1st Quarter Results

RNS Number : 1553I

Galantas Gold Corporation

28 May 2014

 



GALANTAS GOLD CORPORATION

TSXV & AIM : Symbol GAL

GALANTAS REPORTS RESULTS FOR THE QUARTER ENDED MARCH 31, 2014

May 28th, 2014:  Galantas Gold Corporation (the 'Company') is pleased to announce its annual financial results for the Quarter ended March 31, 2014.

Financial Highlights

The Net Loss for the Quarter ended March 31, 2014 amounted to $ 501,200 which compared with a Net Loss of $ 440,554 for the Quarter ended March 31, 2013. Highlights of the first quarter 2014 results, which are expressed in Canadian Dollars, are:

	Quarter Ended March 31
All in CDN$	2014	2013
Revenue	$ 0	$ 364,676
Cost of Sales	$ 77,234	$ 397,588
(Loss) before the undernoted	$ (77,234)	$ (32,912)
Amortization	$ 65,092	$  124,606
General administrative expenses	$ 272,181	$ 297,059
(Gain) Loss on disposal of property, plant and equipment	$ (548)	$ 0
Foreign exchange loss(gain)	$ 88,141	$ (14,023)
Net (Loss) for the Quarter	$ (502,100)	$ ( 440,554)
Working Capital (Deficit)	$ (4,468,576)	$ (2,722,908)
Cash (loss)generated from operations before changes in non-cash working capital	$ (519,533)	$ (239,907)
Cash at March 31, 2014	$ 59,616	$ 823,661

Sales revenues for the quarter ended March 31, 2014 amounted to CDN$ Nil (2013: CDN$ 364,676). 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 first quarter. The Company is presently reviewing the economics of continuing production through the processing of tailings cells.

Cost of sales for the quarter ended March 31, 2014 amounted to CDN$ 77,234 (2013: CDN$ 397,588).  There was a decrease in various production costs at the Omagh mine during the quarter following the suspension of production during 2013. 

The Net Loss for the quarter ended March 31, 2014, amounted to CDN$ 502,100 (2013: Net Loss CDN$ 440,554). The cash loss generated from operating activities before changes in non-cash working capital for the first quarter of 2014 amounted to CDN$ 519,533 (2013: $ 239,907). The cash loss generated from operating activities after changes in non-cash working capital for 2014 amounted to CDN$ 62,262 (2013: CDN$ 85,235). The Company's cash balances March 31, 2014 amounted to CDN$ 59,616 which compared with CDN$ 823,661 at March 31, 2013. The Company working capital deficit at March 31, 2014 amounted to CDN$ 4,468,576 which compared with a deficit of CDN$ 2,722,908 at March 31, 2013.

Subsequent to March 31, 2014 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$0.09375 per common share. Each unit is comprised of one common share and one common share purchase warrant. In addition an application for a shares for debt exchange of 15,125,140 common shares for CDN$ 756,257 of the Company's debt was made to the TSX Venture Exchange subsequent to quarter end.

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. Concentrate grades produced by the pilot study were higher than grades for flotation concentrate from mined vein material. Further test-work has produced anomalous results regarding percentage recovery and this is to be further investigated. The Company is presently reviewing the economics of continuing production through the processing of tailings cells as the size of 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 and the parallel assessment of other low power treatment methodologies is also being carried out.

Exploration

Exploration during the first quarter was restricted to surface sampling to conserve cash funds. Results were received for samples taken within the licences 3039, 3040 & 3235, which are located in the Republic Of Ireland, bordering the Company's Northern Ireland OM4 licence. Nineteen float, outcrop and stream sediment samples were collected from areas closely associated with major fault systems. The largest gold anomaly was identified in a stream sediment sample (0.37 g/t) taken from a NE tributary to Lough Derg. The general drainage for this area is derived from parts of the OM4 catchment. Further samples have been collected in the vicinity of anomalous results and from licence area 2315.

