ANNUAL REPORT
2017
Contents
Annual Financial Statements for the year ended 31 March 2017
Directors, Officers and Advisers
Strategic Report
•
•
Chairman’s Report
Operations Report
Directors’ Report
Independent Auditors’ Report on the Financial Statements
Statements of Financial Position
Statements of Comprehensive Income
Statements of Changes in Equity
Statements of Cash Flows
Accounting Policies
Notes to the Financial Statements
Notice of Annual General Meeting
Form of Proxy
Holding Company
Galileo Resources Plc
Country of incorporation and domicile
United Kingdom
Nature of business and principal activities
2
3
4
11
16
18
19
20
22
23
30
47
49
The Company acts as a holding Company for subsidiary undertakings and investments engaged in the
exploration of natural resources.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
1
Corporate Information
Directors
Secretarial
Services
Registered
Office
Auditors
Broker
Colin Bird – Chairman and CEO
Andrew F Sarosi – Finance and Technical Director
Christopher Molefe – Non-Executive Director
John Richard Wollenberg – Non-Executive Director
Capita Asset Services
34 Beckenham Road
Beckenham, Kent, BR3 4TU
United Kingdom
1st Floor
7/8 Kendrick Mews
London, SW7 3HG
South Africa
7 Einstein Street
Highveld Techno Park
Centurion, 0157
Registrars
Banker
Neville Registrars
Neville House, 18 Laurel Lane
Halesowen, West Midlands, B63 3DA
National Westminster Bank Plc
186 Brompton Road
London, SW3 1XJ
Nominated
Advisor
Beaumont Cornish Limited
2nd Floor, Bowman House
29 Wilson Street, London, EC2M 2SJ
Chapman Davis LLP
2 Chapel Court/Borough High St
London, SE1 1HH
UK Solicitors
to the
Company
Fladgate LLP
16 Great Queen Street
London, WC2B 5DG
Beaufort Securities Ltd
131 Finsbury Pavement
London, EC2A 1NT
Incorporation No: 05679987
2
GALILEO RESOURCES PLC
Strategic Report –
Chairman’s Report
Dear Shareholder
On 30 August 2016 the Company announced the sale of
its Gabbs Gold/Copper property in Nevada, USA for USD$2.5
million in cash. This sale negated the need for short term
placings and allowed the Company to progress the other
assets in its portfolio, particularly the Concordia Copper
project in the Northern Cape Province of South Africa.
The Concordia project, over the past year, underwent
initial modelling, scope potential assessment, ground IP
geophysical investigation and on 15 February 2017 we
announced the commencement of drilling on the Concordia
project.
The IP geophysics demonstrated diverse promising
signatures in the small area tested, which represented less
than 15% of the entire Concordia concession. The test
drilling was to confirm the reliability of IP to identify
disseminated copper ore. The results were inconclusive and
together with our partners we decided to drill further holes
against traditional data i.e. surface outcrops and magnetics
geophysics. The programme took longer than expected
because of the re-iterative requirement for siting bore holes
against the physical results of previous holes. Our difficulties
were compounded in no small way by assay result
interpretation and the fact that data being assessed came
from various co-ordinate sources, thus making assessment
on a common basis difficult. All of this by the end of July
2017 had been largely resolved and we announced on 11
August 2017 a suite of results which on close examination
put some doubt as to the reliability of IP as a targeting tool
but at the same time tabled some interesting, reasonable
copper values within close proximity to surface and
sometimes a little deeper. We have held discussions with
SHIP, our JV partner, and Minxcon, our contracted consulting
geological company, on the results from the drilling and
possible ways forward.
In the 11 August 2017 announcement, we also advised
that our JV partner SHIP was intending to dilute the
Company to a 15% interest in terms of the Co-Operation
and Joint Venture Agreement, which they are not able to
do and we have advised them accordingly. We have also
informed SHIP that in our opinion, the Company owns 51%
of the Concordia project and has not yet had the opportunity
to make a decision on the most appropriate way forward in
terms of Galileo’s options. This is fully provided for in the
agreement as are other matters, which give Galileo full
protection on its current 51% interest in the project.
On 30 August 2016 we agreed with Fer-Min-Ore (Pty)
Ltd (“Fer-Min-Ore”) that their option right to sell our interest
in Glenover Phosphate (Pty) Ltd (“Glenover”) would
terminate and we would work together to add value and
either develop or dispose of the project. In mid -2017 a
major phosphate producer agreed to undertake significant
expenditure (USD$300,000) to test our Glenover phosphate
project for suitability as raw feed to its various value add
phosphate operations. Together with Fer-Min-Ore we
carried out many desktop studies against various off take
Chairman’s Report
Colin Bird
Chairman
agreements and possible hybrid agreements of part sales
and of off take. We have now concluded that the phosphate
core of the Glenover phosphate project could produce a
viable operation for up to 20 years and therefore should be
pursued aggressively. Galileo, being the mining partner,
agreed to finance the application for a mining license and
satisfy the various environmental requirements in order to
be able to make an offer to the industry of its phosphate
upgraded material. The various applications are being
supervised on a turn-key basis by Minxcon, a South African
consultant company in Johannesburg.
At the commencement of the year 2017 our joint venture
partner Orogen Gold Plc on the Silverton Gold property in
Nevada, USA announced the results of
their drilling
programme. Whilst the assays showed gold in every hole,
the overall results did not lead to a conclusion better than
before the drill programme and no further work was carried
out on the property.
During the latter part of 2016 we undertook an extensive
survey of our Ferber property and during this investigation
took many chip samples. The results of the samples were
very encouraging to the extent that we acquired further
ground to enlarge the size of our concession. Our confidence
is such on the Ferber project that we paid for the original
license plus extension during the round of license renewals
in August 2017 and the project is now in good standing
with the intent to carry out drilling during the coming year.
The resource industry in general has experienced
relatively improved circumstances in most cases i.e.
commodity prices, major company market capitalisations,
junior company ability to raise finance and a much
improved appetite from the investment community. At the
time of writing, this appetite is still limited to, in general, the
retail sector and institutional shareholders have yet to enter
the market with any significance. We look forward to this
changing over the coming year and we remain committed
in our quest to identify a large resource, which will be
transformational for the Company and its shareholders.
I would like to thank my fellow directors and
management for their support and efforts during a year,
which has progressed our portfolio in varied ways adding
that we are all very confident about meeting the challenges
of the coming year.
Colin Bird
Chairman
31 August 2017
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
3
(cid:9)(cid:25)(cid:16)(cid:26)(cid:13)(cid:28)(cid:20)(cid:24)(cid:23)(cid:27) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
Strategic Report –
Operations Report
South Africa
Concordia Copper Project (“Concordia” or “Project”)
Period under review
The Company concluded its desktop modelling by
independent consultant Minxcon (Pty) Ltd (“Consultant”) of
historical exploration data with the modelling on Whyte’s
West, Klondike, Wheal Julia and Homeep East prospects. The
study conceptually identified eleven prospect areas with a
combined potential rock mass of more than 750 million
tonnes with a mean grade of 0.57% Cu assuming 50%
Andrew Sarosi
Technical and Finance Director
mineralisation (Table 1). Five of the eleven prospective area
studied, indicated conceptually, considerable near-surface
mining potential. The Consultant based its modelling on
historical geological core logging and drill assay generated
by the O’Okiep Copper Company and others.
Table 1 High Priority Targets Identified in Consultant Desk Top Study
Strike
m
Project
Homeep
5000
Koeëlkop (incl. Whytes’ West) 4000
5000
Shirley
2000
Klondike
1500
Henderson
1000
Henderson North
2000
Ring Dyke
2000
Tweefontein
1100
Horneman
1300
Kliphoog North
1800
Hester Maria
Total
Width
m
38.8
30.0
38.8
25.0
38.8
38.8
38.8
38.8
38.8
38.8
38.8
Depth
m
300
300
300
300
300
300
300
300
200
200
200
%Cu
%
0.58
0.57
0.58
0.63
0.58
0.58
0.58
0.58
0.58
0.58
0.58
Lith
Tonnes
Mt
168.56
104.40
168.56
43.50
50.57
33.71
67.43
67.43
24.72
29.22
40.46
798.55
Cu
Tonnes(a)
Mt
0.49
0.29
0.49
0.14
0.15
0.10
0.19
0.19
0.07
0.08
0.12
2.31
(a) Note:Coppertonnesreportedequatestoapproximately50%ofpotentialhostlithologybeingmineralised(basedoncurrentavailabledata)
Consultant Disclaimer: “Minxcon has ranked the targets resulting from the desktop study in the above table, based
uponitsperceptionofthedataavailabletothematthetimeofthedesktopstudy.Theabovetableissubjecttochange
withtheprogressionofexplorationactivities.Theabovetargetsrepresentareasofdocumentedand/ormappedcopper
occurrences (based on existing data), or in some cases even historical mines (Henderson (Jubilee Mine), Homeep and
WhealJulia)andhavethepotentialforextensionsalongstrikeand/ordip.Thefiguresinthetablespresentedshouldin
nowaybemisconstruedtorepresentcompliantMineralResourceestimatesnortorepresentthedefinitionofacompliant
ExplorationTargetintermsofthevariousReportingCodes,asalltonnages,grades,depthsandstrikesarehighlyconceptual
in nature atthis stageand require the proper exploration practices in order to prove their existenceor to convertthem
eventuallytoacompliantMineralResource.”
Following a strategic joint review of the study and the
Consultant’s assessment of exploration potential on 34
possible prospects on the Concordia property, and their
ranking in terms of prospectivity, the Company prioritised 4
main areas for exploration activities, commencing with an
Induced Polarity (“IP”) geophysical survey. The areas
selected were the Homeep Trend (comprising the Homeep
East, Homeep West, Koeëlkop and Whyte’s West prospects),
the Shirley Trend (comprising Hoogkraal East, Hoogkraal
Central and Hoogkraal West areas), Henderson Prospect and
the Klondike Prospect (south of Hoogkraal West).
IP geophysics survey commenced in October 2016, using
South African-based Geospec Instruments (Pty) Ltd as the
contractor utilizing distributed (electrode) array (“DA”)
design, which enabled direct 3D (three dimensional)
4
GALILEO RESOURCES PLC
modeling of the data. The IP survey was completed in
December 2016. The geophysics programme covered
partially only two of the eleven priority ranked prospects.
