Highlights of the 2016 audited annual results, which are expressed in Canadian Dollars, are summarized below: Year Ended December 31 All in CDN$ 2016 2015 Revenue $ 74,068 $ 80,989 Cost of Sales $ (345,057) $ (356,836)
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS REPORTS RESULTS FOR THE YEAR ENDED DECEMBER 31, 2016
April 28, 2017: Galantas Gold Corporation (the ‘Company’) is pleased to announce its audited annual financial results
for the year ended December 31, 2016.
Financial Highlights
Highlights of the 2016 audited annual results, which are expressed in Canadian Dollars, are summarized below:
Year Ended December 31
All in CDN$ 2016 2015
Revenue $ 74,068 $ 80,989
Cost of Sales $ (345,057) $ (356,836)
Loss before the items below $ (270,989) $ (275,847)
Amortization $ (168,736) $ (207,911)
General administrative expenses $ (1,199,023) $ (1,462,359)
Sundry income $ 0 $ 18,689
Gain on disposal of property, plant and equipment $ 5,479 $ 0
Unrealized gain on fair value of derivative financial liability $ 108,000 $ 268,000
Foreign exchange loss $ (88,029) $ (133,649)
Net loss for the year $ (1,613,298) $ (1,793,077)
Working Capital Deficit $ (3,095,124) $ (3,606,059)
Cash (loss) generated from operations before changes in non-cash working capital $ (1,341,273) $ (1,527,331)
Cash at December 31, 2015 $ 557,005 $ 1,518,332
The Net Loss for t he year ended December 31, 201 6 amounted to CDN$ 1,613,298 (2015: CDN$ 1,793,077) and the
cash outflow from operating activities before changes in non -cash working capital for the year ended December 31,
2016 amounted to CDN$ 1,341,273 (2015: CDN$ 1,527,331).
Sales revenues for the year ended December 31, 201 6 consisted mainly of jewelry sales and amounted to CDN$ 74,068
and (2015: CDN $ 80,989). 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 year ended December 31, 201 6
amounted to CDN$ 345,057 (2015: CDN$ 356,836). Production costs were mainly in connection with ongoing care and
maintenance costs at the Omagh mine site.
The Company had a cash balance of $ 557,005 at December 31, 2016 compared to $ 1,518,332 at December 31, 2015.
The working capital deficit at December 31, 2016 amounted to $ 3,095,125 compared to a working capital deficit of
$ 3,606,059 at December 31, 2015.
During the second quarter of 2016 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$1,466,312. The majority of the placement was taken up by Mr. Ross Beaty, who
acquired 12,825,397 common shares. As a consequence of the placing, Mr. Beaty ha d an interest in 28,825,397 of the
Company’s issued common shares.
In addition to the private placement, Roland Phelps, President & CEO, Galantas Gold Corporation, entered into a shares
for debt exchange on the same terms as the placement during the second quarter. Mr. Phelps exchanged CDN$ 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 currently in
issue.
Subsequent to December 31, 2016 Galantas also completed a part brokered private placement in two parts for aggregate
gross proceeds of $ 2,446,299 (approximately UK£1,482,875) during the first quarter of 2017. The placement comprised
of the issue of 33,093,258 common shares. United Kingdom placees subscribed for a total of 27,087,778 shares at a
price of UK£0.045 per share. Canadian placees subscribed for a total of 6,005,480 s hares at a price of $0.0725 per
shares. The net proceeds raised by the Placing are intended to be used for working capital purposes and to commence
development of the underground mine on the Omagh property. Melquart Ltd, a UK based investment institution,
subscribed for 22,222,222 Common Shares, which has resulted in a holding of 13% of the Company’s issued common
shares. In addition Mr. Ross Beaty subscribed for an additional 3,326,170 common shares in the placing. As a
consequence of the placing, Mr. Beat y now has an interest in 32,151,567 common shares or 18.8% of the Company’s
issued common shares.
Production
Production at the Omagh mine remains suspended. However the granting of planning consent during the second quarter
of 2015 for an underground op eration at the Omagh site, now subject to a judicial review , 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.
