GALANTAS GOLD
CORPORATION
TSXV & AIM: Symbol
GAL
GALANTAS REPORT ANNUAL
FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31,
2023
April 25, 2024: Galantas Gold
Corporation (the 'Company') is pleased to announce its audited
annual financial results for the year ended December 31,
2023.
A copy of the Financial Statements
and Management Discussion and Analysis will be sent to shareholders
in due course and are available on the Company's website at
www.galantas.com/investors.
The Annual and Special
Meeting of the Company is to be held at 11:00 a.m. (Toronto time)
on 24th June 2024 at The Canadian Venture
Building, 82 Richmond Street East, Toronto,
Ontario, M5C1P1, Canada.
Financial Highlights
Highlights of the 2023 audited
annual results, which are expressed in Canadian Dollars, are
summarized below:
|
All
figures denominated in Canadian Dollars (CDN$)
|
Year
Ended
December
31
2023
2022
|
|
Revenue
|
$ 0
|
$ 0
|
|
Cost and expenses of
operations
|
$
(182,295)
|
$ (284,262)
|
|
Loss before the undernoted
|
$
(182,295)
|
$ (284,262)
|
|
Depreciation
|
$ (515,003)
|
$ (624,620)
|
|
General administrative
expenses
|
$ (4,243,507)
|
$ (5,401,289)
|
|
Foreign exchange (loss)
|
$ (233,651)
|
$ (195,938)
|
|
Impairment of Exploration and
Evaluation Assets
|
$ 0
|
$ 0
|
|
Unrealized gain on derivative fair
value adjustment
|
$
241,886
|
$ 0
|
|
(Loss) / Gain on disposal of
property, plant and equipment
|
$ 0
|
$ (2,910)
|
|
Impairment
|
$
(3,635,570)
|
$
(10,124,920)
|
|
Net Loss for the year
|
$
(8,568,140)
|
$
(16,633,939)
|
|
Working Capital Deficit
|
$
(12,599,514)
|
$
(11,027,964)
|
|
Cash loss from operating
activities before changes in non-cash
working capital
|
$
(981,283)
|
$
(2,254,291)
|
|
Cash at December 31, 2022
|
$
2,593,265
|
$
1,038,643
|
Sales revenue for year ended
December 31, 2023 amounted to $ Nil as per the year ended December
31, 2022. Provisional concentrate sales totalled US$ 1,103,532 for
2023 compared to US $ 608,000 for the year 2022. However, until the
mine commences commercial production, the net proceeds from
concentrate sales are being offset against development
assets.
The Net Loss for the year ended
December 31, 2023 amounted to $ 8,568,140 (2022: $ 16,633,939) and
the cash outflow from operating activities before changes in
non-cash working capital for the year ended December 31, 2023
amounted to $ 981,283 (2022: $ 2,254,291).
The Company had a cash balance of $
2,593,265 at December 31, 2023 compared to $ 1,038,643 at December
31, 2022. The working capital deficit at December 31, 2023 amounted
to $ 12,599,514 compared to a working capital deficit
of $11,027,964 at December 31, 2022. Current liabilities include financing facilities and
loans.
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.
Click on, or paste the following
link into your web browser, to view the associated PDF
document.
http://www.rns-pdf.londonstockexchange.com/rns/9313L_1-2024-4-24.pdf
Qualified Person
The financial components of this
disclosure has been reviewed by Alan Buckley (Chief Financial
Officer) and the production and permitting components by Brendan
Morris (COO), and the exploration and geological components by Dr.
Sarah Coulter, all 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'
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.
Information communicated within this
announcement is deemed to constitute inside information as
stipulated under the Market Abuse Regulations (EU) No. 596/2014
which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
Enquiries
Galantas Gold Corporation
Mario Stifano CEO
Email: info@galantas.com
Website: www.galantas.com
Telephone: +44 (0) 2882 241100
Grant Thornton UK LLP (Nomad)
Philip Secrett, Harrison Clarke,
Enzo Aliaj, Elliot
Peters
Telephone: +44(0)20 7383
5100
S.P Angel Corporate Finance (AIM
Broker)
David Hignell, Charlie Bouverat
(Corporate Finance)
Grant Barker (Sales and
Broking)
Telephone: +44(0)20 3470
0470
GALANTAS GOLD
CORPORATION
Consolidated Financial
Statements
(Expressed in Canadian
Dollars)
Years Ended December 31, 2023
and 2022
INDEPENDENT AUDITOR'S
REPORT
To the Shareholders of
Galantas Gold Corporation
Report on the Audit of the Consolidated Financial
Statements
Opinion
We have audited the consolidated
financial statements of Galantas Gold Corporation (the Company),
which comprise the consolidated statements of financial position as
at December 31, 2023 and 2022, and the consolidated statements of
loss, consolidated statements of comprehensive loss, consolidated
statements of cash flows and consolidated statements of changes in
equity for the years then ended, and notes to the consolidated
financial statements, including a summary of significant accounting
policies.
In our opinion, the accompanying
consolidated financial statements present fairly, in all material
respects, the financial position of the Company as at December 31,
2023 and 2022 and its financial performance and its cash flows for
the years then ended, in accordance with International Financial
Reporting Standards.
Basis for Opinion
We conducted our audit in accordance
with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities for
the Audit of the Consolidated Financial Statements section
of our report. We are independent of the Company in accordance with
the ethical requirements that are relevant to our audit of the
consolidated financial statements in Canada, and we have fulfilled
our other ethical responsibilities in accordance with those
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Relating to Going
Concern
We draw your attention to Note 1 in
the consolidated financial statements, which indicates that the
Company incurred a comprehensive loss of $7,604,947 during the year
ended December 31, 2023. As stated in Note 1, these events or
conditions, along with other matters as set forth in Note 1,
indicate that a material uncertainty exists that may cast
significant doubt on the Company's ability to continue as a going
concern. Our opinion is not modified in respect of this
matter.
Key
Audit Matters
Key audit matters are those matters
that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements for the year
ended December 31, 2023. These matters were addressed in the
context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
In addition to the matter described
in the Emphasis of Matter - Material Uncertainty Related to Going
Concern section of our report, we have determined the matter
described below to be the key audit matter to be communicated in
our report.
Impairment of Long-lived Assets
Description of the
matter
In accordance with IAS 36 -
Impairment of Assets,
management is required to test long-lived assets not yet available
for use for impairment annually, or when facts and circumstances
suggest they may be impaired. An impairment loss is recognized if
the carrying amount of an asset, or its cash generating unit (CGU),
exceeds its estimated recoverable amount. The recoverable amount of
an asset is the greater of its value-in-use (VIU) and its fair
value less costs of disposal. Management estimated the recoverable
amount of its property, plant and equipment (PP&E) with a
five-year discounted cashflow VIU approach and concluded an
impairment charge was required as a result of the impairment
testing performed. The Company recorded impairment of PP&E of
$3,353,077 as of December 31, 2023, see note 10 for further
details.
Why the matter is a key audit
matter
This matter represented an area of
significant risk of material misstatement given the magnitude of
PP&E balance and the significant management judgment involved
in assessing the existence of impairment indicators. In addition,
significant auditor judgement, knowledge and effort were required
in evaluating the results of our audit procedures.
How the matter was addressed
in the audit
The following were the primary
procedures we performed to address this key audit
matter:
• We validated the underlying
data used in the recoverable amount calculations and tested the
mathematical accuracy;
• Evaluated reasonableness of
judgments made in management's assessment of the cash generating
units (CGU);
• Evaluated reasonableness of
key assumptions to management's cash flow projection used to
determine recoverable amount of the CGU; including discount rate,
mine production levels factoring published 43- 101 resources, gold
prices, foreign exchange rates and input costs;
• We performed our own
sensitivity analysis to further assess estimation uncertainty;
and;
• We assessed the
appropriateness and completeness of the related disclosures in the
consolidated financial statements.
Measurement and Classification of Convertible
Debentures
Description of the
matter
As described in Note 15 to the
financial statements, on December 20, 2023, the Company completed a
convertible debenture financing (the Loan) for gross proceeds of
$3,502,054. The Loan was determined to be a compound financial
instrument and management applied judgment in assessing the
accounting treatment for the individual components of the Loan.
Notably whether the conversion feature qualified as a derivative
liability or equity instrument based on the "fixed-for-fixed"
requirement in IAS 32, Financial
Instruments: Presentation.
The initial value of the conversion
feature of the Loan, determined to be a derivative liability, was
determined using the Black-Scholes option pricing model.
The initial value of the financial
liability component of the Loan was determined using the residual
method and accordingly measured as the difference between the face
value of the convertible debentures and the initial value of the
derivative liability component.
Why the matter is a key audit
matter
This matter represented an area of
significant risk of material misstatement given the magnitude of
the value of the Loan and the high degree of estimation uncertainty
in determining the initial measurement of the components of the
Loan. Further, the involvement of those with specialized skills and
knowledge were required in evaluating the results of our audit
procedures.
Management applied judgment in
assessing the accounting treatment of the Loan including whether
the conversion feature met the "fixed-for-fixed" requirement to be
classified as equity and in determining the appropriate discount
rate to apply. This in turn, led to a high degree of auditor
judgement and effort in performing procedures to test management's
assumptions.
How the matter was addressed
in the audit
The following were the primary
procedures we performed to address this key audit
matter:
• We read the underlying
agreements and evaluated whether management's interpretation of the
agreements in relation to accounting for the Loan was reasonable,
markedly observing the fixed conversion price, as is a requirement
for the "fixed-for-fixed" condition, not being met, on the basis
the Loan was denominated in a foreign currency (USD);
• Compared discount rate
applied by the Company to discount rates for comparable
entities;
• Reviewed, recalculated and
analyzed interest expense using effective interest rate method;
and;
• Assessed the appropriateness
and completeness of the related disclosures in the financial
statements.
Information Other than the Consolidated Financial Statements
and Auditor's Report Thereon
Management is responsible for the
other information. The other information comprises the annual
management's discussion and analysis, but does not include the
consolidated financial statements and our auditor's report
thereon.
Our opinion on the consolidated
financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the
consolidated financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have
performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We
have nothing to report in this regard.
Responsibilities of Management and Those Charged with
Governance for the Consolidated Financial
Statements
Management is responsible for the
preparation and fair presentation of the consolidated financial
statements in accordance with International Financial Reporting
Standards, and for such internal control as management determines
is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated
financial statements, management is responsible for assessing the
Company's ability to continue as a going concern, disclosing, as
applicable, matters relating to going concern and using the going
concern basis of accounting unless management either intends to
liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are
responsible for overseeing the Company's financial reporting
process.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements
Our objectives are to obtain
reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these consolidated financial statements. As part of an audit in
accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
•
Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company's internal control.
•
Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made
by management.
•
Conclude on the appropriateness of management's use of the going
concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company's
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However, future
events or conditions may cause the Company to cease to continue as
a going concern.
•
Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
• Plan
and perform the group audit to obtain sufficient appropriate audit
evidence regarding the financial information of the entities or
business units within the group as a basis for forming an opinion
on the group financial statements. We are responsible for the
direction, supervision and review of the audit work performed for
purposes of the group audit. We remain solely responsible for our
audit opinion.
We communicate with those charged
with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with
governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with
those charged with governance, we determine those matters that were
of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless
law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because of the adverse
consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
The engagement partner on the audit
resulting in this independent auditor's report is Pat
Kenney.
Chartered Professional
Accountants
Licensed Public
Accountants
Mississauga, Ontario
April 23, 2024
|
Galantas Gold Corporation
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
|
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
2,593,265
|
|
$
|
1,038,643
|
|
|
Accounts receivable and prepaid
expenses (note 8)
|
|
1,596,880
|
|
|
1,810,993
|
|
|
Inventories (note 9)
|
|
18,184
|
|
|
83,242
|
|
|
Total current assets
|
|
4,208,329
|
|
|
2,932,878
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Property, plant and equipment (note
10)
|
|
23,094,171
|
|
|
24,255,849
|
|
|
Long-term deposit (note
12)
|
|
505,110
|
|
|
489,660
|
|
|
Exploration and evaluation assets
(note 11)
|
|
4,776,409
|
|
|
2,665,313
|
|
|
Total non-current assets
|
|
28,375,690
|
|
|
27,410,822
|
|
|
Total assets
|
$
|
32,584,019
|
|
$
|
30,343,700
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable and other
liabilities (notes 13 and 23)
|
$
|
3,662,842
|
|
$
|
4,052,041
|
|
|
Current portion of financing
facilities (note 14)
|
|
6,119,308
|
|
|
4,836,267
|
|
|
Due to related parties (note
21)
|
|
5,838,256
|
|
|
5,072,534
|
|
|
Other liability (note 21)
|
|
1,187,437
|
|
|
-
|
|
|
Total current liabilities
|
|
16,807,843
|
|
|
13,960,842
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Due to related parties (note
21)
|
|
638,432
|
|
|
-
|
|
|
Decommissioning liability (note
12)
|
|
611,452
|
|
|
582,441
|
|
|
Other liability (note 21)
|
|
-
|
|
|
1,085,426
|
|
|
Convertible debenture (note
15)
|
|
1,923,509
|
|
|
-
|
|
|
Derivative liability (note
15)
|
|
1,245,627
|
|
|
-
|
|
|
Total non-current liabilities
|
|
4,419,020
|
|
|
1,667,867
|
|
|
Total liabilities
|
|
21,226,863
|
|
|
15,628,709
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Share
capital (note 17(a)(b))
|
|
71,809,999
|
|
|
69,664,056
|
|
|
Reserves
|
|
18,579,467
|
|
|
15,515,105
|
|
|
Deficit
|
|
(79,032,310
|
)
|
|
(70,464,170
|
)
|
|
Total equity
|
|
11,357,156
|
|
|
14,714,991
|
|
|
Total equity and liabilities
|
$
|
32,584,019
|
|
$
|
30,343,700
|
|
The notes to the consolidated
financial statements are an integral part of these
statements.
