3rd Quarter Results

NOTICE TO SHAREHOLDERS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 GALANTAS GOLD CORPORATION (A Development Stage Company) Dated: 15 November 2006 Responsibility for Consolidated Financial Statements The accompanying consolidated financial statements for Galantas Gold Corporation have been prepared by management in accordance with Canadian generally accepted accounting principles consistently applied. The most significant of these accounting principles have been set out in the December 31, 2005 audited consolidated financial statements. Only changes in accounting information have been disclosed in these consolidated financial statements. These statements are presented on the accrual basis of accounting. Accordingly, a precise determination of many assets and liabilities is dependent upon future events. Therefore, estimates and approximations have been made using careful judgment. Recognizing that the Company is responsible for both the integrity and objectivity of the consolidated financial statements, management is satisfied that these consolidated financial statements have been fairly presented. Auditors' involvement The auditors of Galantas Gold Corporation have not performed a review of the unaudited consolidated financial statements for the three and nine months ended September 30, 2006 and September 30, 2005. GALANTAS GOLD CORPORATION (A Development Stage Company) CONSOLIDATED BALANCE SHEETS (PREPARED BY MANAGEMENT- UNAUDITED) September 30,December 31, 2006 2005 Assets Current Cash $2,006,134 $ 1,121,985 Accounts receivable and advances 235,215 144,727 Inventory 99,978 101,363 Future income taxes 302,900 302,900 2,644,227 1,670,975 Property, plant and equipment (Note 2(a)) 5,248,373 2,903,165 Deferred development costs (Note 2(b)) 6,288,438 4,314,368 Future income taxes 466,900 466,900 $14,647,938 $ 9,355,408 Liabilities Current Accounts payable and accrued liabilities $ 789,438 $ 297,785 Current portion of financing facility (Note 3) 226,982 99,207 Due to directors - 253,103 1,016,420 650,095 Long-term portion of financing facility (Note 3) 406,566 271,664 1,422,986 921,759 Shareholders' Equity Share capital (Note 4) 21,954,200 18,400,862 Warrants (Note 5) 2,417,400 175,166 Contributed surplus (Note 7) 835,962 656,658 25,207,562 19,232,686 Deficit (11,982,610) (10,799,037) 13,224,952 8,433,649 $14,647,938 $ 9,355,408 Going concern (Note 1) GALANTAS GOLD CORPORATION (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (PREPARED BY MANAGEMENT - UNAUDITED) Cumulative since development Three Months EndedNine Months Ended stage on September 30, September 30,January 1, 2003 to 2006 2005 2006 2005September 30, 2006 Sales $ 15,673 $ 7,909 $ 30,565 $44,029 $484,111 Cost of goods sold 2,023 (19,971) 7,923 23,195 521,231 13,650 27,880 22,642 20,834 (37,120) Expenses Accounting and corporate 4,350 4,650 27,205 24,280 95,281 Bank charges and interest 7,780 12,403 11,114 15,956 29,344 Consulting - 12,500 14,007 32,000 64,757 Foreign exchange (gain)loss 93,784 (47,559) 115,975 (27,323) (7,845) Legal and audit 6,325 5,003 186,759 71,021 384,621 Management fees - 25,000 - 75,000 247,500 Operating expenses 32,378 (143,926) 83,427 88,027 1,262,853 Shareholder communication and public relations 64,137 - 512,210 - 743,656 Stock-based compensation 15,638 - 179,304 214,200 701,904 Transfer agent 4,782 3,638 21,736 12,388 85,514 Travel and general office 23,130 21,906 54,478 52,063 209,894 252,304 (106,385) 1,206,215 557,612 3,817,479 (Loss) income before income taxes (238,654) 134,265 (1,183,573) (536,778) (3,854,599) Income tax recovery - - - - 769,800 (Loss)income for the period (238,654) 134,265 (1,183,573) (536,778) (3,084,799) DEFICIT, beginning of period (11,743,956)(11,431,648)(10,799,037)(10,760,605)(8,897,811) DEFICIT, end of period $(11,982,610)$(11,297,383)$(11,982,610)$(11,297,383) $(11,982,610) (Loss)income per share $(0.00) $ 0.00 $(0.01) $(0.00) Weighted average number of shares outstanding 153,977,882 126,335,189 141,870,343 113,568,888 GALANTAS GOLD CORPORATION (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (PREPARED BY MANAGEMENT - UNAUDITED) Cumulative since development Three Months Ended Nine Months Ended stage on September 30, September 30, January 1, 2003 to 2006 2005 