Interim Results

RNS Number : 1673A

Galileo Resources PLC

18 December 2014

 



18 December 2014

Galileo Resources PLC

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

Unaudited interim results for the six months ended 30 September 2014

Galileo, (AIM:GLR) the exploration and development mining company, announces its interim results for the six months ended 30 September 2014.

Highlights

·     The Glenover rare earths project in South Africa continued with optimisation and strategic positioning

·     The acquisition of St. Vincent Minerals Inc ("SVM") was completed on 15 May 2014 and SVM's two projects in Nevada as set out below have been successfully integrated into Galileo

·     The Ferber gold-copper project in north eastern Nevada has been reviewed and shows good potential for multi-model discovery of copper and/or gold

·     The Gabbs gold-copper project data base continues to be reviewed with the intention to develop the exploration potential

Chairman's report

The financial climate, in which Galileo operates, has not improved during the period and has probably deteriorated. This being the case we intend to consolidate our interest and maintain focus on value release from the current asset portfolio.

The Company holds an interest in Glenover, a developing Glenover Rare Earth/Phosphate project, which has progressed very favourably. In addition, the Company has acquired well-above-average potential exploration properties in Nevada, a region which has produced some of the world's most prolific gold and copper mines.

The Company's focus with Glenover is to consolidate the progress made, including securing necessary potential strategic funding partnerships and advance the project to full feasibility study. 

The Company announced in July 2014, the execution, through its subsidiary, St Vincent Minerals Inc, two Exploration Lease and Option to Purchase Agreements, which increased and consolidated the Company's position in the Ferber gold-copper property in Nevada, to 102 unpatented and 21 patented mining claims, which now cover c2,377 contiguous acres. The Ferber property is a historic producer of gold and copper and hosts widespread gold and copper mineralization. The Company continued to review available data on this property, with a view to formulating a near-term exploration program in light of recent major gold discoveries in eastern Nevada at Long Canyon and, more recently, at Kinsley Mountain. The Ferber property is approximately 12 kilometres east of Kinsley Mountain. 

The Group's loss for the six months, before and after taxation and before taking items of other comprehensive income into account, was £ 276 974 (2013: loss of £1 348 604). The Group's loss per share was 0.3 pence (2013: loss of 1.5 pence) per ordinary share.

On 29 October 2014, Brian Gavin our Chief Executive Officer sadly passed away after suffering a major heart attack. Our condolences go out to his family and friends.

I would like to thank my fellow directors and officers for their efforts during a challenging but stable and progressing period. The Board remains convinced that the Company has above average assets and that value will surface.

Colin Bird

Chairman

18 December 2014

For further information, please contact:

Galileo Resources PLC
Colin Bird, Chairman  & CEO	Tel [phone]
Andrew Sarosi, Executive Director www.galileoresources.com	Tel [phone]
Beaumont Cornish Limited - Nominated Adviser Roland Cornish/Felicity Geidt	Tel [phone]
Hume Capital - Broker Jon Belliss Tel [phone]	Tel [phone]
Daniel Stewart & Co - Joint Broker David Coffman/Colin Rowbury	Tel + 44 (0) 20 7776 6596

Statement of Responsibility for the six months ended 30 September 2014

The Directors are responsible for preparing the consolidated interim financial statements for the six months ended 30 September 2014 and they acknowledge, to the best of their knowledge and belief, that:

·     the consolidated interim financial statements for the six months ended 30 September 2014 have been prepared in accordance with IAS 34 - Interim Financial Reporting, as adopted by the EU;

·     based on the information and explanations given by management , the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the consolidated interim financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss;

·     the going concern basis has been adopted in preparing the consolidated interim financial statements and the directors of Galileo have no reason to believe that the Group will not be a going concern in the foreseeable future, based on forecasts and available cash resources;

·     these consolidated interim financial statements support the viability of the company; and  

·     having reviewed the Group's financial position at the balance sheet date and for the period ending on the anniversary of the date of approval of these financial statements they are satisfied that the Group has, or has access to, adequate resources to continue in operational existence for the foreseeable future.

