Interim / Quarterly Report • Aug 20, 2014
Interim / Quarterly Report
Open in ViewerOpens in native device viewer
National Storage Mechanism | Additional information
RNS Number : 6103P
Galantas Gold Corporation
20 August 2014
GALANTAS GOLD CORPORATION
TSXV & AIM : Symbol GAL
GALANTAS REPORTS RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2014
August 20th, 2014: Galantas Gold Corporation (the 'Company') is pleased to announce its financial results for the three and six months ended June 30, 2014.
Financial Highlights
Highlights of the 2014 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 |
Six Months Ended June 30 |
||
| 2014 | 2013 | 2014 | 2013 | |
| Revenue | $ 0 | $ 532,856 | $ 0 | $ 888,532 |
| Cost of Sales | $ 99,446 | $ 511,833 | $ 176,680 | $ 909,421 |
| Income (Loss) before the undernoted | $ (99,446) | $ 12,023 | $ (176,680) | $ (20,889) |
| Depreciation | $ 62,171 | $ 122,224 | $ 127,263 | $ 246,830 |
| General administrative expenses | $ 347,528 | $ 294,721 | $ 619,709 | $ 591,780 |
| (Gain) on sale of property, plant and equipment | $ (19,312) | $ (64,531) | $ (19,860) | $ (64,531) |
| Unrealized (gain) on fair value of derivative financial liability | $ (210,000) | $ 0 | $ (210,000) | $ 0 |
| Foreign exchange loss | $ 16,770 | $ 17,272 | $ 104,911 | $ 3,249 |
| Net (Loss) for the period | $ ( 296,603) | $ (357,663) | $ (798,703) | $ (798,217) |
| Working Capital (Deficit) | $ (2,607,058) | $ (3,037,837) | $ (2,607,058) | $(3,037,837) |
| Cash (loss) from operating activities before changes in non-cash working capital | $ (450,143) | $ (323,010) | $ (969,676) | $ (562,927) |
| Cash at June 30, 2014 | $ 458,849 | $ 476,581 | $ 458,849 | $ 476,581 |
The Net Loss for the three months ended June 30, 2014, amounted to CDN$ 296,603 (2013 Q2: CDN$ 357,663) and the cash loss from operating activities before changes in non-cash working capital in the second quarter of 2014 amounted to CDN$ 450,143 (2013 Q2: CDN$ 323,010). The Net Loss for the six months ended June 30, 2014, amounted to CDN$ 798,703 (2013:CDN$ 798,217) and the cash loss from operating activities before changes in non-cash working capital for the first six months of 2014 amounted to CDN$ 969,676 (2013: CDN$ 562,927).
Sales revenues for the second quarter and six months ended June 30, 2014 amounted to CDN$ Nil (2013: CDN $532,856 and CDN$ 888,532 respectively). Following the suspension of production during the fourth quarter of 2013 due primarily to lower concentrate gold grade coupled with falling gold prices, there were no shipments of concentrates sales from the mine during the second quarter and first six months. The Company continues to review the economics of continuing production through the processing of tailings cells.
Cost of sales for the second quarter and six months ended June 30, 2014 amounted to CDN$ 99,446 and CDN$ 176,680 respectively (2013: CDN$ 511,833 and CDN$ 909,421). There was a decrease in all production costs at the Omagh mine during both periods following the suspension of production during 2013.
The Company had cash balances of CDN$ 458,849 at June 30, 2014 compared to CDN$ 476,581 at June 30, 2013. The working capital deficit at June 30, 2014 amounted to CDN$ 2,607,058 compared to a working capital deficit of CDN$ 3,307,837 at June 30, 2013.
During the second quarter Galantas completed a private placement financing for aggregate gross proceeds of approximately UK£ 516,500. Pursuant to the offering, an aggregate of 10,330,000 units were sold at a price of UK£ 0.05/CDN$0.09375 per common share. Each unit is comprised of one common share and one common share purchase warrant. In addition a shares for debt exchange of 15,125,140 common shares for CDN$ 1,389,150/ UK£ 756,157of the Company's debt was completed during the second quarter.
Production
Production at the Omagh mine remains suspended awaiting planning consent to continue operations underground. Due to continued delays in the planning process, management had to make significant redundancies in the workforce, alongside other cost reduction measures.
During the first quarter of 2014 the Company commenced pilot tests with regards to the processing of tailing cells filled during the earlier operation of the mine. The results confirm pre-existing data that indicated the tailings contain between 0.5g/t gold and 1 g/t gold and meet European Union standards for definition as inert material. A low energy cost processing solution, based upon a Knelson CD12 centrifugal gravity concentrator, which was already utilized in the gold processing plant in a secondary role, was successfully pilot tested as a prime re-treatment component for flotation tailings. The tailings do not require comminution (crushing and grinding) for re-processing by this method. Extended in-house tests with the Knelson concentrator produced a variation in results in terms of grade and recovery. Consequently, alternative gravity oriented test-work was carried out. The results successfully indicate that it is possible to uprate tailings by a low energy consuming, bulk gravity method from 0.5-1.0 g/t to 2-3 g/t gold. The higher feed grade produced in testing has been tested with froth flotation in the Company's in-house laboratory to simulate production flotation in the company's processing plant, followed by an additional gravity scavenging treatment. The results indicate that a finer grind than was previously required may be necessary to enhance the concentrate grade. The existing Knelson concentrator, whilst large enough to test the process, is not large enough to satisfactorily operate the process at the scale required for robust economics at present gold prices. The economics of acquiring a larger concentrator unit and ancillary equipment is subject to satisfactory recoveries being confirmed. The test-work is continuing.
Reserves and Resources
Work continued during the first half of 2014 on updating the resource estimate to incorporate results from later drill holes not included previously. Also the main veins were re-strung to incorporate the new drill data and accommodate the revised cut-off grade and minimum mining width parameters. Importantly, the Joshua and Kearney drill intersects were strung to individual historic channels, this time consuming process has incorporated all of the available assay data in order to make a more informed assessment of grade continuity and vein geometry. The improved statistical assessment is expected to allow some category upgrading in that portion of the resource affected. Based upon the updated technical analysis, work is also well advanced on finalising a revised NI 43-101 report. The work includes the delineation of mining reserves, the completion of a detailed mining plan, mining schedule and comprehensive cost estimates, based upon underground working of the Joshua and Kearney veins.
