REG - Galantas Gold Corp - RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2023
29/11/2023 07:00
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RNS Number : 9728U Galantas Gold Corporation 29 November 2023
29 November 2023
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORTS FINANCIAL RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2023
November 29, 2023: Galantas Gold Corporation (the 'Company') is pleased to
announce its unaudited financial results for the Quarter Ended September 30,
2023.
Financial Highlights
Highlights of the third quarter 2023 results, which are expressed in Canadian
Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Quarter Ended Nine Months Ended
September 30 September 30
2023 2022 2023 2022
Revenue $ 0 $ 0 $ 0 $ 0
Cost and expenses of operations $ (24,728) $ (86,442) $ (147,824) $ (200,076)
Loss before the undernoted $ (24,728) $ (86,442) $ (147,824) $ (200,076)
Depreciation $ (135,597) $ (196,178) $ (390,691) $ (475,045)
General administrative expenses $ (858,600) $ (1,179,927) $ (3,289,260) $ (3,764,038)
Foreign exchange (loss) / gain $ (294,430) $ (96,277) $ (234,710) $ (112,645)
Net Loss for the period $ (1,313,355) $ (1,555,824) $ (4,062,485) $ (4,551,804)
Working Capital (Deficit) $ (14,010,771) $ (714,865) $ (14,010,771) $ (714,865)
Cash (loss) / profit from operating activities before changes in non-cash $ (1,088,096) $ (324,827) $ (1,088,096) $ (3,003,660)
working capital
Cash at September 30, 2023 $ 609,047 $ 3,567,196 $ 609,047 $ 3,567,196
Sales revenue for the quarter ended September 30, 2023 amounted to $ Nil
compared to revenue of $ Nil for the quarter ended September 30, 2023.
Shipments of concentrate commenced during the third quarter of 2019.
Concentrate sales provisional revenues totalled US$ 333,000 (CAD$ 450,000) and
US$ 849,000 (CAD$ 1,148,000) during the three and nine months ended September
30 2023 compared to US $ 183,000 and US$ 329,000 for the three and nine months
ended September 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 September 30, 2023 amounted to $ 1,313,355
(2022: $1,555,824) and the cash outflow from operating activities before
changes in non-cash working capital for the quarter ended September 30, 2023
amounted to $ 1,088,096 (2022: $ 324,827). The main difference in the
reduction in net loss is due to a reduction in the value attributed to stock
based compensation, an increase in financing activities from 2022 and a
foreign exchange loss as a result of movement in the CAD$:Stg£ exchange rate.
The Company had a cash balance of $ 609,047 at September 30, 2023 compared to
$ 3,567,196 at September 30, 2022. The working capital deficit at September
30, 2023 amounted to $ 14,010,771 compared to a working capital deficit of $
714,865 at September 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/9728U_1-2023-11-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9728U_1-2023-11-28.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, Enzo
Aliaj
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 Nine Months Ended September 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.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
(Unaudited)
As at As at
September 30, December 31,
2023 2022
ASSETS
Current assets
Cash and cash equivalents $ 609,047 $ 1,038,643
Accounts receivable and prepaid expenses (note 4) 1,375,524 1,810,993
Inventories (note 5) 14,859 83,242
Total current assets 1,999,430 2,932,878
Non-current assets
Property, plant and equipment (note 6) 26,454,660 24,255,849
Long-term deposit (note 8) 495,300 489,660
Exploration and evaluation assets (note 7) 4,777,844 2,665,313
Total non-current assets 31,727,804 27,410,822
Total assets $ 33,727,234 $ 30,343,700
EQUITY AND LIABILITIES
Current liabilities $
Accounts payable and other liabilities (notes 9 and 16) 4,614,630 $ 4,052,041
Current portion of financing facilities (note 10) 5,684,764 4,836,267
Due to related parties (note 14) 5,710,807 5,072,534
Total current liabilities 16,010,201 13,960,842
Non-current liabilities
Non-current portion of financing facilities (note 10) 605,020 -
Decommissioning liability (note 8) 596,970 582,441
Other liability (note 14) 1,020,712 1,085,426
Total non-current liabilities 2,222,702 1,667,867