Going concern (note 1)
Incorporation and nature of operations (note 2)
Contingency (note 23)
Events after the reporting period (note 24)
Approved on behalf of the Board:
|
"Mario Stifano"
, Director
|
"Jim Clancy"
, Director
|
|
Galantas Gold Corporation
Consolidated Statements of Loss
(Expressed in Canadian Dollars)
|
|
|
|
Year Ended December
31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Sales of
concentrate (note 19)
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost
and expenses of operations
|
|
|
|
|
|
|
|
Cost of sales
|
|
182,295
|
|
|
284,262
|
|
|
Depreciation (note 10)
|
|
515,003
|
|
|
624,620
|
|
|
|
|
697,298
|
|
|
908,882
|
|
|
|
|
|
|
|
|
|
|
Loss
before general administrative and other expenses
|
|
(697,298
|
)
|
|
(908,882
|
)
|
|
|
|
|
|
|
|
|
|
General administrative expenses
|
|
|
|
|
|
|
|
Management and administration wages
(note 21)
|
|
552,901
|
|
|
647,763
|
|
|
Other operating expenses
|
|
301,475
|
|
|
526,162
|
|
|
Accounting and corporate
|
|
273,694
|
|
|
291,535
|
|
|
Legal and audit
|
|
170,074
|
|
|
226,185
|
|
|
Stock-based compensation (note
17(d))
|
|
353,712
|
|
|
1,470,418
|
|
|
Shareholder communication and
investor relations
|
|
478,059
|
|
|
506,090
|
|
|
Transfer agent
|
|
79,273
|
|
|
45,034
|
|
|
Director fees (note 21)
|
|
140,000
|
|
|
140,000
|
|
|
General office
|
|
85,804
|
|
|
57,423
|
|
|
Accretion expenses (notes 12, 14, 15
and 21)
|
|
492,393
|
|
|
691,105
|
|
|
Loan interest and bank charges less
deposit interest (notes 14, 15 and 21)
|
|
1,316,122
|
|
|
799,574
|
|
|
|
|
4,243,507
|
|
|
5,401,289
|
|
|
Other expenses (income)
|
|
|
|
|
|
|
|
Foreign exchange loss
|
|
233,651
|
|
|
195,938
|
|
|
Unrealized gain on derivative fair
value adjustment (note 15)
|
|
(241,886
|
)
|
|
-
|
|
|
Loss on disposal of property, plant
and equipment
|
|
-
|
|
|
2,910
|
|
|
Impairment of property, plant and
equipment and exploration and evaluation assets (notes 10 and
11)
|
|
3,635,570
|
|
|
10,124,920
|
|
|
|
|
3,627,335
|
|
|
10,323,768
|
|
|
Net
loss for the year
|
$
|
(8,568,140
|
)
|
$
|
(16,633,939
|
)
|
|
Basic and diluted net loss per share (note
18)
|
$
|
(0.08
|
)
|
$
|
(0.19
|
)
|
|
Weighted average number of common shares
outstanding
- basic and
diluted
|
|
111,949,878
|
|
|
89,401,620
|
|
The notes to the consolidated
financial statements are an integral part of these
statements.
|
Galantas Gold Corporation
Consolidated Statements of Comprehensive Loss
(Expressed in
Canadian Dollars)
|
|
|
|
Year Ended
|
|
|
|
|
December
31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year
|
$
|
(8,568,140
|
)
|
$
|
(16,633,939
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
Items that will be reclassified subsequently to profit or
loss
|
|
|
|
|
|
|
|
Exchange
differences on translating foreign operations
|
|
963,193
|
|
|
(1,163,486
|
)
|
|
Total comprehensive loss
|
$
|
(7,604,947
|
)
|
$
|
(17,797,425
|
)
|
The notes to the consolidated
financial statements are an integral part of these
statements.
|
Galantas Gold Corporation
Consolidated Statements of Cash Flows
(Expressed in Canadian
Dollars)
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
Net loss for the year
|
$
|
(8,568,140
|
)
|
$
|
(16,633,939
|
)
|
|
Adjustment for:
|
|
|
|
|
|
|
|
Depreciation (note 10)
|
|
515,003
|
|
|
624,620
|
|
|
Stock-based compensation (note
17(d))
|
|
353,712
|
|
|
1,470,418
|
|
|
Accrued interest (notes 14, 15 and
21)
|
|
1,784,034
|
|
|
1,172,976
|
|
|
Foreign exchange loss
|
|
240,861
|
|
|
292,699
|
|
|
Accretion expenses (notes 12, 14, 15
and 21)
|
|
492,393
|
|
|
691,105
|
|
|
Impairment of property, plant and
equipment and exploration and evaluation assets (notes 10 and
11)
|
|
3,635,570
|
|
|
10,124,920
|
|
|
Gain on derivative fair value
adjustment
|
|
(241,886
|
)
|
|
-
|
|
|
Loss on disposal of property, plant
and equipment
|
|
-
|
|
|
2,910
|
|
|
Non-cash working capital
items:
|
|
|
|
|
|
|
|
Accounts receivable and prepaid
expenses
|
|
214,113
|
|
|
438,113
|
|
|
Inventories
|
|
65,058
|
|
|
21,415
|
|
|
Accounts payable and other
liabilities
|
|
205,830
|
|
|
1,216,455
|
|
|
Due to related parties
|
|
-
|
|
|
(327,111
|
)
|
|
Other liability
|
|
-
|
|
|
1,085,426
|
|
|
Net
cash and cash equivalents (used in) provided by operating
activities
|
|
(1,303,452
|
)
|
|
180,007
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
Net purchase of property, plant and
equipment
|
|
(1,959,306
|
)
|
|
(10,414,099
|
)
|
|
Exploration and evaluation
assets
|
|
(1,882,825
|
)
|
|
(1,165,561
|
)
|
|
Lease payments (note 16)
|
|
-
|
|
|
(701,782
|
)
|
|
Net
cash and cash equivalents used in investing
activities
|
|
(3,842,131
|
)
|
|
(12,281,442
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
Proceeds of private placements (note
17(b)(i)(ii))
|
|
2,963,142
|
|
|
5,900,003
|
|
|
Share issue costs
|
|
(377,143
|
)
|
|
(607,860
|
)
|
|
Proceeds from exercise of
warrants
|
|
31,200
|
|
|
5,287,147
|
|
|
Advances from related
parties
|
|
580,392
|
|
|
2,062,693
|
|
|
Repayments to related
parties
|
|
(24,735
|
)
|
|
(524,255
|
)
|
|
Proceeds from convertible debenture
(note 15)
|
|
3,502,054
|
|
|
-
|
|
|
Share issue costs - convertible
debenture
|
|
(53,991
|
)
|
|
-
|
|
|
Net
cash and cash equivalents provided by financing
activities
|
|
6,620,919
|
|
|
12,117,728
|
|
|
|
|
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
|
1,475,336
|
|
|
16,293
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on
cash held in foreign currencies
|
|
79,286
|
|
|
(47,401
|
)
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of year
|
|
1,038,643
|
|
|
1,069,751
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of year
|
$
|
2,593,265
|
|
$
|
1,038,643
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
2,593,265
|
|
$
|
1,038,643
|
|
|
Cash equivalents
|
|
-
|
|
|
-
|
|
|
Cash and cash equivalents
|
$
|
2,593,265
|
|
$
|
1,038,643
|
|
The notes to the consolidated
financial statements are an integral part of these
statements.
|
Galantas Gold Corporation
Consolidated Statements of Changes in Equity
(Expressed in Canadian Dollars)
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
settled
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share-based
|
|
|
currency
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
|
Warrants
|
|
|
payments
|
|
|
translation
|
|
|
|
|
|
|
|
|
|
|
capital
|
|
|
reserve
|
|
|
reserve
|
|
|
reserve
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance, December 31, 2021
|
$
|
57,783,570
|
|
$
|
4,130,200
|
|
$
|
10,417,260
|
|
$
|
887,909
|
|
$
|
(53,830,231
|
)
|
$
|
19,388,708
|
|
|
Shares issued in
private placement (note 17(b)(i))
|
|
5,900,003
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,900,003
|
|
|
Shares issued for
services arrangement (note 17(b)(i))
|
|
1,000,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
|
Warrants issued (note
17(b)(i))
|
|
(1,644,859
|
)
|
|
1,644,859
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Warrants issued (note
21(a)(iv))
|
|
-
|
|
|
74,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
74,000
|
|
|
Share issue costs (note
17(b)(i))
|
|
(752,324
|
)
|
|
144,464
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(607,860
|
)
|
|
Stock-based
compensation (note 17(d))
|
|
-
|
|
|
-
|
|
|
1,470,418
|
|
|
-
|
|
|
-
|
|
|
1,470,418
|
|
|
Exercise of
warrants
|
|
7,377,666
|
|
|
(2,090,519
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,287,147
|
|
|
Exchange differences on
translating foreign operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,163,486
|
)
|
|
-
|
|
|
(1,163,486
|
)
|
|
Net loss for the
year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(16,633,939
|
)
|
|
(16,633,939
|
)
|
|
Balance, December 31, 2022
|
|
69,664,056
|
|
|
3,903,004
|
|
|
11,887,678
|
|
|
(275,577
|
)
|
|
(70,464,170
|
)
|
|
14,714,991
|
|
|
Shares issued in
private placement (note 17(b)(ii))
|
|
2,963,142
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,963,142
|
|
|
Shares issue for
services arrangement (note 17(b)(iii))
|
|
420,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
420,000
|
|
|
Shares issue for debt
settlement (note 17(b)(iv))
|
|
749,020
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
749,020
|
|
|
Warrants issued (note
17(b)(ii)(iv))
|
|
(1,609,634
|
)
|
|
1,609,634
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Warrants issued (notes
15 and 21(a)(iv)(vi))
|
|
-
|
|
|
107,181
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
107,181
|
|
|
Share issue costs (note
17(b)(ii))
|
|
(417,318
|
)
|
|
40,175
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(377,143
|
)
|
|
Stock-based
compensation (note 17(d))
|
|
-
|
|
|
-
|
|
|
353,712
|
|
|
-
|
|
|
-
|
|
|
353,712
|
|
|
Exercise of
warrants
|
|
40,733
|
|
|
(9,533
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
31,200
|
|
|
Warrants
expired
|
|
-
|
|
|
(2,104,148
|
)
|
|
2,104,148
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
Exchange differences on
translating foreign operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
963,193
|
|
|
-
|
|
|
963,193
|
|
|
Net loss for the
year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(8,568,140
|
)
|
|
(8,568,140
|
)
|
|
Balance, December 31, 2023
|
$
|
71,809,999
|
|
$
|
3,546,313
|
|
$
|
14,345,538
|
|
$
|
687,616
|
|
$
|
(79,032,310
|
)
|
$
|
11,357,156
|
|
The notes to the consolidated
financial statements are an integral part of these
statements.
1. 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. 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 uncertainties
related to events or conditions that may cast 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 subsidiaries Gairloch Resources Limited
("Gairloch") incorporated on November 16, 2023 and Cavanacaw
Corporation ("Cavanacaw"). Cavanacaw has a 100% shareholding in
Galántas Irish Gold Limited ("Galántas"), Flintridge Resources
Limited ("Flintridge") who are engaged in the acquisition,
exploration and development of gold properties, mainly in Omagh,
Northern Ireland and Omagh Minerals Limited ("Omagh") who are
engaged in the exploration of gold properties, mainly in the
Republic of Ireland. The Omagh mine has an open pit mine, which was
in production until 2013 when production was suspended and is
reported as property, plant and equipment and as an underground
mine which having established technical feasibility and commercial
viability in December 2018 has resulted in associated exploration
and evaluation assets being reclassified as an intangible
development asset and reported as property, plant and
equipment.
The going concern assumption is
dependent on forecast cash flows being met, further financing
negotiations being completed together. Management' assumptions in
relation to future financing, levels of production, gold prices and
mine operating costs are crucial to forecast cash flows being
achieved. Should production be significantly delayed, revenues fall
short of expectations or operating costs and capital costs increase
significantly, there may be insufficient cash flows to sustain day
to day operations without seeking further finance.
Based on the financial projections
which have been prepared for a five-year period and using
assumptions which management believes to be prudent, alongside
ongoing negotiations with both current and prospective investors
and creditors, management believes it is appropriate to prepare the
consolidated financial statements on the going concern
basis.
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
consolidated financial statements do not include any adjustments
that would result if forecast cash flows were not achieved, if the
existing creditors withdrew their support or if further financing
could not be raised from current or potential investors.
During the year ended December 31,
2022, the Company raised gross proceeds of $11M through the
issuance of shares to investors and the exercise of warrants to
meet the financial requirements of the Company. During the year
ended December 31, 2023, the Company raised gross proceeds of $3M
through the issuance of shares to investors and $3.5M through the
issuance of convertible debentures.
As at December 31, 2023, the Company
had a deficit of $79,032,310 (December 31, 2022 - $70,464,170).
Comprehensive loss for the year ended December 31, 2023 was
$7,604,947 (year ended December 31, 2022 - $17,797,425). These
conditions raise material uncertainties which may cast significant
doubt as to whether the Company will be able to continue as a going
concern. However, management believes that it will 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 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, Northern Ireland. Cavanacaw also
has developed a premium jewellery business founded on the gold
produced under the name Galántas. As at July 1, 2007, the Company's
Omagh mine began production and in 2013 production was suspended.
On April 1, 2014, Galántas amalgamated its jewelry business with
Omagh.
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.
On November 16, 2023, Gairloch was
incorporated. Refer to note 11.
The Company's operations include the
consolidated results of Gairloch, 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. On September 1, 2021, the
Company's common shares started trading under the symbol GALKF on
the OTCQX in the United States. The primary office is located at
The Canadian Venture Building, 82 Richmond Street East, Toronto,
Ontario, Canada, M5C 1P1.
3. Basis of Preparation
(a) Statement of compliance
The consolidated financial
statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") issued by the International
Accounting Standards Board ("IASB") and interpretations issued by
the IFRS Interpretations Committee ("IFRIC"). The Board of
Directors approved the consolidated financial statements on April
23, 2024.
