TIDMGLR
RNS Number : 1694X
Galileo Resources PLC
31 December 2021
Galileo Resources PLC
("Galileo" or "the Company" or "the Group")
Unaudited interim results for the six months ended 30 September
2021
Galileo (AIM: GLR) , the exploration and development mining
company, announces its unaudited interim results for the six-month
period ended 30 September 2021. A copy of the interim results is
available on the Company's website, www.galileoresources.com .
Operational Highlights
BOTSWANA - Kalahari Copperbelt
Period under review
On 2 August 2021 the Company announced that had it entered into
a variation agreement dated 30 July 2021 (the "First Variation
Agreement") with ASX listed Sandfire Resources Limited (ASX:SFR)
("Sandfire") in relation to its conditional licence sale agreement
(the "Licence Sale Agreement") with Sandfire.
The Parties entered into the First Variation Agreement to
facilitate the continuity of exploration expenditure on the
Included Licences and to amend the list of Included Licences and
Excluded Licences. The key commercial terms of the First Variation
Agreement were to make the following variations to the Licence Sale
Agreement:
-- Change the long stop date for the meeting of the conditions
from 31 July 2021 to 31 August 2021;
-- Sandfire to at completion of the Licence Sale Agreement,
reimburse Galileo up to US$500,000 of exploration expenditure
incurred by Galileo in relation to licence obligations of certain
Included Licences being transferred to Sandfire (the "Reimbursed
Exploration Expenditure");
-- Sandfire's US$4,000,000 Exploration Commitment under the
Licence Sale Agreement to be reduced by the amount of the
Reimbursed Exploration Expenditure;
-- PL 368/2018 which was due to expire on 30 September 2021 to
be removed from the list of Included Licences to be transferred to
Sandfire as this licence is, with the agreement of Sandfire, being
relinquished; and
-- Removing the option for Sandfire to elect to pay the Success
Payment under the Licence Sale Agreement by issuing Sandfire shares
to Galileo which means the Success Payment if due will be paid in
cash.
On 1 September 2021, the Company announced that it had entered
into a second variation agreement (the Second Variation Agreement)
with Sandfire in relation to the Licence Sale Agreement to extend
the long stop date to 15 September 2021 to facilitate the
completion of the processes to obtain Ministerial Consent.
The Licence Sale Agreement transaction was completed on 22
September 2021.
Post period under review
On 8 November 2021 the Company provided an update on progress of
a drilling campaign on the Kalahari Copper Belt licences, with more
than 5,000 metres (m) of mixed core and reverse circulation
drilling ('RC') completed on five of the Kalahari Copper Belt
exploration licences. This included work on both the Company's
retained licences and the Sandfire Agreement Licences (see RNS
dated 16 September 2021), with the agreement of Sandfire Resources.
Amongst the results reported were:
-- Drilling on the Sandfire Agreement Licences intersected
visible copper mineralisation at 242.7m in core hole BDDD004 on
PL366/2018 in the form of vein-hosted chalcopyrite.
-- Galileo drilled in two of its retained licences, PL40/2018
and PL253/2018, with most holes intersecting the target
D'kar/Ngwako Pan Fm. One hole intersected a 6.32m interval of 2-5%
fine-grained disseminated pyrite at the target horizon level which
it was considered might represent a hydrothermal mineral system
lateral to a copper occurrence.
-- RC drilling was ongoing on PL253/2018 and diamond drilling
had commenced on PL39/2018 with the aim of testing an extensive
airborne EM target on this property, focussed on the margins of a
regional scale dome feature.
ZAMBIA
Kashitu
Period under review
The Company has continued to make plans for a drilling programme
at the Kashitu zinc project. Site visits were undertaken to
establish the suitability of several potential drill sites, with
the focus on initial testing of a high-grade willemite zinc
silicate vein zone which has been partially mined previously in a
small open pit.
The aim is to undertake the programme, subject to access
constraints during the rainy season.
Star Zinc
Period under review
The Company received an amount of US$50K from Siege Mining
Limited under the agreement signed on 4 March 2021 in relation to
the ceding of ownership and operation of the Star Zinc Project.
Shinganda Project
Post period under review
On 7 December 2021 the Company announced that it had entered
into an Option and Joint Venture agreement with Garbo Resource
Solutions Ltd ("Garbo"), a private special purpose UK company
established to hold the Shinganda copper-gold property located in
Central Zambia. The property is held as a large-scale exploration
licence No. 22990-HQ-LEL, covering an area of 186.76km(2) , by
Garbo Resource Zambia Ltd., which is 99.4% owned by Garbo. The
principal terms of the agreement are as follows:
-- The option agreement gives Galileo the right to earn an
initial 51% interest in the Shinganda copper-gold project in
central Zambia, subject to any necessary Zambian regulatory
approval, by spending US$0.5m on exploration and evaluation over
two years.
-- The Company can subsequently increase its interest through
entering into a Joint Venture to develop a mining operation,
ranging from 65% interest for a large deposit of greater than 1Mt
of contained copper equivalent, up to an 85% interest in a smaller
deposit of less than 200,000 tonnes of contained copper
equivalent.
The project area covers part of a major 10km structural trend
with two previously developed small-scale open pit copper-gold
mines. Very limited historic drilling on the property is reported
to have intersected 1.07% Cu over a true width of 28.3m at shallow
depth within supergene copper oxides. Drilling on the structure
off-property to the west by Vale S.A. recorded 2m @ 3.93% Cu, 1.72
g/t Au.
Galileo plans to review past exploration data followed by a
drilling programme focussed on testing the tenor and extent of the
shallow copper/gold mineralisation indicated by previous drilling
and nearby mining. Historic grab sampling in an exploration pit
towards the south of the Project area by Vale S.A., with reported
assay values of 10.45% Cu, 11g/t Au, will also be followed up in
the field by Galileo for confirmation purposes.
