Half Yearly Report

RNS Number : 3096U

Galileo Resources PLC

20 December 2011

 



20 December 2011

Galileo Resources Plc

("Galileo" or the "Company")

Unaudited Interim Report for the six months ending 30 September 2011

The Board of Galileo Resources Plc ("Galileo"), the AIM-quoted emerging African Rare Earth exploration company, is pleased to announce interim results for the six month period ended 30 September 2011.

Highlights

·      The figures reflect the trading of General Industries Plc - the Company which was renamed Galileo Resources on 28 September 2011 following the acquisition of Skiptons Global Investment Limited (BVI) through a reverse takeover;

·      Losses of £590,487 include the costs of Admission to AIM and the reverse takeover;

·      Since Admission, the Company has embarked on a drilling programme on its joint venture Glenover Rare Earth project;

·      Drilling programme revealed significant REE intersections in boreholes drilled adjacent to the former phosphate pit and in primary rock below the pit at Glenover.

Chairmen Colin Bird commented:

"The Company is encouraged by the drilling results to date and are undertaking further exploration to define a resource and carry out a feasibility study for REO concentrate production.

Galileo is well placed in the global evolving exploration and development of REE resources, outside of China, aimed at countering China's dominance in REE production and is aggressively pursuing capture of raw data for feasibility study and shareholder value enhancement."

For further information, please contact:

Colin Bird                                                                                                         Tel [phone]

Chairman & CEO

Richard Wollenberg                                                                                           Tel [phone]

Non-Executive Director

Beaumont Cornish Limited,                                                                             Tel [phone]

Nominated Advisor and Broker

Roland Cornish/James Biddle

Shore Capital Stockbrokers Limited                                                                 Tel [phone]

Joint Broker

Jerry Keen/Toby Gibbs

Bishopsgate Communications                                                                           Tel [phone]

Nick Rome/Shabnam Bashir

A copy of the announcement is available on the Company's website www.galileoresources.com

Technical Sign-Off

Andrew Sarosi, Technical Director of Galileo, who holds a B.Sc.Metallurgy and M.Sc. Engineering, University of Witwatersrand and is a member of The Institute of Materials, Minerals and Mining, is a 'qualified person' as defined under the AIM Rules for Companies and a competent person under the reporting standards. The technical parts of this announcement have been prepared under Andrew Sarosi's supervision and he has approved the release of this announcement.

Extracts from the Interim Management Report are set out below:

Results

This is my first interim report as Chairman of Galileo Resources Plc ("Galileo" or the "Company") (formerly General Industries Plc), which was admitted for trading on the AIM market on 28 September 2011 following the acquisition of Skiptons Global Investment Limited (BVI) through a reverse takeover.

During the six months to 30 September, the Company made a loss of £590,487 equal to 4.55 pence per share. This figure includes the costs of Admission and the reverse take over. The balance sheet reflects the transaction but the P&L largely relates to the pre-acquisition period.  The balance sheet also reflects the payment to Fer-Min-Ore (Pty) Limited of £1,065,988 in respect of historical engineering work paid in accordance with the shareholders' agreement (further details are set out in Note 6 herein). The directors do not intend to declare a dividend. 

Current Business

The key asset of Galileo is a joint venture with Glenover Phosphate (Pty) Ltd., which has the rights to a large concession containing phosphates in the North West Province of South Africa. Within the mining licence is an open pit, formerly operated for phosphates by Gold Fields of South Africa in the 1980s and subsequently acquired by Fer-Min-Ore, our partners in the project. Historical data suggested that the phosphate and surrounding rock minerals contained Rare Earth Elements (REEs), which was confirmed by the sampling, earlier this year, of previously mined and stockpiled lower grade phosphate on surface. 

The presence of these stockpiles, which contain a significant resource of REEs represents a major potential benefit to the Company, since these stockpiles represent potential feed to a process plant without mining risk. The concession area is a large carbonatite intrusion, which globally, outside of China, is a much sought after geological environment for hosting potential REE deposits.

The Company also has conditional agreements in principal to acquire interests up to 74% in prospecting rights for certain iron ore and manganese concessions and holds a 49% interest in an aggregate quarry in Eastern Cape Province. The quarry is a potential near-ready operation, contingent on meeting certain conditions precedent, including an assessment on the exploration areas prior to detailed exploration comprising, inter alia, mapping, rock sampling and, if appropriate, additional exploration drilling.

