Half Yearly Report

RNS Number : 6307T

Galileo Resources PLC

17 December 2012

 



17 December 2012

Galileo Resources PLC

("Galileo" or "the Company" or "the Group")

Interim results for the six months ended 30 September 2012

Galileo, (AIM:GLR) the emerging African Phosphate/Rare Earth Exploration company, announces its interim results for the six months ended 30 September 2012.

Highlights

·     Flagship property Glenover advances into preliminary economic assessment, with results due in Q1 2013

·     Acquired a 70% interest in Rare Earth International Limited ("REI")

·     REI's "Nkombwa Hill" project in Zambia demonstrates significant potential

·     Praetorian Resources Limited ("Praetorian")  takes a strategic stake in Galileo

The directors of Galileo, the AIM listed emerging African Phosphate/Rare Earth Exploration Company, are pleased to present shareholders with its interim results for the six months ended 30 September 2012.

Chairman's report

This is my second interim report and I am pleased to be able to report an excellent period between interims. An aggressive approach to our flagship property Glenover in South Africa has brought us closer to a production decision than we could have reasonably expected at the time of our initial involvement with the project. 

The Rare Earth market is dominated by China and its approach to exports. During the review period, Rare Earth product prices have declined to more sustainable levels reflecting a more balanced approach to marketing by all concerned. The Chinese approach to the market has become more consistent with increased attention being given to efficiencies and safety within its internal industry. The Western response has included country alliances, company partnerships and aggressive rhetoric targeted at China's dominance.

There remains no doubt in my mind that a well-positioned resource will have a strategic role to play in providing the West with real alternative sources of supply of the critical Rare Earths.

Galileo is a well-structured Rare Earth exploration and development company. The Company has an exceptional management team with proven technical and commercial background. The Group's flagship property is the Glenover Phosphate concession, which was a successful phosphate producer for many years. Phosphate, however, is now subordinated to Rare Earth Elements ("REEs"). The project area is known to contain significant REEs and Galileo has verified that the grades and tonnages are potentially sufficient to justify exploitation. With this in mind Galileo has appointed UK-based GBM Minerals Engineering Consultants Limited ("GBM"), a British based engineering company, to carry out a fully independent preliminary economic assessment ('PEA') for the envisaged operation.

One of the key benefits of the project for a medium-sized operation is the fact that a significant portion of the REE resource is contained in stockpiles from the previous phosphate operations. The availability of stockpiled material negates the cost and associated risks of mining.  Exploration performed by the company has identified additional REE mineralisation outside of the historical mining area: our aim is to investigate these mineralised areas with the view to building a larger resource of REE.

As announced on 4 July 2012, Praetorian, a new resource focused investment holding company, acquired a 9.03% interest in Galileo through a share exchange and subscription agreement. Galileo is pleased to participate in Praetorian's underlying investment model and currently holds 4 million Praetorian shares.

Galileo has the potential, with its near term production, to become a significant REE oxide concentrate producer. The project has considerable potential for increasing the ore resource base. Additionally there exists potential for other non-rare earth contribution in the form of scandium and niobium.

Galileo is dedicated to sustainable and socially responsible development and, as a company, to ensure that all its projects adhere to the highest levels of environmental standards. The Company is also a firm proponent for the role of foreign direct investment as a key form of social development in developing African countries.

Results

The Group reported a basic loss per share for the period under review of 0.75 pence (2011: loss of 5.05 pence) calculated using a basic loss of £584,409 (2011: £544,121).

During October 2012, Utafutaji Trading 112 Proprietary Limited changed its name to Galileo Resources South Africa (Pty) Ltd ("GSA") to better reflect the company's operations and relation with Galileo.

Glenover Rare Earth Project

The Glenover Rare Earth project ("the Glenover Project" or "the Project"), housed by Glenover Phosphate (Pty) Ltd ("Glenover"), is a joint venture with Fer-Min-Ore (Pty) Ltd ("FMO") and a Black Economic Empowered partner.

