TORONTO, ONTARIO--(Marketwired - Apr 20, 2016) - Galantas Gold Corporation (the 'Company') (TSX VENTURE:GAL)(GAL.L) is pleased to announce its audited annual financial results for the year ended December 31, 2015.
Financial Highlights
Highlights of the 2015 audited annual results, which are expressed in Canadian Dollars, are summarized below:
| | |
| | Year Ended December 31 |
| All in CDN$ | 2015 | | 2014 |
| Revenue | $ | 80,989 | | $ | 8,332 |
| Cost of Sales | $ | (356,836) | | $ | (379,379) |
| Loss before the items below | $ | (275,847) | | $ | (371,047) |
| Amortization | $ | (207,911) | | $ | (237,813) |
| General administrative expenses | $ | (1,462,359) | | $ | (1,347,736) |
| Gain on disposal of property, sundry income and plant and equipment | $ | 18,689 | | $ | 20,098 |
| Unrealized gain on fair value of derivative financial liability | $ | 268,000 | | $ | 15,000 |
| Impairment of property, plant and equipment | $ | 0 | | $ | (3,170,202) |
| Foreign exchange loss | $ | (133,649) | | $ | (173,027) |
| Net loss for the year | $ | (1,793,077) | | $ | (5.264,727) |
| Working Capital Deficit | $ | (3,606,059) | | $ | (3,731,696) |
| Cash (loss) generated from operations before changes in non-cash working capital | $ | (2,070,010) | | $ | (1,914,269) |
| Cash at December 31, 2015 | $ | 1,518,332 | | $ | 20,259 |
The Net Loss for the year ended December 31, 2015 amounted to CDN$ 1,793,077 (2014: CDN$ 5,264,727) and the cash outflow from operating activities before changes in non-cash working capital for the year ended December 31, 2015 amounted to CDN$ 1,992,390 (2014: CDN$ 1,914,269). The loss for the year ended December 31, 2014 includes an impairment charge on property, plant and equipment amounting to $ 3,170,202.
Sales revenues for the year ended December 31, 2015 consisted mainly of jewelry sales and amounted to CDN$ 80,989 and (2014: CDN$ 8,332). 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, 2015 amounted to CDN$ 356,836 (2014: CDN$ 379,379). Production costs were mainly in connection with ongoing care and maintenance costs at the Omagh mine site.
The Company had a cash balance of $ 1,518,332 at December 31, 2015 compared to $ 20,259 at December 31, 2014. The working capital deficit at December 31, 2015 amounted to $ 3,606,059 compared to a working capital deficit of $ 3,731,696 at December 31, 2014.
During the first quarter of 2015 the Company completed a Private Placement for aggregate gross proceeds of approximately UK£ 316,677 through the issuing of 10,599,999 new shares at a price of UK£ 0.03/CDN$ 0.057 per common share. Commissions of 6% of the gross proceeds totalling CDN$ 36,424 were paid in connection with the placing together with the issue of 636,000 share purchase warrants. Each warrant will entitle the holder to acquire a further common share of the Company at a price of UK£ 0.045 per share for a period three years from the date the subscription was closed. The proceeds were used for working capital purposes and to finance the Company's continued commitments in regard to its underground planning application, now granted.
During the third quarter of 2015 Galantas completed a non-brokered private placement for aggregate gross proceeds of CDN$ 2,400,000 (approximately UK£ 1,189,000). The placement comprised of the issue of 20 million units, each unit comprising of one common share and one share purchase warrant. The price of each unit was CDN$ 0.12 (approximately UK£ 0.06). Each warrant entitles the holder to acquire a further common share of the Company at a price of CDN$ 0.16 per share for a period twelve months from the date the subscription was closed. The majority of the placement was taken up by Mr. Ross Beaty who acquired 16,000,000 units resulting in an interest before the exercise of warrants of 14.9% of Galantas issued and outstanding shares. The Company intends to use the net proceeds of the placement for exploration, initiating the development of the underground Omagh gold-mine and for working capital purposes.
Production
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.
Exploration
The Company commenced exploration drilling in 2011 which was suspended in 2013 pending the availability of cash for future exploration. Prior to the suspension a total of 17,348 metres had been cored. Channel sampling was also carried out during this period, on the Joshua, Kearney and Kerr vein systems. Assay results from both the drilling and channel sampling programmes have been encouraging with significant gold intersections identified, in particular, the thirteen mineral intersects reported for Joshua in January 2013. With additional funding becoming available, a drilling programme commenced in September 2015 with two rigs and a third rig introduced in October to target the Joshua vein at depth. In total, 2,304 metres were drilled by the end of December 2015. Subsequent to December 31, 2015 Galantas reported the assay results for the three holes completed to date (see press release dated January 26, 2016). Results include (drill hole 155) a 13 metre (true width) intersect with a gold grade of 9.9 g/t (grams per tonne), 30.3 g/t silver and 0.6% lead, at an estimated vertical depth of 117.2 metres. This is the widest high‐grade gold vein yet drilled on the Omagh property and represents the largest accumulation of gold discovered here so far. In addition, recent drilling (drill hole 154) encountered new high grade mineralisation in an underexplored area. A new vein (Kestrel) has been discovered, located approximately 70 metres west of the Joshua vein. The drill results assayed 35.8 g/t gold, 85.8 g/t silver and 4.9% lead over 0.7 metres true width at an approximate depth of 42.4 metres. It was earlier reported (see press release September 16, 2015) that a particular area of interest lay to the west of Joshua, where historic geochemical and geophysical anomalies exist. There is the possibility that a narrow, high grade gold intercept, drilled in core 153, some 156 metres north, represents a northern extension of the new vein. However, the distance between the cores is too far to extrapolate with any degree of certainty.
