REG - Galileo Resources - Interim Results
31/12/2021 07:55
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RNS Number : 1694X Galileo Resources PLC 31 December 2021
Galileo Resources PLC
("Galileo" or "the Company" or "the Group")
Unaudited interim results for the six months ended 30 September 2021
Galileo (AIM: GLR), the exploration and development mining company, announces
its unaudited interim results for the six-month period ended 30 September
2021. A copy of the interim results is available on the Company's website,
www.galileoresources.com (http://www.galileoresources.com) .
Operational Highlights
BOTSWANA - Kalahari Copperbelt
Period under review
On 2 August 2021 the Company announced that had it entered into a variation
agreement dated 30 July 2021 (the "First Variation Agreement") with ASX listed
Sandfire Resources Limited (ASX:SFR) ("Sandfire") in relation to its
conditional licence sale agreement (the "Licence Sale Agreement") with
Sandfire.
The Parties entered into the First Variation Agreement to facilitate the
continuity of exploration expenditure on the Included Licences and to amend
the list of Included Licences and Excluded Licences. The key commercial terms
of the First Variation Agreement were to make the following variations to the
Licence Sale Agreement:
· Change the long stop date for the meeting of the conditions from 31
July 2021 to 31 August 2021;
· Sandfire to at completion of the Licence Sale Agreement, reimburse
Galileo up to US$500,000 of exploration expenditure incurred by Galileo in
relation to licence obligations of certain Included Licences being transferred
to Sandfire (the "Reimbursed Exploration Expenditure");
· Sandfire's US$4,000,000 Exploration Commitment under the Licence Sale
Agreement to be reduced by the amount of the Reimbursed Exploration
Expenditure;
· PL 368/2018 which was due to expire on 30 September 2021 to be
removed from the list of Included Licences to be transferred to Sandfire as
this licence is, with the agreement of Sandfire, being relinquished; and
· Removing the option for Sandfire to elect to pay the Success Payment
under the Licence Sale Agreement by issuing Sandfire shares to Galileo which
means the Success Payment if due will be paid in cash.
On 1 September 2021, the Company announced that it had entered into a second
variation agreement (the Second Variation Agreement) with Sandfire in relation
to the Licence Sale Agreement to extend the long stop date to 15 September
2021 to facilitate the completion of the processes to obtain Ministerial
Consent.
The Licence Sale Agreement transaction was completed on 22 September 2021.
Post period under review
On 8 November 2021 the Company provided an update on progress of a drilling
campaign on the Kalahari Copper Belt licences, with more than 5,000 metres (m)
of mixed core and reverse circulation drilling ('RC') completed on five of the
Kalahari Copper Belt exploration licences. This included work on both the
Company's retained licences and the Sandfire Agreement Licences (see RNS dated
16 September 2021), with the agreement of Sandfire Resources. Amongst the
results reported were:
· Drilling on the Sandfire Agreement Licences intersected visible
copper mineralisation at 242.7m in core hole BDDD004 on PL366/2018 in the form
of vein-hosted chalcopyrite.
· Galileo drilled in two of its retained licences, PL40/2018 and
PL253/2018, with most holes intersecting the target D'kar/Ngwako Pan Fm. One
hole intersected a 6.32m interval of 2-5% fine-grained disseminated pyrite at
the target horizon level which it was considered might represent a
hydrothermal mineral system lateral to a copper occurrence.
· RC drilling was ongoing on PL253/2018 and diamond drilling had
commenced on PL39/2018 with the aim of testing an extensive airborne EM target
on this property, focussed on the margins of a regional scale dome feature.
ZAMBIA
Kashitu
Period under review
The Company has continued to make plans for a drilling programme at the
Kashitu zinc project. Site visits were undertaken to establish the suitability
of several potential drill sites, with the focus on initial testing of a
high-grade willemite zinc silicate vein zone which has been partially mined
previously in a small open pit.
The aim is to undertake the programme, subject to access constraints during
the rainy season.
Star Zinc
Period under review
The Company received an amount of US$50K from Siege Mining Limited under the
agreement signed on 4 March 2021 in relation to the ceding of ownership and
operation of the Star Zinc Project.
Shinganda Project
Post period under review
On 7 December 2021 the Company announced that it had entered into an Option
and Joint Venture agreement with Garbo Resource Solutions Ltd ("Garbo"), a
private special purpose UK company established to hold the Shinganda
copper-gold property located in Central Zambia. The property is held as a
large-scale exploration licence No. 22990-HQ-LEL, covering an area of
186.76km(2), by Garbo Resource Zambia Ltd., which is 99.4% owned by Garbo. The
principal terms of the agreement are as follows:
· The option agreement gives Galileo the right to earn an initial 51%
interest in the Shinganda copper-gold project in central Zambia, subject to
any necessary Zambian regulatory approval, by spending US$0.5m on exploration
and evaluation over two years.
· The Company can subsequently increase its interest through entering
into a Joint Venture to develop a mining operation, ranging from 65% interest
for a large deposit of greater than 1Mt of contained copper equivalent, up to
an 85% interest in a smaller deposit of less than 200,000 tonnes of contained
copper equivalent.
The project area covers part of a major 10km structural trend with two
previously developed small-scale open pit copper-gold mines. Very limited
historic drilling on the property is reported to have intersected 1.07% Cu
over a true width of 28.3m at shallow depth within supergene copper oxides.