3D-wire frame modelling of the IP survey data and its
interpretation, which were carried out during January 2017,
identified a number of both shallow and deeper high-
chargeability(a) zones (IP anomalies) in both the Homeep
and Shirley geological Trends. These anomalies were used
for the selection of targets for drilling, the main focus of
which was to test the reliability of IP, between delineating
geophysical signature with underlying geology signatures,
in identifying and discovering possible copper sulphide
mineralisation associated with these physical features.
The Company developed an initial 1800-metre reverse
circulation (“RC”) drilling programme with up to six angled
drill holes targeting five geophysics anomalies: four on the
Homeep Trend and one on the Shirley Trend. Drilling
commenced on 16 February 2017. As drilling progressed,
inspection of the drill chips (composited every one-metre
intersection down the hole) suggested that targeting IP
anomalies alone was not as precise and less reliable than
anticipated.
In August 2016, SHIP notarially executed the renewed
prospecting right for a further three years to 17 August
2019.
Post period under review
Following the early appraisal of the drilling, which
targeted IP anomalies alone, the Company refocused its
drilling strategy to include local geology, basic rock surface
outcrops and magnetic geophysics criteria in addition to IP
anomaly criterion in location of drill targets. The Company
increased the holes to be drilled to 14 from the initial 6-
hole programme, the effect of which added significantly to
the time scheduled for completion of the programme
including assaying. This strategy change showed visually an
increased reliability in intersecting sulphide mineralisation.
The 14-hole drilling programme was completed on 15 May
2017. During this period the Company carried out further
mapping of outcrops and a limited programme of ground
magnetic
correlation.
Interpretation of the results is pending but initial indications
are that there is a good correlation with the geology and
geophysics
establish
to
a
(cid:9)(cid:25)(cid:16)(cid:26)(cid:13)(cid:28)(cid:20)(cid:24)(cid:23)(cid:27) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
basic rock outcrops. Whilst these non IP geophysics method
are not
sulphide
suitable in identifying of metal
mineralisation, they have application in differentiating rock
types with differing rock mineralogies. Historically, copper
sulphide mineralisation in the area has been associated
with basic rock types (diorite and norite). However, the
opposite is that not all these basic rock types in the host
significant copper mineralisation, which is where IP
anomalism has a role.
Preliminary results of the drilling programme have been
received and are shown in Table 2. The best holes (in basic
rock) numbers GDSP 008, 011 and 014 intersected
respectively, 6 metres (“m”) assaying weighted average
0.90% Cu from 23m to 29m downhole, 10m assaying
weighted average 0.85% Cu from 28m to 38m and 8m
assaying weighted average 1.06% Cu, from 3m to 11m
downhole.
The Consultant has modelled the data but its formal
release is pending final sign off on the quality control and
assurance checks with the analytical laboratory responsible
for the assays.
With due regard to the fact that objective of this initial
drilling, which was to establish the relationship, if any, and
reliability between the IP anomalies, with underlying
geology and to possible copper grades associated with
these physical metrics the preliminary interpretation
suggests that:
●
●
●
the testing (by means of drilling) of the IP survey
anomalies which was conducted in a scientifically
unbiased fashion yielded mixed results and was not
conclusive;
IP anomalies which were drilled blind and steeply into
IP anomalies without geological outcrop or supporting
geophysical evidence did not
intersect significant
mineralisation; and
drilling into IP anomalies which had supporting surface
outcrop, in conjunction with regional and limited ground
geo-magnetic surveys yielded the best results by
intersecting encouraging potentially mineable near-
surface copper mineralisation with good grade.
(a): Chargeability effects are often associated with the presence of disseminated sulphide mineralisation and therefore high-chargeability zones
represent potential drill targets
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
5
(cid:9)(cid:25)(cid:16)(cid:26)(cid:13)(cid:28)(cid:20)(cid:24)(cid:23)(cid:27) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
Table 2 Preliminary Drilling Results and Initial correlation with IP, geology and magnetic
geophysics
Mineralised intersections
(downhole) >0.2%
Cu (cut-off)
Intersect
length
m
From
m
To
m
Assay
%Cu
<0.1
End of
Hole
Depth
m
279
Hole GSPD
001
Not assayed
5
68
73
0.26
6
10
7
10
10
4
2
8
2
6
10
Incl. 3
Incl. 4
11
5
8
Incl. 5
98
120
216
231
273
193
255
140
175
104
130
223
241
283
197
257
148
177
23
29
28
28
34
86
27
3
6
38
31
38
17
32
11
11
0.36
0.46
0.59
0.35
0.62
0.42
0.63
0.4
0.45
0.9
<0.1
<0.1
0.85
0.88
1.29
0.44
0.56
Not assayed
1.06
2.03
002
003
004
005
006
007
008
009
010
011
012
013
014
6
210
102
145
314
286
192
90
90
Anomaly/
Target
IP anomaly –
Drilled blind
Initial
Interpretation
IP on its own
not successful
IP anomaly –
Drilled blind
IP on its own
not successful
Trend
Prospect
Homeep Homeep East
Homeep Homeep East
Successful
Homeep Homeep East
Successful
Shirley Hoogkraal East
Successful
Shirley Hoogkraal East
Successful
Shirley Hoogkraal East
Successful
Shirley
Hoogkraal
IPA – with
supporting
geology and
geophysics
IPA – with
supporting
geology and
geophysics
IPA – with
supporting
geology and
geophysics
IPA – with
supporting
geology and
geophysics
IPA – with
supporting
geology and
geophysics
48 Basic outcrop Did not Test IP
102 Basic outcrop Did not Test IP
96 Basic outcrop Did not Test IP
IPA/Basic
outcrop
Successful
Shirley
Shirley
Shirley
Shirley
Klondike
Klondike
Klondike
Hoogkraal
IPA/Basic
outcrop
Successful
Shirley
Hoogkraal
42 Basic outcrop
Drilling
missed depth
extension due
to orebody
geometry
Shirley
Hoogkraal
120 Basic outcrop Did not Test IP
Shirley
Hoogkraal
GALILEO RESOURCES PLC
The Cooperation and Joint Venture Agreement (the
“Agreement”)
On 15 May 2017, Galileo committed the necessary
funding to earn a 51% interest in the company owning the
Concordia project, Shirley Hayes – ipk (Pty) Ltd (“SHIP”),
having deposited into the Project’s account the funds
required to fulfil
the
the commitment
Agreement.
in terms of
SHIP claimed that the Company should dilute to a 15%
interest in the SHIP Project. The Company has refuted the
claim on the grounds that it has not yet made the election
and could not make it in the time available and on the basis
of the information obtained and modelled, which was
inconclusive.
SHIP is a South African registered privately held company
controlled by Shirley Hayes. The company was incorporated
to hold the Concordia Project and its prospecting right. SHIP’s
sole asset is the Concordia Project.
Glenover Rare-Earth Phosphate Project (“Glenover
Project” or “Project”)
The Glenover Project is situated in the Limpopo Province
of the Republic of South Africa.
Period under review
The exclusive option for the disposal of the Company’s
34% ownership in Glenover Phosphate (Pty)
Ltd,
(“Glenover”) the holding company of the Glenover Project
to Fer-Min-Ore (Pty) Ltd (“FMO”), its partner in the Project
for USD$4 million lapsed by mutual consent at the end of
August 2016. The parties agreed jointly to advance the
Project.
Post Period under Review
On 6 June 2017, Glenover and a major phosphate
producer (“MPP”) executed a proposal agreement (the
“Agreement”) whereby MPP intends to undertake upward
of USD$300,000 in expenditure on a two-phase, pilot plant
phosphate flotation study (“PPFS”), which could lead to the
possible development of the Project. Under this Agreement,
MPP has elected to continue and undertake Phase 1 of the
PPFS; being Water and Ore variability Study.
Phase 2 of the PPFS is intended to produce phosphate
concentrate for testing by MPP in its phosphate production
process. The ultimate objectives of the undertaking include
either developing the Project or selling the Project in whole
or in part to MPP.
Pursuant to the Agreement, Glenover will, concurrent
with the PPFS, fund the application for a mining right for
the Project, for which its existing renewed prospecting right
expires in November 2017.
(cid:9)(cid:25)(cid:16)(cid:26)(cid:13)(cid:28)(cid:20)(cid:24)(cid:23)(cid:27) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
Rare-earths from the tailings of any future phosphate
processing of the ore by MPP, would be returned and
available for further beneficiation by Glenover.
Extensive related test work and negotiations have taken
place prior to this Agreement.
On 6 July 2017 the Company executed a term sheet
(“Term Sheet”) with FMO, pursuant to which the Company
applies for and obtains a mining right from the Department
of Mineral Resources (“DMR”) to mine and produce
phosphate. The terms of the Term Sheet, include amongst
other things, Galileo funding the execution of the mining
right application (“MRA”) by way of an interest free
convertible loan note to FMO, convertible to 4% of the
equity in Glenover. Conversion would increase the
Company’s interest to 38% in Glenover. The Company has
the
engaged the Consultant
submission of which is scheduled for later this calendar year.
The MRA will include an environmental impact assessment
and relevant Water Usage Licence application, in accordance
with the Minerals and Petroleum Resources Development
Act 2002 (as amended).
to execute the MRA,
Existing Glenover shareholder loans will be written down:
Galileo’s loan (ZAR1.9m) will be netted off against FMO’s
loan (ZAR10.6m) and FMO’s remaining agreed outstanding
loan to Glenover will be ZAR4m.
The Term Sheet is valid for 24 months or until formal
grant of the Mining Right. The funding will also include a
monthly payment ZAR35,000 (GBP2,058) into Glenover’s
account to support the funding of the administration of the
Project.
USA Nevada
Period under Review
Gabbs Property
Fund II Cayman,
On 30 August 2016, the Company closed an Asset
Purchase Agreement (the “Agreement”) with a subsidiary
LP
of Waterton Precious Metals
(“Waterton”),
in terms of which Agreement Waterton
purchased the Company’s advanced Gabbs gold-copper
property in Nevada for a consideration of USD$2.5 million
cash. The reason behind the sale, amongst other things,
was the Company’s strategic decision to reduce exposure to
exploration and focus instead on exploration and funding
on its projects in South Africa and base metals.