Subsequent to June 30, 2014 Galantas reported on the revised updated estimate of gold resources together with a Preliminary Economic Assessment (PEA) update (see press release dated July 28, 2014). The revised estimate of resources is in compliance with the Pan European Reporting Code (PERC), Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards and Canadian National Instrument (NI) 43-101 and is summarised below.
| RESOURCE ESTIMATE : GALANTAS 2014 CUT-OFF 2 g/t Au |
Increase over GAL 2013 report |
|||
| RESOURCE CATEGORY |
TONNES | GRADE (Au g/t) |
Au Ozs | |
| MEASURED | 138,241 | 7.24 | 32,202 | 55% |
| INDICATED | 679,992 | 6.78 | 147,784 | 21.4% |
| INFERRED | 1,373,879 | 7.71 | 341,123 | 15.4% |
Minerals Resources that are not Mineral Reserves do not have demonstrated economic viability.
Overall there has been a 19% increase in resources since the Galantas June 2013 Resource Report and a 60% increase in resources since the July 2012 Resource Report by ACA Howe International Ltd The increases since 2012 largely relate to the Kearney and Joshua veins, since this is where the drilling program has been concentrated. The drilling program was mainly designed to focus on increasing the quantity of Measured and Indicated resources on these two veins, to support potential bank funding opportunities for the financing of production. The resource estimate for each vein is tabulated below.
| RESOURCE ESTIMATE BY VEIN : GALANTAS 2014 | ||||||||||
| MEASURED | INDICATED | INFERRED | ||||||||
| Tonnes | Grade Au (g/t) | Contained Au (oz) | Tonnes | Grade Au (g/t) | Contained Au (oz) | Tonnes | Grade Au (g/t) |
Contained Au (oz) | ||
| KEARNEY | 76,936 | 7.48 | 18,490 | 383,220 | 6.66 | 82,055 | 909,277 | 6.61 | 193,330 | |
| JOSHUA | 54,457 | 7.25 | 12,693 | 216,211 | 7.92 | 55,046 | 291,204 | 10.74 | 100,588 | |
| KERR | 6,848 | 4.63 | 1,019 | 12,061 | 4.34 | 1,683 | 23,398 | 3.2 | 2,405 | |
| ELKINS | 68,500 | 4.24 | 9,000 | 20,000 | 5.84 | 3,800 | ||||
| GORMLEYS | 75,000 | 8.78 | 21,000 | |||||||
| PRINCES | 10,000 | 38.11 | 13,000 | |||||||
| SAMMY'S | 27,000 | 6.07 | 5,000 | |||||||
| KEARNEY NORTH | 18,000 | 3.47 | 2,000 | |||||||
| TOTAL | 138,241 | 7.25 | 32,202 | 679,992 | 6.78 | 147,784 | 1,373,879 | 7.71 | 341,123 | |
The resources are calculated at a cut-off grade of 2 g/t gold (Au), numbers are rounded, gold grades are capped at 75 g/t gold and a minimum mining width of 0.9m has been applied.
Measured and Indicated resources on Kearney vein have increased to 100,545 ounces of gold from 69,000 ounces in 2012. Measured and Indicated resources on Joshua vein have increased to 67,739 ounces of gold from 15,800 ounces in 2012. The Kearney and Joshua veins are the early targets of underground mining. Combined Measured and Indicated resource category on these two veins are estimated at 168,284 ounces of gold, with 293,918 ounces of gold in the Inferred resource category. Both vein systems are open at depth.
With regards to the Preliminary Economic Assessment a restricted portion of Inferred resources for two veins - Joshua and Kearney have been included with the Measured and Indicated resources. The Inferred resources (which have lower statistical support than Measured or Indicated Resources) are contiguous with Measured or Indicated resources and / or lie within scheduled mining areas. The use of Inferred resources, in a restricted qualifying manner, is permitted by the PERC code in regard to economic studies but is excluded within NI 43-101, except within a Preliminary Economic Assessment. PERC is an approved code is respect of NI 43-101. As part of PERC requirements, a comparative Feasibility study will be included in the detailed technical report which will not include Inferred resources and will also include studies on sensitivity to gold price.
The total of scheduled Measured and Indicated ounces utilised within the mining study is 104,627 ounces. The Inferred resources scheduled in the economic study are estimated at 60,635 ounces. Total Inferred resource estimated on the Joshua and Kearney orebodies is 293,918 ounces of gold. The amount of Inferred resources included in the PEA amounts to 20.6% of the total Inferred resources estimated on these veins. Were Inferred resources excluded within the mining plan, approximately 1 year would be removed from the estimate of mine life and annual output would be reduced.
At a gold price of UK£750 / US$ 1,260 oz, the pre-tax operating surplus after capital expenditure estimates an Internal Rate of Return of 72% and, at an 8% discount rate, a net present value of approximately UK£ 14.5m (CDN$ 26.6m) and a cash cost of production of UK£394 per ounce (USD$ 662 at $1.68/UK£). The study scheduled approximately 36% of the combined resources identified on the Kearney and Joshua veins.
The Company will file the complete Technical Report on SEDAR during the third quarter, as required by NI 43-101.