Drilling on the structure off-property to the west by Vale S.A. recorded 2m @
3.93% Cu, 1.72 g/t Au.
Galileo plans to review past exploration data followed by a drilling programme
focussed on testing the tenor and extent of the shallow copper/gold
mineralisation indicated by previous drilling and nearby mining. Historic grab
sampling in an exploration pit towards the south of the Project area by Vale
S.A., with reported assay values of 10.45% Cu, 11g/t Au, will also be followed
up in the field by Galileo for confirmation purposes.
Luansobe Copper Project
Post period under review
On 30 December 2021, the Company announced that it had entered into a Joint
Venture Agreement (the "JV Agreement") on 29 December 2021 with Statunga
Investments Limited (the "Vendor"), a private Zambian company owns the
Luansobe Project comprising small-scale exploration licence No. 28340-HQ-SEL,
covering an area of 918 Hectares granted on 16 February 2021 and with its
initial 4-year term expiring on 15 February 2025.
The Luansobe area is situated some 15km to the northwest of Mufulira Mine in
the Zambian Copperbelt which produced well over 9Mt of copper metal during its
operation. It forms part of the northwestern limb of the northwest - southeast
trending Mufulira syncline and is essentially a strike continuation of
Mufulira, with copper mineralisation hosted in the same stratigraphic
horizons. At the Luansobe prospect mineralisation occurs over two contiguous
zones, dipping at 20-30 degrees to the northeast, over a strike length of
about 3km and to a vertical depth of at least 1,250m.
The JV Agreement provides Galileo the right to earn an initial 75% interest in
a special purpose joint venture company (the "JV Company") to be established
under Zambia law to, with Ministerial Consent, acquire the Licence, and the
technical information and other information and assets related to the Luansobe
Project by making an initial payment of US$200,000 and a second payment of
US$200,000 in the initial period from the date of the JV Agreement by 20
February 2022 (the "Initial JV Period") and issuing 5,000,000 Galileo shares
to the Vendor. Based on the closing price share price of 0.98 pence on 29
December 2021 the last practicable date prior to this issue of this
announcement, the aggregate consideration will be approximately £350,000.
During the Initial JV Period the Company will conduct further due diligence in
relation to the Luansobe Project and may at its sole discretion at any time
prior to the end of the Initial JV Period give notice to the Vendor that it
has decided not to proceed with the Joint Venture.
The Company has undertaken to commence raw data investigation of the technical
information available in relation to the Project and devise an exploration
programme for the Luansobe Project, which in their opinion maximise the value
of the Luansobe Project with a view to completing a Project Feasibility Study
within 18 months of 20 February 2022.
SOUTH AFRICA
Glenover Phosphate Project ("Glenover")
Period under review
The Company continued to support Glenover in its application for a mining
licence. Golder Associates completed a revised waste management facility
design for environmental authorisation for the project which was submitted to
the South African Department of Water and Sanitation. A Record of Decision was
awaited in order to finalise Glenover's mining right.
Post period under review
The Company announced on 9 December 2021 that;
· Glenover in which Galileo has a 29% direct shareholding and a 4.99%
indirect shareholding held via Galagen Proprietary Limited who are the BEE
partner of Galileo entered into an Asset sale agreement with JSE Limited
listed Afrimat Limited (JSE: AFT) ("Afrimat") for ZAR 250M (approx. £11.64m)
of certain deposits of phosphate rock located at the Glenover Mine and mining
rights to mine the Vermiculite Deposit at the Glenover Mine (the "Asset Sale
Agreement").
o ZAR 215.1M (approx. £10m) of the Asset Sale Agreement consideration is
unconditional and is anticipated to result in a dividend of ZAR42M (approx.
approx. £1.97M) being paid to Galileo by 28 February 2022 in respect of its
29% direct shareholding in Glenover; and
o ZAR34.9M (approx. £1.64m ) of the Asset Sale Agreement consideration is
conditional on the issue of a vermiculite mining licence to Glenover and is
anticipated to result in a dividend to Galileo of Afrimat Shares worth
approximately ZAR10M (approx.£0.47K) in Q3 2022 in respect of its 29% direct
shareholding in Glenover.
o
· Glenover also entered into a conditional sale of shares agreement
between Afrimat, Glenover and the shareholders of Glenover including Galileo
Resources SA (Pty) Ltd the Company's wholly owned South African subsidiary
under which Glenover has the option to acquire the sale of shares in and
shareholders loans made to Glenover for ZAR300M (approx. £14m) which is
expected to complete by 15 June 2023 if the option is exercised ("Conditional
Share Sale Agreement"). Galileo's 29% share of the gross Conditional Share
Sale Agreement consideration in respect of its 29% direct shareholding in
Glenover is ZAR87M (approx. £4.1m)
NEVADA
Ferber gold-copper project
Post period under review
Galileo initiated a project review aimed at identifying drill targets to test
both skarn-type gold-copper occurrences and small-scale workings and
Carlin-type gold occurrences on the 100% held property. Several priority drill
sites were highlighted, with drill testing now planned for early in 2022.
