Interim Results

RNS Number : 2104X

Galantas Gold Corporation

27 August 2015

 



GALANTAS GOLD CORPORATION

TSXV & AIM : Symbol GAL

GALANTAS REPORTS RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015

August 27, 2015:  Galantas Gold Corporation (the 'Company') is pleased to announce its unaudited financial results for the three and six months ended June 30, 2015.

Financial Highlights

Highlights of the 2015 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       2015                     2014		Six Months Ended June 30       2015                           2014
Revenue	$     13,774	$    0	$       14,897	$ 0
Cost of Sales	$    (114,656)	$    (99,446)	$    (184,653)	$   (176,680)
Loss before the undernoted	$    (100,882)	$    (99,446)	$    (169,756)	$  (176,680)
Depreciation	$      (49,881)	$     (62,171)	$    (102,174)	$   (127,263)
General administrative expenses	$    (624,852)	$     (347,528)	$    (886,384)	$  (619,709)
Gain on sale of property, plant and equipment	$              0	$  19,312	$              0	$   19,860
Unrealized gain on fair value of derivative financial liability	$    95,000	$ 210,000	$   103,000	$ 210,000
Foreign exchange loss	$       (28,142)	$    (16,770)	$     (67,542)	$  (104,911)
Net Loss for the period	$  ( 708,757)	$     (296,603)	$  (1,122,856)	$  (798,703)
Working Capital Deficit	$ (4,273,046)	$ (2,607,058)	$ (4,273,056)	$(2,607,058)
Cash loss from operating activities before changes in non-cash working capital	$ (457,670)	$    (450,143)	$   (958,758)	$ (969,676)
Cash at June 30, 2015	$  198,696	$ 458,849	$  198,696	$458,849

The Net Loss for the three months ended June 30, 2015, which includes stock-based compensation charge of $ 338,000 in connection with the stock options granted during the second quarter which vested immediately amounted to CDN$ 708,757 (2014 Q2: CDN$ 296,603). The cash loss from operating activities before changes in non-cash working capital in the second quarter of 2015 amounted to CDN$ 457,670 (2014 Q2: CDN$ 450,143). The Net Loss for the six months ended June 30, 2015 amounted to CDN$ 1,122,856 (2014:CDN$ 798,703) and the cash loss from operating activities before changes in non-cash working capital for the first six months  of 2015 amounted to CDN$ 958,758 (2014: CDN$ 969,676). 

Sales revenues for the second quarter and six months ended June 30, 2015 consisted of jewelry sales and amounted to CDN$ 13,774 and CDN$ 14,897 respectively (2014: CDN $ Nil and $ Nil respectively). Following the suspension of production during the fourth quarter of 2013 there have not been any shipments of concentrates from the mine.

Cost of sales, which includes production costs and inventory movement, for the second quarter and six months ended June 30, 2015 amounted to CDN$ 114,656 and $ 184,653 respectively (2014: CDN$ 99,446 and $ 176,680).  Production costs were mainly in connection with ongoing care and maintenance costs at the Omagh mine site. 

The Company had cash balances of $ 198,696 at June 30, 2015 compared to $ 458,849 at June 30, 2014. The working capital deficit at June 30, 2015 amounted to $ 4,273,046 compared to a working capital deficit of $ 2,607,058 at June 30, 2014.

During the first quarter of 2015 the Company completed a Private Placement for aggregate gross proceeds of approximately UK£ 316,677 through the issuing of 10,599,999 new shares at a price of UK£ 0.03/CDN$0.05727 per common share. The proceeds were used for working capital purposes and to finance the Company's continued commitments in regard to its underground planning application, now granted.