(b) Basis of presentation
These consolidated financial
statements have been prepared on a historical cost basis with the
exception of certain financial instruments, which are measured at
fair value. In addition, these consolidated financial statements
have been prepared using the accrual basis of accounting except for
cash flow information.
In the preparation of these
consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of expenses during the year. Actual
results could differ from these estimates. Of particular
significance are the estimates and assumptions used in the
recognition and measurement of items included in note
3(e).
(c) Basis of consolidation
The consolidated financial
statements incorporate the financial statements of the Company and
its subsidiaries.
The results of subsidiaries acquired
or disposed of during the years presented are included in the
consolidated statement of loss from the effective date of control
and up to the effective date of disposal or loss of control, as
appropriate. An investor controls an investee if the investor has
the power over the investee, has the exposure, or rights, to
variable returns from its involvement with the investee and the
ability to use its power over the investee to affect the amount of
the investor's returns. All intercompany transactions, balances,
income and expenses are eliminated upon consolidation.
The following wholly owned companies
have been consolidated within the consolidated financial
statements:
|
Company
|
Registered
|
Principal activity
|
|
Galantas Gold Corporation
|
Ontario, Canada
|
Parent company
|
|
Cavanacaw Corporation (1)
|
Ontario, Canada
|
Holding company
|
|
Omagh Minerals Limited (2)(3)
|
Northern Ireland
|
Operating company
|
|
Galántas Irish Gold Limited
(2)(4)
|
Northern Ireland
|
Dormant company
|
|
Flintridge Resources Limited
(2)(5)
|
United Kingdom
|
Operating company
|
|
Gairloch Resources Limited
(1)(6)
|
United Kingdom
|
Operating company
|
(1) 100%
owned by Galantas Gold Corporation;
(2) 100%
owned by Cavanacaw Corporation;
(3) Referred to as Omagh (as defined
herein);
(4) Referred to as Galántas (as defined
herein);
(5) Referred to as Flintridge (as defined
herein); and
(6) Referred to as Gairloch (as defined
herein).
(d) Functional and presentation
currency
The consolidated financial
statements are presented in Canadian Dollars ("CAD"), which is the
parent Company's presentation and functional currency.
Items included in the financial
statements of each of the Company's operating subsidiaries are
measured using the currency of the primary economic environment in
which the entity operates (the "functional currency"). The
functional currency of the operating subsidiaries is the U.K. Pound
Sterling ("GBP"). The functional currency of the subsidiary
Cavanacaw, the holding company, is the CAD.
Assets and liabilities of entities
with functional currencies other than CAD are translated at the
year-end closing rate of exchange, and the results of their
operations are translated at average rates of exchange for the
period unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates,
in which case the results of their operations are translated at the
rate prevailing on the dates of the transactions. The resulting
translation adjustments are recognized as a separate component of
equity.
|
|
|
Year Ended
December 31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
Closing rate (GBP to CAD)
|
|
1.6837
|
|
|
1.6322
|
|
|
Average for the year
|
|
1.6783
|
|
|
1.6080
|
|
(e) Use of estimates and
judgments
The preparation of these
consolidated financial statements in conformity with IFRS requires
management to make certain estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities at the
date of the consolidated financial statements and reported amounts
of revenues and expenses during the reporting period. Actual
outcomes could differ from these estimates. These consolidated
financial statements include estimates that, by their nature, are
uncertain. The impacts of such estimates are pervasive throughout
the consolidated financial statements, and may require accounting
adjustments based on future occurrences. Revisions to accounting
estimates are applied prospectively. These estimates are based on
historical experience, current and future economic conditions and
other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Critical accounting estimates
Significant assumptions about the
future that management has made that could result in a material
adjustment to the carrying amounts of assets and liabilities, in
the event that actual results differ from assumptions made, relate
to, but are not limited to, the following:
· the
recoverability of accounts receivable that are included in the
consolidated statements of financial position;
· the
recoverability of property, plant and equipment in the consolidated
statements of financial position. The Omagh underground mine and
the open pit mine are considered as one Cash generating unit
("CGU") and is tested for impairment when potential indicators of
impairment are present. The calculations of the recoverable amount
of CGU determined using the value-in-use method require the use of
methods such as the discounted cash flow method, which uses
assumptions to estimate future cash flows. Significant assumptions
applied in the discounted cash flow calculation include: discount
rate, foreign exchange rate, gold sale price, grade of ore mined,
mill throughput, mill recovery rate and external contractor
costs;
· the
estimated life of the Omagh underground mine ore body based on the
estimated recoverable ounces or pounds mined from proven and
probable reserves of the mine development costs which impacts the
consolidated statements of financial position and the related
depreciation included in the consolidated statements of
loss;
· the
estimated useful lives and residual value of property, plant and
equipment which are included in the consolidated statements of
financial position and the related depreciation included in the
consolidated statements of loss;
· stock-based compensation - management is required to make a
number of estimates when determining the compensation expense
resulting from share-based transactions, including volatility,
which is an estimate based on historical price of the Company's
share, the forfeiture rate and expected life of the
instruments;
· warrants - management is required to make a number of
estimates when determining the fair value of the warrants,
including volatility and expected life of the
instruments;
· convertible debenture is separated into its liability (host
loan) and embedded derivative liability (conversion feature). The
fair value of the embedded derivative at the time of issue is
calculated by using black-scholes valuation model. Subsequent to
the measurement of derivative liability, the residual value will be
allocated as fair value of the host loan. The host loan will be
subsequently measured at amortized cost by using an effective
interest rate of 37%. Changes in the input assumptions can
materially affect the fair value estimates and the Company's
classification between debt and derivative components. The
transaction costs incurred to obtain the convertible debenture are
pro-rated between equity and debt liability;
· derivative liability - management is required to make a number
of estimates when determining the fair value of the derivative
liability, including volatility and expected life of the
instruments;
· share
issued for non-cash consideration - the Company measures
equity-settled share-based payment transactions based on an
estimate of the fair value of goods or services received, unless
that fair value cannot be estimated reliably, in which case the
Company measures the fair value of the goods or services received
based on the fair value of the equity instruments
granted.
· decommissioning liabilities has been created based on the
estimated settlement amounts. Assumptions, based on the current
economic environment, have been made which management believes are
a reasonable basis upon which to estimate the future liability.
These estimates take into account any material changes to the
assumptions that occur when reviewed regularly by management.
Estimates are reviewed quarterly and are based on current
regulatory requirements and constructive obligations. Significant
changes in estimates of contamination, restoration standards and
techniques will result in changes to liability on a quarterly
basis. Actual decommissioning costs will ultimately depend on
actual future settlement amount for the decommissioning costs which
will reflect the market condition at the time the decommissioning
costs are actually incurred. The final cost of the currently
recognized decommissioning provisions may be higher or lower than
currently provided for.
Critical accounting judgments
· functional currency - the functional currency for the parent
entity and each of its subsidiaries, is the currency of the primary
economic environment in which the entity operates. Determination of
functional currency may involve certain judgments to determine the
primary economic environment and the parent entity reconsiders the
functional currency of its entities if there is a change in events
and conditions which determined primary economic
environment;
· exploration and evaluation assets - the determination of the
demonstration of technical feasibility and commercial viability is
subject to a significant degree of judgment and assessment of all
relevant factors;
· income
taxes - measurement of income taxes payable and deferred income tax
assets and liabilities requires management to make judgments in the
interpretation and application of the relevant tax laws. The actual
amount of income taxes only becomes final upon filing and
acceptance of the tax return by the relevant authorities, which
occurs subsequent to the issuance of the consolidated financial
statements;
· going
concern assumption - Going concern presentation of the consolidated
financial statements which assumes that the Company will continue
in operation for the foreseeable future and will be able to realize
its assets and discharge its liabilities in the normal course of
operations as they come due; and
· whether there are any indicators that the Company's property,
plant and equipment assets and exploration and evaluation assets
are impaired. Where an indicator of impairment exists for its
non-current assets, the Company performs an analysis to estimate
the recoverable amount, which includes various key estimates and
assumptions as discussed above.
4. Significant Accounting
Policies
(a) Foreign currency
transactions
Transactions in foreign currencies
are translated to the respective functional currencies of the
operations at exchange rates at the dates of transactions. Monetary
assets and liabilities denominated in foreign currencies at the
reporting date are retranslated to the functional currency at the
exchange rate at that date. Non-monetary assets and liabilities
denominated in foreign currencies that are measured at fair value
are retranslated to the functional currency at the exchange rate at
the date that the fair value was determined. Foreign currency
differences arising in retranslation are recognized in the
consolidated statements of loss, except for differences arising on
the retranslation of available-for- sale equity instruments which
are recognised in other comprehensive loss. Non-monetary items that
are measured in terms of historical cost in foreign currency are
translated using the exchange rate at the date of the
transaction.
(b) Cash and cash equivalents
Cash and cash equivalents comprise
cash at banks and on hand, and short-term deposits with an original
maturity of three months or less, which are readily convertible
into a known amount of cash.
(c) Financial instruments
Under IFRS 9 - Financial Instruments
("IFRS 9"), financial assets are classified and measured based on
the business model in which they are held and the characteristics
of their contractual cash flows. IFRS 9 contains the primary
measurement categories for financial assets: measured at amortized
cost, fair value through other comprehensive income ("FVTOCI") and
fair value through profit and loss ("FVTPL").
Below is a summary showing the
classification and measurement bases of our financial
instruments.
|
Financial instruments
|
Classification
|
|
Cash and cash equivalents
|
FVTPL
|
|
Accounts receivable
|
Amortized
cost
|
|
Long-term deposit
|
Amortized
cost
|
|
Accounts payable and other
liabilities
|
Amortized
cost
|
|
Financing facilities
|
Amortized
cost
|
|
Due to related parties
|
Amortized
cost
|
|
Convertible debenture (host
loan)
|
Amortized
cost
|
|
Other liability
|
Amortized
cost
|
|
Derivative liability
|
FVTPL
|
Financial assets
Financial assets are classified as
either financial assets at FVTPL, amortized cost, or FVTOCI. The
Company determines the classification of its financial assets at
initial recognition.
i. Financial assets recorded at
FVTPL
Financial assets are classified as
FVTPL if they do not meet the criteria of amortized cost or FVTOCI.
Gains or losses on these items are recognized in profit or
loss.
The Company's cash and cash
equivalents is classified as financial assets measured at
FVTPL.
ii. Amortized cost
Financial assets are classified as
measured at amortized cost if both of the following criteria are
met and the financial assets are not designated as at FVTPL: 1) the
object of the Company's business model for these financial assets
is to collect their contractual cash flows; and 2) the asset's
contractual cash flows represent "solely payments of principal and
interest".
The Company's accounts receivable
and long-term deposit are classified as financial assets measured
at amortized cost.
iii. Financial assets recorded
at FVTOCI
Financial assets are recorded at
FVTOCI when the change in fair value is attributable to changes in
the Company's credit risk.
Financial liabilities
Financial liabilities are classified
as either financial liabilities at FVTPL or at amortized cost. The
Company determines the classification of its financial liabilities
at initial recognition.
i. Amortized cost
Financial liabilities are classified
as measured at amortized cost unless they fall into one of the
following categories: financial liabilities at FVTPL, financial
liabilities that arise when a transfer of a financial asset does
not qualify for derecognition, financial guarantee contracts,
commitments to provide a loan at a below-market interest rate, or
contingent consideration recognized by an acquirer in a business
combination.
The Company's accounts payable and
other liabilities, financing facilities, due to related parties,
convertible debenture and other liability do not fall into any of
the exemptions and are therefore classified as measured at
amortized cost.
ii. Financial liabilities
recorded FVTPL
Financial liabilities are classified
as FVTPL if they fall into one of the five exemptions detailed
above. The Company's derivative liability is measured at
FVTPL.
Transaction costs
Transaction costs associated with
financial instruments, carried at FVTPL, are expensed as incurred,
while transaction costs associated with all other financial
instruments are included in the initial carrying amount of the
asset or the liability.
Subsequent measurement
Instruments classified as FVTPL are
measured at fair value with unrealized gains and losses recognized
in profit or loss. Instruments classified as amortized cost are
measured at amortized cost using the effective interest rate
method. Instruments classified as FVTOCI are measured at fair value
with unrealized gains and losses recognized in other comprehensive
loss.
Derecognition
The Company derecognizes financial
liabilities only when its obligations under the financial
liabilities are discharged, cancelled, or expired. The difference
between the carrying amount of the financial liability derecognized
and the consideration paid and payable, including any non-cash
assets transferred or liabilities assumed, is recognized in profit
or loss.
Expected credit loss impairment
model
IFRS 9 introduced a single expected
credit loss impairment model, which is based on changes in credit
quality since initial application. The adoption of the expected
credit loss impairment model had no impact on the Company's
consolidated financial statements.
The Company assumes that the credit
risk on a financial asset has increased significantly if it is more
than 30 days past due. The Company considers a financial asset to
be in default when the borrower is unlikely to pay its credit
obligations to the Company in full or when the financial asset is
more than 90 days past due.
The carrying amount of a financial
asset is written off (either partially or in full) to the extent
that there is no realistic prospect of recovery. This is generally
the case when the Company determines that the debtor does not have
assets or sources of income that could generate sufficient cash
flows to repay the amounts subject to the write-off.
(d) Impairment of non-financial
assets
When events or circumstances
indicate that the carrying value may not be recoverable, the
Company reviews the carrying amounts of its non-financial assets to
determine whether events or changes in circumstances indicate that
the carrying value may not be recoverable. If any such indication
exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). The
estimated recoverable amount is determined on an asset by asset
basis, except where such assets do not generate cash flows
independent of other assets, in which case the recoverable amount
is estimated at the CGU level.
The recoverable amount is the higher
of fair value less costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset.
If the recoverable amount of an
asset (or CGU) is estimated to be less than its carrying amount,
the carrying amount of the asset (or CGU) is reduced to its
recoverable amount. An impairment loss is recognized immediately in
the consolidated statement of comprehensive loss.
If an impairment loss subsequently
reverses, the carrying amount of the asset (or CGU) is increased up
to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognized
for the asset (or CGU) in prior years.