Exploration
Following the receipt of two new licences in the Republic of Ireland earlier in 2014 Omagh Minerals Limited now holds a total of 11 exploration licenses with a total coverage of 766.5 km2. Exploration during the second quarter was restricted to conserve cash funds exploration reports and publications relating to the geology and known mineralisation of the two new licences referred to above were reviewed. Following this, some reconnaissance fieldwork was carried out in order to identify the areas which will be prioritised for exploration over the summer. Four broad exploration targets have been established, based on the potential for mineralisation with consideration given to land accessibility and suitable exposure
Permitting
Discussions continued with the planning services in Northern Ireland during the first half of 2014 with regards to the planning application for an underground mine plan and accompanying Environmental Statement which were submitted to the Planning Services in 2012. The Company has been advised that the final consultation response has been received and is positive. The Company understands a timeline in the fourth quarter of 2014 is possible for a final determination. However it should be noted that the timeline for delivery of the determination is not within the control of the Company. Shareholders may see progress on the public planning portal at :-http://epicpublic.planningni.gov.uk/PublicAccess/zd/zdApplication/application_detailview.aspx?caseno=M6QQVVSV30000
Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "The robust results of the recent economic study, with the upcoming planning determination, which we expect to be positive, lead us to be confident about the establishment of a sound business based on the Omagh gold property. "
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.
Click on, or paste the following link into your web browser, to view the associated Management, Discussion and Analysis PDF document:
http://www.rns-pdf.londonstockexchange.com/rns/6103P_-2014-8-20.pdf
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
Charles Stanley Securities (AIM Nomad & Broker)
Mark Taylor
Telephone +44 (0)20 7149 6000
| Condensed Interim Consolidated Statements of Financial Position | ||||||
| (Expressed in Canadian Dollars) | ||||||
| (Unaudited) | ||||||
| As at | As at | |||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash | $ | 458,849 | $ | 166,617 | ||
| Accounts receivable and prepaid expenses (note 5) | 238,281 | 405,124 | ||||
| Inventories (note 6) | 351,053 | 338,865 | ||||
| Total current assets | 1,048,183 | 910,606 | ||||
| Non-current assets | ||||||
| Property, plant and equipment (note 7) | 10,391,063 | 10,100,319 | ||||
| Long-term deposit (note 9) | 483,917 | 467,116 | ||||
| Exploration and evaluation assets (note 8) | 1,983,194 | 1,875,771 | ||||
| Total non-current assets | 12,858,174 | 12,443,206 | ||||
| Total assets | $ | 13,906,357 | $ | 13,353,812 | ||
| EQUITY AND LIABILITIES | ||||||
| Current liabilities | ||||||
| Accounts payable and other liabilities (note 10) | $ | 914,482 | $ | 1,217,360 | ||
| Due to related parties (note 14) | 2,740,759 | 3,597,550 | ||||
| Total current liabilities | 3,655,241 | 4,814,910 | ||||
| Non-current liabilities | ||||||
| Decommissioning liability (note 9) | 553,597 | 528,810 | ||||
| Derivative financial liability (note 11(c)) | 296,000 | - | ||||
| Total liabilities | 4,504,838 | 5,343,720 | ||||
| Capital and reserves | ||||||
| Share capital (note 11) | 31,702,575 | 29,874,693 | ||||
| Reserves | 6,615,708 | 6,253,460 | ||||
| Deficit | (28,916,764) | (28,118,061) | ||||
| Total equity | 9,401,519 | 8,010,092 | ||||
| Total equity and liabilities | $ | 13,906,357 | $ | 13,353,812 |
| Condensed Interim Consolidated Statements of Loss | ||||||||||||
| (Expressed in Canadian Dollars) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months | Six Months | |||||||||||
| Ended | Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Revenues | ||||||||||||
| Gold sales | $ | - | $ | 523,856 | $ | - | $ | 888,532 | ||||
| Cost and expenses of operations | ||||||||||||
| Cost of sales (note 13) | 99,446 | 511,833 | 176,680 | 909,421 | ||||||||
| Depreciation | 62,171 | 122,224 | 127,263 | 246,830 | ||||||||
| 161,617 | 634,057 | 303,943 | 1,156,251 | |||||||||
| Loss before the undernoted | (161,617) | (110,201) | (303,943) | (267,719) | ||||||||
| General administrative expenses | ||||||||||||
| Management and administration wages (note 14) | 130,671 | 126,523 | 268,704 | 252,171 | ||||||||
| Other operating expenses | 27,477 | 34,627 | 64,381 | 105,005 | ||||||||
| Accounting and corporate | 15,869 | 17,241 | 30,496 | 27,971 | ||||||||
| Legal and audit | 52,411 | 16,640 | 81,353 | 43,553 | ||||||||
| Stock-based compensation (note 11(d)) | - | 13,089 | - | 26,179 | ||||||||
| Shareholder communication and investor relations | 67,049 | 53,683 | 92,653 | 83,433 | ||||||||
| Transfer agent | 24,527 | 11,642 | 27,603 | 13,659 | ||||||||
| Director fees (note 14) | 9,250 | 8,250 | 14,250 | 13,250 | ||||||||
| General office | 2,462 | 1,778 | 4,784 | 3,891 | ||||||||
| Accretion expenses (note 9) | 2,898 | - | 5,781 | - | ||||||||
| Loan interest and bank charges | 14,914 | 11,248 | 29,704 | 22,668 | ||||||||
| 347,528 | 294,721 | 619,709 | 591,780 | |||||||||
| Other expenses | ||||||||||||
| Gain on disposal of property, plant and equipment | (19,312) | (64,531) | (19,860) | (64,531) | ||||||||
| Unrealized gain on fair value of derivative financial liability (note 11(c)) | (210,000) | - | (210,000) | - | ||||||||
| Foreign exchange loss | 16,770 | 17,272 | 104,911 | 3,249 | ||||||||
| (212,542) | (47,259) | (124,949) | (61,282) | |||||||||
| Net loss for the period | $ | (296,603) | $ | (357,663) | $ | (798,703) | $ | (798,217) | ||||
| Basic and diluted net loss per share (note 12) | $ | (0.00) | $ | (0.01) | $ | (0.01) | $ | (0.02) | ||||
| Weighted average number of common shares outstanding - basic and diluted | 62,618,186 | 51,242,016 | 56,906,564 | 51,242,016 |
| Condensed Interim Consolidated Statements of Comprehensive Loss | ||||||||||||