Total liabilities 18,232,903 15,628,709
Equity
Share capital (note 11(a)(b)) 71,982,149 69,664,056
Reserves 18,038,837 15,515,105
Deficit (74,526,655 ) (70,464,170 )
Total equity 15,494,331 14,714,991
Total equity and liabilities $ 33,727,234 $ 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)
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2023 2022 2023 2022
Revenues
Sales of concentrate (note 13) $ - $ - $ - $ -
Cost and expenses of operations
Cost of sales 24,728 86,442 147,824 200,076
Depreciation (note 6) 135,597 196,178 390,691 475,045
160,325 282,620 538,515 675,121
Loss before general administrative and
other expenses (160,325 ) (282,620 ) (538,515 ) (675,121 )
General administrative expenses
Management and administration wages (note 14) 136,117 220,289 421,076 486,034
Other operating expenses 60,368 66,676 210,572 258,634
Accounting and corporate 26,658 33,705 245,054 223,166
Legal and audit 51,117 70,190 140,561 199,918
Stock-based compensation (note 11(d)) 29,277 236,623 329,658 1,232,600
Shareholder communication and investor relations 63,126 128,889 444,808 399,410
Transfer agent 10,614 17,394 61,670 39,127
Director fees (note 14) 35,000 35,000 105,000 105,000
General office 7,724 13,468 74,203 49,543
Accretion expenses (notes 8, 10 and 14) 94,043 138,144 299,790 351,965
Loan interest and bank charges less deposit
interest (notes 10 and 14) 344,556 219,549 956,868 418,641
858,600 1,179,927 3,289,260 3,764,038
Other expenses
Foreign exchange loss 294,430 93,277 234,710 112,645
294,430 93,277 234,710 112,645
Net loss for the period $ (1,313,355 ) $ (1,555,824 ) $ (4,062,485 ) $ (4,551,804 )
Basic and diluted net loss per share (note 12) $ (0.01 ) $ (0.02 ) $ (0.04 ) $ (0.05 )
Weighted average number of common shares
outstanding - basic and diluted 114,841,403 92,115,467 110,976,336 84,788,729
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 Nine Months Ended
September 30, September 30,
2023 2022 2023 2022
Net loss for the period $ (1,313,355 ) $ (1,555,824 ) $ (4,062,485 ) $ (4,551,804 )
Other comprehensive (loss) income
Items that will be reclassified subsequently
to profit or loss
Exchange differences on translating foreign
operations (154,630 ) (1,101,693 ) 471,287 (3,191,409 )
Total comprehensive loss $ (1,467,985 ) $ (2,657,517 ) $ (3,591,198 ) $ (7,743,213 )
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)
Nine Months Ended
September 30,
2023 2022
Operating activities
Net loss for the period $ (4,062,485 ) $ (4,551,804 )
Adjustment for:
Depreciation (note 6) 390,691 475,045
Stock-based compensation (note 11(d)) 329,658 1,232,600
Accrued interest (notes 10 and 14) 1,209,383 704,919
Foreign exchange loss (gain) 744,867 (1,139,442 )
Accretion expenses (notes 8, 10 and 14) 299,790 275,022
Non-cash working capital items:
Accounts receivable and prepaid expenses 439,346 346,959
Inventories 68,552 71,611
Accounts payable and other liabilities 1,171,840 1,068,811
Due to related parties - 246,714
Net cash and cash equivalents provided by (used in) operating activities 591,642 (1,269,565 )
Investing activities
Net purchase of property, plant and equipment (2,301,514 ) (7,065,758 )
Exploration and evaluation assets (2,074,404 ) (893,830 )
Lease payments - (668,534 )
Net cash and cash equivalents used in investing activities (4,375,918 ) (8,628,122 )
Financing activities
Proceeds of private placements (note 11(b)(i)(ii)) 2,963,142 5,900,003
Share issue costs (204,993 ) (601,932 )
Proceeds from exercise of warrants 31,200 5,074,467
Advances from related parties - 2,044,133
Repayments to related parties (21,552 ) -
Proceeds from financing facilities (note 10) 580,392 -
Net cash and cash equivalents provided by financing activities 3,348,189 12,416,671
Net change in cash and cash equivalents (436,087 ) 2,518,984
Effect of exchange rate changes on cash held in foreign currencies 6,491 (21,539 )
Cash and cash equivalents, beginning of period 1,038,643 1,069,751
Cash and cash equivalents, end of period $ 609,047 $ 3,567,196
Cash $ 609,047 $ 3,567,196
Cash equivalents - -
Cash and cash equivalents $ 609,047 $ 3,567,196
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars)
(Unaudited)
Reserves
Equity settled Foreign
share-based currency
Share Warrants payments translation