Ferber Property
The Ferber property is a historic producer of gold and
copper
hosts widespread
gold
and
and
copper
mineralisation.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
7
(cid:9)(cid:25)(cid:16)(cid:26)(cid:13)(cid:28)(cid:20)(cid:24)(cid:23)(cid:27) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
The Company acquired further land position on Ferber
following a quitclaim by another mining company of 210
unpatented claims around the perimeter of the concession.
The Company undertook a sampling campaign comprising
an initial suite of 23 samples, collected over an area of 6 km
by 2 km. These samples yielded significant gold assay
results shown in Table 3 below. Seven of the samples
exceeded 1 g/t gold (Au) reaching 10.8 g/t. The highest-
grade sample contained greater than 1% Bismuth and 167
ppm Tellurium, elements
the mineral
hedleyite. Hedleyite is a characteristic mineral in productive
gold skarn deposits, such as those at McCoy and Fortitude
in north-central Nevada, which also flank Late Eocene
intrusions. Preliminary analysis of the data, together with
historic results, indicated a geochemical zoning from more
copper-rich gold mineralisation with a high silver Ag-to-Au
ratio (“Ag:Au”) marginal to the central stock to distal,
indicative of
copper-poor, gold mineralisation with relatively low silver
and a lower Ag:Au. One sample of jasperoid from this distal
setting , yielded 9.8 g/t Au with a Ag:Au of only 1:3; an
historic sample from the same area assayed 11.7 g/t Au
with a Ag:Au of 1:5. A sample of jasperoid over 1 km from
the central stock yielded 325 ppb Au.
The Ferber intrusion-centered gold system is broadly
similar to productive gold deposits elsewhere in north-
central Nevada, where Carlin-style gold mineralisation and
gold skarn mineralisation are genetically related to Late
Eocene intrusions similar in age to the Ferber stock. This
large district requires a broad approach aimed at recognising
geochemical zoning, delineating district-scale structure and
understanding the stratigraphy.
Integrating these three
components should serve as a vector to quality exploration
targets.
Table 3. Selected gold-mineralised samples
Sample
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Description
gossanous-saprolitic zone in marble
dark brown Fe—ox stained gossanous jasperoid and marble,
pieces to 8”
gossanous, silicified jasperoid breccia, pieces to 18in
marble with local gossanous silicified zones marginal to
altered dike
gossanous silicified jasperoid
sheared gossanous marble and jasperoid
strongly-limonitic jasperoid, locally gossanous; surrounded
by alluvium
gossanous jasperoid in marble
gossanous skarn in marble
haematite-goethite stained siliceous skarn
siliceous gossan, weak skarn
gossanous siliceous skarn
gossanous soft to siliceous skarn
strongly Fe-ox stained jasperoid
Soft haematitic locally siliceous gossan
Iron-stained chalcedonic jasperoid
Type
outcrop
Au ppm
1.420
Ag ppm
0.13
dump
dump
outcrop
dump
outcrop
dump
dump
outcrop
dump
dump
dump
dump
float
outcrop
subcrop
0.229
9.760
2.900
1.570
0.147
0.494
0.114
0.062
1.265
1.275
0.603
10.800
0.095
0.132
0.325
0.16
12.80
16.15
14.60
25.00
159.00
62.80
7.71
570.00
184.00
302.00
136.00
383.00
32.60
95.40
These initial results indicate that the project offers an
opportunity for the discovery of intrusion proximal gold
skarn mineralisation as well distal Carlin-style gold
mineralisation. In addition to mineralisation marginal to the
stock, solidification also occurs along district-scale structures
at the edge of alluvial cover distal to the intrusion, offering
the potential for concealed mineralisation.
The Company continues to seek JV/farm-out partners or
sale.
8
Silverton Property
Period under Review
On 27 June 2016 the Company executed, with Orogen
Gold Plc (“Orogen”), an Earn-In Agreement, in terms of
which Orogen has the right to earn an initial 51% interest
in Galileo’s 6 km² Silverton gold/silver property (“Silverton”)
in Nye County, Nevada through exploration spend of
USD$400,000 over 18 months and may earn an additional
24% interest in the Property through a further exploration
GALILEO RESOURCES PLC
(cid:9)(cid:25)(cid:16)(cid:26)(cid:13)(cid:28)(cid:20)(cid:24)(cid:23)(cid:27) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
spend of USD$1.5 million over a subsequent 30 month
period.
appeared to be a potential feeder to widespread shallow
gold mineralisation.
The Company and Orogen visited the Silverton site and
identified new targets with historic silver/gold workings
along cross structures. Orogen as operator completed a
focussed re-mapping and sampling programme to confirm
sites for an initial diamond drilling phase.
During October – November 2016, Orogen completed a
1274m-inclined reverse circulation-drilling programme on
the property. The drill holes were targeted primarily at
testing the Silverton Fault Zone at depth beneath previous
shallower vertical drilling that had intercepted moderate to
low-grade gold and silver mineralisation over significant
widths in the fault hanging-wall. The Silverton Fault
Holes OS-2 to OS-5 were angled at 60 to 70 degrees
towards the west and northwest across the steeply east-
dipping fault system over a 600m-strike length from north
to south. The holes generally confirmed earlier results, with
low-grade gold occurring in a package of iron-stained and
pyrite-bearing felsitic tuff and quartzite within the hanging-
wall sequence above the fault structure. Three of the four
holes aimed at
zone intersected gold
mineralisation, including a wide interval in OS-2, however
the intercepts were not enhanced compared to the
shallower historic holes. The intervals are detailed in the
table 4 below:
the fault
Table 4 – Drilling Results on Silverton
Silverton Project, Nevada – Au assay results
Hole No
OS-2
incl.
incl.
and
OS-3
and
OS-5
Depth from (m) Depth to (m)
96.01
39.62
39.62
62.48
16.76
106.68
123.44
24.38
24.38
38.10
54.86
0.00
102.11
118.87
Interval (m)
71.63
15.24
1.52
7.62
16.76
4.57
4.57
Au g/t
0.20
0.34
1.33
0.38
0.11
0.35
0.28
Hole OS-1 was drilled vertically in the northeast segment
of the property to test the mineralised tuff unit proximal to
a possible caldera boundary fault structure. While the
geology was much as expected, no significant gold
mineralisation was encountered.
The drill holes cut across extensive low-order gold
mineralisation on the Silverton Fault Zone. The results from
this test drilling showed gold mineralisation persisting at
depth along the Silverton Fault over a wide interval. The
programme, which also included drilling to test structurally
controlled high-grade feeder zones in the property, did not
identify any new lithology or conditions to support this
prognosis. Mineralised intervals up to 71.63m grading
0.20g/t Au, with values to 1.33g/t Au – 600m strike length
of fault system tested at intermediate depths in mineralised
tuff-quartzite package.
On 24 March 2017, Orogen announced a new business
strategy for the company and consequently proposed to
dispose of all its mineral exploration interests.
Post Period under Review
On 12 May 2017 Orogen formally changed its business
strategy and ceased its mineral exploration activities.
Consequently, Orogen officially withdrew from the Silverton
project in accordance with the terms of the Silverton Earn-
In Agreement dated 27 June 2016 and without recourse. All
interests in Silverton and the data acquired by Orogen
reverted to Galileo.
The claim fees for Silveron were paid to August 2017.
The Company does not intend to retain the property and
will not pay any further claim fees after August 2017.
Crow Springs Project
The Company intends not to retain Crow Springs.
About the Projects
Concordia
Concordia is located in the Okiep Copper District (“OCD”),
within the Bushmanland mobile belt in the Namaqualand
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
9
(cid:9)(cid:25)(cid:16)(cid:26)(cid:13)(cid:28)(cid:20)(cid:24)(cid:23)(cid:27) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
region of the Northern Cape Province of South Africa. The
OCD is approximately 600 kilometres (“km”) (370 miles)
from Cape Town and the town of Concordia is within 30 km
of the town of Springbok.
The Project area and prospecting license covers a little
more than 36 000 hectares (360 km2) on the farm
Concordia (ERF 1251) some 15 km north east of the closed
O’Kiep copper mine, which at one stage was the 2nd largest
copper producer in southern Africa after the Phalaborwa
copper mine (still in production) in the Limpopo Province.
The OCD has been subjected to intense geological and
geophysical exploration over the past 55 years to 1998.
While this exploration included 1300 km drilling, of which
133 000m were in the Project area, the focus of this historic
drilling targeted high grade underground deposits that were
emplaced at depth within steeply dipping structures
comprising basic rocks of anorthosite, diorite and norite of
the major Koperberg (Old Dutch – copper mountain)
Geological Suite (“KS”). Excellent outcropping of the KS and
associated sympathetic geophysical anomalies made
locating these copper bearing deposits relatively easy. These
easily located deposits are now all but depleted.
Total production and known reserves from these deposits
as at 1985 was 2 Mt (million tonnes) of Cu from/within 27
separate localities over an area of around 3000 km2. The
total production plus reserves for the period 1940 to 1979
was 95 Mt @ 1.75% Cu, with individual mines including
Okiep, Spektakel, Carolusberg, Nababeep and Concordia,
ranging in production from 0.2 Mt to 37 Mt.
The mined and known copper deposits are confined to
the KS, the youngest major group of intrusives in the district,
which occurs as swarms of generally irregular, easterly
trending, steep north dipping, dyke-like bodies, usually 60
to 100m wide, and seldom exceeding 1 km in continuous
strike length. The Koperberg suite bodies are found within
narrow linear antiformal structures (locally called ‘steep
structures’), along which the continuity of the adjoining
‘intruded’ Namaqualand Metamorphic Complex rocks has
been interrupted by piercement folding and faulting. In
places pipe-like bodies of ‘mega-breccia’ that generally lie
along these structures are hosts to the Koperberg Suite.
Steep structures, ‘mega-breccias’ and the Koperberg Suite
all postdate the major fold events. The KS comprises mainly
basic rock types of diorite, anorthosite and norite in order of
decreasing abundance. Many of the Koperberg Suite bodies
are entirely uniform, while others are composite. There is
some evidence for
followed by
progressively more basic types.
initial anorthosite,
to coarse granular,
The copper is associated with the more basic lithologies.