Post-period drilling

Since Admission, the Company embarked post period, on a drilling programme on its joint venture Glenover Rare Earth project and has announced significant REE intersections in boreholes drilled adjacent to the former phosphate pit and in primary rock below the pit as highlighted below:

·      Four boreholes (GVH001 to GVH 004) drilled (and reported) in an area peripheral to the old open pit, previously worked for its high grade phosphate ore,  but in which the REEs present,  in the lower grade ore mined and stockpiled, were neither recognised nor in significant demand at the time  of mining

·      Rare earth oxide ("REO") mineralisation >1% REO  intersected in all four boreholes with whole core > 100 metres assaying between  2.15% and 2.44% REO

·      Borehole intersections included 77 metres assaying 3.66% REO, 5 metres assaying5.41% REO (GVH001); 52.6 metres  from surface assaying 4.27% REO  and 18.3 metres assaying 8.24% REO (GVH003);  and  45 metres from surface assaying  3.23% REO with 8 metres assaying  8.03% REO (GVH004)

·      Drilling continues with a further four boreholes (GVH005 to GVH008) drilled around the old pit and samples submitted for assay,  and twelve further boreholes drilled for logging sampling.

Future Prospects

The Company is encouraged by the drilling results to date and are undertaking further exploration to define a resource and carry out a feasibility study for REO concentrate production.

Galileo is well placed in the global evolving exploration and development of REE resources, outside of China, aimed at countering China's dominance in REE production and is aggressively pursuing capture of raw data for feasibility study and shareholder value enhancement.

Colin Bird

Chairman

20 December 2011

Consolidated Interim Income Statement

for the six months ended 30 September 2011

			Six months ended 30 September 2011 (Unaudited)	Six months ended 30 September 2010 (Unaudited)	Year ended 31 March 2011 (Audited)
			£	£	£
Administration expenditure			(550,932)	(8,085)	(17,857)
Loss from operations			(550,932)	(8,085)	(17,857)
Interest receivable and similar income			6,811	8,315	16,746
Foreign exchange loss			(46,366)	-	-
(Loss)/profit before taxation			(590,487)	230	(1,111)
Taxation			-	-	(1,400)
(Loss)/profit for the period attributable to    equity holders			(590,487)	230	(2,511)
Shares
Number in issue			70,700,040	10,700,040	11,700,040
Weighted basic and diluted average number in issue			12,989,657	10,533,373	10,658,373
Loss per share - pence
Basic and diluted			(4.55)	0.00	(0.02)
Headline loss per share			(4.55)	0.00	(0.02)

Consolidated Interim Statement of Financial Position

as at 30 September 2011

			At 30 September 2011 (Unaudited)	At 30 September 2010 (Unaudited)	At 31 March 2011 (Audited)
			£	£	£
Non-current assets
Intangible assets - intellectual property    rights			1,065,988	-	-
Intangible assets - goodwill			10,174,705	-	-
Investments			757,933	-	361,757
Total non-current assets			11,998,626	-	361,757
Current assets
Trade and other receivables			16,438	3,704	5,837
Cash and cash equivalents			2,403,669	1,044,942	831,434
Total current assets			2,420,107	1,048,646	837,271
Total assets			14,418,733	1,048,646	1,199,028
Current liabilities
Trade and other payables			(245,489)	(424)	(5,297)
Total current liabilities being total    liabilities			(245,489)	(424)	(5,297)

Net assets

14,173,244

1,048,222

1,193,731

Equity
Called up share capital						3,535,002	535,002	585,002
Share premium account						11,219,309	499,309	599,309
Retained earnings						(581,067)	13,911	9,420
	Shareholders' funds attributable to equity holders					14,173,244	1,048,222		1,193,731
Net assets per share - pence						20.05	9.80		10.20

Consolidated Cash Flow Statement

for the six months ended 30 September 2011

			Six months ended 30 September 2011 (Unaudited)	Six months ended 30 September 2010 (Unaudited)	Year ended 31 March 2011 (Audited)
			£	£	£
Cash flows from operating activities
(Loss)/profit for the period			(590,487)	230	(2,511)
Financial income			(6,811)	(8,315)	(16,746)
Foreign exchange loss			46,366	-	-
Fair value of share options granted			-	1,749	-
Taxation			-	-	1,400
Cash flows from operating activities before changes in working capital			(550,932)	(6,336)	(17,587)
(Increase)/decrease in trade and other    receivables			(10,601)	4,536	2,403
Increase/(decrease) in trade and other    payables			240,192	(8,864)	(5,392)
Cash absorbed by operating activities being    net cash flows from operating activities			(321,341)	(10,664)	(20,846)
Cash flows from investing activities
Financial income			6,811	8,315	16,746
Acquisition of subsidiaries			(10,174,705)	-	-
Purchase of intangible fixed assets			(1,065,988)	-	-
Purchase of investments			(396,176)	-	(361,757)
Net cash flows from investing activities			(11,630,058)	8,315	(345,011)
Cash flows from financing activities
Issue of shares, net of issuance costs			13,570,000	65,000	215,000
Foreign exchange loss			(46,366)	-	-
Net cash flows from financing activities			13,523,634	65,000	215,000
Net increase/(decrease) in cash and cash    equivalents			1,572,235	62,651	(150,857)
Cash and cash equivalents at beginning of the    period			831,434	982,291	982,291
Cash and cash equivalents at end of the    period			2,403,669	1,044,942	831,434