| (Expressed in Canadian Dollars) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months | Six Months | |||||||||||
| Ended | Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Net loss for the period | $ | (296,603) | $ | (357,663) | $ | (798,703) | $ | (798,217) | ||||
| Other comprehensive loss | ||||||||||||
| Items that will be reclassified subsequently to profit or loss | ||||||||||||
| Foreign currency translation differences | (89,511) | 323,508 | 362,248 | (107,303) | ||||||||
| Total comprehensive loss | $ | (386,114) | $ | (34,155) | $ | (436,455) | $ | (905,520) |
| Condensed Interim Consolidated Statements of Cash Flows | ||||||
| (Expressed in Canadian Dollars) | ||||||
| (Unaudited) | ||||||
| Six Months | ||||||
| Ended | ||||||
| June 30, | ||||||
| 2014 | 2013 | |||||
| Operating activities | ||||||
| Net loss for the period | $ | (798,703) | $ | (798,217) | ||
| Adjustment for: | ||||||
| Depreciation | 127,263 | 246,830 | ||||
| Stock-based compensation (note 11(d)) | - | 26,179 | ||||
| Foreign exchange | (74,157) | 26,812 | ||||
| Gain on disposal of property, plant and equipment | (19,860) | (64,531) | ||||
| Accretion expenses (note 9) | 5,781 | - | ||||
| Unrealized gain on fair value of derivative financial liability (note 11(c)) | (210,000) | - | ||||
| Non-cash working capital items: | ||||||
| Accounts receivable and prepaid expenses | 166,843 | 260,040 | ||||
| Inventories | (12,188) | 6,535 | ||||
| Accounts payable and other liabilities | (262,211) | (404,234) | ||||
| Due to related parties | 363,900 | - | ||||
| Net cash used in operating activities | (713,332) | (700,586) | ||||
| Investing activities | ||||||
| Purchase of property, plant and equipment | (68,534) | (112,463) | ||||
| Proceeds from sale of property, plant and equipment | 33,833 | 207,014 | ||||
| Exploration and evaluation assets | (42,035) | (265,346) | ||||
| Net cash used in investing activities | (76,736) | (170,795) | ||||
| Financing activities | ||||||
| Proceeds of private placement | 968,438 | - | ||||
| Share issue costs | (23,706) | - | ||||
| Repayment of related party loan | - | (32,278) | ||||
| Advances from related parties | 127,792 | 210,180 | ||||
| Net cash provided by financing activities | 1,072,524 | 177,902 | ||||
| Net change in cash | 282,456 | (693,479) | ||||
| Effect of exchange rate changes on cash held in foreign currencies | 9,776 | 5,192 | ||||
| Cash, beginning of period | 166,617 | 1,164,868 | ||||
| Cash, end of period | $ | 458,849 | $ | 476,581 | ||
| Supplemental information | ||||||
| Shares issued to settle accounts payable and other liabilities | $ | 40,667 | $ | - | ||
| Shares issued to settle due to related parties | $ | 1,348,483 | $ | - |
| Condensed Interim Consolidated Statements of Changes in Equity | ||||||||||||||||||
| (Expressed in Canadian Dollars) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Reserves | ||||||||||||||||||
| Equity settled | Foreign | |||||||||||||||||
| share-based | currency | |||||||||||||||||
| Share | payments | Warrant | translation | |||||||||||||||
| capital | reserve | reserve | reserve | Deficit | Total | |||||||||||||
| Balance, December 31, 2012 | $ | 29,874,693 | $ | 4,477,699 | $ | 957,450 | $ | 5,047 | $ | (26,173,706 | ) | $ | 9,141,183 | |||||
| Stock-based compensation (note 11(d)) | - | 26,179 | - | - | - | 26,179 | ||||||||||||
| Net loss and other comprehensive loss for the period | - | - | - | (107,303) | (798,217) | (905,520) | ||||||||||||
| Balance, June 30, 2013 | $ | 29,874,693 | $ | 4,503,878 | $ | 957,450 | $ | (102,256) | $ | (26,971,923) | $ | 8,261,842 | ||||||
| Balance, December 31, 2013 | $ | 29,874,693 | $ | 5,471,109 | $ | - | $ | 782,351 | $ | (28,118,061) | $ | 8,010,092 | ||||||
| Units issued in private placement (note 11(b)(i)) | 968,438 | - | - | - | - | 968,438 | ||||||||||||
| Warrants issued (note 11(b)(i)) | (506,000) | - | - | - | - | (506,000) | ||||||||||||
| Share issue costs (note 11(b)(i)) | (23,706) | - | - | - | - | (23,706) | ||||||||||||
| Common shares issued for debt (note 11(b)(ii)) | 1,389,150 | - | - | - | - | 1,389,150 | ||||||||||||
| Net loss and other comprehensive income for the period | - | - | - | 362,248 | (798,703) | (436,455) | ||||||||||||
| Balance, June 30, 2014 | $ | 31,702,575 | $ | 5,471,109 | $ | - | $ | 1,144,599 | $ | (28,916,764) | $ | 9,401,519 |
| Notes to Condensed Interim Consolidated Financial Statements |
| Three and Six Months Ended June 30, 2014 |
| (Expressed in Canadian Dollars) |
| (Unaudited) |
1. Going Concern
These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis which contemplates that Galantas Gold Corporation (the "Company") will be able to realize assets and discharge liabilities in the normal course of business. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern.
The Company's future viability depends on the consolidated results of the Company's wholly-owned subsidiary Cavanacaw Corporation ("Cavanacaw"). Cavanacaw has a 100% shareholding in Omagh Minerals Limited ("Omagh") which is engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland. Omagh has an open pit mine, which is in production and reported as property, plant and equipment and an underground mine which is in the exploration stage and reported as exploration and evaluation assets. The production at the open pit mine was suspended later in 2013 due to falling grades and gold prices.
The going concern assumption is dependent upon the ability of the Company to obtain the following:
| a. | Planning permission for the development of an underground mine in Omagh; and | |
| b. | Securing sufficient financing to fund ongoing operational activity and the development of the underground mine. |
Should the Company be unsuccessful in securing the above, there would be significant uncertainty over the Company's ability to continue as a going concern.
As at June 30, 2014, the Company had a deficit of $28,916,764 (December 31, 2013 - $28,118,061). Management is confident that it will be able to secure the required financing to enable the Company to continue as a going concern. However, this is subject to a number of factors including market conditions.