The copper sulphides, mainly chalcopyrite (CuFeS2) and
bornite (Cu5FeS4) with subsidiary chalcocite (Cu2S), range
to vein
from fine disseminations,
aggregates, to local massive concentrations. Pyrite (FeS2) is
widespread but in small amounts, sometimes containing
traces of cobalt. Pyrrhotite (~FeS) is present in some
orebodies, with associated pentlandite (NIFeS), while minor
galena (PbS) and sphalerite (ZnFeS) is found in others. The
sulphides post-date silicate and oxide minerals and are
present
interstitially
between silicate grains; as granular aggregates with
silicates; along cleavage planes of hypersthene and mica;
and replacing Fe-Ti-oxides.
Localised hydrothermal
alteration of hypersthene around sulphide grains is a
conspicuous feature in little altered host rock.
in a number of
forms including,
Ferber Property
Geology and Mineralisation
The Ferber property is underlain by a stratigraphic
sequence of Pennsylvania-Permian age carbonate units
thought to include the Rib Hill Formation, Riepe Spring
Formation, Ferguson Mountain Formation, and possibly the
Pequop Formation. The sedimentary units are intruded and
domed by a multi-phase diorite-quartz monzonite Tertiary-
aged igneous complex. The intrusive complex has an
exposed footprint of 6.1 km east-west by 1.6 km north-
south. A contact metamorphic marble and calc-silicate zone
are found at the margin of the intrusive complex. The
project area is intersected by a number east-west, north-
northwest and north-east trending faults. Copper and gold
mineralisation occurs in the following styles: calc-silicate
skarn near the intrusive contact, as replacement zones in
the marble, in silicified shear zones and veins near contacts,
along structures and horizons in silicated marble and as
disseminations in the stock. Information contained in the
data package acquired as part of the land acquisition show
historic drilling by Royal Gold in the 1990s encountered the
following intercepts on lands at Ferber:
●
●
●
●
●
10.8 m of 0.53 g/t Au in marble with iron oxides
4.6 m of 2.15 g/t Au in oxidized intrusive
4.6 m of 0.718% Cu (oxide) in intrusive
26.2 m of 0.415% Cu (oxide) in contact zone
12.3 m of 0.832% Cu (oxide) in contact zone
Andrew Sarosi
Technical and Finance Director
31 August 2017
10
GALILEO RESOURCES PLC
Directors’ Report
(cid:3)(cid:20)(cid:26)(cid:16)(cid:14)(cid:28)(cid:24)(cid:26)(cid:27)(cid:30) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
1. REVIEW OF ACTIVITIES
Risk review
The Group’s main activities are contained in this annual
report. Details of the likely future developments of the
Group have been addressed in the Chairman’s report and
the Operations report.
The board and the executive committee keep the risks
inherent in an exploration business under constant review.
The principal risks for an exploration company and the
measures taken by the Company to mitigate them are
detailed below:
Principal activities
Galileo Resources Plc (AIM : GLR) is a focused resource
company whose mission is to identify above average
projects where the fundamentals are fully understood and
have been released by significant raw data capture. The
strategy is to acquire projects where early risk has been
mitigated and major potential exists for value-add. All of
our projects satisfy these strategic criteria and subject to
financing and other constraints, the Company will continue
to opportunistically grow and develop.
Business review
The function of the business review is to provide a
the Group’s
balanced and comprehensive review of
performance and developments during the year and its
position at the year-end. The review also covers the
principal risks and uncertainties faced by the Group. At this
stage in the Group’s development, the key performance
indicators that the directors monitor on a regular basis are
management of liquid resources, which are cash flows and
bank balances. The results of the Company and the Group
for the year are set out in the audited financial statements
on pages 18 to 46.
A review of the Group’s operations during the year ended
31 March 2017 and future developments are contained in
the Chairman’s Report and in the Operations Report on
pages 3 to 10.
Financial review
The Group reported a net loss of £1,388,697 (2016: loss
of £419,627) before and after taxation. Basic and diluted
loss is 0.7 pence (2016: loss of 0.3 pence) per share.
The ZAR stood its ground against the GBP during the
period under review as did the USD. Operating expenses
were £871,776 compared to £435,862 in 2016.
The Group continues to tighten its cost management.
Included in the loss of £1,388,697 is a loss in an amount of
£469,259 in relation to the sale of the Company’s Gabbs
asset in the USA. The loss is mainly attributable to the uplift
of the foreign exchange movement in the value of the asset
up to the point of disposal.
Political risk
Political risk is the risk that assets will be lost through
expropriation and unrest or war. The Group minimises
political risk by operating in countries with relatively stable
political systems, established fiscal and mining codes and a
respect for the rule of law. The Company has instigated a
black economic empowerment policy to comply with the
South African mining charter, code of practice and black
economic legislation.
Commodity risk
Commodity risk is the risk that the price earned for
minerals will fall to a point where it becomes uneconomic
to extract them from the ground and process. The principal
metals in the Group’s portfolio are gold, copper and rare
earth elements (“REE”) and phosphorus (as phosphate). The
prices of these elements have been volatile during the year
but an uptrend is in place. The potential economics of all
the Group’s projects are kept under close review on a
regular basis.
Financial risk
The three main types of financial risk faced by the Group
are credit risk, liquidity risk and currency risk. Liquidity risk
is the risk of insufficient working and investment capital.
The Group’s goal is to finance its exploration and activities
from operational cash flow from operations but in the
absence of such cash flow, the Group relies on the issue of
equity share capital to finance its activities. Galileo secured
additional funds by way of a placing during the year under
review, to advance exploration activities in order to further
develop a mineral resource estimate, advance metallurgical
test work and continue with a Preliminary Economic
Assessment (“PEA”) of the Company’s Glenover project.
The Group finances its overseas operations by purchasing
South African Rand with Pound Sterling in the United
Kingdom and transferring it to meet local operating costs.
The Group does not hedge its exposure and is therefore
exposed to currency fluctuations between these two
currencies and local currencies but this policy will be
reviewed from time to time. The Group maintains tight
financial and budgetary control to keep its operations cost
effective to mitigate these financial risks.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
11
(cid:3)(cid:20)(cid:26)(cid:16)(cid:14)(cid:28)(cid:24)(cid:26)(cid:27)(cid:30) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
Strategic risk
Significant and increasing competition exists for mineral
acquisition opportunities throughout the world. As a result
of this competition, the Group may be unable to acquire
rights to exploit additional attractive mining properties on
terms it considers acceptable. Accordingly, there can be no
assurance that the Group will acquire any interest in
additional operations that would yield reserves or result in
commercial mining operations. The Group expects to
undertake sufficient due diligence where warranted to help
ensure opportunities are subjected to proper evaluation.
Funding risk
The Group has raised funds via equity contributions from
new and existing shareholders and asset disposal, thereby
ensuring the Company remains a going concern until such
time that it enters into an off-take agreement/debt financial
arrangement. The directors regularly review cash flow
requirements to ensure the Company can meet financial
obligations as and when they fall due.
Exploration risk
Exploration risk is the risk of investing cash and resources
on projects, which may not provide a return. The Group
addresses this risk by using its skills, experience and local
knowledge to select only the most promising areas to
the
explore. Mineral exploration and development of
Group’s mineral exploration properties is speculative in
nature and is contingent upon obtaining satisfactory
exploration results. Mineral exploration and development
involves substantial expenses and a high degree of risk,
which even a combination of experience, knowledge and
careful evaluation may not be able adequately mitigate. The
degree of
risk reduces substantially when a Group’s
properties move from the exploration phase to the
development phase.
Operational risk
Exploration and subsequent mining operations are
subject to hazards normally encountered in exploration,
development and production. Although it is intended to take
adequate precautions during each stage of development to
minimise risk, there is a possibility of a material adverse
impact on the Group’s operations and its financial results.
The Group will develop and maintain policies appropriate
to the stage of development of
its various projects.
Recruiting and retaining skilled and qualified personnel are
critical to the Group’s success. The number of persons skilled
in the acquisition, exploration and development of mining
properties is limited and competition for such persons is
intense. While the Group has good relations with its
employees, these relations may be impacted by changes
in the scheme of labour relations, which may be introduced
by the relevant governmental authorities. Adverse changes
in such legislation may have a material adverse effect on
the Group’s business, results of operations and financial
condition. Members of staff are encouraged to discuss with
management matters of interest to the employees and
subjects affecting day-to-day operations of the Group.
Mining risk
There is no guarantee that the minerals contained in the
various assets can be mined either practically, technically
or at a cost less than the realisable value of the contained
minerals. The cost of development and access may preclude
the development of the mine. Should a mine be developed
there is no assurance that operations can continue since
operations are dependent on product prices, direct
operating cost and the cost of “stay in business” capital.
Mining operations are often challenged by difficult mining
and/or slope stability conditions, variability of grade, excess
water and small faulting. All of these factors could adversely
affect mining production rate and therefore profitability.
Processing risk
REEs are relatively difficult to process and as such require
complex chemistry solutions to gain satisfactory recovery
and quality. The recovery of one element may be at the
sacrifice of another rare-earth element and no assurance
can be given that the ultimate suite of elements that can be
recovered can be done so economically. Should the
Company elect to progress to recovery only to concentrate,
then there is no assurance that a global market exists for
the concentrate. Shareholders and investors should be
aware that the cost of building a rare-earth processing plant
is considerably higher than other mineral processing plants
and that the Company may not be able to raise sufficient
finance to build such a plant.
Political stability
The Group is conducting its activities in South Africa and
in the United States of America. The directors believe that
the government of South Africa supports the development
of natural resources by foreign investors and actively
monitors the situation. However, there is no assurance that
future political and economic conditions in South Africa will
not result in the government of South Africa adopting
different policies regarding foreign development and
ownership of mineral resources. Any changes in policy
affecting ownership of assets, taxation, rates of exchange,
environmental protection, labour relations, repatriation of
income and return of capital, may affect the Group’s ability
to develop the projects. The Company is complying with
current South African mining charter code of practice and
black economic empowerment legislation (refer to the
directors’
the USA are well
understood and transparent with full democracy. Federal
law could change in the USA thereby affecting the cost of
mineral concession ownership. Nevada Mining Law could
change to the detriment of future mining development.
report). The politics of
12
GALILEO RESOURCES PLC
(cid:3)(cid:20)(cid:26)(cid:16)(cid:14)(cid:28)(cid:24)(cid:26)(cid:27)(cid:30) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
Uninsurable risks
The Group may become subject to liability for accidents,
pollution and other hazards, which it cannot insure or
against which it may elect not to insure because of
premium costs or for other reasons, such as in amounts,
which exceed policy limits.