FUNDRAISING
Period under review
· The Company issued 133 666 664 new ordinary shares to raise £ 2
million before expenses
For further information, please contact:
Colin Bird, Chairman & CEO Tel +44 (0) 20 7581 4477
Edward Slowey, Executive Director Tel +353 (1) 601 4466
www.galileoresources.com (http://www.galileoresources.com)
Beaumont Cornish Limited
Nominated Advisor
Roland Cornish/James Biddle Tel +44 (0)20 7628 3396
Novum Securities Limited - Broker
Colin Rowbury/ Jon Belliss Tel +44 (0)20 7382 8416
Statement of Responsibility for the six months ended 30 September 2021
The directors are responsible for preparing the consolidated interim financial
statements for the six months ended 30 September 2021 and they acknowledge, to
the best of their knowledge and belief, that:
· the consolidated interim financial statements for the six months ended
30 September 2021 have been prepared in accordance with IAS 34 - Interim
Financial Reporting, as adopted by the EU;
· based on the information and explanations given by management, the
system of internal control provides reasonable assurance that the financial
records may be relied on for the preparation of the
consolidated interim financial statements. However, any system of
internal financial control can
provide only reasonable, and not absolute, assurance against material
misstatement or loss;
· the going concern basis has been adopted in preparing the consolidated
interim financial statements and the directors of Galileo have no reason to
believe that the Group will not be a going concern in the
foreseeable future, based on forecasts and available cash resources;
· these consolidated interim financial statements support the viability
of the Company; and
· having reviewed the Group's financial position at the balance sheet
date and for the period ending on the anniversary of the date
of approval of these financial statements they are satisfied that the
Group has, or has access to, adequate resources to continue in operational
existence for the foreseeable future.
C Bird
Chairman and Chief Executive Officer
31 December 2021
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Six months Six months Year
ended ended ended
30 September 30 September 31 March
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
£s £s £s
ASSETS
Intangible assets 2,854,706 3,610,194 2,114,817
Investment in joint ventures 1,990,053 1,867,227 1,979,640
Loans to joint ventures and associates 364,644 339,420 345,684
Other financial assets 1,440,148 351,881 373,521
Non-current assets 6,649,551 6,168,722 4,813,662
Trade and other receivables 49,796 5,452 1,359
Other financial assets 6,930 - -
Cash and cash equivalents 3,523,794 1,054,247 1,392,955
Current assets 3,580,520 1,059,699 1,394,314
Non-current assets held for sale 1,574,160 - 3,952,786
Total Assets 11,804,231 7,228,421 10,160,763
EQUITY AND LIABILITIES
Share capital and share premium 31,636,356 27,774,345 29,705,244
Reserves 887,304 749,594 837,700
Accumulated loss (21,687,406) (21,589,733) (21,134,916)
Equity 10,836,254 6,934,206 9,408,028
Liabilities
Other financial liabilities 6 5 5
Deferred taxation 425,813 - 425,813
Non-current liabilities 425,819 5 425,818
Trade and other payables 542,158 294,210 326,916
Total liabilities 967,977 294,215 752,735
Total Equity and liabilities 11,804,231 7,228,421 10,160,763
Joel Silberstein
31 December 2021
Company number: 05679987
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2021
Six months Six months
ended ended
30 September 30 September
2021 2020
(Unaudited) (Unaudited)
£s £s
Revenue - -
Operating expenses (556,524) (360,390)
Operating loss (556,524) (360,390)
Investment revenue - -
Gain on bargain purchase through business combinations -
Share of loss from equity accounted investments 4,031 (6,555)
Loss for the period (552,493) (366,945)
Other comprehensive loss:
Exchange differences on translating foreign operations 41,091 (119,646)
Total comprehensive loss (511,402) (486,591)
Total comprehensive loss attributable to:
Owners of the parent (511,402) (486,591)
Weighted average number of shares in issue 919,808,258 600,066,170
Basic loss per share - pence (0.06) (0.06)
STATEMENTS OF CHANGES IN EQUITY as at 30 September 2021
Share Share Total capital Foreign currency translation reserve Convertible instruments Share based payment reserve Total reserves Accumulated Total
capital loss equity
premium
Figures in Pound Sterling
reserve
Balance at 1 April 2020 6,168,446 20,300,873 26,469,319 (709 982) 1,047,821 283,292 621,131 (21 222 788) 5,867,662
Loss for the year - - - - - - - 87,877 87,877
Other comprehensive income - - - (66,513) - - (66,513) - (66,513)
Total comprehensive income for the year - - - (66,513) - - (66,513) 87,877 21,364
Issue of warrants - (150,544) (150,544) - - 150,544 150,544 - -
Options granted - - - - - 270,595 270,595 - 270,595
Warrants exercised - 138,057 138,057 - - (138,057) (138,057) - -
Issue of shares 354,163 2,894,249 3,248,412 - - -- - - - - 3,248,412
Total contributions by and distributions to owners of company recognised 354,163 2,881,762 3,235,925 - - 283,082 283,082 - 3,519,007
directly in equity
-
Balance at 1 April 2021 6,522,609 23,182,635 29,705,244 (776,495) 1,047,821 566,374 837,700 (21,134,913) 9,408,031
Loss for the 6 months - - - - - - - (552,493) (552,493)
Other comprehensive income - - - 41,091 - - 41,091 41,091
Total comprehensive income for the 6 months - - - 41,091 41,091 (552,493) (511,402)
Warrants issued - - - - - 8,513 8,513 - 8,513
Warrants exercised - - - - - - - - -
Issue of shares 95,567 1,835,545 1,931,112 - - - - - 1,931,112
Total contributions by and distributions to owners of company recognised
directly in equity
95,567 1,835,545 1,931,112 - - 8,513 8,513 - 1,939,625
Balance at 30 September 2021 6,618,176 25,018,180 31,636,356 (735,404) 1,047,821 574,887 887,304 (21,687,406) 10,836,254
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE SIX MONTHS ENDED 30 SEPTEMBER Six months Six months Year
2021
ended ended ended
30 September 30 September 31 March
