REG - Galantas Gold Corp - RESULTS FOR THE QUARTER ENDED MARCH 31, 2024
30/05/2024 07:00
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RNS Number : 3309Q Galantas Gold Corporation 30 May 2024
GALANTAS GOLD CORPORATION
TSXV & AIM: Symbol GAL
GALANTAS REPORT FINANCIAL RESULTS FOR THE QUARTER ENDED MARCH 31, 2024
May 28, 2024: Galantas Gold Corporation (the 'Company') is pleased to
announce its unaudited financial results for the Quarter ended March 31, 2024.
Financial Highlights
Highlights of the first quarter 2024 results, which are expressed in Canadian
Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Quarter Ended
March 31
2024 2023
Revenue $ 0 $ 0
Cost and expenses of operations $ (17,332) $ (50,215)
Loss before the undernoted $ (17,332) $ (50,215)
Depreciation $ (106,226) $ (126,105)
General administrative expenses $ (1,173,035) $ (1,242,764)
Foreign exchange gain (loss) $ 119,127 $ 25,470
Unrealized gain on derivative fair value adjustment $ 523,850 $ 0
Net (Loss) for the quarter $ (653,616) $ (1,393,614)
Working Capital Deficit $ (11,290,856) $ (11,074,990)
Cash loss from operating activities before changes in non-cash working capital $ (495,610) $ (475,530)
Cash at March 31, 2024 $ 1,288,200 $ 2,516,822
Sales revenue for the quarter ended March 31, 2024 amounted to $ Nil compared
to revenue of $ Nil for the quarter ended March 31, 2023. Shipments of
concentrate commenced during the third quarter of 2019. Concentrate sales
provisional revenues totalled US$ 206,566 for the first quarter of 2024
compared to US $ 255,000 for the first quarter of 2023. Until the mine
commences commercial production, the net proceeds from concentrate sales are
being offset against development assets.
The Net Loss for the quarter ended March 31, 2024 amounted to $ 653,616 (2023:
$ 1,393,614) and the cash outflow from operating activities before changes in
non-cash working capital for the quarter ended March 31, 2024 amounted to
$495,610 (2023: $475,530).
The Company had a cash balance of $1,288,200 at March 31, 2024 compared to
$2,516,822 at March 31, 2023. The working capital deficit at March 31, 2024
amounted to $11,290,856 compared to a working capital deficit of $11,074,990
at March 31, 2023.
Safety is a high priority for the Company and we continue to invest in
safety-related training and infrastructure. The zero lost time accident rate
since the start of underground operations continues. Environmental monitoring
demonstrates a high level of regulatory compliance.
The detailed results and Management Discussion and Analysis (MD&A) are
available on www.sedar.com (http://www.sedar.com) and www.galantas.com
(http://www.galantas.com) and the highlights in this release should be read in
conjunction with the detailed results and MD&A. The MD&A provides an
analysis of comparisons with previous periods, trends affecting the business
and risk factors.
Click on, or paste the following link into your web browser, to view the
associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/3309Q_1-2024-5-29.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3309Q_1-2024-5-29.pdf)
Qualified Person
The financial components of this disclosure have been reviewed by Alan Buckley
(Chief Financial Officer) and the production and permitting components by
Brendan Morris (COO), qualified persons under the meaning of NI. 43-101. The
information is based upon local production and financial data prepared under
their supervision.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains
forward-looking statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and applicable Canadian securities
laws, including revenues and cost estimates, for the Omagh Gold project.
