Incentive Stock Options to Employees and a Consultant
Galantas Reports Results for the Year Ended December 31, 2017 and Awards
Incentive Stock Options to Employees and a Consultant
TORONTO, April 20, 2018 -- Galantas Gold Corporation (the ‘Company’) (AIM:GAL) (TSX-V:GAL) is pleased to announce its
audited annual financial results for the year ended December 31, 2017.
Financial Highlights
Highlights of the 2017 audited annual results, which are expressed in Canadian Dollars, are summarized below:
Year Ended December 31
All in CDN$ 2017 2016
Revenue $ 35,308 $ 74,068
Cost of Sales $ (225,451) $ (345,057)
Loss before the items below $ (190,143) $ (270,989)
Amortization $ (203,431) $ (168,736)
General administrative expenses $ (1,714,264) $ (1,199,023)
Gain on disposal of property, plant and equipment $ 0 $ 5,479
Unrealized gain on fair value of derivative financial liability $ 14,000 $ 108,000
Foreign exchange gain / (loss) $ 15,699 $ (88,029)
Net loss for the year $ (2,078,139) $ (1,613,298)
Working Capital Deficit $ (3,492,608) $ (3,095,124)
Cash loss generated from operations before changes in non-cash working capital $ (1,357,221) $ (1,341,273)
Cash at December 31, 2017 $ 779,758 $ 557,005
The Net Loss for the year ended December 31, 2017 amounted to $ 2,078,139 (2016: $ 1,613,298) and the cash outflow from
operating activities before changes in non-cash working capital for the year ended December 31, 2017 amounted to $
1,357,221 (2016: $ 1,341,273).
Sales revenues for the year ended December 31, 2017 consisted mainly of jewelry sales and amounted to $ 35,308 (2016: $
74,068). Following the suspension of production during the fourth quarter of 2013 there have not been any shipments of
concentrates from the mine.
Production and sales of concentrate await the mining of feed from underground.
Cost of sales, which includes production costs and inventory movement, for the year ended December 31, 2017 amounted to $
225,451 (2016: $ 345,057). Production costs were mainly in connection with ongoing care, maintenance and restoration costs
at the Omagh mine site. Costs related to underground mine development were capitalized.
The Company had a cash balance of $ 779,758 at December 31, 2017 compared to $ 557,005 at December 31, 2016. The
working capital deficit at December 31, 2017 amounted to $ 3,492,608 compared to a working capital deficit of $ 3,095,124 at
December 31, 2016.
Two private placements were completed during 2017. During the first quarter of 2017 Galantas completed a part brokered
private placement in two parts for aggregate gross proceeds of $ 2,446,299 (approximately UK£ 1,482,875). The placement
comprised of the issue of 33,093,258 common shares of no par value. 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 shares at a price of
$ 0.0725 per share. During the fourth quarter of 2017 Galantas completed a further private placement of shares on a part-
brokered basis for aggregate gross proceeds of $ 1,165,857 (approximately UK£ 682,859). The placement comprised of the
issue of 16,655,099 common shares of no par value. United Kingdom placees subscribed for a total of 9,746,343 shares at a
price of UK£ 0.041 per share. Canadian placees subscribed for a total of 6,908,756 shares at a price of $ 0.07 per share. The
net proceeds raised by both placings were for working capital purposes and to continue underground development at the
Omagh gold mine.
Subsequent to December 31, 2017 Galantas announced that its operating subsidiary, Flintridge Resources Ltd. had signed a
concentrate pre-payment agreement and a loan facility agreement for US$ 1.6 million (CDN$ 2.012 million) with Ocean
Partners UK Ltd. a United Kingdom based company, together with an increased, on-demand loan facility of £600,000 with
G&F Phelps Ltd.. The loans are to be used for further development of the Omagh Mine and working capital. As consideration
for the US$ 1.6 million loan facility Ocean Partners will receive 15,000,000 bonus warrants of Galantas which will be
exercisable into one common share of Galantas at an exercise price of $ 0.1575 per bonus share. The bonus warrants will
have a maximum life of two years and the bonus shares will be subject to an initial four month plus one day hold period from
the date of issuance of the bonus warrants. No bonus warrants are to be issued in respect of the G&F Phelps loan facility. The
bonus warrants are subject to TSXV and regulatory approval. (See press release dated April 12, 2018).