Glenover has the rights to a large concession containing phosphates in the Limpopo Province in the North West of South Africa. Within the licence area is an open pit, formerly operated for phosphates by Gold Fields of South Africa in the 1980s and subsequently acquired by FMO.  Historical data suggested that the phosphate and surrounding rock minerals contained Rare Earth Elements (REEs), which were  confirmed by sampling of the previously mined lower grade phosphate stockpiles 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 underlain by a large carbonatite intrusion, a highly prospective geological environment for hosting potential REE deposits.

Resource Estimate

During the period under review the Company completed its mineral resource-definition drilling of the open pit surroundings and issued a SAMREC compliant Mineral Resource on 14 April 2012, as announced on 17 April 2012. The Resource Statement estimated the remnant open pit breccia and surrounding carbonatite resource and the stockpiles to contain a total Indicated + Inferred 28.9 million tonnes grading 1.24% TREO + Y2O3 (total rare earth oxides and yttrium oxide) of which 16.78 million tonnes were in the Indicated Resource category grading at 1.45 % TREO + Y2O3. Of the Indicated Resource, 7.41 million tonnes, grading 2.20% TREO Y2O3, are contained in the apatite breccia and the balance of 9.37 million tonnes grading 0.88% TREO + Y2O3 are in the carbonatite. The Inferred Resource is estimated at 12.14 million tonnes grading 0.98 % TREO + Y2O3, of which 2.68 million tonnes are contained in the stockpiles grading 1.94% TREO + Y2O3 and 8.74 million tonnes grading 0.66%
TREO + Y2O3 are in the pyroxenite rocks.

Preliminary Economic Assessment ("PEA")

In August 2012, Glenover commissioned GBM as lead contractor to undertake a compliant PEA of the Glenover Project. The PEA scope of work includes a review of the Resource Estimate, an environmental study, a preliminary open pit mine design and metallurgical test work amalgamated to form an overall financial assessment. The PEA report is anticipated in the first quarter of 2013. 

New Business

On 25 July 2012 Galileo entered into an agreement with Rare Earth International Limited ("REI") to earn-in to three rare earth projects located in Zambia, Mozambique and Spain (the "Projects"), in consideration for which REI will be issued with 5.25 million Ordinary Shares in Galileo  priced at the date of signing the agreement and subject to satisfactory due diligence on title and licence holder's standing.

REI holds the right to earn up to a 50% interest in the Zambian "Nkombwa Hill" Project. Under the terms of the agreement, Galileo will provide funding to REI of a minimum amount of US$1.2 million to complete the specified exploration programme at "Nkombwa Hill" to earn an effective 35% interest in the "Nkombwa Hill" Project.  Further funding of the project will be pro rata the interests held by the parties to the agreement, with an option for REI to elect that Galileo funds REI's interest by way of a loan to REI bearing interest at Libor plus 2 % per cent and repayable from future cash flows.

The Company's legal due diligence on title and standing of the licence holder was recently completed and concluded that the licence and the licence holder are in good standing save for final letter of approval from the appropriate government department.

Following the completion of the earn-in, REI will have the option (expiry date 31 December 2013) to sell its remaining interest in the "Nkombwa Hill" Project to Galileo for a further US$2 million in cash or Galileo shares.

Following the completion of a bankable feasibility study in respect of the "Nkombwa Hill" Project, Galileo will have the option to acquire REI's remaining interest at a price to be determined as per the agreement.

Two boreholes historically drilled on the "Nkombwa Hill" Project intersected 4 to 6 metres thick intervals, with elevated REEs. A re-assay of the samples in 2010 returned values of 5% and 8% TREO. Extensive surface sampling by REI during 2011 identified highly prospective drilling targets one of which is 25 to 50 metres wide zone, over which sample assays consistently report over 3% TREO - including a high proportion assaying 5% to 10% TREO - over a sampling strike length of 350 metres. Several outcrop samples have been collected having in excess of 20% TREO.

The "Xiluvo" Project in Mozambique has a JORC compliant Indicated Resource of 1.1 million tonnes of 2.05% TREO and 4.4% phosphate (P2O5) (at a cut off 1% TREO).

Future Prospects

The PEA is progressing satisfactorily, within budget and on time, and we are confident that we will receive a favourable outcome allowing us to progress into a full feasibility study. The key risk factors in a REE project are generally processing and the work to date suggests that this will not be a fatal flaw to prevent Galileo from progressing this project. Our scrutiny of competing companies suggests that Glenover is extremely well positioned in its mix of critical Rare Earths; recognising this Galileo is committed to a fast track approach to developing the project.

