Final Results

GALANTAS GOLD CORPORATION
TSX Venture Exchange: GAL
London Stock Exchange AIM: GAL

30th April 2007

GALANTAS FILES 2006 ANNUAL ACCOUNTS & M D & A

Galantas Gold Corporation today filed Annual Accounts and Management, Discussion and Analysis for the year ending 31st
December 2006, on www.sedar.com, www.londonstockexchange.co.uk and copied on www.galantas.com .

Highlights included the following :-
As At December 31st 2006, Canadian $

Current Assets include
Cash                                            $234,909
Property, Plant & Equipment                 $6,110,357

Total Assets                                    $15,559,278

Liabilities Total                               $2,132,980

Loss before Income Taxes                        $1,290,750

Net Loss (after future income tax recovery)     $995,250

End of Period Deficit                           $11,794,287

Basic and diluted loss per share                $0.01

Weighted average number of shares
Outstanding for 2006                            145,930,481

Readers are directed to the accounts as filed for notes and detail that relate to results as highlighted.

Galantas Gold Corporation Issued and Outstanding Shares total 167,535,855.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the
contents of this news release.

Enquiries

Galantas Gold Corporation                       Telephone:  [phone]
Jack Gunter P.Eng - Executive Chairman
Roland Phelps C.Eng - President & CEO
Maurice Lavigne P.Geo - Vice President
Email: [e-mail]                        Website: www.galantas.com

ARM Corporate Finance Limited                   Telephone:  [phone]
Nick Harriss

Lewis Charles Securities Limited.               Telephone:  [phone]
Kealan Doyle



MANAGEMENT DISCUSSION AND ANALYSIS
Year ended December 31, 2006

This document, dated April 26, 2007, constitutes management's discussion and analysis (MD&A) of the financial and
operational results of Galantas Gold Corporation (the Company) for the 12 months ending December 31, 2006. The MD&A, to
be read in conjunction with the audited financial statements for the same period, does not form part of these financial
statements. The Company prepares and files its financial statements in accordance with Canadian generally accepted
accounting principles (GAAP). The MD&A was approved by the Company's audit committee on April 26, 2007.

FORWARD LOOKING STATEMENTS

The information in the MD&A contains forward looking statements, including statements regarding anticipated operational
and financial performance.  Such statements are not guarantees of the Company's future performance which is subject to
risks and uncertainties only some of which are within the Company's control, and any or all of which could cause the
Company's performance to be materially different from what directors may believe. Given the uncertainties associated
with forward looking statements, readers are cautioned not to place undue reliance on them. The Company does not
undertake to update any forward looking statement contained herein.

OVERVIEW - STRATEGY, DESCRIPTION OF BUSINESS

Galantas Gold Corporation is a development stage mineral resource company and the first to acquire and the only company
to hold planning consent to mine gold in Ireland. The Company's wholly owned Ontario holding company, Cavanacaw
Corporation, owns all of the shares of two Northern Ireland companies - Omagh Minerals Limited, owner of prospecting and
mining rights, planning consents plus land, buildings and equipment; and Galantas Irish Gold Limited, owner of rights to
work, market and sell the Company's gold production as certified Irish gold jewellery.

The Company's strategy is to:

·  Develop and operate a 150 tonnes per day open pit mine and processing plant on its Kearney deposit,
·  Explore and develop extensions to the Kearney and nearby known deposits so as to expand minable reserves and increase
gold production in stages,
·  Explore its 189 square kilometre prospecting licence, focusing on the more than 50 gold targets identified to date,
and
·  Establish on a commercial basis the Galantas® Irish gold jewellery business once certified Irish gold from the mine
becomes available.

Omagh Minerals Limited is moving towards full production of its open pit mine on proven reserves in the Kearney deposit.
 Plant, mine and infrastructure construction has been the focus to date. However, diamond drilling with one machine
started early in the year aimed at expanding resources within the Kearney Mine deposit. Drilling also got underway to
investigate the neighbouring "Elkin Vein".  Once full production has been achieved, exploration will be expanded,
initially targeted on the 15 known gold occurrences in the Kearney Vein Swarm and the more than 30 occurrences known
elsewhere on the 189 square kilometre licence as well as, potentially, other prospective areas outside the present
licence.

Reserves and Resources

References
(1) December, 2005; ACA Howe International Ltd. "Technical Report of the Gold Mining and Exploration Interests of the
Omagh Gold Project of Galantas Gold Corporation in Counties Tyrone and Fermanagh, Northern Ireland" (the "Howe Report")
(2) September 22, 2006; Galantas Gold Corporation Press Release: "Galantas Develops Omagh Gold Mine…."
(3) January 22, 2007; Galantas Gold Corporation Press Release: "Ore Reserve and Resource Estimate".

Ore reserves and mineral resources are found within eight veins in a 5 square kilometre area at the eastern end of the
Company's prospecting licence which encompasses a 20 by 6 kilometre fault-bounded inlier of Precambrian "Dalradian"
rocks. The deposits sub-outcrop beneath a few metres of glacial and recent overburden and are open to depth and usually
along the strike. The Kearney deposit is to be mined first.  This steeply dipping deposit is some 850 metres long and,
in its southern stripped portion, an average of 4.3 metres wide. It has been drilled with 40 diamond drill holes to a
depth of 137 metres and was intersected in one hole at a depth of 300 metres. Below the average 3 metres of overburden,
a 359 metres long section at the southern end of the deposit had been 88 % exposed and sampled in detail at surface in
the late 1980's by Rio Tinto (212 metres) and in 1991 by Omagh Minerals (103 metres).  These results together with
drilling data were used in the Howe Report to calculate reserves and resources. These calculations have not been updated
with results obtained in 2006, although such update is committed for later in 2007.

On the Kearney Deposit, which is the initial focus of mine development, the Company has: (i) proven ore reserves of
181,480 tonnes at a grade of 7.36 grams per tonne of gold plus (ii) probable ore reserves of 185,830 tonnes at a grade
of 7.68 grams per tonne of gold; plus (iii) an indicated resource of 1,183,680 tonnes at a grade of 7.02 grams per tonne
of gold. All of the above reserves and resources have been calculated using a cut-off grade of 1.0 gram per tonne gold
and a cut-off width of 0.5 metres. The proven and probable reserves are contained within the open pit, the "Kearney
Pit", currently being developed. The indicated resource extends from the bottom of the Kearney Pit at 37 metres vertical
depth to a vertical depth of 137 metres.  The deposit remains open below this depth.

Additional to the reserves and resources on the Kearney Deposit, the Howe Report confirmed indicated and inferred
resources in other deposits within the Company's mining licence, summarised as follows at a cut-off grade of 1.0 gram
per tonne gold and a cut-off width of 0.5 metres:

Indicated Resource   Grade     Contained Gold        Inferred Resource     Grade      Contained Gold
(Tonnes)            (g/t Au)     (Grams Au)              (Tonnes)         (g/t Au)      (Grams Au)
328,820              6.72         2.208,530              135,500            4.68          634,643

These estimates of mineral reserves and resources were included the Howe Report. The Company is in the midst of
exploration and development involving diamond drilling, results of which will lead to a new estimate of reserves and
resources.  This new estimate and accompanying NI 43-101 technical report has been commissioned for delivery by the end
of the third quarter of 2007.

The estimate contained in the Howe Report was carried out to the standards of the Joint Committee of the Australasian
Mining Industry Council code (JORC). A reconciliation to the mineral resource and mineral reserve categories as set out
in National Instrument 43-101 was included with the Howe Report.

The Howe Report describes in Section 12 a mining trial on proven reserves that produced four selectively mined samples
weighing 101.4 tonnes returning an average gold grade of 53.41 grams per tonne.  The difference between this and the
reserve grade is attributed to a) selectivity used in the mining trial, b) dilution inbuilt into the original sampling,
and c) naturally inhomogeneous gold distribution. The sustainable mining grade will be established through sampling
prior to and during the early life of the open pit. Mineralisation is tightly constrained in the irregular sulphide
veins that make up the Kearney and other deposits, making them amenable to selective mining. The processing plant has
been designed to accept ore grading 20 grams per tonne gold.

In addition,  channel sampling within 2 segments aggregating 150 metres within the southern portion of the Kearney vein
was carried out by independent geologists to obtain an estimate in that area of the mining grade that can be sustained
in keeping with selective mining. The assay results, combined with those from 124 samples earlier taken by the Company
showed a weighted undiluted average grade at a cut-off grade of 3.0 g/t gold for individual veins of 16.25 g/t gold.
Detail of this sampling is contained within the press release dated September 22nd, 2006.

Exploration Targets

The Howe Report describes 53 targets selected from integration of geological, geochemical and geophysical data over the
approximate 20 kilometre length and 6 kilometre breadth of the Dalradian inlier. The targets were grouped on a priority
of 1 to 10, scores reflecting technical merit, ie the likelihood of their hosting additional gold resources. Eight veins
around the Kearney Vein were classified as very high priority resource augmentation targets with scores of 9 and 10.
These exhibit high grade channel and/or drill intercepts and already have resources (1995 and 2004) and/or reserves
(1995). Eight veins not drilled, or drilled with lower grades, have target scores of 5 to 8. The remaining 37 targets
comprise one scoring 6, 6 scoring 5, 4 scoring 4, 11 scoring 2, and 7 scoring 1.