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
£s £s £s
Cash used in operations (175,946) (315 552) (1,186,567)
Interest income - - -
Net cash from operating activities (175,946) (315 552) (1,186,567)
Investment in intangible assets (700,753) (167 738) (453,724)
Proceeds on sale of non-current assets held for sale 1,095,385 - -
Loans advanced (18,960) (45 848) (84,239)
Net cash from investing activities 375,672 (213 586) (537,963)
Proceeds on share issue 1,931,113 1 226 900 2,761,000
Net cash flows from financing activities 1,931,113 1 226 900 2,761,000
Total cash movement for the period 2,130,839 697 762 1,036,470
Cash at the beginning of the period 1,392,955 356 485 356,485
Total cash at end of the period 3,523,794 1 054 247 1,392,955
Notes to the Financial Statements
1. Status of interim report
The Group unaudited condensed interim results for the 6 months ended 30
September 2021 have been prepared using the accounting policies applied by the
Company in its 31 March 2021
annual report, which are in accordance with International Financial Reporting
Standards (IFRS and IFRC interpretations) issued by the International
Accounting Standards Board ("IASB") as adopted for use in the EU ("IFRS"),
including the SAICA financial reporting guides as issued by the Accounting
Practices Committee, IAS 34 - Interim Financial Reporting, , the AIM rules of
the London Stock Exchange and the Companies Act 2006 (UK). This condensed
consolidated interim financial report does not include all notes of the type
normally included in an annual financial report. Accordingly, this report is
to be read in conjunction with the annual report for the year ended 31 March
2021 and any public announcements by Galileo Resources Plc. All monetary
information is presented in the presentation currency of the Company being
Great British Pound. The Group's principal accounting policies and assumptions
have been applied consistently over the current and prior comparative
financial period. The financial information for the year ended 31 March 2021
contained in this interim report does not constitute statutory accounts as
defined by section 435 of the Companies Act 2006. A copy of the statutory
accounts for that year has been delivered to the Registrar of Companies. The
auditor's report on those accounts was unqualified and did not contain a
statement under section 498(2)-(3) of the Companies Act 2006.
2. Basis of preparation
The consolidated annual financial statements incorporate the annual financial
statements of the Company and all entities, including special purpose
entities, which are controlled by the Company. Control exists when the Company
has the power to govern the financial and operating policies of an entity to
obtain benefits from its activities. The results of subsidiaries are included
in the consolidated annual financial statements from the effective date of
acquisition to the effective date of disposal. Adjustments are made when
necessary to the annual financial statements of subsidiaries to bring their
accounting policies in line with those of the Group.
All intra-group transactions, balances, income and expenses are eliminated in
full on consolidation. Non-controlling interests in the net assets of
consolidated subsidiaries are identified and recognised separately from the
Group's interest therein and are recognised within equity. Losses of
subsidiaries attributable to non-controlling interests are allocated to the
non-controlling interest even if this results in a debit balance being
recognised for non-controlling interest. Transactions which result in changes
in ownership levels, where the Group has control of the subsidiary both before
and after the transaction, are regarded as equity transactions and are
recognised directly in the statement of changes in equity. The difference
between the fair value of consideration paid or received and the movement in
non-controlling interest for such transactions is recognised in equity
attributable to the owners of the parent.
3. Segmental analysis
Business segments
The Company's investments in subsidiaries and associates, that were
operational during the period, operate in four geographical locations being
South Africa, Zambia, Botswana and USA, and are organised into one business
unit, namely Mineral Assets, from which the Group's expenses are incurred and
future revenues are expected to be earned. This being the exploration for and
extraction of its mineral assets through direct and indirect holdings. The
reporting on these investments to the board focuses on the use of funds
towards the respective projects and the forecasted profit earnings potential
of the projects. An analysis of the loss on ordinary activities before
taxation is given below:
Six months ended 30 Six months ended 30 Year
September September ended
2021 2020 31 March
(Unaudited) (Unaudited) 2021
(Audited)
£s £s £s
Loss on ordinary activities before taxation:
Rare earths, aggregates and iron ore and manganese 4,031 (6,555) (9,088)
Gold, Copper - USA (2 288) - -
Copper Botswana (110 638) - 1,569,776
Corporate costs (443,598) (360,390) (1,472,816)
(552,493) (366,945) 87,872
4. Financial review
The Group reported a net loss of £ 552 493 (2020: £ 366,945) before and
after taxation. Basic loss reported is 0.06 pence (2020: 0.06 pence) per
share. Loss per share is based on a weighted average number of ordinary shares
of 919 808 258 (2020: 600 066 170).
5. Share Capital
During the period under review the Company issued a total of 138 066 664
bringing the total number of shares in issue at the period end to 1 050
042 981 ordinary shares. During the period under review the Company issued
133 666 664 ordinary shares for cash to raise £ 2.0 million before expenses
and 4 400 000 ordinary shares through the exercise of warrants with total
proceeds of £ 0.03 million. Post the period under review the Company issued a
total of 41 903 863 ordinary shares bringing the total shares in issue at the
date of this report to 1 091 946 844 ordinary shares.