Subsequent to June 30, 2015 Galantas completed a non-brokered private placement for aggregate gross proceeds of                 $ 2,400,000 (approximately UK£ 1,189,000). The placement comprised of the issue of 20 million units, each unit comprising of one common share and one share purchase warrant. The price of each unit was $ 0.12 (approximately UK£ 0.06). Each warrant entitles the holder to acquire a further common share of the Company at a price of $ 0.16 per share for a period twelve months from the date the subscription was closed. A four month hold period from closing will apply. The majority of the placement was taken up by Mr. Ross Beaty who acquired 16,000,000 Units resulting in an interest before the exercise of warrants of 14.9% of Galantas issued and outstanding shares. The Company intends to use the net proceeds of the placement for exploration, initiating the development of the underground Omagh gold-mine and for working capital purposes.

Production

Production at the Omagh mine remains suspended. However the granting of planning consent during the second quarter for an underground operation at the Omagh site will permit the continuation and expansion of gold mining. The underground mine will utilize the same processing methods and will be the first underground gold mine, of any scale, in Ireland. The robust results of the recent economic study, now with the positive planning determination, are expected to lead to the establishment of a sound business based on the Omagh gold property. The strategy is to establish the underground mine as soon as finance is available and look for further expansion of gold resources on the property, which has many un-drilled targets.

Exploration

The Company has not carried out any exploration drilling in the vicinity of the mine site following the suspension of drilling during 2013 pending the availability of cash for future exploration. In total, 17,348 metres were drilled following the commencement of the programme in March 2011. Channel sampling was also carried out, during this period, on the Joshua, Kearney and Kerr vein systems. Assay results released to date from both the drilling and channel sampling programmes have been encouraging with significant gold intersections being identified. Additional funding is now available and the programme will continue and further drilling is planned.

The granting of a further two prospecting licences in the Republic of Ireland (ROI) during 2014 brought the total number of licences held in both Northern Ireland and the Republic of Ireland to eleven covering a total area to 766.5 square kilometres. Fieldwork, which commenced within the three more recently acquired ROI licences during the first quarter of 2015, continued into the second quarter with regional samples being collected, analysed and evaluated in all three licence areas. A total of thirty samples were collected, thirteen of which yielded notable results. Most interesting were sediments collected from first order and second order streams which drained an upland area situated close to a distinct magnetic anomaly. These showed gold grades of 1.6, 1.9 and 2.5 parts per million (ppm) (g/t) (see press release dated June 22, 2015). 

Permitting

In June 2015 the Company reported that the Minister of Environment, Northern Ireland, Mr. Mark H. Durkan, had granted planning consent for an underground gold mine at the Omagh site. The planning consent will permit the continuation and expansion of gold mining and is expected to create hundreds of jobs locally.The positive decision is the result of 3 years of examination of environmental and other factors regarding the application. Included were environmental studies by NIEA (Northern Ireland Environment Agency) and independent specialists. The consent includes operating and environmental conditions which the Company has reviewed. Some conditions require clarification but appear workable with some modifications to operating and construction methodology. A number of conditions precedent to development are required to be satisfied and the Company is carrying those out.

Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "The receipt of the planning permit is very significant for Galantas. Our open pit gold mine, operated until recently, is the only one in Ireland. It had excellent environmental standards, monitored with detailed studies by NIEA and used a safe processing methodology to produce a smelter concentrate. We recently completed a substantial fund-raising which is being used to push our exploration and mine development plans forward."

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.
 
http://www.rns-pdf.londonstockexchange.com/rns/2104X_-2015-8-26.pdf

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.

Enquiries

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

Grant Thornton UK LLP (Nomad)       

Philip Secrett, Richard Tonthat                                                   

Telephone: [phone]                       

Whitman Howard  Ltd (Broker & Corporate Adviser) 