Luansobe Copper Project
Post period under review
On 30 December 2021, the Company announced that it had entered
into a Joint Venture Agreement (the "JV Agreement") on 29 December
2021 with Statunga Investments Limited (the "Vendor"), a private
Zambian company owns the Luansobe Project comprising small-scale
exploration licence No. 28340-HQ-SEL, covering an area of 918
Hectares granted on 16 February 2021 and with its initial 4-year
term expiring on 15 February 2025.
The Luansobe area is situated some 15km to the northwest of
Mufulira Mine in the Zambian Copperbelt which produced well over
9Mt of copper metal during its operation. It forms part of the
northwestern limb of the northwest - southeast trending Mufulira
syncline and is essentially a strike continuation of Mufulira, with
copper mineralisation hosted in the same stratigraphic horizons. At
the Luansobe prospect mineralisation occurs over two contiguous
zones, dipping at 20-30 degrees to the northeast, over a strike
length of about 3km and to a vertical depth of at least 1,250m.
The JV Agreement provides Galileo the right to earn an initial
75% interest in a special purpose joint venture company (the "JV
Company") to be established under Zambia law to, with Ministerial
Consent, acquire the Licence, and the technical information and
other information and assets related to the Luansobe Project by
making an initial payment of US$200,000 and a second payment of
US$200,000 in the initial period from the date of the JV Agreement
by 20 February 2022 (the "Initial JV Period") and issuing 5,000,000
Galileo shares to the Vendor. Based on the closing price share
price of 0.98 pence on 29 December 2021 the last practicable date
prior to this issue of this announcement, the aggregate
consideration will be approximately GBP350,000.
During the Initial JV Period the Company will conduct further
due diligence in relation to the Luansobe Project and may at its
sole discretion at any time prior to the end of the Initial JV
Period give notice to the Vendor that it has decided not to proceed
with the Joint Venture.
The Company has undertaken to commence raw data investigation of
the technical information available in relation to the Project and
devise an exploration programme for the Luansobe Project, which in
their opinion maximise the value of the Luansobe Project with a
view to completing a Project Feasibility Study within 18 months of
20 February 2022.
SOUTH AFRICA
Glenover Phosphate Project ("Glenover")
Period under review
The Company continued to support Glenover in its application for
a mining licence. Golder Associates completed a revised waste
management facility design for environmental authorisation for the
project which was submitted to the South African Department of
Water and Sanitation. A Record of Decision was awaited in order to
finalise Glenover's mining right.
Post period under review
The Company announced on 9 December 2021 that;
-- Glenover in which Galileo has a 29% direct shareholding and a
4.99% indirect shareholding held via Galagen Proprietary Limited
who are the BEE partner of Galileo entered into an Asset sale
agreement with JSE Limited listed Afrimat Limited (JSE: AFT)
("Afrimat") for ZAR 250M (approx. GBP11.64m) of certain deposits of
phosphate rock located at the Glenover Mine and mining rights to
mine the Vermiculite Deposit at the Glenover Mine (the "Asset Sale
Agreement").
o ZAR 215.1M (approx. GBP10m) of the Asset Sale Agreement
consideration is unconditional and is anticipated to result in a
dividend of ZAR42M (approx. approx. GBP1.97M) being paid to Galileo
by 28 February 2022 in respect of its 29% direct shareholding in
Glenover; and
o ZAR34.9M (approx. GBP1.64m ) of the Asset Sale Agreement
consideration is conditional on the issue of a vermiculite mining
licence to Glenover and is anticipated to result in a dividend to
Galileo of Afrimat Shares worth approximately ZAR10M
(approx.GBP0.47K) in Q3 2022 in respect of its 29% direct
shareholding in Glenover.
o
-- Glenover also entered into a conditional sale of shares
agreement between Afrimat, Glenover and the shareholders of
Glenover including Galileo Resources SA (Pty) Ltd the Company's
wholly owned South African subsidiary under which Glenover has the
option to acquire the sale of shares in and shareholders loans made
to Glenover for ZAR300M (approx. GBP14m) which is expected to
complete by 15 June 2023 if the option is exercised ("Conditional
Share Sale Agreement"). Galileo's 29% share of the gross
Conditional Share Sale Agreement consideration in respect of its
29% direct shareholding in Glenover is ZAR87M (approx. GBP4.1m)
NEVADA
Ferber gold-copper project
Post period under review
Galileo initiated a project review aimed at identifying drill
targets to test both skarn-type gold-copper occurrences and
small-scale workings and Carlin-type gold occurrences on the 100%
held property. Several priority drill sites were highlighted, with
drill testing now planned for early in 2022.
FUNDRAISING
Period under review
-- The Company issued 133 666 664 new ordinary shares to raise GBP 2 million before expenses
For further information, please contact:
Colin Bird, Chairman & CEO Tel +44 (0) 20 7581 4477
Edward Slowey, Executive Tel +353 (1) 601 4466
Director
www.galileoresources.com
Beaumont Cornish Limited
Nominated Advisor
Roland Cornish/James Biddle Tel +44 (0)20 7628 3396
Novum Securities Limited
- Broker Tel +44 (0)20 7382 8416
Colin Rowbury/ Jon Belliss
Statement of Responsibility for the six months ended 30
September 2021
The directors are responsible for preparing the consolidated
interim financial statements for the six months ended 30 September
2021 and they acknowledge, to the best of their knowledge and
belief, that:
-- the consolidated interim financial statements for the six
months ended 30 September 2021 have been prepared in accordance
with IAS 34 - Interim Financial Reporting, as adopted by the
EU;
-- based on the information and explanations given by
management, the system of internal control provides reasonable
assurance that the financial records may be relied on for the
preparation of the consolidated interim 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 interim financial statements and the directors of
Galileo 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 interim financial statements support the viability of the Company; and
-- having 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 they are satisfied that
the Group has, or has access to, adequate resources to continue in
operational existence for the foreseeable future.