Key pathfinder element anomalies have been discovered for float, outcrop and soil samples collected within the OM4 Magheranageeragh target. Gold, Arsenic, Lead, Zinc and Copper anomalies were detected in a central area and specific element associations are identified which point towards a local mineral source. Analysis of geochemistry in combination with pH readings were performed this quarter. Under some circumstances this may assist in locating buried mineralization, in this case the method has helped to constrain an important area of interest. Further sampling and the examination of alternate influences are required before mineralization can be confirmed.

Official documents for two new licence areas in the ROI were received during the quarter. These licences encompass 47.8 km² in the Manorhamilton region, 15 km east of Sligo town. The geological inlier is composed partially of  rocks from the Dalradian group, and has a general trend of SW to NE. Importantly, NE trending faults are dominant and one major structure correlates with the Omagh Thrust.  Historical records indicate the occurrence of Gold in this area. The duration of the licence is six years, with renewal and reports required every second year.  These bring the total number of licences held by OML to 11, with a total coverage of 766.5 km².

Technical detail of the exploration status of all licences is to be included in the upcoming NI.43-101 Technical Report.

During 2012 ACA Howe International Ltd (Howe UK) completed an Interim Resource to Canadian National Instrument NI 43-101 compliant mineral resource estimate and a Preliminary Economic Assessment for the Omagh Gold Project (see press release dated July 3, 2012). This report, filed in August 2012, which was based on drilling results and analyses received to June 2012, identified all resources discovered at that date. An updated resource estimate was prepared by the Company during the second quarter of 2013 based on drilling results received to May 5, 2013 (see press release dated June 12, 2013). The drilling program was mainly targeted to increase the amount of measured and indicated resources related to the potential development of anunderground mine. When compared to the resource estimate prepared in 2012 there has been a 50% increase in resources classified as measured and indicated from a total of 95,300 troy ounces gold (2012) to 142,533 troy ounces gold (2013)  and a 28% increase in resources classified as inferred, from 231,000 troy ounces gold (2012) to 295,599 troy ounces gold (2013). The overall increase was 34%. Galantas subsequently filed an updated Technical Report on SEDAR in July 2013. 

Work continued during the first quarter of 2014 on updating the 2013 resource estimate to incorporate results from drill holes subsequent to May 2013 and not included previously. Also the main veins were re-strung to incorporate the new drill data and accommodate a revised cut-off grade and minimum mining width parameters.  Importantly, the Joshua and Kearney drill intersects were strung to individual 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 the drafting of a revised NI 43-101 report. The work is expected to allow the delineation of mining reserves, following the completion of a detailed mining plan, mining schedule and comprehensive cost estimates, based upon underground working of the Joshua and Kearney veins.

Permitting

Discussions continued with the planning services in Northern Ireland during the first quarter 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. 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, "Discussions are on-going with  Planning Services on the underground mine proposal and road improvements (i.e. passing bays). Additional information has been submitted in relation to passing bays and we are awaiting confirmation from Planning Services that there are no further outstanding issues in this regard. Once confirmation is received, the application is expected to move to a determination of that matter. The underground mine proposal is nearing a conclusion also and we await confirmation that clarifications submitted in April are acceptable. A decision on the underground mine is expected to follow a decision on the passing bays. We have requested a further meeting with Planning Service to confirm a determination timeframe for both elements but the Company has been advised by its consultants that, due to bureaucratic delays, the time-line for planning determination may now be in the second half of 2014, although the date is undefined because it is in the hands of other parties. "

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 PDF document:

http://www.rns-pdf.londonstockexchange.com/rns/1553I_-2014-5-27.pdf

Enquiries

Galantas Gold Corporation
Jack Gunter P.Eng - Chairman
Roland Phelps C.Eng - President & CEO
Email: [e-mail]
Website: www.galantas.com
Telephone: [phone]

Charles Stanley Securities (AIM Nomad & Broker)

Mark Taylor

Telephone [phone]

NOTICE TO READER

The accompanying unaudited condensed interim consolidated financial statements of Galantas Gold Corporation (the "Company") have been prepared by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not been reviewed by the Company's auditors.

