Galantas Second Quarter 2016 Results and Activity Summary
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS REPORTS RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016
August 24, 2016: Galantas Gold Corporation (the ‘Company’) is pleased to announce its financial results for the three and six months ended June 30, 2016.
Highlights of the 2016 second quarter’s and first six months results, which are expressed in Canadian Dollars, are summarized below:
All figures denominated in Canadian Dollars (CDN$)
Second Quarter Ended June 30 2016
|Second Quarter Ended June 30 2015||6 Months Ended 2016||6 Months Ended 2015|
|Revenue||$ 1,648||$ 13,774||$ 29,721||$ 14,897|
|Cost of Sales||$ (88,572)||$ (114,656)||$ (210,103)||$ (184,653)|
|Loss before the undernoted||$ (86,924)||$ (100,882)||$ (180,382)||$ (169,756)|
|Depreciation||$ (42,732)||$ (49,881)||$ (90,283)||$ (102,174)|
|General administrative expenses||$ (419,506)||$ (624,852)||$ (755,617)||$ (886,384)|
|Gain on sale of property, plant and equipment||$ 5,479||$ 0||$ 5,479||$ 0|
|Unrealized gain on fair value of derivative financial liability||$ 1,000||$ 95,000||$ 80,000||$ 103,000|
|Foreign exchange loss||$ (103,146)||$ (28,142)||$ (78,371)||$ (67,542)|
|Net Loss for the period||$ ( 645,829)||$ (708,757)||$ (1,019,174)||$ (1,122,856)|
|Net Loss for the period||$ (2,068,440)||$ (4,273,046)||$ (2,068,440)||$(4,273,046)|
|Cash loss from operating activities before changes in non-cash working capital||$ (300,796)||$ (457,670)||$ (337,823)||$ (958,758)|
|Cash at June 30, 2016||$ 1,312,989||$ 198,696||$ 1,312,989||$ 198,696|
The Net Loss for the three months ended June 30, 2016 amounted to CDN$ 645,829 (2015:CDN$ 708,757) and the cash loss from operating activities before changes in non-cash working capital for the second quarter of 2016 amounted to CDN$ 300,796 (2015 Q2: CDN$ 457,670). The Net Loss for the six months ended June 30, 2016 amounted to CDN$ 1,019,174 (2015:CDN$ 1,122,856) and the cash loss from operating activities before changes in non-cash working capital for the first six months of 2016 amounted to CDN$ 337,823 (2015: CDN$ 958,758).
Sales revenues for the second quarter and six months ended June 30, 2016 consisted of jewelry sales and amounted to CDN$ 1,648 and CDN$ 29,721 respectively (2015: CDN $ 13,774 and $ 14,897 respectively). 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 second quarter and six months ended June 30, 2016 amounted to CDN$ 88,572 and $ 210,103 respectively (2015: CDN$ 114,656 and $ 184,653). Production costs were mainly in connection with ongoing care, maintenance and restoration costs at the Omagh mine site.
The Company had cash balances of $ 1,312,989 at June 30, 2016 compared to $ 198,696 at June 30, 2015. The working capital deficit at June 30, 2016 amounted to $ 2,068,440 compared to a working capital deficit of $ 4,273,046 at June 30, 2015.
During the second quarter the Company announced a private placement of shares and shares for debt exchange. Placing priority was given to existing shareholders, with 18,619,841 common shares issued, at a price of CDN$ 0.07875 per common share for a total of CDN $1,466,312. The majority of the placement was taken up by Mr. Ross Beaty, who acquired 12,825,397 common shares. As a consequence of the placing, Mr. Beaty has an interest in 28,825,397 Common Shares or 20.9% of the Company’s issued common shares.
In addition to the private placement, Roland Phelps, President & CEO, Galantas Gold Corporation, entered into a shares for debt exchange on the same terms as the placement. Mr. Phelps exchanged $ 935,852 debt accruing to him for 11,883,835 common shares. Shareholder consent was received for the debt exchange by means of a written resolution, with a majority of disinterested shareholder votes consenting. Following the debt exchange, Mr. Phelps holds 33,356,750 common shares, representing 24.2% of the enlarged number of common shares in issue.
Production at the Omagh mine remains suspended. However the granting of planning consent during the 2015 for an underground operation at the Omagh site, now subject to a judicial review to be heard in September 2016, will permit the continuation and expansion of gold mining. The underground mine will utilize the same processing methods. The strategy is to establish the underground mine as soon as finance is available and look for further expansion of gold resources on the property, which has many undrilled targets.
The drilling program, 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. 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 true width) of the Joshua vein at a vertical depth of 117 m grading 9.9 g/t Au. This drilling program 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 (true width). A later second hole targeted the Kestrel vein approximately 80m north of the previous hole and hit mineralisation at a vertical depth of 73 m (3.2 g/t Au over 1.2 m true width). A detailed table of drilling data is included in an addendum to this release.
Following extensive geological review, which included a detailed mapping study reported on 9th August 2016, new targets have been outlined in preparation for future drilling.
An area of PL3039 in the Republic Of Ireland was revisited during Q2. The results of earlier fieldwork had shown bedrock gold anomalies of 2.1 and 1.8 g/t, associated with significant silver. Recent excavations of the site for construction purposes revealed narrow mineralised quartz veins along 5 m strike. Samples of these were taken for analysis.
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 first 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, “Rehabilitation work at the mine has been continued during the last quarter. Additional conditions precedent to the underground planning permit have been satisfied. The processing plant has been subject to throughput checks and is operational, awaiting ore. Initial underground mining equipment is receiving modification to suit Galantas requirements and is expected to be delivered shortly. The exploration program continues to progress well, with a new vein discovered, our best ever drilling result in terms of gold accumulation in Hole 155 and new targets added.”
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