Galantas announced In December that subject to suitable financing, it intends to commence the first phase of
underground development and re -start concentrate shipments at its Omagh mine. The Company, under the planning
consent which it can implement, has been carrying out pre -conditions attaching to the planning consent and is read y for
the next phase of implementation. On the basis of legal advice received, the Board of Directors have decided to press
ahead with immediate implementation of underground mining, to a plan as outlined in a NI 43 -101 economic study
(reported 4th Septemb er 2014). It is anticipated that a phased start -up of that plan will deliver early positive cash flow
for a relatively modest capital expenditure. The phased arrangement, in terms of mine access dimensions, will allow for
rapid expansion of production as a dditional capital becomes available. The mill has now been re -commissioned in
anticipation of a restarting of concentrate shipments in the first half of 2017, subject to suitable financing. A budget of £
2,000,000 (excluding lease finance) for the first ph ase of underground mining has been estimated. The Company is at an
advanced stage of negotiation with a provider of lease finance, which will provide funding for additional mine
equipment (see press release dated December 6, 2016). Subsequent to December 3 1, 2016 and following the closure of a
part-brokered private placement for aggregate gross proceeds of $ 2,446,299 (approximately UK£ 1,482,875) the
Company announced that underground development has commenced on the Omagh gold property. The initial works are
for the formation of a portal (initial tunnel entry area) in the western side wall at the base of the Kearney open pit. The
portal works were completed in mid -April 2017, the underground development will continue in order to access ore
beneath a crown pillar retained in the base of the open pit when arrangements have been put in place with the Police
Service of Northern Ireland. Galantas subsequently reported that the underground development at the Omagh mine has
been put on hold following the receipt of notification that the Police Service of Northern Ireland (PSNI) will not provide
its required anti-terrorism cover in regard to blasting operations required for mine development. The Company has been
told that, due to PSNI resource constraints and compet ing priorities, PSNI is currently only prepared to provide anti -
terrorism cover for a maximum of a 2 hour period, 2 days per week which is insufficient to sustain the development or
operation of the mine. The PSNI will also require a cost recovery agreemen t. The Company disagreed with the principle
of cost recovery for anti -terrorism policing but advised the PSNI that the Company was prepared to enter into a costs
recovery agreement, without prejudice to its legal remedies in that respect, for a 2 hour peri od, 5 days per week.
Although PSNI provided the costs analysis for the 5 day and 2 hour period anti -terrorism cover, which was agreed
without prejudice, the PSNI has refused to provide the cover, citing competing priorities. The Company has been given
no alternative other than pursuing its legal options, which may include seeking substantial compensation for the cost of
delays.
Exploration
An exploration programme carried out between 2011 and 2013 included the drilling of 17,348 metres of core and
channel sampling on the Joshua, Kearney and Kerr vein systems. Assay results from both the drilling and channel
sampling programmes were encouraging with significant gold intersections encountered. A new programme
commenced in September 2015 to target the Joshua vein at depth. In total, 3,602 metres were drilled by March 2016. 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 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 true width. A further drill hole
targeted the Kestrel vein ~80 metres north and hit mineralisation at a vertical depth of 73 m (3.2 g/t Au over 1.2 m true
width).
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 investigated during the next drill programme. A series of n ew
targets has been drawn up in preparation for future drilling.
A re -mapping exercise was completed during the second quarter, focussing on a 2 km stretch of the Creeven Burn
running directly south of the main veins. This section of the burn incorporate s several known vein outcrops, the most
recent exploration phase uncovered two new mineralised outcrops which were identified close to the ‘Discovery’ veins.
Good evidence for both ductile and brittle deformation was recorded, particularly around Sharkey. Field observations
and existing geophysical evidence confirm a dextral offset and support the theory that Sharkey and McCrossan veins are
sheared extensions of the main Joshua vein. Structural measurements fed into the construction of a conceptual model,
later tested through comparison with lithological and textural changes in logged drill core. The geological model is one
of an imbricated thrust stack, the upward extension of which may have formed weak zones which were later re -activated
by the Creevan B urn Shear. Results for final samples collected during the Creevan mapping project were received
during Q3 (see press release dated August 9, 2016). Of particular note are grab samples on strike extensions to two of
the ‘Discovery’ vein outcrops which register 38.3 g/t and 25.9 g/t gold; 90.9 g/t and 13.5 g/t silver, respectively.
Mapping of the existing open pit walls was completed during the second quarter. Lithological and structural information
were recorded for areas which previously could not be acc essed. A change in strike of the visible units is coincident
with vein location, an important observation for future exploration.
The geology team completed Advanced Micromine training at the beginning of July; the Joshua vein has since been re -
strung, encompassing the results of the latest drilling programme (completed in March 2016). Arsenic levels have also
been modelled for Joshua for the purpose of ore processing planning. A similar re -modelling of the Kearney vein is
currently in progress.