Forward-looking statements are based on estimates and assumptions made by
Galantas in light of its experience and perception of historical trends,
current conditions and expected future developments, as well as other factors
that Galantas believes are appropriate in the circumstances. Many factors
could cause Galantas' actual results, the performance or achievements to
differ materially from those expressed or implied by the forward looking
statements or strategy, including: gold price volatility; discrepancies
between actual and estimated production, actual and estimated
metallurgical recoveries and throughputs; mining operational risk,
geological uncertainties; regulatory restrictions, including environmental
regulatory restrictions and liability; risks of sovereign involvement;
speculative nature of gold exploration; dilution; competition; loss of or
availability of key employees; additional funding requirements; uncertainties
regarding planning and other permitting issues; and defective title to mineral
claims or property. These factors and others that could affect Galantas's
forward-looking statements are discussed in greater detail in the section
entitled "Risk Factors" in Galantas' Management Discussion & Analysis of
the financial statements of Galantas and elsewhere in documents filed from
time to time with the Canadian provincial securities regulators and other
regulatory authorities. These factors should be considered carefully, and
persons reviewing this press release should not place undue reliance on
forward-looking statements. Galantas has no intention and undertakes no
obligation to update or revise any forward-looking statements in this press
release, except as required by law.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
Enquiries
Galantas Gold Corporation
Mario Stifano - CEO
Email: info@galantas.com (mailto:info@galantas.com)
Website: www.galantas.com (http://www.galantas.com/)
Telephone: 001 416 453 8433
Grant Thornton UK LLP (Nomad)
Philip Secrett, Harrison Clarke, Elliot
Peters:
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 Months Ended March 31, 2024
NOTICE TO READER
The accompanying unaudited condensed interim consolidated financial statements
of Galantas Gold Corporation (the "Company") have been prepared by and are the
responsibility of management. The unaudited condensed interim consolidated
financial statements have not been reviewed by the Company's auditors.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
(Unaudited)
As at As at
March 31,
December 31,
2024
2023
ASSETS
Current assets
Cash and cash equivalents $ 1,288,200 $ 2,593,265
Accounts receivable and prepaid expenses (note 4) 1,548,489 1,596,880
Inventories (note 5) 128,355 18,184
Total current assets 2,965,044 4,208,329
Non-current assets
Property, plant and equipment (note 6) 23,893,540 23,094,171
Long-term deposit (note 8) 513,420 505,110
Exploration and evaluation assets (note 7) 4,964,381 4,776,409
Total non-current assets 29,371,341 28,375,690
Total assets $ 32,336,385 $ 32,584,019
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (notes 9 and 17) $ 3,435,140 $ 3,662,842
Financing facilities (note 10) 6,488,362 6,119,308
Due to related parties (note 15) 4,332,398 5,838,256
Other liability (note 15) - 1,187,437
Total current liabilities 14,255,900 16,807,843
Non-current liabilities
Due to related parties (note 15) - 638,432
Decommissioning liability (note 8) 624,214 611,452
Convertible debenture (note 11) 5,285,669 1,923,509
Derivative liability (note 11) 1,470,114 1,245,627
Total non-current liabilities 7,379,997 4,419,020
Total liabilities 21,635,897 21,226,863
Equity
Share capital (note 12(a)(b)) 71,699,799 71,809,999
Reserves 18,686,615 18,579,467
Deficit (79,685,926 ) (79,032,310 )
Total equity 10,700,488 11,357,156
Total equity and liabilities $ 32,336,385 $ 32,584,019
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
Going concern (note 1)
Incorporation and nature of operations (note 2)
Contingency (note 17)
Event after the reporting period (note 18)
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2024 2023
Revenues
Sales of concentrate (note 14) $ - $ -
Cost and expenses of operations
Cost of sales 17,332 50,215
Depreciation (note 6) 106,226 126,105
123,558 176,320
Loss before general administrative and other income (123,558 ) (176,320 )
General administrative expenses
Management and administration wages (note 15) 110,932 124,198
Other operating expenses 34,910 94,763
Accounting and corporate 28,528 146,611
Legal and audit 32,949 43,393
Stock-based compensation (note 12(d)) 29,814 183,723
Shareholder communication and investor relations 123,536 162,595
Transfer agent 21,265 6,345
Director fees (note 15) 35,000 35,000
General office 22,960 41,946
Accretion expenses (notes 8, 10, 11 and 15) 293,275 111,132
Loan interest and bank charges less deposit interest (notes 10, 11 and 15) 439,866 293,058
1,173,035 1,242,764
Other income
Foreign exchange gain (119,127 ) (25,470 )
Unrealized gain on derivative fair value adjustment (note 11) (523,850 ) -
(642,977 ) (25,470 )
Net loss for the period $ (653,616 ) $ (1,393,614 )
Basic and diluted net loss per share (note 13) $ (0.01) $ (0.01 )
Weighted average number of common shares outstanding - basic and diluted 114,732,865 103,893,399
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements. of Comprehensive Loss
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2024 2023
Net loss for the period $ (653,616 ) $ (1,393,614 )