These unaudited condensed interim consolidated financial statements do not reflect adjustments to the carrying values of assets and liabilities, the reported expenses and financial position classifications used that would be necessary if the going concern assumption was not appropriate. These adjustments could be material.
2. Incorporation and Nature of Operations
The Company was formed on September 20, 1996 under the name Montemor Resources Inc. on the amalgamation of 1169479 Ontario Inc. and Consolidated Deer Creek Resources Limited. The name was changed to European Gold Resources Inc. by articles of amendment dated July 25, 1997. On May 5, 2004, the Company changed its name from European Gold Resources Inc. to Galantas Gold Corporation. The Company was incorporated to explore for and develop mineral resource properties, principally in Europe. In 1997, it purchased all of the shares of Omagh which owns a mineral property in Northern Ireland, including a delineated gold deposit. Omagh obtained full planning and environmental consents necessary to bring its property into production.
The Company entered into an agreement on April 17, 2000, approved by shareholders on June 26, 2000, whereby Cavanacaw, a private Ontario corporation, acquired Omagh. Cavanacaw has established an open pit mine to extract the Company's gold deposit near Omagh. Cavanacaw also has developed a premium jewellery business founded on the gold produced under the name Galántas Irish Gold Limited ("Galántas"). On April 1, 2014, Galántas amalgamated with Omagh.
As at July 1, 2007, the Company's Omagh mine began production.
On April 8, 2014, Cavanacaw acquired Flintridge Resources Limited ("Flintridge"), a dormant UK company.
The Company's operations include the consolidated results of Cavanacaw, and its wholly-owned subsidiaries Omagh, Galántas and Flintridge.
The Company's common shares are listed on the TSX Venture Exchange and London Stock Exchange AIM under the symbol GAL. The primary office is located at 36 Toronto Street, Suite 1000, Toronto, Ontario, Canada, M5C 2C5.
3. Basis of Preparation
Statement of compliance
The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements.
The policies applied in these unaudited condensed interim consolidated financial statements are based on IFRSs issued and outstanding as of August 15, 2014 the date the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim consolidated financial statements as compared with the most recent annual consolidated financial statements as at and for the year ended December 31, 2013. Any subsequent changes to IFRS that are given effect in the Company's annual consolidated financial statements for the year ending December 31, 2014 could result in restatement of these unaudited condensed interim consolidated financial statements.
4. Significant Accounting Policies
Change in accounting policies
IAS 32 - Financial Instruments, Presentation ("IAS 32") was effective for annual periods beginning on or after January 1, 2014. IAS 32 was amended to clarify that the right of offset must be available on the current date and cannot be contingent on a future date. At January 1, 2014, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements.
Warrants with an exercise price denominated in a foreign currency denominated in a foreign currency are recorded at fair value and classified as a derivative financial liability. The liability is initially measured at estimated fair value with subsequent changes in fair value recorded as a gain or loss in the unaudited condensed interim consolidated statements of loss. As the warrants are exercised, the value of the recorded liability will be included in share capital along with the proceeds from the exercise. If these warrants expire, the related liability is reversed through the unaudited condensed interim consolidated statements of loss.
Recent accounting pronouncements
IFRS 9 - Financial Instruments ("IFRS 9") was issued by the IASB in October 2010 and will replace IAS 39 - Financial Instruments: Recognition and Measurement ("IAS 39"). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. IFRS 9 will be effective for accounting periods beginning January 1, 2018. The Company is currently assessing the impact of this pronouncement.
5. Accounts Receivable and Prepaid Expenses
| As at | As at | |||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| Sales tax receivable - Canada | $ | 13,142 | $ | 21,866 | ||
| Valued added tax receivable - Northern Ireland | 10,569 | 10,752 | ||||
| Accounts receivable | 47,044 | 202,205 | ||||
| Prepaid expenses | 167,526 | 170,301 | ||||
| $ | 238,281 | $ | 405,124 |
Prepaid expenses includes advances for consumables and for construction of the passing bays in the Omagh mine.
The following is an aged analysis of accounts receivable:
| As at | As at | |||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| Less than 3 months | $ | 23,711 | $ | 138,839 | ||
| 3 to 12 months | 11,983 | 59,177 | ||||
| More than 12 months | 35,061 | 36,807 | ||||
| Total accounts receivable | $ | 70,755 | $ | 234,823 |
6. Inventories
| As at | As at | |||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| Concentrate inventories | $ | 11,870 | $ | 11,458 | ||
| Finished goods | 339,183 | 327,407 | ||||
| $ | 351,053 | $ | 338,865 |
7. Property, Plant and Equipment
| Plant | Mine | |||||||||||||||||||||||
| Freehold | and | Motor | Office | development | ||||||||||||||||||||
| Cost | land | Buildings | machinery | vehicles | equipment | Moulds | costs | Total | ||||||||||||||||
| Balance, December 31, 2012 | $ | 2,315,212 | $ | 391,563 | $ | 5,996,937 | $ | 84,171 | $ | 105,396 | $ | 58,844 | $ | 12,422,216 | $ | 21,374,339 | ||||||||
| Additions | - | - | - | - | - | - | 343,588 | 343,588 | ||||||||||||||||
| Disposals | - | - | (1,369,832) | (11,986) | - | - | - | (1,381,818) | ||||||||||||||||
| Foreign exchange adjustment | 207,365 | 35,069 | 534,617 | 7,538 | 9,449 | 5,271 | 1,112,726 | 1,912,035 | ||||||||||||||||