Ranald McGregor-Smith, Nick Lovering

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
		June 30,			December 31,
		2015			2014
ASSETS
Current assets
Cash	$	198,696		$	20,259
Accounts receivable and prepaid expenses (note 4)		107,691			102,213
Inventories (note 5)		71,591			111,137
Total current assets		377,978			233,609
Non-current assets
Property, plant and equipment (note 6)		7,663,565			7,087,455
Long-term deposit (note 8)		588,420			542,130
Exploration and evaluation assets (note 7)		2,255,012			2,070,772
Total non-current assets		10,506,997			9,700,357
Total assets	$	10,884,975		$	9,933,966
EQUITY AND LIABILITIES
Current liabilities
Accounts payable and other liabilities (note 9)	$	1,009,253		$	869,322
Current portion of financing facility (note 10)		6,453			-
Due to related parties (note 14)		3,635,348			3,095,983
Total current liabilities		4,651,054			3,965,305
Non-current liabilities
Non-current portion of financing facility (note 10)		32,579			-
Decommissioning liability (note 8)		607,002			553,544
Derivative financial liability (note 11(c))		297,000			368,000
Total non-current liabilities		936,581			921,544
Total liabilities		5,587,635			4,886,849
Capital and reserves
Share capital (note 11(a)(b))		32,351,440			31,825,575
Reserves		7,451,544			6,604,330
Deficit		(34,505,644	)		(33,382,788	)
Total equity		5,297,340			5,047,117
Total equity and liabilities	$	10,884,975		$	9,933,966

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)
Event after the reporting period (note 17)

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						Six Months
		Ended						Ended
		June 30,						June 30,
		2015			2014			2015			2014
Revenues
Gold sales	$	13,774		$	-		$	14,897		$	-
Cost and expenses of operations
Cost of sales (note 13)		114,656			99,446			184,653			176,680
Depreciation (note 6)		49,881			62,171			102,174			127,263
		164,537			161,617			286,827			303,943
Loss before the undernoted		(150,763	)		(161,617	)		(271,930	)		(303,943	)
General administrative expenses
Management and administration wages (note 14)		130,548			130,671			261,167			268,704
Other operating expenses		11,715			27,477			45,487			64,381
Accounting and corporate		15,688			15,869			31,084			30,496
Legal and audit		19,098			52,411			40,908			81,353
Stock-based compensation (note 11(d)(i)(ii))		338,000			-			338,000			-
Shareholder communication and investor relations		67,927			67,049			98,144			92,653
Transfer agent		8,653			24,527			10,633			27,603
Director fees (note 14)		10,500			9,250			15,500			14,250
General office		1,984			2,462			3,965			4,784
Accretion expenses (note 8)		2,976			2,898			5,942			5,781
Loan interest and bank charges (note 14)		17,763			14,914			35,554			29,704
		624,852			347,528			886,384			619,709
Other expenses
Gain on disposal of property, plant and equipment		-			(19,312	)		-			(19,860	)
Unrealized gain on fair value of derivative financial liability (note 11(c))		(95,000	)		(210,000	)		(103,000	)		(210,000	)
Foreign exchange loss		28,142			16,770			67,542			104,911
		(66,858	)		(212,542	)		(35,458	)		(124,949	)
Net loss for the period	$	(708,757	)	$	(296,603	)	$	(1,122,856	)	$	(798,703	)
Basic and diluted net loss per share (note 12)	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Weighted average number of common shares outstanding - basic and diluted		87,297,154			62,618,186			84,533,844			56,906,564

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 Loss and Other Comprehensive Income (Loss)

(Expressed in Canadian Dollars)

(Unaudited)

		Three Months						Six Months
		Ended						Ended
		June 30,						June 30,
		2015			2014			2015			2014
Net loss for the period	$	(708,757	)	$	(296,603	)	$	(1,122,856	)	$	(798,703	)
Other comprehensive income (loss)
Items that will be reclassified subsequently to profit or loss
Foreign currency translation differences		254,815			(89,511	)		509,214			362,248
Total comprehensive loss	$	(453,942	)	$	(386,114	)	$	(613,642	)	$	(436,455	)

