TIDMGLR
RNS Number : 1124R
Galileo Resources PLC
08 September 2014
Galileo Resources Plc
("Galileo" or the "Company" or the "Group")
8 September 2014
Audited Results for the year ended 31 March 2014
Notice of AGM
Galileo (AIM: GLR), the exploration and development mining
company, announces its audited results for the year ended 31 March
2014.
Highlights
The Glenover Project, South Africa
-- Project more clearly defined by optimisation work with
Dorfner Anzaplan (Anzaplan), metallurgical consultant
-- Completion of the optimization test work at Anzaplan on the sulphuric acid process
-- Completion of testwork to pre-feasibility level using alternative nitric-acid process
-- Demonstrated significantly potentially better metallurgical
results and economics than the process using sulphuric acid
-- Management assessing the overall financial impact and optimizing the Project definition
-- Company intends to consolidate onthe advances made including
securing the necessary strategic fertiliser and funding
partnerships to move project towards production and commissioning a
full project pre-feasibility study. Glenover Phosphate Pty Ltd
(Glenover) iscurrently considering bids for this study
St Vincent Minerals Acquisition
-- Acquisition completed in May 2014 - assets includethe
resource-estimate level Gabbs gold-copper property, located in Nye
County, Nevada, USA and a number of other gold-copper properties,
Nevada, USA, including Ferber Property in Elko County
-- The Company executed two Exploration Lease and Option to
PurchaseAgreements to consolidate its Ferber position in July
2014
Colin Bird, Chairman of Galileo, commented: "The period under
review has been a period of significant progression for the
Company, consolidating our Glenover Rare Earth/Phosphate project in
South Africa as well as the post year end completion of the
acquisition of the St Vincent Minerals portfolio which includes the
Gabbs copper/gold project in Nevada.
"The former two projects now represent the core assets within
the Group and we believe respectively represent a significant
strategic investment in Glenover which is well placed in both the
phosphate and rare earth arenas and the Gabbs resource, which has
the potential to become a world class copper/gold asset."
A copy of this announcement is available on the Company's
website www.galileoresources.com. You can also follow Galileo on
Twitter: @GalileoResource.
For further information, please contact:
Colin Bird, Chairman Tel +44 (0) 20 7581 4477
Brian Gavin, CEO Tel +1 509 263 7213
Andrew Sarosi, Technical Director Tel +44 (0) 1752 221937
Beaumont Cornish Limited: Nominated Advisor Tel +44 (0)20 7628 3396
and Broker
Roland Cornish
Shore Capital Stockbrokers Limited: Joint Tel +44 (0)20 7408 4090
Broker
Jerry Keen/Toby Gibbs
Gable Communications Tel +44 (0)20 7193 7463
John Bick M +44 (0) 7872 061007
Chairman's Report
The year under review was one of consolidation of our interests
in the Glenover Rare Earth/Phosphate Project and the post year end
acquisition of St. Vincent Minerals Inc. (Acquisition), the owner
of significant Nevada, USA based copper and gold interests.
The Glenover Project was more clearly defined by optimisation
work with Anzaplan, the German metallurgical consultant. Further
work with Guangzhou Research Institute in China was completed and
announced during the year. This work primarily involved the use of
nitric acid as opposed to sulfuric acid and demonstrated that a
viable alternative processing route was available. The major
benefits of the nitric acid route are that, in the process it
produces some high demand, valuable nitrogen and calcium based
fertiliser products.
It is the view of the board that Glenover represents a
significant strategic investment which is well placed in both, the
phosphate and rare earth evolving project arenas. Like all
projects, irrespective of commodity, the driving economic force is
of course the price of the commodity. Currently there exists some
considerable uncertainty in the forward pricing of rare earth
products whilst phosphates remain reasonably predictable against
supply/demand fundamentals. To its benefit, Glenover has a basket
of rare earth, some of which is identified as critical rare earth,
and as such should be well positioned in any future rare earth
price progression.
In previous Chairman's reports I have mentioned the extreme
difficulties that smaller resource companies are experiencing in
financing work to release the values contained in their assets. The
year under review was no better than the previous five years and
many companies began facing distress as opposed to difficulties.
The consequence of this was that quality project availability was
better than seen for many years. The board therefore decided to
balance country and commodity risk by acquiring assets which fitted
the Glenover model. The Glenover model had prior abundant technical
information and positive studies, which mitigated the high level of
risk associated with conceptual exploration. After reviewing many
opportunities at desktop level, Galileo identified St. Vincent
Minerals Inc. as a prime target, fitting this model, mainly because
of its exploration history, location and prospectivity.
The main project, detailed later, is in the south of Nevada
known as Gabbs. This project is maturing and has the potential to
be considered as a "world class" copper/gold project. It became
apparent in March of this year that considerable gold potential
existed near one of our projects known as Ferber which is only 12
km from a rapidly evolving exploration site owned by Pilotgold,
listed in Toronto. The whole property package of St. Vincent
Minerals Inc. represents exciting prospects in what is considered
to be one of the world's most friendly jurisdictions for
exploration and mining. The mining world in general is not well
considered by major investors and there is much talk about the
"commodity super cycle " being over. We are seeing significant
consolidation and disposal of production capability by the major
mining companies. This is being driven by the need to provide the
necessary investment returns to shareholders and to give
shareholders and the investing world the confidence of focus.
The changing exploration sector again provides many
opportunities for the smaller cap mining resource sector with
access to capital being the main hurdle. The forecast for mid and
long term base metal requirements coupled with lower exploration
success will inevitably lead to a financing renaissance for our
sector, a rebirth which is long awaited and overdue. My past
experience tells me that when forecasters are professing the end of
cycles, they are more likely just about to begin and I remain
cynical of such sweeping generalisations in a rapidly changing and
developing world.
Consistent with the decision to broaden the commodity and
country base, it was decided to abandon any further interest in the
Company's other various rare earth projects in southern Africa.