2006 2005 September 30, 2006 CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES Net (loss) income for the period $(238,654) $134,265 $(1,183,573) $(536,778) $ (3,084,799) Adjustment for Amortization 163 (21,679) 3,180 19,346 166,138 Stock-based compensation 15,638 - 179,304 214,200 701,904 Future income taxes - - - - (769,800) Net change in non-cash working capital (Note 10) 260,154 186,590 402,550 161,145 404,018 ________ _______ ________ ________ __________ 37,301 299,176 (598,539) (142,087) (2,582,539) INVESTING ACTIVITIES Purchase of property, plant and equipment (908,780) (184,440) (2,573,130) (730,372) (3,780,362) Deferred development costs (582,427) (792,226) (1,749,328) (792,226) (2,748,221) Marketable securities - - - - 2,096 __________ ________ __________ ________ __________ (1,491,207) (976,666) (4,322,458) (1,522,598) (6,526,487) FINANCING ACTIVITIES Issue of common shares for cash 3,500,000 - 6,127,500 3,503,333 11,264,053 Share issue costs (331,928) (25,142) (331,928) (249,192) (692,328) Advances from financing facility - - 365,400 398,696 920,400 Repayments of financing facility (29,691) (55,472) (102,723) - (342,994) Advances to directors - (7,610) (253,103) (326,471) (127,140) _______ ________ __________ ________ ___________ 3,138,381 (88,224) 5,805,146 3,326,366 11,021,991 NET CHANGE IN CASH 1,684,475 (765,714) 884,149 1,661,681 1,912,965 CASH, beginning of period 321,659 2,561,151 1,121,985 133,756 93,169 CASH, end of period $2,006,134 $1,795,437 $2,006,134 $1,795,437 $ 2,006,134 GALANTAS GOLD CORPORATION (A Development Stage Company) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (PREPARED BY MANAGEMENT - UNAUDITED) Shares issued and subscribed Warrant Contributed # of Shares Share Value Value Surplus Deficit Total Balance at January 1, 2003 71,115,222 $13,082,493 - $1,420 $(8,897,811) 4,186,102 Shares issued on exercise of warrants 250,000 27,461 - - - 27,461 Common shares issued, net of issue costs 8,707,860 1,048,524 - - - 1,048,524 Common shares issued for debt settlement 7,416,395 741,640 - - - 741,640 Valuation of agents options - - - 20,751 - 20,751 Valuation of warrants issued - (78,537) 78,537 - - - Loss for the year - - - - (676,142) (676,142) Balance at December 31, 2003 87,489,477 14,821,581 78,537 22,171 (9,573,953) 5,348,336 Shares issued on exercise of warrants 945,554 159,089 - - - 159,089 Common shares issued, net of issue costs 2,866,825 395,318 - - - 395,318 Valuation of stock options granted - - - 287,649 - 287,649 Valuation of warrants issued - (71,671) 71,671 - - - Valuation of warrants exercised or expired - 17,570 (78,537) 60,967 - - Loss for the year - - - - (186,652) (1,186,652) Balance at December 31, 2004 91,301,856 15,321,887 71,671 370,787 (10,760,605) 5,003,740 Common shares issued, net of issue costs 35,033,333 3,254,141 - - - 3,254,141 Valuation of warrants issued - (175,166) 175,166 - - - Valuation of warrants expired - - (71,671) 71,671 - - Valuation of stock options granted - - - 214,200 - 214,200 Loss for the year - - - - (38,432) (38,432) Balance at December 31, 2005 126,335,189 18,400,862 175,166 656,658 (10,799,037) 8,433,649 Shares issued on exercise of warrants 17,516,666 2,627,500 - - - 2,627,500 Common shares issued, net of issue costs 14,000,000 3,168,072 - - - 3,168,072 Valuation of warrants issued - (2,417,400)2,417,400 - - - Valuation of warrants exercised - 175,166 (175,166) - - - Valuation of stock options granted - - - 179,304 - 179,304 Loss for the period - - - - (1,183,573) (1,183,573) _______________ ____________ ________ ________ ___________ ____________ Balance at September 30, 2006 157,851,855 $21,954,200 $2,417,400 $835,962 $(11,982,610) $13,224,952 GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 1. NATURE OF OPERATIONS AND GOING CONCERN These 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. The recoverability of these consolidated amounts, which includes the consolidated results of the Company's wholly-owned subsidiary Cavanacaw Corporation ("Cavanacaw"), is dependent on the ability of the Company to obtain future financing and to recover its investment in Omagh Minerals Limited ("Omagh"). Cavanacaw has a 100% shareholding in Omagh which is engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland. The