Galantas Gold Corporation (the ‘Company’) (
TSXV & AIM :
Symbol GAL) is pleased to announce its audited annual
financial results for the year ended December 31, 2019. A copy of
the Financial Statements and Management Discussion and Analysis
will be sent to shareholders in due course and are available on the
Company's website at www.galantas.com/investors.
Financial HighlightsHighlights of the 2019
audited annual results, which are expressed in Canadian Dollars,
are summarized below:
|
Year Ended December 31 |
All in CDN$ |
|
2019 |
|
|
2018 |
|
Revenue |
$ |
5,788 |
|
$ |
71,243 |
|
Cost of Operations |
$ |
(221,691 |
) |
$ |
(185,058 |
) |
Loss before the items below |
$ |
(215,903 |
) |
$ |
(113,815 |
) |
Aggregates levy |
|
(0 |
) |
$ |
(352,168 |
) |
Depreciation |
$ |
(457,134 |
) |
$ |
(350,999 |
) |
General administrative expenses |
$ |
(2,690,952 |
) |
$ |
(2,131,872 |
) |
Foreign exchange (loss) gain |
$ |
(16,659 |
) |
$ |
53,417 |
|
Impairment of exploration and evaluation assets |
$ |
(155,482 |
) |
$ |
0 |
|
Loss on disposal of property, plant and equipment |
$ |
(28,479 |
) |
$ |
0 |
|
Unrealized gain on fair value of derivative financial
liability |
$ |
0 |
|
$ |
10,000 |
|
Net loss for the year |
$ |
(3,564,609 |
) |
$ |
(2,885,437 |
) |
Working Capital (Deficit) |
$ |
(6,093,200 |
) |
$ |
(272,783 |
) |
Cash loss generated from operations before changes in non-cash
working capital |
$ |
(1,826,066 |
) |
$ |
(1,848,019 |
) |
Cash at December 31, 2019 |
$ |
1,913,420 |
|
$ |
6,188,554 |
|
|
|
|
|
|
|
|
Revenue for the years ended December 31, 2019
and 2018 consisting of jewellery sales amounted to $5,788 and
$71,243 respectively. Shipments of concentrate commenced during the
second quarter of 2019. Concentrate sales provisional revenues
totalled approximately US$1,518,000 for the year. However, until
the mine commences commercial production, the net proceeds from
concentrate sales are being offset against Development assets.
The Net Loss for the year ended December 31,
2019 amounted to $3,564,609 (2018: $2,885,437) and the cash outflow
from operating activities before changes in non-cash working
capital for the year ended December 31, 2019 amounted to $1,826,066
(2018: $1,848,019).
The Company had a cash balance of $1,913,420 at
December 31, 2019 compared to $6,188,554 at December 31, 2018. The
working capital deficit at December 31, 2018 amounted to $6,093,200
compared to a working capital deficit of $272,783 at December 31,
2018.
Galantas completed one private placement of
common shares in 2019 during the third quarter. The placement
included funds raised in both UK and Canadian currency for
2,352,941 shares, at an issue price of UK£ 0.425 ($ 0.68) per share
for gross proceeds of UK£1,000,000 ($1,600,000). In addition, in
December 2019 Galantas completed the issue of a Convertible
Debenture for UK£1,000,000 ($1,731,190). The debenture is
unsecured, is for a term of one year, carries a coupon of 15% per
annum and is convertible into common shares of the Company. The
debenture was fully subscribed by Melquart Limited, an Insider and
Control person of the Company.
Production/Mine
DevelopmentDuring 2019 the Omagh gold mine continued
limited production of gold concentrate from feed produced in the
development of the Kearney vein. The plant, which produces a gold
& silver concentrate using a non-toxic, froth-flotation
process, ran on a batch basis from a stockpile of underground vein
material plus additional feed produced from on-vein development
operations (prior to the cessation of blasting).
Underground development of the decline tunnel
continued to be progressed during 2019 with further crosscuts
allowing access to lower levels of vein development which forms the
development necessary to demarcate production panels. On-vein
development continued on the 1084 (second) level and the 1072
(third) level during the first half of 2019. Development then
continued southwards on the third (1072) level with gold grades
within the expected range.
During the third quarter the Company reported
that the access drive on the fourth (1060) level has intersected
the Kearney vein ahead of schedule. The intersection showed
strongly developed mineralization. The north and south faces of the
vein were channel sampled. The average of the two channels was 8.35
g/t gold over an average true width of 2.65 metres. The Company
also reported that drivage from the 1072 access has been taken
northwards, in-vein, for approximately 40 metres. Mineralisation
beyond the first 20 metres is currently excluded from the
geological model, due to paucity of data. The mineralisation was
shown to be persistent and has been followed in an in-vein
development. Two channel samples, taken across the face as the
drivage was developed at 24.1m and 27.6m into the third level
(1072) north development, showed a grade of 6.2g/t gold and 16.3
g/t gold respectively, each with a true width of 3 metres. The vein
will continue to be followed northwards on the third (1072) level
and elevates potential for additional mineralisation to be added to
the resource model if discovered on the adjacent first (1096),
second (1084) and fourth (1060) levels. Underground drivages have
now been developed to expose the main Kearney vein on four levels
with a fifth level at the point of intersection. The mine is
serviced by a decline tunnel of 1 in 6 gradient, of dimensions
approximately 4.5m by 4.5m.
