
December 31, 2016 United Kingdom Canada Total
Current assets $ 283,773 $ 403,816 $ 687,589
Non-current assets 10,180,747 60,418 10,241,165
16. Contingency
During the year ended December 31, 2010, the Company's subsidiary Omagh
received a payment demand from Her Majesty's Revenue and Customs in the amount
of $508,651 (GBP 304,290) in connection with an aggregate levy arising from
the removal of waste rock from the mine site during 2008 and early 2009. The
Company believes this claim is without merit. An appeal has been lodged and
the Company's subsidiary Omagh intends to vigorously defend itself against
this claim. The hearing started at the beginning of March 2017 but a further
two days hearing is scheduled in January 2018. No provision has been made for
the claim in the unaudited condensed interim consolidated financial
statements.
17. Events After the Reporting Period
(i) On November 3, 2017, the Company announced that it received notice of an
application, by a third party, to the Court of Appeal, in relation to the
positive judicial review judgment, given by Madam Justice McBride, regarding
the grant of planning permission at the Omagh gold mine in July 2015.
In a detailed and comprehensive judgement, delivered on September 29, 2017,
Madam Justice McBride confirmed the planning consent granted by Department of
Environment, Northern Ireland (now Department for Infrastructure), for
underground development. Refer to note 7.
(ii) On November 15, 2017, the Company announced a proposed private placement
of shares. The proposed placement is for a maximum of 20,000,000 shares, at an
issue price of $0.07 (GBP 0.041) per share (the "Placing") for maximum gross
proceeds of $1,400,000 (GBP 820,000). A four month old period will apply to
the shares and issuance will be subject to TSX Venture Exchange and regulatory
approval.
The net proceeds to be raised by the Placing are intended to be used for
working capital purposes and to continue development of an underground mine on
the Omagh property. The Placing is expected to be on a part brokered basis.
This information is provided by RNS
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