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)
		Six Months
		Ended
		June 30,
		2015			2014
Operating activities
Net loss for the period	$	(1,122,856	)	$	(798,703	)
Adjustment for:
Depreciation		102,174			127,263
Stock-based compensation (note 11(d)(i)(ii))		338,000			-
Foreign exchange		(179,018	)		(74,157	)
Gain on disposal of property, plant and equipment		-			(19,860	)
Accretion expenses (note 8)		5,942			5,781
Unrealized gain on fair value of derivative financial liability (note 11(c))		(103,000	)		(210,000	)
Non-cash working capital items:
Accounts receivable and prepaid expenses		(5,478	)		166,843
Inventories		39,546			(12,188	)
Accounts payable and other liabilities		139,931			(262,211	)
Due to related parties		494,047			363,900
Net cash used in operating activities		(290,712	)		(713,332	)
Investing activities
Purchase of property, plant and equipment		(85,995	)		(68,534	)
Proceeds from sale of property, plant and equipment		-			33,833
Exploration and evaluation assets		(102,442	)		(42,035	)
Net cash used in investing activities		(188,437	)		(76,736	)
Financing activities
Proceeds of private placement		607,062			968,438
Share issue costs		(49,197	)		(23,706	)
Advances from related parties		45,318			127,792
Proceeds from financing facility		39,032			-
Net cash provided by financing activities		642,215			1,072,524
Net change in cash		163,066			282,456
Effect of exchange rate changes on cash held in foreign currencies		15,371			9,776
Cash, beginning of period		20,259			166,617
Cash, end of period	$	198,696		$	458,849
Supplemental information
Shares issued to settle accounts payable and other liabilities (note 11(b)(ii))	$	-		$	40,667
Shares issued to settle due to related parties (note 11(b)(ii))	$	-		$	1,348,483

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			translation
		capital			reserve			reserve			Deficit			Total
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))		(383,000	)		-			-			-			(383,000	)
Shares issued 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	$	31,825,575		$	5,471,109		$	1,144,599		$	(28,916,764	)	$	9,524,519
Balance, December 31, 2014	$	31,825,575		$	5,471,109		$	1,133,221		$	(33,382,788	)	$	5,047,117
Shares issued in private placement (note 11(b)(iii))		607,062			-			-			-			607,062
Warrants issued (note 11(b)(iii))		(32,000	)		-			-			-			(32,000	)
Share issue costs		(49,197	)		-			-			-			(49,197	)
Stock-based compensation (note 11(d)(i)(ii))		-			338,000			-			-			338,000
Net loss and other comprehensive income for the period		-			-			509,214			(1,122,856	)		(613,642	)
Balance, June 30, 2015	$	32,351,440		$	5,809,109		$	1,642,435		$	(34,505,644	)	$	5,297,340

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 and Six Months Ended June 30, 2015

(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 both Omagh Minerals Limited ("Omagh") and Flintridge Resources Limited ("Flintridge") who are engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland. The Omagh mine has an open pit mine, which was in production and is reported as property, plant and equipment and an underground mine which is in the development stage and reported as exploration and evaluation assets. The production at the open pit mine was suspended in 2013. The going concern assumption is dependent upon the ability of the Company to obtain the following:

a.

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. The Company is currently in discussions with a number of potential financiers. As at June 30, 2015, the Company had a deficit of $34,505,644 (December 31, 2014 - $33,382,788). 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 it's jewelry business with Omagh.

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

2.	Incorporation and Nature of Operations (Continued)

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

On April 8, 2014, Cavanacaw acquired Flintridge. Following a strategic review of its business by the Company during 2014 certain assets owned by Omagh were acquired by Flintridge.

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 ("TSXV") 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. 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 24, 2015 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, 2014. Any subsequent changes to IFRS that are given effect in the Company's annual consolidated financial statements for the year ending December 31, 2015 could result in restatement of these 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. In July 2014, the IASB issued the final version of IFRS 9. The final amendments made in the new version include guidance for the classification and measurement of financial assets and a third measurement category for financial assets, fair value through other comprehensive income. The standard also contains a new expected loss impairment model for debt instruments measured at amortized cost or fair value through other comprehensive income, lease receivables, contract assets and certain written loan commitments and financial guarantee contracts. 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.