Galantas Gold Corporation

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

(Unaudited)

		As at			As at
		March 31,			December 31,
		2014			2013
ASSETS
Current assets
Cash	$	59,616		$	166,617
Accounts receivable and prepaid expenses (note 5)		253,918			405,124
Inventories (note 6)		354,302			338,865
Total current assets		667,836			910,606
Non-current assets
Property, plant and equipment (note 7)		10,527,989			10,100,319
Long-term deposit (note 9)		488,395			467,116
Exploration and evaluation assets (note 8)		1,967,753			1,875,771
Total non-current assets		12,984,137			12,443,206
Total assets	$	13,651,973		$	13,353,812
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (note 10)	$	1,123,509		$	1,217,360
Due to related parties (note 14)		4,012,903			3,597,550
Total current liabilities		5,136,412			4,814,910
Non-current liabilities
Decommissioning liability (note 9)		555,810			528,810
Total liabilities		5,692,222			5,343,720
Capital and reserves
Share capital (note 11)		29,874,693			29,874,693
Reserves		6,705,219			6,253,460
Deficit		(28,620,161	)		(28,118,061	)
Total equity		7,959,751			8,010,092
Total equity and liabilities	$	13,651,973		$	13,353,812

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Going concern (note 1)
Contingent liability (note 16)
Events after the reporting period (note 18)

Approved on behalf of the Board:
"Roland Phelps",   Director		"Lionel J. Gunter",   Director

Galantas Gold Corporation

Condensed Interim Consolidated Statements of Loss

(Expressed in Canadian Dollars)

(Unaudited)

		Three Months
		Ended
		March 31,
		2014			2013
Revenues
Gold sales	$	-		$	364,676
Cost and expenses of operations
Cost of sales (note 13)		77,234			397,588
Depreciation		65,092			124,606
		142,326			522,194
Loss before the undernoted		(142,326	)		(157,518	)
General administrative expenses
Management and administration wages (note 14)		138,033			125,648
Other operating expenses		36,904			70,378
Accounting and corporate		14,627			10,730
Legal and audit		28,942			26,913
Stock-based compensation (note 11(d))		-			13,090
Shareholder communication and investor relations		25,604			29,750
Transfer agent		3,076			2,017
Director fees (note 14)		5,000			5,000
General office		2,322			2,113
Accretion expenses (note 9)		2,883			-
Loan interest and bank charges		14,790			11,420
		272,181			297,059
Other expenses
Gain on disposal of property, plant and equipment		(548	)		-
Foreign exchange loss (gain)		88,141			(14,023	)
		87,593			(14,023	)
Net loss for the period	$	(502,100	)	$	(440,554	)
Basic and diluted net loss per share (note 12)	$	(0.01	)	$	(0.01	)
Weighted average number of common shares outstanding - basic and diluted		51,242,016			51,242,016

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Galantas Gold Corporation

Condensed Interim Consolidated Statements of Comprehensive Loss

(Expressed in Canadian Dollars)

(Unaudited)

		Three Months
		Ended
		March 31,
		2014			2013
Net loss for the period	$	(502,100	)	$	(440,554	)
Other comprehensive income (loss)
Items that will be reclassified subsequently to profit or loss
Foreign currency translation differences		451,759			(430,811	)
Total comprehensive loss	$	(50,341	)	$	(871,365	)

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Galantas Gold Corporation

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

(Unaudited)