Previous exploration on the "Nkombwa Hill" Project by REI identified a number of drill ready REE targets. An initial drilling programme has been designed to define the extent and continuity of the REE mineralisation in the more attractive targets.

Recognising the complexity of the REE market together with processing constraints, the Company is actively pursuing avenues for corporate and strategic alliances in order to enhance the overall value of the projects and to ensure a prime position in the rapidly developing REE arena.

Colin Bird

Chairman

14 December 2012

For further information, please contact:

Colin Bird, Chairman  & CEO	Tel [phone]
Andrew Sarosi, Executive Director	Tel [phone]
Beaumont Cornish Limited Nominated Advisor and Broker Roland Cornish/James Biddle	Tel [phone]
Shore Capital Stockbrokers Limited                                                     Joint Broker Jerry Keen/Toby Gibbs	Tel [phone]
Gable Communications Justine James	Tel [phone] M  [phone]

UNAUDITED INTERIM FINANCIAL STATEMENTS
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2012
		Six months	Six months	Year
		ended	ended	ended
	Notes	30 September	30 September	31 March
		2012	2011	2012
		(Unaudited)	(Unaudited)	(Audited)
		£	£	£
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Property, plant and equipment		851	1 065 988	897
Intangible assets	6	8 691 083	10 174 705	10 174 642
Investment in joint ventures	7	2 213 172	-	1 519 841
Loans receivable		320 827	238 310	1 015 912
Other financial assets	8	415 405	519 623	5
		11 641 338	11 998 626	12 711 297
Current assets
Trade and other receivables		-	16 438	-
Cash and cash equivalents		2 696 246	2 403 669	2 722 932
Total Assets		14 337 584	14 418 733	15 434 229
EQUITY AND LIABILITIES
Equity
Share capital	9	3 902 859	3 535 002	3 777 859
Share premium	9	13 489 511	11 219 309	12 614 511
Reserves	6,10	(670 380)	-	791 761
Accumulated loss		(2 410 924)	(581 067)	(1 826 515)
		14 311 066	14 173 244	15 357 616
Liabilities
Current liabilities
Trade and other payables		26 518	245 489	76 613
Total Equity and liabilities		14 337 584	14 418 733	15 434 229

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
		Six months	Six months	Year
	Notes	ended	ended	ended
		30 September	30 September	31 March
		2012	2011	2012
		(Unaudited)	(Unaudited)	(Audited)
		£	£	£
Revenue		-	-	19 164
Operating expenses		(619 914)	(550 932)	(1 836 034)
Operating loss		(619 914)	(550 932)	(1 816 870)
Investment income		22 446	6 811	10 295
Income/(loss) from equity accounted investments		13 059	-	(29 340)
Finance costs		-	-	(20)
Loss for the period		(584 409)	(544 121)	(1 835 935)
Other comprehensive income:
Exchange differences on translating foreign operations	6	(1 462 141)	(46 366)	4 623
Total comprehensive loss		(2 046 550)	(590 487)	(1 831 312)
Total comprehensive loss attributable to:
Owners of the parent		(2 046 550)	(590 487)	(1 831 312)
Number of shares in issue		83 057 183	70 700 040	78 200 040
Weighted and diluted average number of shares in issue		77 611 347	11 700 040	47 111 047
Loss per share - pence
Basic and diluted loss per share	5	(0.75)	(4.65)	(3.90)
Headline loss per share	5	(0.75)	(4.65)	(3.90)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Figures in Pound Sterling	Share Capital	Share Premium	Total Share Capital	Foreign currency translation reserve	Share based payment reserve	Total reserves	Accumulated loss	Total equity
Balance at 01 April 2011	585 002	599 309	1 184 311	-	-	-	9 420	1 193 731
Changes in equity
Total comprehensive income for the 6 months	-	-	-	-	-	-	(590 487)	(590 487)
Share issues	2 950 000	10 620 000	13 570 000	-	-	-		13 570 000
Total changes	2 950 000	10 620 000	13 570 000	-	-	-	(590 487)	12 979 513
Balance at 30 September 2011	3 535 002	11 219 309	14 754 311	-	-	-	(581 067)	14 173 244
Changes in equity
Total comprehensive income for the 6 months	-	-	-	4 622	787 139	791 761	(1 245 448)	(453 687)
Share issues	242 857	1 457 143	1 700 000					1 700 000
Share issue and other costs	-	(61 941)	(61 941)					(61 941)
Total changes	242 857	1 395 202	1 638 059	4 622	787 139	791 761	(1 245 448)	1 184 372
Balance at 31 March 2012	3 777 859	12 614 511	16 392 370	4 622	787 139	791 761	(1 826 515)	15 357 616
Changes in equity
Total comprehensive income for the 6 months	-	-	-	(1 462 141)	-	(1 462 141)	(584 409)	(2 046 550)
Share issues (after conversion to no par value shares)	-	1 000 000	1 000 000	-	-	-	-	1 000 000
Total changes	-	1 000 000	1 000 000	(1 462 141)	-	(1 462 141)	(584 409)	(1 046 550)
Balance at 30 September 2012	3 777 859	13 614 511	17 392 370	(1 457 519)	787 139	(670 380)	(2 410 924)	14 311 066

ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOW
		Six months	Six months	Year
		ended	ended	ended
		30 September	30 September	31 March
		2012	2011	2012
		(Unaudited)	(Unaudited)	(Audited)
		£	£	£
Cash used in operations		(403 627)	(367 707)	(634 703)
Interest income		22 446	6 811	10 295
Finance costs		-	-	(20)
Net cash from operating activities		(381 181)	(360 896)	(624 428)
Purchase of property, plant and equipment		-	-	(897)
Increase in investments in associates and joint ventures		(680 271)	(11 636 869)	(1 549 186)
Decrease/(Increase) in loans to group companies		695 085	-	(1 015 912)
Sale of financial assets		(660 319)	-	(104 802)
Net cash from investing activities		(645 505)	(11 636 869)	(2 670 797)
Proceeds on share issue		1 000 000	13 570 000	5 186 723
Net cash flows from financing activities		1 000 000	13 570 000	5 186 723
Total cash movement for the 6 months		(26 686)	1 572 235	1 891 498
Cash at the beginning of the 6 months		2 722 932	831 434	831 434
Total cash at end of the 6 months		2 696 246	2 403 669	2 722 932

Statement of Responsibility for the six months ended 30 September 2012

The directors are responsible for preparing the consolidated interim financial statements for the six months ended 30 September 2012 and they acknowledge, to the best of their knowledge and belief, that:

·     the  consolidated interim financial statements for the six months ended 30 September 2012 have been prepared in accordance with IAS 34 - Interim Financial Reporting, as adopted by the EU;

·     the interim management report includes a fair review of the information required by:

a)    DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of interim financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and

b)    DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the group during that period; and any changes in the related party transactions described in the last annual report that could do so.

Colin Bird                                        Chairman and Chief Executive Officer

Dr Robin Edward Harmer         Technical Director

Andrew Francis Sarosi               Finance & Corporate Development Director

J Richard Wollenberg                Non-Executive director

Christopher Molefe                   Non-Executive Director

14 December 2012

Notes to the Financial Statements

             1. Status of interim report

The consolidated interim financial statements for the six months ended 30 September 2012 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 14 December 2012. 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 2012 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 preparation

Basis of consolidation

The consolidated accounts comprise the accounts of the parent company and all its subsidiaries and included the group's interest in its associate until the date of its dissolution. They will include the group's interest in its joint venture when its formation is complete.

Entities over which the group has the ability to exercise control are accounted for as subsidiaries. Entities that are not subsidiaries or joint ventures but where the group has significant influence (i.e. the power to participate in the financial and operating policy decisions) are accounted for as associates.

The results and assets and liabilities of the associate were included in the consolidated accounts using the equity method of accounting.

The results and assets and liabilities of the joint venture will be included in the consolidated accounts using the equity method of accounting.

