Galantas reports Financial Results for Quarter 1 2016
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS REPORTS RESULTS FOR THE QUARTER ENDED MARCH 31, 2016
May 24, 2016: Galantas Gold Corporation (the "Company") is pleased to announce its financial results for the Quarter ended March 31, 2016.
Highlights of the first quarter 2016 results, which are expressed in Canadian Dollars, are summarised below:
All in CDN$
|Quarter Ended March 31, 2016||Quarter Ended March 31, 2017|
|Revenue||$ 28,073||$ 1,123|
|Cost of Sales||$ (121,531)||$ (69,997)|
|Loss before the items below||$ (93,458)||$ (68,874)|
|Amortization||$ (47,551)||$ (52,293)|
|General administrative expenses||$ (336,111)||$ (261,532)|
|Unrealized gain on fair value of derivative financial liability||$ 79,000||$ 8,000|
|Foreign exchange gain (loss)||$ 24,775||$ (39,400)|
|Net (Loss) for the quarter||$ (373,345)||$ (414,099)|
|Working Capital (Deficit)||$ (4,012,704)||$ (3,677,040)|
|Cash (loss) generated from operations before changes in non-cash working capital||$ (416,547)||$ (501,088)|
|Cash at March 31, 2016||$ 568,284||$ 380,764|
The Net Loss for the quarter ended March 31, 2016 amounted to CDN$ 373,345 (2015: CDN$ 414,099) and the cash outflow from operating activities before changes in non-cash working capital items for the quarter ended March 31, 2016 amounted to CDN$ 416,547 (2015: CDN$ 501,088).
Sales revenues for the quarter ended March 31, 2016 consisted mainly of jewelry sales and amounted to CDN$ 28,073 (2015: CDN $ 1,123). Following the suspension of production during the fourth quarter of 2013 there have not been any shipments of concentrates from the mine.
Cost of sales, which includes production costs and inventory movement, for the quarter ended March 31, 2016 amounted to CDN$ 121,531 (2015: CDN$ 69,997). Production costs were mainly in connection with ongoing care, maintenance and restoration costs at the Omagh mine site.
The Company had a cash balance of $ 568,284 at March 31, 2016 compared to $ 380,764 at March 31, 2015. The working capital deficit at March 31, 2016 amounted to $ 4,012,704 compared to a working capital deficit of $ 3,677,040 at March 31, 2015.
Subsequent to March 31, 2016 the Company announced a proposed private placement of shares and shares for debt exchange. The private placement is expected to be for 16 million shares at a price of $ 0.07875 per share for a total of $1,260,000. While the placing is expected to be for 16 million shares the Company may close for less than or more than this amount. A four month hold period will apply to the shares and issuance will be subject to TSXV approval. In addition to the placing, Roland Phelps, President and CEO of the Company, intends to, subject to approvals, enter into a shares for debt exchange on the same terms as the placing. Mr. Phelps will exchange debt accruing to him, as of March 31, 2016, for up to $935,852 for up to 11,883,835 shares.
Production at the Omagh mine remains suspended. However the granting of planning consent during the second quarter of 2015 for an underground operation at the Omagh site, now subject to a judicial review expected to be heard in September 2016, will permit the continuation and expansion of gold mining. The underground mine will utilize the same processing methods and will be the first underground gold mine, of any scale, in Ireland. The strategy is to establish the underground mine as soon as finance is available and look for further expansion of gold reserves on the property, which has many undrilled targets.
The drilling programme, which recommenced in September 2015, continued into the first quarter of 2016 with two drill rigs in operation and a further six holes were completed before the rigs left the site in March. During the first quarter, 1,298 metres were drilled, bringing the total number of metres for the programme to 3,602 m. In early 2016 Galantas reported the assay results for three holes completed in 2015 (see press release dated January 26, 2016). Most notable was hole OML-DD-15-155 which intersected a wide zone (13 m) of the Joshua vein at a vertical depth of 117 m grading 9.9 g/t Au. This drilling programme also identified a new vein, Kestrel, running 70 m west of Joshua. An initial shallow (42.4 m) intersect returned 35.8 g/t Au over 0.7 m. One of the drill holes completed this quarter, targeted the Kestrel vein ~80 north of the previous hole and hit mineralisation at a vertical depth of 73 m (3.7 g/t Au over 1 m).
Vertical longitudinal sections were constructed in Micromine for the Joshua and Kearney veins. Each intersect was categorised according to its width and grade. This enabled an evaluation of the spatial variability of mineralisation across the site and has identified key areas that should be targeted during the next drill programme.
In addition detailed analysis of all available historic maps and geophysical data for the eastern Lack region was conducted during the current quarter. The overall aim was to identify key areas for further study which may facilitate a better understanding of movement on the Lack and Luis shear zones, which are likely to have caused displacement of the main veins. Fieldwork was carried out in the Cornavarrow, Creeven, Corlea and Botera burns during March to assess the availability of outcrop which could be incorporated into a detailed re-mapping exercise. The re-mapping exercise will focus on the Creeven Burn and is underway in parallel with a petrographic study on samples from the main and minor veins. It is hoped that detailed structural mapping, in conjunction with new geochemical information, can be used to tie mineralisation south of the Creeven Burn to the main veins.
In June 2015 the Company reported that the Minister of Environment, Northern Ireland had granted planning consent for an underground gold mine at the Omagh site. The planning consent will permit the continuation and expansion of gold mining and is expected to create hundreds of jobs locally. The positive decision is the result of 3 years of examination of environmental and other factors regarding the application. Included were environmental studies by NIEA (Northern Ireland Environment Agency) and independent specialists. The consent includes operating and environmental conditions, which the Company has reviewed. Some conditions require clarification but appear workable with some modifications to operating and construction methodology. A number of conditions precedent to development are required to be satisfied and the Company is carrying those out.
Later in 2015 Galantas reported that they had been made aware of pre-action correspondence from an individual who intends to challenge, by judicial review, the actions of the Department of Environment Northern Ireland (DOENI) in granting planning permission for underground mining beneath the existing open pit. During the current quarter Galantas confirmed that this third party had obtained leave from Belfast High Court to bring a judicial review of the planning consent granted by Department of Environment Northern Ireland, for the Company’s underground mine. The review is scheduled to be heard in September 2016.
Roland Phelps, President & CEO, Galantas Gold Corporation, commented, “Work continues at a low level at the mine, satisfying conditions precedent to the underground planning permit, progressing restoration and some advance works related to underground development. The processing plant has been subject to throughput checks and is operational, awaiting ore.”
The detailed results and Management Discussion and Analysis (MD&A) are available on www.sedar.com and 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.
The financial components of this disclosure has been reviewed by Leo O’ Shaughnessy (Chief Financial Officer) and the production, exploration and permitting components by Roland Phelps (President & CEO), 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.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Galantas Gold Corporation
Jack Gunter P.Eng – Chairman
Roland Phelps C.Eng – President & CEO
Telephone: +44 (0) 2882 241100
Grant Thornton UK LLP (Nomad)
Philip Secrett, Richard Tonthat
Telephone: +44(0)20 7383 5100
Whitman Howard Ltd (Broker & Corporate Adviser)
Ranald McGregor-Smith, Nick Lovering
Telephone: +44(0)20 7659 1234