Following approval of exploration plans by Department for the Economy (Northern Ireland), two soil grids were
completed in a central area of licence OM4 during September. A total of 102 soil samples were collected. This extends
the original (2013) grid 1.2 km to the west and 400 m to the east, incorporating two major NE -SW trending faults within
Southern Highland and Argyll group lithologies. Outcrop within this central region is poor, with exposures generally
limited to small quartzite crags on hill sides. How ever, an outcropping quartz vein with visible sulphides was identified
within a small portion of the western grid and samples were collected for analysis. The vein is trending NE -SW
coinciding with regional scale faulting. Further fieldwork included strea m sediment and heavy mineral concentrate
sampling within both central and south -east areas of OM4. Geochemical results for all of the OM4 2016 samples were
recently released. These show minor Ag anomalies (0.2, 0.3 and 0.8 g/t) in clustered soils within 20 0 m of the Derg
Fault, the central soil also contains raised Pb (2210 g/t), Zn (192 g/t) and trace Au (0.03 g/t). The outcropping vein
referred to above returned Ag 0.7 g/t, Cu 218 g/t, and a first order panned stream sediment collected ~600 m north
contained 0.3 g/t Au. Raised Zinc is common throughout the gridded area with seven samples yielding >150 g/t and
peaks of 637 g/t and 1030 g/t recorded for sites <100 m apart.
Part of licence area PL3039 in the Republic of Ireland was revisited during Q2. Th e results of earlier fieldwork had
shown bedrock gold anomalies of 2.1 and 1.8 g/t, associated with significant silver. A recently excavated road cutting
now reveals narrow mineralised quartz veins along 5 m strike. Samples of these were taken for analysi s and the results
were received in September. All nine outcrop samples contain detectable gold ranging from 0.1 g/t to 1.8 g/t; and silver:
0.1 g/t to 8.7 g/t. During the last quarter geologists examined an area of PL 3135 associated with strong magnetic a nd
conductivity signals. Earlier work in the vicinity showed high Cr and Ni values associated with a possible ultramafic
intrusion (see press release 5 th November, 2015). New results for sediments and heavy mineral concentrates extracted
from nearby strea ms indicate low level Mo (0.2 -3.1 g/t) and As (<238 g/t) with an important gold component (0.01 –
2.13 g/t). Gold in stream sediments was previously reported for samples in close proximity to a similar, but larger,
ultramafic intrusion in bordering licence 4034. Follow up work planned for 2017 will focus on this area and the
aforementioned site in PL3039.
Towards the end of the year near mine site targets were revisited and prioritised. West and east stretches of the
Aghadulla Burn were examined due to st ructural setting similarities with the Kearney deposit. Outcrop samples
contained only trace Ag, with veinlets yielding unusually raised levels of Li (117 g/t) and Sb (3.5 g/t). In addition, a
thorough review of historic data associated with the Elkins tar get was completed and a plan for future diamond drill
locations constructed.
The renewal of Republic exploration licences 1469, 3162 (Leitrim), and 2315, 3039, 3040 3235 in Co. Donegal were
confirmed in November. New two year phases of the licences will continue until March 2018. Exploration reports
covering activities within the first ten months of renewed options OM1 and OM4 were sent to the Crown Estate
Commissioners in December and have been approved. Exploration options for OM1 and OM4 are in place u ntil July
2021 and December 2020, respectively.
Permitting
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 studi es by
NIEA (Northern Ireland Environment Agency) and independent specialists. The consent includes operating and
environmental conditions, which the Company has reviewed. A number of conditions precedent to development are
required to be satisfied and the Company is carrying those out.
During the first quarter of 2016 Galantas reported that a third party had obtained leave from Belfast High Court to bring
a judicial review challenging the actions of the DOENI in granting planning permission for underground mining beneath
the existing open pit. The judicial review hearing commenced in late September when the Company was notified of an
extension for the time required for the hearing beyond the September listing dates. Galantas was subsequently advised
that the continuation of the review hearing has been listed for the 6 th, 7th and 8 th of December. However the Company
was later informed that the dates previously allocated in December were no longer available and the hearing was
subsequently listed for February 13 – 15th 2017. Most of the Applicant’s evidence was heard during the September
listing dates. The judicial review hearing was subsequently completed in February and Galantas is presently awaiting
judgement for which no date has been advised.
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 Person
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 (Presid ent & 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 estim ates 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 co uld 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 other s 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 tim e
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 ha s 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.
Enquiries
Galantas Gold Corporation
Jack Gunter P.Eng – Chairman
Roland Phelps C.Eng – President & CEO
Email: [email protected]
Website: www.galantas.com
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