Other Primary Statements

for the six months ended 30 September 2011

Consolidated Interim Statement of Changes in Equity

		Share capital	Share premium	Retained earnings	Total
		£	£	£	£
At 1 April 2010		510,002	459,309	11,931	981,242
Issue of share capital		25,000	-	-	25,000
Premium on issue of share capital		-	40,000	-	40,000
Net profit for the period		-	-	1,980	1,980
At 30 September 2010		535,002	499,309	13,911	1,048,222
Issue of share capital		50,000	-	-	50,000
Premium on issue of share capital		-	100,000	-	100,000
Net loss for the period		-	-	(4,491)	(4,491)
At 31 March 2011		585,002	599,309	9,420	1,193,731
Issue of share capital		2,950,000	-	-	2,950,000
Premium on issue of share capital		-	10,620,000	-	10,620,000
Net loss for the period		-	-	(590,487)	(590,487)
At 30 September 2011		3,535,002	11,219,309	(581,067)	14,173,244

Consolidated Interim Statement of Comprehensive Income and Expense

			Six months ended 30 September 2011 (Unaudited)	Six months ended 30 September 2010 (Unaudited)	Year ended 31 March 2011 (Audited)
			£	£	£
(Loss)/profit for the period being total comprehensive income and expense for the period attributable to equity shareholders			(590,487)	230	(2,511)

Notes to the Financial Statements

             1. Status of interim report

The consolidated interim financial statements for the six months ended 30 September 2011 and the comparative period have been prepared using applicable International Financial Reporting Standards adopted by the EU ("IFRS"), which include IAS 34 and Interpretations issued by the International Accounting Standards Board ("IASB") and its committees, which are expected to be endorsed by the EU. The interim financial information has been prepared in accordance with the Listing Rules of the Financial Services Authority and was approved by the board on 20 December 2011. They are unaudited and do not comprise statutory accounts within the meaning of section 435 (1) of the Companies Act 2006.

 The comparative figures for the financial year ended 31 March 2011 are not the company's statutory accounts for that financial year. 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 preparation

Accounting policies

The accounting policies and methods of computation have been applied consistently throughout the group and are consistent with those for the financial year ended 31 March 2011.  

Use of estimates and judgement

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The key areas in which estimates have been used and the assumptions applied are in valuing investments and in the calculation of provisions.

Intangible assets - intellectual property rights

Separately acquired intellectual property rights are shown at historical cost.

Intellectual property rights are regarded as having an indefinite useful life. Based on all relevant information there is effectively no limit to the period over which the asset is expected to generate net cash inflows. Accordingly, amortisation is not provided for on the intellectual property, but it is tested for impairment annually and whenever there is an indication that the asset may be impaired.

Intangible assets - goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in 'intangible assets'. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment.

2. Basis of preparation (continued)

Investments

Investments are initially measured at cost. They are measured at subsequent reporting dates at cost less provision for impairment where they relate to unquoted equity investments where fair value cannot be readily determined, and at fair value otherwise.

Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in Pounds Sterling, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

At the end of the reporting period, foreign currency monetary items are translated using the closing rate. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous periods are recognised as gains or losses in the period in which they arise.

Share based payments

In accordance with IFRS 2 "Share-based payments", the company reflects the economic cost of awarding shares and share options to directors and employees by recording an expense in the statement of comprehensive income equal to the fair value of the benefit awarded, fair value being determined by reference to option pricing models.  The expense is recognised in the statement of comprehensive income over the vesting period of the award.

Fair value of share options granted

The fair values of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the option is measured based on a Black Scholes model (with the contractual life of the option built into the model).

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. Accordingly, the directors consider it appropriate to continue to adopt the going concern basis in preparing these interim financial statements.

3. Segmental analysis

Business segments

The group's only business is the exploration and development of Rare Earths and Aggregates.