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

4.	Accounts Receivable and Prepaid Expenses

		As at			As at
		June 30,			December 31,
		2015			2014
Sales tax receivable - Canada	$	4,046		$	1,469
Valued added tax receivable - Northern Ireland		37,977			14,894
Accounts receivable		40,481			35,999
Prepaid expenses		25,187			49,851
	$	107,691		$	102,213

The following is an aged analysis of accounts receivable:

		As at			As at
		June 30,			December 31,
		2015			2014
Less than 3 months	$	42,023		$	16,363
3 to 12 months		1,765			11,316
More than 12 months		38,716			24,683
Total accounts receivable	$	82,504		$	52,362

5.	Inventories

		As at			As at
		June 30,			December 31,
		2015			2014
Concentrate inventories	$	12,749		$	11,746
Finished goods		58,842			99,391
	$	71,591		$	111,137

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

6.	Property, Plant and Equipment

		Freehold			Plant												Mine
		land and			and			Motor			Office						development
Cost		buildings			machinery			vehicles			equipment			Moulds			costs			Total
Balance, December 31, 2013	$	2,949,209		$	5,161,722		$	79,723		$	114,845		$	64,115		$	13,878,530		$	22,248,144
Additions		2,087			-			-			2,091			-			129,840			134,018
Disposals		-			(131,705	)		-			(4,724	)		(64,115	)		-			(200,544	)
Transfer		(585,067	)		-			-			-			-			585,067			-
Foreign exchange adjustment		74,286			129,311			2,009			(920	)		-			349,581			554,267
Balance, December 31, 2014		2,440,515			5,159,328			81,732			111,292			-			14,943,018			22,735,885
Additions		-			-			38,708			-			-			47,287			85,995
Foreign exchange adjustment		208,385			438,142			8,620			9,504			-			1,275,914			1,940,565
Balance, June 30, 2015	$	2,648,900		$	5,597,470		$	129,060		$	120,796		$	-		$	16,266,219		$	24,762,445

		Freehold			Plant												Mine
		land and			and			Motor			Office						development
Accumulated depreciation		buildings			machinery			vehicles			equipment			Moulds			costs			Total
Balance, December 31, 2013	$	1,364,975		$	4,029,181		$	57,034		$	59,054		$	64,115		$	6,573,466		$	12,147,825
Depreciation		14,465			211,554			4,520			7,274			-			-			237,813
Disposals		-			(118,069	)		-			(3,663	)		(64,115	)		-			(185,847	)
Impairment		558,982			78,812			12,926			24,213			-			2,495,269			3,170,202
Foreign exchange adjustment		30,630			98,907			1,323			(1,675	)		-			149,252			278,437
Balance, December 31, 2014		1,969,052			4,300,385			75,803			85,203			-			9,217,987			15,648,430
Depreciation		12,200			87,229			747			1,998			-			-			102,174
Foreign exchange adjustment		178,786			368,545			6,504			7,360			-			787,081			1,348,276
Balance, June 30, 2015	$	2,160,038		$	4,756,159		$	83,054		$	94,561		$	-		$	10,005,068		$	17,098,880

		Freehold			Plant												Mine
		land and			and			Motor			Office						development
Carrying value		buildings			machinery			vehicles			equipment			Moulds			costs			Total
Balance, December 31, 2014	$	471,463		$	858,943		$	5,929		$	26,089		$	-		$	5,725,031		$	7,087,455
Balance, June 30, 2015	$	488,862		$	841,311		$	46,006		$	26,235		$	-		$	6,261,151		$	7,663,565

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

7.	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. On June 11, 2015, the Company announced that it had obtain planning consent for an underground gold mine at the Omagh site. The consent includes operating and environmental conditions.