capital reserve reserve reserve Deficit Total
Balance, December 31, 2021 $ 57,783,570 $ 4,130,200 $ 10,417,260 $ 887,909 $ (53,830,231 ) $ 19,388,708
Shares issued in private placement (note 11(b)(i)) 5,900,003 - - - - 5,900,003
Shares issued for services arrangement (note 11(b)(i)) 1,000,000 - - - - 1,000,000
Warrants issued (note 11(b)(i)) (2,320,000 ) 2,320,000 - - - -
Warrants issued (note 14(a)(iii)) - 74,000 - - - 74,000
Share issue costs (note 11(b)(i)) (813,932 ) 212,000 - - - (601,932 )
Stock-based compensation (note 11(d)) - - 1,232,600 - - 1,232,600
Exercise of warrants 7,100,006 (2,025,539 ) - - - 5,074,467
Exchange differences on translating foreign operations - - - (3,191,409 ) - (3,191,409 )
Net loss for the period - - - - (4,551,804 ) (4,551,804 )
Balance, September 30, 2022 $ 68,649,647 $ 4,710,661 $ 11,649,860 $ (2,303,500 ) $ (58,382,035) $ 24,324,633
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)(ii)) 2,963,142 - - - - 2,963,142
Shares issue for services arrangement (note 11(b)(iii)) 420,000 - - - - 420,000
Shares issue for debt settlement (note 11(b)(iv)) 749,020 - - - - 749,020
Warrants issued (note 11(b)(ii)(iv)) (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)(ii)) (245,168 ) 40,175 - - - (204,993 )
Stock-based compensation (note 11(d)) - - 329,658 - - 329,658
Exercise of warrants 40,733 (9,533 ) - - - 31,200
Warrants expired - (1,829,245 ) 1,829,245 - - -
Exchange differences on translating foreign operations - - - 471,287 - 471,287
Net loss for the period - - - - (4,062,485 ) (4,062,485 )
Balance, September 30, 2023 $ 71,982,149 $ 3,796,546 $ 14,046,581 $ 195,710 $ (74,526,655 ) $ 15,494,331
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 and Nine Months Ended September 30, 2023
(Expressed in Canadian Dollars)
(Unaudited)
1. Going Concern
These unaudited condensed interim consolidated financial statements have been
prepared on a going concern basis which contemplates that Galantas Gold
Corporation (the "Company") will be able to realize assets and discharge
liabilities in the normal course of business. In assessing whether the going
concern assumption is appropriate, management takes into account all available
information about the future, which is at least, but is not limited to, twelve
months from the end of the reporting period. Management is aware, in making
its assessment, of uncertainties related to events or conditions that may cast
doubt on the Company's ability to continue as a going concern. The Company's
future viability depends on the consolidated results of the Company's
wholly-owned subsidiary Cavanacaw Corporation ("Cavanacaw"). Cavanacaw has a
100% shareholding in both Flintridge Resources Limited ("Flintridge") who are
engaged in the acquisition, exploration and development of gold properties,
mainly in Omagh, Northern Ireland and Omagh Minerals Limited ("Omagh") who are
engaged in the exploration of gold properties, mainly in the Republic of
Ireland. The Omagh mine has an open pit mine, which was in production until
2013 when production was suspended and is reported as property, plant and
equipment and as an underground mine which having established technical
feasibility and commercial viability in December 2018 has resulted in
associated exploration and evaluation assets being reclassified as an
intangible development asset and reported as property, plant and equipment.
The going concern assumption is dependent upon forecast cash flows being met
and further financing currently being negotiated. The management's assumptions
in relation to future levels of production, gold prices and mine operating and
capital costs are crucial to forecast cash flows being achieved. Should
production be significantly delayed, revenues fall short of expectations or
operating costs and capital costs increase significantly, there may be
insufficient cash flows to sustain day to day operations without seeking
further finance.
Negotiations with current finance providers to extend short-term loans have
commenced, are progressing positively and the maturity dates for both the
G&F Phelps Ltd. ("G&F Phelps") and Ocean Partners UK Ltd. ("Ocean
Partners") loans are expected to be extended beyond March 31, 2023 (see notes
10 and 14).