Howe considered targets scoring 3 to 8 to present some excellent opportunities for new discoveries on or near known
veins in the Kearney Vein Swarm and elsewhere on the prospecting licence. Howe considered it likely that aggressive
exploration will add substantially to the reserves and resources and that veins similar to Kearney may lie undiscovered.
Howe considered that the relatively high grades and widths and continuity of the deposits with known reserves and
resources indicate the potential for underground production in future.

Initial Mining Project

The project embraces an open pit mine capable of supplying a crushing-grinding-froth flotation plant with a capacity of
150 tonnes per day. The plant is designed to produce a gold- and silver-rich sulphide flotation concentrate for sale to
a smelter. Whilst still in commissioning, on February 15th, 2007, the Company announced the first shipment of
concentrate to a Canadian smelter owned by Falconbridge Ltd., subsidiary of Xstrata plc.  Plant commissioning continues.

A gravity section which remains to be completed, is expected to recover a small amount of the free gold, possibly around
4%, as certified Irish gold for feedstock for Galantas® jewellery. Site infrastructure includes, in addition to access
and haul roads and process building, a diesel powered electrical generating station, a modified paste tailings storage
facility, water containment dam and reticulation and discharge system including a channel diverting run-off water away
from site working places. This is described in "Technical Report(s)" filed on www.SEDAR.com on March 29th, 2006.

Galantas Irish Gold Limited

Galantas Irish Gold has carried out market trials wherein jewellery to the value of $690,928 has been sold through
retailers in Ireland and direct via the company's e-commerce enabled website www.galantas.com. ($45,928 of the sales
were made in 2006.  Manufacturing and distribution systems and an initial retailer network in Ireland are in place and
the business awaits production of Irish gold in 2007 to enable the start of regular commercial activity.

Management and Staff

There were no changes in the Directors of the Company. There continues to be three executive Directors. Vice President,
Mr M. J. Lavigne, is General Manager with responsibility for the site in Omagh where the mine, processing plant and
administration employs 20 people.

Key Performance Driver

Given that the Company is still in the late stages of construction and commissioning of a mine and processing plant,
there remains one key performance driver - the achievement of production and cash flow from the gold deposits at Omagh.


1.1  Date

This MD&A was prepared on April 26, 2007

1.2  Overall Performance

Mine Construction

After purchase of mining and metallurgical equipment and commencement of site stripping in mid-2005, the focus of work
during 2006 was on constructing the processing plant and establishing infrastructure necessary to achieve production.
Access roads, waste storage facilities including modified paste cell repositories, a recirculation pond, and drainage
channels for site water control were brought to an advanced state and the processing plant was assembled in a building
constructed on the site and by year-end, was nearing readiness for commissioning.  This has been carried out
intermittently subsequent to the year-end and still continues, producing small amounts of concentrate for sale.

Construction progress suffered from a series of delays when compared with the original plan and   forecasts made in a
press release entitled, "Operational Update", on June 26th and re-iterated in page 5 of the June 30th MD&A.

The shortfall from plan and forecast is the result of a number of causes. Significant delays were incurred early in the
project, in 2005 and early 2006, due to more stringent regulatory requirements related to archaeological supervision of
overburden excavation. In particular, this restricted the movement of peat deposits on the property during the optimum
summer season for handling such material. The difficulties with moving saturated peat were under-estimated by management
and this was made worse by having to do so in inclement weather. Equipment delivery delays were notable as was the
performance of certain specialist contractors.  Earlier delays impacted construction, especially site preparation, in
the last half of the year as weather conditions deteriorated. Subsequent to the end of the period, in January 2007,
commissioning did get underway and has continued in an intermittent manner due to the slow completion and modification
of certain items of plant and the laboratory. At the time of writing in mid-April, 2007, some progress toward production
has been made as announced on April 18th. It was noted in a press release dated January 8th that "operations would be
irregular and slow" and such has proved to be the case.  Production rates are expected to improve over the next two
months, but this expectation carries risk due to the fact that items of plant have not yet performed at rated capacity.
As a consequence, it is noted that it is still not possible to forecast the date of commencement of regular plant
operation.

An internal audit of the processing plant was carried out in November, 2006, assisted by professional external
metallurgical engineers, GBM Minerals engineering Consultants Ltd. The main conclusion was that the plant was in
accordance with results of test work and could be expected to produce satisfactory results technically, but there were
concerns expressed about the ability of the plant to maintain a high degree of operating time, largely due to lack of
duplicates including pumps. Since then, expenditures have included capital items to provide for duplication of some
systems, particularly pumps. As a subsequent event, in mid-April, the external metallurgical engineers were engaged
again to assist with final commissioning.

The Kearney vein has been exposed for approximately 390 metres of its length and wall rocks stripped back enough to
enable initial mining to take place. This has been restricted during plant commissioning to extracting ore
intermittently along the vein so as to prepare the working surface for detailed pre-production sampling and regular
mining.

Exploration

Diamond drilling was carried out in the period with two main objectives - definition drilling on the Kearney Deposit
mainly within the mining envelope, and sampling the Elkin Vein, parallel to and 500 metres separated from Kearney, to
assess its suitability, subject to planning consent, for a further open pit mine. Seven holes were drilled in each
target, aggregating 546.2 metres in Kearney and 422.5 metres in Elkin.  Results are reported in press releases dated
December 12th, 2006 and 30th January, 2007.  Earlier drilling included sterilisation drilling related to site
facilities, and to testing one geophysical anomaly, neither intersecting ore or potential ore.

Subsequent to the end of the period, a further seven infill holes were completed in Kearney for a total of 898.9 metres,
and 4 holes into Elkin for a total of 269 metres. Sampling results are awaited. Drilling continues.

Channel Sampling was carried out on parts of the southern portion of the Kearney deposit, and extended into areas
historically sampled by Rio Tinto. The strike length sampled aggregated 150 metres. The purpose of the sampling was to
assist in estimating the mining grade that could be sustained in keeping with the selective mining that will be
practised.

A total of 119 channel samples was taken and assayed at OMAC Laboratories in Galway, Ireland, (an independent, certified
CCRMP laboratory) for gold by fire assay and a suite of other elements by ICP-ORE. The assay results were reported in
the above referenced press release dated September 22nd,, 2006.
These assay results, combined with those from 124 samples earlier taken by the Company and reported on in a press
release dated March 17th, 2006, showed a weighted undiluted average grade at a cut-off grade of 3.0 g/t gold for
individual veins of 16.25 g/t gold.   These results are interim as the programme is continuing as mining gets underway

1.3     Selected Annual Information

                                                2006          2005           2004
Revenue                                        45,928        47,804          175,831
Loss before tax                             (1,290,750)    (808,232)      (1,186,652)
Future tax recovery                            295,500      769,800              nil
Net Income(loss)                              (995,250)     (38,432)      (1,186,652)
Basic & Diluted loss/share                       (0.01)       (0.00)           (0.01)
Total Assets                                15,559,278    9,355,408        5,575,356
Total liabilities                            2,132,980      921,759          571,616
Long-term portion                              379,773      271,664              nil


Revenues, solely deriving from sales of jewellery from inventory, have declined as inventory has become depleted. The
precipitate fall in 2005 reflected the discontinuation of advertising after 2004 upon inventory depletion.

Higher before-tax losses in 2004 and 2006 reflected larger overhead levels in 2004 when a Vancouver office was
maintained and subsequently discontinued, and in 2006 high legal, accounting and related expenses were incurred with
having the Company's shares listed for trading on the London Stock Exchange's AIM market.

Assets increased over the 3 years in line with acquisition of mining plant and equipment and, in May of 2006, the
purchase of 6.12 hectares (15.12 acres) of additional freehold land at the mine site in Northern Ireland. The purchase
price inclusive of duty, tax, and registration charges was $781,182. The property adjoins the north side of the land
parcel aleady owned by the Company, and contains the Elkin Vein which had a calculated resource (see reference 1., page
1.) and is being diamond drilled at the present.

Liabilities reflected mainly those incurred in the normal course of business, the large amount in 2006 reflecting trade
creditors having accumulated expenses until completion of phases of work. Long-term debt in 2005 and 2006 relates to
equipment backed "lease purchase" loans from Barclays Lease Finance.

1.4   Results of Operations

The Company's core business is gold mining. Its only source of revenue is from sales of gold jewellery which have been
possible with test market products made from gold from earlier mined "bulk samples" from the Kearney deposit. Sales have
dwindled over the past several quarters and amounted to $15,363 in the quarter ending December 31st.  This compares with
$15,673 in the previous quarter.  Continuing low sales are from inventory, now largely depleted, of finished jewellery
products. This situation will continue until supplies of certified Irish gold become available later after the start of
mine production followed by production of certified Irish gold for the manufacture of new inventory.