		Exploration
		and
		evaluation
Cost		assets
Balance, December 31, 2013	$	1,875,771
Additions		92,872
Foreign exchange adjustment		102,129
Balance, December 31, 2014		2,070,772
Additions		102,442
Foreign exchange adjustment		81,798
Balance, June 30, 2015	$	2,255,012

		Exploration
		and
		evaluation
Carrying value		assets
Balance, December 31, 2014	$	2,070,772
Balance, June 30, 2015	$	2,255,012

8.	Decommissioning Liability

The Company's decommissioning liability is a result of mining activities at the Omagh mine in Northern Ireland. The Company estimated its decommissioning liability at June 30, 2015 based on a risk-free discount rate of 1% (December 31, 2014 - 1%) and an inflation rate of 1.50% (December 31, 2014 - 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, 2015, the estimated fair value of the liability is $607,002 (December 31, 2014 - $553,544). Changes in the provision during the six months ended June 30, 2015 are as follows:

		As at			As at
		June 30,			December 31,
		2015			2014
Decommissioning liability, beginning of period	$	553,544		$	528,810
Accretion		5,942			11,489
Foreign exchange		47,516			13,245
Decommissioning liability, end of period	$	607,002		$	553,544

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars) (Unaudited)

8.	Decommissioning Liability (Continued)

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 300,000 (December 31, 2014 - GBP 300,000), of which GBP 300,000 was funded as of June 30, 2015 (GBP 300,000 was funded as of December 31, 2014) and reported as long-term deposit of $588,420 (December 31, 2014 - $542,130).

9.	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,
		2015			2014
Accounts payable	$	353,273		$	306,359
Accrued liabilities		655,980			562,963
Total accounts payable and other liabilities	$	1,009,253		$	869,322

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

		As at			As at
		June 30,			December 31,
		2015			2014
Less than 3 months	$	267,444		$	240,145
3 to 12 months		171,765			183,164
12 to 24 months		166,954			120,987
More than 24 months		403,090			325,026
Total accounts payable and other liabilities	$	1,009,253		$	869,322

10.	Financing Facility

Amounts payable on the long-term debt are as follow:

					As at			As at
					June 30,			December 31,
		Interest			2015			2014
Financing facility (GBP 19,900)		6.79%		$	39,032		$	-
Less current portion					(6,453	)		-
Financing facility - long term portion				$	32,579		$	-

In June 2015, the Company obtained financing in the amount of GBP 19,900 for the purchase of a vehicle. The financing of three years at 6.79% with monthly principal and interest payments of GBP 377 together with a final payment in June 2018 of GBP 9,383. The financing was secured on the vehicle.

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

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, 2015, 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, 2015, the issued share capital amounted to $32,351,440. The change in issued share capital for the periods presented is as follows:

		Number of
		common
		shares			Amount
Balance, December 31, 2013		51,242,015		$	29,874,693
Units issued in private placement (i)		10,330,000			968,438
Warrants issued (i)		-			(383,000	)
Share issue costs (i)		-			(23,706	)
Common shares issued for debt (ii)		15,125,140			1,389,150
Balance, June 30, 2014		76,697,155		$	31,825,575
Balance, December 31, 2014		76,697,155		$	31,825,575
Shares issued in private placement (iii)		10,599,999			607,062
Warrants issued (iii)		-			(32,000	)
Share issue costs		-			(49,197	)
Balance, June 30, 2015		87,297,154		$	32,351,440

(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 one common share and one warrant. Each warrant entitles the holder to purchase one further common share at GBP 0.10 per share for a period of two years. Commissions of $8,156 were paid in connection with the placement.

The fair value of the 10,330,000 warrants was estimated at $383,000 using the Black-Scholes option 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.

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

11.	Share Capital and Reserves (Continued)

b)	Common shares issued (continued)

(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.

(iii) On February 16, 2015, the Company closed a private placement of 10,599,999 common shares at GBP 0.03 ($0.05727) per common share for gross proceeds of GBP 316,667 ($607,062). Commissions of $36,424 were paid in connection with the placement. The agent also received 636,000 broker warrants. Each broker warrant can be exercised for one common share at an exercise price of GBP 0.045 for a period of 3 years.