During the period under review the Company issued new ordinary shares as
follows:
Number of
Date ordinary shares
Opening balance 911 976 317
Warrants exercised 4 400 000
Placing for cash 133 666 664
Closing balance 1 050 042 981
Post the period under review the Company issued new ordinary shares as
follows:
Number of
Date ordinary shares
Opening balance 1 050 042 981
Warrants exercised 23 312 500
Shares in lieu of director remuneration 16 425 032
Shares issued in lieu of consultant fees 2 166 331
Closing balance 1 091 946 844
The Company had the following warrants outstanding at the period end:
Issue date Number of warrants Issue price (pence) Expiry date
01-Nov-19 24 125 000 0.60 2021/10/18
12-Jun-20 27 281 250 1.25 2021/12/12
24-Jun-20 5 625 000 0.80 2021/12/24
24-Jun-20 12 943 750 1.25 2021/12/24
15-Sep-20 10 000 000 2.00 2022/10/15
01-Jun-21 3 341 666 2.25 2023/06/01
01-Jun-21 66 833 332 2.25 2023/06/01
150 149 998
The Company had the following warrants outstanding at the date of this report:
Issue date Number of warrants Issue price (pence) Expiry date
15-Sep-20 10 000 000 2.00 2022/10/15
01-Jun-21 3 341 666 2.25 2023/06/01
01-Jun-21 66 833 332 2.25 2023/06/01
80 174 998
6. Intangible assets
Reconciliation of Intangible assets:
Group as at 30 September 2021
Asset currency Opening balance Disposal as part of assets held for sale Additions Foreign exchange movements Closing balance
Exploration and evaluation asset - Botswana (1) BWP 2,796,950 (2,378,626) 605,575 391 1,024,290
Exploration and evaluation asset - U.S.A. US$ 1,696,493 - 95,178 38,744 1,830,415
Total intangible assets 4,493,443 (2,378,626) 700,753 39,135 2,854,705
Exploration and evaluation asset - Zambia held for sale(2) ZMW 1,574,160 - - - 1,574,160
6,067,603 (2,378,626) 700,753 39,135 4 428 865
Botswana
1. Sale of 9 licenses held in the Kalahari Copper Belt
Further to announcements in May 2020 and October 2020, Sandfire and Galileo
entered into a variation agreement on 30 July2021. The key commercial terms of
the Variation Agreement were to make the following variations to the Licence
Sale Agreement:
· Change the long stop date for the meeting of the conditions from 31
July 2021 to 31 August 2021;
· Sandfire to at completion of the Licence Sale Agreement, reimburse
Galileo up to US$500,000 of exploration expenditure incurred by Galileo in
relation to licence obligations of certain Included Licences being transferred
to Sandfire (the "Reimbursed Exploration Expenditure");
· Sandfire's US$4,000,000 Exploration Commitment under the Licence Sale
Agreement to be reduced by the amount of the Reimbursed Exploration
Expenditure;
· PL 368/2018 which was due to expire on 30 September 2021 to be
removed from the list of Included Licences to be transferred to Sandfire as
this licence is, with the agreement of Sandfire, being relinquished; and
· Removing the option for Sandfire to elect to pay the Success Payment
under the Licence Sale Agreement by issuing Sandfire shares to Galileo which
means the Success Payment if due will be paid in cash. Note: given the limited
exploration conducted on the Included Licences to date and the many years that
it could take to establish an Ore Reserve, there can be no guarantee that any
such Success Payment will be forthcoming.
Included Licences to be assigned to Sandfire at completion:
Licence ID Title Holder Beneficial Interest
PL 250/2018 Crocus-Serv Resources Pty Ltd 100%
PL 251/2018 Crocus-Serv Resources Pty Ltd 100%
PL 366/2018 Africibum Co Pty Ltd 100%
PL 367/2018 Africibum Co Pty Ltd 100%
PL 122/2020 Africibum Co Pty Ltd 100%
PL 154/2020 Africibum Co Pty Ltd 100%
PL 044/2018 Virgo Business Solutions Pty Ltd 100%
PL 045/2018 Virgo Business Solutions Pty Ltd 100%
On 16 September 2021, the Company reported that all the conditions precedent
had been met in relation to its conditional licence sale agreement with
Sandfire entered into in January 2021.
2. Star Zinc
Assets of £1,574,460 are included as held for sale in the balance sheet as at
30 September 2021.
On 4 March 2021, the Company entered into a conditional agreement with Siege
Mining Limited ("Siege") in relation to the ceding of ownership and operation
of the Star Zinc Project (the "Star Zinc Project") for US$750,000 (being
US$200,000 in relation to the large-scale exploration license 19653-HQ-LEL
(the "Star Zinc Project License") (the "License Consideration") and US$550,000
for the Company ceding its participation in the Star Zinc Project and all
exploration information which it has in relation to the Star Zinc Project (the
"Project Assets") (the "Project Consideration"). The Company will also be paid
a royalty (proportion share) based on future sales of zinc from the Star Zinc
Project for Galileo allowing Siege to use Galileo's information, know-how and
commercial experience in relation to the Star Zinc Project (the
"Agreement").
Royalties payable under the Agreement are dependent upon the zinc concentrate
in ore sold, future price of Zinc and ore produced at the Star Zinc project.
The Company had previously announced that following a second phase of drilling
the tonnage target was between 600,000 to 900,000 tonnes with an estimated
average grade of 10-12% zinc at above 3% cut off
grade.