		Three Months
		Ended
		March 31,
		2014			2013
Operating activities
Net loss for the period	$	(502,100	)	$	(440,554	)
Adjustment for:
Depreciation		65,092			124,606
Stock-based compensation (note 11(d))		-			13,090
Foreign exchange		(84,860	)		62,951
Gain on disposal of property, plant and equipment		(548	)		-
Accretion expenses (note 9)		2,883			-
Non-cash working capital items:
Accounts receivable and prepaid expenses		151,206			248,001
Inventories		(15,437	)		(26,851	)
Accounts payable and other liabilities		(93,851	)		(66,478	)
Due to related parties		287,561			-
Net cash used in operating activities		(190,054	)		(85,235	)
Investing activities
Purchase of property, plant and equipment		(33,727	)		(48,566	)
Proceeds from sale of property, plant and equipment		917			-
Exploration and evaluation assets		(9,381	)		(215,291	)
Net cash used in investing activities		(42,191	)		(263,857	)
Financing activities
Repayment of related party loan		-			(32,278	)
Advances from related parties		127,792			-
Net cash provided by (used in) financing activities		127,792			(32,278	)
Net change in cash		(104,453	)		(381,370	)
Effect of exchange rate changes on cash held in foreign currencies		(2,548	)		40,163
Cash, beginning of period		166,617			1,164,868
Cash, end of period	$	59,616		$	823,661

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Galantas Gold Corporation

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))		-			13,090			-			-			-			13,090
Net loss and other comprehensive loss for the period		-			-			-			(430,811	)		(440,554	)		(871,365	)
Balance, March 31, 2013	$	29,874,693		$	4,490,789		$	957,450		$	(425,764	)	$	(26,614,260	)	$	8,282,908
Balance, December 31, 2013	$	29,874,693		$	5,471,109		$	-		$	782,351		$	(28,118,061	)	$	8,010,092
Net loss and other comprehensive income for the period		-			-			-			451,759			(502,100	)		(50,341	)
Balance, March 31, 2014	$	29,874,693		$	5,471,109		$	-		$	1,234,110		$	(28,620,161	)	$	7,959,751

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three Months Ended March 31, 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 March 31, 2014, the Company had a deficit of $28,620,161 (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 (see note 18(ii)). 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").

As at July 1, 2007, the Company's Omagh mine began production.

The Company's operations include the consolidated results of Cavanacaw and its wholly-owned subsidiaries Omagh and Galántas.

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 May 22, 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.

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
		March 31,			December 31,
		2014			2013
Sales tax receivable - Canada	$	8,013		$	21,866
Valued added tax receivable - Northern Ireland		8,458			10,752
Accounts receivable		78,648			202,205
Prepaid expenses		158,799			170,301
	$	253,918		$	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
		March 31,			December 31,
		2014			2013
Less than 3 months	$	16,471		$	138,839
3 to 12 months		41,934			59,177
More than 12 months		36,714			36,807
Total accounts receivable	$	95,119		$	234,823

6.	Inventories

		As at			As at
		March 31,			December 31,
		2014			2013
Concentrate inventories	$	11,980		$	11,458
Finished goods		342,322			327,407
	$	354,302		$	338,865

Refer to note 13 for inventory movement.

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		-			-			-			-			-			-			33,727			33,727
Disposals		-			-			(3,686	)		-			-			-			-			(3,686	)
Foreign exchange adjustment		114,916			19,437			233,868			3,632			5,232			2,920			632,238			1,012,243
Balance, March 31, 2014	$	2,637,493		$	446,069		$	5,391,904		$	83,355		$	120,077		$	67,035		$	14,544,495		$	23,290,428

								Plant												Mine
Accumulated		Freehold						and			Motor			Office						development
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		-			2,850			58,605			1,470			2,167			-			-			65,092
Disposals		-			-			(3,317	)		-			-			-			-			(3,317	)
Foreign exchange adjustment		45,251			16,958			182,932			2,612			2,711			2,920			299,455			552,839
Balance, March 31, 2014	$	1,038,610		$	391,424		$	4,267,401		$	61,116		$	63,932		$	67,035		$	6,872,921		$	12,762,439

									Plant												Mine
Carrying			Freehold						and			Motor			Office						development
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, March 31, 2014		$	1,598,883		$	54,645		$	1,124,503		$	22,239		$	56,145		$	-		$	7,671,574		$	10,527,989
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		9,464
Foreign exchange adjustment		82,518
Balance, March 31, 2014	$	1,967,753