During the year ended December 31, 2022, the Company raised gross proceeds of
$11M through the issuance of shares to investors and the exercise of warrants
to meet the financial requirements of the Company for the foreseeable future.
During the nine months ended September 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 September 30, 2023, the Company had a deficit of $74,526,655 (December
31, 2022 - $70,464,170). Comprehensive loss for the nine months ended
September 30, 2023 was $3,591,198 (nine months ended September 30, 2022 -
$7,743,213). 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 November
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
September 30, December 31,
2023 2022
Sales tax receivable - Canada $ 6,666 $ 22,971
Valued added tax receivable - Northern Ireland 173,353 281,308
Accounts receivable 91,791 116,374
Prepaid expenses 1,103,714 1,390,340
$ 1,375,524 $ 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
September 30, December 31,
2023 2022
Less than 3 months $ 215,252 $ 343,381
3 to 12 months 44,450 51,868
More than 12 months 12,108 25,404
Total accounts receivable $ 271,810 $ 420,653
5. Inventories
As at As at
September 30, December 31,
2023 2022
Concentrate inventories $ 14,859 $ 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 - - - - 1,971,314 330,200 2,301,514
Foreign exchange adjustment 25,940 100,070 2,544 2,488 244,409 - 375,451
Balance, September 30, 2023 $ 2,277,993 $ 8,821,868 $ 223,410 $ 218,517 $ 23,617,763 $ 330,200 $ 35,489,751
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 3,000 365,721 13,552 8,418 - - 390,691
Foreign exchange adjustment 21,528 63,052 1,455 1,428 - - 87,463
Balance, September 30, 2023 $ 1,900,770 $ 6,806,786 $ 173,622 $ 153,913 $ - $ - $ 9,035,091
Carrying value
Balance, December 31, 2022 $ 375,811 $ 2,343,785 $ 62,251 $ 71,962 $ 21,402,040 $ - $ 24,255,849
Balance, September 30, 2023 $ 377,223 $ 2,015,082 $ 49,788 $ 64,604 $ 23,617,763 $ 330,200 $ 26,454,660
(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 2,074,404
Foreign exchange adjustment 38,127
Balance, September 30, 2023 $ 4,777,844
Carrying value
Balance, December 31, 2022 $ 2,665,313
Balance, September 30, 2023 $ 4,777,844
(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 September 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 September 30, 2023, the
estimated fair value of the liability is $596,970 (December 31, 2022 -
$582,441). Changes in the provision during the nine months ended September 30,
2023 are as follows:
As at As at
September 30, December 31,
2023 2022
Decommissioning liability, beginning of period $ 582,441 $ 600,525
Accretion 7,932 10,154
Foreign exchange 6,597 (28,238 )
Decommissioning liability, end of period $ 596,970 $ 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 September 30, 2023 (GBP 300,000 was funded as of December 31, 2022) and
reported as long-term deposit of $495,300 (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
September 30, December 31,
2023 2022
Accounts payable $ 2,635,478 $ 2,528,245
Accrued liabilities 1,300,112 1,523,796
Advance private placement 679,040 -
Total accounts payable and other liabilities $ 4,614,630 $ 4,052,041
The following is an aged analysis of the accounts payable and other
liabilities:
As at As at
September 30, December 31,
2023 2022
Less than 3 months $ 2,703,877 $ 2,939,972
3 to 12 months 1,145,242 412,168
12 to 24 months 128,254 61,247
More than 24 months (see also note 16) 637,257 638,654
Total accounts payable and other liabilities $ 4,614,630 $ 4,052,041
10. Financing Facilities
Amounts payable on the Company's financial facilities are as follow:
As at As at
September 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 4,954 -
Interest 44,153 -
Foreign exchange adjustment (7,495 ) -
605,020 -
G&F Phelps
Financing facility, beginning of period 4,836,267 4,247,488
Accretion 194,517 269,512
Interest 681,150 618,903
Repayment (100,000 ) (24,120 )
Foreign exchange adjustment 72,830 (275,516 )
5,684,764 4,836,267
Less current portion (5,684,764 ) (4,836,267 )
Financing facilities - non-current portion $ 605,020 $ -
(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 September 30, 2023, the amount of interest
accrued is $44,153 (GBP 26,743).