Colin Bird                                      Chairman and Chief Executive Officer

Andrew Francis Sarosi                Finance & Corporate Development Director

J Richard Wollenberg                  Non-Executive Director

Christopher Molefe                     Non-Executive Director

18 December 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION		Six months ended 30 September 2014	Six months ended 30 September 2013		Year ended 31 March 2014
		(Unaudited)	(Unaudited)		(Audited)
		£	£		£
ASSETS
Property, plant and equipment		282	1 435		282
Intangible assets		10 156 860	7 160 799		6 635 128
Investment in joint ventures		2 211 137	2 452 658		2 313 663
Loans to associates		92 547	-		79 804
Other financial assets		338 051	3 341 507		728 128
Non-current assets		12 798 877	12 956 399		9 757 005
Trade and other receivables		24 115	6 741		568
Cash and cash equivalents		210 079	932 753		324 819
Current assets		234 194	939 494		325 387
Total Assets		13 033 071	13 895 893		10 082 392
EQUITY AND LIABILITIES
Share capital and share premium		23 961 531	21 603 932		21 603 932
Reserves		(4 012 960)	(2 722 244)		(3 736 063)
Accumulated loss		(8 107 811)	(5 014 947)		(7 830 837)
Equity		11 840 760	13 866 741		10 037 032
Liabilities
		3 089	7		6
Other financial liabilities		3 089	7		6
Non-current liabilities
Other financial liabilities		906 254	-		-
Trade and other payables		282 968	29 145		45 354
Current liabilities		1 189 222	29 145		45 360
Total Equity		13 033 071	13 895 893		10 082 392
Shares in issue		114 502 721	88 307 183		88 307 183
Net asset value per share - pence		10.34	15.7		11.37
Net tangible asset value per share - pence		1.47	7.6		3.85
The statement of financial position has been approved by the board of directors and are signed off by:
Colin Bird 18 December 2014		Andrew Sarosi
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014		Six months ended 30 September 2014		Six months ended 30 September 2013	Year ended 31 March 2014
		(Unaudited)		(Unaudited)	(Audited)
		£		£	£
Revenue		8 394		-	-
Operating expenses		(296 591)		(655 731)	(2 991 626)
Operating loss		(288 197)		(655 731)	(2 991 626)
Investment revenue		24 467		30 089	55 975
Fair value adjustments		-		(700 000)	(1 190 000)
Share of loss from equity accounted investments		(13 244)		(22 961)	(38 843)
Finance costs		-		(1)	-
Loss for the period		(276 974)		(1 348 604)	(4 164 494)
Other comprehensive income:
Exchange differences on translating foreign operations		(276 897)		(1 317 290)	(2 331 109)
Total comprehensive loss		(553 871)		(2 665 894)	(6 495 603)
Total comprehensive loss attributable to:
Owners of the parent		(553 871)		(2 665 894)	(6 495 603)
Weighted and diluted average number of shares in issue		99 431 316		88 307 183	88 307 183
Loss per share - pence
Basic loss per share		(0.3)		(1.5)	(4.7)
Diluted loss per share		(0.3)		(1.5)	(4.7)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 SEPTEMBER 2014 Figures in Pound Sterling		Total Share Capital	Foreign currency translation reserve	Share based payment reserve	Total reserves	Accumulated loss	Total equity
Balance at 01 April 2013		21 603 932	(2 192 093)	787 139	(1 404 954)	(3 666 343)	16 532 635
Changes in equity
Loss for the 6 months						(1 348 604)	(1 348 604)
Other comprehensive income for the 6 months		-	(1 317 290)	-	(1 317 290)		(1 317 290)
Total comprehensive loss for the 6 months		-	(1 317 290)	-	(1 317 290)	(1 348 604)	(2 665 894)
Balance at 30 September 2013		21 603 932	(3 509 383)	787 139	(2 722 244)	(5 014 947)	13 866 741
Changes in equity
Loss for the 6 months						(2 815 890)	(2 815 890)
Other comprehensive income for the 6 months		-	(1 013 819)	-	(1 013 819)		(1 013 819)
Total comprehensive loss for the 6 months		-	(1 013 819)	-	(1 013 819)	(2 815 890)	(3 829 709)
Total contribution by and distributions to owners of company recognised directly in equity			-	-	-		-
Balance at 31 March 2014		21 603 932	(4 523 202)	787 139	(3 736 063)	(7 830 837)	10 037 032
Changes in equity						(276 974)	(276 974)
Other comprehensive income for the 6 months		-	(276 897)	-	(276 897)		(276 897)
Total comprehensive loss for the 6 months		-	(276 897)	-	(276 897)	(276 974)	(553 871)
Total contribution by and distributions to owners of company recognised directly in equity		2 357 599	-	-	-		2 357 599
Balance at 30 September 2014		23 961 531	(4 800 099)	787 139	(4 012 960)	(8 107 811)	11 840 760