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 77,334 453,574
Total comprehensive loss $ (576,282 ) $ (940,040 )
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
Galantas Gold Corporation
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
(Unaudited)
Three Months Ended
March 31,
2024 2023
Operating activities
Net loss for the period $ (653,616 ) $ (1,393,614 )
Adjustment for:
Depreciation (note 6) 106,226 126,105
Stock-based compensation (note 12(d)) 29,814 183,723
Accrued interest (notes 10, 11 and 15) 423,051 395,054
Foreign exchange (gain) loss (170,510 ) 102,070
Accretion expenses (notes 8, 10, 11 and 15) 293,275 111,132
Impairment of property, plant and equipment and
Gain on derivative fair value adjustment (note 11) (523,850 ) -
Non-cash working capital items:
Accounts receivable and prepaid expenses 49,870 251,144
Inventories (108,094 ) 4,896
Accounts payable and other liabilities (272,994 ) 461,212
Net cash and cash equivalents (used in) provided by operating activities (826,828 ) 241,722
Investing activities
Net purchase of property, plant and equipment (532,574 ) (1,187,334 )
Exploration and evaluation assets (134,653 ) (921,853 )
Net cash and cash equivalents used in investing activities (667,227 ) (2,109,187 )
Financing activities
Proceeds of private placements (note 12(b)(i)) - 2,963,142
Share issue costs - (204,993 )
Proceeds from exercise of warrants - 5,600
Advances from related parties 169,852 -
Repayments to related parties - (6,500 )
Proceeds from financing facilities - 580,392
Net cash and cash equivalents provided by financing activities 169,852 3,337,641
Net change in cash and cash equivalents (1,324,203 ) 1,470,176
Effect of exchange rate changes on cash held in foreign currencies 19,138 8,003
Cash and cash equivalents, beginning of period 2,593,265 1,038,643
Cash and cash equivalents, end of period $ 1,288,200 $ 2,516,822
Cash $ 1,288,200 $ 2,516,822
Cash equivalents - -
Cash and cash equivalents $ 1,288,200 $ 2,516,822
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, 2022 $ 69,664,056 $ 3,903,004 $ 11,887,678 $ (275,577 ) $ (70,464,170 ) $ 14,714,991
Shares issued in private 2,963,142 - - - - 2,963,142
placement (note 12(b)(i))
Warrants issued (note 12(b)(i)) (1,284,806 ) 1,284,806 - - - -
Warrants issued - 82,511 - - - 82,511
Share issue costs (note 12(b)(i)) (245,168 ) 40,175 - - - (204,993 )
Stock-based compensation (note 12(d)) - - 183,723 - - 183,723
Exercise of warrants 7,311 (1,711 ) - - - 5,600
Warrants expired - (51,000 ) 51,000 - - -
Exchange differences on translating - - - 453,574 - 453,574
foreign operations
Net loss for the period - - - - (1,393,614 ) (1,393,614 )
Balance, March 31, 2023 $ 71,104,535 $ 5,257,785 $ 12,122,401 $ 177,997 $ (71,857,784 ) $ 16,804,934
Balance, December 31, 2023 $ 71,809,999 $ 3,546,313 $ 14,345,538 $ 687,616 $ (79,032,310 ) $ 11,357,156
Shares cancelled (110,200 ) - - - - (110,200 )
Stock-based compensation (note 12(d)) - - 29,814 - - 29,814
Exchange differences on translating - - - 77,334 - 77,334
foreign operations
Net loss for the period - - - - (653,616 ) (653,616 )
Balance, March 31, 2024 $ 71,699,799 $ 3,546,313 $ 14,375,352 $ 764,950 $ (79,685,926 ) $ 10,700,488
The notes to the unaudited condensed interim consolidated financial statements
are an integral part of these statements.
Galantas Gold Corporation
Notes to Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2024
(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 subsidiaries Gairloch Resources Limited ("Gairloch") incorporated
on November 16, 2023 and Cavanacaw Corporation ("Cavanacaw"). Cavanacaw has a
100% shareholding in Galántas Irish Gold Limited ("Galántas"), 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 on forecast cash flows being met,
further financing negotiations being completed together. Management'
assumptions in relation to future financing, levels of production, gold prices
and mine operating 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.
Based on the financial projections which have been prepared for a five-year
period and using assumptions which management believes to be prudent,
alongside ongoing negotiations with both current and prospective investors and
creditors, management believes it is appropriate to prepare the unaudited
condensed interim consolidated financial statements on the going concern
basis.
Should the Company be unsuccessful in securing the above, there would be
significant uncertainty over the Company's ability to continue as a going
concern. The unaudited condensed interim consolidated financial statements do
not include any adjustments that would result if forecast cash flows were not
achieved, if the existing creditors withdrew their support or if further
financing could not be raised from current or potential investors.
During the year ended December 31, 2023, the Company raised gross proceeds of
$3M through the issuance of shares to investors and $3.5M through the issuance
of convertible debentures.
As at March 31, 2024, the Company had a deficit of $79,685,926 (December 31,
2023 - $79,032,310). Comprehensive loss for the three months ended March 31,
2024 was $576,282 (three months ended March 31, 2023 - $940,040). 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. As at July 1, 2007, the Company's Omagh mine began
production and in 2013 production was suspended. On April 1, 2014, Galántas
amalgamated its jewelry business with Omagh.