Company is considered to be in the development stage as it has yet to earn substantial revenues and it is devoting substantially all of its efforts toward the development of this process. As at December 31, 2001, studies performed on Omagh's mineral property confirmed the existence of economically recoverable reserves. The mineral property is currently in the development stage of operation and the directors believe that the capitalized development expenditures will be fully recovered by the future operation of the mine. The recoverability of Omagh's capitalized development costs is thus dependent on the ability to secure financing, future profitable production or proceeds from the disposition of the mineral property. These development expenditures will be amortized over the estimated life of the ore body. 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 consolidated financial statements do not reflect adjustments to the carrying value of assets and liabilities, the reported expenses and balance sheet classifications used that would be necessary if the going concern assumption was not appropriate. Such adjustments could be material. 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. Its first exploration project was a property in Portugal. 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"). Cavanacaw operations include the consolidated results of Cavanacaw and its wholly-owned subsidiaries Omagh and Galántas. The unaudited consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and notes to the consolidated financial statements required by Canadian generally accepted accounting principles for annual consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2006 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2006. GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 1. NATURE OF OPERATIONS AND GOING CONCERN (Continued) The consolidated balance sheet at December 31, 2005 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by Canadian generally accepted accounting principles for complete consolidated financial statements. The interim consolidated financial statements have been prepared by management in accordance with the accounting policies described in the Company's annual consolidated financial statements for the year ended December 31, 2005. For further information, refer to the consolidated financial statements and notes for the year ended December 31, 2005. New accounting pronouncements In January 2005, the Canadian Institute of Chartered Accountants issued four new accounting standards: Handbook Section 1530, Comprehensive Income, Handbook Section 3251, Equity, Handbook Section 3855, Financial Instruments - Recognition and Measurement and Handbook Section 3865, Hedges. These standards are effective for interim and annual consolidated financial statements for the Company's fiscal years beginning January 1, 2006. 2. PROPERTY, PLANT AND EQUIPMENT AND DEFERRED DEVELOPMENT COSTS (a) Property, plant and equipment 2006 2005 Accumulated Cost Amortization Net Net Freehold land and buildings $ 3,877,314 $ 45,659 $3,831,655 $ 1,743,967 Plant and machinery 1,896,868 546,873 1,349,995 1,115,756 Motor vehicles 61,438 29,562 31,876 7,214 Office equipment 75,782 40,935 34,847 36,228 Moulds 81,802 81,802 - - ___________ __________ ___________ ____________ $5,993,204 $744,831 $5,248,373 $2,903,165 GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 2. PROPERTY, PLANT AND EQUIPMENT AND DEFERRED DEVELOPMENT COSTS (Continued) (b) Deferred development costs Three months Nine months ended ended September 30, September 30, 2006 2006 Opening balance $5,619,033 $4,314,368 Additions during the period: Leases 10,436 163,963 Consultants 59,308 183,526 Fuel 48,837 129,278 Wages 214,699 579,229 Interest 12,121 32,010 Travelling 57,698 126,374 Repairs and maintenance 49,711 122,293 Construction 109,412 355,713 General 20,205 56,942 Amortization of plant equipment 86,978 224,742 _______ ________ 669,405 1,974,070 Total deferred development costs $6,288,438 $6,288,438 3. FINANCING FACILITY On March 17, 2006, the Company received a loan from Barclays Mercantile Business Finance Ltd. in the amount of $365,400 (180,000 GBP)(i) to assist in the purchase of certain metallurgical equipment having a cost of $728,770 (359,000 