During the period under review the Company lost GBP4,164,494
which represents 4.7 pence per ordinary share compared to a loss of
GBP1,839,828 2013 and loss per share of 2.2 pence per ordinary
share for the comparative period.
I would like to thank my fellow board members and management for
their hard work and support during a year of better understanding
for Glenover and the exciting new acquisition of St. Vincent. I
sincerely hope that the coming year identifies a suitable major
partner for Glenover and allows us to add value to our Nevada
project portfolio to the benefit of all shareholders.
Operations Report
Summary
Galileo's (Company) key asset is the Glenover Rare Earth
project, (the Glenover Project or the Project) held through its
shareholding in Glenover. The project is Black Economic Empowered
(BEE) through a 26% ownership by Galagen (Pty) Ltd in Glenover.
Galileo's funding of the project has driven the feasibility
agenda, resulting in both a SAMREC-compliant resource statement
(Annual report 2013) and during the period under review a
Preliminary Economic Assessment (PEA), proving that the project is
both technically feasible and economically an attractive investment
using a process based on sulphuric acid and tested at Anzaplan in
Germany.
The Company through Glenover continued to optimise the Anzaplan
testwork (now completed) against key assumptions made in the
PEA.
Galileo funded further testwork on Glenover ore to
pre-feasibility level at Guangzhou Research Institute of
Non-ferrous Metals (GZRINM) in China using an alternative process
based on nitric acid, which has demonstrated significantly
potentially better metallurgical results and economics than the
process using sulphuric acid.
The Company commenced seeking and continues to seek a strategic
partner to advance this Project to feasibility study level.
In the period under review the Company agreed to acquire Toronto
(Ontario) SVM by way of issuing 21,650,000 new Galileo ordinary
shares of par 5p (Galileo Shares) at a strike rice of 11p in
exchange for the entire issued share capital of SVM. SVM's assets
include a resource-estimate level Gabbs gold-copper property (Gabbs
Property) in Nye County and a number of other properties in Nevada,
USA
Brian Gavin ex President and CEO of SVM, was appointed CEO elect
of Galileo with special responsibility for US operations, replacing
Colin Bird, who remains executive chairman of the Company.
The Company elected not to pursue the Nkombwa Hill rare earth
project (Nkombwa) in Zambia and other rare-earth opportunities in
Mozambique and Spain under its earn-in agreement with Rare Earth
International Limited and so holds no further interest in these
projects.
The Glenover Project
Glenover holds the prospecting rights to a large concession
containing phosphates and other potentially economic minerals in
the North West Province of South Africa. Within the license area is
an open pit, formerly mined for phosphates by Gold Fields of South
Africa Ltd for approximately 20 years (ceasing in the early 1980's)
and subsequently acquired by Fer-Min-Ore. Historical data suggested
that the phosphate and surrounding rocks contained Rare Earth
Elements (REEs), which was confirmed by Glenover's sampling, during
2012, of the previously mined "low" phosphate grade stockpiles on
surface.
The concession area is a large pyroxenite and carbonatite
intrusion, which globally, outside of China, is a much sought after
geological environment for hosting potential REE deposits.
The surface stockpiles, which contain significant quantities of
REEs, constitute a major potential benefit to the Company, as these
stockpiles represent potential feed for immediate processing
without mining cost.
Glenover has applied for the renewal of the prospecting rights,
which application is pending approval from the South African
Department of Mineral Resources (DMR).
Since completing the positive PEA of the Project, Glenover in
which the Company now holds 33.99% interest, continued with and
completed optimisation work on its sulphuric acid processing route.
It also commissioned testwork by GZRINM in China on an alternative
ore processing route involving bulk rare earth-phosphate flotation
and nitric acid as the rare-erath and phosphate lixiviant for the
concentrate. An advantage of this route over the PEA sulphuric acid
route, is that the reagents consumed in the process are converted
into saleable nitrogen and calcium based phosphate fertilizer
products.
Glenover advanced all the critical metallurgical test work to
Pre-Feasibility Study (PFS) status.
Sulphuric acid process
The Company completed the optimization test work at Anzaplan on
the sulphuric acid process, in December 2013, against key
assumptions made in the PEA and aimed at improving project
fundamentals by increasing the recovery of the phosphate component
in the ore to sealable fertilizer product and streamlining the flow
sheet.
Nitric Acid Process
Glenover completed the GZRINM test work to prefeasibility-study
level in December 2013 with positive results. The Company directors
believe this test work has added significant value toboth its
investment in Glenoverand the GlenoverProject.
The nitric acid process could potentially produce more highly
saleable products, than those from the sulphuric acid process,
which former process includes mixed rare earth oxides,
nitro-phosphate and calcium nitrate fertilisers. Internal project
finance studies suggest that Glenovercould be viable from these
fertiliser products alone thus making the cost of rare earth oxide
production potentially much lower than previously anticipated.
The results also indicate that niobium can be recovered, which
providesGlenover with the potential to an additional increased high
value by-product, if economically viable to process.
GZRINM Test Results Highlights
The highlights of the GZRINM metallurgy referred to by Glenover
as the Nitrophos-Rare Earth (NPRE) process,are as follows:
Ore Feed: 400 000 tonnes per annum (TPA) (over 25 year
mine-life)
--------------------- -------------------------------------------------
Phosphate recovery: 63% overall
--------------------- -------------------------------------------------
Fertiliser Products: Granular NP (nitro-phosphate) - 310 000TPA
Calcium Nitrate 190 000TPA
--------------------- -------------------------------------------------
Overall REO recovery: 53% (into mixed REO concentrate) and 24%
(into an intermediate
Nb-REO concentrate for further processing)
--------------------- -------------------------------------------------
Final REO product: +90% purity mixed REO Concentrate: 5 500TPA
--------------------- -------------------------------------------------
Project Summary
The Company and Glenover have now completed the major phase of
its PFS-levelmetallurgy. This included both the update and
optimisation of the previous Preliminary Economic Assessment (PEA)
metallurgy work carried out by Anzaplan, as well asthe alternative
PFS-level process metallurgy by GZRINM. Both programmes were
completed in December 2013. Keyimprovements made to the previously
reported PEA flow sheet (7March 2013), which was based on whole-ore
sulphuric acid cracking process (Anzaplan), include the potential
economic value-add recovery of 93% of the phosphate in the ore into
PK (phosphate-potassium) a granular fertiliser product.