C Bird Chairman and Chief Executive Officer
31 December 2021
CONSOLIDATED STATEMENTS OF FINANCIAL Six months Six months Year
POSITION ended ended ended
30 September 30 September 31 March
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
GBPs GBPs GBPs
ASSETS
Intangible assets 2,854,706 3,610,194 2,114,817
Investment in joint ventures 1,990,053 1,867,227 1,979,640
Loans to joint ventures and
associates 364,644 339,420 345,684
Other financial assets 1,440,148 351,881 373,521
--------------- --------------- ---------------
Non-current assets 6,649,551 6,168,722 4,813,662
--------------- --------------- ---------------
Trade and other receivables 49,796 5,452 1,359
Other financial assets 6,930 - -
Cash and cash equivalents 3,523,794 1,054,247 1,392,955
--------------- --------------- ---------------
Current assets 3,580,520 1,059,699 1,394,314
--------------- --------------- ---------------
Non-current assets held for
sale 1,574,160 - 3,952,786
--------------- --------------- ---------------
Total Assets 11,804,231 7,228,421 10,160,763
--------------- --------------- ---------------
EQUITY AND LIABILITIES
Share capital and share premium 31,636,356 27,774,345 29,705,244
Reserves 887,304 749,594 837,700
Accumulated loss (21,687,406) (21,589,733) (21,134,916)
--------------- --------------- ---------------
Equity 10,836,254 6,934,206 9,408,028
--------------- --------------- ---------------
Liabilities
Other financial liabilities 6 5 5
Deferred taxation 425,813 - 425,813
Non-current liabilities 425,819 5 425,818
--------------- --------------- ---------------
Trade and other payables 542,158 294,210 326,916
--------------- --------------- ---------------
Total liabilities 967,977 294,215 752,735
--------------- --------------- ---------------
Total Equity and liabilities 11,804,231 7,228,421 10,160,763
--------------- --------------- ---------------
Joel Silberstein
31 December 2021
Company number: 05679987
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME FOR THE SIX MONTHSED Six months Six months
30 SEPTEMBER 2021 ended ended
30 September 30 September
2021 2020
(Unaudited) (Unaudited)
GBPs GBPs
Revenue - -
Operating expenses (556,524) (360,390)
--------------- ---------------
Operating loss (556,524) (360,390)
Investment revenue - -
Gain on bargain purchase through -
business combinations
Share of loss from equity accounted
investments 4,031 (6,555)
Loss for the period (552,493) (366,945)
Other comprehensive loss:
Exchange differences on translating
foreign operations 41,091 (119,646)
--------------- ---------------
Total comprehensive loss (511,402) (486,591)
--------------- ---------------
Total comprehensive loss attributable
to:
Owners of the parent (511,402) (486,591)
Weighted average number of shares
in issue 919,808,258 600,066,170
Basic loss per share - pence (0.06) (0.06)
STATEMENTS OF CHANGES IN EQUITY as at 30 September 2021
Share Share Total capital Foreign currency Convertible Share based Total Accumulated Total
capital translation instruments payment reserve reserves loss equity
premium reserve
----------- --------
Figures in Pound Sterling
reserve
--------------------------------------------------------------------------------------- ---------------- ----------------- -------------------------- --------------- ------- -------------- --------
Balance at 1 April 2020 6,168,446 20,300,873 26,469,319 (709 982) 1,047,821 283,292 621,131 (21 222 788) 5,867,662
Loss for the year - - - - - - - 87,877 87,877
Other comprehensive income - - - (66,513) - - (66,513) - (66,513)
-------------- ---------------- --------------------------------- ------------- ------------------------ ------------------ ------------------ -------------- -------------
Total comprehensive income
for the year - - - (66,513) - - (66,513) 87,877 21,364
Issue of warrants - (150,544) (150,544) - - 150,544 150,544 - -
Options granted - - - - - 270,595 270,595 - 270,595
Warrants exercised - 138,057 138,057 - - (138,057) (138,057) - -
- -
Issue of shares 354,163 2,894,249 3,248,412 -- - - - - 3,248,412
-------------- ---------------- --------------------------------- ------------- ------------------------ ------------------ ------------------ -------------- -------------
Total contributions by and
distributions to owners of
company recognised directly -
in equity 354,163 2,881,762 3,235,925 - - 283,082 283,082 - 3,519,007
Balance at 1 April 2021 6,522,609 23,182,635 29,705,244 (776,495) 1,047,821 566,374 837,700 (21,134,913) 9,408,031
-------------- ---------------- --------------------------------- ------------- ------------------------ ------------------ ------------------ -------------- -------------
Loss for the 6 months - - - - - - - (552,493) (552,493)
Other comprehensive income - - - 41,091 - - 41,091 41,091
-------------- ---------------- --------------------------------- ------------- ------------------------ ------------------ ------------------ -------------- -------------
Total comprehensive income
for the 6 months - - - 41,091 41,091 (552,493) (511,402)
-------------- ---------------- --------------------------------- ------------- ------------------------ ------------------ ------------------ -------------- -------------
Warrants issued - - - - - 8,513 8,513 - 8,513
Warrants exercised - - - - - - - - -