On April 8, 2014, Cavanacaw acquired Flintridge. Following a strategic review
of its business by the Company during 2014 certain assets owned by Omagh were
acquired by Flintridge.
On November 16, 2023, Gairloch was incorporated.
The Company's operations include the consolidated results of Gairloch,
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 May 28,
2024 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, 2023. Any subsequent changes to IFRS that are given effect in the
Company's annual consolidated financial statements for the year ending
December 31, 2024 could result in restatement of these unaudited condensed
interim consolidated financial statements.
4. Accounts Receivable and Prepaid Expenses
As at As at
March 31, December 31,
2024 2023
Sales tax receivable - Canada $ 55,700 $ 15,067
Valued added tax receivable - Northern Ireland 67,913 9,959
Accounts receivable 362,332 83,266
Prepaid expenses 1,062,544 1,488,588
$ 1,548,489 $ 1,596,880
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
March 31,
December 31,
2024
2023
Less than 3 months $ 401,252 $ 50,614
3 to 12 months 66,666 45,330
More than 12 months 18,027 12,348
Total accounts receivable $ 485,945 $ 108,292
5. Inventories
As at As at
March 31,
December 31,
2024
2023
Concentrate inventories $ 128,355 $ 18,184
6. Property, Plant and Equipment
Cost Freehold Plant
land and
and
Motor
Office
Development
Assets under
buildings
machinery
vehicles
equipment
assets (i)
construction
Total
Balance, December 31, 2022 $ 2,252,053 $ 8,721,798 $ 220,866 $ 216,029 $ 21,402,040 $ - $ 32,812,786
Additions - - - - 3,423,820 26,939 3,450,759
Cash receipts from concentrate sales - - - - (1,491,453 ) - (1,491,453 )
Impairment - - - - (3,353,077 ) - (3,353,077 )
Foreign exchange adjustment 71,058 274,128 6,969 6,816 658,736 - 1,017,707
Balance, December 31, 2023 2,323,111 8,995,926 227,835 222,845 20,640,066 26,939 32,436,722
Additions - - - - 532,574 - 532,574
Transfer - 27,382 - - - (27,382 ) -
Foreign exchange adjustment 38,220 147,439 3,748 3,666 336,565 443 530,081
Balance, March 31, 2024 $ 2,361,331 $ 9,170,747 $ 231,583 $ 226,511 $ 21,509,205 $ - $ 33,499,377
Accumulated depreciation
Balance, December 31, 2022 $ 1,876,242 $ 6,378,013 $ 158,615 $ 144,067 $ - $ - $ 8,556,937
Depreciation 3,954 482,088 17,864 11,097 - - 515,003
Foreign exchange adjustment 59,213 201,755 5,062 4,581 - - 270,611
Balance, December 31, 2023 1,939,409 7,061,856 181,541 159,745 - - 9,342,551
Depreciation 805 99,605 3,413 2,403 - - 106,226
Foreign exchange adjustment 35,732 115,707 2,990 2,631 - - 157,060
Balance, March 31, 2024 $ 1,975,946 $ 7,277,168 $ 187,944 $ 164,779 $ - $ - $ 9,605,837
Carrying value
Balance, December 31, 2023 $ 383,702 $ 1,934,070 $ 46,294 $ 63,100 $ 20,640,066 $ 26,939 $ 23,094,171
Balance, March 31, 2024 $ 385,385 $ 1,893,579 $ 43,639 $ 61,732 $ 21,509,205 $ - $ 23,893,540
(i) Development assets are expenditures for the underground mining operations
in Omagh.
