REG - Galantas Gold Corp - RESULTS FOR THE 3 AND 6 MONTHS ENDED JUNE 30, 2023
29/08/2023 07:00
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RNS Number : 5471K Galantas Gold Corporation 29 August 2023
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORTS FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2023
August 29, 2023: Galantas Gold Corporation (the 'Company') is pleased to
announce its unaudited financial results for the Quarter ended June 30, 2023.
Financial Highlights
Highlights of the second quarter 2023 results, which are expressed in Canadian
Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Quarter Ended Six Months Ended
June 30 June 30
2023 2022 2023 2022
Revenue $ 0 $ 0 $ 0 $ 0
Cost and expenses of operations $ (72,881) $ (66,995) $ (123,096) $ (113,634)
Loss before the undernoted $ (72,881) $ (66,995) $ (123,096) $ (113,634)
Depreciation $ (128,989) $ (148,336) $ (255,094) $ (278,867)
General administrative expenses $ (1,187,896) $ (1,412,941) $ (2,430,660) $ (2,584,111)
Foreign exchange (loss) / gain $ (34,250) $ (48,104) $ (59,720) $ 19,368
Net Loss for the period $ (1,355,516) $ (1,580,168) $ (2,749,130) $ (2,995,980)
Working Capital (Deficit) $ (12,059,946) $ (3,687,844) $ (12,059,946) $ (3,687,844)
Cash (loss) / profit from operating activities before changes in non-cash $ (793,674) $ (1,738,055) $ (793,674) $ (1,738,055)
working capital
Cash at June 30, 2023 $ 586,464 $ 903,455 $ 586,464 $ 903,435
Sales revenue for the quarter ended June 30, 2023 amounted to $ Nil compared
to revenue of $ Nil for the quarter ended June 30, 2023. Shipments of
concentrate commenced during the third quarter of 2019. Concentrate sales
provisional revenues totalled US$ 255,000 (CAD$ 419,000) and US$ 516,000 (CAD$
851,000) during the three and six months ended June 30 2023 compared to US $
Nil and US$ 219,000 for the three and six months ended June 30, 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 June 30, 2023 amounted to $ 1,355,516
(2022: $1,580,168) and the cash outflow from operating activities before
changes in non-cash working capital for the quarter ended June 30, 2023
amounted to $ 793,674 (2022: $1,738,055). The main difference in the
reduction in net loss is due to a reduction in the value attributed to stock
based compensation and an increase in financing activities from 2021.
The Company had a cash balance of $ 586,464 at June 30, 2023 compared to $
903,455 at June 30, 2022. The working capital deficit at June 30, 2023
amounted to $ 12,059,946 compared to a working capital deficit of $ 3,687,844
at June 30, 2022.
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.
Click on, or paste the following link into your web browser, to view the
associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/5471K_1-2023-8-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5471K_1-2023-8-28.pdf)
Qualified Person
The financial components of this disclosure has been reviewed by Alan Buckley
(Chief Financial Officer) and the production and permitting components by
Brendan Morris (COO), qualified persons under the meaning of NI. 43-101. The
information is based upon local production and financial data prepared under
their supervision.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains
forward-looking statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian securities
laws, including revenues and cost estimates, for the Omagh Gold project.
Forward-looking statements are based on estimates and assumptions made by
Galantas in light of its experience and perception of historical trends,
current conditions and expected future developments, as well as other factors
that Galantas believes are appropriate in the circumstances. Many factors
could cause Galantas' actual results, the performance or achievements to
differ materially from those expressed or implied by the forward looking
statements or strategy, including: gold price volatility; discrepancies
between actual and estimated production, actual and estimated
metallurgical recoveries and throughputs; mining operational risk,
geological uncertainties; regulatory restrictions, including environmental
regulatory restrictions and liability; risks of sovereign involvement;
speculative nature of gold exploration; dilution; competition; loss of or
availability of key employees; additional funding requirements; uncertainties
regarding planning and other permitting issues; and defective title to mineral
claims or property. These factors and others that could affect Galantas's
forward-looking statements are discussed in greater detail in the section
entitled "Risk Factors" in Galantas' Management Discussion & Analysis of
the financial statements of Galantas and elsewhere in documents filed from
time to time with the Canadian provincial securities regulators and other
regulatory authorities. These factors should be considered carefully, and
persons reviewing this press release should not place undue reliance on
forward-looking statements. Galantas has no intention and undertakes no
obligation to update or revise any forward-looking statements in this press
release, except as required by law.