Issue of shares 95,567 1,835,545 1,931,112 - - - - - 1,931,112
-------------- ---------------- --------------------------------- ------------- ------------------------ ------------------ ------------------ -------------- -------------
Total contributions by and
distributions to owners of
company recognised directly
in equity 95,567 1,835,545 1,931,112 - - 8,513 8,513 - 1,939,625
Balance at 30 September 2021 6,618,176 25,018,180 31,636,356 (735,404) 1,047,821 574,887 887,304 (21,687,406) 10,836,254
-------------- ---------------- --------------------------------- ------------- ------------------------ ------------------ ------------------ -------------- -------------
CONSOLIDATED STATEMENTS OF Six months Six months Year
CASH FLOW FOR THE SIX MONTHS ended ended endedED 30 SEPTEMBER 2021 30 September 30 September 31 March
2021 2020 2021
(Unaudited) (Unaudited) (Audited)
GBPs GBPs GBPs
Cash used in operations (175,946) (315 552) (1,186,567)
Interest income - - -
Net cash from operating activities (175,946) (315 552) (1,186,567)
-------------- -------------- ------------
Investment in intangible assets (700,753) (167 738) (453,724)
Proceeds on sale of non-current 1,095,385 - -
assets held for sale
Loans advanced (18,960) (45 848) (84,239)
Net cash from investing activities 375,672 (213 586) (537,963)
-------------- -------------- ------------
Proceeds on share issue 1,931,113 1 226 900 2,761,000
-------------- -------------- ------------
Net cash flows from financing
activities 1,931,113 1 226 900 2,761,000
Total cash movement for the
period 2,130,839 697 762 1,036,470
Cash at the beginning of the
period 1,392,955 356 485 356,485
-------------- -------------- ------------
Total cash at end of the period 3,523,794 1 054 247 1,392,955
-------------- -------------- ------------
Notes to the Financial Statements
1. Status of interim report
The Group unaudited condensed interim results for the 6 months
ended 30 September 2021 have been prepared using the accounting
policies applied by the Company in its 31 March 2021
annual report, which are in accordance with International
Financial Reporting Standards (IFRS and IFRC interpretations)
issued by the International Accounting Standards Board ("IASB") as
adopted for use in the EU ("IFRS"), including the SAICA financial
reporting guides as issued by the Accounting Practices Committee,
IAS 34 - Interim Financial Reporting, , the AIM rules of the London
Stock Exchange and the Companies Act 2006 (UK). This condensed
consolidated interim financial report does not include all notes of
the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the
annual report for the year ended 31 March 2021 and any public
announcements by Galileo Resources Plc. All monetary information is
presented in the presentation currency of the Company being Great
British Pound. The Group's principal accounting policies and
assumptions have been applied consistently over the current and
prior comparative financial period. The financial information for
the year ended 31 March 2021 contained in this interim report does
not constitute statutory accounts as defined by section 435 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on those accounts was unqualified and did not contain a
statement under section 498(2)-(3) of the Companies Act 2006.
2. Basis of preparation
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 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.
3. Segmental analysis
Business segments
The Company's investments in subsidiaries and associates, that
were operational during the period, operate in four geographical
locations being South Africa, Zambia, Botswana and USA, and are
organised into one business unit, namely Mineral Assets, from which
the Group's expenses are incurred and future revenues are expected
to be earned. This being 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. An analysis of the loss on ordinary
activities before taxation is given below:
Six months Six months Year
ended 30 ended 30
September September ended
2021 2020 31 March
(Unaudited) (Unaudited) 2021
(Audited)
GBPs GBPs GBPs
Loss on ordinary activities
before taxation:
Rare earths, aggregates
and iron ore and manganese 4,031 (6,555) (9,088)
Gold, Copper - USA (2 288) - -
Copper Botswana (110 638) - 1,569,776
Corporate costs (443,598) (360,390) (1,472,816)
(552,493) (366,945) 87,872
------------- ------------- ------------
4. Financial review
The Group reported a net loss of GBP 552 493 (2020: GBP 366,945)
before and after taxation. Basic loss reported is 0.06 pence (2020:
0.06 pence) per share. Loss per share is based on a weighted
average number of ordinary shares of 919 808 258 (2020: 600 066 170
).
5. Share Capital
During the period under review the Company issued a total of 138
066 664 bringing the total number of shares in issue at the period
end to 1 050 042 981 ordinary shares. During the period under
review the Company issued 133 666 664 ordinary shares for cash to
raise GBP 2.0 million before expenses and 4 400 000 ordinary shares
through the exercise of warrants with total proceeds of GBP 0.03
million. Post the period under review the Company issued a total of
41 903 863 ordinary shares bringing the total shares in issue at
the date of this report to 1 091 946 844 ordinary shares.