The GZRINM metallurgy developed over 14 months provides a
potentially superior and well-understood process, that offers the
market potentially highly saleable product packages - Phosphate
fertiliser, mixed Rare Earth Oxides(REO), a value-addcalcium
nitrate by-product and the certainty of Niobium (Nb) credits,if
commercially recoverable, from the Nb-REO intermediate concentrate
(Nb-REO).
Based on the NPREProcess work data, Glenover internally
completed basic project operational economics, which suggest that
Glenover could potentially be a very low / near zero cost rare
earth producer i.e. Glenover could be viable from the production of
fertiliser products only, while still operatingthe rare earth
recovery circuit.
The Company's logistical studies highlight potentially optimal
construction of a processing facility on the east coast of (Natal)
in South Africa, which Glenover believes should simplify its ore
and reagent logistics and provide a suitable and cost effective
location relative to potentialexport markets. In order to secure an
ore-to-coast logistics solution, Glenoveris in discussions with a
local coal mining entity, which is in the process of constructing a
railline in the Waterberg that is set to pass within20 kilometres
of the Glenovermine site.
As far as its markets are concerned, Glenover intends selling
its fertiliser products into the Southern African, East African and
Indian markets and marketing its Rare Earths globally. With respect
to the latter, discussions are in progress on collaborating with a
strategic Rare Earth processing and marketing corporation with an
established refinery. A letter of interest has recently been signed
with this entity.
Going Forward - 2014
The PEA and subsequent optimization work covered all aspects of
a proposed Rare Earth/phosphate operation and the Company intends
to rework the PEA to assess the overall financial impact per se and
against the results from the Chinese process route in order to
select the final route for project definition.
During 2014, the Company intends to consolidate on the advances
made including securing the necessary strategic fertiliser and
funding partnerships to move the Glenover project towards
production and commissioning a full project pre-feasibility study.
Glenover is currentlyconsidering bids for this study.
St Vincent MineralsInc. Acquisition
During the period under review with difficult market and
financing conditions prevailing, the Company assessed other
opportunities in the smaller resources company sector, which the
directors believed presented unprecedented value and identified a
gold-copper opportunity in the prolific and mining-friendly state
of Nevada USA.
To this end, the Company agreed to acquire the entire issued
share capital of Toronto (Ontario) incorporated SVM whose assets
include the Gabbs Propertylocated in Nye County, Nevada, USA and a
number of other gold-copper properties, Nevada, USA, including
Ferber Property in Elko County, The Acquisition, valued at CDN$4.3
million, was agreed by way of a share exchange, issuing 21,650,000
Galileo Shares at a strike rice of 11p pursuant to a Business
Combination Agreement (Business Combination) signed on28 January
2014 between Galileo, its special purpose wholly-owned Canadian
subsidiary 2404119Ontario Inc. (Subco) and SVM including an
Amalgamation Agreement betweenSVM and Subco under the Ontario
Business Corporations Act.
The resulting Galileo shareholders agreed to have an
8-monthslock-up period, during which these shares may not be
disposed of without the prior written consent of Galileo (not to be
unreasonably withheld or delayed).
Gabbs Property Acquired
Gabbs Property, Nye County, Nevada
The Gabbs Property is located in the Fairplay Mining District,
on the southwest flank of the Paradise Range, about 9 km (5.6
miles) south-southwest of the town of Gabbs, Nye County, Nevada.
The Gabbs Property consists of 355 unpatented lode claims and 1
patented lode claim which constitute a 28-square kilometre
contiguous claim block, which contains at least three separate
mineralised Au-Cu porphyries and one epithermal gold prospect.
Interpretation of extensive geophysical surveys over theGabbs
Property postulates the potential for a major porphyry feeder
source at depth for these separate mineralised zones.
Geology
The Gabbs Property is underlain by a stratigraphic sequence of
intermediate volcanic rocks and shallow marine sediments that are
intruded by a large mafic to ultramafic igneous gabbroic
complex.
Monzonite bodies intrude the Triassic units and gabbroic
complex. These intrusive bodies are extremely significant as they
host porphyry style Au-Cu mineralization found at the Sullivan,
Lucky Strike and Gold Ledge mineralized areas on the property. The
Car Body prospect by comparison is classified as an epithermal gold
system.
Overlying the pre-Tertiary (Triassic) rocks are thick sequences
of Tertiary intermediate and felsic volcanic rocks.
Gabbs Resource
SVM completed a 2,400 metre (7,875 feet) drilling programme
consisting of 10 reversecirculation (RC) holes in March- April of
2011. The goal of this drilling was to expandthe area of known
mineralization at the Lucky Strike area (6 holes) and test
geophysic IP (induced polarisation) anomalies (4 holes) identified
by previous owner, Newcrest. Gold mineralization was encountered in
7 of 10 holes. Highlights of the three most interesting holes
include extension of the mineralization 2,000 feet (610 metres) at
Lucky Strike and encountering mineralization in a new area
identified by an IP anomaly south of the Sullivan mineralized
zone.
Theindependently preparedInferred Mineral Resource estimate
(details of which are available on the Company's website
www.galileoresources.com.) is based on 494 drill hole records,
consisting of 397 historical drill holes, 87 drill holes completed
by Newcrest and ten RC drill holes recently completed by St.
Vincent. Thehistorical drill holes do not meet NI43-101 and CIM
guidelines forthe public reporting of a mineral resource.