Permitting
In 2015 the Company reported that the Minister of Environment, Northern Ireland had granted planning consent for an
underground gold mine at the Omagh site which permits the continuation and expansion of gold mining at the Omagh mine.
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 September 2016 when it was adjourned to February 2017 and then
concluded. In September 2017 Galantas reported a positive outcome to the judicial review into the planning consent for
underground development at the Omagh mine with the third party’s request for the quashing of the consent being denied.
However, Galantas reported in November 2017 that it had received notice of an application, by a third party, to the Court of
Appeal, in relation to the positive judicial review judgment regarding the grant of planning permission which was subsequently
heard in February 2018. The Court will deliver its judgement at a later date, currently unknown.
Production/Mine Development
The underground mine, which is now in active development, will utilize the same processing methods as the open pit mine and
will be the first underground gold mine, of any scale, in Ireland. The strategy is to expand the continuing development of the
underground mine and look for further expansion of gold resources on the property, which has many undrilled targets.
The phased development arrangement, in terms of mine access dimensions, is expected to allow for rapid expansion of
production as additional capital becomes available. The mill has now been re-commissioned in anticipation of a restarting of
concentrate shipments, subject to suitable financing. A budget of £ 2,000,000 (excluding lease finance) for the first phase of
underground mining has been estimated. During the first quarter of 2017 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 had commenced on the Omagh gold property.
Underground development continued to progress during the remainder of 2017 with underground development totaling over 150
metres at year end. Galantas has a detailed plan to accelerate progress in line with the planning consent. The stringer vein
intersected in the third quarter (see press release dated August 1, 2017) has been accessed from the main decline tunnel.
Mineralisation is approximately 0.5m wide and will be split-fired (a process where the vein is blasted separately to the
surrounding country rock to minimise dilution). A narrow width loader has been acquired to operate short term on the splinter
vein. This is expected to cover the delivery period for new specialist vein mining equipment. After sampling, a small stockpile of
suitable material has been made underground which will be milled when there is sufficient to operate batch processing in the
flotation plant. Tunnel development continues to progress towards accessing the principal target, which are the main Kearney
veins.
The underground development is being carried out by an in-house crew which is fully trained in safety and operating
procedures. An in-house, mines rescue team has also been trained and equipped. The present drilling and loading equipment,
which was purchased for training and early tunnel development purposes, is performing above expectations but has lower
productivity than is expected with current technology. New drilling equipment is being acquired on a rental basis with options
to purchase, and is expected to improve advance rates by over 40%. The supplier of the equipment has advised of delays in
production of the new equipment but has recently commissioned a substitute, used tunnelling drill rig on loan. Whilst the
interim unit is not expected to be as efficient compared to that anticipated for the new rig, this has led to a significant
improvement in advance rate, the amount of which is too early to fully assess. Infrastructure improvements have been made to
support the rig and these are working well. Shotcreting equipment has also been acquired on a rental purchase basis. This
has cut shotcreting costs and allowed integration of shotcreting with the mining cycle. The rental purchase arrangements
cover equipment to the value of approximately one million pounds sterling (£1,000,000). Included in the rental arrangements
are various time-dependent options to purchase, for instance if the purchase option is exercised within one year with a rebate
of 92% of rental amounts paid expected to be applied against the final purchase price. Additional personnel have been added
to the workforce, which now totals 27 on the Omagh site. Safety and environmental matters remains a high priority for
Galantas. The Company is pleased to continue to report zero lost time accidents since the start of underground operations
and routine water monitoring continues to be compliant.