During the period under review the Company issued new ordinary
shares as follows:
Number of
Date ordinary shares
=================== ================
Opening balance 911 976 317
Warrants exercised 4 400 000
=================== ================
Placing for cash 133 666 664
=================== ================
Closing balance 1 050 042 981
=================== ================
Post the period under review the Company issued new ordinary
shares as follows:
Number of
Date ordinary shares
======================================== ================
Opening balance 1 050 042 981
Warrants exercised 23 312 500
======================================== ================
Shares in lieu of director remuneration 16 425 032
======================================== ================
Shares issued in lieu of consultant
fees 2 166 331
======================================== ================
Closing balance 1 091 946 844
======================================== ================
The Company had the following warrants outstanding at the period
end:
Issue date Number of warrants Issue Expiry date
price
(pence)
01-Nov-19 24 125 000 0.60 2021/10/18
--------------------------- ------------- ------------
12-Jun-20 27 281 250 1.25 2021/12/12
--------------------------- ------------- ------------
24-Jun-20 5 625 000 0.80 2021/12/24
--------------------------- ------------- ------------
24-Jun-20 12 943 750 1.25 2021/12/24
--------------------------- ------------- ------------
15-Sep-20 10 000 000 2.00 2022/10/15
--------------------------- ------------- ------------
01-Jun-21 3 341 666 2.25 2023/06/01
--------------------------- ------------- ------------
01-Jun-21 66 833 332 2.25 2023/06/01
--------------------------- ------------- ------------
150 149 998
--------------------------- ------------- ------------
The Company had the following warrants outstanding at the date
of this report:
Issue date Number of warrants Issue Expiry date
price
(pence)
15-Sep-20 10 000 000 2.00 2022/10/15
--------------------------- ------------- ------------
01-Jun-21 3 341 666 2.25 2023/06/01
--------------------------- ------------- ------------
01-Jun-21 66 833 332 2.25 2023/06/01
--------------------------- ------------- ------------
80 174 998
--------------------------- ------------- ------------
6. Intangible assets
Reconciliation of Intangible assets:
Group as at 30 September 2021
Asset Opening balance Disposal Additions Foreign Closing
currency as part exchange balance
of assets movements
held for
sale
Exploration
and
evaluation
asset -
Botswana
(1) BWP 2,796,950 (2,378,626) 605,575 391 1,024,290
----------- -------------------- ------------- --------------- ---------------- -------------------
Exploration
and
evaluation
asset -
U.S.A. US$ 1,696,493 - 95,178 38,744 1,830,415
----------- -------------------- ------------- --------------- ---------------- -------------------
Total intangible
assets 4,493,443 (2,378,626) 700,753 39,135 2,854,705
-------------------- ------------- --------------- ---------------- -------------------
Exploration
and
evaluation
asset -
Zambia
held for
sale
(2) ZMW 1,574,160 - - - 1,574,160
----------- -------------------- ------------- --------------- ---------------- -------------------
6,067,603 (2,378,626) 700,753 39,135 4 428 865
-------------------------- -------------------- ------------- --------------- ---------------- -------------------
Botswana
1. Sale of 9 licenses held in the Kalahari Copper Belt
Further to announcements in May 2020 and October 2020, Sandfire
and Galileo entered into a variation agreement on 30 July2021. The
key commercial terms of the Variation Agreement were to make the
following variations to the Licence Sale Agreement:
-- Change the long stop date for the meeting of the conditions
from 31 July 2021 to 31 August 2021;
-- Sandfire to at completion of the Licence Sale Agreement,
reimburse Galileo up to US$500,000 of exploration expenditure
incurred by Galileo in relation to licence obligations of certain
Included Licences being transferred to Sandfire (the "Reimbursed
Exploration Expenditure");
-- Sandfire's US$4,000,000 Exploration Commitment under the
Licence Sale Agreement to be reduced by the amount of the
Reimbursed Exploration Expenditure;
-- PL 368/2018 which was due to expire on 30 September 2021 to
be removed from the list of Included Licences to be transferred to
Sandfire as this licence is, with the agreement of Sandfire, being
relinquished; and
-- Removing the option for Sandfire to elect to pay the Success
Payment under the Licence Sale Agreement by issuing Sandfire shares
to Galileo which means the Success Payment if due will be paid in
cash. Note: given the limited exploration conducted on the Included
Licences to date and the many years that it could take to establish
an Ore Reserve, there can be no guarantee that any such Success
Payment will be forthcoming.
Included Licences to be assigned to Sandfire at completion:
Licence ID Title Holder Beneficial
Interest
Crocus-Serv Resources
PL 250/2018 Pty Ltd 100%
--------------------------- -----------
Crocus-Serv Resources
PL 251/2018 Pty Ltd 100%
--------------------------- -----------
PL 366/2018 Africibum Co Pty Ltd 100%
--------------------------- -----------
PL 367/2018 Africibum Co Pty Ltd 100%
--------------------------- -----------
PL 122/2020 Africibum Co Pty Ltd 100%
--------------------------- -----------
PL 154/2020 Africibum Co Pty Ltd 100%
--------------------------- -----------
Virgo Business Solutions
PL 044/2018 Pty Ltd 100%
--------------------------- -----------
Virgo Business Solutions
PL 045/2018 Pty Ltd 100%
--------------------------- -----------
On 16 September 2021, the Company reported that all the
conditions precedent had been met in relation to its conditional
licence sale agreement with Sandfire entered into in January
2021.
2. Star Zinc
Assets of GBP1,574,460 are included as held for sale in the
balance sheet as at 30 September 2021.
On 4 March 2021, the Company entered into a conditional
agreement with Siege Mining Limited ("Siege") in relation to the
ceding of ownership and operation of the Star Zinc Project (the
"Star Zinc Project") for US$750,000 (being US$200,000 in relation
to the large-scale exploration license 19653-HQ-LEL (the "Star Zinc
Project License") (the "License Consideration") and US$550,000 for
the Company ceding its participation in the Star Zinc Project and
all exploration information which it has in relation to the Star
Zinc Project (the "Project Assets") (the "Project Consideration").
The Company will also be paid a royalty (proportion share) based on
future sales of zinc from the Star Zinc Project for Galileo
allowing Siege to use Galileo's information, know-how and
commercial experience in relation to the Star Zinc Project (the
"Agreement").
Royalties payable under the Agreement are dependent upon the
zinc concentrate in ore sold, future price of Zinc and ore produced
at the Star Zinc project. The Company had previously announced that
following a second phase of drilling the tonnage target was between
600,000 to 900,000 tonnes with an estimated average grade of 10-12%
zinc at above 3% cut off grade.
The Company entered into the Agreement following a period in
which it reviewed the options for putting the Star Zinc Project
into operation taking into consideration operational, community and
regulatory issues associated with mining a project that is in the
outskirts of Lusaka and allowing ownership and operational
responsibilities to be assumed by a Zambian mining company, whilst
the Company can still participate in the future success of the Star
Zinc Project.
The royalty will vary based on the contained zinc percentage of
the ore sold (the "Contained Zinc Percentage") and the LME Zinc
price at which the ore is sold (the "LME Zinc Price") The base
royalty rate is 3% and will increase by 1% for each US$250 increase
in the Zinc sale price over US$2,500 per tonne up to a maximum of
10% (the "Royalty Rate") The royalty will be calculated by
multiplying the Contained Zinc Percentage * the LME Zinc price *
Royalty Rate.