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 September 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 September 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
Shares issued in private placement (i) 13,111,119 5,900,003
Shares issued for services arrangement (i) 2,222,222 1,000,000
Warrants issued (i) - (2,320,000 )
Share issue costs - (813,932 )
Exercise of warrants 12,969,667 7,100,006
Balance, September 30, 2022 102,986,809 $ 68,649,647
Balance, December 31, 2022 103,518,509 $ 69,664,056
Shares issued in private placement (ii) 8,230,951 2,963,142
Shares issued for services arrangement (iii) 933,334 420,000
Shares issued for debt settlement (iv) 2,080,609 749,020
Warrants issued (ii)(iv) - (1,609,634 )
Share issue costs (ii) - (245,168 )
Exercise of warrants 78,000 40,733
Balance, September 30, 2023 114,841,403 $ 71,982,149
(i) On August 30, 2022, Galantas completed a private placement of 13,111,119
units at a price of $0.45 per unit for aggregate gross proceeds of $5,900,003.
In addition, 2,222,222 units were sold to a third-party service provider on
the same term as the offering. The gross proceeds being $1,000,000 was offset
against certain fees to be paid to the third-party service provider by the
Company pursuant to a service agreement between the third-party service
provider and the Company dated August 30, 2022, for the underground
development at the Omagh Gold Project.
Each unit comprises one common share and one-half common share purchase
warrant. Each warrant will be exercisable into one additional common share at
an exercise price of $0.55 until February 28, 2025.
The fair value of the 7,666,669 warrants was estimated at $2,320,000 using the
Black-Scholes option pricing model with the following assumptions: expected
dividend yield - 0%, expected volatility - 128.35%, risk-free interest rate -
3.64% and an expected average life of 2.5 years.
The Company paid the agents a cash commission equal to $355,320 and issue
820,000 non-transferable broker warrants of the Company. Each broker warrant
is exercisable to acquire one common share at an exercise price of $0.45 until
August 30, 2024. The fair value of the 820,000 warrants was estimated at
$212,000 using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility - 109.13%,
risk- free interest rate - 3.63% and an expected average life of 2 years.
Melquart Limited ("Melquart") acquired 2,666,667 units for consideration of
$1,200,000. Following the offering, Melquart holds 28,140,195 common shares,
representing approximately 27.36% of the issued and outstanding common shares
on a non-diluted basis. Ocean Partners acquired 461,112 units of the private
placement, for consideration of $207,500. Mario Stifano, a director of the
Company, acquired 55,556 units for consideration of $25,000.
(ii) 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.
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.
(iii) 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.
(iv) 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.
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 (notes 11(b)(i) and 14(a)(iii)) 8,861,669 0.54
Exercised (12,969,667 ) 0.36
Balance, September 30, 2022 24,583,600 $ 0.45
Balance, December 31, 2022 24,051,900 $ 0.45
Issued (notes 10(i), 11(b)(ii)(iv) and 14(a)(iv)) 11,148,722 0.54
Exercised (78,000 ) 0.40
Expired (14,707,231 ) 0.40
Balance, September 30, 2023 20,415,391 $ 0.53
The following table reflects the actual warrants issued and outstanding as of
September 30, 2023:
Grant date Exercise
Number fair value price
Expiry date of warrants ($) ($)
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
20,415,391 3,796,546 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) (220,000 ) 0.94
Balance, September 30, 2022 6,152,500 $ 0.78
Balance, December 31, 2022 6,152,500 $ 0.78
Expired (25,000 ) 1.10
Cancelled (i) (340,000 ) 0.76
Balance, September 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 nine months ended September
30, 2023, amounted to $29,277 and $329,658, respectively (three and nine
months ended September 30, 2022 - $236,623 and $1,232,600, respectively). In
addition, during the three and nine months ended September 30, 2023, nil and
340,000 options granted in the prior years were cancelled (three and nine
months ended September 30, 2022 - 15,000 and 220,000 options cancelled).
d) Stock options (continued)
(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 $900,000 and was expensed in
the unaudited condensed interim consolidated statements of loss and credited
to equity settled share-based payments reserve.