It was announced on April 20th that discussions were well advanced with the UK's Goldsmiths Group plc whereby this large
high-quality jewellery retailer would have Galantas® jewellery products available for sale in certain of its UK stores.

1.5   Summary of Quarterly Results

Revenues and net financial results in Canadian dollars for the fourth quarter of 2006 and for the seven preceding
quarters are summarised:

Quarter ended             Revenue    Net Profit/(loss)Per Share           Diluted/Undiluted
December 31, 2006         15,363           188,323                             0.00
September 30, 2006        15,673          (238,654)                            0.00
June 30, 2006             11,047          (420,215)                            0.00
March 31, 2006             3,845          (524,704)                            0.00
December 31, 2005          3,775           498,346                             0.01
September 30, 2005         7,909           134,265                             0.00
June 30, 2005             15,623          (519,016)                           (0.01)
March 31, 2005            20,497          (152,027)                            0.00

Revenues derived solely from word of mouth sales of a largely depleted inventory of Galantas® jewellery products which
had been created to enable the market trial carried out mainly over the past 3 years.

1.6     Liquidity and  1.7 Capital Resources

As with all exploration and development stage companies, Galantas relies on cash reserves, borrowing ability, and sale
of equity as required to fund its activities.  Being in the midst of developing a mine and processing plant on its
project in Omagh, the Company has been successful in private placings of equity, as detailed below, and in arranging
debt finance to assist in capital equipment purchase and subsequent to the end of the year a further loan for general
working capital purposes. In addition, a small amount of cash (($45,928) been provided in the year from sales of
jewellery.

On December 31, 2006, the Company had a working capital deficiency of $806,140 as compared with positive $1,020,880 at
the end of 2005. The deficit at year end was due to the costs incurred in the construction of the infrastructure for the
mine and plant.  Proceeds of a private placement early in 2007, detailed elsewhere, were received and applied in large
part to settle with contractor creditors.  Cash at the end of the period was $234,909, compared with $1,121,985 at the
end of 2005, the decline reflecting use of cash to capitalising the mine and plant.

Subsequent to year-end, plant commissioning has haltingly got underway and at the time of preparation of this report,
timing of start of regular production remains uncertain.  Whilst plant commissioning has produced and should produce
gradually increasing amounts of saleable concentrate, it may become necessary to raise additional funds prior to
profitable production, particularly to be applied to increasing the pace of the diamond drilling campaign. These funds
could come in part from borrowing against land and other assets and in part from additional sale of equity. At present
there are no specific plans for such capital raising.

The Company's main cash requirements are in respect of:

1.      accounts payable in the normal course of business, including corporate overheads;
2.      residual amounts to be funded to complete constructing the mine at Omagh;
3.      repayment of loans incurred against processing and mining equipment, as detailed elsewhere.

The Company has no further capital commitments.

1.8   Off-Balance Sheet Arrangements

There are no off-balance sheet transactions at either the parent company or subsidiary level.

1.9     Related Party Transactions

The Company was charged $45,296 (2005 - $35,183) for the provision of accounting and corporate secretarial services
provided by companies associated to the Corporate Secretary. Accounts payable includes $5,568 (2005 - $4,505) owing to
these companies. Provision of the services continues on a month to month basis.

The Executive Chairman, the President/Chief Executive Officer, and the Vice President have each been compensated £40,000
during the year for their services which are in essence applied in executive capacity to developing the gold mine at
Omagh and in managing the Company's corporate affairs.  Their compensation has been capitalised to deferred development
costs. The provision of the services is governed by contract.

Non-executive directors were paid $25,250 in 2006 and $28,500 in 2005.

There were no other related party transactions.

1.10    Fourth Quarter

Sales of jewellery were $15,363 compared with $15,673 in the 3rd quarter and $45,928 in the year.

Expenses were $123,973 or $41,324 per month in the quarter.  This compared with $252,304 or $84,101 per month in the
previous quarter and with $1,330,188 or $110,849 per month in the year. The decline in the second half of the year
reflected normal operations; earlier in the year payments included extraordinary legal and accounting costs associated
with the listing of the Company's shares of the LSE's AIM market.

As at December 31st, the Company had total assets of $15,559,278. This was an increase of $911,340 over assets at the
3rd quarter, the increase representing acquisition of plant and equipment. The main net additions to assets were
deferred development costs ($7,542,920, up $1,254,482 in the quarter), property, plant and equipment ($6,110,357, up
$861,984 from the previous quarter) reflecting mainly additions to mining and processing equipment purchased as the
project develops.

Accounts receivable at $397,953 compared with $144,727 a year ago, the increase reflecting timing differences of VAT
refund.  Inventory representing a combination of finished jewellery products and broken ore at $100,839 was similar to
the position a year ago ($101,363).

Liabilities included $1,499,678 of accounts payable which compared with $297,785 a year ago.  The increase reflected
delayed paying of invoices of project expenses, mainly incurred by contractors. The level of these expenses was high in
the period due to site activity intensifying as the processing plant was being installed and connected. The current
portion of the financing facilities discussed below was $253,529 at the quarter end compared with $99,207 a year ago.
The increase reflected the impact of the second Barclays "lease purchase" loan put in place in 2006.

EXPENSES

Expenses were $230,973 in the fourth quarter, as compared with $252,304 in the previous quarter. Specific items showing
material variance in the quarter from a year ago are -
·  Consulting fees were negative $7757, reflecting reallocating the cost of metallurgical consultancy to operating
expense.
·  There was a foreign exchange gain of $67,271 as compared with a loss of $93,784 in the third quarter and $76,248 for
the year. Expenses incurred in British pounds have cost more Canadian dollars given that currency's strength.
·  Legal and audit fees at $36,990 for the fourth quarter compared with $6,325 in the previous quarter and $223,749 for
the year. The increased annual expense related to the cost of the AIM listing. The fourth quarter expense reflected
delayed invoicing from earlier in the year from the Company's legal advisors.
·  Management fees were nil in both the quarter and year as opposed to $164,000 in 2005 reflecting termination payments,
now expired, with the former president.
·  Shareholder communications and public relations cost $55,911 in the quarter as compared with $64,137 in the previous
quarter. The expense represents contractual arrangements with an IR firm as required for the introduction to AIM as well
as the Company's attendance at 3 trade shows including the annual PDAC. The expenditure for the year at $568,121
included extraordinary expenditures connected with the AIM listing.
·  Transfer Agent fees were $3,466 in the quarter, as compared with $4,782 in the previous quarter and $25,202 in the
year, the higher annual figure representing the cost of issue of stock upon private placements.
·  Travel and general office expenses were $5,476 in the fourth quarter, compared with $23,130 in the previous quarter
and $59,954 in the year.
·  The non-cash item of stock-based compensation added $13.032 to expenses in the quarter, as compared with $15,638 for
the previous quarter and $192,327 for the year.   The item reflects the non-cash cost to the company of the granting of
employee incentive options.

1.11    Proposed Transactions

Other than a jewellery offtake agreement as noted above, the Company has no proposed transactions.

1.12    Critical Accounting Estimates

The Company did not rely on any critical accounting estimates.

1.13    Changes in Accounting Policies Including Initial Adoption

The Company adopted Accounting Guideline 11 - Enterprises in the Development Stage - as of January 1, 2006, once formal
development commenced at the Omagh site.

1.14    Financial Instruments and Other Instruments

On July 28th, 2006, the Company announced the closing of a private placement for gross proceeds of $3,500,000. Pursuant
to the terms of the offering, Galantas issued 14,000,000 Units at the price of $0.25 per Unit, including 2,000,000 Units
for subscribers specifically identified by Galantas, (the "President's List"). Each Unit consisted of one common share
of Galantas and one common share purchase warrant, each warrant entitling the purchaser to purchase one common share at
a price of $0.32 per share at any time until July 26, 2008. An application has been made to admit any new shares issued
under the placing to trading on AIM on the same day that they become eligible for trading on the TSX Venture Exchange.

Total costs of the share issue were $331,928 or 9.5% of the gross proceeds. Union Securities Ltd., acting as agent, was
paid a cash fee of $240,000 representing 8% commission based on units sold under the offering, plus $20,000 representing
4% in cash for units sold pursuant to the President's List. Other costs amounting to $71,928 associated directly with
the issue were mainly to defer the costs of Union Securities' due diligence. In addition to the cash costs associated to
the private placement, Galantas issued to the agent 1,300,000 compensation options equal to 10% of all Units sold and 5%
of all units sold pursuant to the President's List. Each Agent's Compensation Option entitles the Agent to purchase one
Unit of Galantas at $0.25 per unit at any time prior to July 26, 2008 at the price of $0.25 per unit. The funds were
used to purchase the land referred to in the Company's last MD&A and in a press release dated May 25th, 2006,($793,744)
and items of plant and equipment ($115,036), fund exploration, mainly diamond drilling prior to project cash flow
($400,000), and provide working capital of $2,046,256 to fund construction.