Group as at 30 September 2020
Asset Opening Additions Foreign Closing
currency balance exchange balance
movements
Exploration
and evaluation
asset - Botswana BWP - 229,323 67,368 296,691
------------ ----------- ------------------- ------------------ --------------------
Exploration
and evaluation
asset - U.S.A. US$ 1,773,859 101,439 (135,956) 1,739,342
------------ ----------- ------------------- ------------------ --------------------
Exploration
and evaluation
asset - Zambia ZMW 1,574,160 - - 1,574,160
------------ ----------- ------------------- ------------------ --------------------
3,348,019 330,762 (68,588) 3,610,193
--------------------------------- ----------- ------------------- ------------------ --------------------
Group as at 31 March 2021
Asset Opening Additions Additions Foreign Reclassify Total
currency through exchange as non-
business movements current
combinations assets
held for
sale
2021
---------- ------------------------------------------ ------------------------------------- ------------------------- --------------------------------- ------------------------ -------------------------
Exploration
and
evaluation
asset -
Botswana BWP - 342,946 2,531,022 (77,018) (2,378,626) 418,324
---------- ------------------------------------------ ------------------------------------- ------------------------- --------------------------------- ------------------------ -------------------------
Exploration
and
evaluation
asset -
U.S.A. US$ 1,773,859 110,778 - (188,144) - 1,696,493
---------- ------------------------------------------ ------------------------------------- ------------------------- --------------------------------- ------------------------ -------------------------
Exploration
and
evaluation
asset -
Zambia ZMW 1,574,160 - - - (1,574,160) -
---------- ------------------------------------------ ------------------------------------- ------------------------- --------------------------------- ------------------------ -------------------------
3,348,019 453,724 2,531,022 (265,162) (3,952,786) 2,114,817
------------------------ ------------------------------------------ ------------------------------------- ------------------------- --------------------------------- ------------------------ -------------------------
7. Going concern
The Group has sufficient financial resources to enable it to
continue in operational existence for the foreseeable future, to
continue the current development programme and meet its liabilities
as they fall due. During the period under review the Group raised
GBP2 million before expenses and the Company has no external debt
or overdrafts. The Company also received proceeds on the exercise
of warrants in an amount of GBP 0.2 million.
The directors have further reviewed the Group's cash flow
forecast, and in light of this review and the financial position at
the date of this report, they are satisfied that the Company and
Group have access to adequate resources to continue in operational
existence for the foreseeable future. Accordingly, the directors
consider it appropriate to continue to adopt the going-concern
basis in preparing these financial statements. This basis presumes
that funds will be available to finance future operations and that
the realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of
business.
8. Post balance sheet events
8.1. Issue of equity
On 30 November 2021 the Company issued a total of 18,591,363
shares, which included 17,358,363 shares ("Fee Shares") which was
approved by shareholders at the last AGM, to settle contractually
accrued but unpaid fees due to directors and consultants in respect
of the period from October 2018 to March 2021, amounting to
GBP118,750 (the "Accrued Fees") as well as 1,233,000 shares
("Consultant Fee Shares") issued at an issue price of 2.68p per
share, to a consultant of the Company in relation to fees amounting
to GBP22,030.
The Accrued Fees includes accrued fees owed to directors
totalling GBP106,250 (GBP 65,000 owed to Mr Bird and GBP41,250 to
Mr Wollenberg). Following the issue of the Fee Shares, Mr Bird was
issued 10,570,862 Ordinary Shares and Mr Wollenberg 5,854,170
Ordinary Shares, following which Mr Bird is interested in a total
of 78,605,862 Ordinary Shares representing 7.22% and Mr Wollenberg
a total of 13,575,511 Ordinary Shares representing 1.25% of the
Company's enlarged issued share capital.
On 23 December 2021 the Company announced that it had issued
2,812,500 fully paid ordinary shares in the Company at a price of
0.8p per share pursuant to the exercise of warrants in terms of the
Placing Agreement dated 30 May 2020 (RNS announced 1 June
2020).
8.2. Option and Joint Venture Agreement over Shinganda Copper-Gold Project, Zambia
On entered into an Option and Joint Venture agreement with Garbo
Resource Solutions Ltd ("Garbo"), a private special purpose UK
company established to hold the Shinganda copper-gold property
located in Central Zambia. The property is held as a large-scale
exploration licence No. 22990-HQ-LEL, covering an area of
186.76km2, by Garbo Resource Zambia Ltd., which is 99.4% owned by
Garbo.
Project Licence
Licence No. 22990-HQ-LEL is in its initial 4-year term which
expires on 22 August 2022. An exploration licence is valid for a
period of four years. It may be renewed for two further periods not
exceeding three years each but the maximum period from the initial
grant of the licence shall not exceed 10 years. A holder of an
exploration licence shall relinquish 50% of the licence at each
renewal.
Summary of Option Terms
An Option and Joint Venture Agreement has been signed with Garbo
on the following summary terms:
i. Galileo may earn an initial 51% interest in the Project by
spending US$500,000 on exploration, including drilling and
evaluation studies, over a two-year period, subject to any
necessary Zambian regulatory approval.
ii. Galileo may withdraw without penalty at any stage during the Option period.
iii. At any time during the Option period Galileo may elect to
move forward to a Joint Venture to more fully evaluate and, if
warranted, develop the Project.
iv. Should the parties decide to advance the Project to
feasibility study, then Galileo will pay the cost
of such a study.
v. Galileo's share of profits from a mining operation will vary,
depending on the projected size of the deposit, ranging from 85% if
the project has the potential of greater than 50,000 but up to
200,000 tonnes of contained copper equivalent, to 65% if the
project has the potential for more than 1,000,000 tonnes of
contained copper equivalent.
vi. On decision to mine, each party will be responsible for
funding of the development pro-rata to its equity holding in the
Joint Venture.
vii. Should Garbo fail to finance its share in the development
of the Project, 100% ownership of the Project will revert to
Galileo and Garbo will be granted a 2% net smelter royalty on
commercial production.