		Exploration
		and
		evaluation
Carrying value		assets
Balance, December 31, 2013	$	1,875,771
Balance, March 31, 2014	$	1,967,753

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 March 31, 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 March 31, 2014, the estimated fair value of the liability is $555,810 (December 31, 2013 - $528,810). Changes in the provision during the period ended March 31, 2014 are as follows:

		As at			As at
		March 31,			December 31,
		2014			2013
Decommissioning liability, beginning of period	$	528,810		$	404,450
Revision due to change in estimate		-			109,680
Accretion		2,883			14,680
Foreign exchange		24,117			-
Decommissioning liability, end of period	$	555,810		$	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 301,579 (December 31, 2013 - GBP 300,000), of which GBP 265,000 was funded as of March 31, 2014 and reported as long-term deposit of $488,395 (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
		March 31,			December 31,
		2014			2013
Accounts payable	$	476,339		$	545,557
Accrued liabilities		647,170			671,803
Total accounts payable and other liabilities	$	1,123,509		$	1,217,360

The following is an aged analysis of the accounts payable and other liabilities:

		As at			As at
		March 31,			December 31,
		2014			2013
Less than 3 months	$	375,841		$	376,400
3 to 12 months		345,904			361,376
12 to 24 months		85,119			122,183
More than 24 months		316,645			357,401
Total accounts payable and other liabilities	$	1,123,509		$	1,217,360

11.	Share Capital and Reserves

As part of the share consolidation completed on April 14, 2014 (see note 18(i)), 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 March 31, 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 March 31, 2014, the issued share capital amounted to $29,874,693. The change in issued share capital for the periods presented is as follows:

		Number of
		common
		shares			Amount
Balance, December 31, 2012 and March 31, 2013		51,242,016		$	29,874,693
Balance, December 31, 2013 and March 31, 2014		51,242,016		$	29,874,693

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 March 31, 2013		4,910,000		$	0.50
Balance, December 31, 2013 and March 31, 2014		-		$	-

As at March 31, 2014, there were no warrants outstanding.

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 and March 31, 2013		1,990,000		$	0.50
Balance, December 31, 2013 and March 31, 2014		940,000		$	0.50

Stock-based compensation includes $nil (three months ended March 31, 2013 - $13,090) 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 March 31, 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			1.65			200,000			200,000			-
January 28, 2016		0.50			1.83			50,000			50,000			-
September 6, 2016		0.50			2.44			690,000			690,000			-
		0.50			2.24			940,000			940,000			-

12.	Net Loss per Common Share

The calculation of basic and diluted loss per share for the three months ended March 31, 2014 was based on the loss attributable to common shareholders of $502,100 (three months ended March 31, 2013 - $440,554) and the weighted average number of common shares outstanding of 51,242,016 (three months ended March 31, 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 months ended March 31, 2014 and 2013, as they are anti-dilutive.

13.	Cost of Sales

		Three Months
		Ended
		March 31,
		2014			2013
Production wages	$	40,463		$	151,586
Oil and fuel		11,558			173,845
Repairs and servicing		6,324			45,675
Equipment hire		319			15,032
Consumable		-			32,098
Royalties		8,978			8,509
Carriage		-			6,058
Other costs		9,592			(8,364	)
Production costs		77,234			424,439
Inventory movement		-			(26,851	)
Cost of sales	$	77,234		$	397,588

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
					Ended
					March 31,
		Notes			2014			2013
Interest on related party loans		(i)		$	13,592		$	9,788

(i) G&F Phelps Limited ("G&F Phelps"), a company controlled by a director of the Company, had amalgamated loans to the Company of $2,237,896 (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 March 31, 2014, the amount of interest accrued is $180,113 (GBP 97,728) (December 31, 2013 - $159,144 -GBP 90,284). See note 18(ii).