| Balance, December 31, 2013 | 2,522,577 | 426,632 | 5,161,722 | 79,723 | 114,845 | 64,115 | 13,878,530 | 22,248,144 | ||||||||||||||||
| Additions | - | - | - | - | - | - | 68,534 | 68,534 | ||||||||||||||||
| Disposals | - | - | (129,198) | - | - | - | - | (129,198) | ||||||||||||||||
| Foreign exchange adjustment | 90,731 | 15,346 | 184,647 | 2,868 | 4,131 | 2,306 | 499,177 | 799,206 | ||||||||||||||||
| Balance, June 30, 2014 | $ | 2,613,308 | $ | 441,978 | $ | 5,217,171 | $ | 82,591 | $ | 118,976 | $ | 66,421 | $ | 14,446,241 | $ | 22,986,686 |
| Plant | Mine | |||||||||||||||||||||||
| Freehold | and | Motor | Office | development | ||||||||||||||||||||
| Accumulated depreciation | land | Buildings | machinery | vehicles | equipment | Moulds | costs | Total | ||||||||||||||||
| Balance, December 31, 2012 | $ | 911,702 | $ | 328,444 | $ | 3,987,043 | $ | 54,149 | $ | 45,164 | $ | 58,844 | $ | 5,962,024 | $ | 11,347,370 | ||||||||
| Depreciation | - | 12,573 | 400,922 | 7,475 | 8,993 | - | 70,793 | 500,756 | ||||||||||||||||
| Disposals | - | - | (750,631) | (10,143) | - | - | - | (760,774) | ||||||||||||||||
| Foreign exchange adjustment | 81,657 | 30,599 | 391,847 | 5,553 | 4,897 | 5,271 | 540,649 | 1,060,473 | ||||||||||||||||
| Balance, December 31, 2013 | 993,359 | 371,616 | 4,029,181 | 57,034 | 59,054 | 64,115 | 6,573,466 | 12,147,825 | ||||||||||||||||
| Depreciation | - | 5,572 | 114,566 | 2,854 | 4,271 | - | - | 127,263 | ||||||||||||||||
| Disposals | - | - | (115,225) | - | - | - | - | (115,225) | ||||||||||||||||
| Foreign exchange adjustment | 35,727 | 13,355 | 143,783 | 2,044 | 2,113 | 2,306 | 236,432 | 435,760 | ||||||||||||||||
| Balance, June 30, 2014 | $ | 1,029,086 | $ | 390,543 | $ | 4,172,305 | $ | 61,932 | $ | 65,438 | $ | 66,421 | $ | 6,809,898 | $ | 12,595,623 |
| Plant | Mine | |||||||||||||||||||||||
| Freehold | and | Motor | Office | development | ||||||||||||||||||||
| Carrying value | land | Buildings | machinery | vehicles | equipment | Moulds | costs | Total | ||||||||||||||||
| Balance, December 31, 2013 | $ | 1,529,218 | $ | 55,016 | $ | 1,132,541 | $ | 22,689 | $ | 55,791 | $ | - | $ | 7,305,064 | $ | 10,100,319 | ||||||||
| Balance, June 30, 2014 | $ | 1,584,222 | $ | 51,435 | $ | 1,044,866 | $ | 20,659 | $ | 53,538 | $ | - | $ | 7,636,343 | $ | 10,391,063 |
8. Exploration and Evaluation Assets
Exploration and evaluation assets are expenditures for the underground mining operations in Omagh. The proposed underground mine is dependent on the ability of the Company to obtain the necessary planning permission.
| Exploration | |||
| and | |||
| evaluation | |||
| Cost | assets | ||
| Balance, December 31, 2012 | $ | 1,399,254 | |
| Additions | 357,061 | ||
| Foreign exchange adjustment | 119,456 | ||
| Balance, December 31, 2013 | 1,875,771 | ||
| Additions | 42,510 | ||
| Foreign exchange adjustment | 64,913 | ||
| Balance, June 30, 2014 | $ | 1,983,194 |
| Exploration | |||
| and | |||
| evaluation | |||
| Carrying value | assets | ||
| Balance, December 31, 2013 | $ | 1,875,771 | |
| Balance, June 30, 2014 | $ | 1,983,194 |
9. Decommissioning Liability
The Company's decommissioning liability is as a result of mining activities at the Omagh mine in Northern Ireland. The Company estimated its decommissioning liability at June 30, 2014 based on a risk-free discount rate of 1% (December 31, 2013 - 1%) and an inflation rate of 1.50% (December 31, 2013 - 1.50%) . The expected undiscounted future obligations allowing for inflation are GBP 330,000 and based on management's best estimate the decommissioning is expected to occur over the next 5 to 10 years. On June 30, 2014, the estimated fair value of the liability is $553,597 (December 31, 2013 - $528,810). Changes in the provision during the period ended June 30, 2014 are as follows:
| As at | As at | |||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| Decommissioning liability, beginning of period | $ | 528,810 | $ | 404,450 | ||
| Revision due to change in estimate | - | 109,680 | ||||
| Accretion | 5,781 | 14,680 | ||||
| Foreign exchange | 19,006 | - | ||||
| Decommissioning liability, end of period | $ | 553,597 | $ | 528,810 |
As required by the Crown in Northern Ireland, the Company is required to provide a bond for reclamation related to the Omagh mine in the amount of GBP 303,158 (December 31, 2013 - GBP 300,000), of which GBP 265,000 was funded as of June 30, 2014 and reported as long-term deposit of $483,917 (December 31, 2013 - $467,116).
10. Accounts Payable and Other Liabilities
Accounts payable and other liabilities of the Company are principally comprised of amounts outstanding for purchases relating to exploration costs on exploration and evaluation assets, general operating activities, amounts payable for financing activities and professional fees activities.
| As at | As at | |||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| Accounts payable | $ | 443,307 | $ | 545,557 | ||
| Accrued liabilities | 471,175 | 671,803 | ||||
| Total accounts payable and other liabilities | $ | 914,482 | $ | 1,217,360 |
The following is an aged analysis of the accounts payable and other liabilities:
| As at | As at | |||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| Less than 3 months | $ | 247,611 | $ | 376,400 | ||
| 3 to 12 months | 286,159 | 361,376 | ||||
| 12 to 24 months | 83,447 | 122,183 | ||||
| More than 24 months | 297,265 | 357,401 | ||||
| Total accounts payable and other liabilities | $ | 914,482 | $ | 1,217,360 |
11. Share Capital and Reserves
On April 14, 2014, the Company completed the consolidation of its issued and outstanding common shares on the basis of one post-consolidated common shares for five pre-consolidated common shares. As part of the share consolidation all applicable references to the number of shares, warrants and stock options and their exercise price and per share information has been restated.
a) Authorized share capital
At June 30, 2014, the authorized share capital consisted of an unlimited number of common and preference shares issuable in Series.