Corporate and Project fund raising had started in mid-2005 when the Company initiated project development. Ongoing
development has been financed, prior to the August 2006 private placing, in the following manner:

·  Sale of equity completed March, April and May of 2005, providing cash net of fees of $3,279,283.
·  Equipment lease financing from Barclay's Asset Finance, $470,000 in April, 2005 and $359,252 in March, 2006.
·  Exercising of warrants in March and April 2006, providing $2,627,500.

In addition in 2005, sales of jewellery provided cash of $47,804 and in 2006, $45,928.  Sales have been in decline since
early 2005, as jewellery inventory has become depleted.

Subsequent Events

1.      On February 12, 2007, 4,400,000 stock options were exercised by Directors and Officers and a Consultant of the
Company.  Exercise prices were from $0.10 to $0.15 per share and total proceeds were $540,000.
2.      On March 2, 2007, the Company announced a private placing of 5,284,000 units with the UK's Gartmore Irish Fund. Each
unit was priced at $0.325 and comprises one common share and one warrant. Each warrant entitles the holder to purchase
one common share within 18 months from closing at a price of $0.45. Gross funds raised by the placing are $1,717,300.
An arrangement fee of 5% is payable to Lewis Charles Securities, the Company's London broker. The placing shares were
subject to a 4 month hold period which expires on July 3rd, 2007. The warrants are exercisable up until September 3rd,
2008.
3.      On February 13th, 2007, the Company announced that it was arranging, on behalf of its wholly owned subsidiary, Omagh
Minerals Limited, a £250,000 loan facility repayable over 3 years at an interest rate of 5.25%. The facility is provided
by First Trust Bank in Northern Ireland. Draw downs will be made in the near future.

Commitments

Two "Lease Purchase" loans extended by Barclays Asset Finance have time limited repayment provisions as tabled below.
At current exchange rate of $2.1 CDN to the British pound, the blended monthly payment until April, 2009, is $22,830 and
thereafter until June, 2010, $10,650.  Both loans provide for the assets to be purchased at the end of the term for
nominal consideration.

Loan                    Date                Repayment Terms

$555,000 (£238,700)     May 19, 2005        48 monthly payments of £5,071
Mining Fleet                                from 18 June, 2005 to 18 June, 2010

$365,400 (£180,000)     Mar. 17, 2006       36 monthly payments of £5,578
Mill Equipment                              from 15 April, 2006 to 15 April, 2009


CUMULATIVE RESULTS OF OPERATIONS AND DEFICIT

Since development commenced on January 1, 2003, the company has had sales of $494,478 resulting in a negative gross
margin of $36,018, which reduced to negative $20,324 after interest income of $15,694.  All the sales were made as part
of marketing trials of Galantas® jewellery products. Expenses in the same period have amounted to $3,941,452, resulting
in a before tax loss of $3,961,776 which is reduced to a loss of $2,896,476 after future income tax recovery of
$1,065,300. Deficit increased to $11,794,287 at the end of the period, up $2,896,476 from $8,897,811 at the beginning of
the developmental period.

CAPITAL EXPENDITURE

Property, plant and equipment were purchased for $861,984 in the quarter, as compared with $908,780 in the prior quarter
and $3,207,192 in the year. These expenditures were for various items connected with the development of the project and
consisted mainly of costs related to the processing plant at Omagh.

Deferred development costs capitalised amounted to $7,542,920 on December 31st, 2006, up from $4,314,368 at the end of
December, 2005 and up from $6,288,438 in the 3rd quarter of 2006. The capital additions were all related to construction
of the mine at Omagh. Notable items included in deferred development cost were -
·  wages at $309,604 in the quarter ($888,833 in the year) which was up from $214,699 in the previous quarter reflecting
intensifying development on the site;
·  construction at $330,463 ($686,176 in the year) compared with $109,412 in the previous quarter, all due to work
related to construction of the processing plant, tailings facilities and mining preparation. The higher cost in the 4th
quarter reflected the higher level of construction activity.
·  diamond drilling on which $180,665 was expended in the year;
·  consultants at $51,728 ($235,254 in the year) which was equivalent to the previous quarter and largely attributed to
the employment of executive directors whose time is devoted to the project;
·  fuel at $75,420 ($204,698 in the year), up from $48,837 in the previous quarter, reflecting increased activity in site
clearance and mining;
·  repairs and maintenance at $100,477 ($222,770 in the year) compared with $49,711 in the previous quarter, the increase
due to modifications and repairs to crushing equipment;
·  travelling at $34.723 ($161,097 in the year) compared with $57,698 in the previous quarter;
·  general expenses at $29,704 in the quarter (86,646 in the year), in line with 3rd quarter expense of $20,205;
·  laboratory expenses of $23,587, began to be incurred in the quarter as the facility was nearing commissioning.

SHARE CAPITAL

The Company is authorised to issue in series an unlimited number of common and preference shares. At the end of
December, 2006, 157,851,855 shares had been issued, unchanged from the previous quarter. The 157,851,855 shares on issue
at the end of September, 2006, compared with 143,851,855 issued at the end of June, 2006.  As of September 30, 2006, at
total of 15,300,000 warrants remained outstanding, 14,000,000 exercisable at $0.32 on July 26, 2008, and 1,300,000
exercisable at $0.25 on the same date, both relating to the private placement made in the third quarter of 2006.

STOCK BASED COMPENSATION

The Company had 7,500,000 options outstanding to directors, employees, certain consultants and contractors at exercise
prices ranging from 10 cents per share up to 26 cents per share with a weighted average price of $0.14 per share.
Details of all options outstanding as at December 31st, 2006, are:

Exercisable Options       Number of Options      Exercise Price ($)        Expiry Date
1,500,000                     1,500,000                0.12                May 17, 2007
2,800,000                     2,800,000                0.15                April 10, 2008
2,000,000                     2,000,000                0.10                April 1, 2009
133,334                         200,000                0.10                 May 13,2010
333,334                       1,000,000                0.26                 June 14, 2011

6,766,668                     7,500,000



Subsequent Event

On February 12th, 2007, 4,400,000 options with an exercise price ranging from $0.10 up to $0.15 per share were exercised
by directors, officers and a consultant for gross proceeds of $540,000.

TRENDS AFFECTING THE COMPANY'S BUSINESS

Metal prices continued strong after the long period of price weakness which ended starting approximately 2 years ago.
The sustained price recovery is thought largely due to increasing metal consumption in countries of the Far East, most
notably China and India, both of which are experiencing rapid growth in manufacturing and exports. Thus, the
fundamentals of the metals business are once again favourable for capitalising new mines and investors have returned to
the mineral sector, particularly to large public companies.

For junior resource companies like Galantas, there has been selective enhancement in market valuation and it has been
possible to raise money from the public for mining and exploration ventures. However, markets are always uncertain and
careful management of the company's cash continues to be the guiding principle for Galantas.

In Northern Ireland, the peace has held and the climate for investment remains positive.

RISKS AND UNCERTAINTIES

Galantas operates in a sector - early stage mineral project development and exploration - which carries inherent risks
only some of which are within management's ability to reduce or remove. The main sector risk is always metal price. The
company's other business, high value Irish Gold jewellery, is dependent upon a mine being developed to provide a
reliable supply of certified Irish gold.

The Company has assessed the risks surrounding its businesses. It has concluded that most if not all of the risks are
standard to the industry and none of them so profound as to inhibit pursuit of the Company's strategy. The main risks
identified and considered are:

1.      Ore Reserves   Tonnage and grade of ore may be lower than anticipated. The Kearney deposit along strike and to depth
has been proven within the confines of the initial open pit and indicated well beyond. Nevertheless, the ore is variable
in detail and it may prove difficult or if not impossible to mine at a consistent grade and supply the plant with
sufficient ore regularly into the future. The Company has commissioned an independent re-assessment of its reserves and
resources and a report is anticipated towards the end of the third quarter 2007.
2.      Mineral Processing   The plant may not perform to design, and in commissioning to date, has not done so in part. Ore
from the Kearney deposit has been subjected to metallurgical trials including pilot plant studies in reputable
laboratories by the Company. The previous owner, Rio Tinto, did mineralogical and bench scale metallurgical studies. The
flow sheet is simple and the equipment in the plant is industry standard. Nevertheless, scale-up to commercial
production may introduce unforeseen technical problems. Efforts to foresee such problems and ameliorate them have been
made and an internal metallurgical audit assisted by independent professionals was carried out in advance of
commissioning and production.  The study concluded that, "The process selected is in accordance with the results of test
work and would be expected to produce satisfactory results technically but there are mechanical and electrical concerns
regarding the capability of the facility to maintain a high degree of operating time". This is primarily due to lack of
spare capacity, particularly of pumps.  Management considers that this situation is manageable with the additions of
extra pump capacity which has been implemented. Nonetheless, the plant has failed to produce to rated capacity to date
(mid-April) and there is no reliable estimate as to when it will. Therefore there is risk to 2007 cash flow and to the
capital budget.
3.      Environmental   The project was subject to one of Ireland's lengthiest public enquiries whereat its design and
operating fundamentals were challenged and defended to the satisfaction of the independent assessors and industry
experts representing regulators and the company. In operation, the facilities will be subject to self monitoring and
strict independent monitoring. One of management's priorities has been to establish and maintain a culture of
environmental care on the site with the object of preventing accidents. Such, however, cannot be ruled out as was
evidenced by an incident on the 27th of January, 2007, when a small discharge of natural silt bearing water was
mistakenly made during surface works. While the incident caused no environmental damage and incurred no penalties, it
has prompted a review of site procedures to minimise the chances of similare incidents recurring.
4.      Permitting   The company has comprehensive permission to carry out its activities. Overall consents were granted in
2000 after an exhaustive public inquiry and fulfilment of more than 30 pre-conditions which attached to the provisional
consent granted in 1995. Remaining consents required - building regulations, archaeological supervision of excavation
which is mandatory throughout Ireland, compliance with IPPC regulations - relate to operating procedures and are being
addressed with the relevant authorities as the project develops. Nevertheless, as in all jurisdictions, regulatory
provisions are subject to change and the Company may be faced with additional constraints in future.
5.      Title   The Company owns the land in secure freehold on which the project is located. Precious metals licences and
mining leases have been granted to the Company by the Crown Estate and renewed as required since the mid-1990's when
initially granted. Licences and Leases are subject in the usual way to minimum performance requirements which are set at
a level so as not to inhibit development. There is a dialogue ongoing with the Northern Ireland Department of Enterprise
Trade and Industry (DETI) concerning a licence to extract base metals which occur with the gold and silver in the
quartz-sulphide veins and which may be recovered as a by-product of gold and silver. The licence if applicable may
require a fee paid to owners of surface rights. In the case of the Company's planned mine, since the owner is the
Company itself, it is thought unlikely that there will be a material impact on the Company.
6.      Political   Northern Ireland has achieved a stable political status conducive to business as is evidenced by the
relatively large amounts of inward investment that the province has enjoyed over the past decade. The mine is well
removed from areas of potential urban disturbance.
7.      Financial   The risk is that additional funds, if required, may not be available.  With the recent private placement,
the company believes that it has sufficient capital to enable the Kearney mine to be brought to initial production this
year. Nonetheless, any further slippage in start-up/commissioning will result in a cash shortage.  Steps have been taken
aimed at having additional working capital available if required. At the time of writing, and due to delays in achieving
profitable production, it is uncertain whether or not additional funds will be required this year. An assessment
indicates that both debt and equity funding may be available, but this is not certain.
8.      Revenue   The Company has contracted sale of its concentrate to Falconbridge. Whilst the payments terms are specific,
there is risk that unit income may fall short of forecast. This could be due to a number of factors including failure of
the concentrate to be within the specification contracted as regards both value elements and penalty elements and
failure to produce concentrate of consistent quantity,   This will become more clear as additional shipments are made
this year and close contact with the smelter is maintained.
9.      Currency Fluctuations/Bullion Price   Most of the costs to the company are incurred in British Pounds Sterling. Gold
price expressed in Sterling is within approximately 15% of 5 year highs and may stay such or remain on a rising trend.
There is risk that this trend may reverse and reduce Sterling income. Inflation is widely viewed as a threat in the
United Kingdom and elsewhere and this is cause for concern. Results are published in Canadian dollars and there is
therefore a currency risk. The Company's policy is to not sell forward its bullion.
10.     Construction and Development   The project has taken longer to build than forecast with increased cost and deferment
of future revenue.  This risk is particularly acute for a new and relatively small project such as Galantas is building
in Northern Ireland where there is no mining history. One is mindful that there has already been serious slippage from
schedule and it cannot be ruled out that further slippage may occur given that there are uncertainties connected with
factors such as the detail of environmental compliance measures, geological conditions, contractor performance,
materials availability and actual outturn costs.  At the date of this report, the plant is still in an early stage of
commissioning due to various equipment problems and delays in delivery of capital items.
11.     Personnel   Notwithstanding the relatively small scale of the Kearney mine, a level of expertise is required in the
mine, plant and ancillary activities including geology and accounting.  With the world experiencing a high level of
minerals industry activity, the Company foresees difficulties in recruiting additional qualified people. Already, the
Company was short a geologist for most of the summer and this has caused a delay in logging and sampling drill cores.
While a geologist is now engaged, the general shortage of skilled people may well prevail for some time to come and the
risk is that costs, operations, future expansion and indeed excellence may be impacted negatively.

CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,                                       2006            2005

Assets

Current
Cash                                           $        234,909 $       1,121,985
Accounts receivable and advances                        397,953           144,727
Inventory                                               100,839           101,363
Future income taxes (Note 9(b))                         213,366           302,900
                                                        947,067         1,670,975
Property, plant and equipment (Note 4)                6,110,357         2,903,165
Deferred development and exploration costs (Note 5)   7,542,920         4,314,368
Future income taxes (Note 9(b))                         958,934           466,900
                                                $    15,559,278 $       9,355,408


Liabilities

Current
Accounts payable and accrued liabilities        $     1,499,678 $        297,785
Current portion of financing facility (Note 6)          253,529           99,207
Due to directors (Note 10)                                -              253,103

                                                      1,753,207          650,095

Long term portion of financing facility (Note 6)        379,773          271,664
                                                      2,132,980          921,759
Shareholders' Equity
Share capital (Note 7(a))                            22,458,500       18,400,862
Warrants (Note 7(b))                                  1,913,100          175,166
Contributed surplus (Note 8)                            848,985          656,658
                                                     25,220,585       19,232,686
Deficit                                             (11,794,287)     (10,799,037)
                                                     13,426,298        8,433,649
                                             $       15,559,278 $      9,355,408

Going concern (Note 1)
Subsequent events (Note 15)

SIGNED ON BEHALF OF THE BOARD

        (Signed) "L.J. Gunter"  (Signed) "Roland Phelps"
        Director        Director


CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                                                                               Cumulative
                                                                                  from
YEARS ENDED DECEMBER 31,                2006                2005            January 1, 2003


Sales                            $      45,928         $        47,804  $       494,478
Cost of goods sold                      17,188                  98,913          530,496

                                        28,740                 (51,109)         (36,018)
Interest income                         10,698                   4,996           15,694

                                        39,438                 (46,113)         (20,324)

Expenses
        Accounting and corporate        39,055                  28,880          107,131
        Bank charges and interest       14,293                   6,100           32,558
        Consulting fees                  6,250                  50,750           57,000
        Foreign exchange loss (gain)    76,248                 (82,495)        (166,428)
        Legal and audit                223,749                  74,728          421,611
        Management fees                      -                 164,000          247,500
        Operating expenses             124,989                 146,298        1,304,415
        Shareholder communication
        and public relations            568,121                114,028          823,037
        Stock based compensation
                   (Note 7(c))          192,327                214,200          714,927
        Transfer agent                   25,202                 14,753           65,510
        Travel and general office        59,954                 30,877          215,335

                                      1,330,188                762,119        3,941,452
Loss before income taxes             (1,290,750)              (808,232)      (3,961,776)
Future income tax recovery
(Note 9(a))                             295,500                769,800        1,065,300
Net loss                               (995,250)               (38,432)      (2,896,476)

Deficit, beginning of period        (10,799,037)           (10,760,605)      (8,897,811)

Deficit, end of period       $      (11,794,287)   $       (10,799,037) $   (11,794,287)


Basic and diluted loss per share     $    (0.01)        $         0.00

Weighted average number
of shares outstanding               145,930,481            116,992,358




CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                Cumulative
                                                                                    from
YEARS ENDED DECEMBER 31,                               2006         2005        January 1, 2003

CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net loss                                       $   (995,250)    $ (38,432)      $(2,896,476)
Adjustments for non cash items:
Amortization                                          4,240        24,504           167,198
Stock based compensation                            192,327       214,200           714,927
Future income tax recovery                         (295,500)     (769,800)       (1,065,300)
Foreign exchange                                   (107,000)            -          (107,000)
Net change in non cash working capital (Note 11)    949,191       239,345           950,659
                                                   (251,992)     (330,183)       (2,235,992)
INVESTING ACTIVITIES
Purchase of property, plant and equipment        (3,538,423)    (1,161,188)      (4,745,655)
Deferred development and exploration costs       (2,901,561)      (961,474)      (3,900,454)
Marketable securities                                   -             -               2,096
                                                 (6,439,984)    (2,122,662)      (8,644,013)

FINANCING ACTIVITIES
Issue of common shares                            6,127,500      3,503,333       11,264,053
Share issue costs                                  (331,928)      (249,192)        (692,328)
Advances from financing facility                    365,400        555,000          920,400
Repayments of financing facility                   (102,969)      (191,459)        (343,240)
Advances from directors                            (253,103)      (176,608)        (127,140)
                                                  5,804,900      3,441,074       11,021,745

NET CHANGE IN CASH                                 (887,076)       988,229          141,740

CASH, BEGINNING OF PERIOD                         1,121,985        133,756           93,169

CASH, END OF PERIOD                            $    234,909     $1,121,985      $   234,909


Supplemental information (note 11)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005

1.      GOING CONCERN

These financial statements have been prepared on a going concern basis which contemplates that Galantas Gold Corporation
(the "Company") will be able to realize assets and discharge liabilities in the normal course of business.  The
recoverability of these consolidated amounts, which includes the consolidated results of the Company's wholly owned
subsidiary Cavanacaw Corporation (Cavanacaw), is dependent on the ability of the Company to obtain future financing and
to recover its investment in Omagh Minerals Limited (Omagh).  Cavanacaw has a 100% shareholding in Omagh which is
engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland.