(e) Property, plant and
equipment
Property, plant and equipment are
carried at cost, less accumulated depreciation and accumulated
impairment losses.
The cost of an item of property,
plant and equipment consists of the purchase price, any costs
directly attributable to bringing the asset to the location and
condition necessary for its intended use and an initial estimate of
the costs of dismantling and removing the item and restoring the
site on which it is located.
Depreciation is recognized based on
the cost of an item of property, plant and equipment, less its
estimated residual value, over its estimated useful life at the
following rates:
|
Detail
|
Percentage
|
Method
|
|
Buildings
|
20%
|
Declining balance
|
|
Plant and machinery
|
20%
|
Declining balance
|
|
Motor vehicles
|
25%
|
Declining balance
|
|
Office equipment
|
15%
|
Declining balance
|
|
Development assets
|
|
No depreciation
|
|
Assets under construction
|
|
No depreciation
|
An asset's residual value, useful
life and depreciation method are reviewed, and adjusted if
appropriate, on an annual basis.
(f) Borrowing Costs
General and specific borrowing costs
that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised during the period
of time that is required to complete and prepare the asset for its
intended use or sale.
Qualifying assets are assets that
necessarily take a substantial period of time to get ready for
their intended use or sale.
Investment income earned on the
temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation.
Other borrowing costs are expensed
in the period in which they are incurred.
(g) Exploration and evaluation
assets
These assets relate to the
exploration and evaluation expenditures incurred in respect to
resource projects that are in the exploration and evaluation
stage.
Exploration and evaluation
expenditures include costs which are directly attributable to
acquisition, exploration and evaluation activities, assessing
technical feasibility and commercial viability. These expenditures
are capitalized using the full cost method until the technical
feasibility and commercial viability of extracting the mineral
resource of a project are demonstrable. During the exploration
period, exploration and evaluation assets are not
amortized.
Exploration and evaluation assets
are allocated to CGU for the purpose of assessing such assets for
impairment. At the end of each reporting period, the asset is
reviewed for impairment indicators in accordance with IFRS
6.20:
(i) the period for which the
entity has the right to explore in the specific area has expired
during the period or will expire in the near future, and is not
expected to be renewed.
(ii) substantive expenditure on
further exploration for and evaluation of mineral resources in the
specific area is neither budgeted nor planned.
(iii) exploration for and
evaluation of mineral resources in the specific area have not led
to the discovery of commercially viable quantities of mineral
resources and the entity has decided to discontinue such activities
in the specific area.
(iv) sufficient data exist to
indicate that, although a development in the specific area is
likely to proceed, the carrying amount of the exploration and
evaluation asset is unlikely to be recovered in full from
successful development or by sale.
If such indicators exist, the asset
is tested for impairment and the recoverable amount of the asset is
estimated. If the recoverable amount of the asset is estimated to
be less than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is
recognized immediately in consolidated statements of
loss.
Once the technical feasibility and
commercial viability of extracting a mineral resource of a project
are demonstrable, the relevant exploration and evaluation asset is
assessed for impairment, and any impairment loss recognized, prior
to the balance being reclassified as a development asset in
property, plant and equipment.
The determination of the
demonstration of technical feasibility and commercial viability is
subject to a significant degree of judgment and assessment of all
relevant factors. In general, technical feasibility may be
demonstrable once a positive feasibility study is completed. When
determining the commercial viability of a project, in addition to
the receipt of a feasibility study, the Company also considers
factors such as the availability of project financing, the
existence of markets and/or long term contracts for the product,
and the ability of obtaining the relevant operating
permits.
All subsequent expenditures to ready
the property for production are capitalized within development
assets, other than those costs related to the construction of
property, plant and equipment.
Once production has commenced, all
costs included in development assets are reclassified to mine
development costs.
Exploration and evaluation
expenditures incurred prior to the Company obtaining mineral rights
related to the property being explored are recorded as expense in
the period in which they are incurred.
(h) Stripping costs
Till stripping costs involving the
removal of overburden are capitalized where the underlying ore will
be extracted in future periods. The Company defers these till
stripping costs and amortizes them on a unit-of-production basis as
the underlying ore is extracted.
(i) Inventories
Inventories are comprised of
finished goods, concentrate inventory and work-in-process
amounts.
All inventories are recorded at the
lower of production costs on a first-in, first-out basis, and net
realizable value. Production costs include costs related to mining,
crushing, mill processing, as well as depreciation on production
assets and certain allocations of mine-site overhead expenses
attributable to the manufacturing process.
Net realizable value is the
estimated selling price in the ordinary course of business, less
the estimated costs of completion and selling expenses.
(j) Revenue recognition
Revenue from sales of finished goods
is recognized at the time of shipment when significant risks and
rewards of ownership are considered to be transferred, the terms
are fixed or determinable, collection is probable, the associated
costs and possible return of goods can be estimated reliably, and
there is no continuing management involvement in the goods, and the
amount of revenue can be measured reliably.
Revenue from sales of gold
concentrate is recognized at the time of shipment when title passes
and significant risks and benefits of ownership are considered to
be transferred and the amount of revenue to be receivable by the
Company is known or could be accurately estimated. The final
revenue figure at the end of any given period is subject to
adjustment at the date of ultimate settlement as a result of final
assay agreement and metal prices changes.
(k) Provisions
A provision is recognized when the
Company has a present legal or constructive obligation as a result
of a past event, it is probable that an outflow of economic
benefits will be required to settle the obligation, and the amount
of the obligation can be reliably estimated. If the effect is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the
risks specific to the liability.
A provision for onerous contracts is
recognized when the expected benefits to be derived by the Company
from a contract are lower than the unavoidable cost of meeting its
obligations under the contract.
(l) Share-based compensation
transactions
Share-based compensation transactions
Employees (including directors and
senior executives) of the Company receive a portion of their
remuneration in the form of share-based compensation transactions,
whereby employees render services as consideration for equity
instruments ("equity-settled transactions").
In situations where equity
instruments are issued and some or all of the goods or services
received by the entity as consideration cannot be specifically
identified, such as share-based payments to employees, they are
measured at fair value of the share-based payment.
Share-based payments to employees of
the subsidiaries are recognized as cash settled share-based
compensation transactions.
Equity-settled transactions
The costs of equity-settled
transactions with employees are measured by reference to the fair
value at the date on which they are granted.
The costs of equity-settled
transactions are recognized, together with a corresponding increase
in equity, over the period in which the performance and/or service
conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award ("the vesting date").
The cumulative expense is recognized for equity- settled
transactions at each reporting date until the vesting date reflects
the Company's best estimate of the number of equity instruments
that will ultimately vest. The profit or loss charge or credit for
a period represents the movement in cumulative expense recognized
as at the beginning and end of that period and the corresponding
amount is represented in "equity settled share-based payments
reserve".
No expense is recognized for awards
that do not ultimately vest, except for awards where vesting is
conditional upon a market condition, which are treated as vesting
irrespective of whether or not the market condition is satisfied
provided that all other performance and/or service conditions are
satisfied.
Where the terms of an equity-settled
award are modified, the minimum expense recognized is the expense
as if the terms had not been modified. An additional expense is
recognized for any modification which increases the total fair
value of the share-based payment arrangement, or is otherwise
beneficial to the employee as measured at the date of
modification.
The dilutive effect of outstanding
options (if any) is reflected as additional dilution in the
computation of loss per share.
Cash-settled transactions
The cost of cash-settled
transactions is measured initially at fair value. The liability is
re-measured to fair value at each reporting date up to, and
including the settlement date, with changes in fair value
recognised in employee benefits expense.
(m) Income taxes
Income tax on the consolidated
statements of loss for the years presented comprises current and
deferred tax. Income tax is recognized in the consolidated
statements of loss except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in
equity.
Current tax expense is the expected
tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at period end, adjusted for
amendments to tax payable with regards to previous
years.
Deferred tax is recognized in
respect of taxable temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not
recognized for the following temporary differences: the initial
recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor
taxable profit or loss, and differences relating to investments in
subsidiaries and joint ventures to the extent that it is probable
that they will not reverse in the foreseeable future. In addition,
deferred tax is not recognized for taxable temporary differences
arising on the initial recognition of goodwill. Deferred tax is
measured at the tax rates that are expected to be applied to
taxable temporary differences when they reverse, based on the laws
that have been enacted or substantively enacted by the reporting
date. Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, but they intend to settle
current tax liabilities and assets on a net basis or their tax
assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized
for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable
profits will be available against which they can be utilized.
Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the
related tax benefit will be realized.
(n) Convertible debentures
The convertible debenture is
convertible into units in US$ and the Company's functional currency
is the Canadian Dollars. As a result the instrument contains an
embedded derivative liability.
The proceeds received on issuance of
the Company's convertible debenture are allocated to the host debt
and derivative liability component. The fair value of the component
is determined based on the residual method.
At the time of issue, the derivative
liability feature was measured using the Black-Scholes option
pricing model. The residual value was allocated as fair value of
the host debt component. The derivative liability is fair valued at
each statement of financial position date using the Black-Scholes
option pricing model.
The host debt component accretes up
to the principal balance at maturity with the accretion expense
included in the consolidated statements of loss. The derivative
liability component will be reclassified to share capital on
conversion.
Transaction costs are apportioned to
the debt liability and derivative liability component in proportion
to the allocation of proceeds.
(o) Decommissioning liability
A legal or constructive obligation
to incur restoration, rehabilitation and environmental costs may
arise when environmental disturbance is caused by the exploration,
development or ongoing production of a mineral property interest.
Such costs arising from the decommissioning of plant and other site
preparation work, discounted to their net present value, are
provided for and capitalized at the start of each project to the
carrying amount of the asset, when there is a present obligation,
as a result of a past event, it is probable to be settled by a
future outflow of resources and a reliable estimate can be made of
the obligation. Discount rates using a pretax rate that reflects
the risk and the time value of money are used to calculate the net
present value. These costs are charged against the consolidated
statements of loss over the economic life of the related asset,
through amortization using either a unit-of-production or the
straight-line method as appropriate. The related liability is
adjusted for each period for the unwinding of the discount rate and
for changes to the current market-based discount rate, amount or
timing of the underlying cash flows needed to settle the
obligation. Costs for restoration of subsequent site damage that is
created on an ongoing basis during production are provided for at
their net present values and charged against profits and/or
inventories as extraction progresses.
(p) Loss per share
The Company presents basic and
diluted loss per share data for its common shares, calculated by
dividing the loss attributable to common shareholders of the
Company by the weighted average number of common shares outstanding
during the year. Diluted loss per share is computed similarly to
basic loss per share except that the weighted average shares
outstanding are increased to include additional shares for the
assumed exercise of stock options and warrants, if dilutive. The
number of additional shares is calculated by assuming that
outstanding stock options and warrants were exercised and that the
proceeds from such exercises were used to acquire common stock at
the average market price during the years. Options and warrants are
anti-dilutive and, therefore, have not been taken into account in
the per share calculation.
(q) Leases
At inception of a contract, the
Company assesses whether a contract is, or contains, a lease.
Contracts that convey the right to control the use of an identified
asset for a period of time in exchange for consideration are
accounted for as leases giving rise to right-of-use
assets.
At the commencement date, a
right-of-use asset is measured at cost, where cost comprises: (a)
the amount of the initial measurement of the lease liability; (b)
any lease payments made at or before the commencement date, less
any lease incentives received; (c) any initial direct costs
incurred by the Company; and (d) an estimate of costs to be
incurred by the Company in dismantling and removing the underlying
asset, restoring the site on which it is located or restoring the
underlying asset to the condition required by the terms and
conditions of the lease, unless those costs are incurred to produce
inventories.
The Company subsequently measures a
right-of-use asset at cost less any accumulated depreciation and
any accumulated impairment losses; and adjusted for any
re-measurement of the lease liability. Right-of-use assets are
depreciated over the shorter of the asset's useful life and the
lease term.
A lease liability is initially
measured at the present value of the unpaid lease payments.
Subsequently, the Company measures a lease liability by: (a)
increasing the carrying amount to reflect interest on the lease
liability; (b) reducing the carrying amount to reflect the lease
payments made; and (c) remeasuring the carrying amount to reflect
any reassessment or lease modifications, or to reflect revised
in-substance fixed lease payments. Each lease payment is allocated
between repayment of the lease principal and interest. Interest on
the lease liability in each period during the lease term is
allocated to produce a constant periodic rate of interest on the
remaining balance of the lease liability.
Except where the costs are included
in the carrying amount of another asset, the Company recognizes in
profit or loss (a) the interest on a lease liability and (b)
variable lease payments not included in the measurement of a lease
liability in the period in which the event or condition that
triggers those payments occurs.
The Company elected to not recognize
right-of-use assets and lease liabilities that have a lease term of
12 months or less and leases of low-value assets. The lease
payments associated with these leases are charged directly to
profit on a straight-line basis over the lease term.
5. Capital Risk Management
The Company manages its capital with
the following objectives:
· to
ensure sufficient financial flexibility to achieve the ongoing
business objectives including funding of future growth
opportunities, and pursuit of accretive acquisitions;
and
· to
maximize shareholder return.
The Company monitors its capital
structure and makes adjustments according to market conditions in
an effort to meet its objectives given the current outlook of the
business and industry in general. The Company may manage its
capital structure by issuing new shares, repurchasing outstanding
shares, adjusting capital spending, or disposing of assets. The
capital structure is reviewed by management and the Board of
Directors on an ongoing basis.
The Company considers its capital to
be equity, comprising share capital, reserves and deficit which at
December 31, 2023 totaled $11,357,156 (December 31, 2022 -
$14,714,991). The Company manages capital through its financial and
operational forecasting processes. The Company reviews its working
capital and forecasts its future cash flows based on future sales
revenues, operating expenditures, and other investing and financing
activities. The forecast is updated based on its operating and
exploration activities. Selected information is provided to the
Board of Directors of the Company. The Company's capital management
objectives, policies and processes have remained unchanged during
the year ended December 31, 2023. The Company is not subject to any
capital requirements imposed by a lending institution or regulatory
body.