7. Exploration and Evaluation Assets
Acquisition Exploration
Cost
costs
costs
Total
Balance, December 31, 2022 $ - $ 2,665,313 $ 2,665,313
Additions 1,140,115 1,162,710 2,302,825
Impairment - (282,493 ) (282,493 )
Foreign exchange adjustment - 90,764 90,764
Balance, December 31, 2023 1,140,115 3,636,294 4,776,409
Additions - 134,653 134,653
Foreign exchange adjustment - 53,319 53,319
Balance, March 31, 2024 $ 1,140,115 $ 3,824,266 $ 4,964,381
Carrying value
Balance, December 31, 2023 $ 1,140,115 $ 3,636,294 $ 4,776,409
Balance, March 31, 2024 $ 1,140,115 $ 3,824,266 $ 4,964,381
8. Decommissioning Liability
The Company's decommissioning liability is a result of mining activities at
the Omagh mine in Northern Ireland. The Company estimated its decommissioning
liability at March 31, 2024 based on a risk-free discount rate of 1% (December
31, 2023 - 1%) and an inflation rate of 1.50% (December 31, 2023 - 1.50%). The
expected undiscounted future obligations allowing for inflation are GBP
330,000 and based on management's best estimate the decommissioning is
expected to occur over the next 5 to 10 years. On March 31, 2024, the
estimated fair value of the liability is $624,214 (December 31, 2023 -
$611,452). Changes in the provision during the three months ended March 31,
2024 are as follows:
As at As at
March 31,
December 31,
2024
2023
Decommissioning liability, beginning of period $ 611,452 $ 582,441
Accretion 2,700 10,601
Foreign exchange 10,062 18,410
Decommissioning liability, end of period $ 624,214 $ 611,452
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, 2023 - GBP 300,000), of which GBP 300,000 was funded as
of March 31, 2024 (GBP 300,000 was funded as of December 31, 2023) and
reported as long-term deposit of $513,420 (December 31, 2023 - $505,110).
9. Accounts Payable and Other Liabilities
Accounts payable and other liabilities of the Company are principally
comprised of amounts outstanding for purchases relating to exploration costs
on exploration and evaluation assets, general operating activities and
professional fees activities.
As at As at
March 31,
December 31,
2024
2023
Accounts payable $ 2,271,977 $ 2,131,257
Accrued liabilities 1,163,163 1,531,585
Total accounts payable and other liabilities $ 3,435,140 $ 3,662,842
The following is an aged analysis of the accounts payable and other
liabilities:
As at As at
March 31,
December 31,
2024
2023
Less than 3 months $ 1,165,947 $ 1,672,744
3 to 12 months 910,566 807,338
12 to 24 months 606,431 474,290
More than 24 months (see also note 17) 752,196 708,470
Total accounts payable and other liabilities $ 3,435,140 $ 3,662,842
10. Financing Facilities
Amounts payable on the Company's financial facilities are as follow:
As at As at
March 31,
December 31,
2024
2023
G&F Phelps
Financing facility, beginning of period $ 6,119,308 $ 4,836,267
Accretion - 259,354
Interest 268,176 961,722
Shares for debt settlement - (100,000 )
Foreign exchange adjustment 100,878 161,965
6,488,362 6,119,308
Less current portion (6,488,362 ) (6,119,308 )
Financing facilities - non-current portion $ - $ -
11. Convertible Debentures
(i) On December 20, 2023, the Company closed a $3,502,054 (US$ 2,627,000)
convertible debenture. The convertible debenture is unsecured, is for a term
of three year commencing on the date that it is issued, carries a coupon of
10% per annum and is convertible into common shares of the Company. Each
debenture consists of US$1,000 principal amount of unsecured convertible
debentures. The convertible debentures have a term of 36 months from the date
of issuance with a conversion price of US$0.255 being the equivalent of a
conversion price of $0.35 per conversion share. A four month hold period will
apply to common shares converted through the convertible debenture. The hold
period will expire on April 21, 2024.
In accordance with the terms of the convertible debentures, if, at any time
following the issuance of the convertible 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
convertible debentures into conversion shares at the conversion price, upon
giving the holders of the convertible debentures not less than 30 calendar
days advance written notice. On December 20, 2026, any outstanding principal
amount of convertible debentures plus any accrued and unpaid interest thereon
shall be repaid by the Company in cash.
Interest on the principal amount outstanding under each convertible debenture
shall accrue during the period commencing on December 20, 2023 until December
20, 2026 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 convertible
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 December 20, 2023 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; provided, however, that, without the prior acceptance of the
TSXV, the average interest rate shall not exceed 24% per annum during the term
of the convertible debentures. 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 Interest Period ending on December 31, 2024, from
December 20, 2023 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.
Melquart, an insider and control person of the Company (as defined by the
TSXV), subscribed for US$875,000. Ocean Partners, which has a common director
with the Company, acquired US$875,000 aggregate principal amount of
convertible debentures.
The Company paid a cash finder's fee of US$40,500 (CAD$53,990) and issued
158,823 non-transferable finder's warrants to Canaccord Genuity Corp. in
consideration for providing certain finder services to the Company under the
offering. Each finder warrant is exercisable to acquire one common share in
the capital of the Company at an exercise price of $0.35 per common share at
any time on or before December 20, 2026. The fair value of the 158,823 finder
warrants was estimated at $24,670 using the Black-Scholes option pricing model
with the following assumptions: expected dividend yield - 0%, expected
volatility - 107.02%, risk-free interest rate - 3.71% and an expected average
life of 3 years.