Both the Kearney and Joshua veins strike in excess of 830 metres north‐south. The current drilling programme aims to increase the known depth of the Joshua vein and both drill holes 153 and 155 achieved this in central and northern zones, respectively. The intersect on hole 153, at a vertical depth of 212 metres, is the deepest mineralisation reported for Joshua to date. Going forward, drill plans for early 2016 will focus on exploring the strike continuity and grade of the Kestrel vein, and will also test a stratigraphically favourable zone of north Joshua.
The granting of a further two prospecting licences in the Republic of Ireland (ROI) during 2014 brought the total number of licences held in both Northern Ireland and the Republic of Ireland to eleven covering a total area to 766.5 square kilometres. Fieldwork, which commenced earlier in 2015, within one of the ROI licences showed gold grades in grab samples of 1.6, 1.9 and 2.5 g/t, within stream sediments (see press release dated June 22, 2015). Follow up prospecting in the second and third quarters focussed on the distinct magnetic and conductivity anomalies in another licence situated directly east. The source of the gold has yet to be identified but a cluster of strongly anomalous results for Chromium and Nickel were found in outcrop, float rock and stream sediments. Results range from 1800 g/t to 1960 g/t Nickel (Ni) and 1680 g/t to 1760 g/t Chromium (Cr) in float grab samples. Anomalous Ni and Cr in outcrop grab samples ranged from 2040 g/t to 2050 g/t Ni and 1770-2020 g/t Cr (2040 g/t approximates to 0.2% ) (see press release dated September 10, 2015). These results correspond to samples taken from the eastern magnetic high, considered to represent an ultramafic intrusion within Slishwood Division metasediments. Re-sampling in this area, and investigation of a smaller intrusion to the west, returned increased levels for both Ni (up to 3060 g/t) and Cr (up to 7290 g/t), and high Magnesium (up to 25%), see press release 5th November, 2015). Towards the end of the field season geologists were granted permission to access a large site within licences 3039 and 3040. These licences run adjacent to Northern Ireland licence OM4, in which a trend of gold pathfinder minerals have been recorded. The new area contains vein hosted mineralisation which bears a similar trend to major regional faulting. Large fresh exposures of rock were mapped and sampled. Two proximal outcrop samples yielded notable gold (1.82 and 2.15 g/t) and silver (18.7 and 32.7 g/t) values. During the fourth quarter a third licence block, in the vicinity of Manorhamilton (Co. Leitrim), was explored briefly. Targets for outcrop mapping and sampling had been generated from the Tellus Border datasets. Strong gold pathfinder elements were found in a float rock sample, especially silver and arsenic with values 1.65 g/t and 1380 g/t, respectively. These anomalies are further supported by high values for antimony (211 g/t) and molybdenum (31.6 g/t); both elements have strong associations with precious metal deposits.
In 2014 detailed sampling took place in an area close to the mine site where, thirty years ago, initial exploration carried out by RioFinex uncovered visible vein outcrops ('Discovery' and 'Sharkey') in the banks of a neighbouring burn. Attention and resources were subsequently diverted towards drilling the Kearney vein, following its discovery in the late 1980's. However, recent resource modelling and underground mine planning activities prompted a re-investigation of the burn veins when water levels were unusually low during the third quarter of 2014. Two in-situ quartz veins were identified 18 m west and 35 m west of the Rio 'Discovery' vein together with a completely isolated zone of sulphide rich clay gouge which was also uncovered 70 m east of 'Discovery'. In addition to these outcrops, several high grade boulders (float) were discovered over 40 metres from the RioFinex 'Sharkey' vein. These boulders are comparatively large in size and are likely to be derived from a local source (see press release dated October 6, 2014). The presence of these strong gold anomalies found near to the southern boundary of the recently operating Omagh mine site instigated a detailed investigation of new and a re-evaluation of existing targets. Further exploration was carried out in the Creeven Burn, and the southern and north-eastern flanks of Pigeon Top during the third quarter of 2015. Results received for a single outcrop sample and an associated boulder, recovered directly south of the mine site, yielded 67.5 g/t gold, 81.2 g/t silver and 24.2 g/t gold, 6.8 g/t silver. Also some 540 metres to the east, near Discovery vein, an additional outcrop was grab sampled. Geochemical analyses indicate 11.8 g/t gold and 19.9 g/t gold. The Lack Shear Zone is considered to lie south of the main veins, Joshua and Kearney, at a strike of 80 degrees and to dip north. The current hypothesis is that the main veins have been, for the most part, dextrally offset south of the Lack Shear Zone (LSZ). This hypothesis is supported by recent discoveries (see press release dated September 16, 2015). A detailed re-mapping of this zone, encompassing all of the aforementioned vein exposures is planned to take place in second quarter of 2016. Some of this work will form part of a post-graduate student project.
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 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.
During the fourth quarter of 2015 Galantas reported that they had been made aware of what purports to be 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. Subsequent to December 31, 2015 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 expected to be heard in late September 2016.
Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "Our exploration efforts continue to bear fruit and demonstrate the potential of the area under license. The true width (13 metres) of the recent high grade (9.9 g/t) gold intersect cored on Joshua vein gives us increased confidence that the geological model being developed will greatly assist our near term mining project."
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. 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.