As at December 31, 2001, studies performed on Omagh's mineral property confirmed the existence of economically
recoverable reserves.  The mineral property is currently in the development stage of operation and the directors believe
that the capitalized development expenditures will be fully recovered by the future operation of the mine.  The
recoverability of Omagh's capitalized development costs is thus dependent on the ability to secure financing, future
profitable production or proceeds from the disposition of the mineral property.

Management is confident that it will be able to secure the required financing to enable the Company to continue as a
going concern.  However, this is subject to a number of factors including market conditions.  These consolidated
financial statements do not reflect adjustments to the carrying value of assets and liabilities, the reported expenses
and balance sheet classifications used that would be necessary if the going concern assumption was not appropriate.
Such adjustments could be material.

2.      INCORPORATION AND NATURE OF OPERATIONS

The Company was formed on September 20, 1996 under the name Montemor Resources Inc. on the amalgamation of 1169479
Ontario Inc. and Consolidated Deer Creek Resources Limited.  The name was changed to European Gold Resources Inc. by
articles of amendment dated July 25, 1997.  On May 5, 2004, the Company changed its name from European Gold Resources
Inc. to Galantas Gold Corporation.  The Company was incorporated to explore for and develop mineral resource properties,
principally in Europe.  In 1997, it purchased all of the shares of Omagh which owns a mineral property in Northern
Ireland, including a delineated gold deposit.  Omagh obtained full planning and environmental consents necessary to
bring its property into production.

The Company entered into an agreement on April 17, 2000, approved by shareholders on June 26, 2000, whereby Cavanacaw, a
private Ontario corporation, acquired Omagh.  The Company is developing an open pit mine to extract the Company's gold
deposit near Omagh, Northern Ireland. The Company also has developed a premium jewelry business founded on the gold
produced under the name Galántas Irish Gold Limited (Galántas).

The Company's operations include the consolidated results of Cavanacaw and its wholly owned subsidiaries Omagh and
Galántas.

3.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting
principles ("Canadian GAAP"). The preparation of financial statements in conformity with Canadian GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reporting period. The most
significant estimates and assumptions include the recovery of the deferred development and exploration costs, the
valuation of stock-based compensation and other stock-based payments and the ability of the Company to continue as a
going concern (note 1). Actual results could differ from those estimates.

Principles of Consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries.  All material
intercompany balances have been eliminated.

Foreign Currency Translation

The Company's operations expose it to significant fluctuations in foreign exchange rates.  Cavanacaw, Omagh and Galántas
are denominated in British pounds and are, therefore, subject to exchange variations against the reporting currency, the
Canadian dollar.  They are integrated foreign operations, and as such their financial statements have been translated
into Canadian dollars using the temporal method.  All assets and liabilities are translated at exchange rates effective
at the end of each year and all non monetary assets and liabilities are translated at their historical rates. Income and
expenses are translated at the average exchange rate for the year. The foreign currency translation gains and losses are
included in the determination of net loss.

Inventory

Inventory of jewelry is stated at the lower of cost and net realizable value, with cost determined on a specific item
basis.

Property, Plant and Equipment

The cost of property, plant and equipment is their purchase cost, together with any related costs of acquisition.
Amortization is calculated at the following rates:

        Buildings                4 % straight line
        Plant and machinery     20 % declining balance
        Motor vehicles          25 % declining balance
        Office equipment        15 % declining balance
        Moulds                  25 % straight line

Freehold land is not amortized.

Asset Retirement Obligation

The Company is subject to the provisions of CICA Handbook Section 3110, Asset Retirement Obligations, which require the
estimated fair value of any asset retirement obligations to be recognized as a liability in the period in which the
related environmental disturbance occurs and the present value of the associated future costs can be reasonably
estimated.  As of December 31, 2006 the Company has capitalized any asset retirement obligations in respect of its
mineral exploration property.  If the project is successful, the related expenditures will be amortized using
units-of-production method over the estimated life of the ore body based on estimated recoverable ounces or pounds mined
from proven and probable reserves.

Revenue Recognition

Revenue from sale of gold jewelry is recognized at point of sale.



Long Lived Assets

Long lived assets, which comprise property, plant and equipment, are reviewed for impairment if events or changes in
circumstances indicate that the carrying value may not be recoverable.  If the sum of the undiscounted future cash flows
expected from use and residual value is less than carrying amount, the long lived asset is considered impaired.  An
impairment loss is measured as the amount by which the carrying value of the long lived asset exceeds its fair value.

Deferred Development and Exploration Costs

Deferred development and exploration costs are capitalized until results of the related projects, based on geographic
areas, are known.  If a project is successful, the related expenditures will be amortized using the units of production
method over the estimated life of the ore body based on estimated recoverable ounces or pounds mined from proven and
probable reserves.  Provision for loss is made where a project is abandoned or considered to be of no further interest
to the Company, or where the directors consider such a provision to be prudent.

Income Taxes

The asset and liability method is used for determining income taxes.  Under this method, future tax assets and
liabilities are recognized for the estimated taxes recoverable or payable that would arise if assets and liabilities
were recovered and settled at the financial statement carrying amounts.  Future tax assets and liabilities are measured
using the substantively enacted tax rates expected to be in effect when the tax assets or liabilities are recovered or
settled, respectively.  Changes to these rates are recognized in income in the year in which the changes occur. Future
income tax assets are recognized to the extent that it is more likely than not that the company will realize the benefit
from the asset.

Stock Based Compensation

The fair value of any stock options granted to directors, officers, employees and consultants is recorded as an expense
over the vesting period with a corresponding increase recorded to contributed surplus. The fair value of the stock based
compensation is determined using the Black Scholes option pricing model and management's assumptions.  Upon exercise of
the stock options, consideration paid by the option holder together with the amount previously recognized in contributed
surplus is recorded as an increase to share capital.

Other Stock based Payments

The Company accounts for other stock based payments based on the fair value of the equity instruments issued in exchange
for the receipt of goods and services from non employees or the fair value of the goods and services received, whichever
is the more reliable basis, by using the stock price and other measurement assumptions as at the measurement date.

Per Share Information

Per share information is computed using the weighted average number of common shares outstanding during the year.
Diluted per share information is calculated using the treasury stock method for options and warrants.  The treasury
stock method assumes that any proceeds obtained upon exercise of options and warrants would be used to purchase common
shares at the average market price during the year.  For the purpose of calculating diluted earnings per share, no
adjustment to basic earnings per share is made if the result of these calculations is anti-dilutive.
4.      PROPERTY, PLANT AND EQUIPMENT

                2006
                                  Accumulated
                                       Cost            Amortization             Net

Freehold land and buildings     $       2,962,629       $       32,999  $       2,929,630
Plant and machinery                     3,773,982               657,702         3,116,280
Motor vehicles                             61,438                31,851            29,587
Office equipment                           77,303                42,443            34,860
Moulds                                     81,802                81,802                 -

                                $       6,957,154       $       846,797 $       6,110,357

                                           2005
                                         Accumulated
                                            Cost        Amortization              Net

Freehold land and buildings     $       1,772,673       $       28,706  $       1,743,967
Plant and machinery                     1,458,487               342,731         1,115,756
Motor vehicles                             34,511               27,297          7,214
Office equipment                           70,783               34,555          36,228
Moulds                                     81,802               81,802          -

                               $        3,418,256       $       515,091 $       2,903,105

Freehold land and buildings includes an asset retirement obligation of $101,900.

The Company holds a Crown Mining Lease which grants the Company the right to extract gold and silver from its property
at Omagh, County Tyrone, Northern Ireland.  This Lease is for 10 years from June 2005.  The Lease requires the Company
to pay $46,000 (GBP 20,000) per year for the first three years with additional rent payable calculated on gold output
after the first three years.  The Company also has two-year prospecting licenses expiring in July 2007 in respect to
gold, silver and other metals.  The Lease and licenses contain certain rights as to renewal providing that certain rent
and royalty payments, exploration expenditure and other terms have been met, including the provision of a restoration
bond.

During the year the Company purchased an adjoining property at a cost of $781,182 (GBP 377,073).  The purchase includes
only surface rights as rights to gold and silver are already held by the Company through its Crown Mining Lease.