The debentures consist of the liability component and conversion feature. Due
to the convertible debenture being denominated in US$, the conversion feature
has been presented as a non-cash derivative liability.
On the date of issuance, the fair value of the derivative liability was
estimated to be $1,495,208 using the Black-Scholes option pricing model with
the following assumptions: expected dividend yield - 0%, expected volatility -
95.0%, risk-free interest rate - 3.94% and an expected average life of 3
years.
As at December 31, 2023, the fair value of the derivative liability was
revalued at $1,245,627 using the Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected volatility -
94.9%, risk-free interest rate - 3.91% and an expected average life of 2.97
years.
On issuance the fair value of the liability component was recorded at
$2,006,846, discounted at an effective interest rate of 37%.
The Company incurred transaction costs of $153,481 which was allocated
pro-rata on the value of the conversion feature and the liability component.
During the year ended December 31, 2023, the Company recorded accretion
expense of $33,265 and interest expense of $29,184 as loan interest and bank
charges less deposit interest in the consolidated statement of loss.
As at March 31, 2024, the fair value of the derivative liability was revalued
at $830,639 using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility - 95%,
risk-free interest rate - 4.20% and an expected average life of 2.72 years.
During the three months ended March 31, 2024, the Company recorded accretion
expense of $183,024 and interest expense of $88,569 as loan interest and bank
charges less deposit interest in the unaudited condensed interim consolidated
statement of loss.
(ii) On February 5, 2024, the Company announced that it closed a debt
settlement transaction, pursuant to which the Company settled US$2,711,000 of
indebtedness owing to Ocean Partners through the issuance of US$2,711,000
aggregate principal amount of unsecured convertible debentures of the Company.
The convertible debenture issued in connection with the debt settlement were
issued on substantially the same terms as the unsecured convertible debentures
closed on December 20, 2023. The convertible debentures issued pursuant to the
debt settlement are subject to a four-month hold period which will expire on
June 6, 2024.
The debentures consist of the liability component and conversion feature. Due
to the convertible debenture being denominated in US$, the conversion feature
has been presented as a non-cash derivative liability.
On the date of issuance, the fair value of the derivative liability was
estimated to be $748,337 using the Black-Scholes option pricing model with the
following assumptions: expected dividend yield - 0%, expected volatility -
95.0%, risk-free interest rate - 4.28% and an expected average life of 2.87
years.
The fair value of the liability component was recorded at $2,918,833,
discounted at an effective interest rate of 20%.
As at March 31, 2024, the fair value of the derivative liability was revalued
at $639,475 using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility - 95%,
risk-free interest rate - 4.20% and an expected average life of 2.72 years.
During the three months ended March 31, 2024, the Company recorded accretion
expense of $105,428 and interest expense of $66,306 as loan interest and bank
charges less deposit interest in the unaudited condensed interim consolidated
statement of loss.
Convertible Derivative
debenture
liability
Balance, December 31, 2022 $ - $ -
Principal amount (i) 3,502,054 -
Derivative liability component (i) (1,495,208 ) 1,495,208
Transaction costs (i) (153,481 ) -
Transaction costs allocated to derivative liability component (i) 7,695 (7,695 )
Interest expense (i) 29,184 -
Accretion expense (i) 33,265 -
Change in fair value (i) - (241,886 )
Balance, December 31, 2023 1,923,509 1,245,627
Principal amount (ii) 3,667,170 -
Derivative liability component (ii) (748,337 ) 748,337
Interest expense (i)(ii) 154,875 -
Accretion expense (i)(ii) 288,452 -
Change in fair value (i)(ii) - (523,850 )
Balance, March 31, 2024 $ 5,285,669 $ 1,470,114
12. Share Capital and Reserves
a) Authorized share capital
At March 31, 2024, the authorized share capital consisted of an unlimited
number of common and preference shares issuable in Series.
The common shares do not have a par value. All issued shares are fully paid.
No preference shares have been issued. The preference shares do not have a par
value.
b) Common shares issued
At March 31, 2024, the issued share capital amounted to $71,699,799. The
continuity of issued share capital for the periods presented is as follows:
Number of Amount
common
shares
Balance, December 31, 2022 103,518,509 $ 69,664,056
Shares issued in private placement (i) 8,230,951 2,963,142
Warrants issued (i) - (1,284,806 )
Share issue costs (i) - (245,168 )
Exercise of warrants 14,000 7,311
Balance, March 31, 2023 111,763,460 $ 71,104,535
Number of Amount
common
shares
Balance, December 31, 2023 114,841,403 $ 71,809,999
Shares cancelled (306,110 ) (110,200 )
Balance, March 31, 2024 114,535,293 $ 71,699,799
(i) On March 27, 2023, the Company closed a non-brokered private placement of
8,230,951 units at a price of $0.36 per unit for gross proceeds of $2,963,142.