Historical drill holes were therefore used only to define the
extent of the mineralized deposits, and historical assay grades
were not incorporated into the mineral resource estimate. The
Mineral Resource estimate for the Gabbs Property is reported at a
cut-off grade of 0.40 g/t Au for the oxide deposits and 0.30 g/t Au
for the non-oxide deposits (see Table 1). A summary of the mineral
resource sensitivity is presented in Table 2.
Table 1 Resource Estimate
Deposit Au Cut-off 1000 t Au Au 1000 oz Cu ppm AuEq g/t AuEq 1000 oz
g/t g/t
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Sullivan
Oxide 0.40 9,935 0.80 254.5 2,463 0.80 254.5
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Sullivan
Non- Oxide 0.30 10,782 0.47 161.6 2,185 0.83 288.1
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Car Body
Oxide 0.40 836.5 1.44 38.6 ---- 1.44 38.6
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Car Body
Non- Oxide 0.30 44.4 0.78 1.1 ---- 0.78 1.1
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Gold
Ledge Oxide 0.40 108.2 0.47 1.6 2,691 0.47 1.6
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Gold
Ledge Non- Oxide 0.30 760.6 0.61 15.0 1,800 0.91 22.3
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Lucky
Strike Oxide 0.40 243.5 0.52 4.1 2,479 0.52 4.1
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Lucky
Strike Non- Oxide 0.30 34,489 0.50 552.6 2,427 0.90 1,002
------------------- ---------- ------ ---- ---------- ------ -------- ------------
Total --- 57,199 0.56 1,029 2,342 0.88 1,612
------------------- ---------- ------ ---- ---------- ------ -------- ------------
(1) Mineral Resources, which are not mineral reserves, donot
have demonstrated economicviability. Environmental, permitting,
legal, title, taxation, socio-political, marketing, or other
relevant issues maymaterially affect the estimateof Mineral
Resources.
(2) The quantity and grade of reported Inferred Mineral
Resources are uncertainin nature and there has been insufficient
exploration to define these Inferred Mineral Resources as an
Indicated or Measured Mineral P&E Mining Consultants Inc. iii
St. Vincent MineralsInc. Gabbs Au-Cu Property Report No. 220
Resource, and it is uncertainif further exploration will result in
upgrading them toan Indicated or Measured Mineral Resource
category.
(3) Mineral Resources were estimated using the CanadianInstitute
of Mining, Metallurgy and Petroleum ("CIM"), CIM Standards on
Mineral Resources and Reserves, Definitions and Guidelines prepared
bythe CIM Standing Committee on ReserveDefinitions and adopted by
CIM Council
(4) Mineral Resources are reported within a conceptual pit shell.
(5) Inverse distance weighting of capped composite grades within grade envelopes was used
for estimation.
(6) Composite grade capping of 5.00 g/t Au and 9000 ppm Cu was implemented prior to
estimation.
(7) A bulk density of 2.70 t/m3 was used for tonnage calculations.
(8) A two-year, November 30, 2011 trailing average copper price
of US$3.70/lb and a gold price of $1,350.00/oz were used along with
an oxide process cost of $6.50/tonne, a sulphide process cost of
$9.50/tonne and G&A costs of $2.25/tonne.
(9) An oxide Aurecover of 50% and a sulphide Au recovery of 90% were used
(10) Resources were estimated within an optimized pit shell utilizing pit slopes of 45 degrees
and mining costs of $1.50/tonne of rock.
(11) The conversion factor for AuEq: Au+Cu*1.67/10,000.
Table 2 Summary - Sensitivity To Cut-Off Of Gabbs Resource
Estimate
Grade Sensitivity Matrix, Gabbs, Nevada
----------------------------------------------------------------------------------------------------------------------
Cut-off Au g/t Tonnage (1,000 t) Au (g/t) Au (1,000 oz) Cu (ppm) AuEq (g/t) AuEq (1,000 oz)
Oxide/Non-oxide
----------------------------- ------------------ --------- -------------- --------- ----------- ----------------
0.60 / 0.50 20,132 0.82 532 2740 1.17 756
----------------------------- ------------------ --------- -------------- --------- ----------- ----------------
0.50 / 0.40 38,528 0.65 806 2443 0.97 1,208
----------------------------- ------------------ --------- -------------- --------- ----------- ----------------
0.40 / 0.30 57,199 0.56 1,029 2,342 0.88 1,612
----------------------------- ------------------ --------- -------------- --------- ----------- ----------------
0.30 / 0.20 85,014 0.46 1,262 2253 0.77 2,117
----------------------------- ------------------ --------- -------------- --------- ----------- ----------------
0.20 / 0.10 167,942 0.37 1,977 2213 0.74 3,972
----------------------------- ------------------ --------- -------------- --------- ----------- ----------------
Post Balance Sheet Events
Following further negotiations with SVM and review of SVM's
other US properties, including the prospective Ferber gold -copper
property ("Ferber') and pursuant to SVM shareholder meeting and
agreement for the Acquisition on 15 May 2014, the Company closed
the Acquisition with the issue of 26,195,538 Galileo Shares 5p
shares at a strike price of 9p, in exchange for the entire issued
share capital of SVM, including converted SVM shares for loan notes
held by SVM shareholders. SVM shareholders hold 22.88% of the
enlarged issued share capital of Galileo following the
Acquisition.
On 21 July 2014, the Companythrough SVM, executed two
Exploration Lease and Option to PurchaseAgreements to consolidate
its Ferber position. These agreements increased the Company's
position in Ferber from 88 unpatented mining claims covering circa
1,760 acres to 102 unpatented and 21 patentedmining claims, which
now cover circa 2,377 contiguous acresat Ferber.