5.      DEFERRED DEVELOPMENT AND EXPLORATION COSTS

                                                            2006        2005

Opening balance $                                      4,314,368        $       3,218,811

Additions during the period:
        Minerals and metallurgical                               -              297,238
        Consultants                                           235,254           60,935
        Leases                                                 168,280          19,522
        Fuel                                                   204,698          14,852
        Wages                                                 888,833           119,800
        Interest                                               43,555           17,449
        Traveling                                             161,097           88,369
        Repairs and maintenance                                222,770          47,594
        Construction                                          686,176           284,402
        General                                                86,646           11,313
        Amortization                                           326,991          134,083
        Drilling                                               180,665          -
        Laboratory                                              23,587          -

                                                              3,228,552         1,095,557

Total deferred development and exploration costs        $        7,542,920      $        4,314,368

6.      FINANCING FACILITY

(i) On May 27, 2005, the Company obtained financing from Barclays Mercantile Business Finance Ltd. in the amount of
$555,000 (238,700 GBP) for the purchase of mining equipment. The loan is for a period of four years at 3.71% with
monthly principal and interest payments of $10,172 (5,071 GBP).

(ii) On March 17, 2006, the Company obtained financing from Barclays Mercantile Business Finance Ltd. in the amount of
$365,400 (180,000 GBP) to assist in the purchase of certain metallurgical equipment having a cost of $728,770 (359,000
GBP). The loan is for a period of three years at 3.97% with monthly principal and interest payments of $11,658 (5,578
GBP).

Borrowings are secured by a legal mortgage charge over the land and a letter of guarantee.

Amounts payable on the long term debt are as follows:
                2006    2005

Financing facility (i)  $       319,201 $       370,871
Financing facility (ii)         314,101         -

                633,302         370,871
Less:  Current portion          253,529         99,207
        $       379,773 $       271,664
Principal repayments over the next three years are as follows:

        2007    $       253,529
        2008            273,771
        2009            106,002
                $       633,302

7.      SHARE CAPITAL

(a)     Authorized and issued

Authorized
Unlimited number of common and preference shares issuable in Series

Issued common shares
        Number of       Stated
        Shares  Value

Balance, January 1, 2003                                   71,115,222   $       13,082,493
Exercise of warrants                                          250,000           27,461
Common shares issued, net of issue costs                    8,707,860           1,048,524
Common shares issued for debt settlement                    7,416,395           741,640
Warrants issued                                                 -               (78,537)

Balance, December 31, 2003                              87,489,477              14,821,581
Issued under private placement                           2,866,825              430,024
Warrants issued                                    -             (71,671)
Warrants exercised              945,554         176,659
Share issue costs               -               (34,706)

Balance, December 31, 2004              91,301,856              15,321,887
Issued under private placements (i) and (ii)            35,033,333              3,503,333
Warrants issued (i) and (ii)            -               (175,166)
Share issue costs               -               (249,192)

Balance, December 31, 2005              126,335,189             18,400,862
Issued under private placement (iii)            14,000,000              3,500,000
Warrants issued (iii)           -               (1,735,000)
Agent's compensation options granted (iii)          -               (178,100)
Warrants exercised              17,516,666              2,802,666
Share issue costs               -               (331,928)

Balance, December 31, 2006              157,851,855     $       22,458,500

 (a)    Authorized and issued (Continued)

(i) On April 4, 2005, the Company closed the first tranche of a private placement, issuing 23,333,333 units at a price
of $0.10 per unit for gross proceeds of $2,333,333.  Each unit consisted of one common share in the capital of the
Company and one half of one common share purchase warrant.  Each whole common share purchase warrant entitles the holder
to purchase one common share at an exercise price of $0.15 until April 4, 2006. Finder's fees in the amount of $74,320
of the brokered portion of the placement were paid to several parties in connection with this placement.

(ii) On April 14, 2005, the Company closed the second tranche of a private placement, issuing 11,700,000 units at a
price of $0.10 per unit for gross proceeds of $1,170,000.  Each unit consisted of one common share in the capital of the
Company and one half of one common share purchase warrant.  Each whole common share purchase warrant entitles the holder
to purchase one common share at an exercise price of $0.15 until April 14, 2006. Finder's fees in the amount of $57,365
of the brokered portion of the placement were paid to several parties in connection with this placement.

The fair value of the 17,516,666 warrants in (i) and (ii) above were estimated using the Black Scholes option pricing
model with the following assumptions: dividend yield   0%; volatility   68%; risk free interest rate   2.0% and an
expected life of 1 year. The fair value attributed to the warrants was $175,166.

(iii) On July 26, 2006, the Company closed a private placement (the "Offering") for gross proceeds of $3,500,000.
Pursuant to this offering, the Company issued 14,000,000 units of the Company (each a "Unit") at the price of $0.25 per
Unit (including an over allotment of 1,200,000 Units (the "Over Allotment") and 2,000,000 Units for subscribers
specifically identified by management (the "President's List"). Each Unit consists of one common share of the Company
and one warrant of the Company.  Each warrant entitles the purchaser to purchase one common share at a price of $0.32
per share at any time until July 26, 2008.

Union Securities Ltd., acting as agent (the "Agent") was paid a cash fee of $240,000 representing 8% in cash commission
based on Units sold under the Offering and the Over Allotment Option (excluding Units sold pursuant to the President's
List) and $20,000 representing 4% in cash for Units sold pursuant to the President's List. In addition, the Company
issued to the Agent 1,300,000 compensation options (the "Agent's Compensation Options") equal to 10% of all Units sold
pursuant to the Offering and the Over Allotment Option (excluding Units sold pursuant to the President's List) and 5% of
all Units sold pursuant to the President's List. Each Agent's Compensation Option entitles the Agent to purchase one
unit of the Company at $0.25 per Unit at any time prior to July 26, 2008.  Each Unit consists of one common share of the
Company and one warrant of the Company.

Other costs associated directly with the private placement amounted to $71,928.

The fair value of the 14,000,000 warrants and 1,300,000 compensation options (collectively "the warrants") were
estimated using the Black Scholes option pricing model with the following assumptions: dividend yield   0%; volatility
110%; risk free interest rate   4.15% and an expected life of 2 years. The fair value attributed to the warrants was
$1,735,000 and $178,100 respectively.

 (b)    Warrants
The following table shows the continuity of warrants for the years ended December 31, 2006 and 2005.

                Weighted
        Number of       Average
        Warrants        Exercise Price

Balance, January 1, 2003        -       $         -
Issued under private placements 8,151,664               0.18
Exercised       (250,000)               0.16

Balance, December 31, 2003      7,901,664               0.18
Issued under private placement  1,433,412               0.05
Exercised       (945,554)               0.17
Expired (6,956,110)             0.18

Balance, December 31, 2004      1,433,412               0.05
Issued (Note 7(a)(i)(ii))       17,516,666              0.15
Expired (1,433,412)             0.05

Balance, December 31, 2005      17,516,666              0.15
Exercised       (17,516,666)            0.15
Issued (Note 7(a)(iii)) 15,300,000              0.32

Balance, December 31, 2006      15,300,000      $       0.32

As at December 31, 2006, the following warrants were outstanding:
        Number  Fair    Exercise        Expiry
        of Warrants     Value   Price ($)       Date

        14,000,000      $       1,735,000       0.32    July 26, 2008
        1,300,000               178,100 0.25    July 26, 2008

        15,300,000      $       1,913,100

(c)     Stock options
The Company has a stock option plan ("the Plan"), the purpose of which is to attract, retain and compensate qualified
persons as directors, senior officers and employees of, and consultants to the Company and its affiliates and
subsidiaries by providing such persons with the opportunity, through share options, to acquire an increased proprietary
interest in the Company. The number of shares reserved for issuance under the Plan cannot be more than a maximum of 10%
of the issued and outstanding shares at the time of any grant of options.  The period for exercising an option shall not
extend beyond a period of five years following the date the option is granted.


 (c)    Stock options (continued)

Insiders of the Company are restricted on an individual basis from holding options which when exercised would entitle
them to receive more than 5% of the total issued and outstanding shares at the time the option is granted. The exercise
price of options granted in accordance with the Plan shall be the closing price of the  shares on the TSX Venture
Exchange immediately preceding the date on which the option is granted, subject to permissible discounting in accordance
with the Corporate Finance Policies of the Exchange.

The following table shows the continuity of options for the years ended December 31, 2006 and 2005.

        Weighted
        Number of       Average
        Options                 Price

Balance, January 1, 2003        2,380,000       $       0.12
Granted 4,200,000               0.15
Cancelled/Expired       (580,000)               0.12

Balance, December 31, 2003      6,000,000               0.14
Granted 2,000,000               0.22

Balance, December 31, 2004      8,000,000               0.16
Granted (i)     300,000         0.10
Cancelled/Expired       (400,000)               0.12

Balance, December 31, 2005      7,900,000               0.11
Granted (ii)    1,000,000               0.26
Cancelled/Expired       (1,400,000)             0.15

Balance, December 31, 2006      7,500,000       $       0.14

Stock based compensation expense includes $118,542 (2005   $98,200) relating to stock options granted in previous years
that vested during the year.