Security of tenure
The Group investigates its rights to explore and extract
minerals from all of its material properties and, to the best
of its knowledge; those rights are expected to be in good
standing. However, no assurance can be given that the
Group will be able to secure the grant or the renewal of
existing mineral rights and tenures on terms satisfactory to
it, or that governments in the jurisdiction in which the Group
operates will not revoke or significantly alter such rights or
tenures or that such rights or tenures will not be challenged
or impugned by third parties, including local governments
or other claimants. Although the Group is not aware of any
existing title uncertainties with respect to any of its future
material properties,
there is no assurance that such
uncertainties, if negative, will not result in future losses or
additional expenditures, which could have an adverse
impact on the Group’s future cash flows, earnings, results
of operations and financial condition.
Market perception
Market perception of mining and exploration companies
may change, which could impact on the value of investors’
holdings and impact on the ability of the Company to raise
further funds by issue of further shares in the Company.
Glenover licence
Glenover has six new order prospecting rights covering a
surface area of 15,802 hectares. These mineral assets are
located primarily on the farm Glenover 371 LQ, but are also
spread across other farms. The Department of Mineral
Resources granted renewal of Glenover’s prospecting right
on the Glenover
rare earth phosphate concession to
November 2017.
Environmental factors
All mining operations have some degree of an
environmental risk. Although the directors have made
reasonable assessment, no assurance can be given that no
outstanding or intended claims against disturbance of the
environment exist. Rare earths are often associated with
radioactivity and the Glenover project has amongst other
minerals, radioactive thorium present in the ore. The
directors have considered the significance of this and what
potential problems may be presented due to the presence
of radioactive minerals. They have concluded that the
potential radioactivity will not prevent operations but no
assurance can be given that the presence of radioactivity
will impact on either capital or operating cost or both. In
addition, the Group will also be subjected to, where
appropriate, clean-up costs and for any toxic or hazardous
substances, which may be produced as a result of its
legislation and permitting are
operation. Environmental
evolving in a non-mining supportive manner, which could
result in onerous standards and enforcement with the risk
of consequential
fines, penalties and closure. As the
Company develops, the directors intend to carry out the
appropriate environmental base-line studies with experts
outsourced from independent environmental consultancies.
Reserve and resource estimates
The Group’s future reported reserves and resources of
Glenover are only estimates. No assurance can be given
that the estimated reserves and resources will be recovered
or that they will be recovered at the rates estimated.
Mineral and metal reserve and resource estimates are
based on limited sampling and, consequently, are uncertain
because the samples may not be representative. Mineral
and metal reserve and resource estimates may require
revision (either up or down) based on actual production
experience or further sampling. Any future reserve and/or
resource figures will be estimates and there can be no
assurance that the minerals are present, will be recovered
or can be brought into profitable production. Furthermore,
a decline in the market price for natural resources that the
Group may discover or invest in could render reserves
containing relatively lower grades of
these resources
uneconomic to recover and may ultimately result in a
restatement of reserves.
2. GOING CONCERN
The Group has sufficient financial resources to enable it
to continue in operational existence for the foreseeable
future, to continue the current development programme
and meet its liabilities as they fall due. The directors have
further reviewed the Group’s cash flow forecast. In the light
of this review and the current financial position, they are
satisfied that the Company and Group have access to
adequate resources to continue in operational existence for
the foreseeable future. Accordingly, the directors consider it
appropriate to continue to adopt the going-concern basis in
preparing these financial statements. This basis presumes
that funds will be available to finance future operations and
that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the
ordinary course of business.
3. EVENTS AFTER THE REPORTING PERIOD
Other than the events described in the Chairman’s and
Operations Report and the transactions described below, the
directors are not aware of any matter or circumstances
arising that should be disclosed since the end of the
financial year. Refer to note 32 for details on subsequent
events.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
13
(cid:3)(cid:20)(cid:26)(cid:16)(cid:14)(cid:28)(cid:24)(cid:26)(cid:27)(cid:30) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
4. DIRECTORS’ SHAREHOLDING ANALYSIS
Directors’ direct and indirect interests in the ordinary shares of the Company as at the date of this report were as
follows:
Beneficial owner
Colin Bird
Andrew Sarosi
John Richard Wollenberg
The Cardiff Property Plc*
At 31 March 2017
At 31 March 2016
Shares
% holding
Shares
% holding
48,185,000
24.60
48,185,000
10,000
4,921,341
900,000
0.01
2.51
0.46
10,000
3,300,000
900,000
24.81
0.01
1.70
0.46
*John Richard Wollenberg and his family are 44.42% shareholders in the Cardiff Property Plc
Colin Bird holds 48,185,000 ordinary shares of 1 pence each or 24.60% of the Company’s issued share capital. This makes
him a majority shareholder in Galileo with potentially significant influence over the affairs of the Company.
Directors’ interests in the Company’s share option scheme at the date of this report were as follows:
Beneficial owner
Colin Bird
Andrew Sarosi
John Richard Wollenberg
Chris Molefe
At 31 March 2017(1)
At 31 March 2016(2)
Options
5,000,000
3,000,000
750,000
250,000
Options
500,000
250,000
2,500,000
900,000
(1)= These options were granted to the directors 27 January 2017 at a strike price of £0.02 per share.
(2)= These options were granted to the directors on 1 October 2011 and have since expired.
Refer to note 28 for directors’ emoluments.
5. CAPITAL STRUCTURE AND SHARE ISSUE
During the period under review the Company issued
2,121,341 new ordinary shares as follows:
your directors’ intention that the resolution be limited to
one year and that its renewal be proposed at each annual
general meeting.
Date
Number of
ordinary shares
Purpose of issue
12 April 2016
500,000
Settlement of debt
3 February 2017
1,621,341
Shares in lieu of
director remuneration
Subsequent to the period under review the Company
issued no new ordinary shares.
Allotment of shares
As ordinary business at the annual general meeting, a
resolution will be proposed to renew the power of your
directors to allot equity securities, pursuant to section 551
of the Companies act 2006, such power being to equity
securities having an aggregate nominal value of £64,638.
This authority may be renewed for five years but,
in
common with modern corporate governance practice, it is
Pre-emption rights
As special business at the annual general meeting, a
resolution will be proposed to renew for a further year the
power of your directors to allot equity securities for cash
without
to existing
offering such securities
shareholders. The aggregate nominal amount of equity
securities, which may be allotted in this way shall not
exceed £195,874.
first
6. DIVIDENDS
No dividends were declared or paid to shareholders
during the year under review.
7. DIRECTORS
The directors of the Company during the year and to the
date of this report are disclosed under Corporate Information
on page 2 of this report.
14
GALILEO RESOURCES PLC
8. SECRETARY
The secretary of the Company is Capita Asset Services,
Ltd with address;
a division of Capita Registrars
34 Beckenham Road, Beckenham, Kent, BR3 4TU.
9. AUDITORS
A resolution proposing the appointment of the auditors,
Chapman Davis LLP, will be put to vote at the annual general
meeting.
10. DISCLOSURE OF INFORMATION TO AUDITORS
The directors, who held office at the date of approval of
this directors’ report, confirm that as far as they are each
aware, there is no relevant audit information of which the
Company’s auditors are unaware, and each director has
taken all the steps that he ought to have taken as a director
to make himself aware of any relevant audit information
and to establish that the Company’s auditors are aware of
that information.
11. DIRECTORS’ RESPONSIBILITIES AND
APPROVAL
financial
statements
The directors are required in terms of the Companies Act
2006 to maintain adequate accounting records and are
responsible for the content and integrity of the consolidated
and related financial
annual
information included in this report. It is their responsibility
to ensure that the consolidated annual financial statements
fairly represent the state of affairs of the Group as at the
end of the financial year and the results of its operations
and cash flows for the period then ended, in conformity
with the applicable UK laws.
a
strong
on maintaining
The consolidated annual
financial statements are
prepared in accordance with International Financial
(“IFRS”) and are based upon
Reporting Standards
appropriate accounting policies consistently applied and
supported by reasonable and prudent judgements and
estimates. The directors acknowledge that
they are
ultimately responsible for the system of internal financial
control established by the Group and place considerable
controlled
importance
environment. To enable the directors to meet
these
responsibilities, the Board sets standards for internal control
aimed at reducing the risk of error or loss in a cost-effective
manner. The standards include the proper delegation of
responsibilities within a clearly defined framework, effective
accounting procedures and adequate segregation of duties
to ensure an acceptable level of risk. These controls are
monitored throughout the Group and all employees are
required to maintain the highest ethical standards in
ensuring the Group’s business is conducted in a manner that
in all reasonable circumstances is above reproach. The focus
in the Group is on identifying,
of
assessing, managing and monitoring all known forms of risk
risk management
(cid:3)(cid:20)(cid:26)(cid:16)(cid:14)(cid:28)(cid:24)(cid:26)(cid:27)(cid:30) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
across the Group. While operating risk cannot be fully
eliminated,
the Group endeavours to minimise it by
ensuring that appropriate infrastructure, controls, systems
and ethical behaviour are applied and managed within
predetermined procedures and constraints.
The directors are of the opinion, based on the information
and explanations given by management that the system of
internal control provides reasonable assurance that the
financial records may be relied on for the preparation of the
consolidated annual financial statements. However, any
system of
financial control can provide only
reasonable, and not absolute, assurance against material
misstatement or loss.
internal
The going-concern basis has been adopted in preparing
the consolidated annual 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 consolidated annual
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.
12. RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in note 26.
13. FINANCIAL INSTRUMENTS
For the period under review the Group held no financial
instruments, outside of cash and receivables. Financial risk
management policies are disclosed in note 29.
14. POLITICAL AND CHARITABLE
CONTRIBUTIONS
The Group made no charitable donations (2016: £Nil) and
no political donations (2016: £Nil) during the year.