CONSOLIDATED STATEMENT OF CASH FLOW FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014		Six months ended 30 September 2014	Six months ended 30 September 2013	Year ended 31 March 2014
		(Unaudited)	(Unaudited)	(Audited)
		£	£	£
Cash used in operations		(361 162)	(498 664)	(809 433)
Interest income		1 327	30 089	6 032
Finance costs		-	(1)	-
Net cash from operating activities		(359 835)	(468 576)	(803 401)
Purchase of property, plant and equipment		(139 520)	(609)	544
Decrease/ (Increase) in investments in associates and joint ventures		22 170	(418 780)	(433 040)
Increase in loans to group companies		(12 743)	-	(79 804)
Sale of financial assets		340 955	85 645	(84 554)
Net cash from investing activities		210 862	(333 744)	(606 854)
Proceeds on share issue		-	-	-
Repayment of other financial liabilities		34 233	1	-
Net cash flows from financing activities		34 233	1	-
Total cash movement for the 6 months		(114 740)	(802 321)	(1 410 255)
Cash at the beginning of the 6 months		324 819	1 735 074	1 735 074)
Total cash at end of the 6 months		210 079	932 753	324 819

Notes to the Financial Statements

             1. Status of interim report

The Group unaudited condensed interim results for the 6 months ended 30 September 2014 have been prepared using the accounting policies applied by the company in its 31 March 2014  annual report which are in accordance with International Financial Reporting Standards (IFRS and IFRC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU("IFRS, including the SAICA financial reporting guides as issued by the Accounting Practices Committee, IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited, the AIM rules of the London Stock Exchange and the Companies Act 2006 (UK). This condensed consolidated interim financial report does not include all notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 March 2014 and any public announcements by Galileo Resources Plc. All monetary information is presented in the presentation currency of the Company being Great British Pound. The Group's principal accounting policies and assumptions have been applied consistently over the current and prior comparative financial period. The financial information for the year ended 31 March 2014 contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

2. Basis of preparation

2.1. Basis of consolidation

The consolidated interim financial statements incorporate the interim financial statements of the Company and all entities, including special purpose entities, which are controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries are included in the consolidated interim financial statements from the effective date of acquisition to the effective date of disposal. Adjustments are made when necessary to the interim financial statements of subsidiaries to bring their accounting policies in line with those of the group.  All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately from the group's interest therein, and are recognised within equity. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance being recognised for non-controlling interest. 

Transactions, which result in changes in ownership levels and/or where the group has control of the subsidiary both before and after the transaction, are regarded as equity transactions and are recognised directly in the statement of changes in equity.

The difference between the fair value of consideration paid or received and the movement in non-controlling interest for such transactions is recognised in equity attributable to the owners of the parent.

Where a subsidiary is disposed of and a non-controlling shareholding is retained, the remaining investment is measured to fair value with the adjustment to fair value recognised in profit or loss as part of the gain or loss on disposal of the controlling interest.

2.2 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 2014.  