6. Financial and Property Risk
Management
Property risk
The Company's significant project is
the Omagh mine. Unless the Company acquires or develops additional
significant projects, the Company will be solely dependent upon the
Omagh mine. If no additional projects are acquired by the Company,
any adverse development affecting the Omagh mine would have a
material effect on the Company's consolidated financial condition
and results of operations.
Financial risk
The Company's activities expose it
to a variety of financial risks: credit risk and sales
concentration, liquidity risk and market risk (including interest
rate risk, foreign currency risk and commodity and equity price
risk). Risk management is carried out by the Company's management
team with guidance from the Audit Committee under policies approved
by the Board of Directors. The Board of Directors also provides
regular guidance for overall risk management.
(i) Credit risk and sales
concentration
Credit risk is the risk of loss
associated with a counterparty's inability to fulfill its payment
obligations. The Company's credit risk is primarily attributable to
cash and cash equivalents, accounts receivable and long-term
deposit. Cash and long-term deposit are held with financial
institutions and the United Kingdom Crown, respectively, from which
management believes the risk of loss to be minimal. All the revenue
from sales are from one customer and the accounts receivable
consist mainly of a trade account receivable from one customers,
value added tax receivable and sales tax receivable. The Company is
exposed to concentration of credit and sales risk with one of its
customers. Management believes that the credit risk is minimized
due to the financial worthiness of this company. Valued added tax
receivable is collectable from the Government of Northern Ireland.
Sales tax receivable is collectable from government authorities in
Canada.
(ii) Liquidity risk
Liquidity risk is the risk that the
Company will not have sufficient cash resources to meet its
financial obligations as they come due. The Company's liquidity and
operating results may be adversely affected if the Company's access
to the capital market is hindered, whether as a result of a
downturn in stock market conditions generally or matters specific
to the Company. The Company manages liquidity risk by monitoring
maturities of financial commitments and maintaining adequate cash
reserves and available borrowing facilities to meet these
commitments as they come due. As at December 31, 2023, the Company
had working capital deficit of $12,599,514 (December 31, 2022 -
working capital deficit of $11,027,964). All of the Company's
financial liabilities have contractual maturities of less than 30
days other than certain related party loans and the financing
liabilities.
(iii) Market risk
Market risk is the risk of loss that
may arise from changes in market factors such as interest rate
risk, foreign exchange rate risk and commodity price
risk.
(a) Interest rate
risk
Interest rate risk is the risk that
the fair value or future cash flows of a financial instrument will
fluctuate due to changes in market interest rates. The Company has
cash balances, significant interest-bearing debt due to related
parties and financing facility. The Company is exposed to interest
rate risk on certain related party loans and third party loans
which bear interest at variable rates.
(b) Foreign currency
risk
Certain of the Company's assets,
liabilities are designated in GBP and expenses are incurred in GBP
which is the currency of Northern Ireland and the United Kingdom
while the Company's primary revenues are received in the currency
of United States and are therefore subject to gains and losses due
to fluctuations in these currencies against the functional
currency. The loan from third party is designated in US
dollars.
(c) Commodity price
risk
The Company is exposed to price risk
with respect to commodity prices. Commodity price risk is defined
as the potential adverse impact on earnings and economic value due
to commodity price movements and volatilities. The Company closely
monitors commodity prices, as it relates to gold to determine the
appropriate course of action to be taken by the Company.
Sensitivity analysis
Based on management's knowledge and
experience of the financial markets, the Company believes the
following movements are reasonably possible over a twelve month
period:
(i) Certain related party
loans, a loan facility with a third party and convertible
debentures are subject to interest rate risk. As at December 31,
2023, if interest rates had decreased/increased by 1% with all
other variables held constant, the net loss for the year ended
December 31, 2023, would have been approximately $150,000
lower/higher respectively, as a result of lower/higher interest
rates from certain related party loans, a loan facility and
convertible debentures. Similarly, as at December 31, 2023,
shareholders' equity would have been approximately $150,000
higher/lower as a result of a 1% (ii) The Company is exposed
to foreign currency risk on fluctuations related to cash and cash
equivalents, accounts receivable, long-term deposit, accounts
payable and other liabilities, financing liability, lease liability
and due to related parties that are denominated in GBP as well as
convertible debentures that are denominated in US$. As at December
31, 2023, had the GBP and US$ weakened/strengthened by 5% against
the CAD with all other variables held constant, the Company's
consolidated comprehensive loss for the year ended December 31,
2023 would have been approximately $620,000 higher/lower as a
result of foreign exchange losses/gains on translation of non-CAD
denominated financial instruments. Similarly, as at December 31,
2023, shareholders' equity would have been approximately $620,000
higher/lower had the GBP and US$ weakened/strengthened by 5%
against the CAD as a result of foreign exchange losses/gains on
translation of non-CAD denominated financial
instruments.
(iii) Commodity price risk
could adversely affect the Company. In particular, the Company's
future profitability and viability of development depends upon the
world market price of gold. Gold prices have fluctuated widely in
recent years. There is no assurance that, even as commercial
quantities of gold may be produced in the future, a profitable
market will exist for them. A decline in the market price of gold
may also require the Company to reduce production of its mineral
resources, which could have a material and adverse effect on the
Company's value. Management believes that the impact would be
immaterial for the year ended December 31, 2023.
7. Categories of Financial
Instruments
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
Financial assets:
|
|
|
|
|
|
|
|
FVTPL
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
2,593,265
|
|
$
|
1,038,643
|
|
|
Amortized cost
|
|
|
|
|
|
|
|
Accounts receivable
|
|
108,292
|
|
|
420,653
|
|
|
Long-term deposit
|
|
505,110
|
|
|
489,660
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
FVTPL
|
|
|
|
|
|
|
|
Derivative liability
|
|
1,245,627
|
|
|
-
|
|
|
Amortized cost
|
|
|
|
|
|
|
|
Accounts payable and other
liabilities
|
|
3,662,842
|
|
|
4,052,041
|
|
|
Financing facilities
|
|
6,757,740
|
|
|
4,836,267
|
|
|
Due to related parties
|
|
5,838,256
|
|
|
5,072,534
|
|
|
Convertible debenture
|
|
1,923,509
|
|
|
-
|
|
|
Other liability
|
|
1,187,437
|
|
|
1,085,426
|
|
As of December 31, 2023 and 2022,
the fair value of all the Company's financial instruments
approximates the carrying value.
8. Accounts Receivable and Prepaid
Expenses
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Sales tax receivable -
Canada
|
$
|
15,067
|
|
$
|
22,971
|
|
|
Valued added tax receivable -
Northern Ireland
|
|
9,959
|
|
|
281,308
|
|
|
Accounts receivable
|
|
83,266
|
|
|
116,374
|
|
|
Prepaid expenses
|
|
1,488,588
|
|
|
1,390,340
|
|
|
|
$
|
1,596,880
|
|
$
|
1,810,993
|
|
Prepaid expenses includes advances
for consumables and for construction of the passing bays in the
Omagh mine. Prepaid expenses includes also $1,000,000 pursuant to
services agreement for the underground development at the Omagh
Gold Project.
The following is an aged analysis of
receivables:
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
Less than 3 months
|
$
|
50,614
|
|
$
|
343,381
|
|
|
3 to 12 months
|
|
45,330
|
|
|
51,868
|
|
|
More than 12 months
|
|
12,348
|
|
|
25,404
|
|
|
Total accounts receivable
|
$
|
108,292
|
|
$
|
420,653
|
|
9. Inventories
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Concentrate inventories
|
$
|
18,184
|
|
$
|
83,242
|
|
10. Property, Plant and
Equipment
|
|
|
Freehold
|
|
|
Plant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
land and
|
|
|
and
|
|
|
Motor
|
|
|
Office
|
|
Development
|
|
Assets
under
|
|
|
|
|
|
Cost
|
|
buildings
|
|
machinery
(i)
|
|
|
vehicles
|
|
|
equipment
|
|
|
assets (ii)
|
|
construction
|
|
|
Total
|
|
|
Balance, December 31, 2021
|
$
|
2,363,814
|
|
$
|
8,108,988
|
|
$
|
199,217
|
|
$
|
216,653
|
|
$
|
22,561,674
|
|
$
|
556,273
|
|
$
|
34,006,619
|
|
|
Additions
|
|
-
|
|
|
464,632
|
|
|
45,599
|
|
|
9,619
|
|
|
11,008,120
|
|
|
-
|
|
|
11,527,970
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
(14,531
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(14,531
|
)
|
|
Transfer
|
|
-
|
|
|
529,972
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(529,972
|
)
|
|
-
|
|
|
Cash receipts from concentrate
sales
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(823,475
|
)
|
|
-
|
|
|
(823,475
|
)
|
|
Impairment (iii)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(10,124,920
|
)
|
|
-
|
|
|
(10,124,920
|
)
|
|
Foreign exchange
adjustment
|
|
(111,761
|
)
|
|
(381,794
|
)
|
|
(9,419
|
)
|
|
(10,243
|
)
|
|
(1,219,359
|
)
|
|
(26,301
|
)
|
|
(1,758,877
|
)
|
|
Balance, December 31, 2022
|
|
2,252,053
|
|
|
8,721,798
|
|
|
220,866
|
|
|
216,029
|
|
|
21,402,040
|
|
|
-
|
|
|
32,812,786
|
|
|
Additions
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,423,820
|
|
|
26,939
|
|
|
3,450,759
|
|
|
Cash receipts from concentrate
sales
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,491,453
|
)
|
|
-
|
|
|
(1,491,453
|
)
|
|
Impairment (iii)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,353,077
|
)
|
|
-
|
|
|
(3,353,077
|
)
|
|
Foreign exchange
adjustment
|
|
71,058
|
|
|
274,128
|
|
|
6,969
|
|
|
6,816
|
|
|
658,736
|
|
|
-
|
|
|
1,017,707
|
|
|
Balance, December 31, 2023
|
$
|
2,323,111
|
|
$
|
8,995,926
|
|
$
|
227,835
|
|
$
|
222,845
|
|
$
|
20,640,066
|
|
$
|
26,939
|
|
$
|
32,436,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021
|
$
|
1,964,309
|
|
$
|
6,067,698
|
|
$
|
147,888
|
|
$
|
137,888
|
|
$
|
-
|
|
$
|
-
|
|
$
|
8,317,783
|
|
|
Depreciation
|
|
4,734
|
|
|
587,131
|
|
|
20,676
|
|
|
12,510
|
|
|
-
|
|
|
-
|
|
|
625,051
|
|
|
Disposals
|
|
-
|
|
|
-
|
|
|
(3,268
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,268
|
)
|
|
Foreign exchange
adjustment
|
|
(92,801
|
)
|
|
(276,816
|
)
|
|
(6,681
|
)
|
|
(6,331
|
)
|
|
-
|
|
|
-
|
|
|
(382,629
|
)
|
|
Balance, December 31, 2022
|
|
1,876,242
|
|
|
6,378,013
|
|
|
158,615
|
|
|
144,067
|
|
|
-
|
|
|
-
|
|
|
8,556,937
|
|
|
Depreciation
|
|
3,954
|
|
|
482,088
|
|
|
17,864
|
|
|
11,097
|
|
|
-
|
|
|
-
|
|
|
515,003
|
|
|
Foreign exchange
adjustment
|
|
59,213
|
|
|
201,755
|
|
|
5,062
|
|
|
4,581
|
|
|
-
|
|
|
-
|
|
|
270,611
|
|
|
Balance, December 31, 2023
|
$
|
1,939,409
|
|
$
|
7,061,856
|
|
$
|
181,541
|
|
$
|
159,745
|
|
$
|
-
|
|
$
|
-
|
|
$
|
9,342,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2022
|
$
|
375,811
|
|
$
|
2,343,785
|
|
$
|
62,251
|
|
$
|
71,962
|
|
$
|
21,402,040
|
|
$
|
-
|
|
$
|
24,255,849
|
|
|
Balance, December 31, 2023
|
$
|
383,702
|
|
$
|
1,934,070
|
|
$
|
46,294
|
|
$
|
63,100
|
|
$
|
20,640,066
|
|
$
|
26,939
|
|
$
|
23,094,171
|
|
(i) Right-of-use assets of $nil
is included in additions of the plant and machinery for the year
ended December 31, 2023 (year ended December 31, 2022 -
$282,041).
(ii) Development assets are
expenditures for the underground mining operations in
Omagh.
(iii) The Company conducts
impairment testing on an annual basis. The cash generating unit for
the purpose of impairment testing is the Omagh Mine. The basis on
which the recoverable amount is assessed is its value in use. The
cash flow forecast employed for the value in use computation is for
a five year period discounted at a rate reflective of market
conditions.
The most critical assumption for the
value in use calculation was the granting of planning permission
for the development of an underground mine. Planning permission was
granted but was the subject of a judicial review which found in
favour of the Company in September 2017. The judicial review
decision was then appealed by a third party to the Court of Appeal
in relation to the positive judicial review judgment. This appeal
was completed in February 2018 and later in 2018 the Court of
Appeal delivered its judgement in regard to an appeal against the
Company's planning consent. The Court determined that the appeal
had failed and thus the planning consent is confirmed.
As of December 31, 2023, the Company
performed its annual impairment tests for development assets. The
recoverable amount of the Company's cash generating unit was
determined based on their value-in-use using Level 3 inputs in a
discounted cash flow model. The key assumptions used in the
estimates of the recoverable amounts are described as
follows:
· Cash
flows: Estimated cash flows were projected based on the Company's
business plans, which are based on actual operating results from
internal sources as well as industry and market trends. The
forecasts were extended to a total of 5 years;
· Discount rate: The post tax discount rates were approximately
16-17%.
As at December 31, 2023, the Company
determined the development assets was impaired by $3,353,077
(December 31, 2022 - $10,124,920).