Roland Phelps, President and CEO of Galantas Gold Corporation, commented, “I look forward to seeing the improved
advanced rate expected with the interim tunnelling rig. At anticipated advance rates, we expect to reach the Kearney vein
system, after approximately 160 metres of further development, in around 10 weeks.”
Exploration
Two 155 m deep water monitoring holes were drilled at the beginning of 2017; these were located according to planning
specifications, not with the aim of mineral recovery. However, the PQ drill core provided insight to key lithological changes with
depth, north and south of the site. This information was incorporated into the site mapping project instigated last summer.
Key structural measurements are recorded by geologists as the underground development advances. This data is used to
assist tunnel support design considerations. Towards the end of 2017 mapping of the decline, now progressing northward,
indicates improved rock mass ratings due to the presence of thick competent units with tighter joints and fewer faults.
Regional exploration data for PL 3162, in the Republic Of Ireland, was reviewed towards the end of the second quarter and two
high priority target areas were selected. In target one, stream sediment samples that OML geologists had collected as part of
the Tellus funded project (2013) showed elevated Au, Ag, Sb, Pb and Cu downstream of a major NE trending fault, separating
Carboniferous and Slishwood Division lithologies. The contacts were examined for surface exposures and boulders during the
third quarter. Sulphide rich serpentinite float rocks with fuchsite and talc were identified and sampled along with boulders of
quartz breccia, along the margin of Ox Mountain fault. Stream sediments and heavy mineral concentrates were also collected
from first order streams draining the northern side of Benbo mountain. Target area two is associated with a wealth of historic
exploration data and references to small scale base metal mining within the Ballyshannon Limestone. Several hundred metres
of drill core, a remnant of exploration in the 1990’s, had been stored by a local farmer. Sections of core previously analysed for
base metals, and found to contain appreciable concentrations of Zn (up to 3.2%), were sub-sampled. The site of an old mine
shaft was also investigated and large dolomitic rocks rich in galena and pyrite were collected around the margins.
All prospecting samples were sent to ALS laboratories for geochemical analysis at the end of 2017, results were summarised
in a press release on 18 th January. The float rocks identified in Target one returned multi-element anomalies including Cu (up
to 5.66 %). In Target two, as expected, high levels of Pb, Zn and moderate Ag were found in float rock and historic drill core in
the vicinity of Twigspark. A shallow drill intersect (7-7.8 m) contained 1.57 % Zn, 70.8 g/t Pb and 511 g/t Cu; the deeper
intersect (42.9-43.9 m) indicates higher Zn (12.85 %) and Pb (5720 g/t) with less Cu (250 g/t). No trace of Au is reported for
any of the pyrite/galena rich samples in this batch; however, a float rock containing 0.96 g/t Au was found in the Pollboy area,
upstream of the anomalous samples previously collected as part of the Tellus Border project, referred to above. Exploration
along strike of the Pollboy and Twigspark areas, into neighbouring licence 1469, will continue during the first quarter of 2018.
The Exploration and Mining Division (EMD) confirmed renewal of Republic Of Ireland licences: 4034, 3134 and 3234, at the end
of the year. Plans for further exploration in licences: 2315, 3039, 3040 and 3235 have been drafted. Fieldwork commenced in
early January 2018.
Stock Options
Effective 19th April 2018, Employee Stock Options (the Options) were granted on a total of one million shares in the Company
to 3 employees and one consultant. The Options are exercisable at a price of CDN$0.11until 19 th April 2023 and are issued
under the approved Company Stock Option Plan. The Options vest in three annual tranches commencing 19 th April 2018 for
the first tranche. The 3 employees and consultant are actively engaged in operations at the mine and the options form part of
an incentive remuneration package.
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 (President & CEO), qualified persons under the meaning
of NI. 43-101 and AIM rules. 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.
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