Each unit consists of one common share of the Company and one common share
purchase warrant, with each warrant entitling the holder to purchase an
additional common share at a price of $0.55 per share until March 27, 2028.
The fair value of the 8,230,951 warrants was estimated at $1,284,806 using the
Black-Scholes option pricing model with the following assumptions: expected
dividend yield - 0%, expected volatility - 126.22%, risk-free interest rate -
2.96% and an expected average life of 5 years.
The Company paid the agents a cash commission equal to $130,966 and issued
237,162 non-transferable broker warrants of the Company. Each broker warrant
is exercisable to acquire one common share at an exercise price of $0.36
until March 27, 2025. The fair value of the 237,162 warrants was estimated at
$40,175 using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility - 99.18%,
risk-free interest rate - 3.61% and an expected average life of 2 years.
Ocean Partners acquired 691,666 units for consideration of $249,000 and
Brendan Morris, an officer of the Company, acquired 468,416 units for
consideration of $168,630.
c) Warrant reserve
The following table shows the continuity of warrants for the periods
presented:
Number of Weighted
warrants
average
exercise
price
Balance, December 31, 2022 24,051,900 $ 0.45
Issued (notes 12(b)(i) and 15(a)(vi)) 9,068,113 0.54
Exercised (14,000 ) 0.40
Expired (250,000 ) 0.50
Balance, March 31, 2023 32,856,013 $ 0.47
Balance, December 31, 2023 and March 31, 2024 19,658,904 $ 0.54
The following table reflects the actual warrants issued and outstanding as of
March 31, 2024:
Number Grant date Exercise
Expiry date
of warrants
fair value
price
($)
($)
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 407,962 40,175 0.36
December 20, 2026 158,823 24,670 0.35
March 27, 2028 7,924,841 1,284,806 0.55
April 26, 2028 2,080,609 324,828 0.55
19,658,904 3,546,313 0.54
d) Stock options
The following table shows the continuity of stock options for the periods
presented:
Number of Weighted
options
average
exercise
price
Balance, December 31, 2022 6,152,500 $ 0.78
Cancelled (i) (177,500 ) 0.71
Balance, March 31, 2023 5,975,000 $ 0.78
Balance, December 31, 2023 5,862,500 $ 0.78
Expired (85,000 ) 0.90
Balance, March 31, 2024 5,777,500 $ 0.78
(i) The portion of the estimated fair value of options granted in the current
and prior periods and vested during the three months ended March 31, 2024,
amounted to $29,814 (three months ended March 31, 2023 - $183,723). In
addition, during the three months ended March 31, 2024, nil options granted in
the prior years were cancelled (three months ended March 31, 2023 - 177,500
options cancelled).
The following table reflects the actual stock options issued and outstanding
as of March 31, 2024:
Weighted average Number of Number of Number of
Exercise
remaining
options
options
options
Expiry date
price ($)
contractual
outstanding
vested
unvested
life (years)
(exercisable)
June 27, 2024 0.90 0.24 100,000 100,000 -
May 19, 2026 0.86 2.13 3,635,000 3,635,000 -
June 21, 2026 0.73 2.22 425,000 425,000 -
August 27, 2026 0.86 2.41 20,000 20,000 -
May 3, 2027 0.60 3.09 1,597,500 1,065,000 532,500
0.78 2.37 5,777,500 5,245,000 532,500
13. Net Loss per Common Share
The calculation of basic and diluted loss per share for the three months ended
March 31, 2024 was based on the loss attributable to common shareholders of
$653,616 (three months ended March 31, 2023 - $1,393,614) and the weighted
average number of common shares outstanding of 114,732,865 (three months ended
March 31, 2023 - 103,893,399) for basic and diluted loss per share. Diluted
loss did not include the effect of 19,658,904 warrants (three months ended
March 31, 2023 - 32,856,013) and 5,777,500 options (three months ended March
31, 2023 - 5,975,000) for the three months ended March 31, 2024, as they are
anti-dilutive.
14. Revenues
Shipments of concentrate under the off-take arrangements commenced during the
second quarter of 2019. Concentrate sales provisional revenues during the
three months ended March 31, 2024 totalled approximately US$207,000
(CAD$279,897) (three months ended March 31, 2023 - US$255,000 (CAD$419,169).