11. Exploration and Evaluation
Assets
|
Cost
|
|
Acquisition
costs
|
|
|
Exploration
costs
|
|
|
Total
|
|
|
Balance, December 31, 2021
|
$
|
-
|
|
$
|
1,574,183
|
|
$
|
1,574,183
|
|
|
Additions
|
|
-
|
|
|
1,165,561
|
|
|
1,165,561
|
|
|
Foreign exchange
adjustment
|
|
-
|
|
|
(74,431
|
)
|
|
(74,431
|
)
|
|
Balance, December 31, 2022
|
|
-
|
|
|
2,665,313
|
|
|
2,665,313
|
|
|
Additions (i)
|
|
1,140,115
|
|
|
1,162,710
|
|
|
2,302,825
|
|
|
Impairment
|
|
-
|
|
|
(282,493
|
)
|
|
(282,493
|
)
|
|
Foreign exchange
adjustment
|
|
-
|
|
|
90,764
|
|
|
90,764
|
|
|
Balance, December 31, 2023
|
$
|
1,140,115
|
|
$
|
3,636,294
|
|
$
|
4,776,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying value
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2022
|
$
|
-
|
|
$
|
2,665,313
|
|
$
|
2,665,313
|
|
|
Balance, December 31, 2023
|
$
|
1,140,115
|
|
$
|
3,636,294
|
|
$
|
4,776,409
|
|
(i) On January 26, 2023, the
Company announced that it entered into an agreement to acquire a
100% interest and the exclusive rights to explore and develop the
Gairloch Project from the owners of the Gairloch Estate lands. The
Company has acquired exploration and developments rights for an
initial payment of GBP 347,000 and annual payments of GBP 69,000
beginning in year 6.
The lease agreement will continue
for 30 years and will be renewable at the election of Galantas,
upon 90 days' prior written notice and upon the approval of the
lessor, not to be unreasonably withheld, for a further 20-year
period, assuming all conditions of this agreement have been met
satisfactorily according to the Lessor, acting reasonably, in
respect of the Galantas' conduct and operations. Galantas may
terminate the agreement with 18 months' notice.
Galantas made a payment of $580,392
(GBP 347,000) representing payment for the first five years of the
lease. If the exploration phase continues past the fifth
anniversary of the effective date of the agreement, Galantas will
pay the lessor GBP 69,400 index linked per lease year for each such
lease year following the fifth anniversary of the effective date,
with such payment to be made at the commencement of each such lease
year.
During any mining phase, Galantas
will pay the lessor GBP 50,000 index linked per lease year, with
such payment to be made at the commencement of each such lease
year. Galantas will grant a 5% net profits interest royalty (the
"NPI"), calculated according to standard industry terms and
practices with the option by the Lessor to convert the NPI to a 2%
net smelter returns royalty, calculated according to standard
industry terms and practices.
As of December 31, 2023, the Company
assessed that the exploration assets were impaired by $282,493
(December 31, 2022 - $Nil).
12. 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 December 31, 2023 based on a risk-free discount rate
of 1% (December 31, 2022 - 1%) and an inflation rate of 1.50%
(December 31, 2022 - 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 December 31, 2023, the estimated
fair value of the liability is $611,452 (December 31, 2022 -
$582,441). Changes in the provision during the year ended December
31, 2023 are as follows:
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Decommissioning liability, beginning
of year
|
$
|
582,441
|
|
$
|
600,525
|
|
|
Accretion
|
|
10,601
|
|
|
10,154
|
|
|
Foreign exchange
|
|
18,410
|
|
|
(28,238
|
)
|
|
Decommissioning liability, end of
year
|
$
|
611,452
|
|
$
|
582,441
|
|
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, 2022 - GBP 300,000), of which GBP 300,000 was funded as of
December 31, 2023 (GBP 300,000 was funded as of December 31, 2022)
and reported as long-term deposit of $505,110 (December 31,
2022 - $489,660).
13. 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 and
professional fees activities.
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
Accounts payable
|
$
|
2,131,257
|
|
$
|
2,528,245
|
|
|
Accrued liabilities
|
|
1,531,585
|
|
|
1,523,796
|
|
|
Total accounts payable and other
liabilities
|
$
|
3,662,842
|
|
$
|
4,052,041
|
|
The following is an aged analysis of
the accounts payable and other liabilities:
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
Less than 3 months
|
$
|
1,672,744
|
|
$
|
2,939,972
|
|
|
3 to 12 months
|
|
807,338
|
|
|
412,168
|
|
|
12 to 24 months
|
|
474,290
|
|
|
61,247
|
|
|
More than 24 months (see also note
23)
|
|
708,470
|
|
|
638,654
|
|
|
Total accounts payable and other
liabilities
|
$
|
3,662,842
|
|
$
|
4,052,041
|
|
14. Financing Facilities
Amounts payable on the Company's
financial facilities are as follow:
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
G&F Phelps
|
|
|
|
|
|
|
|
Financing facility, beginning of
period (i)
|
|
4,836,267
|
|
|
4,247,488
|
|
|
Accretion (i)
|
|
259,354
|
|
|
269,512
|
|
|
Interest (i)
|
|
961,722
|
|
|
618,903
|
|
|
Shares for debt settlement
|
|
(100,000
|
)
|
|
(24,120
|
)
|
|
Foreign exchange
adjustment
|
|
161,965
|
|
|
(275,516
|
)
|
|
|
|
6,119,308
|
|
|
4,836,267
|
|
|
Less
current portion
|
|
(6,119,308
|
)
|
|
(4,836,267
|
)
|
|
Financing facilities - non-current portion
|
$
|
-
|
|
$
|
-
|
|
(i) As at December 31, 2023,
G&F Phelps had amalgamated loans to the Company of $3,139,728
(GBP 1,864,779) (December 31, 2022 - $2,719,042 - GBP 1,665,875)
included with financing facilities bearing interest at 2% above UK
base rates, repayable on demand and secured by a mortgage debenture
on all the Company's assets. In April 2018, the interest increased
to 6.75% + US$ 12 month LIBOR. Interest accrued on G&F Phelps
loan is included with financing facilities. As at December 31,
2023, the amount of interest accrued is $2,979,582 (GBP 1,769,663)
(December 31, 2022 - $1,950,675 - GBP 1,195,120).
The G&F Phelps loans expired on
December 31, 2023 and are being rolled forward on a month to month
basis. Interest may be deferred and added to the balance
outstanding until March 31, 2022, at which point interest will be
paid monthly. In consideration for extending the G&F loan and
deferring interest, G&F Phelps has received 1,700,000 warrants
exercisable into one common share at an exercise price of $0.33,
with said warrants expiring on December 31, 2023. The fair value of
the 1,700,000 warrants was estimated at $670,000 using the
following Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility -
123.98% to 144.48%, risk-free interest rate - 0.32% and an expected
average life of 2.63 years.
During the year ended December 31,
2023, the Company recorded accretion expense of $259,354 in the
consolidated statements of loss in regards with this loan facility
(year ended December 31, 2022 - $269,512).
During the year ended December 31,
2023, the Company recorded interest expense of $961,722 in the
consolidated statements of loss in regards with this loan facility
(year ended December 31, 2022 - $618,903).
15. Convertible Debenture
On December 20, 2023, the Company
closed a $3,502,054 (US$ 2,627,000) convertible debenture. The
convertible debenture is unsecured, is for a term of three year
commencing on the date that it is issued, carries a coupon of 10%
per annum and is convertible into common shares of the Company.
Each debenture consists of US$1,000 principal amount of unsecured
convertible debentures. The convertible debentures have a term of
36 months from the date of issuance with a conversion price of
US$0.255 being the equivalent of a conversion price of $0.35 per
conversion share. A four month hold period will apply to common
shares converted through the convertible debenture. The hold period
will expire on April 21, 2024.
In accordance with the terms of the
convertible debentures, if, at any time following the issuance of
the convertible debentures, the closing price of the common shares
of the Company on the TSXV equals or exceeds $0.70 per common share
for 10 consecutive trading days or more, the Company may elect to
convert all but not less than all of the outstanding principal
amount of the convertible debentures into conversion shares at the
conversion price, upon giving the holders of the convertible
debentures not less than 30 calendar days advance written notice.
On December 20, 2026, any outstanding principal amount of
convertible debentures plus any accrued and unpaid interest thereon
shall be repaid by the Company in cash.
Interest on the principal amount
outstanding under each convertible debenture shall accrue during
the period commencing on December 20, 2023 until December 20, 2026
and shall be payable in cash on an annual basis on December 31st of
each year (each, an "Interest Payment Date"); provided, however,
that the first interest payment date shall be December 31, 2024.
Each convertible debenture shall bear interest at a minimum
interest rate of 10% per annum (the "Base Interest Rate"). During
each interest period (an "Interest Period"), being the period
commencing on December 20, 2023 to but excluding the first Interest
Payment Date and thereafter the period from and including an
Interest Payment Date to but excluding the next Interest Payment
Date or other applicable payment date, the Base Interest Rate will
be adjusted based on a gold price of US$2,000 per ounce, with the
Base Interest Rate being increased by 1% per annum for each US$100
in which the average gold price for such Interest Period exceeds
US$2,000 per ounce, up to a maximum interest rate of 30% per annum;
provided, however, that, without the prior acceptance of the TSXV,
the average interest rate shall not exceed 24% per annum during the
term of the convertible debentures. Any adjustment to the Base
Interest Rate in respect of an Interest Period shall be calculated
based on the average gold price quoted by the London Bullion Market
Association, being the LBMA Gold Price PM, in respect of the
Interest Period ending on December 31, 2024, from December 20, 2023
to and including December 15, 2024, and for each subsequent
Interest Period, from January 1st to and including December 15th of
that year or 15 days prior to the applicable payment
date.
Melquart, an insider and control
person of the Company (as defined by the TSXV), subscribed for
US$875,000. Ocean Partners, which has a common director with the
Company, acquired US$875,000 aggregate principal amount of
convertible debentures.
The Company paid a cash finder's fee
of US$40,500 (CAD$53,990) and issued 158,823 non-transferable
finder's warrants to Canaccord Genuity Corp. in consideration for
providing certain finder services to the Company under the
offering. Each finder warrant is exercisable to acquire one common
share in the capital of the Company at an exercise price of $0.35
per common share at any time on or before December 20, 2026. The
fair value of the 158,823 finder warrants was estimated at $24,670
using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility -
107.02%, risk-free interest rate - 3.71% and an expected average
life of 3 years.
The debentures consist of the
liability component and conversion feature. Due to the convertible
debenture being denominated in US$, the conversion feature has been
presented as a non-cash derivative liability.
On the date of issuance, the fair
value of the derivative liability was estimated to be $1,495,208
using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility -
95.0%, risk-free interest rate - 3.94% and an expected average life
of 3 years.
As at December 31, 2023, the fair
value of the derivative liability was revalued at $1,245,627 using
the Black-Scholes option pricing model with the following
assumptions: expected dividend yield - 0%, expected volatility -
94.9%, risk-free interest rate - 3.91% and an expected average life
of 2.97 years.
The fair value of the liability
component was recorded at $2,006,846, discounted at an effective
interest rate of 37%.
The Company incurred transaction
costs of $153,481 which was allocated pro-rata on the value of the
conversion feature and the liability component.
During the year ended December 31,
2023, the Company recorded accretion expense of $33,265 and
interest expense of $29,184 as loan interest and bank charges less
deposit interest in the consolidated statement of
loss.
|
|
|
Convertible
|
|
|
Derivative
|
|
|
|
|
debenture
|
|
|
liability
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 and 2022
|
$
|
-
|
|
$
|
-
|
|
|
Principal amount
|
|
3,502,054
|
|
|
-
|
|
|
Derivative liability
component
|
|
(1,495,208
|
)
|
|
1,495,208
|
|
|
Transaction costs
|
|
(153,481
|
)
|
|
-
|
|
|
Transaction costs allocated to
derivative liability component
|
|
7,695
|
|
|
(7,695
|
)
|
|
Interest expense
|
|
29,184
|
|
|
-
|
|
|
Accretion expense
|
|
33,265
|
|
|
-
|
|
|
Change in fair value
|
|
-
|
|
|
(241,886
|
)
|
|
Balance, December 31, 2023
|
$
|
1,923,509
|
|
$
|
1,245,627
|
|
16. Leases
|
|
|
|
|
|
Balance, December 31, 2021
|
$
|
416,040
|
|
|
Addition (i)
|
|
282,041
|
|
|
Interest expense
|
|
18,857
|
|
|
Lease payments
|
|
(701,782
|
)
|
|
Foreign exchange
|
|
(15,156
|
)
|
|
Balance, December 31, 2022 and 2023
|
$
|
-
|
|
(i) During the year ended December
31, 2022, the Company entered into lease agreements in respect to
rent of equipments, all of which expired in July 2022.
17. Share Capital and Reserves
a) Authorized share capital
At December 31, 2023, 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 December 31, 2023, the issued
share capital amounted to $71,809,999. The continuity of issued
share capital for the years presented is as follows:
|
|
|
Number of
common
shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021
|
|
74,683,801
|
|
$
|
57,783,570
|
|
|
Shares issued in private placement
(i)
|
|
13,111,119
|
|
|
5,900,003
|
|
|
Shares issued for services
arrangement (i)
|
|
2,222,222
|
|
|
1,000,000
|
|
|
Warrants issued (i)
|
|
-
|
|
|
(1,644,859
|
)
|
|
Share issue costs
|
|
-
|
|
|
(752,324
|
)
|
|
Exercise of warrants
|
|
13,501,367
|
|
|
7,377,666
|
|
|
Balance, December 31, 2022
|
|
103,518,509
|
|
|
69,664,056
|
|
|
Shares issued in private placement
(ii)
|
|
8,230,951
|
|
|
2,963,142
|
|
|
Shares issued for services
arrangement (iii)
|
|
933,334
|
|
|
420,000
|
|
|
Shares issued for debt settlement
(iv)
|
|
2,080,609
|
|
|
749,020
|
|
|
Warrants issued (ii)(iv)
|
|
-
|
|
|
(1,609,634
|
)
|
|
Share issue costs (ii)
|
|
-
|
|
|
(417,318
|
)
|
|
Exercise of warrants
|
|
78,000
|
|
|
40,733
|
|
|
Balance, December 31, 2023
|
|
114,841,403
|
|
$
|
71,809,999
|
|
(i) On August 30, 2022, Galantas
completed a private placement of 13,111,119 units at a price of
$0.45 per unit for aggregate gross proceeds of
$5,900,003.