The fair value of the 636,000 broker warrants was estimated at $32,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield - 0%, expected volatility - 168.98%, risk-free interest rate -0.43% and an expected average life of 3 years. As a result of the exercise price of the broker warrants being denominated in a currency other than the functional currency, the broker warrants are considered a derivative financial liability.

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, 2013		-		$	-
Issued (note 11(i))		10,330,000			0.18
Balance, June 30, 2014		10,330,000		$	0.18
Balance, December 31, 2014		10,330,000		$	0.18
Issued (Note 11(b)(iii))		636,000			0.08
Balance, June 30, 2015		10,966,000		$	0.18

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars) (Unaudited)

11.	Share Capital and Reserves (Continued)
c)	Warrant reserve (continued)

The following table reflects the actual warrants issued and outstanding as of June 30, 2015:

					Grant date			Exercise			Fair value
		Number			fair value			price			June 30, 2015
Expiry date		of warrants			($)			(GBP)			($)
May 7, 2016		10,330,000			383,000			0.10			245,000
February 16, 2018		636,000			32,000			0.045			52,000
		10,966,000			415,000			0.10			297,000

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, 2015, 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 147% to 161%; risk free interest rate of 0.49%; and an expected life of 0.85 years to 2.64 years. As a result, the fair value of the warrants was calculated to be $297,000 and the Company recorded an unrealized gain on fair value of derivative financial liability for the three and six months ended June 30, 2015 of $95,000 and $103,000, respectively.

d)	Stock options

The following table shows the continuity of stock options for the periods presented:

					Weighted
					average
		Number of			exercise
		options			price
Balance, December 31, 2013 and June 30, 2014		940,000		$	0.50
Balance, December 31, 2014		940,000		$	0.50
Granted (i)(ii)		3,700,000			0.11
Balance, June 30, 2015		4,640,000		$	0.19

(i) On June 1, 2015, 3,550,000 stock options were granted to directors, officers, consultants and key employees of the Company to purchase common shares at a price of $0.105 per share until June 1, 2020. The options vested immediately. The fair value attributed to these options was $324,000 and was expensed in the unaudited condensed interim consolidated statements of loss and credited to equity settled share-based payments reserve. During the three and six months ended June 30, 2015, included in stock-based compensation is $324,000 related to the vested portion of these options.The fair value of the options was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield - 0%; volatility - 134%; risk-free interest rate - 0.90% and an expected life of 5 years.

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

11.	Share Capital and Reserves (Continued)

(d)	Stock options (continued)

(ii) On June 13, 2015, 150,000 stock options were granted to a consultant of the Company to purchase common shares at a price of $0.105 per share until June 12, 2020. The options vested immediately. The fair value attributed to these options was $14,000 and was expensed in the unaudited condensed interim consolidated statements of loss and credited to equity settled share-based payments reserve. During the three and six months ended June 30, 2015, included in stock-based compensation is $14,000 related to the vested portion of these options.

The fair value of the options was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield - 0%; volatility - 133%; risk-free interest rate - 1.01% and an expected life of 5 years.

The following table reflects the actual stock options issued and outstanding as of June 30, 2015:

					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			0.40			200,000			200,000			-
January 28, 2016		0.50			0.58			50,000			50,000			-
September 6, 2016		0.50			1.19			690,000			690,000			-
June 1, 2020		0.105			4.93			3,550,000			3,550,000			-
June 12, 2020		0.105			4.96			150,000			150,000			-
		0.19			4.13			4,640,000			4,640,000			-

12.	Net Loss per Common Share

The calculation of basic and diluted loss per share for the three and six months ended June 30, 2015 was based on the loss attributable to common shareholders of $708,757 and $1,122,856, respectively (three and six months ended June 30, 2014 - $296,603 and $798,703, respectively) and the weighted average number of common shares outstanding of 87,297,154 and 84,533,844, respectively (three and six months ended June 30, 2014 - 62,618,186 and 56,906,564, respectively) 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, 2015 and 2014, as they are anti-dilutive.