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, 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 and Six Months Ended June 30, 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.
As at As at
June 30, December 31,
2023 2022
ASSETS
Current assets
Cash and cash equivalents $ 586,464 $ 1,038,643
Accounts receivable and prepaid expenses (note 4) 1,549,543 1,810,993
Inventories (note 5) 63,905 83,242
Total current assets 2,199,912 2,932,878
Non-current assets
Property, plant and equipment (note 6) 26,279,319 24,255,849
Long-term deposit (note 8) 504,510 489,660
Exploration and evaluation assets (note 7) 4,412,469 2,665,313
Total non-current assets 31,196,298 27,410,822
Total assets $ 33,396,210 $ 30,343,700
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (notes 9 and 16) $ 3,374,426 $ 4,052,041
Current portion of financing facilities (note 10) 5,481,198 4,836,267
Due to related parties (note 14) 5,403,934 5,072,534
Total current liabilities 14,259,558 13,960,842
Non-current liabilities
Non-current portion of financing facilities (note 10) 595,886 -
Decommissioning liability (note 8) 605,415 582,441
Other liability (note 14) 1,002,312 1,085,426
Total non-current liabilities 2,203,613 1,667,867
Total liabilities 16,463,171 15,628,709
Equity
Share capital (note 11(a)(b)) 71,982,149 69,664,056
Reserves 18,164,190 15,515,105
Deficit (73,213,300 ) (70,464,170 )
Total equity 16,933,039 14,714,991
Total equity and liabilities $ 33,396,210 $ 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)
Event after the reporting period (note 17)
Three Months Ended Six Months Ended
June 30, June 30,
2023 2022 2023 2022
Revenues
Sales of concentrate (note 13) $ - $ - $ - $ -
Cost and expenses of operations
Cost of sales 72,881 66,995 123,096 113,634
Depreciation (note 6) 128,989 148,336 255,094 278,867
201,870 215,331 378,190 392,501
Loss before general administrative and other expenses (201,870 ) (215,331 ) (378,190 ) (392,501 )
General administrative expenses
Management and administration wages (note 14) 160,761 148,105 284,959 265,745
Other operating expenses 55,441 113,170 150,204 191,958
Accounting and corporate 71,785 36,482 218,396 189,461
Legal and audit 46,051 66,088 89,444 129,728
Stock-based compensation (note 11(d)) 116,658 645,438 300,381 995,977
Shareholder communication and investor relations 219,087 134,734 381,682 270,521
Transfer agent 44,711 17,718 51,056 21,733
Director fees (note 14) 35,000 35,000 70,000 70,000
General office 24,533 14,888 66,479 36,075
Accretion expenses (notes 8, 10 and 14) 94,615 93,334 205,747 213,821
Loan interest and bank charges less deposit interest (notes 10 and 14) 319,254 107,984 612,312 199,092
1,187,896 1,412,941 2,430,660 2,584,111
Other expenses
Foreign exchange (loss) gain (34,250 ) (48,104 ) (59,720 ) 19,368
(34,250 ) (48,104 ) (59,720 ) 19,368
Net loss for the period $ (1,355,516 ) $ (1,580,168 ) $ (2,749,130 ) $ (2,995,980 )
Basic and diluted net loss per share (note 12) $ (0.01 ) $ (0.02 ) $ (0.03 ) $ (0.04 )
Weighted average number of common shares outstanding - basic and diluted 114,112,719 84,140,878 109,014,481 81,353,664
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
Three Months Ended Six Months Ended
June 30, June 30,
2023 2022 2023 2022
Net loss for the period $ (1,355,516 ) $ (1,580,168 ) $ (2,749,130 ) $ (2,995,980 )
Other comprehensive income (loss)
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 172,343 (1,218,739 ) 625,917 (2,089,716 )
Total comprehensive loss $ (1,183,173 ) $ (2,798,907 ) $ (2,123,213 ) $ (5,085,696 )
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
Six Months Ended
June 30,
2023 2022
Operating activities
Net loss for the period $ (2,749,130 ) $ (2,995,980 )
Adjustment for:
Depreciation (note 6) 255,094 278,867
Stock-based compensation (note 11(d)) 300,381 995,977
Accrued interest (notes 10 and 14) 806,052 375,855
Foreign exchange loss (gain) 388,182 (573,713 )
Accretion expenses (notes 8, 10 and 14) 205,747 180,939
Non-cash working capital items:
Accounts receivable and prepaid expenses 275,578 811,072
Inventories 21,218 34,717
Accounts payable and other liabilities (113,387 ) 621,711
Due to related parties - (16,255 )
Net cash and cash equivalents used in operating activities (610,265 ) (286,810 )
Investing activities
Net purchase of property, plant and equipment (1,551,447 ) (4,891,767 )
Exploration and evaluation assets (1,658,757 ) (650,437 )
Lease payments - (339,470 )
Net cash and cash equivalents used in investing activities (3,210,204 ) (5,881,674 )
Financing activities
Proceeds of private placements (note 11(b)(i)) 2,963,142 -
Share issue costs (204,993 ) -
Proceeds from exercise of warrants 31,200 4,610,133
Advances from related parties - 1,465,792
Repayments to related parties (11,991 ) -
Proceeds from financing facilities (note 10) 580,392 -
Net cash and cash equivalents provided by financing activities 3,357,750 6,075,925
Net change in cash and cash equivalents (462,719 ) (92,559 )
Effect of exchange rate changes on cash held in foreign currencies 10,540 (73,757 )
Cash and cash equivalents, beginning of period 1,038,643 1,069,751
Cash and cash equivalents, end of period $ 586,464 $ 903,435
Cash $ 586,464 $ 903,435
Cash equivalents - -
Cash and cash equivalents $ 586,464 $ 903,435
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
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)) - - 995,977 - - 995,977
Exercise of warrants 6,288,499 (1,678,366 ) - - - 4,610,133
Exchange differences on translating foreign operations - - - (2,089,716 ) - (2,089,716 )
Net loss for the period - - - - (2,995,980 ) (2,995,980 )
Balance, June 30, 2022 $ 64,072,069 $ 2,502,834 $ 11,413,237 $ (1,201,807 ) $ (56,826,211 ) $ 19,960,122
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
Shares issue for services arrangement (note 11(b)(ii)) 420,000 - - - - 420,000
Shares issue for debt settlement (note 11(b)(iii)) 749,020 - - - - 749,020
Warrants issued (note 11(b)(i)(iii)) (1,609,634 ) 1,609,634 - - - -
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)) - - 300,381 - - 300,381
Exercise of warrants 40,733 (9,533 ) - - - 31,200
Warrants expired - (1,806,245 ) 1,806,245 - - -
Exchange differences on translating foreign operations - - - 625,917 - 625,917
Net loss for the period - - - - (2,749,130 ) (2,749,130 )
Balance, June 30, 2023 $ 71,982,149 $ 3,819,546 $ 13,994,304 $ 350,340 $ (73,213,300 ) $ 16,933,039
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
1. Going Concern
These unaudited condensed interim consolidated financial statements have been
prepared on a going concern basis which contemplates that Galantas Gold
Corporation (the "Company") will be able to realize assets and discharge
liabilities in the normal course of business. In assessing whether the going
concern assumption is appropriate, management takes into account all available
information about the future, which is at least, but is not limited to, twelve
months from the end of the reporting period. Management is aware, in making
its assessment, of uncertainties related to events or conditions that may cast
doubt on the Company's ability to continue as a going concern. The Company's
future viability depends on the consolidated results of the Company's
wholly-owned subsidiary Cavanacaw Corporation ("Cavanacaw"). Cavanacaw has a
100% shareholding in both Flintridge Resources Limited ("Flintridge") who are
engaged in the acquisition, exploration and development of gold properties,
mainly in Omagh, Northern Ireland and Omagh Minerals Limited ("Omagh") who are
engaged in the exploration of gold properties, mainly in the Republic of
Ireland. The Omagh mine has an open pit mine, which was in production until
2013 when production was suspended and is reported as property, plant and
equipment and as an underground mine which having established technical
feasibility and commercial viability in December 2018 has resulted in
associated exploration and evaluation assets being reclassified as an
intangible development asset and reported as property, plant and equipment.