The common shares do not have a par value. All issued shares are fully paid.
No preference shares have been issued. The preference shares do not have a par value.
b) Common shares issued
At June 30, 2014, the issued share capital amounted to $31,702,575. The change in issued share capital for the periods presented is as follows:
| Number of | ||||||
| common | ||||||
| shares | Amount | |||||
| Balance, December 31, 2012 and June 30, 2013 | 51,242,016 | $ | 29,874,693 | |||
| Balance, December 31, 2013 | 51,242,016 | $ | 29,874,693 | |||
| Units issued in private placement (i) | 10,330,000 | 968,438 | ||||
| Warrants issued (i) | - | (506,000 | ) | |||
| Share issue costs (i) | - | (23,706 | ) | |||
| Common shares issued for debt (ii) | 15,125,140 | 1,389,150 | ||||
| Balance, June 30, 2014 | 76,697,156 | $ | 31,702,575 |
(i) On May 7, 2014, the Company completed a private placement of 10,330,000 units at GBP 0.05 ($0.09375) per unit for gross proceeds of GBP 516,500 ($968,438). Each unit is comprised of 1 common share and 1 warrant. Each warrant entitles the holder to purchase 1 further common share at GBP 0.10 per share for a period of two years. The common share issued are subject to a four month hold period. Commissions of $8,156 were paid in connection with the placement.
The fair value of the 10,330,000 warrants was estimated at $506,000 using the Black-Scholes pricing model with the following assumptions: expected dividend yield - 0%, expected volatility - 168.92%, risk-free interest rate - 1.07% and an expected average life of 2 years. As a result of the exercise price of the warrants being denominated in a currency other than the functional currency, the warrants are considered a derivative financial liability.
(ii) On May 30, 2014, the Company issued 15,125,140 common shares as settlement of accounts payable and other liabilities of GBP 21,976 ($40,667) and due to related parties of GBP 718,256 ($1,319,054) and GBP 16,025 ($29,429).
Due to related parties consisted of amounts owing to Roland Phelps (President & Chief Executive Officer) for a loan of GBP 718,256 settled for 14,365,120 common shares and Leo O'Shaughnessy (Chief Financial Officer) for a loan of GBP 16,025 settled for 320,500 common shares.
c) Warrant reserve
The following table shows the continuity of warrants for the periods presented:
| Weighted | ||||||
| average | ||||||
| Number of | exercise | |||||
| warrants | price | |||||
| Balance, December 31, 2012 and June 30, 2013 | 4,910,000 | $ | 0.50 | |||
| Balance, December 31, 2013 | - | $ | - | |||
| Issued (Note 11(b)(i)) | 10,330,000 | 0.18 | ||||
| Balance, June 30, 2014 | 10,330,000 | $ | 0.18 |
The following table reflects the actual warrants issued and outstanding as of June 30, 2014:
| Grant date | Exercise | Fair value | ||
| Number | fair value | price | June 30, 2014 | |
| Expiry date | of warrants | ($) | (GBP) | ($) |
| May 7, 2016 | 10,330,000 | 506,000 | 0.10 | 296,000 |
As a result of the exercise price of the warrants being denominated in a currency other than the functional currency, the warrants are considered a derivative financial liability. The warrants are revalued at each period end with any gain or loss in the fair value being record in the unaudited condensed interim consolidated statements of loss as an unrealized gain or loss on fair value of derivative financial liability.
On June 30, 2014, the fair value of the warrants was estimated using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 170.27%; risk free interest rate of 1.10%; and an expected life of 1.85 years. As a result, the fair value of the warrants was calculated to be $296,000 and the Company recorded an unrealized gain on fair value of derivative financial liability for the three and six months ended June 30, 2014 of $210,000.
d) Stock options
The Company has a stock option plan (the "Plan"), the purpose of which is to attract, retain and compensate qualified persons as directors, senior officers and employees of, and consultants to the Company and its affiliates and subsidiaries by providing such persons with the opportunity, through share options, to acquire an increased proprietary interest in the Company. The number of shares reserved for issuance under the Plan cannot be more than a maximum of 10% of the issued and outstanding shares at the time of any grant of options. The period for exercising an option shall not extend beyond a period of five years following the date the option is granted.
Insiders of the Company are restricted on an individual basis from holding options which when exercised would entitle them to receive more than 5% of the total issued and outstanding shares at the time the option is granted. The exercise price of options granted in accordance with the Plan must not be lower than the closing price of the shares on the Exchange immediately preceding the date on which the option is granted and in no circumstances may it be less than the permissible discounting in accordance with the Corporate Finance Policies of the Exchange.
The Company records a charge to the consolidated statements of comprehensive loss using the Black-Scholes option pricing model. The valuation is dependent on a number of inputs and estimates, including the strike price, exercise price, risk-free interest rate, the level of stock volatility, together with an estimate of the level of forfeiture. The level of stock volatility is calculated with reference to the historic traded daily closing share price at the date of issue.
Option pricing models require the inputs including the expected price volatility. Changes in the inputs can materially affect the fair value estimate.
The following table shows the continuity of stock options for the periods presented:
| Weighted | ||||||
| average | ||||||
| Number of | exercise | |||||
| options | price | |||||
| Balance, December 31, 2012 | 1,990,000 | $ | 0.50 | |||
| Expired | (100,000) | 0.50 | ||||
| Balance, June 30, 2013 | 1,890,000 | $ | 0.50 | |||
| Balance, December 31, 2013 and June 30, 2014 | 940,000 | $ | 0.50 |
Stock-based compensation includes $nil (three and six months ended June 30, 2013 - $13,089 and $26,179, respectively) relating to stock options granted in previous years that vested during the periods.