2.3 Use of estimates and judgments

In preparing the interim financial statements, management is required to make estimates and assumptions that affect the amounts represented in the interim financial statements and related disclosures. Use of available information and the application of judgment are inherent in the formation of estimates. Actual results in the future could differ from these estimates, which may be material to the interim financial statements.

2.3.1   Options granted

Management used the intrinsic value model to determine the value of the options issued at listing date and will use the Black-Scholes formula for subsequent options being granted.

2.3.2      Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available for sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the end of the reporting period.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

2.4       Exploration and evaluation costs

Exploration and evaluation costs, including the costs of acquiring licenses, 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.

No amortisation is recognised in respect of exploration and evaluation expenditure. Amortisation of the exploration and evaluation asset will start once mining commences on the related exploration and evaluation asset.

Exploration and evaluation assets are assessed for impairment if:

(i)           sufficient data exist 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 ('CGU') to which the exploration activity related.

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

2.5       Translation of foreign currencies

2.5.1      Functional and presentation currency

Items included in the interim financial statements of each of the Group entities are measured using the currency of the primary economic environment in which the entity operates (functional currency).

The consolidated interim financial statements are presented in pound sterling, which is the Group's functional and presentation currency.

2.5.2      Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in US$ or ZAR, 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;

·     non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction; and

·     non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

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 annual financial statements are recognised in profit or loss in the period in which they arise.

When a gain or loss on a non-monetary item is recognised to other comprehensive income and accumulated in equity, any exchange component of that gain or loss is recognised to other comprehensive income and accumulated in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

Cash flows arising from transactions in a foreign currency are recorded in Rand by applying to the foreign currency amount the exchange rate between the rand and the foreign currency at the date of the cash flow.

2.6       Going concern

The going concern basis has been adopted in preparing the consolidated interim financial statements. The Directors have no reason to believe that the Group will not be a going concern in the foreseeable future, based on forecasts and available cash resources. These unaudited consolidated interim financial statements support the viability of the company. The Directors have reviewed the Group's financial position at the balance sheet date and for the period ending on the anniversary of the date of approval of these financial statements, and they are satisfied that the Group has or has access to adequate resources to continue in operational existence for the foreseeable future.

3. Segmental analysis

Business segments

The Group's business is the exploration and development of Rare Earths in Africa and gold-copper in USA .

Geographical segments

An analysis of the loss on ordinary activities before taxation is given below:

			Six months ended 30 September 2014 (Unaudited)	Six months ended 30 September 2013 (Unaudited)	Year ended 31 March 2014 (Audited)
			£	£	£
Loss on ordinary activities before taxation:
United Kingdom			(228 045)	(1 325 643)	(4 125 651)
South Africa			(13 244)	(22 961)	(38 843)
USA			(35 685)	-	-
			(276 974)	(1 348 604)	(4 164 494)

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.

No has been made for tax for the period under review as the Company has no taxable income. The estimated tax loss available for set off against future taxable income as 31 March 2014 £1 406 233  (2013: £974,428).

5. Earnings per share

The Group's loss for the six months, before and after taxation and before taking items of other comprehensive income into account, was £ 276 974 (2013: loss of £1 348 604). The Group's loss per share was 0.3 (2013: loss of 1.5) pence per ordinary share.

Earnings per share has been calculated using a weighted average number of shares in issue of 99 431 316 (September 2013: 88 307 183).

6. Intangible assets

Intangible assets of £10.2 million (2013: £7.2 million) includes a value of £9.3 million attached to assets identified in Skiptons, a wholly owned subsidiary of Galileo, namely the Glenover Rare Earth project situated in South Africa. The balance of intangible assets, £0.9 million is represented by the value of the intangible assets in SVM acquired on 15 May 2014.

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.

Intangible assets 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. The translation difference of £0.3 million (2013:£1.1 million) is allocated to a foreign currency translation reserve through other comprehensive income. This reserve forms part of equity.

No amortisation is recognised in respect of exploration and evaluation expenditure. Amortisation of the exploration and evaluation asset will only be recognised once mining commences on the related assets.