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

13.	Cost of Sales

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2015			2014			2015			2014
Production wages	$	27,676		$	46,901		$	52,208		$	87,364
Oil and fuel		8,088			14,581			16,887			26,139
Repairs and servicing		9,493			3,528			24,660			9,852
Equipment hire		3,061			8,523			5,174			8,842
Consumable		-			8,055			-			8,055
Royalties		10,897			11,684			20,133			20,662
Other costs		8,401			6,174			18,551			15,766
Production costs		67,616			99,446			137,613			176,680
Inventory movement		47,040			-			47,040			-
Cost of sales	$	114,656		$	99,446		$	184,653		$	176,680

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 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						Six Months Ended
					June 30,						June 30,
		Note			2015			2014			2015			2014
Interest on related party loans		(i)		$	17,012 $			13,893		$	33,622 $			27,485

(i) G&F Phelps Limited ("G&F Phelps"), a company controlled by a director of the Company, had amalgamated loans to the Company of $2,585,820 (GBP 1,318,354) (December 31, 2014 - $2,338,872 - GBP 1,294,268) 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, 2015, the amount of interest accrued is $271,783 (GBP 138,566) (December 31, 2014 - $218,113 -GBP 120,698).

(ii) See Note 11(b)(ii).

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

14.	Related Party Disclosures (Continued)

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

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2015			2014			2015			2014
Salaries and benefits (1)	$	121,420		$	119,350		$	237,708 $			234,148
Stock-based compensation		109,521			-			109,521			-
	$	230,941		$	119,350		$	347,229 $			234,148

⁽¹⁾Salaries and benefits include director fees. As at June 30, 2015, due to directors for fees amounted to $70,500 (December 31, 2014 - $55,000) and due to key management, mainly for salaries and benefits accrued amounted to $707,245 (GBP 360,582) (December 31, 2014 - $483,998 - GBP 267,831), and is included with due to related parties.

(c) As of June 30, 2015, Kenglo One Limited ("Kenglo") owns 13,222,068 common shares of the Company or approximately 15.15% 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 24.60% of the outstanding common shares of the Company. The remaining 60.25% 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 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 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 follows:

June 30, 2015		United Kingdom			Canada			Total
Current assets	$	322,103		$	55,875		$	377,978
Non-current assets		10,446,362			60,635			10,506,997
Revenues	$	14,897		$	-		$	14,897

December 31, 2014		United Kingdom			Canada			Total
Current assets	$	208,066		$	25,543		$	233,609
Non-current assets		9,639,643			60,714			9,700,357

Galantas Gold Corporation

Notes to Condensed Interim Consolidated Financial Statements

Three and Six Months Ended June 30, 2015

(Expressed in Canadian Dollars)

(Unaudited)

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 $596,834 (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. A hearing date for the appeal has not yet been determined. No provision has been made for the claim in the unaudited condensed interim consolidated financial statements.

17.	Event After the Reporting Period

On July 24, 2015, the Company closed a private placement of 20,000,000 units at GBP 0.06 ($0.12) per common share for gross proceeds of GBP 1,189,000 ($2,400,000) (the "Placement"). Each unit consists of one common share and one share purchase warrant. Each warrant is exercisable into one common share of the Company for a period of 12 months from closing at an exercise price of GBP 0.08 ($0.16) . The common share issued are subject to a four month hold period.

The majority of the Placement was taken up by Mr. Ross Beaty, who acquired 16,000,000 units resulting in an interest, before the exercise of warrants, of 14.9% of the Company issued and outstanding common shares. If all warrants issued under the Placement were to be exercised, Mr. Beaty would have an interest in 32,000,000 common shares, representing up to 25.1% of the outstanding common shares, which meets the definition of a "Control Person" by the TSXV.

 

END

 

 

IR SEFFIMFISELA