8.3 Glenover
On 9 December2021 Galileo announced a transaction in relation to
its investment in Glenover Phosphate Proprietary Limited
("Glenover") as follows:
a. Glenover in which Galileo has a 29% direct shareholding and a
4.99% indirect shareholding held via Galagen Proprietary Limited
who are the BEE partner of Galileo entered into an Asset sale
agreement with JSE Limited listed Afrimat Limited (JSE: AFT)
("Afrimat") for ZAR 250M (approx. GBP11.64m) of certain deposits of
phosphate rock located at the Glenover Mine and mining rights to
mine the Vermiculite Deposit at the Glenover Mine (the "Asset Sale
Agreement").
o ZAR 215.1M (approx. GBP10m) of the Asset Sale Agreement
consideration is unconditional and is anticipated to result in a
dividend of ZAR42M (approx. approx. GBP1.97M) being paid to Galileo
by 28 February 2022 in respect of its 29% shareholding in Glenover;
and
o ZAR34.9M (approx. GBP1.64m ) of the Asset Sale Agreement
consideration is conditional on the issue of a vermiculite mining
licence to Glenover and is anticipated to result in a dividend to
Galileo of Afrimat Shares worth approximately ZAR10M
(approx.GBP470K) in Q3 2022 in relation to Galileo's 29%
shareholding in Glenover.
b. Glenover also entered into a conditional sale of shares
agreement between Afrimat, Glenover and the shareholders of
Glenover including Galileo Resources SA (Pty) Ltd the Company's
wholly owned South African subsidiary under which Glenover has the
option to acquire the sale of shares in and shareholders loans made
to Glenover for ZAR300M (approx. GBP14m) which is expected to
complete by 15 June 2023 if the option is exercised ("Conditional
Share Sale Agreement"). Galileo's 29% share of the gross
Conditional Share Sale Agreement consideration is ZAR87M (approx.
GBP4.1m)
8.4 Joint Venture Agreement over Luansobe Copper Project,
Zambia
On 30 December 2021, the Company announced that it had entered
into a Joint Venture Agreement (the "JV Agreement") on 29 December
2021 with Statunga Investments Limited (the "Vendor"), a private
Zambian company owns the Luansobe Project comprising small-scale
exploration licence No. 28340-HQ-SEL, covering an area of 918
Hectares granted on 16 February 2021 and with its initial 4-year
term expiring on 15 February 2025.
Summary of JV Agreement Terms
1) Parties Statunga Investments Limited (hereinafter referred
to as "Vendor") and Galileo Resources Plc entered
into the JV Agreement on 29 December 2021
------------------------------- ----------------------------------------------------------
2) Luansobe Project The Luansobe Project's location in Zambia relative
to the Mufulira Copper Mine in Zambia is situated
approximately 15 kilometres to the North West
of Mufulira Mine site as per a 27 February
2008 report ( "2008 Report") provided by the
Vendor. The western limit is bounded by the
international border with the Democratic Republic
of the Congo (DRC). The Luansobe Project forms
part of the western limb of the northwest -
southeast trending Mufulira syncline and has
an estimated non-JORC compliant mineral resource
totalling 5.5 million tonnes at 1.6%TCu, 0.5%ASCu
and covers the full area of the shallow oxide
zone, down-dip to include the mixed oxide-sulphide
zone and the deeper sulphide zones as delineated
by drilling in 2006-07 and reported in the
2008 Report. The Luansobe (Insato, Kasaria)
Technical report also provided by the Vendor
refers to an Indicated Mineral Resource of
14.2 million tonnes at 2% Cu and the project
being 10 kilometres north-west of Mufulira
in the Copperbelt Province and contained within
ZCCM's Licence "Mufulira ML 15)
------------------------------- ----------------------------------------------------------
3) Initial JV (a) The parties agreed on an exclusive basis
period to enter into a joint venture in relation to
the Luansobe Project. The initial period is
from the date of the JV Agreement to 20 February
2022 (the "Initial JV Period").
(b) During the Initial Period Galileo will
conduct due diligence in relation to the Luansobe
Project and may at its sole discretion at any
time prior to the end of the Initial Period
give notice to the Vendor that it has decided
not to proceed with the Joint Venture ("Notice
Not To Proceed"). In the event of Galileo giving
Notice Not To Proceed (i) Galileo will not
be liable to pay the Second JV Payment (ii)
Galileo will only be entitled to a refund of
the Initial JV Payment in the event of a title
defect of the Licence or material misrepresentation
under the Vendor's warranties ("Refund Entitlement")
; and (iii) The JV Agreement will be terminated
and the parties will have no further obligations
or liabilities under this agreement save if
Galileo is due a Refund Entitlement.
------------------------------- ----------------------------------------------------------
4) Payments by (a) Galileo has to pay the initial payment
Galileo of US$200,000 by 31 December 2021 (the "Initial
JV Payment").
(b) Galileo has to pay the second payment of
US$200,000 by no later than 20 February 2022
but may elect to make the payment early (the
"Second JV Payment").
------------------------------- ----------------------------------------------------------
5) Issue of Galileo (c) Upon payment of the Second JV Payment Galileo
Shares & lock is to issue 5,000,000 Galileo Resources PLC
up shares to the Vendor which shall be subject
to a three month lock up arrangement and thereafter
a further three months orderly market arrangement.
Under the orderly market arrangement the shares
can be sold via Galileo's broker at a price
determined by the Vendor (the "Nominated Sale
Price") which shall not be less than the lower
of i) 10 day VWAP and ii) Galileo closing bid
price on the day before the fixing of the Nominated
Sale Price and Galileo's broker will have 10
business days to sell the shares at the Nominated
Sale Price.