The Company entered into the Agreement following a period in which it reviewed
the options for putting the Star Zinc Project into operation taking into
consideration operational, community and regulatory issues associated with
mining a project that is in the outskirts of Lusaka and allowing ownership and
operational responsibilities to be assumed by a Zambian mining company, whilst
the Company can still participate in the future success of the Star Zinc
Project.
The royalty will vary based on the contained zinc percentage of the ore sold
(the "Contained Zinc Percentage") and the LME Zinc price at which the ore is
sold (the "LME Zinc Price") The base royalty rate is 3% and will increase by
1% for each US$250 increase in the Zinc sale price over US$2,500 per tonne up
to a maximum of 10% (the "Royalty Rate") The royalty will be calculated by
multiplying the Contained Zinc Percentage * the LME Zinc price * Royalty
Rate.
Group as at 30 September 2020
Asset currency Opening balance Additions Foreign exchange movements Closing balance
Exploration and evaluation asset - Botswana BWP - 229,323 67,368 296,691
Exploration and evaluation asset - U.S.A. US$ 1,773,859 101,439 (135,956) 1,739,342
Exploration and evaluation asset - Zambia ZMW 1,574,160 - - 1,574,160
3,348,019 330,762 (68,588) 3,610,193
Group as at 31 March 2021
Asset currency Opening Additions Additions through business combinations Foreign exchange movements Reclassify as non- current assets held for sale Total
2021
Exploration and evaluation asset - Botswana BWP 342,946 2,531,022 (77,018) (2,378,626) 418,324
-
Exploration and evaluation asset - U.S.A. US$ 1,773,859 110,778 - (188,144) - 1,696,493
Exploration and evaluation asset - Zambia ZMW 1,574,160 - - - (1,574,160) -
3,348,019 453,724 2,531,022 (265,162) (3,952,786) 2,114,817
7. Going concern
The Group has sufficient financial resources to enable it to continue in
operational existence for the foreseeable future, to continue the current
development programme and meet its liabilities as they fall due. During the
period under review the Group raised £2 million before expenses and the
Company has no external debt or overdrafts. The Company also received proceeds
on the exercise of warrants in an amount of £ 0.2 million.
The directors have further reviewed the Group's cash flow forecast, and in
light of this review and the financial position at the date of this report,
they are satisfied that the Company and Group have access to adequate
resources to continue in operational existence for the foreseeable future.
Accordingly, the directors consider it appropriate to continue to adopt the
going-concern basis in preparing these financial statements. This basis
presumes that funds will be available to finance future operations and that
the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of business.
8. Post balance sheet events
8.1. Issue of equity
On 30 November 2021 the Company issued a total of 18,591,363 shares, which
included 17,358,363 shares ("Fee Shares") which was approved by shareholders
at the last AGM, to settle contractually accrued but unpaid fees due to
directors and consultants in respect of the period from October 2018 to March
2021, amounting to £118,750 (the "Accrued Fees") as well as 1,233,000 shares
("Consultant Fee Shares") issued at an issue price of 2.68p per share, to a
consultant of the Company in relation to fees amounting to £22,030.
The Accrued Fees includes accrued fees owed to directors totalling £106,250
(£ 65,000 owed to Mr Bird and £41,250 to Mr Wollenberg). Following the
issue of the Fee Shares, Mr Bird was issued 10,570,862 Ordinary Shares and Mr
Wollenberg 5,854,170 Ordinary Shares, following which Mr Bird is interested in
a total of 78,605,862 Ordinary Shares representing 7.22% and Mr Wollenberg a
total of 13,575,511 Ordinary Shares representing 1.25% of the Company's
enlarged issued share capital.
On 23 December 2021 the Company announced that it had issued 2,812,500 fully
paid ordinary shares in the Company at a price of 0.8p per share pursuant to
the exercise of warrants in terms of the Placing Agreement dated 30 May 2020
(RNS announced 1 June 2020).
8.2. Option and Joint Venture Agreement over Shinganda Copper-Gold
Project, Zambia
On entered into an Option and Joint Venture agreement with Garbo Resource
Solutions Ltd ("Garbo"), a private special purpose UK company established to
hold the Shinganda copper-gold property located in Central Zambia. The
property is held as a large-scale exploration licence No. 22990-HQ-LEL,
covering an area of 186.76km2, by Garbo Resource Zambia Ltd., which is 99.4%
owned by Garbo.
Project Licence
Licence No. 22990-HQ-LEL is in its initial 4-year term which expires on 22
August 2022. An exploration licence is valid for a period of four years. It
may be renewed for two further periods not exceeding three years each but the
maximum period from the initial grant of the licence shall not exceed 10
years. A holder of an exploration licence shall relinquish 50% of the licence
at each renewal.
Summary of Option Terms
An Option and Joint Venture Agreement has been signed with Garbo on the
following summary terms:
i. Galileo may earn an initial 51% interest in the Project
by spending US$500,000 on exploration, including drilling and
evaluation studies, over a two-year period, subject to any necessary Zambian
regulatory approval.
ii. Galileo may withdraw without penalty at any stage during
the Option period.
iii. At any time during the Option period Galileo may elect to
move forward to a Joint Venture to more fully evaluate and,
if warranted, develop the Project.
iv. Should the parties decide to advance the Project to
feasibility study, then Galileo will pay the cost of such a study.
v. Galileo's share of profits from a mining operation will
vary, depending on the projected size of the deposit, ranging from
85% if the project has the potential of greater than 50,000 but up to
200,000 tonnes of contained copper equivalent, to 65% if the project has the
potential for more than 1,000,000 tonnes of contained copper
equivalent.
vi. On decision to mine, each party will be responsible for
funding of the development pro-rata to its equity holding in the Joint
Venture.
vii. Should Garbo fail to finance its share in the development of
the Project, 100% ownership of the Project will revert to Galileo and
Garbo will be granted a 2% net smelter royalty on commercial production.