The going concern assumption is dependent upon forecast cash flows being met
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 six months ended June 30, 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 June 30, 2023, the Company had a deficit of $73,213,300 (December 31,
2022 - $70,464,170). Comprehensive loss for the six months ended June 30, 2023
was $2,123,213 (six months ended June 30, 2022 - $5,085,696). 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 August 28,
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
June 30, December 31,
2023 2022
Sales tax receivable - Canada $ 12,414 $ 22,971
Valued added tax receivable - Northern Ireland 106,144 281,308
Accounts receivable 297,281 116,374
Prepaid expenses 1,133,704 1,390,340
$ 1,549,543 $ 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
June 30, December 31,
2023 2022
Less than 3 months $ 394,341 $ 343,381
3 to 12 months 9,164 51,868
More than 12 months 12,334 25,404
Total accounts receivable $ 415,839 $ 420,653
5. Inventories
As at As at
June 30, December 31,
2023 2022
Concentrate inventories $ 63,905 $ 83,242
6. Property, Plant and Equipment
Freehold Plant
land and and Motor Office Development Assets under
Cost buildings machinery (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 - - - - 1,551,447 - 1,551,447
Foreign exchange adjustment 68,299 263,482 6,698 6,552 643,526 - 988,557
Balance, June 30, 2023 $ 2,320,352 $ 8,985,280 $ 227,564 $ 222,581 $ 23,597,013 $ - $ 35,352,790
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 1,959 238,790 8,848 5,497 - - 255,094
Foreign exchange adjustment 56,923 195,173 4,912 4,432 - - 261,440
Balance, June 30, 2023 $ 1,935,124 $ 6,811,976 $ 172,375 $ 153,996 $ - $ - $ 9,073,471
Carrying value
Balance, December 31, 2022 $ 375,811 $ 2,343,785 $ 62,251 $ 71,962 $ 21,402,040 $ - $ 24,255,849
Balance, June 30, 2023 $ 385,228 $ 2,173,304 $ 55,189 $ 68,585 $ 23,597,013 $ - $ 26,279,319
(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 1,658,757
Foreign exchange adjustment 88,399
Balance, June 30, 2023 $ 4,412,469
Carrying value
Balance, December 31, 2022 $ 2,665,313
Balance, June 30, 2023 $ 4,412,469
(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 June 30, 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 June 30, 2023, the estimated
fair value of the liability is $605,415 (December 31, 2022 - $582,441).
Changes in the provision during the six months ended June 30, 2023 are as
follows:
As at As at
June 30, December 31,
2023 2022
Decommissioning liability, beginning of period $ 582,441 $ 600,525
Accretion 5,251 10,154
Foreign exchange 17,723 (28,238 )
Decommissioning liability, end of period $ 605,415 $ 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 June 30, 2023 (GBP 300,000 was funded as of December 31, 2022) and reported
as long-term deposit of $504,510 (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
June 30, December 31,
2023 2022
Accounts payable $ 1,997,301 $ 2,528,245
Accrued liabilities 1,377,125 1,523,796
Total accounts payable and other liabilities $ 3,374,426 $ 4,052,041
The following is an aged analysis of the accounts payable and other
liabilities:
As at As at
June 30, December 31,
2023 2022
Less than 3 months $ 1,562,776 $ 2,939,972
3 to 12 months 1,045,002 412,168
12 to 24 months 119,141 61,247
More than 24 months (see also note 16) 647,507 638,654
Total accounts payable and other liabilities $ 3,374,426 $ 4,052,041
10. Financing Facilities
Amounts payable on the Company's financial facilities are as follow:
As at As at
June 30, December 31,
2023 2022
Melquart Limited
Financing facilities, beginning of period $ - $ -
Financing facility received (i) 580,392 -
Less bonus warrants issued (i) (16,984 ) -
Accretion 2,831 -
Interest 26,489 -
Foreign exchange adjustment 3,158 -
595,886 -
G&F Phelps
Financing facility, beginning of period 4,836,267 4,247,488
Accretion 129,678 269,512
Interest 456,881 618,903
Repayment (100,000 ) (24,120 )
Foreign exchange adjustment 158,372 (275,516 )
5,481,198 4,836,267
Less current portion (5,481,198 ) (4,836,267 )
Financing facilities - non-current portion $ 595,886 $ -
(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 June 30, 2023, the amount of interest
accrued is $26,489 (GBP 10,166).