Ferber Property, Elko County, Nevada
The Ferber property is a historic producer of gold and copper
and hosts widespread gold and copper mineralisation. Galileo is
reviewing available data on the property in light of recent major
golddiscoveries in eastern Nevada at Long Canyon and, more
recently, at Kinsley Mountain. Ferber is approximately 12
kilometres (km) east of Kinsley Mountain. The Ferber property is
located about 25 miles south of Wendover in Elko County Nevada and
approximately 20 kilometres east of the Kinsley Mountains. The
Ferber claim block (Ferber Flat) comprises 88 unpatented lode
claims.
Galileo's Land Position at Ferber
SVMacquired a 100% interest in 88 unpatented mining claims
(approximately 1,760 acres) at Ferber in 2010 from Newcrest
Resources Inc. To consolidate mineral ownership at Ferber, SVM
recently signed an Exploration Lease and Option to Purchase
Agreement covering 14 unpatented claims (approximately 280 acres)
and a separate Exploration Lease and Option to Purchase Agreement
covering approximately 337 acres of patented mining claims. The two
Exploration Lease and Option to Purchase Agreements give SVM an
option topurchase the properties with a netsmelter royalty (NSR)
(subjectto a partial buy back at the rate of $1m per 1%) retained
to the seller. All annual paymentsand purchase payments to the
landowners are credits against any eventual purchase and the
on-going annual and quarterly advance payments (which increase
steadily over a ten year period) will be against payments under the
NSR arrangements, which are in line with industry
standard-arrangements.
Exploration Strategy at Ferber
Recent new gold discoveries in the nearby regionprovide strong
evidence for a mineralised system at Ferber, whichmakes the
property a compelling target forreinterpretation and subsequent
exploration.
SVM geologists, following site visits and on-going review of all
data, have identified many geologic similarities with these nearby
discoveries and are formulating a near-term exploration
programme.
SVM geologists are currently conducting a thorough review of the
newly acquired lands and geologic information in order to formulate
a near-term exploration plan. Likely exploration activities include
geologic mapping, datacompilation, soil and rock geochemical
sampling as well as ground geophysics in order to move rapidly to
the drilling stage.
Recent Discoveries Close To Ferber
Recent Carlin-type gold discoveries at Long Canyon and Kinsley
Mountain have opened up an important new exploration frontier in
eastern Nevada. The Long Canyon property was discovered and defined
between2005-2011 by a Fronteer- AuEx joint venture and is reported
to host an estimated 2.2million ounces of gold. Newmont Mining
purchased the property in 2011 for $2.33 billion dollars. At
Kinsley Mountain, a former producer of gold controlled by "Pilot
Gold" (listedon the Toronto Stock Exchange), a reinterpretation of
the regional and local geology and subsequent drilling has revealed
high grade gold up to 21.3g/t over 29 metres (m) and 10.5g/t over
42.7 m. (Note: Galileo has no ownership interest in either Long
Canyon or Kinsley Mountain).
Geology and Mineralisation at Ferber
The Ferber District consists of a multi-phase Tertiary igneous
complex intruding Permian carbonates. Marble and skarn are
developed at the margin of the intrusive complex. USGS Rock chip
sampling has shown copper <= 2% and lesser gold (<= 0.2 ppm)
to occur in 'skarn', 'jasperoid', and 'marble'. The Ferber property
is underlain by a stratigraphic sequence of Pennsylvania-Permian
age carbonate units thought to include the Rib Hill Formation,
Riepe Spring Formation, Ferguson Mountain Formation, and possibly
the Pequop Formation. The sedimentary units are intruded and domed
by a multi-phase diorite-quartz monzonite Tertiary-aged igneous
complex. The intrusivecomplex has anexposed footprintof 6.1 km
east-westby 1.6 km north-south. A contact metamorphic marble and
calc-silicate zone are found at the marginof the intrusive complex.
Theproject area isintersected by a number east-west,
north-northwest and north-east trending faults.
Historic Activity at Ferber
Historical drilling in the district in the mid-late 1990's
reported mineralization in metamorphosed sedimentary rocks and
intrusive. Intercepts included:
11 metres of 0.53g/t Au in contact metamorphosed rocks
5 metres of 2.15g/t Au in oxidized intrusive
5 metres of 0.718% Cu (oxide) in intrusive
26 metres of 0.415% Cu (oxide) in contact zone
12 metres of 0.832% Cu (oxide) in contact zone
Active exploration by others in the nearby Kinsley Mountains has
recently reported, inter alia, " that infill and step-out drilling
at Kinsley Mountain's Western Flank target continues to intersect
high grade gold mineralization, including 21.3 grams per tonne gold
("g/t Au") over 29.0 metres. The upper portion of this intercept,
including an interval grading 46.4 g/t Au over 4.9 metres, is
oxidized, similar to other nearby drill holes with high grade zones
of oxidation." (1) .