However, until the mine reaches the commencement of commercial production, the
net proceeds from concentrate sales will be offset against Development assets.
15. Related Party Disclosures
Related parties 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
March 31,
2024 2023
Interest on related party loans (i) $ 143,307 $ 173,665
(i) Refer to note 15(a)(iv).
(ii) Refer to note 12(b).
(iii) Refer to note 11.
(iv) As at March 31, 2024, the Company owes Ocean Partners $3,422,239
(December 31, 2023 - $5,673,150) which is recorded as due to related parties
on the unaudited condensed interim consolidated statement of financial
position.
March 31, December 31,
2024 2023
Balance, beginning of period $ 5,673,150 $ 4,978,069
Converted to convertible debentures (note 11) (2,575,382 ) -
Repayment - (24,735 )
Accretion - 116,569
Interest 123,338 729,033
Foreign exchange adjustment 201,133 (125,786 )
Balance, end of period 3,422,239 5,673,150
Less current balance (3,422,239 ) (5,673,150 )
Due to related parties - non-current balance $ - $ -
(v) In February 2024, the loan balance due to Ocean Partner was converted to
convertible debentures. Refer to note 11. As at March 31, 2024, balance
related to the loan is recorded as other liability on the unaudited condensed
interim consolidated statement of financial position is $Nil (December 31,
2023 - $1,187,437).
March 31, December 31,
2024
2023
Melquart Limited
Financing facilities, beginning of period $ 638,432 $ -
Financing facility received - 580,392
Less bonus warrants issued - (16,984 )
Accretion 2,123 7,077
Interest 19,969 64,095
Foreign exchange adjustment 10,666 3,852
Balance, end of period 671,190 638,432
Less current portion (671,190 ) -
Due to related parties - non-current balance $ - $ 638,432
(b) Remuneration of officer and directors of the Company was as follows:
Three Months Ended
March 31,
2024 2023
Salaries and benefits ((1)) $ 92,121 $ 113,334
Stock-based compensation 21,569 141,231
$ 113,690 $ 254,565
((1)) Salaries and benefits include director fees. As at March 31, 2024, due
to directors for fees amounted to $105,000 (December 31, 2023 - $140,000) and
due to officers, mainly for salaries and benefits accrued amounted to $133,969
(December 31, 2023 - $25,106), and is included with due to related parties.
(c) As at March 31, 2024, the issued shares of Galantas total 114,535,293.
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 24.6% 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 49% 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.
16. Segment Disclosure
The Company has determined that it has one reportable segment. The Company's
operations are substantially all related to its investment in Cavanacaw and
its subsidiaries, Omagh and Flintridge. Substantially all of the Company's
revenues, costs and assets of the business that support these operations are
derived or located in Northern Ireland. Segmented information on a geographic
basis is as follows:
March 31, 2024 United Kingdom Canada Total
Current assets $ 687,365 $ 2,277,679 $ 2,965,044
Non-current assets $ 27,638,714 $ 1,732,558 $ 29,371,272
Revenues $ - $ - $ -
December 31, 2023 United Kingdom Canada Total
Current assets $ 1,831,473 $ 2,376,856 $ 4,208,329
Non-current assets $ 26,702,212 $ 1,673,478 $ 28,375,690
Revenues $ - $ - $ -
17. Contingency
During the year ended December 31, 2010, the Company's subsidiary Omagh
received a payment demand from Her Majesty's Revenue and Customs ("HMRC") in
the amount of $520,762 (GBP 304,290) in connection with an aggregate levy
arising from the removal of waste rock from the mine site during 2008 and
early 2009. Omagh believed this claim to be without merit. An appeal was
lodged with the Tax Tribunals Service and the hearing started at the beginning
of March 2017 and following a number of adjournments was completed in August
2018. During the year ended December 31, 2019, the Tax Tribunals Service
issued their judgement dismissing the appeal by Omagh in respect of the
assessments. A provision has now been included in the unaudited condensed
interim consolidated financial statements in respect of the aggregates levy
plus interest and penalty.
There is a contingent liability in respect of potential additional interest
which may be applied in respect of the aggregates levy dispute. Omagh is
unable to make a reliable estimate of the amount of the potential additional
interest that may be applied by HMRC.
18. Event After the Reporting Period
On April 29, 2024, the Company granted 3,175,000 stock options to directors,
officers, employees and consultants of the Company to purchase common shares
at $0.23 per share until April 29, 2029. The options will vest as to one third
immediately and one third on each of April 29, 2025 and April 29, 2026.
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