The Company’s independent auditors, Chapman Davis LLP,
audited the Group’s consolidated annual financial statement,
and their report is presented on pages 16 to 17.
The Group and Company annual financial statements set
out on pages 18 to 46, which have been prepared on the
going-concern basis, were approved by the Board on
31 August 2017 and were signed on its behalf by:
Colin Bird
Chairman
31August2017
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
15
(cid:6)(cid:23)(cid:15)(cid:16)(cid:25)(cid:16)(cid:23)(cid:15)(cid:16)(cid:23)(cid:28) (cid:2)(cid:29)(cid:15)(cid:20)(cid:28)(cid:24)(cid:26)(cid:27)(cid:30) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
Independent Auditors’ Report
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF GALILEO RESOURCES PLC
We have audited the financial statements of Galileo Resources PLC for the year ended 31 March 2017 which comprise
the Group and Company Statements of Financial Position, Statements of Comprehensive Income, Statements of Changes
in Equity, Statements of Cash Flows and the related notes 1 to 32. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out in the Directors’ Report, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent
company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read
all the financial and non-financial information in the Group Strategic Report and the Report of the Directors to identify
material inconsistencies with the audited financial statements and to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit.
If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our
report.
Opinion on financial statements
In our opinion the financial statements:-
●
●
●
give a true and fair view of the state of the group’s and the parent company’s affairs as at 31 March 2017 and of the
group’s and the parent company’s results for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and,
as regards the group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Group Strategic Report and the Report of the Directors for the financial year
for which the financial statements are prepared is consistent with the financial statements.
16
GALILEO RESOURCES PLC
(cid:6)(cid:23)(cid:15)(cid:16)(cid:25)(cid:16)(cid:23)(cid:15)(cid:16)(cid:23)(cid:28) (cid:2)(cid:29)(cid:15)(cid:20)(cid:28)(cid:24)(cid:26)(cid:27)(cid:30) (cid:11)(cid:16)(cid:25)(cid:24)(cid:26)(cid:28)
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
●
●
●
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
● we have not received all the information and explanations we required for our audit.
We have nothing to report by exception.
Rowan J Palmer
(SeniorStatutoryAuditor)
For and on behalf of Chapman Davis LLP
Chartered Accountants and Statutory Auditors
London
United Kingdom
31August2017
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
17
Statements of Financial Position
as at 31 March 2017
FiguresinPoundSterling
Group
Company
Note(s)
31 March
2017
31 March
2016
31 March
2017
31 March
2016
Assets
Non-current assets
Intangible assets
Investment in subsidiaries
Investment in joint ventures
Loans to joint ventures and
subsidiaries
Other financial assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Reserves
Accumulated loss
Liabilities
Non-current liabilities
Loans from subsidiaries
Other financial liabilities
Current liabilities
Trade and other payables
Total liabilities
4
5
6
7
8
10
11
12
15
16
1,473,494
–
2,325,144
640,030
454,604
2,667,062
–
1,868,370
79,457
556,078
–
2,357,599
–
5,156,026
–
–
2,357,599
–
5,350,128
198,908
4,893,272
5,170,967
7,513,625
7,906,635
30,522
1,110,821
1,141,343
20,453
135,086
155,539
–
915,733
915,733
–
136,264
136,264
6,034,615
5,326,506
8,429,358
8,042,899
23,883,494
890,060
(19,136,926)
23,854,957
155,384
(18,977,249)
23,883,494
1,197,614
(17,630,333)
23,854,957
1,834,960
(17,711,657)
5,636,628
5,033,092
7,450,775
7,978,260
–
4,016
393,971
397,987
–
2,692
290,722
293,414
919,178
–
59,405
978,583
–
–
64,639
64,639
Total equity and liabilities
6,034,615
5,326,506
8,429,358
8,042,899
These financial statements were approved by the directors and authorised for issue on 31 August 2017 and are signed
on their behalf by:
Colin Bird
Company number: 05679987
Andrew Sarosi
18
GALILEO RESOURCES PLC
Statements of Comprehensive Income
for the year ended 31 March 2017
FiguresinPoundSterling
Group
Company
Note(s)
31 March
2017
31 March
2016
31 March
2017
31 March
2016
Revenue
Operating expenses
Operating loss
Investment revenue
Finance Costs
Loss on disposal of non-current
asset
Loss from equity accounted
investments
18
19
4
6
(871,776)
(435,862)
(706,596)
(381,575)
(871,776)
(435,862)
(706,596)
(381,575)
781
–
48,578
(2)
(469,259)
–
(48,443)
(32,341)
781
–
–
–
775
–
–
–
Loss for the year
(1,388,697)
(419,627)
(705,815)
(380,800)
Other comprehensive income:
Exchange differences on translating
foreign operations
22
1,372,022
(364,872)
–
–
Total comprehensive loss for the year
(16,675)
(784,499)
(705,815)
(380,800)
Loss per share in pence (basic)
23
(0.7)
(0.3)
All operating expenses and operating losses relate to continuing activities.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
19
Statements of Changes in Equity
as at 31 March 2017
FiguresinPoundSterling
FiguresinPoundSterling
Share
capital
Share
premium
Total share
capital
Foreign
currency
transaction
reserve
Merger
reserve
Share based
payment
reserve
Total
reserves
Accumulated
loss
Total
equity
5,735,137
17,418,570
23,153,707
(1,314,704)
1,047,821
787,139
520,256
(18,556,522)
5,116,341
Group
Balance at 1 April 2015
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Issue of shares
Total contributions by and distributions to owners
of Company recognised directly in equity
Balance at 1 April 2016
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Issue of share options
Share options expired
Issue of shares
Transfer between reserves
–
–
–
–
–
–
–
–
–
69,250
632,000
701,250
69,250
632,000
701,250
5,804,387
18,050,570
23,854,957
–
–
–
–
–
2,121
–
–
–
–
–
–
26,416
–
–
–
–
–
–
28,537
–
Total contributions by and distributions to owners of
company recognised directly In equity
Balance at 31 March 2017
2,121
26,416
28,537
5,806,508
18,076,986
23,883,494
Company
Balance at 1 April 2015
Loss for the year
Total comprehensive loss for the year
Issue of shares
Total contributions by and distributions to owners
of Company recognised directly in equity
Balance at 1 April 2016
Loss for the year
Total comprehensive loss for the year
Issue of share options
Share options expired
Issue of shares
Total contributions by and distributions to owners of
company recognised directly In equity
Share
capital
Share
premium
Total share
capital
5,735,137
17,418,570
23,153,707
–
–
–
–
–
–
69,250
632,000
701,250
69,250
632,000
701,250
5,804,387
18,050,570
23,854,957
–
–
–
–
2,121
2,121
–
–
–
–
26,416
–
–
–
–
28,537
26,416
28,537
Balance at 31 March 2017
5,806,508
18,076,986
23,883,494
12
12
12
Note(s)
20
–
(364,872)
(364,872)
–
–
–
–
–
–
–
–
–
–
–
–
–
(364,872)
(364,872)
(419,627)
–
(419,627)
–
–
–
–
(1,679,576)
1,047,821
787,139
155,384
(18,977,249)
–
1,813,903
1,813,903
–
–
–
(441,881)
1,372,022
–
–
–
–
–
–
–
–
(307,554)
1,047,821
–
–
–
149,793
(787,139)
–
–
(637,346)
149,793
Foreign
currency
transaction
reserve
Merger
reserve
Share based
payment
reserve
–
1,813,903
1,813,903
149,793
(787,139)
–
(441,881)
(1,388,697)
–
(1,388,697)
–
787,139
–
441,881
584,883
890,060
(159,677)
603,536
(19,136,926)
5,636,628
Total
reserves
Accumulated
loss
Total
equity
(419,294)
(365,205)
(784,499)
701,250
701,250
5,033,092
(1,388,697)
1,813,903
425,206
149,793
–
28,537
–
1,047,821
787,139
1,834,960
(17,330,857)
7,657,810
–
–
–
–
–
–
–
–
–
–
–
–
(380,800)
(380,800)
–
–
(380,800)
(380,800)
701,250
701,250
1,047,821
787,139
1,834,960
(17,711,657)
7,978,260
–
–
–
–
–
–
1,047,821
–
–
149,793
(787,139)
–
(637,346)
149,793
–
–
(705,815)
(705,815)
(705,815)
(705,815)
149,793
(787,139)
–
–
787,139
–
149,793
–
28,537
(637,346)
787,139
178,330
1,197,614
(17,630,333)
7,450,775
–
–
–
–
–
–
–
–
–
–
–
–
–
14
GALILEO RESOURCES PLC
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
21
Statements of Cash Flows
for the year ended 31 March 2017
Cash flows from operating activities
Cash used in operations
Investment Revenue
Finance Cost
Net cash from operating activities
Cash flows from investing activities
Additions to intangible assets
Sale of intangible asset
Net movement on group company loans
Loans and receivables
FiguresinPoundSterling
Group
Company
Note(s)
31 March
2017
31 March
2016
31 March
2017
31 March
2016
24
19
4
7
(654,067)
781
–
(459,601)
45
(2)
(562,037)
781
–
(382,326)
775
–
(653,286)
(459,558)
(561,256)
(381,551)
(23,969)
1,957,587
(333,134)
–
(163,701)
–
14,956
(138,732)
–
–
1,113,280
198,908
–
–
(157,569)
(198,908)
Net cash flows from investing activities
1,600,484
(287,477)
1,312,188
(356,477)
Cash flows from financing activities
Proceeds on share issue
Net cash flows from financing activities
Total cash movement for the year
Cash at the beginning of the year
28,537
28,537
975,735
135,086
701,250
701,250
(45,785)
180,871
28,537
28,537
779,469
136,264
701,250
701,250
(36,778)
173,042
Total cash at end of the year
11
1,110,821
135,086
915,733
136,264
22
GALILEO RESOURCES PLC
Accounting Policies
1. PRESENTATION OF ANNUAL FINANCIAL
STATEMENTS
The consolidated annual financial statements have been
prepared in accordance with International Financial
Reporting Standards IFRIC interpretations issued by the
International Accounting Standards Board and the
Companies Act 2006. The consolidated annual financial
statements have been prepared on the historical cost basis,
except for certain financial instruments at fair value, and
incorporate the principal accounting policies set out below.