GBP). The loan is for a period of three years at 3.97% (flat interest) with monthly blended installments of $11,132 (5,578 GBP). Amounts payable on the long term debt are as follows: September 30, December 31, Interest 2006 2005 Financing facility 3.71% $ 317,993 $ 370,871 Financing facility (i) 3.97% 315,555 - 633,548 370,871 Less current portion 226,982 99,207 _________ _________ $ 406,566 $ 271,664 Principal repayments over the next three years are as follows: 2007 $ 226,982 2008 245,473 2009 161,093 _________ $ 633,548 GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 4. SHARE CAPITAL (a) AUTHORIZED Unlimited number of common and preference shares issuable in Series (b) COMMON SHARES ISSUED NUMBER OF STATED SHARES VALUE Balance, January 1, 2006 126,335,189 $18,400,862 Private Placement, net of issue cash (1) 14,000,000 3,168,072 Warrant valuation (2) - (2,417,400) Warrant exercise 17,516,666 2,627,500 Warrant exercise - valuation - 175,166 ___________ ___________ Balance, September 30, 2006 157,851,855 $21,954,200 (1) The Company closed a private placement (the "Offering") for gross proceeds of $3,500,000. Pursuant to this offering, the Company issued 14,000,000 units of the Company (each a "Unit") at the price of $0.25 per Unit (including an over-allotment of 1,200,000 Units (the "Over-Allotment") and 2,000,000 Units for subscribers specifically identified by management (the "President's List"). Each Unit consists of one common share of the Company and one warrant of the Company. Each warrant entitles the purchaser to purchase one common share at a price of $0.32 per share at any time until July 26, 2008. Union Securities Ltd., acting as agent (the "Agent") was paid a cash fee of $240,000 representing 8% in cash commission based on Units sold under the Offering and the Over-Allotment Option (excluding Units sold pursuant to the President's List) and $20,000 representing 4% in cash for Units sold pursuant to the President's List. In addition, the Company issued to the Agent 1,300,000 compensation options (the "Agent's Compensation Options") equal to 10% of all Units sold pursuant to the Offering and the Over-Allotment Option (excluding Units sold pursuant to the President's List) and 5% of all Units sold pursuant to the President's List. Each Agent's Compensation Option entitles the Agent to purchase one Unit of the Company at $0.25 per Unit at any time prior to July 26, 2008. Other costs associated directly to the private placement amounted to $71,928. (2) The fair value of the 14,000,000 warrants and 1,300,000 compensation options were estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield - 0%; volatility - 144%; risk-free interest rate - 4.15% and an expected life of 2 years. The fair value attributed to the warrants and compensation options were $2,417,400. GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 5. WARRANTS The following summarizes the warrant activity for the period: Number of Weighted average warrants price Balance, December 31, 2006 17,516,666 $ 0.15 Exercised (1) (17,516,666) 0.15 Issued 15,300,000 0.31 Balance, September 30, 2006 15,300,000 $ 0.31 (1) During the period, 11,666,666 warrants expiring April 4, 2006 and 5,850,000 warrants expiring April 15, 2006 were exercised for gross proceeds of $2,627,500. As of September 30, 2006, the following warrants were outstanding: Number Fair Exercise Expiry of Warrants Value Price Date $ $ 14,000,000 2,212,000 0.32 July 26,2008 1,300,000 205,400 0.25 July 26, 2008 15,300,000 2,417,400 GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 6. STOCK OPTIONS The Company has a stock option plan as detailed in Note 7(c) of the December 31, 2005 audited consolidated financial statements. Number of Weighted Average Stock Options Exercise Price $ Balance, January 1, 2006 7,900,000 0.11 Options granted 1,000,000 0.26 Expired/cancelled (1,400,000) 0.15 __________ _____ Balance, September 30, 2006 7,500,000 0.14 Details of the stock options outstanding as of September 30, 2006 are: Exercisable Number Exercise Expiry Options of Options Price Date $ 1,500,000 1,500,000 0.12 May 17,2007 2,800,000 2,800,000 0.15 April 10,2008 2,000,000 2,000,000 0.10 April 1,2009 133,334 200,000 0.10 May 13, 2010 333,334 1,000,000 0.26 June 14,2011 __________ ____________ 6,766,668 7,500,000 During the period, 1,000,000 stock options were granted to employees of the Company to purchase common shares at a price of $0.26 per share until June 14, 2011. The fair value of these stock options was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield - 0%; volatility - 60%; risk-free interest rate - 4.26% and an estimated life of 5 years. The estimated fair value of $143,000 will be expensed in the statement of operations and deficit and credited to contributed surplus as the options vest over a three year period. Stock-based compensation includes $61,771 related to the vested portion of these stock options. Stock based compensation also includes $117,534 relating to 733,333 options that have vested from previous stock option grants. On February 13, 2006, 1,000,000 stock options at an exercise price of $0.15 expired and 400,000 options at an exercise price of $0.15 expiring April 10, 2008 were cancelled. GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 7. CONTRIBUTED SURPLUS The following table reflects the continuity of contributed surplus: Contributed Surplus Balance, January 1, 2006 $656,658 Stock-based compensation charged to the statement of operations and deficit (Note 6) 179,304 ________ Balance, September 30, 2006 $835,962 8. RELATED PARTY TRANSACTIONS As at September 30, 2006, the Company was indebted to directors in the amount of $nil (2005 - $103,240). This amount represents amounts paid by the directors on behalf of the Company along with unpaid management fees. These amounts are interest-free and there are no fixed terms of repayment. During the period, the Company was charged $nil (2005 - $75,000) by directors of the Company for management services which are in the normal course of operations and are measured at the exchange amount established and agreed to by the related parties. Accounts payable includes $nil (2005 - $50,000) owing to these directors for management services and repayment of expenses incurred on behalf of the Company. The Company was charged $32,921 (2005 - $30,133) for accounting and corporate secretarial services by companies associated to an officer of the Company. Accounts payable includes $5,922 (2005 - $2,242) owing to these companies. 9. SEGMENT DISCLOSURE The Company, after reviewing its reporting systems, has determined that it has one reportable segment. The Company's operations are substantially all related to its investment in Cavanacaw and its subsidiaries, Omagh and Galántas. Substantially all of Cavanacaw's revenues, costs and assets of the business that support these operations are derived or located in Northern Ireland. GALANTAS GOLD CORPORATION (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 (PREPARED BY MANAGEMENT - UNAUDITED) 10. SUPPLEMENTAL CASH FLOW INFORMATION (a) Net change in non-cash working capital Three months Three months Nine months Nine months ended ended ended ended September 30,2006 September 30,2005 September 30,2006 September 30, 2005 Accounts receivable and advances $8,634 $(36,154) $(90,488) $(84,480) Inventory (1,462) 16,909 1,385 42,746 Accounts payable and accrued liabilities 252,982 205,835 491,653 202,879 $ 260,154 $186,590 $402,550 $161,145 (b) Supplemental information Interest paid $ 19,901 $12,403 $43,124 $5,956 Interest paid includes $32,010 (2005 - $nil) of interest paid on the financing facility. This amount was charged to deferred development costs. 11. OTHER INFORMATION Effective March 31, 2006 the Company's shares were successfully admitted to trading on the Alternative Investment Market ("AIM") of the London Stock Exchange. As a result, the Company is dual-listed on both AIM and the TSX Venture Exchange in Canada. Enquiries Galantas Gold Corporation Telephone: +44 (0) 2882 241100 Jack Gunter P.Eng - Executive Chairman Roland Phelps C.Eng - President & CEO Moe Lavigne P.Geo - Vice President Email: info@galantas.com Website: www.galantas.com Bishopsgate Communications Ltd. Telephone: +44 (0) 207 430 1600 Dominic Barretto Nick Rome Website: www.bishopsgatecommunications.com ARM Corporate Finance Limited Telephone: +44 (0) 20 7512 0191 Nick Harriss Lewis Charles Securities Limited. Telephone: +44 (0) 20 7065 1150 David Scott

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