In addition, 2,222,222 units were
sold to a third-party service provider on the same term as the
offering. The gross proceeds being $1,000,000 was offset against
certain fees to be paid to the third-party service provider by the
Company pursuant to a service agreement between the third-party
service provider and the Company dated August 30, 2022, for the
underground development at the Omagh Gold Project.
Each unit comprises one common share
and one-half common share purchase warrant. Each warrant will be
exercisable into one additional common share at an exercise price
of $0.55 until February 28, 2025.
The fair value of the 7,666,669
warrants was estimated at $1,644,859 using the Black-Scholes option
pricing model with the following assumptions: expected dividend
yield - 0%, expected volatility - 128.35%, risk-free interest rate
- 3.64% and an expected average life of 2.5 years.
The Company paid the agents a cash
commission equal to $355,320 and issue 820,000 non-transferable
broker warrants of the Company. Each broker warrant is exercisable
to acquire one common share at an exercise price of $0.45 until
August 30, 2024. The fair value of the 820,000 warrants was
estimated at $144,464 using the Black- Scholes option pricing model
with the following assumptions: expected dividend yield - 0%,
expected volatility - 109.13%, risk-free interest rate - 3.63% and
an expected average life of 2 years.
Melquart acquired 2,666,667 units
for consideration of $1,200,000. Following the offering, Melquart
holds 28,140,195 common shares, representing approximately 27.36%
of the issued and outstanding common shares on a non-diluted basis.
Ocean Partners acquired 461,112 units of the private placement, for
consideration of $207,500. Mario Stifano, a director of the
Company, acquired 55,556 units for consideration of
$25,000.
(ii) On March 27, 2023, the
Company closed a non-brokered private placement of 8,230,951 units
at a price of $0.36 per unit for gross proceeds of $2,963,142. Each
unit consists of one common share of the Company and one common
share purchase warrant, with each warrant entitling the holder to
purchase an additional common share at a price of $0.55 per share
until March 27, 2028. The fair value of the 7,924,841 warrants was
estimated at $1,284,806 using the Black-Scholes option pricing
model with the following assumptions: expected dividend yield - 0%,
expected volatility - 126.22%, risk-free interest rate - 2.96% and
an expected average life of 5 years.
The Company paid the agents a cash
commission equal to $146,966 and issued 407,962 non-transferable
broker warrants of the Company. Each broker warrant is exercisable
to acquire one common share at an exercise price of $0.36 until
March 27, 2025. The fair value of the 407,962 warrants was
estimated at $40,175 using the Black-Scholes option pricing model
with the following assumptions: expected dividend yield - 0%,
expected volatility - 99.18%, risk-free interest rate - 3.61% and
an expected average life of 2 years.
Ocean Partners acquired 691,666
units for consideration of $249,000 and Brendan Morris, an officer
of the Company, acquired 468,416 units for consideration of
$168,630.
(iii) The Company has entered
into an agreement to acquire the historical Gairloch drill and
exploration database (refer to note 11) for (i) a payment of
$420,000 (approximately GBP 252,153), to be satisfied through the
issuance of common shares of the Company based on the 5-day volume
weighted average price at the time of signing (subject to the
approval of the TSXV) and (ii) GBP 50,000 in cash. On April 13,
2023, the Company issued 933,334 common shares per terms of the
agreement.
(iv) On April 26, 2023, the
Company agreed to the terms of a proposed shares-for-debt
transaction with several arm's length creditors of the Company and
agreed to settle a total of approximately $749,020 of indebtedness
through the issuance of an aggregate of 2,080,609 units a deemed
price of $0.36 per unit. Each unit consists of one common share of
the Company and one common share purchase warrant, with each
warrant entitling the holder to purchase an additional common share
at a price of $0.55 per share until April 26, 2028. The fair value
of the 2,080,609 warrants was estimated at $324,828 using the
Black-Scholes option pricing model with the following assumptions:
expected dividend yield - 0%, expected volatility - 126.25%,
risk-free interest rate - 2.98% and an expected average life of 5
years.
c) Warrant reserve
The following table shows the
continuity of warrants for the years presented:
|
|
|
|
|
|
Weighted
average
|
|
|
|
|
Number of
|
|
|
exercise
|
|
|
|
|
warrants
|
|
|
price
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021
|
|
28,691,598
|
|
$
|
0.39
|
|
|
Issued (notes 17(b)(i) and
21(a)(iv))
|
|
8,861,669
|
|
|
0.54
|
|
|
Exercised
|
|
(13,501,367
|
)
|
|
0.39
|
|
|
Balance, December 31, 2022
|
|
24,051,900
|
|
|
0.45
|
|
|
Issued (notes 15, 17(b)(ii)(iv) and
21(a)(iv)(vi))
|
|
11,172,235
|
|
|
0.54
|
|
|
Exercised
|
|
(78,000
|
)
|
|
0.40
|
|
|
Expired
|
|
(15,487,231
|
)
|
|
0.40
|
|
|
Balance, December 31, 2023
|
|
19,658,904
|
|
$
|
0.54
|
|
The following table reflects the
actual warrants issued and outstanding as of December 31,
2023:
|
Expiry date
|
|
Number
of warrants
|
|
|
Grant date
fair value
($)
|
|
|
Exercise
price
($)
|
|
|
August 30, 2024
|
|
820,000
|
|
|
144,464
|
|
|
0.45
|
|
|
January 31, 2025
|
|
500,000
|
|
|
65,527
|
|
|
0.55
|
|
|
February 13, 2025
|
|
100,000
|
|
|
16,984
|
|
|
0.41
|
|
|
February 28, 2025
|
|
7,666,669
|
|
|
1,644,859
|
|
|
0.55
|
|
|
March 27, 2025
|
|
407,962
|
|
|
40,175
|
|
|
0.36
|
|
|
December 20, 2026
|
|
158,823
|
|
|
24,670
|
|
|
0.35
|
|
|
March 27, 2028
|
|
7,924,841
|
|
|
1,284,806
|
|
|
0.55
|
|
|
April 26, 2028
|
|
2,080,609
|
|
|
324,828
|
|
|
0.55
|
|
|
|
|
19,658,904
|
|
|
3,546,313
|
|
|
0.54
|
|
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 TSXV
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
TSXV.
The Company records a charge to the
consolidated statements of 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 years presented:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
average
|
|
|
|
|
Number of
|
|
|
exercise
|
|
|
|
|
options
|
|
|
price
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021
|
|
4,885,000
|
|
$
|
0.88
|
|
|
Granted (ii)
|
|
1,742,500
|
|
|
0.60
|
|
|
Expired
|
|
(255,000
|
)
|
|
1.35
|
|
|
Cancelled (i)
|
|
(220,000
|
)
|
|
0.94
|
|
|
Balance, December 31, 2022
|
|
6,152,500
|
|
|
0.78
|
|
|
Expired
|
|
(25,000
|
)
|
|
1.10
|
|
|
Cancelled (i)
|
|
(265,000
|
)
|
|
0.76
|
|
|
Balance, December 31, 2023
|
|
5,862,500
|
|
$
|
0.78
|
|
(i) The portion of the
estimated fair value of options granted in the current and prior
years and vested during the year ended December 31, 2023, amounted
to $353,712 (year ended December 31, 2022 - $1,470,418). In
addition, during the year ended December 31, 2023, 265,500 options
granted in the prior years were cancelled (year ended December 31,
2022 - 220,000 options cancelled).
(ii) On May 3, 2022, the
Company granted 1,742,500 stock options to directors, officers,
employees and consultants of the Company to purchase common shares
at $0.60 per share until May 3, 2027. The options will vest as to
one third immediately and one third on each of May 3, 2023 and May
3, 2024. The fair value attributed to these options was $900,000
and was expensed in the consolidated statements of loss and
credited to equity settled share-based payments reserve.
The following table reflects the
actual stock options issued and outstanding as of December 31,
2023:
|
Expiry date
|
Exercise
price ($)
|
Weighted average
remaining
contractual
life (years)
|
Number of
options
outstanding
|
Number of
options
vested
(exercisable)
|
Number of
options
unvested
|
|
February 13, 2024
|
0.90
|
0.12
|
85,000
|
85,000
|
-
|
|
June 27, 2024
|
0.90
|
0.49
|
100,000
|
100,000
|
-
|
|
May 19, 2026
|
0.86
|
2.38
|
3,635,000
|
3,635,000
|
-
|
|
June 21, 2026
|
0.73
|
2.47
|
425,000
|
425,000
|
-
|
|
August 27, 2026
|
0.86
|
2.66
|
20,000
|
20,000
|
-
|
|
May 3, 2027
|
0.60
|
3.34
|
1,597,500
|
1,065,000
|
532,500
|
|
|
0.78
|
2.60
|
5,862,500
|
5,330,000
|
532,500
|
18. Net Loss per Common Share
The calculation of basic and diluted
loss per share for the year ended December 31, 2023 was based on
the loss attributable to common shareholders of $8,568,140 (year
ended December 31, 2022 - $16,633,939) and the weighted average
number of common shares outstanding of 111,949,878 (year ended
December 31, 2022 - 89,401,620) for basic and diluted loss per
share. Diluted loss did not include the effect of 19,658,904
warrants (year ended December 31, 2022 - 24,051,900) and 5,862,500
options (year ended December 31, 2022 - 6,152,500) for the year
ended December 31, 2023, as they are anti-dilutive.
19. Revenues
Shipments of concentrate under the
off-take arrangements commenced during the second quarter of 2019.
Concentrate sales provisional revenues during the year
ended December 31, 2023 totalled approximately US$1,103,532
(CAD$1,491,453) (year ended December 31, 2022 - US$608,000
(CAD$823,475). However, until the mine reaches the commencement of
commercial production, the net proceeds from concentrate sales will
be offset against Development assets.
20. Taxation
(a) Provision for income taxes
The reported recovery of income
taxes differs from amounts computed by applying the statutory
income tax rates to the reported loss before income taxes due to
the following:
|
Year
Ended December 31,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
$
|
(8,568,140
|
)
|
$
|
(16,633,939
|
)
|
|
Expected tax recovery at statutory
rate of 26.5% (2022 - 26.5%)
|
|
(2,270,557
|
)
|
|
(4,407,994
|
)
|
|
Difference resulting
from:
|
|
|
|
|
|
|
|
Foreign tax rate
differential
|
|
93,504
|
|
|
191,802
|
|
|
Stock-based compensation
|
|
93,734
|
|
|
389,661
|
|
|
Share issue costs directly in
equity
|
|
(96,650
|
)
|
|
(128,866
|
)
|
|
Permanent differences and
other
|
|
(630,248
|
)
|
|
1,587,816
|
|
|
Change in deferred income tax assets
not recognized
|
|
2,810,217
|
|
|
2,367,581
|
|
|
|
$
|
-
|
|
$
|
-
|
|
(b) Deferred tax balances
The temporary differences and unused
tax losses that give rise to deferred income tax balances are
presented below:
|
As
at December 31,
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax assets
(liabilities)
|
|
|
|
|
|
|
|
Losses carried
forward
|
$
|
17,696,034
|
|
$
|
14,600,831
|
|
|
Share issue costs
and other
|
|
263,746
|
|
|
270,340
|
|
|
Non-current
assets
|
|
(3,408,901
|
)
|
|
(3,130,509
|
)
|
|
Deferred tax
assets not recognized
|
|
(14,550,879
|
)
|
|
(11,740,662
|
)
|
|
|
$
|
-
|
|
$
|
-
|
|
(c) Losses carried forward
As at December 31, 2023, the Company
had non-capital losses carried forward, available to offset future
taxable income for income tax purposes as follows:
|
Expires
|
2026
|
$
|
1,064,484
|
|
|
|
2027
|
|
598,595
|
|
|
|
2029
|
|
373,962
|
|
|
|
2030
|
|
440,512
|
|
|
|
2031
|
|
993,770
|
|
|
|
2032
|
|
600,689
|
|
|
|
2033
|
|
1,100,268
|
|
|
|
2034
|
|
906,488
|
|
|
|
2035
|
|
884,526
|
|
|
|
2036
|
|
901,063
|
|
|
|
2037
|
|
772,787
|
|
|
|
2038
|
|
891,330
|
|
|
|
2039
|
|
1,027,232
|
|
|
|
2040
|
|
1,321,064
|
|
|
|
2041
|
|
1,409,184
|
|
|
|
2042
|
|
2,173,300
|
|
|
|
2043
|
|
2,557,630
|
|
|
Indefinite
|
|
|
51,566,359
|
|
|
|
|
$
|
69,583,243
|
|
At December 31, 2023, the potential
benefit of these losses and deductible temporary differences in
excess of the deferred tax liabilities have not been recognized in
these consolidated financial statements as it is not considered
probable that sufficient future tax profit will allow the deferred
tax assets to be recovered.
21. Related Party Disclosures
Related parties pursuant to IFRS
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 exchange
amount 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:
|
|
|
|
Year Ended
|
|
|
|
|
|
December
31,
|
|
|
|
|
|
2023
|
|
|
2022
|
|
|
Interest on related party
loans
|
(i)
|
$
|
729,033
|
|
$
|
554,073
|
|
(i) Refer to note
21(a)(iv).
(ii) Refer to note
17(b).
(iii) Refer to note
15.
(iv) On May 14, 2021, the
maturity date of the US$1.6 million loan facility with Ocean
Partner due on December 31, 2021 has been extended to December 31,
2023. Ocean Partners and the Company have a common director.
Interest may be deferred and added to the balance outstanding until
March 31, 2022, at which point interest will be paid
monthly.
On February 3, 2022, the Company
announced the closing of the loan agreement for US$1.06 million
with Ocean Partners. Ocean Partners and the Company have a common
director. Terms of the loan agreement are:
· The
loan matured on July 31, 2022.
· The
loan will bear interest at an annual rate of 10% compounded monthly
payable upon repayment of the loan.