(b) Remuneration of key management of the Company was as follows:

		Three Months
		Ended
		March 31,
		2014			2013
Salaries and benefits (1)	$	114,798		$	99,505
Stock-based compensation		-			7,705
	$	114,798		$	107,210

⁽¹⁾ Salaries and benefits include director fees. As at March 31, 2014, due to directors for fees amounted to $32,750 (December 31, 2013 - $27,750) and due to key management, mainly for salaries and benefits accrued amounted to $1,562,144 (GBP 847,609) (December 31, 2013 - $1,393,656 - GBP 790,637), and is included with due to related parties. See note 18(ii).

(c) As of March 31, 2014, Kenglo One Limited ("Kenglo") owns 13,222,068 common shares of the Company or approximately 25.8% of the outstanding common shares of the Company. Roland Phelps, Chief Executive Officer and director, owns, directly and indirectly, 7,107,796 common shares of the Company or approximately 13.9% of the outstanding common shares of the Company. The remaining 60.3% 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:

March 31, 2014		United Kingdom			Canada			Total
Current assets	$	637,267		$	30,569		$	667,836
Non-current assets		12,923,434			60,703			12,984,137
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 $560,806 (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.

18.	Events After the Reporting Period

(i) On April 8, 2014, the Company announced that the Board is seeking regulatory approval of documents relating to the consolidation of the Company's issued and outstanding share capital, exchange of shares for debt and the private placement of shares .

The TSX Venture Exchange has approved the consolidation and effective at opening on the TSX Venture Exchange and AIM on April 14, 2014, the existing issued share capital was cancelled and replaced by the new common shares in consolidated form on the basis of one (1) post-consolidated common shares for five (5) pre-consolidated common shares.

(ii) On May 8, 2014, the Company announced the completion of the private placement of 10,330,000 units at GBP 0.05 per unit for gross proceeds of GBP 516,500. Each unit is comprised of 1 new ordinary share and 1 warrant (the "Placement"). Each warrant will entitle the holder to purchase 1 further new ordinary share at GBP 0.10 per share for a period of two years from the date on which the subscription is closed. The new ordinary shares issued pursuant to the Placement are subject to a four month hold period. Commissions of $8,156 were paid in connection with the Placement. Final documentation in respect of the Placement has been submitted to the TSX Venture Exchange.

Kenglo has subscribed for 5,000,000 units for a sum of £250,000. Post the closing of the transaction and the share for debt exchange detailed below, the Company is advised that Kenglo will hold 13,222,068 shares and 5,000,000 warrants in Galantas representing 20.9% of the enlarged Galantas issued share capital, on a diluted basis. As a result, Kenglo is deemed to be a related party of Galantas by virtue of being a Substantial Shareholder in the Company (as defined in the AIM Rules for Companies). As a consequence, the directors consider, having consulted with their nominated adviser, Charles Stanley Securities, that the terms of the subscription by Kenglo, are fair and reasonable insofar as shareholders are of concerned.

An application for a shares for debt exchange (the "Debt Exchange"), as approved by shareholders on January 16, 2014, is being made to the TSX Venture Exchange. As announced previously, Roland Phelps (President & CEO) has agreed to exchange a loan of GBP 716,256 for 14,365,120 new ordinary shares. Leo O'Shaughnessy (Chief Financial Officer) has agreed to exchange a loan of €16,025 for 320,500 new ordinary shares. Amounts due to certain other third party creditors have also agreed to settlement of amounts owed totalling GBP 21,976, through the issue of 439,520 new ordinary shares. Following the Debt Exchange and the Placement, Mr. Phelps and Mr. O'Shaughnessy will hold 24.7% and 0.4% of the Galantas enlarged issued share capital respectively. No warrants will be attached to the new ordinary shares issued in relation to any of the Debt Exchange. This Debt Exchange remains subject to the final approval of the TSX Venture Exchange.

Subject to TSX Venture Exchange approval of the transactions, application has been made for the 10,330,000 common shares, subject to the Placement, and 15,125,140 common shares, subject to the Debt Exchange, to trading on AIM and admission is expected during May 2014.

 

END

 

 

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