Geographical segments

An analysis of the profit/(loss) on ordinary activities before taxation and net assets is given below:

			Six months ended 30 September 2011 (Unaudited)	Six months ended 30 September 2010 (Unaudited)	Year ended 31 March 2011 (Audited)
			£	£	£
(Loss)/profit on ordinary activities before income tax
United Kingdom			(574,047)	230	(1,111)
South Africa			(16,440)	-	-
			(590,487)	230	(1,111)
Net assets by location
United Kingdom			12,240,045	1,048,222	831,974
South Africa			1,933,199	-	361,757
			14,173,244	1,048,222	1,193,731

4. Taxation

The tax position for the period is estimated on the basis of the anticipated tax rates applying for the full year and includes adjustments to the prior year charge based upon final computations for that period.

Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.

Deferred tax assets are recognised to the extent that on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of underlying timing differences can be deducted.

5. Earnings per share

Earnings per share has been calculated using the loss after tax for the period of £590,487 (September 2010: profit £230; March 2011 loss: £2,511) and the weighted average number of shares as follows:

                                                                                                                                                                                                                                                                  Weighted average number of shares

						At 30 September 2011 (Unaudited)	At 30 September 2010 (Unaudited)		At 31 March 2011 (Audited)
Basic and diluted						12,989,657		10,533,373		10,658,753

6 Intangible assets - intellectual property rights

As part of a shareholders' agreement between Utafutaji Trading 112 Proprietary Limited and Glenover Phosphate (Pty) Limited, Utafutaji committed to pay Fer-Min-Ore (Pty) Limited up to $2 million for historical engineering work. On 30 September 2011, an amount of £1,065,988 was paid in accordance with the shareholders' agreement.

7. Intangible assets - goodwill

The amount shown in the balance sheet for Goodwill of £10,174,705 represents the amount paid for Skiptons Global Investment Limited (BVI) based on the issue of 44,200,000 ordinary shares of 5 pence each at 23 pence, adjusted for the net assets of Skiptons on acquisition.

8. Investments

Included in Investments is a loan from Utafutaji Trading 112 Proprietary Limited to Glenover Phosphate (Pty) Limited of £519,623. This loan is not repayable in cash, rather it will be converted into equity.

Also included is a loan from Utafutaji Trading 112 Proprietary Limited to Brightwater Trade & Invest 55 (Pty) Limited of £238,310. This loan is not repayable within the next twelve months. 

9. Issue of ordinary shares

On 26 September pursuant to an Admission document dated 1 September 2011, the company allotted 14,500,000 ordinary shares of 5 pence each at 23 pence to raise £3,335,000. On the same date, the company issued a further 44,200,000 ordinary shares of 5 pence each at 23 pence to acquire the whole of the issued share capital in Skiptons Global Investment Limited (BVI) and a further 300,000 ordinary shares of 5 pence each at 23 pence to J Richard Wollenberg in lieu of fees.

10. Share based payments

By option certificates dated 1 September 2011, each of the following directors, key management and advisors was granted an option 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

No charge has been recognised in the Income Statement, as the options vested on Admission to trading on AIM on 28 September 2011.

11. Directors' responsibilities

The interim report is the sole responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the AIM Rules issued by the London Stock Exchange.

As disclosed in Note 1, the financial statements included in this interim report have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union." 

ENDS

Note:

Galileo Resources Plc is a natural resource exploration company. The Company has an experienced management team with proven technical and commercial background. The flagship property is the Glenover Phosphate concession, which produced phosphate for many years. Phosphate however, is now subordinated to Rare Earth Elements (REEs). The project area is known to contain REEs and that the grades, if of sufficient size and continuity may well lead to a medium-sized operation for the production of REOs.

Galileo Resources currently has an 11.5% interest in the Glenover Project and has the option, via additional stage payments as set out in the Company's Admission Document, to earn up to a maximum interest of 73.73%.

One of the key benefits of the project for a medium-sized operation is that, if REEs, which have been shown to be present in the stockpiles from the previous phosphate operations, can be proven to compliant resource category, the cost of mining it and the associated risks should substantially be reduced.

The concession is of considerable size and hosts mineralisation types suitable for potential REE presence. The aim is to investigate the mineralisation types for REE presence and content with the view to proving up a mineable resource of REOs.

The Company also has a number of Iron Ore and Manganese exploration projects in the Cape, all of which are in proximity either to current operations or discoveries, which are not currently being processed.

Galileo has rights to joint venture in an aggregate producing quarry close to Mthata in the Eastern Cape. The Directors believe that the quarry is well positioned to supply construction aggregate for the significant potential infrastructure programme being undertaken by local government.

.

 

END

 

 

IR KBLBLFLFLFBB