Kinsley Mountain hosts near-surface mineralization similar to
other Carlin-style, sediment-hosted gold systems. (2)
(1)
(http://www.pilotgold.com/news/pilot-gold-reports-213-gt-gold-over-290-metres-western-flank-kinsley-mountain)
(2) Pilot Gold NEWS RELEASE 14-14 April 23, 2014
CONSOLIDATED AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
31 MARCH 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS 31 MARCH
2014
Figures in Pound Sterling 2014 2013
Assets
Non Current Assets
Property, plant and equipment 282 826
Intangible assets 6,635,128 8,305,592
Investment in joint ventures 2,313,663 2,385,759
Loans to Group companies 79,804 -
Other financial assets 328,202 4,065,584
============== ============
9,357,079 14,757,761
============== ============
Current Assets
Other financial assets 399,926 61,568
Trade and other receivables 568 11,452
Cash and cash equivalents 324,819 1,735,074
============== ============
725,313 1,808,094
============================== ============== ============
10,082,392 16,565,855
============== ============
Total Assets
============================== ============== ============
Equity and liabilities
Equity
Share capital 21,603,932 21,603,932
Reserves (3,736,063) (1,404,954)
Accumulated loss (7,830,837) (3,666,343)
============== ============
10,037,032 16,532,635
============== ============
Liabilities
Non-Current Liabilities
Other financial liabilities 6 8
Current Liabilities
============== ============
Trade and other payables 45,354 33,212
============== ============
Total Liabilities 45,360 33,220
============== ============
Total Equity and Liabilities 10,082,392 16,565,855
============================== ============== ============
These financialstatements were approved by the directors and
authorised for issue on 5 September 2014 and are signed on their
behalf by:
Colin Bird AndrewSarosi
5 September 2014
Company number: 05679987
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 MARCH 2014
Figures in Pound Sterling 2014 2013
Revenue
Operating expenses (2,991,626) (1,071,164)
=============== ===============
Operating loss (2,991,626) (1,071,164)
=============== ===============
Investment revenue 55,975 36,945
Fair value adjustments (1,190,000) (500,000)
Loss from equity accounted investments (38,843) (113,039)
Finance costs - (192,570)
=============== ===============
Loss for the year (4,164,494) (1,839,828)
=============== ===============
Other comprehensive income:
=============== ===============
Exchange differences on translating
foreign operations (2,331,109) (2,196,715)
=============== ===============
Total comprehensive loss for the year (6,495,603) (4,036,543)
======================================= =============== ===============
Loss per share in Pence (basic and
diluted) (4.7) (2.2)
All operatingexpenses and operating losses relate to
continuingactivities.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 MARCH 2014
Statement of Changes in Equity
-----------------------------------------------------------------------------------------------------------------------------------------------------
Share capital Share premium Total Foreign Other NDR Total reserves Accumulated Total equity
share capital currency loss
translation
Figures in Pound Sterling reserve
----------------------------------------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Group
Balance at 01
April 2012 3,777,859 12,614,511 16,392,370 4,622 787,139 791,761 (1,826,515) 15,357,616
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Loss for the
year - - - - - - (1,839,828) (1,839,828)
Other
comprehensive
income - - - (2,196,715) - (2,196,715) - (2,196,715)
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Total
comprehensive
Loss for
the year - - - (2,196,715) - (2,196,715) (1,839,828) (4,036,543)
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Issue of
shares 637,500 4,574,062 5,211,562 - - - - 5,211,562
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Total
contributions
by and
distributions
to owners of
company
recognised
directly
in equity 637,500 4,574,062 5,211,562 - - - - 5,211,562
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Balance at 01
April 2013 4,415,359 17,188,573 21,603,932 (2,192,093) 787,139 (1,404,954) (3,666,343) 16,532,635
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Loss for the
year - - - - - - (4,164,494) (4,164,494)
Other
comprehensive
income - - - (2,331,109) - (2,331,109) - (2,331,109)
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Total
comprehensive
Loss for
the year - - - (2,331,109) - (2,331,109) (4,164,494) (6,495,603)
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
Balance at 31
March 2014 4,415,359 17,188,573 21,603,932 (4,523,202) 787,139 (3,736,063) (7,830,837) 10,037,032
--------------- ------------- -------------- ---------------- -------------- ---------------- --------------- ---------------
STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2014
Figures in Pound Sterling 2014 2013
Cash flows from operating activities
Cash used in operations (809,433) (959,360)
Interest income 6,032 36,945
Finance costs - (192,570)
============== ===================
Net cash from operating activities (803,401) (1,114,785)
================================================= ============== ===================
Cash flows from investing activities
Disposal of property, plant and equipment 544 -
-
Movement in investments (incl subs, JVs & Assoc) (443,040) (457,496)
Loans advanced to Group companies (79,804) -
Purchase of financial assets (84,554) (4,627,147)
============== ===================
Net cash from investing activities (606,854) (5,084,643)
================================================= ============== ===================
Cash flows from financing activities
Proceeds on share issue - 5,211,562
Repayment of other financial liabilities - 8
============== ===================
Net cash from financing activities - 5,211,570
================================================= ============== ===================
Total cash movement for the year (1,410,255) (987,858)
Cash at the beginning of the year 1,735,074 2,722,932
============== ===================
Total cash at end of the year 324,819 1,735,074
================================================= ============== ===================
Statement of Directors' Responsibilities for the year ended 31
March 2014
-- The directors are required in terms of the Companies Act 2006
to maintain adequate accounting records and are responsible for the
content and integrity of the consolidated annual financial
statements and related financial information included in this
report. It is their responsibility to ensure that the consolidated
annual financial statements fairly present the state of affairs of
the Group as at the end of the financial year and the results of
its operations and cash flows for the period then ended, in
conformity with the applicable UK laws.
-- The consolidated annual financial statements are prepared in
accordance with International Financial reporting standards (IFRS)
and are based upon appropriate accounting policies consistently
applied and supported by reasonable and prudent judgments and
estimates. The directors acknowledge that they are ultimately
responsible for the system of internal financial control
established by the Group and place considerable importance on
maintaining a strong control environment. To enable the directors
to meet these responsibilities, the board sets standards for
internal control aimed at reducing the risk of error or loss in a
cost effective manner. The standards include the proper delegation
of responsibilities within a clearly defined framework, effective
accounting procedures and adequate segregation of duties to ensure
an acceptable level of risk. These controls are monitored
throughout the Group and all employees are required to maintain the
highest ethical standards in ensuring the Group's business is
conducted in a manner that in all reasonable circumstances is above
reproach. The focus of risk management in the Group is on
identifying, assessing, managing and monitoring all known forms of
risk across the Group. While operating risk cannot be fully
eliminated, the Group endeavours to minimise it by ensuring that
appropriate infrastructure, controls, systems and ethical behaviour
are applied and managed within predetermined procedures and
constraints.
-- The directors are of the opinion, based on the information
and explanations given by management that the system of internal
control provides reasonable assurance that the financial records
may be relied on for the preparation of the consolidated annual
financial statements. However, any system of internal financial
control can provide only reasonable, and not absolute, assurance
against material misstatement or loss.