7. Investment in joint venture

In terms of a share subscription and funding agreement Galileo Resources South Africa (Pty) Ltd will earn up to a 51% interest in the Glenover project for an expenditure contribution of US$5.2 million which is represented by 395 510 ordinary Glenover shares at US$13.1 per share.

In terms of the funding arrangement between the shareholders of Glenover, Galileo Resources South Africa's obligation to complete its funding expired on 3 January 2014. Funding from this date onwards is done through a combination of convertible loans from existing shareholders or alternatively from third-party funding. The shareholders are currently reviewing the funding of the Black Economic Empowerment Partners' interest in the project.

The total funding provided from inception of the project, amounted to US$4.5 million which amount was converted into Glenover ordinary shares, resulting in an increase in Galileo's economic interest in Glenover to 33.99% as at 30 September 2014 (2013: 32.11%).

Galileo's portion of the loss in the joint venture for the period under review amounted to £13 244 (2013: £22 961).

8. Other financial assets

	Six months ended 30 September 2014 (unaudited) £	Six months ended 30 September 2013 (unaudited) £	Year ended 31 March 2014 (audited) £
At fair value through profit or loss - designated
Praetorian Resources Limited incorporated in Guernsey	-	800 000	310 000
On May 2014, the Company announced that it had sold its entire holding of 4 million ordinary shares of nil par value in Praetorian Resources Limited ("Praetorian Shares") at 8p per share for gross proceeds of £320,000. The Praetorian Shares were acquired in July 2012 in return for the issue of 5 million ordinary shares of 5p each in Galileo ("Galileo Shares") issued at a price of 40p per share. At the same time, Praetorian subscribed for 2.5 million Galileo Shares at 40p per share raising £1 million in cash. At 31 March 2014 the Praetorian Shares were carried at a total value of £800,000. The further loss arising on the sale will be treated as a charge against income and the proceeds of the sale net of commissions will be added to the Company's working capital resources.
Non-current assets
Galagen Pty Ltd - ordinary shares	12	12	10
Galagen Pty Ltd - B preference shares	334 255	326 334	324 255
	334 267	1 126 346	634 265

	Six months ended 30 September 2014 (unaudited) £	Six months ended 30 September 2013 (unaudited) £	Year ended 31 March 2014 (audited) £
Loans and receivables   Rare Earth International Limited (REI) incorporated in the British Virgin Islands The Company believed that there existed and continues to exist some considerable uncertainty in the forward pricing of rare earth products whilst phosphates remain reasonably predictable against supply/demand fundamentals. Consequently the Company elected not to pursue the greenfield Nkombwa Hill rare earth project (Nkombwa) in Zambia and other rare-earth opportunities in Mozambique and Spain under its earn-in agreement with Rare Earth International Limited and so holds no further interest in these projects.	-	2 211 562	-
Galagen Pty Ltd this loan bears no interest and has no fixed terms of repayment.	3 784	3 599	93 863
	3 784	2 215 163	93 863
Total other financial assets	338 051	3 341 507	728 128

The above non-listed preference share investment represents the "B" class zero% coupon rate preference shares issued by Galagen for its investment in Glenover phosphate as part of the BBBEE (Broad-Based Black Economic Empowerment) transaction.

9. Issue of ordinary shares

On 15 May 2014 Galileo acquired the entire issued capital of St. Vincent Minerals Inc. ("SVM"). The acquisition was funded by way of a share exchange and issue of 26 195 538 new Galileo ordinary shares of 5 pence each pursuant to a Business Combination Agreement entered into between Galileo, SVM and its wholly owned Canadian subsidiary 2404119 Ontario Inc. SVM's assets include the resource estimate level Gabbs gold-copper property and a prospective Ferber gold-copper property respectively in Nye Country and Elko Country Nevada, USA.

10. Share based payments

The Company did not grant any new options to Directors, staff or advisers during the period under review.

11. Availability of the Interim Results

Copies of the Interim Results for the six months ended 30 September 2014 will be available to view and download from the Company's website www.galileoresources.com 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.

 

END

 

 

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