Cost is based on the fair values of the consideration given
in exchange for assets and they are presented in Pound
Sterling.
1.1 Basis of Consolidation
The consolidated annual financial statements incorporate
the annual financial statements of the Company and all
entities,
including special purpose entities, which are
controlled by the Company.
Control exists when the Company has the power to
govern the financial and operating policies of an entity so
as to obtain benefits from its activities.
The results of
subsidiaries are included in the
consolidated annual financial statements from the effective
date of acquisition to the effective date of disposal.
Adjustments are made when necessary to the annual
financial statements of subsidiaries to bring their accounting
policies in line with those of the Group.
All
intra-group transactions, balances,
income and
expenses are eliminated in full on consolidation.
Non-controlling interests in the net assets of consolidated
subsidiaries are identified and recognised separately from
the Group’s interest therein, and are recognised within
equity. Losses of subsidiaries attributable to non-controlling
interests are allocated to the non-controlling interest even
if this results in a debit balance being recognised for non-
controlling interest.
Transactions, which result in changes in ownership levels,
where the Group has control of the subsidiary both before
the transaction, are regarded as equity
and after
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.
Business combinations
The Group accounts for business combinations using the
acquisition method of accounting. The cost of the business
combination is measured as the aggregate of the fair values
of assets given, liabilities incurred or assumed and equity
instruments issued. Costs directly attributable to the
business combination are expensed as incurred, except the
costs to issue debt, which are amortised as part of the
effective interest, and costs to issue equity, which are
included in equity.
Contingent consideration is included in the cost of the
combination at fair value as at the date of acquisition.
Subsequent changes to the assets, liability or equity, which
arise as a result of the contingent consideration, are not
affected against goodwill, unless
are valid
measurement period adjustments.
they
The acquiree’s
identifiable assets,
liabilities and
contingent liabilities which meet the recognition conditions
of IFRS 3 Business combinations are recognised at their fair
values at acquisition date, except for non-current assets (or
disposal group) that are classified as held-for-sale in
accordance with IFRS 5 non-current assets held-for-sale and
discontinued operations, which are recognised at fair value
less costs to sell.
Contingent liabilities are only included in the identifiable
assets and liabilities of the acquiree where there is a
present obligation at acquisition date.
On acquisition, the Group assesses the classification of
the acquiree’s assets and liabilities and reclassifies them
where the classification is inappropriate for Group purposes.
This excludes lease agreements and insurance contracts,
whose classification remains as per their inception date.
Non-controlling interests arising from a business
combination, which are present ownership interests, and
entitle their holders to a proportionate share of the entity’s
net assets in the event of liquidation, are measured either
at the present ownership interests’ proportionate share in
the recognised amounts of the acquiree’s identifiable net
assets or at fair value. The treatment is not an accounting
policy choice but is selected for each individual business
combination, and disclosed in the note for business
combinations. All other components of non-controlling
interests are measured at their acquisition date fair values,
unless another measurement basis is required by IFRSs.
In cases where the Group held a non-controlling
shareholding in the acquiree prior to obtaining control, that
interest is measured to fair value as at acquisition date. The
measurement to fair value is included in profit or loss for
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
23
(cid:2)(cid:14)(cid:14)(cid:24)(cid:29)(cid:23)(cid:28)(cid:20)(cid:23)(cid:18) (cid:10)(cid:24)(cid:21)(cid:20)(cid:14)(cid:20)(cid:16)(cid:27)
the year. Where the existing shareholding was classified as
an available-for-sale financial asset, the cumulative fair
value adjustments
to other
comprehensive income and accumulated in equity are
recognised in profit or loss as a reclassification adjustment.
recognised previously
Goodwill is determined as the consideration paid, plus
the fair value of any shareholding held prior to obtaining
control, plus non-controlling interest and less the fair value
of the identifiable assets and liabilities of the acquiree.
Goodwill is not amortised but is tested on an annual basis
for impairment. If goodwill is assessed to be impaired, that
impairment is not subsequently reversed.
Goodwill arising on acquisition of foreign entities is
considered an asset of the foreign entity. In such cases the
goodwill
is translated to the functional currency of the
Group at the end of each reporting period with the
adjustment
recognised in equity through to other
comprehensive income.
Investment in associates
An associate is an entity over which the Group has
significant influence and which is neither a subsidiary nor a
joint venture. Significant
to
participate in the financial and operating policy decisions of
the investee but is not control or joint control over those
policies.
influence is the power
An investment in associate is accounted for using the
equity method, except when the investment is classified as
held-for-sale in accordance with IFRS 5 non-current assets
held-for-sale and discontinued operations. Under the equity
method,
investments in associates are carried in the
consolidated statement of financial position at cost adjusted
for post-acquisition changes in the Group’s share of net
assets of the associate, less any impairment losses.
Losses in an associate in excess of the Group’s interest in
that associate are recognised only to the extent that the
Group has incurred a legal or constructive obligation to
make payments on behalf of the associate.
Any goodwill on acquisition of an associate is included
in the carrying amount of the investment; however, a gain
on acquisition is recognised immediately in profit or loss.
Profits or losses on transactions between the Group and
an associate are eliminated to the extent of the Group’s
interest therein.
When the Group reduces its level of significant influence
or loses significant influence, the Group proportionately
reclassifies the related items, which were previously
accumulated in equity through other comprehensive income
to profit or loss as a reclassification adjustment. In such
cases,
is
measured to fair value, with the fair value adjustment being
recognised in profit or loss as part of the gain or loss on
disposal.
if an investment
investment
remains,
that
Interests in joint ventures
A joint venture is a contractual agreement whereby the
Group and other parties undertake an economic activity that
is subject to joint control that is when the strategic financial
and operating policy decisions relating to the activities of
the joint venture require the unanimous consent of the
parties sharing control.
Jointly controlled entities
An interest in a jointly controlled entity is accounted for
using the equity method, except when the investment is
classified as held-for-sale in accordance with IFRS 5 non-
current assets held-for-sale and discontinued operations.
Under the equity method, interests in jointly controlled
entities are carried in the consolidated statement of
financial position at cost adjusted for post-acquisition
changes in the Group’s share of net assets of the jointly
controlled entity, less any impairment losses. Profits or
losses on transactions between the Group and a joint
venture are eliminated to the extent of the Group’s interest
therein.
joint
control,
accumulated
When the Group loses
the Group
proportionately reclassifies the related items, which were
previously
other
in
comprehensive income to profit or loss as a reclassification
adjustment. In such cases, if an investment remains, that
investment is measured to fair value, with the fair value
adjustment being recognised in profit or loss as part of the
gain or loss on disposal.
through
equity
1.2 Significant judgements and sources of estimation
uncertainty
preparing
is
In
annual
the
statements,
financial
management
required to make estimates and
assumptions that affect the amounts represented in the
annual financial statements and related disclosures. Use of
available information and the application of judgement is
inherent in the formation of estimates. Actual results in the
future could differ from these estimates, which may be
material to the annual financial statements. Significant
judgements include:
Options granted
Management used the ABC model to determine the
value of the options issued at listing date and will use the
Black Scholes Formula for subsequent options being
granted. Additional details regarding the estimates are
included in note 13 – share-based payments.
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
the counter
in an active market (for example, over
24
GALILEO RESOURCES PLC
(cid:2)(cid:14)(cid:14)(cid:24)(cid:29)(cid:23)(cid:28)(cid:20)(cid:23)(cid:18) (cid:10)(cid:24)(cid:21)(cid:20)(cid:14)(cid:20)(cid:16)(cid:27)
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.
●
●
the fair value, at the date of exchange, of assets given,
liabilities incurred or assumed, and equity instruments
issued by the Company; plus
any costs directly attributable to the purchase of the
subsidiary.
An adjustment to the cost of a business combination
contingent on future events is included in the cost of the
combination if the adjustment is probable and can be
measured reliably.
1.5 Investment in joint ventures
Company annual financial statements
An investment in a joint venture is carried at cost less
any accumulated impairment.
In respect of its interests in jointly controlled operations,
the Company recognises in its annual financial statements:
1.3 Exploration and evaluation costs
Exploration and evaluation costs, including the costs of
acquiring licences, are capitalised as exploration and
evaluation assets on an area of interest basis.
●
●
Exploration and evaluation assets are only recognised if
the rights of the area of interest are current and either:
(i) the expenditures are expected to be recouped through
successful development and exploitation of the area of
interest; or
(ii) activities in the area of interest have not at the reporting
date, reached a stage which permits a reasonable
assessment of
the existence or otherwise of
economically recoverable reserves and active and
significant operations in, or in relation to, the area of
interest are continuing.
Exploration and evaluation assets are assessed for
impairment if:
(i) sufficient data exist to determine technical feasibility
and commercial viability; and
(ii) facts and circumstances suggest
the carrying
amount exceeds the recoverable amount. For the
testing, exploration and
purposes of
evaluation assets are allocated to cash-generating units
(“CGU”) to which the exploration activity related.
impairment
that
Exploration and evaluation assets are carried forward in
the balance sheet under intangible assets.
1.4 Investment in subsidiaries
Company annual financial statements
In the Company’s separate annual financial statements,
investment in subsidiaries are carried at:
The cost of an investment in a subsidiary is the aggregate
of:
the assets that it controls and the liabilities that it incurs;
and
the expenses that it incurs and its share of the income
that it earns from the sale of goods or services by the
joint venture.
In respect of its interest in jointly controlled assets, the
Company recognises in its annual financial statements:
●
●
●
●
●
its share of the jointly controlled assets, classified
according to the nature of the assets;
any liabilities that it has incurred;
its share of any liabilities incurred jointly with the other
venturers in relation to the joint venture;
any income from the sale or use of its share of the
output of the joint venture, together with its share of
any expenses incurred by the joint venture; and
any expenses that it has incurred in respect of its
interest in the joint venture.
1.6 Investments in associates
Company annual financial statements
An investment in an associate is carried at cost less any
accumulated impairment.