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 June 30, 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 June 30, 2023, the issued share capital amounted to $71,982,149. 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 11,686,333 6,288,499
Balance, June 30, 2022 86,370,134 $ 64,072,069
Balance, December 31, 2022 103,518,509 $ 69,664,056
Shares issued in private placement (i) 8,230,951 2,963,142
Shares issued for services arrangement (ii) 933,334 420,000
Shares issued for debt settlement (iii) 2,080,609 749,020
Warrants issued (i)(iii) - (1,609,634 )
Share issue costs (i) - (245,168 )
Exercise of warrants 78,000 40,733
Balance, June 30, 2023 114,841,403 $ 71,982,149
(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.
(ii) 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.
(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 fair value of the 2,080,609 warrants was estimated at
$324,828 using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility - 126.25%,
risk-free interest rate - 2.98% and an expected average life of 5 years. The
securities pursuant to the debt settlement will be subject to a four-month
hold period under applicable Canadian securities laws.
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 (11,686,333 ) 0.39
Balance, June 30, 2022 17,255,265 $ 0.40
Balance, December 31, 2022 24,051,900 $ 0.45
Issued (notes 10(i), 11(b)(i)(iii) and 14(a)(iv)) 11,148,722 0.54
Exercised (78,000 ) 0.40
Expired (14,582,231 ) 0.40
Balance, June 30, 2023 20,540,391 $ 0.53
The following table reflects the actual warrants issued and outstanding as of
June 30, 2023:
Grant date Exercise
Number fair value price
Expiry date of warrants ($) ($)
July 25, 2023 125,000 23,000 0.48
December 31, 2023 780,000 274,903 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, 2027 8,230,951 1,284,806 0.55
April 26, 2028 2,080,609 324,828 0.55
20,540,391 3,819,546 0.53
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
Granted (ii) 1,742,500 0.60
Expired (255,000 ) 1.35
Cancelled (i) (205,000 ) 0.96
Balance, June 30, 2022 6,167,500 $ 0.85
Balance, December 31, 2022 6,152,500 $ 0.78
Expired (25,000 ) 1.10
Cancelled (i) (340,000 ) 0.76
Balance, June 30, 2023 5,787,500 $ 0.78
(i) The portion of the estimated fair value of options granted in the current
and prior years and vested during the three and six months ended June 30,
2023, amounted to $116,658 and $300,381, respectively (three and six months
ended June 30, 2022 - $645,438 and $995,977, respectively). In addition,
during the three and six months ended June 30, 2023, 340,000 options granted
in the prior years were cancelled (three and six months ended June 30, 2022 -
205,000 options cancelled).
(ii) 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.
The fair value attributed to these options was $900,000 and was expensed in
the unaudited condensed interim consolidated statements of loss and credited
to equity settled share-based payments reserve.