The following table reflects the actual stock options issued and outstanding as of June 30, 2014:
| Weighted average | Number of | ||||
| remaining | Number of | options | Number of | ||
| Exercise | contractual | options | vested | options | |
| Expiry date | price ($) | life (years) | outstanding | (exercisable) | unvested |
| November 23, 2015 | 0.50 | 1.40 | 200,000 | 200,000 | - |
| January 28, 2016 | 0.50 | 1.58 | 50,000 | 50,000 | - |
| September 6, 2016 | 0.50 | 2.19 | 690,000 | 690,000 | - |
| 0.50 | 1.99 | 940,000 | 940,000 | - |
12. Net Loss per Common Share
The calculation of basic and diluted loss per share for the three and six months ended June 30, 2014 was based on the loss attributable to common shareholders of $296,603 and $798,703, respectively (three and six months ended June 30, 2013 - $357,663 and $798,217, respectively) and the weighted average number of common shares outstanding of 62,618,186 and 56,906,564, respectively (three and six months ended June 30, 2013 - 51,242,016) for basic and diluted loss per share. Diluted loss did not include the effect of warrants and options for the three and six months ended June 30, 2014 and 2013, as they are anti-dilutive.
13. Cost of Sales
| Three Months | Six Months | |||||||||||
| Ended | Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Production wages | $ | 46,901 | $ | 161,696 | $ | 87,364 | $ | 313,282 | ||||
| Oil and fuel | 14,581 | 183,828 | 26,139 | 357,673 | ||||||||
| Repairs and servicing | 3,528 | 39,703 | 9,852 | 85,378 | ||||||||
| Equipment hire | 8,523 | 3,553 | 8,842 | 18,585 | ||||||||
| Consumable | 8,055 | 48,004 | 8,055 | 80,102 | ||||||||
| Royalties | 11,684 | 14,197 | 20,662 | 22,706 | ||||||||
| Carriage | - | 5,296 | - | 11,354 | ||||||||
| Other costs | 6,174 | 22,170 | 15,766 | 13,806 | ||||||||
| Production costs | 99,446 | 478,447 | 176,680 | 902,886 | ||||||||
| Inventory movement | - | 33,386 | - | 6,535 | ||||||||
| Cost of sales | $ | 99,446 | $ | 511,833 | $ | 176,680 | $ | 909,421 |
14. Related Party Disclosures
Related parties include the Board of Directors, close family members, other key management individuals and enterprises that are controlled by these individuals as well as certain persons performing similar functions.
Related party transactions conducted in the normal course of operations are measured at the fair value (the amount established and agreed to by the related parties) and approved by the Board of Directors in strict adherence to conflict of interest laws and regulations.
(a) The Company entered into the following transactions with related parties:
| Three Months | Six Months | ||||||||||||||
| Ended | Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| Notes | 2014 | 2013 | 2014 | 2013 | |||||||||||
| Interest on related party loans | (i) | $ | 13,893 | $ | 9,944 | $ | 27,485 | $ | 19,732 |
(i) G&F Phelps Limited ("G&F Phelps"), a company controlled by a director of the Company, had amalgamated loans to the Company of $2,217,374 (GBP 1,214,268) (December 31, 2013 - $2,017,000 - GBP 1,144,268) included with due to related parties bearing interest at 2% above UK base rates, repayable on demand and secured by a mortgage debenture on all the Company's assets. Interest accrued on related party loans is included with due to related parties. As at June 30, 2014, the amount of interest accrued is $192,285 (GBP 105,298) (December 31, 2013 - $159,144 -GBP 90,284).
(ii) See Note 11(b)(ii).
(b) Remuneration of key management of the Company was as follows:
| Three Months | Six Months | |||||||||||
| Ended | Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Salaries and benefits (1) | $ | 119,350 | $ | 103,400 | $ | 234,148 | $ | 202,905 | ||||
| Stock-based compensation | - | 7,792 | - | 15,497 | ||||||||
| $ | 119,350 | $ | 111,192 | $ | 234,148 | $ | 218,402 |
(1) Salaries and benefits include director fees. As at June 30, 2014, due to directors for fees amounted to $42,000 (December 31, 2013 - $27,750) and due to key management, mainly for salaries and benefits accrued amounted to $289,100 (GBP 158,315) (December 31, 2013 - $1,393,656 - GBP 790,637), and is included with due to related parties.
(c) As of June 30, 2014, Kenglo One Limited ("Kenglo") owns 13,222,068 common shares of the Company or approximately 17.2% of the outstanding common shares of the Company. Roland Phelps, Chief Executive Officer and director, owns, directly and indirectly, 21,472,915 common shares of the Company or approximately 28.0% of the outstanding common shares of the Company. The remaining 54.8% of the shares are widely held, which includes various small holdings which are owned by directors of the Company. These holdings can change at anytime at the discretion of the owner.
The Company is not aware of any arrangements that may at a subsequent date result in a change in control of the Company.
15. Segment Disclosure
The Company has determined that it has two reportable segment. The Company's operations are substantially all related to its investment in Cavanacaw and its subsidiaries, Omagh and Galántas. Substantially all of the Company's revenues, costs and assets of the business that support these operations are derived or located in Northern Ireland. Segmented information on a geographic basis is as follow:
| June 30, 2014 | United Kingdom | Canada | Total | ||||||
| Current assets | $ | 582,928 | $ | 465,255 | $ | 1,048,183 | |||
| Non-current assets | 12,797,803 | 60,371 | 12,858,174 | ||||||
| Revenues | $ | - | $ | - | $ | - |
16. Contingent Liability
During the year ended December 31, 2010, the Company's subsidiary Omagh received a payment demand from Her Majesty's Revenue and Customs in the amount of $555,664 (GBP 304,290) in connection with an aggregate levy arising from the removal of waste rock from the mine site during 2008 and early 2009. The Company believes this claim is without merit. An appeal has been lodged and the Company's subsidiary Omagh intends to vigorously defend itself against this claim. No provision has been made for the claim in the unaudited condensed interim consolidated financial statements.
17. Comparative Figures
Certain of the prior period's numbers have been reclassified and item descriptions changed to conform to the current period's presentation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GCGDISGDBGSG
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.