8.3 Glenover
On 9 December2021 Galileo announced a transaction in relation to its
investment in Glenover Phosphate Proprietary Limited ("Glenover") as follows:
a. Glenover in which Galileo has a 29% direct shareholding and a 4.99%
indirect shareholding held via Galagen Proprietary Limited who are the BEE
partner of Galileo entered into an Asset sale agreement with JSE Limited
listed Afrimat Limited (JSE: AFT) ("Afrimat") for ZAR 250M (approx. £11.64m)
of certain deposits of phosphate rock located at the Glenover Mine and mining
rights to mine the Vermiculite Deposit at the Glenover Mine (the "Asset Sale
Agreement").
o ZAR 215.1M (approx. £10m) of the Asset Sale Agreement consideration is
unconditional and is anticipated to result in a dividend of ZAR42M (approx.
approx. £1.97M) being paid to Galileo by 28 February 2022 in respect of its
29% shareholding in Glenover; and
o ZAR34.9M (approx. £1.64m ) of the Asset Sale Agreement consideration is
conditional on the issue of a vermiculite mining licence to Glenover and is
anticipated to result in a dividend to Galileo of Afrimat Shares worth
approximately ZAR10M (approx.£470K) in Q3 2022 in relation to Galileo's 29%
shareholding in Glenover.
b. Glenover also entered into a conditional sale of shares agreement
between Afrimat, Glenover and the shareholders of Glenover including Galileo
Resources SA (Pty) Ltd the Company's wholly owned South African subsidiary
under which Glenover has the option to acquire the sale of shares in and
shareholders loans made to Glenover for ZAR300M (approx. £14m) which is
expected to complete by 15 June 2023 if the option is exercised ("Conditional
Share Sale Agreement"). Galileo's 29% share of the gross Conditional Share
Sale Agreement consideration is ZAR87M (approx. £4.1m)
8.4 Joint Venture Agreement over Luansobe Copper Project, Zambia
On 30 December 2021, the Company announced that it had entered into a Joint
Venture Agreement (the "JV Agreement") on 29 December 2021 with Statunga
Investments Limited (the "Vendor"), a private Zambian company owns the
Luansobe Project comprising small-scale exploration licence No. 28340-HQ-SEL,
covering an area of 918 Hectares granted on 16 February 2021 and with its
initial 4-year term expiring on 15 February 2025.
Summary of JV Agreement Terms
1) Parties Statunga Investments Limited (hereinafter referred to as "Vendor") and Galileo
Resources Plc entered into the JV Agreement on 29 December 2021
2) Luansobe Project The Luansobe Project's location in Zambia relative to the Mufulira Copper Mine
in Zambia is situated approximately 15 kilometres to the North West of
Mufulira Mine site as per a 27 February 2008 report ( "2008 Report") provided
by the Vendor. The western limit is bounded by the international border with
the Democratic Republic of the Congo (DRC). The Luansobe Project forms part
of the western limb of the northwest - southeast trending Mufulira syncline
and has an estimated non-JORC compliant mineral resource totalling 5.5 million
tonnes at 1.6%TCu, 0.5%ASCu and covers the full area of the shallow oxide
zone, down-dip to include the mixed oxide-sulphide zone and the deeper
sulphide zones as delineated by drilling in 2006-07 and reported in the 2008
Report. The Luansobe (Insato, Kasaria) Technical report also provided by the
Vendor refers to an Indicated Mineral Resource of 14.2 million tonnes at 2% Cu
and the project being 10 kilometres north-west of Mufulira in the Copperbelt
Province and contained within ZCCM's Licence "Mufulira ML 15)
3) Initial JV period (a) The parties agreed on an exclusive basis to enter into a joint venture
in relation to the Luansobe Project. The initial period is from the date of
the JV Agreement to 20 February 2022 (the "Initial JV Period").
(b) During the Initial Period Galileo will conduct due diligence in relation
to the Luansobe Project and may at its sole discretion at any time prior to
the end of the Initial Period give notice to the Vendor that it has decided
not to proceed with the Joint Venture ("Notice Not To Proceed"). In the event
of Galileo giving Notice Not To Proceed (i) Galileo will not be liable to pay
the Second JV Payment (ii) Galileo will only be entitled to a refund of the
Initial JV Payment in the event of a title defect of the Licence or material
misrepresentation under the Vendor's warranties ("Refund Entitlement") ; and
(iii) The JV Agreement will be terminated and the parties will have no
further obligations or liabilities under this agreement save if Galileo is due
a Refund Entitlement.
4) Payments by Galileo (a) Galileo has to pay the initial payment of US$200,000 by 31 December 2021
(the "Initial JV Payment").
(b) Galileo has to pay the second payment of US$200,000 by no later than 20
February 2022 but may elect to make the payment early (the "Second JV
Payment").