· US$20,000 structuring fee has been paid to Ocean
Partners.
· US$40,000 consulting fee will be paid to Ocean
Partners.
· 250,000 warrants have been granted to Ocean Partners, which
will be exercisable for a period of 12 months at an exercise price
of $0.50. The bonus warrants are subject to a hold period under
applicable securities laws and the rules of the TSXV, expiring on
June 4, 2022. The fair value of the 250,000 warrants was valued at
$51,000 using the following Black-Scholes option pricing model with
the following assumptions: expected dividend yield - 0%, expected
volatility - 107%, risk-free interest rate - 1.22% and an expected
average life of 1 year.
· US$40,000 extension fee was paid to Ocean Partners if the
Company elects to extend the loan for a further six months from the
maturity date. The Company exercised its option to extend the
US$1.06 million loan for a further six months, to January 31, 2023
by paying the US$40,000 extension fee to Ocean Partners.
Proceeds from the loan will be used
for further development of the Omagh mine in Northern Ireland and
working capital. Subsequent to year end, this loan was converted
into a convertible debenture. Refer to note 24(i).
(a) The Company entered into the
following transactions with related parties:
On August 3, 2022, the Company
announced the closing of the loan agreement for US$530,000 with
Ocean Partners. Terms of the loan agreement are:
· The
loan matures on January 31, 2023.
· The
loan will bear interest at an annual rate of 12% compounded monthly
and repayable in full on the maturity date.
· US$10,000 commitment fee has been paid to Ocean
Partners.
· 125,000 bonus warrants have been granted to Ocean Partners,
which will be exercisable for a period of 12 months at an exercise
price of $0.48. The bonus warrants are subject to a hold period
under applicable securities laws and the rules of the TSXV,
expiring on July 25, 2023. The fair value of the 125,000 warrants
was valued at $23,000 using the following Black-Scholes option
pricing model with the following assumptions: expected dividend
yield - 0%, expected volatility - 95.09%, risk-free interest rate -
3.12% and an expected average life of 1 year.
· US$20,000 extension fee will be paid to Ocean Partners if the
Company elects to extend the loan for a further six months from the
maturity date.
Subsequent to year end, this loan
was converted into a convertible debenture. Refer to note
24(i).
As at December 31, 2023, the Company
owes Ocean Partners $5,673,150 (December 31, 2022 - $4,978,069)
which is recorded as due to related parties on the consolidated
statement of financial position.
|
|
|
2023
|
|
|
2022
|
|
|
Balance, beginning of year
|
$
|
4,978,069
|
|
$
|
2,444,376
|
|
|
Loan received
|
|
-
|
|
|
2,062,693
|
|
|
Less bonus warrants
|
|
-
|
|
|
(74,000
|
)
|
|
Share issue
costs (1)(2)
|
|
-
|
|
|
(93,444
|
)
|
|
Advance
|
|
-
|
|
|
93,284
|
|
|
Repayment
|
|
(24,735
|
)
|
|
(524,255
|
)
|
|
Accretion
|
|
116,569
|
|
|
391,128
|
|
|
Interest
|
|
729,033
|
|
|
554,073
|
|
|
Foreign exchange
adjustment
|
|
(125,786
|
)
|
|
124,214
|
|
|
Balance, end of year
|
|
5,673,150
|
|
|
4,978,069
|
|
|
Less
current balance
|
|
(5,673,150
|
)
|
|
(4,978,069
|
)
|
|
Due
to related parties - non-current balance
|
$
|
-
|
|
$
|
-
|
|
(v) In December 2022, the
Company entered into an agreement (the "Trading Agreement") with
Ocean Partners, whereby Ocean Partners has sold on behalf of
Galantas call options on 6,000 ounces of gold at 500 ounces per
month from February 2024 to January 2025 at a strike price of
US$1,775 per ounce for proceeds of US$804,000 to Galantas (an
option premium of US$134 per gold ounce). Proceeds from the sale
was used to fund development of the underground mining operations
at the Omagh Gold Project in Northern Ireland and working
capital.
Pursuant to the Trading Agreement,
and in return for Ocean Partners facilitating the call option sale
and agreeing to maintain all margin requirements on Galantas'
behalf, which Galantas has determined has a value of at least
$150,000, Galantas has agreed to grant 500,000 warrants to Ocean
Partners at an exercise price of $0.55 expiring on January 31,
2025. The warrants were subject to a hold period under applicable
securities laws and the rules of the TSXV. The fair value of the
500,000 warrants was valued at $65,527 using the following
Black-Scholes option pricing model with the following assumptions:
expected dividend yield - 0%, expected volatility - 97.85%,
risk-free interest rate - 3.73% and an expected average life of 1.9
year.
In October 2023, the Trading
Agreement was terminated and converted to a loan.
As at December 31, 2023, balance
related to the loan is recorded as other liability on the
consolidated statement of financial position is $1,187,437
(December 31, 2022 - $1,085,426).
Subsequent to year end, the loan was
converted to convertible debenture. Refer to note 24(i).
(vi) On February 13, 2023, the
Company announced that it entered into a loan agreement for
$580,392 (GBP 347,000) with London-based family office Melquart
Limited ("Melquart"), an insider and control person of the Company
(as defined by the TSXV). The loan is to be used for the initial
lease payment for the Gairloch Project in Scotland (refer to note
11). The loan is payable 24 months from the date of the loan
agreement and will bear interest at an annual rate of 12% payable
upon repayment of the loan. The Company granted to Melquart a
security interest in the lease for the Gairloch Project. As at
December 31, 2023, the amount of interest accrued is $64,095 (GBP
38,068).
During the year ended December 31,
2023, the Company recorded accretion expense of $7,077 in the
consolidated statements of loss in regards with this loan
facility.
During the year ended December 31,
2023, the Company recorded interest expense of $64,095 in the
consolidated statements of loss in regards with this loan
facility.
As consideration for providing the
loan, Melquart received 100,000 warrants of Galantas. Each bonus
warrant are exercisable into one common share of Galantas at an
exercise price of $0.41, with said warrants expiring on February
13, 2025. The fair value of the 100,000 warrants was estimated at
$16,984 using the following Black-Scholes option pricing model with
the following assumptions: expected dividend yield - 0%, expected
volatility - 97.54%, risk-free interest rate - 3.47% and an
expected average life of 1.90 years.
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Melquart Limited
|
|
|
|
|
|
|
|
Financing facilities, beginning of
period
|
$
|
-
|
|
$
|
-
|
|
|
Financing facility
received
|
|
580,392
|
|
|
-
|
|
|
Less bonus warrants issued
|
|
(16,984
|
)
|
|
-
|
|
|
Accretion
|
|
7,077
|
|
|
-
|
|
|
Interest
|
|
64,095
|
|
|
-
|
|
|
Foreign exchange
adjustment
|
|
3,852
|
|
|
-
|
|
|
Balance, end of year
|
|
638,432
|
|
|
-
|
|
|
Less
current portion
|
|
-
|
|
|
-
|
|
|
Due
to related parties - non-current balance
|
$
|
638,432
|
|
$
|
-
|
|
(b) Remuneration of officer and
directors of the Company was as follows:
|
|
|
Year Ended
|
|
|
|
|
December
31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Salaries and
benefits (1)
|
$
|
450,861
|
|
$
|
558,941
|
|
|
Stock-based compensation
|
|
263,333
|
|
|
930,223
|
|
|
|
$
|
714,194
|
|
$
|
1,489,164
|
|
(1) Salaries
and benefits include director fees. As at December 31, 2023, due to
directors for fees amounted to $140,000 (December 31, 2022 -
$70,000) and due to officers, mainly for salaries and benefits
accrued amounted to $25,106 (December 31, 2022 - $24,465), and is
included with due to related parties.
(c) As at December 31, 2023,
the issued shares of Galantas total 114,841,403. Ross Beaty owns
3,744,747 common shares of the Company or approximately 3.3% of the
outstanding common shares. Premier Miton owns 4,848,243 common
shares of the Company or approximately 4.2%. Melquart owns,
directly and indirectly, 28,140,195 common shares of the Company or
approximately 24.5% of the outstanding common shares of the
Company. G&F Phelps owns 5,353,818 common shares of the Company
or approximately 4.7%. Eric Sprott owns 10,166,667 common shares of
the Company or approximately 8.9%. Mike Gentile owns 6,217,222
common shares of the Company or approximately 5.4%.
Excluding the Melquart Ltd, Premier
Miton, Mr. Beaty, Mr. Phelps, Mr. Sprott and Mr. Gentile
shareholdings discussed above, the remaining 49% 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 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.
(d) Additional disclosures
required for Alternate Investment Market ("AIM")
reporting:
Pursuant to the AIM Rules for
Companies (the "AIM Rules"), a related party is any person who is;
a director of an AIM company, a substantial shareholder (any person
who has a shareholding greater than 10%), their associates, or any
person who was a director of an AIM company or a substantial
shareholder within the twelve months preceding the date of the
transaction.
1. As described in note
21(a)(vi), Melquart i participated in the
private placement in February 2023.
2. Related party balances Loan
accounts - owed to related parties
|
|
|
December
31,
|
|
|
|
|
2023
|
|
|
2022
|
|
|
Melquart
|
(i)
|
$
|
638,432
|
|
$
|
-
|
|
|
Ocean Partners
|
(ii)
|
|
5,673,150
|
|
|
4,978,069
|
|
|
Total
|
|
$
|
6,311,582
|
|
$
|
4,978,069
|
|
(i) Pursuant to the AIM Rules,
Melquart is deemed to be a related party of the Company by virtue
of being a substantial shareholder in the Company.
(ii) Pursuant to IFRS, Ocean
Partners are deemed to be a related of the Company as they have a
common director.
|
|
|
Year
Ended
|
|
|
|
|
December
31,
|
|
|
Salaries and benefits
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Mario Stifano, CEO
|
$
|
197,748
|
|
$
|
246,894
|
|
|
Alan Buckley, CFO
|
|
113,113
|
|
|
172,047
|
|
|
Brent Omland, director
|
|
30,000
|
|
|
30,000
|
|
|
David Cather, director
|
|
30,000
|
|
|
30,000
|
|
|
James B. Clancy, director
|
|
30,000
|
|
|
30,000
|
|
|
Roisin Magee, director
|
|
50,000
|
|
|
50,000
|
|
|
|
$
|
450,861
|
|
$
|
558,941
|
|
The Company awarded incentive stock
options on the Company's common shares to directors and officers in
accordance with the terms of the Company's incentive Stock Option
Plan as set out in the below table. The table also shows the fair
value of stock received during the year using the Black-Scholes
option pricing model.
|
|
|
|
Number of
options
|
|
|
Share-based
compensation
|
|
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
Notes
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mario Stifano, CEO
|
17(d)
|
|
-
|
|
|
500,000
|
|
$
|
142,744
|
|
$
|
498,713
|
|
|
Alan Buckley, CFO
|
17(d)
|
|
-
|
|
|
125,000
|
|
|
29,795
|
|
|
97,427
|
|
|
Brendan Morris, COO
|
17(d)
|
|
-
|
|
|
125,000
|
|
|
22,928
|
|
|
63,186
|
|
|
Brent Omland, director
|
17(d)
|
|
-
|
|
|
62,500
|
|
|
17,673
|
|
|
81,754
|
|
|
David Cather, director
|
17(d)
|
|
-
|
|
|
62,500
|
|
|
14,897
|
|
|
48,713
|
|
|
James B. Clancy, director
|
17(d)
|
|
-
|
|
|
62,500
|
|
|
9,006
|
|
|
48,713
|
|
|
Roisin Magee, director
|
17(d)
|
|
-
|
|
|
92,500
|
|
|
26,290
|
|
|
91,717
|
|
|
|
|
|
-
|
|
|
1,030,000
|
|
$
|
263,333
|
|
$
|
930,223
|
|
22. 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 Flintridge. 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:
|
December 31, 2023
|
|
United
Kingdom
|
|
|
Canada
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
$
|
1,831,473
|
|
$
|
2,376,856
|
|
$
|
4,208,329
|
|
|
Non-current assets
|
$
|
26,702,212
|
|
$
|
1,673,478
|
|
$
|
28,375,690
|
|
|
Revenues
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
December 31, 2022
|
|
United
Kingdom
|
|
|
Canada
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
$
|
1,659,045
|
|
$
|
1,273,833
|
|
$
|
2,932,878
|
|
|
Non-current assets
|
$
|
27,271,081
|
|
$
|
139,741
|
|
$
|
27,410,822
|
|
|
Revenues
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
23. Contingency
During the year ended December 31,
2010, the Company's subsidiary Omagh received a payment demand from
Her Majesty's Revenue and Customs ("HMRC") in the amount of
$512,333 (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. Omagh believed this claim to be without merit. An
appeal was lodged with the Tax Tribunals Service and the hearing
started at the beginning of March 2017 and following a number of
adjournments was completed in August 2018. During the year ended
December 31, 2019, the Tax Tribunals Service issued their judgement
dismissing the appeal by Omagh in respect of the assessments. A
provision has now been included in the consolidated financial
statements in respect of the aggregates levy plus interest and
penalty.
There is a contingent liability in
respect of potential additional interest which may be applied in
respect of the aggregates levy dispute. Omagh is unable to make a
reliable estimate of the amount of the potential additional
interest that may be applied by HMRC.
24. Events After the Reporting
Period
(i) On February 5, 2024, the
Company announced that it closed a debt settlement transaction,
pursuant to which the Company settled US$2,711,000 of indebtedness
owing to Ocean Partners through the issuance of US$2,711,000
aggregate principal amount of unsecured convertible debentures of
the Company.
The convertible debenture issued in
connection with the debt settlement were issued on substantially
the same terms as the unsecured convertible debentures closed on
December 20, 2023 (refer to note 15).
The debt settlement remains subject
to the final acceptance of the TSXV. The convertible debentures
issued pursuant to the debt settlement are subject to a four-month
hold period which will expire on June 6, 2024.
(ii) On February 13, 2024,
125,000 stock options with exercise price of $0.90 expired
unexercised.