-- The going concern basis has been adopted in preparing the
consolidated annual financial statements. The directors have no
reason to believe that the Group will not be a going concern in the
foreseeable future, based on forecasts and available cash
resources. These consolidated annual financial statements support
the viability of the company. the directors have reviewed the
Group's financial position at the balance sheet date and for the
period ending on the anniversary of the date of approval of these
financial statements and they are satisfied that the Group has, or
has access to, adequate resources to continue in operational
existence for the foreseeable future.
Colin Bird Chairman
Brian Gavin Chief Executive Officer
Andrew Francis Sarosi Finance & Technical Director
J Richard Wollenberg Non-Executive director
Christopher Molefe Non-Executive Director
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated annual financial statements have been prepared
in accordance with International Financial Reporting Standards
IFRIC interpretations issued by the International Accounting
Standards Board and the Companies Act 2006. The consolidated annual
financial statements have been prepared on the historical cost
basis, except for certain financial instruments at fair value, and
incorporate the principal accounting policies set out below. Cost
is based on the fair values of the consideration given in exchange
for assets and they are presented in Pound Sterling. The accounting
policies applied are consistent with those of the previous
period.
The comparative figures for the financial year ended 31 March
2014 are not the Company's statutory accounts for that financial
year but the consolidated accounts. Those accounts have been
reported on by the Company's auditors and delivered to the
registrar of companies. The report of the auditors was (i)
unqualified, (ii) did not give any reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement
under sections 498 (2) or (3) of the Companies Act 2006, relating
to the accounting records of the company.
2. Basis of consolidation
The consolidated annual financial statements incorporate the
annual financial statements of the Company and all entities,
including special purpose entities, which are controlled by the
Company. Control exists when the Company has the power to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities. The results of subsidiaries are
included in the consolidated annual financial statements from the
effective date of acquisition to the effective date of disposal.
Adjustments are made when necessary to the annual financial
statements of subsidiaries to bring their accounting policies in
line with those of the Group.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation. Non-controlling interests in
the net assets of consolidated subsidiaries are identified and
recognised separately from the Group's interest therein, and are
recognised within equity. Losses of subsidiaries attributable to
non-controlling interests are allocated to the non-controlling
interest even if this results in a debit balance being recognised
for non- controlling interest. Transactions, which result in
changes in ownership levels, where the Group has control of the
subsidiary both before and after the transaction are regarded as
equity transactions and are recognised directly in the statement of
changes in equity. The difference between the fair value of
consideration paid or received and the movement in non-controlling
interest for such transactions is recognised in equity attributable
to the owners of the parent.
Where a subsidiary is disposed of and a non-controlling
shareholding is retained, the remaining investment is measured to
fair value with the adjustment to fair value recognised in profit
or loss as part of the gain or loss on disposal of the controlling
interest.
3. Segmental analysis
All investments in subsidiaries and associates that were
operational at year end, operate in one geographical location being
South Africa, and are organised into one business unit from which
the Group's expenses are incurred and future revenues are expected
to be earned, being for the exploration for and extraction of its
mineral assets through direct and indirect holdings. The reporting
on these investments to the Board focuses on the use of funds
towards the respective projects and the forecasted profit earnings
potential of the projects. Following the acquisition of the Gabbs
project the Group will have another segment to report on being
Gold.
Business segments
The Group's business is the exploration and development of rare
earths, aggregates and potentially Iron ore and Manganese.
Geographical segments
An analysis of the loss on ordinary activities before taxation
and net assets is given below:
2014 Loss from operating Loss from Country of
activities (ZAR) operating operations
activities
(GBP)
Glenover (621,482 ) (38, 843) South Africa
Corporate costs and (4,125,651) South Africa
impairments
and united Kingdom
---------------------------------- ======================== ============================
Total (621,482 ) (4,164,494)
---------------------------------- ======================== ============================
2013
Loss from operating Loss from Country of
activities (ZAR) operating operations
activities
(GBP)
Glenover (1,517, 295) (113,039) South Africa
Corporate costs - (1,726,789) South Africa
and united Kingdom
---------------------------------- ======================== ============================
Total (1,517,295) (1,839,828)
---------------------------------- ======================== ============================
4. Taxation
Major components of the tax expense
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense:
Accounting loss (4,164,494) (1 839 828)
Tax at the applicable tax rate of
20% (2012: 20%) (367 966) (367 187)
Tax effect of adjustments on taxable income:
Expenses not allowed for tax purposes 704,969 4,013
Subsidiaries operating in other tax
jurisdictions 41,569 166,063
Tax losses carried forward 86,361 197,890
No provision has been made for 2014 tax as the Group has no
taxable income. The estimated tax loss available for set off
against future taxable income is GBP1,406,233 (2013: GBP974,428).
The Group has not reflected a deferred tax asset in respect of the
losses carried forward as the Group is not expected to generate
taxable profits in the foreseeable future.
5. Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing profit or
loss attributable to the ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during
the year.
Where there is a discontinued operation, earnings per share is
determined for both continuing and discontinued operations.
Basic earnings per share was based on a loss of GBP4,164,494
(2013: GBP1,839,828) and a weighted average number of ordinary
shares of GBP88,307,183 (2013: GBP84,049,649).
Reconciliation of loss attributable to equity holders of the
parent to loss for the year
-------------------------------------------------------------------------
2014 2013
--------------------------------------------- ------------ ------------
Profit or loss for the year attributable
to equity, holders of the parent
Adjusted for: (6,495,603) (4,036,543)
--------------------------------------------- ------------ ------------
Foreign exchange differences on translation
of
foreign operations 2,331,109 2,196,715
--------------------------------------------- ------------ ------------
Loss for the year (4,164,494) (1,839,828)
--------------------------------------------- ------------ ------------
Loss per share in pence
--------------------------------------------- --------------------------
Basic loss per share (4,7) (2,2)
--------------------------------------------- ------------ ------------
Diluted loss per share (4,7) (2,2)
--------------------------------------------- ------------ ------------
In the determination of dilutedearnings per share, profit or
loss attributable to the equity holders of the
parent and the weightedaverage number of ordinaryshares are
adjusted for the effects of all dilutive
potential ordinaryshares. Where there is a discontinued
operation, diluted earningsper share is determined
for both continuing and discontinued operations. Diluted
earnings per share are equal to earnings per
share because there are no dilutivepotential ordinaryshares in
issue.