5) Issue of Galileo Shares & lock up (c) Upon payment of the Second JV Payment Galileo is to issue 5,000,000
Galileo Resources PLC shares to the Vendor which shall be subject to a three
month lock up arrangement and thereafter a further three months orderly market
arrangement. Under the orderly market arrangement the shares can be sold via
Galileo's broker at a price determined by the Vendor (the "Nominated Sale
Price") which shall not be less than the lower of i) 10 day VWAP and ii)
Galileo closing bid price on the day before the fixing of the Nominated Sale
Price and Galileo's broker will have 10 business days to sell the shares at
the Nominated Sale Price.
6) Joint Venture (d) The JV Agreement established a joint venture in relation to the Luansobe
Project (the "Joint Venture") and once Galileo has paid the Second JV Payment
(referred to above); Galileo or its nominee will be issued 75% of the shares
in a to be established Zambian joint venture company (the "JV Company") to own
the Licence, technical information and other information and assets related to
the Luansobe Project and the Vendor will be issued 25% of the shares in the JV
Company
7) Technical management of JV (a) Galileo is to undertake to commence a raw data investigation of the
technical information available in relation to the Project and devise an
exploration programme for the Luansobe Project, which in Galileo's opinion
will maximise the value of the Luansobe Project and conduct a feasibility
study, which in their opinion will identify the most economic and practical
way of advancing the project.
(b) The parties have agreed that a benchmark expenditure for the raw data
investigation and exploration to complete a project feasibility study (the
"Project Feasibility Study Work") is US$4,000,000 (the "Benchmark
Expenditure"). In the event that the actual expenditure incurred on the
Project Feasibility Study Work prior to a sale is;
1. less than the Benchmark Expenditure then the shortfall (the "Benchmark
Expenditure Shortfall") shall be added to the Vendor's share of the gross
sale proceeds; and
2. more than the Benchmark Expenditure then the excess (the "Excess
Benchmark Expenditure") shall be deducted from the Vendor's share of the
gross sale proceeds.
(c) The Project Feasibility Study is to be concluded within 18 months from
20(th) February, 2022 and may be extended by a further 6 months if during the
initial 18 months there is a JORC resource for the Project (the "Feasibility
Study Period") .
8) Decision to Mine and funding (a) If a decision to mine is made by Galileo (a "Decision to Mine"), then
the parties will be entitled to fund pro rata to their beneficial interest in
the JV Company and will seek funding for a mine.
(b) Should the Vendor elect not to fund their 25%, then their interest will
be assumed on a carried basis ("Vendor Funding") to be borne by a specific
purpose vehicle to be formed to raise the funding amount as debt for the
project construction ("SPV FundingCo") and the SPV FundingCo will recover the
Vendor Funding from future cashflows on terms and conditions to be agreed upon
by the parties to the Vendor Funding.
(c) The Vendor is not obligated to obtain the Vendor Funding from the SPV
FundingCo and is at liberty to engage and obtain funding from a commercial
lending institution creating security only to the extent of the Vendor's
interest in the JV company
(d) In the event that Galileo makes a decision not to mine, the parties
agree to seek to sell the Project on the terms of point 8 below and /or obtain
a new investor.
9) No commitment to Mine Galileo makes no representation or commitment to develop a mine and will
only progress to the development of a mine if in their opinion the in-situ or
primary material fulfil their requirements for investment.
10) Distribution of cashflows Upon commercial production the agreed and disclosed debt ( indicative of the
principal sum, interest per annum, instalments and duration/period) shall be
deducted out of the daily of cashflow for debt servicing. The remaining
amount available shall be paid 75% to Galileo and 25% to the Vendor net of
operational costs.
11) Consequence of sale In the event of a third party sale of the Luansobe project and / or the JV
Company after the Second JV payment the gross sale proceeds will be
distributed as follows;
(a) First Priority: The Vendor will be entitled to US$6,000,000 (the
"Base Vendor Sale Consideration") plus the Benchmark Expenditure Shortfall
less the Excess Benchmark Expenditure (the "Vendor's Priority Return"). By way
of example in the event that prior to a sale no money has been spent by
Galileo on the Project Feasibility Study Work then the Vendor's Priority
Return would equal U$10,000,000 (US$6,000,000 of Base Vendor Sale
Consideration + US$4,000,000 of Benchmark Expenditure Shortfall); and
(b) Second Priority: After the Vendor has been paid the Vendor's Priority
Return the balance of the sale proceeds shall be paid 75% to Galileo and 25%
to the Vendor.
The Vendor will have come along rights so Galileo cannot sell without giving
the Vendor the opportunity to sell on the same terms on a pro rata basis.
12) Maintenance of Licence Vendor to assist on an ongoing basis in maintaining the Licence in good
standing with government agencies and local communities.
13) JV Committee A joint venture committee shall be formed, comprising three representatives
from Galileo and two from the Vendor. The chairman shall be a representative
and appointee of Galileo.
14) JV Agreement on establishment of JV Company It is agreed by the parties that upon establishment of the JV Company the
parties will enter into a joint venture agreement in relation to the JV
Company which shall encompass all of the commercial terms contained in the JV
Agreement (the "JV Company Agreement"). The JV Company Agreement matters will
consist of the following, but not be limited to the commercial terms outlined
in the JV Agreement, grievance procedures, arbitration procedures, notices,
joint venture committee functions, licence maintenance, SPV construction.
15) Termination This agreement will only be terminated if;
(a) The parties jointly agree in writing to terminate the agreement; or
(b) If Galileo has given Notice Not to Proceed; or
(c) If Galileo fails to meet any conditions precedent.
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. END IR DKDBQOBDKFBNRecent news on Galileo Resources
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