The following table reflects the actual stock options issued and outstanding
as of September 30, 2023:
Weighted average Number of
remaining Number of options Number of
Exercise contractual options vested options
Expiry date price ($) life (years) outstanding (exercisable) unvested
February 13, 2024 0.90 0.37 85,000 85,000 -
June 27, 2024 0.90 0.74 50,000 50,000 -
May 19, 2026 0.86 2.64 3,610,000 3,610,000 -
June 21, 2026 0.73 2.73 425,000 425,000 -
August 27, 2026 0.86 2.91 20,000 20,000 -
May 3, 2027 0.60 3.59 1,597,500 1,065,000 532,500
0.78 2.86 5,787,500 5,255,000 532,500
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the three and nine
months ended September 30, 2023 was based on the loss attributable to common
shareholders of $1,313,355 and $4,062,485, respectively (three and nine months
ended September 30, 2022 - $1,555,824 and $4,551,804, respectively) and the
weighted average number of common shares outstanding of 114,841,403 and
110,976,336, respectively (three and nine months ended September 30, 2022 -
92,115,467 and 84,788,729, respectively) for basic and diluted loss per share.
Diluted loss did not include the effect of 20,415,391 warrants (three and nine
months ended September 30, 2022 - 24,583,600) and 5,787,500 options (three and
nine months ended September 30, 2022 - 6,152,500) for the three and nine
months ended September 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 nine months ended September 30, 2023 totalled approximately
US$333,000 (CAD$450,000) and US$849,000 (CAD$1,148,000), respectively (three
and nine months ended September 30, 2022 - US$183,000 and US$402,000,
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 Nine Months Ended
September 30, September 30,
2023 2022 2023 2022
Interest on related party loans (i) $ 179,062 $ 214,159 $ 528,233 $ 376,908
(i) Refer to note 14(a)(iii).
(ii) Refer to note 11(b).
(iii) As at September 30, 2023, the Company owes Ocean Partners $5,579,008
(December 31, 2022 - $4,978,069) which is recorded as due to related parties
on the unaudited condensed interim consolidated statement of financial
position.
September 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 ((1)(2)) - (93,444 )
Advance - 93,284
Repayment (21,552 ) (524,255 )
Accretion 92,387 391,128
Interest 528,233 554,073
Foreign exchange adjustment 1,871 124,214
Balance, end of period 5,579,008 4,978,069
Less current balance (5,579,008 ) (4,978,069 )
Due to related parties - non-current balance $ - $ -
(1) 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.
(2) 125,000 bonus warrants have been granted to Ocean Partners, which will be
exercisable for a period of 12 months at an exercise price of $0.48. The bonus
warrants are subject to a hold period under applicable securities laws and the
rules of the TSXV, expiring on July 25, 2023. The fair value of the 125,000
warrants was valued at $23,000 using the following Black-Scholes option
pricing model with the following assumptions: expected dividend yield - 0%,
expected volatility - 95.09%, risk-free interest rate - 3.12% and an expected
average life of 1 year.
(a) The Company entered into the following transactions with related parties
(continued):
(iv) In December 2022, the Company entered into an agreement (the "Trading
Agreement") with Ocean Partners, whereby Ocean Partners has sold on behalf of
Galantas call options on 6,000 ounces of gold at 500 ounces per month from
February 2024 to January 2025 at a strike price of US$1,775 per ounce for
proceeds of US$804,000 to Galantas (an option premium of US$134 per gold
ounce). Proceeds from the sale will be used to fund development of the
underground mining operations at the Omagh Gold Project in Northern Ireland
and working capital.
If the gold price during February 2024 to January 2025 is at or below US$1,775
per ounce, Galantas will receive the price of gold at the time for the sale of
its gold produced. If the gold price is above US$1,775 per ounce, Galantas
will receive US$1,775 per ounce in revenue for the sale of its gold.
Pursuant to the Trading Agreement, and in return for Ocean Partners
facilitating the call option sale and agreeing to maintain all margin
requirements on Galantas' behalf, which Galantas has determined has a value of
at least $150,000, Galantas has agreed to grant 500,000 warrants to Ocean
Partners at an exercise price of $0.55 expiring on January 31, 2025. The
warrants are subject to a hold period under applicable securities laws and the
rules of the TSXV. The fair value of the 500,000 warrants was valued at
$65,527 using the following Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected volatility -
97.85%, risk-free interest rate - 3.73% and an expected average life of 1.9
year.
As at September 30, 2023, balance related to the Trading Agreement is recorded
as other liability on the unaudited condensed interim consolidated statement
of financial position is $1,020,712 (December 31, 2022 - $1,085,426).