------------------------------- ----------------------------------------------------------
6) Joint Venture (d) The JV Agreement established a joint venture
in relation to the Luansobe Project (the "Joint
Venture") and once Galileo has paid the Second
JV Payment (referred to above); Galileo or
its nominee will be issued 75% of the shares
in a to be established Zambian joint venture
company (the "JV Company") to own the Licence,
technical information and other information
and assets related to the Luansobe Project
and the Vendor will be issued 25% of the shares
in the JV Company
------------------------------- ----------------------------------------------------------
7) Technical (a) Galileo is to undertake to commence a raw
management of data investigation of the technical information
JV available in relation to the Project and devise
an exploration programme for the Luansobe Project,
which in Galileo's opinion will maximise the
value of the Luansobe Project and conduct a
feasibility study, which in their opinion will
identify the most economic and practical way
of advancing the project.
(b) The parties have agreed that a benchmark
expenditure for the raw data investigation
and exploration to complete a project feasibility
study (the "Project Feasibility Study Work")
is US$4,000,000 (the "Benchmark Expenditure").
In the event that the actual expenditure incurred
on the Project Feasibility Study Work prior
to a sale is;
1. less than the Benchmark Expenditure then
the shortfall (the " Benchmark Expenditure
Shortfall ") shall be added to the Vendor's
share of the gross sale proceeds; and
2. more than the Benchmark Expenditure then
the excess (the " Excess Benchmark Expenditure
") shall be deducted from the Vendor's share
of the gross sale proceeds.
(c) The Project Feasibility Study is to be
concluded within 18 months from 20(th) February,
2022 and may be extended by a further 6 months
if during the initial 18 months there is a
JORC resource for the Project (the "Feasibility
Study Period") .
------------------------------- ----------------------------------------------------------
8) Decision to (a) If a decision to mine is made by Galileo
Mine and funding (a "Decision to Mine"), then the parties will
be entitled to fund pro rata to their beneficial
interest in the JV Company and will seek funding
for a mine.
(b) Should the Vendor elect not to fund their
25%, then their interest will be assumed on
a carried basis ("Vendor Funding") to be borne
by a specific purpose vehicle to be formed
to raise the funding amount as debt for the
project construction ("SPV FundingCo") and
the SPV FundingCo will recover the Vendor Funding
from future cashflows on terms and conditions
to be agreed upon by the parties to the Vendor
Funding.
(c) The Vendor is not obligated to obtain the
Vendor Funding from the SPV FundingCo and is
at liberty to engage and obtain funding from
a commercial lending institution creating security
only to the extent of the Vendor's interest
in the JV company
(d) In the event that Galileo makes a decision
not to mine, the parties agree to seek to sell
the Project on the terms of point 8 below and
/or obtain a new investor.
------------------------------- ----------------------------------------------------------
9) No commitment Galileo makes no representation or commitment
to Mine to develop a mine and will only progress to
the development of a mine if in their opinion
the in-situ or primary material fulfil their
requirements for investment.
------------------------------- ----------------------------------------------------------
10) Distribution Upon commercial production the agreed and disclosed
of cashflows debt ( indicative of the principal sum, interest
per annum, instalments and duration/period)
shall be deducted out of the daily of cashflow
for debt servicing. The remaining amount available
shall be paid 75% to Galileo and 25% to the
Vendor net of operational costs.
------------------------------- ----------------------------------------------------------
11) Consequence In the event of a third party sale of the Luansobe
of sale project and / or the JV Company after the Second
JV payment the gross sale proceeds will be
distributed as follows;
(a) First Priority: The Vendor will be entitled
to US$6,000,000 (the "Base Vendor Sale Consideration")
plus the Benchmark Expenditure Shortfall less
the Excess Benchmark Expenditure (the "Vendor's
Priority Return"). By way of example in the
event that prior to a sale no money has been
spent by Galileo on the Project Feasibility
Study Work then the Vendor's Priority Return
would equal U$10,000,000 (US$6,000,000 of Base
Vendor Sale Consideration + US$4,000,000 of
Benchmark Expenditure Shortfall); and
(b) Second Priority: After the Vendor has been
paid the Vendor's Priority Return the balance
of the sale proceeds shall be paid 75% to Galileo
and 25% to the Vendor.
The Vendor will have come along rights so Galileo
cannot sell without giving the Vendor the opportunity
to sell on the same terms on a pro rata basis.
------------------------------- ----------------------------------------------------------
12) Maintenance Vendor to assist on an ongoing basis in maintaining
of Licence the Licence in good standing with government
agencies and local communities.
------------------------------- ----------------------------------------------------------
13) JV Committee A joint venture committee shall be formed,
comprising three representatives from Galileo
and two from the Vendor. The chairman shall
be a representative and appointee of Galileo.
------------------------------- ----------------------------------------------------------
14) JV Agreement It is agreed by the parties that upon establishment
on establishment of the JV Company the parties will enter into
of JV Company a joint venture agreement in relation to the
JV Company which shall encompass all of the
commercial terms contained in the JV Agreement
(the "JV Company Agreement"). The JV Company
Agreement matters will consist of the following,
but not be limited to the commercial terms
outlined in the JV Agreement, grievance procedures,
arbitration procedures, notices, joint venture
committee functions, licence maintenance, SPV
construction.
------------------------------- ----------------------------------------------------------
15) Termination This agreement will only be terminated if;
(a) The parties jointly agree in writing to
terminate the agreement; or
(b) If Galileo has given Notice Not to Proceed;
or
(c) If Galileo fails to meet any conditions
precedent.
------------------------------- ----------------------------------------------------------
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END
IR DKDBQOBDKFBN
(END) Dow Jones Newswires
December 31, 2021 02:52 ET (07:52 GMT)
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