(i) On May 13, 2005, the Company granted 300,000 stock options to consultants of the Company to purchase common shares
at a price of $0.10 per common share until May 13, 2010. The options vest one third upon grant, one third on the first
anniversary of grant and one third on the second anniversary of grant. The fair value attributed to these options was
$12,000 and will be expensed in the statement of operations and deficit and recorded as contributed surplus as the
options vest. Included in the stock based compensation for 2006 is $6,542 (2005   $4,000) related to the vested portion
of these stock options.  100,000 of these stock options were cancelled in 2005 due to forfeiture.

(ii) On June 14, 2006, 1,000,000 stock options were granted to employees of the Company to purchase common shares at a
price of $0.26 per share until June 14, 2011. The options vest one third upon grant, one third on the first anniversary
of grant and one third on the second anniversary of grant. The fair value attributed to these options was $143,000 and
will be expensed in the statement of operations and deficit and credited to contributed surplus as the options vest.
Included in the stock based compensation for 2006 is $73,785 related to the vested portion of these stock options.

 (c)    Stock options (continued)

All granted stock options were valued on the date of grant using the Black Scholes option pricing model with the
following assumptions:
        2006    2005

        Risk free interest rate         4.26%   2.9%
        Expected life of options        5 years 5 years
        Annualized volatility   110%    68%
        Dividend rate   0 %     0 %

As at December 31, 2006, the following stock options were outstanding:

        Exercisable     Number  Exercise        Expiry
        Options of Options      Price ($)       Date

                1,500,000               1,500,000       0.12    May 17, 2007
                2,800,000               2,800,000       0.15    April 10, 2008
                2,000,000               2,000,000       0.10    April 1, 2009
                133,334         200,000 0.10    May 13, 2010
                333,334         1,000,000       0.26    June 14, 2011

                6,766,668               7,500,000

On April 1, 2005, the Company received Exchange approval to re price 2,000,000 stock options granted in 2004 from $0.22
to $0.10.  The Company also changed the expiry date of 1,000,000 stock options from April 10, 2008 to February 13, 2006
to correspond with the expiry date of a contract with a consultant of the Company.  These 1,000,000 stock options were
not exercised and expired on February 13, 2006.

8.      CONTRIBUTED SURPLUS

The following table reflects the continuity of contributed surplus:


Balance, January 1, 2003        $       1,420
Stock options granted           20,751

Balance, December 31, 2003              22,171
Stock options granted           287,649
Warrants exercised/expired              60,967

Balance, December 31, 2004              370,787
Stock options granted           214,200
Warrants expired                71,671

Balance, December 31, 2005              656,658
Stock options granted           192,327

Balance, December 31, 2006      $       848,985


9.      INCOME TAXES

(a)     Provision for income taxes

Income taxes differ from the amount that would be computed by applying the Company's Canadian statutory rate of 36.12%
(2005   36.12%) to loss before provision for, or recovery of, income taxes.  The reasons for the differences are as
follows:
                2006                    2005

Loss before income taxes        $       (1,290,695)     $       (808,232)

Expected tax recovery at statutory rate $       (466,200)       $       (291,900)
Increase (decrease) resulting from:
Stock based compensation                69,500          77,400
Share issue costs               (54,100)                (32,600)
Foreign exchange                26,400          (29,800)
Tax amortization in excess of accounting                (877,600)               (229,500)
Change in future tax assets not previously recognized           -               (539,400)
Foreign tax rate differences            607,800         68,200
Non capital losses not recognized               398,700         207,800

                $       (295,500)       $       (769,800)

(b)     Future tax balances

The tax effects of temporary differences that give rise to future income tax assets and future income tax liabilities
are as follows:
                2006                    2005

Future income tax assets (liabilities)
Non capital losses      $       4,124,600       $       2,726,300
Share issue costs               54,100          34,200
Property, plant and equipment and deferred development costs            (1,663,800)             (1,049,600)
Valuation allowance             (1,342,600)             (941,100)

                        1,172,300               769,800
                Current portion         213,366         302,900
                $       958,934 $       466,900

 (c)    Losses carried forward

As at December 31, 2006, the Company had non-capital losses carried forward of $13,170,813 (2005   $8,475,747) for
income tax purposes as follows:

Expires 2007    $       32,488
        2008            240,733
        2009            94,158
        2011            249,460
        2014            426,803
        2015            568,540
        2026            1,073,616
Indefinite                      10,515,015
                $       13,170,813
A future tax asset for non capital losses of $3,907,727 has been recognized as at December 31, 2006, as it has been
determined that it is more likely than not that the benefit will be realized in the future.

10.     RELATED PARTY TRANSACTIONS

As at December 31, 2006, the Company was indebted to directors in the amount of $nil (2005   $253,103). This amount
represents amounts paid by the directors on behalf of the Company along with unpaid management fees.  These amounts are
interest free and there are no fixed terms of repayment.

During the year, the Company was charged $nil (2005   $164,000) by directors of the Company for management services
which are in the normal course of operations and are measured at the exchange amount established and agreed to by the
related parties. Accounts payable includes $nil (2005   $139,000) owing to these directors for management services and
repayment of expenses incurred on behalf of the Company.

The Company was charged $45,296 (2005   $35,183) for accounting and corporate secretarial services by companies
associated to an officer of the Company in the normal course of business at the exchange amount. Accounts payable
includes $5,568 (2005   $4,505) owing to these companies.

Pursuant to employment agreements dated March 15th, 2006 (which were retroactive to January 1, 2005) entered into with
Mr. Jack Gunter, Chairman of the Company and Mr. Roland Phelps, Chief Executive Officer they provided for them to be
each paid annually 40,000 GBP.  Pursuant to an employment agreement dated March 29th, 2004 Mr. Moe Lavigne, Vice
President Exploration and Development is to be paid annually 40,000 GBP.  Therefore the Company paid to management in
salary $250,800 (2005-$264,800). These amounts were capitalized to the deferred development and exploration costs.

The independent directors only are compensated as to an annual fee of $5,000, the chair of any Committee is compensated
$500 per meeting and each director or member of a committee is compensated $250 per meeting.  This was effective January
1, 2005. In 2006 a total of $25,250 (2005-$28,500) was paid to the independent directors under these arrangements,
namely to Mr. Golla $6,250 (2005-$7,000), to Mr. Brewster $6,000 (2005-$6,500), to Mr Clancy $7,000 (2005-$7,750) and to
Mr. Alexander $6,000 (2005-$7,250).

11.     SUPPLEMENTAL CASH FLOW INFORMATION

(a)     Net change in non cash working capital

                        2006    2005

        Accounts receivable and advances        $       (253,226)       $       (40,056)
        Inventory               524             116,191
        Accounts payable and accrued liabilities                1,201,893               163,210
        $       949,191 $       239,345

(b)     Supplemental information
                        2006    2005

        Interest paid   $       57,848  $       23,549

        Interest paid includes $43,555 (2005   $17,449) of interest paid on the financing facility and charged to deferred
development costs.

12.  FINANCIAL INSTRUMENTS

Fair  Value

The carrying value of cash, accounts receivable and advances, accounts payable and accrued liabilities are considered to
be representative of their respective values due to their short-term nature.

The fair value of the financing facility approximates carrying value since actual rates approximate market rates.

Foreign Exchange Risk

Certain of the Company's expenses and revenues are incurred in the currencies of Northern Ireland and the United Kingdom
and are therefore subject to gains or losses due to fluctuations in these currencies against the Canadian Dollar.

Commodity Price Risk

The ability of the Company to develop its properties and the future profitability of the Company is directly related to
the market price of certain minerals.

13.     SEGMENT DISCLOSURE

The Company, after reviewing its reporting systems, has determined that it has one reportable segment.  The Company's
operations are substantially all related to its investment in Cavanacaw Corporation and its subsidiaries, Omagh and
Galantas. Substantially all of the Company's revenues, costs and assets of the business that support these operations
are derived, incurred or located in Northern Ireland.

14.     OTHER INFORMATION

Effective March 31, 2006 the Company's shares were admitted to trading on the Alternative Investment Market ("AIM") of
the London Stock Exchange. As a result, the Company is dual listed on both AIM and the TSX Venture Exchange in Canada
under the symbol "GAL".

15.     SUBSEQUENT EVENTS

On February 12, 2007, 4,400,000 stock options with an exercise price from $0.10 to $0.15 per share were exercised for
total proceeds of $540,000.

On March 2, 2007 the Company announced a placement of 5,284,000 units for gross proceeds of $1,717,300.  Each unit is
priced at $0.325 and is comprised of one common share and one warrant.  Each warrant entitles the holder to purchase one
common share within 18 months from closing at a price of $0.45.  An arrangement fee of 5% is payable to the broker.

16.     COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform with the current year's presentation. Net loss previously
reported has not been affected by this reclassification.