The results of businesses acquired or disposed of in the year are consolidated from or up to the effective date of acquisition or disposal respectively. The net assets of businesses acquired are incorporated in the consolidated accounts at their fair values at the date of acquisition.

Transactions and balances between group companies are eliminated. No profit is taken on transactions between group companies and the group's share of profits on transactions with its associate was also eliminated.

In the parent company balance sheet, businesses acquired by the parent company from other group companies are incorporated at book value at the date of acquisition. Where the consideration given exceeds the book value of the net assets acquired this difference is accounted for as goodwill.

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 2012.  

Use of estimates and judgments

The preparation of financial statements in conformity with IRFS requires management to make judgments, 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 on-going 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 - exploration and evaluation assets

Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis.

Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:

·     the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or

·     activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment if: (i) sufficient data exists to determine technical feasibility and commercial viability and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity related.

Exploration and evaluation assets are carried forward in the balance sheet under intangible assets.

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.

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.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation shall be treated as assets and liabilities of the foreign operation.  Thus they shall be expressed in the functional currency of the foreign operation and shall be translated at the closing rate

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 loss on ordinary activities before taxation and net assets is given below:

			Six months ended 30 September 2012 (Unaudited)	Six months ended 30 September 2011 (Unaudited)	Year ended 31 March 2012 (Audited)
			£	£	£
Loss on ordinary activities before taxation
United Kingdom			(597,468)	(574,047)	(1,806,595)
South Africa			13,059	(16,440)	(29,340)
			(584,409)	(590,487)	(1,835,935)
Net assets by location
United Kingdom			5,204,058	2,065,403	5,080,268
South Africa			9,107,008	12,107,841	10,277,348
			14,311,066	14,173,244	15,357,616

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 IFRS 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 for the period of £584,409 (September 2011: loss of £590,487; March 2012 a loss of £1,835,935) and the weighted average number of shares as follows:

						At 30 September 2012 (Unaudited)	At 30 September 2011 (Unaudited)		At 31 March 2012 (Audited)
	Basic and diluted					77,611,347		11,700,040		47,111,047

6. Intangible assets

The intangible asset of £8.7 million represents the value attached to assets identified in a subsidiary of Skiptons, namely Glenover, situated in South Africa.

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 Rand amount attached to the exploration and evaluation asset on acquisition was ZAR116.8 million. The asset must be expressed in the functional currency of the foreign operation and shall be translated at the closing rate at the end of each reporting period. As at 30 September 2012 this amount represents GBP8.7 million. The translation difference of R1,5 million was allocated to a foreign currency translation reserve through other comprehensive income. This reserve forms part of equity.

7. Investment in joint venture

In terms of a share subscription and funding agreement entered into between GSA, FMO and Galagen, GSA would be able to earn in up to a 51% interest in Glenover for an expenditure of US$7million with further options to increase its interest to 74% at agreed prices.

During the period under review, GSA provided funding in an amount of £611,161. At 30 September 2012 the total funding provided amounted to £1.2million which amount was converted into Glenover ordinary shares, resulting in an increase in Galileo's investment in Glenover. At 30 September 2012, Galileo owns an effective interest of 22.26% in Glenover.

Galileo's portion of the loss in the joint venture for the period under review amounted to £13,059.

8. Other financial assets

Included in other financial assets is a loan from GSA to Brightwater Trade & Invest 55 (Pty) Limited of £320,827. This loan is not repayable within the next twelve months. 

9. Issue of ordinary shares

In July 2012 the Company entered into a Share Exchange Agreement (the "Exchange Agreement") with AIM-quoted Praetorian Resources Limited ("Praetorian") and a subscription agreement with Praetorian for a placing of 2.5 million Galileo ordinary shares for £1 million cash, in terms of which Galileo agreed to exchange 5 million of its ordinary shares of GBP0.05 each at a strike price of GBP0.40 ("Exchange Shares") for 4 million Praetorian ordinary shares of nil par value with Subscription Shares of nil par value attached on a 1 for 2 basis at a price of GBP0.50.

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 10 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.

11. Availability of the Interim Results

Copies of the Interim Results for the six months ended 30 September 2012 will be mailed to shareholders and 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 is available from Company's website: www.galileoresources.com.

 

END

 

 

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