The following table reflects the actual stock options issued and outstanding
as of June 30, 2023:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
February 13, 2024 0.90 0.62 85,000 85,000 -
June 27, 2024 0.90 0.99 50,000 50,000 -
May 19, 2026 0.86 2.89 3,610,000 3,610,000 -
June 21, 2026 0.73 2.98 425,000 425,000 -
August 27, 2026 0.86 3.16 20,000 13,333 6,667
May 3, 2027 0.60 3.84 1,597,500 1,065,000 532,500
0.78 3.11 5,787,500 5,248,333 539,167
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the three and six
months ended June 30, 2023 was based on the loss attributable to common
shareholders of $1,355,516 and $2,749,130, respectively (three and six months
ended June 30, 2022 - $1,580,168 and $2,995,980, respectively) and the
weighted average number of common shares outstanding of 114,112,719 and
109,014,481, respectively (three and six months ended June 30, 2022 -
84,140,878 and 81,353,664, respectively) for basic and diluted loss per share.
Diluted loss did not include the effect of 20,540,391 warrants (three and six
months ended June 30, 2022 - 17,255,265) and 5,787,500 options (three and six
months ended June 30, 2022 - 6,167,500) for the three and six months ended
June 30, 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 and six months ended June 30, 2023 totalled approximately US$255,000
(CAD$419,000) and US$516,000 (CAD$851,000), respectively (three and six months
ended June 30, 2022 - US$nil and US$219,000, respectively). However, until the
mine reaches the commencement of commercial production, the net proceeds from
concentrate sales will be offset against Development assets.
14. Related Party Disclosures
Related parties 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 Six Months Ended
June 30, June 30,
2023 2022 2023 2022
Interest on related party loans (i) $ 175,506 $ 88,054 $ 349,171 $ 162,749
(i) Refer to note 14(a)(iii).
(ii) Refer to note 11(b).
(iii) As at June 30, 2023, the Company owes Ocean Partners $5,308,840
(December 31, 2022 - $4,978,069) which is recorded as due to related parties
on the unaudited condensed interim consolidated statement of financial
position.
June 30, 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 (11,991 ) (524,255 )
Accretion 67,987 391,128
Interest 349,171 554,073
Foreign exchange adjustment (74,396 ) 124,214
Balance, end of period 5,308,840 4,978,069
Less current balance (5,308,840 ) (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.
(a) The Company entered into the following transactions with related parties
(continued):
(iv) (continued) 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 June 30, 2023, balance related to the Trading Agreement is recorded as
other liability on the unaudited condensed interim consolidated statement of
financial position is $1,002,312 (December 31, 2022 - $1,085,426).
(b) Remuneration of officer and directors of the Company was as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2023 2022 2023 2022
Salaries and benefits ((1)) $ 111,315 $ 145,551 $ 224,649 $ 253,134
Stock-based compensation 80,117 383,377 221,348 633,687
$ 191,432 $ 528,928 $ 445,997 $ 886,821
(1) Salaries and benefits include director fees. As at June 30, 2023, due to
directors for fees amounted to $70,000 (December 31, 2022 - $70,000) and due
to officers, mainly for salaries and benefits accrued amounted to $25,094
(December 31, 2022 - $24,465), and is included with due to related parties.
(c) As at June 30, 2023, the issued shares of Galantas total 114,841,403.
Ross Beaty owns 3,744,747 common shares of the Company or approximately 3.3%
of the outstanding common shares. Premier Miton owns 4,848,243 common shares
of the Company or approximately 4.2%. Melquart owns, directly and indirectly,
28,140,195 common shares of the Company or approximately 24.5% of the
outstanding common shares of the Company. G&F Phelps owns 5,353,818 common
shares of the Company or approximately 4.7%. Eric Sprott owns 10,166,667
common shares of the Company or approximately 8.9%. Mike Gentile owns
6,217,222 common shares of the Company or approximately 5.4%.
Excluding the Melquart Ltd, Premier Miton, Mr. Beaty, Mr. Phelps, Mr. Sprott
and Mr. Gentile shareholdings discussed above, the remaining 55.2% 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 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:
June 30, 2023 United Kingdom Canada Total
Current assets $ 901,820 $ 1,298,092 $ 2,199,912
Non-current assets $ 29,842,804 $ 1,353,492 $ 31,196,296
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
June 30, 2022 United Kingdom Canada Total
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 $511,724 (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. Event After the Reporting Period
(i) On July 25, 2023, 125,000 warrants with exercise price of $0.48 expired
unexercised.
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