6. Intangible assets
Galileo's key asset is the Glenover Rare Earth Project, held
through its shareholding in Glenover Phosphate (Pty) Limited
("Glenover"), which is a joint venture with Fer-Min-ore (Pty)
Limited. The Project is Black Economic Empowered ("Bee") through a
26% ownership by Galagen (Pty) Limited in Glenover.
The intangible asset of GBP6.6 million (2013: GBP8.3 million)
represents the value attached to assets identified in a subsidiary
of Skiptons Global Investment Limited (BVI) a wholly owned
subsidiary of Galileo, namely Glenover, situated in South Africa.
Glenover is a joint venture company which is currently evaluating a
Rare Earth/Phosphate project in South Africa.
The exploration and evaluation asset is a South African Rand
denominated asset. It is carried at cost
adjusted for any foreigncurrency movementsduring the period
under review.
No amortisation is recognised in respectof exploration
expenditure. Amortisation of evaluation asset will
start once miningcommences on the related exploration and
evaluation asset. The period of amortisation
will be the estimatedlife of the mine.
The carrying amount of the exploration and evaluation asset
identified, on acquisition as part of the purchase price
allocation, is treated as assets of Glenover. The asset must be
expressed in the functional currency of the foreign operation and
is translated at the closing rate at the end of each reporting
period. As at 31 March 2014 this amount represented GBP6.63 million
(2013:GBP8.3 million). The translation difference of GBP1.7 million
(2013: GBP1.9 million) was allocated to a foreign currency
translation reserve through other comprehensive income. This
reserve forms part of equity.
7. Investment in joint venture
Galileo's direct investment in Glenover is 29% and it also has
an indirect investmentin Glenover through
its shareholding in Galagen of 4.99% resulting in a total
economicinterest in Glenover of 33.99%. Galileois
currently carrying the BEE in terms of its interestin Glenover.
The shareholders are currentlyreviewing the
funding of the BEE interestin the project.The carrying amounts
of Joint ventures are shown net of impairment
losses.Galileo's share of the equity accountedprofit/loss for
the Joint Venture is recognised from the date of
acquisition on 4 July 2011. Galileo's portion of the loss in the
joint venture for the period under review amounted to GBP38 843
(2013: GBP113 039).
8. Other financial assets
Included in other financial assets, at fair value through profit
or loss, is a listed investment in Praetorian of GBP310 000 (2013:
1 500 000) which is carried at its quoted value on 31 March 2014
and approximates its fair value at that date. The investment in
Praetorian Resources was reclassified as a current asset as the
investment disposed subsequent to the period under review.
Also included in other financial assets is a non-listed
preference share investment of GBP324 255 (2013: GBP352 958) which
represents the "B" class zero% coupon rate preference shares issued
by Galagen for its investment in Glenover as part of the BBBEE
transaction.
Preference share dividends are not receivable as the share are
represented by zero percent coupon rate and are only redeemable
after 3 years under the following terms:
The terms and conditions of the B Preference Shares state that
"for so long as any A Preference Shares remain outstanding, the
Company shall be obliged, in priority to and before any provision
for, or payment of, any Distribution on any other class of Share in
the capital of the Company which does not rank pari passu with the
B Preference Shares, to utilize 70% of the balance of the Glenover
Distributions after the Distribution payable to the A Preference
Shares, to redeem the B Preference Shares pro rata with the Holders
of all other B Preference Shares; and after there are no further A
Preference Shares outstanding, the Company shall be obliged, in
priority to and before any provision for, or payment of, any
Distribution on any other class of Share in the capital of the
Company which does not rank pari passu with the B Preference
Shares, to utilise 70% of all Glenover Distributions to redeem the
B Preference Shares pro rata with the Holders of all other B
Preference Shares". The fair value of this preference share
investment is estimated by discounting expected future cash flows
using an appropriate market related discount rate assessed at
15%.
9. Share based payments
By option certificates dated 1 September 2011, each of the
following directors, key management and advisors were granted
options to subscribe at a price of 23 pence per share for a number
of ordinary shares of 5 pence each:
Number of
Ordinary
Shares
---------------------- ----------
Colin Bird 500 000
Alex Andersson 250 000
Andrew Sarosi 250 000
Chris Molefe 250 000
J Richard Wollenberg 2 500 000
Beaumont Cornish 100 000
---------------------- ----------
Total 3 850 000
---------------------- ----------
No charge has been recognised in the Statement of Comprehensive
Income for the period under review, as the options vested on
Admission to trading on AIM on 26 September 2011.
10. Auditors' Report
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 March 2014 or
31 March 2013 but is derived from those accounts. Statutory
accounts for 2013 have been delivered to the registrar of
companies, and those for 2014 will be delivered in due course. The
auditor has reported on those accounts; his reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying his report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
11. Availability of the Annual Report
This information has been extracted from the Company's Audited
Annual Report for the year ended 31 March 2014, copies of which
will be mailed to shareholders on 5 September 2013 and a copy will
also be available to shareholders and members of the public in hard
copy and free of charge, from the Company's London office at 4th
floor 2 Cromwell Place, London SW7 2JE, United Kingdom.
Alternatively a downloadable version will be available from 2
September 2013 from Company's website:
www.galileoresources.com.
12. Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of
Galileo will be held at the Pelham Hotel, 15 Cromwell Place,
London, SW7 2LA on 30 September 2014 at 11:00 a.m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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