(b) Remuneration of officer and directors of the Company was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2023 2022 2023 2022
Salaries and benefits ((1)) $ 115,413 $ 193,705 $ 340,062 $ 446,839
Stock-based compensation 20,992 148,268 242,340 781,955
$ 136,405 $ 341,973 $ 582,402 $ 1,228,794
(1) Salaries and benefits include director fees. As at September 30, 2023,
due to directors for fees amounted to $105,000 (December 31, 2022 - $70,000)
and due to officers, mainly for salaries and benefits accrued amounted to
$26,798 (December 31, 2022 - $24,465), and is included with due to related
parties.
(c) As at September 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:
September 30, 2023 United Kingdom Canada Total
Current assets $ 489,020 $ 1,510,410 $ 1,999,430
Non-current assets $ 30,142,659 $ 1,585,145 $ 31,727,804
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
September 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 $502,383 (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
On November 9, 2023, the Company announced the terms of a proposed
non-brokered private placement of up to US$3.0 million aggregate principal
amount of unsecured convertible debentures of the Company (the "Debentures"),
in the principal amount of US$1,000 per Debenture (the "Offering"). The
Company anticipates that the closing of the Offering will occur on or about
November 30, 2023 (the "Closing Date").
The net proceeds of the Offering are expected to be used for exploration and
development, working capital and for general corporate purposes.
Each Debenture will be convertible at the option of the holder thereof into
common shares in the capital of the Company (the "Conversion Shares") at a
conversion price of US$0.255 per Conversion Share (the "Conversion Price"),
being the equivalent of a conversion price of $0.35 per Conversion Share, at
any time prior to 5:00 p.m. (Toronto time) on the last business day
immediately preceding the date that is 36 months following the Closing Date
(the "Maturity Date"). On the Maturity Date, any outstanding principal amount
of Debentures plus any accrued and unpaid interest thereon shall be repaid by
the Company in cash. In accordance with the terms of the Debentures, if at any
time following the issuance of the Debentures, the closing price of the common
shares of the Company on the TSXV equals or exceeds $0.70 per common share for
10 consecutive trading days or more, the Company may elect to convert all but
not less than all of the outstanding principal amount of the Debentures into
Conversion Shares at the Conversion Price, upon giving the holders of the
Debentures not less than 30 calendar days advance written notice.
Interest on the principal amount outstanding under each Debenture shall accrue
during the period commencing on the Closing Date until the Maturity Date and
shall be payable in cash on an annual basis on December 31st of each year
(each, an "Interest Payment Date"); provided, however, that the first Interest
Payment Date shall be December 31, 2024. Each Debenture shall bear interest at
a minimum interest rate of 10% per annum (the "Base Interest Rate"). During
each interest period (an "Interest Period"), being the period commencing on
the Closing Date to but excluding the first Interest Payment Date and
thereafter the period from and including an Interest Payment Date to but
excluding the next Interest Payment Date or other applicable payment date, the
Base Interest Rate will be adjusted based on a gold price of US$2,000 per
ounce, with the Base Interest Rate being increased by 1% per annum for each
US$100 in which the average gold price for such Interest Period exceeds
US$2,000 per ounce, up to a maximum interest rate of 30% per annum. Any
adjustment to the Base Interest Rate in respect of an Interest Period shall be
calculated based on the average gold price quoted by the London Bullion Market
Association, being the LBMA Gold Price PM, in respect of the first Interest
Period, from the Closing Date to and including December 15, 2024, and for each
subsequent Interest Period, from January 1st to and including December 15th of
that year or 15 days prior to the applicable payment date.
In connection with the Offering, certain finders may receive from the Company:
(i) a cash finder's fee payment equal to 5.0% of the gross proceeds raised
under the Offering from subscribers introduced to the Company by such finder;
and
(ii) such number of non-transferable finder's warrants as is equal to 5.0% of
the maximum number of Conversion Shares issuable under the Debentures sold
under the Offering to subscribers introduced to the Company by such finder.
Each finder warrant will be exercisable to acquire one common share in the
capital of the Company at the Conversion Price at any time on or before that
date which is 36 months following the Closing Date.
The Offering remains subject to the acceptance of the TSXV. The securities
issued pursuant to the Offering will be subject to a four-month hold period
under applicable Canadian securities laws.
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