Milling operations progressed during 2019 and
moved to a two-shift basis in the third quarter. The processing
plant, which was used formerly for open-pit operations, has had the
benefit of a recent upgrade and further upgrades are planned.
Shipments of concentrate under the off-take arrangements commenced
during the second quarter of 2019. Concentrate sales provisional
revenues during the year ended December 31, 2019 totalled
approximately US$ 1,519,000 and until the mine reaches the
commencement of commercial production, the net proceeds from
concentrate sales will be offset against Development assets.
However, during the fourth quarter Galantas
announced a temporary suspension of blasting operations at its
Omagh gold mine (see press release dated October 29, 2019).
Blasting operations are currently limited since all blasting must
be supervised by the Police Service of Northern Ireland (PSNI) and
were not sufficient for the desired level of operations. The
Company had been working with the PSNI to increase blasting
availability to normal levels for an underground mine. While
progress has been made and substantive investment incurred in
accordance with recommendations the Company was still awaiting
final approvals from the authorities to be able to implement its
increased blasting protocols prior to the suspension. The Company
had been waiting for some time for these approvals and although the
Company expected to receive the approvals based on previous
discussions with the relevant authorities, a date for receipt of
the required approvals and therefore the date for implementation of
the increased blasting schedule was not known. The arrangements,
current at that time were not sufficient to allow for the expansion
of mine operations as envisaged by the Company’s existing mine plan
and until changes were agreed, the present inefficiencies caused by
those arrangements formed an increasing financial burden, which has
proved a significant drain on the financial resources of the
Company. Accordingly, to reduce costs, the number of people
employed at the operation were reduced from 46 to 21. Some mine
operations continue at the Omagh gold mine, on a single shift.
Subsequent to December 31, 2019 Galantas reported that confirmation
has been received from PSNI, in regard to their satisfaction of
certain secure storage and handling protocols required for an
increase in blasting to a commercial level subject to financial
matters being agreed. The Company now understands that these
financial matters have now been mutually agreed. Certain
underground work continues but ore production is suspended until
finance is available to expand the underground operation.
A probe drilling campaign was subsequently
carried out using the retained personnel and equipment. The results
of this campaign, combined with detailed mapping of the exposed
mineralisation underground suggests zones of higher width of
mineralisation within the vein, linking adjacent levels. This
supports an implication that such zonal mineralisation may continue
at depth, with enhanced exploration potential for targeting gold
resources particularly to the north and within the Company’s
license area. Probe drilling does not provide samples suitable for
use in mineral resource estimates but can provide strong
indications where mineralisation is concentrated and is of
significantly less cost than core drilling. Subsequently in May
2020, the Company reported that it had filed a short technical
report in respect of the probe drilling campaign. The report is
available on www.sedar.com and www.galantas.com.
Considering the economic impingement on the
Company’s operations, the Company is seeking strategic alternatives
including reviewing its licenses and operations; and considering
the possibility of engaging in a sale, joint venture, partnership
or other options with third parties and alternative financing
structures. The company is actively engaged in that process.
In March 2020 and following UK government
guidelines regarding Covid-19, processing operations temporarily
ceased until later in May when the Company announced that
concentrate processing has recommenced. The company carried out
maintenance to the processing plant during the milling suspension,
to minimise future maintenance interruptions. The restart follows a
review of Northern Ireland / UK government health advice regarding
Covid-19, a risk assessment and the introduction of appropriate
modifications to working practices. Feedstock for the processing
plant is from low grade stock until suitable arrangements are in
place to recommence vein development underground. The number of
employees furloughed under a NI/UK government scheme has been
reduced to three from seven.
Safety is a high priority and the company
continued to invest in safety-related training and infra-structure.
The zero lost time accident rate since the start of underground
operations, continues. Environmental monitoring demonstrates a high
level of regulatory compliance. Phased site restoration works
continue with thousands of tree saplings recently planted.
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.
Qualified PersonThe financial
components of this disclosure have 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.
Galantas Gold Corporation Roland Phelps C.Eng – President &
CEO Email: info@galantas.com Website: www.galantas.com Telephone:
+44 (0) 2882 241100
Grant Thornton UK LLP (Nomad)Philip Secrett,
Richard TonthatTelephone: +44(0)20 7383 5100
Whitman Howard Ltd (Broker & Corporate
Adviser) Ranald McGregor-Smith, Nick Lovering Telephone:
+44(0)20 7659 1234
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