1.7 Financial instruments
Classification
The Group classifies financial assets and financial
liabilities into the following categories:
●
●
●
Financial assets at fair value through profit or loss
designated
Loans and receivables
Financial liabilities measured at amortised cost
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
25
(cid:2)(cid:14)(cid:14)(cid:24)(cid:29)(cid:23)(cid:28)(cid:20)(cid:23)(cid:18) (cid:10)(cid:24)(cid:21)(cid:20)(cid:14)(cid:20)(cid:16)(cid:27)
Classification depends on the purpose for which the
financial instruments were obtained/incurred and takes
place at initial recognition. Classification is reassessed on an
annual basis, except for derivatives and financial assets
designated as at fair value through profit or loss, which shall
not be classified out of the fair value through profit or loss
category.
Initial recognition and measurement
Financial instruments are recognised initially when the
Group becomes a party to the contractual provisions of the
instruments.
The Group classifies financial
their
component parts, on initial recognition as a financial asset,
a financial liability or an equity instrument in accordance
with the substance of the contractual arrangement.
instruments, or
Financial instruments are measured initially at fair value,
except for equity investments for which a fair value is not
determinable, which are measured at cost and are classified
as available-for-sale financial assets.
For financial instruments, which are not at fair value
through profit or loss, transaction costs are included in the
initial measurement of the instrument.
Transaction costs on financial instruments at fair value
through profit or loss are recognised in profit or loss.
Regular way purchases of financial assets are accounted
for at trade date.
Subsequent measurement
Financial instruments at fair value through profit or loss
are subsequently measured at fair value, with gains and
losses arising from changes in fair value being included in
profit or loss for the period.
Net gains or losses on the financial instruments at fair
value through profit or loss exclude dividends and interest.
Dividend income is recognised in profit or loss as part of
other income when the Group’s right to receive payment is
established.
Loans and receivables are subsequently measured at
amortised cost, using the effective interest method, less
accumulated impairment losses.
Financial liabilities at amortised cost are subsequently
measured at amortised cost, using the effective interest
method.
Loans to/(from) Group companies and Joint Ventures
These include loans to and from holding companies,
joint ventures and
subsidiaries,
fellow subsidiaries,
associates and are recognised initially at fair value plus
direct transaction costs.
Loans to Group companies are classified as loans and
receivables.
Loans from Group companies are classified as financial
liabilities measured at amortised cost.
Inter-company loans bear no interest.
Trade and other receivables
Trade receivables are measured at initial recognition at
fair value, and are subsequently measured at amortised cost
using the effective interest
rate method. Appropriate
allowances for estimated irrecoverable amounts are
recognised in profit or loss when there is objective evidence
that the asset is impaired.
Trade and other receivables are classified as loans and
receivables.
Trade and other payables
Trade payables are initially measured at fair value, and
are subsequently measured at amortised cost, using the
effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and
demand deposits, and other short-term highly liquid
investments that are readily convertible to a known amount
of cash and are subject to an insignificant risk of changes in
value. These are initially and subsequently recorded at fair
value.
1.8 Tax
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent
unpaid, recognised as a liability. If the amount already paid
in respect of current and prior periods exceeds the amount
due for those periods, the excess is recognised as an asset.
Current tax liabilities (assets) for the current and prior
periods are measured at the amount expected to be paid to
(recovered from) the tax authorities, using the tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and liabilities
A deferred tax liability is recognised for all taxable
temporary differences, except
the
deferred tax liability arises from the initial recognition of an
asset or liability in a transaction which at the time of the
transaction, affects neither accounting profit nor taxable
profit (tax loss).
to the extent
that
A deferred tax asset is recognised for all deductible
temporary differences to the extent that it is probable that
taxable profit will be available against which the deductible
temporary difference can be utilised. A deferred tax asset is
not recognised when it arises from the initial recognition of
an asset or liability in a transaction at the time of the
26
GALILEO RESOURCES PLC
(cid:2)(cid:14)(cid:14)(cid:24)(cid:29)(cid:23)(cid:28)(cid:20)(cid:23)(cid:18) (cid:10)(cid:24)(cid:21)(cid:20)(cid:14)(cid:20)(cid:16)(cid:27)
transaction, affects neither accounting profit nor taxable
profit (tax loss).
if the goods or services were acquired in a cash-settled
share based payment transaction.
Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
Tax expenses
Current and deferred taxes are recognised as income or
an expense and included in profit or loss for the period,
except to the extent that the tax arises from:
●
●
a transaction or event which is recognised, in the same
or a different period, to other comprehensive income; or
a business combination.
Current tax and deferred taxes are charged or credited to
other comprehensive income if the tax relates to items that
are credited or charged, in the same or a different period,
to other comprehensive income.
Current tax and deferred taxes are charged or credited
directly to equity if the tax relates to items that are credited
or charged, in the same or a different period, directly in
equity.
1.9 Leases
A lease is classified as a finance lease if it transfers
substantially all
to
ownership. A lease is classified as an operating lease if it
does not transfer substantially all the risks and rewards
incidental to ownership.
the risks and rewards incidental
Operating leases – lessee
When the goods or services received or acquired in a
transaction do not qualify for
share based payment
recognition as assets, they are recognised as expenses.
For equity-settled share-based payment transactions the
goods or services received and the corresponding increase
in equity are measured, directly, at the fair value of the
goods or services received provided that the fair value can
be estimated reliably.
If the fair value of the goods or services received cannot
be estimated reliably, or if the services received are
employee services, their value and the corresponding
increase in equity, are measured, indirectly, by reference to
the fair value of the equity instruments granted.
Vesting conditions, which are not market, related (i.e.
service conditions and non-market related performance
taken into consideration when
conditions) are not
determining the fair value of
the equity instruments
granted. Instead, vesting conditions which are not market
related shall be taken into account by adjusting the number
of equity instruments included in the measurement of the
transaction amount so that, ultimately,
the amount
recognised for goods or services received as consideration
for the equity instruments granted shall be based on the
number of equity instruments that eventually vest. Market
conditions, such as a target share price, are taken into
account when estimating the fair value of the equity
instruments granted. The number of equity instruments are
not adjusted to reflect equity instruments which are not
expected to vest or do not vest because the market
condition is not achieved.
Operating lease payments are recognised as an expense
on a straight-line basis over the lease term. The difference
between the amounts recognised as an expense and the
contractual payments are recognised as an operating lease
asset. This liability is not discounted.
If the share-based payments granted do not vest until
the counterparty completes a specified period of service,
Group accounts for those services as they are rendered by
the counterparty during the vesting period, (or on a straight-
line basis over the vesting period).
Any contingent rents are expensed in the period they are
If the share based payments vest immediately the
incurred.
1.10 Share-capital and equity
An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting all
of its liabilities.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
1.11 Share-based payments
Goods or services received or acquired in a share based
payment transaction are recognised when the goods or as
the services are received. A corresponding increase in equity
is recognised if the goods or services were received in an
equity-settled share based payment transaction or a liability
services received are recognised in full.
1.12 Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable
within 12 months after the service is rendered, such as paid
vacation leave and sick leave, bonuses, and non-monetary
benefits such as medical care), are recognised in the period
in which the service is rendered and are not discounted.
The expected cost of
is
recognised as an expense as the employees render services
that increase their entitlement or, in the case of non-
accumulating absences, when the absence occurs.
compensated absences
The expected cost of profit sharing and bonus payments
is recognised as an expense when there is a legal or
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
27
(cid:2)(cid:14)(cid:14)(cid:24)(cid:29)(cid:23)(cid:28)(cid:20)(cid:23)(cid:18) (cid:10)(cid:24)(cid:21)(cid:20)(cid:14)(cid:20)(cid:16)(cid:27)
constructive obligation to make such payments as a result
of past performance.
1.14 Translation of foreign currencies
Functional and presentation currency
●
●
●
●
●
1.13 Revenue
Revenue from the sale of goods is recognised when all
the following conditions have been satisfied:
the Group has transferred to the buyer the significant
risks and rewards of ownership of the goods;
the Group retains neither continuing managerial
involvement to the degree usually associated with
ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with
the transaction will flow to the Group; and
Items included in the annual 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 annual
financial statements are
presented in Pound Sterling, which is the Group functional,
and presentation currency.
Foreign currency transactions
A foreign currency transaction is recorded, on initial
recognition in South African Rand, 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.
the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
At the end of the reporting period:
When the outcome of a transaction involving the
rendering of services can be estimated reliably, revenue
associated with the transaction is recognised by reference
to the stage of completion of the transaction at the end of
the reporting period. The outcome of a transaction can be
estimated reliably when all the following conditions are
satisfied:
●
●
●
●
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with
the transaction will flow to the Group;
the stage of completion of the transaction at the end of
the reporting period can be measured reliably; and
the costs incurred for the transaction and the costs to
complete the transaction can be measured reliably.
When the outcome of the transaction involving the
rendering of services cannot be estimated reliably, revenue
shall be recognised only to the extent of the expenses
recognised that are recoverable.
the fair value of
Revenue is measured at
the
consideration received or receivable and represents the
amounts receivable for goods and services provided in the
normal course of business, net of trade discounts and
volume rebates, and value added tax.
Interest is recognised, in profit or loss, using the effective
interest rate method.
●
●
●
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.
to
other
comprehensive
When a gain or
loss on a non-monetary item is
recognised
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.
income
Cash flows arising from transactions in a foreign currency
are recorded in South African 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.
Investments
associates
in subsidiaries,
joint ventures and
Service fees included in the price of the product are
recognised as revenue over the period during which the
service is performed.
The results and financial position of a foreign operation
are translated into the functional currency using the
following procedures:
28
GALILEO RESOURCES PLC
●
●
●
assets and liabilities for each statement of financial
position presented are translated at the closing rate at
the date of that statement of financial position;
income and expenses for each item of profit or loss are
translated at exchange rates at
the
transactions; and
the dates of
all resulting exchange differences are recognised to
other comprehensive income and accumulated as a
separate component of equity.
Exchange differences arising on a monetary item that
forms part of a net investment in a foreign operation are
recognised initially to other comprehensive income and
accumulated in the translation reserve. They are recognised
in profit or loss as a reclassification adjustment through to
other comprehensive income on disposal of net investment.
Any goodwill arising on the acquisition of a foreign
operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition of
that foreign operation are treated as assets and liabilities of
the foreign operation.
The cash flows of a foreign subsidiary are translated at
the exchange rates between the functional currency and
the foreign currency at the dates of the cash flows.
1.15 Going concern
The going concern basis has been adopted in preparing
the consolidated annual 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 consolidated annual
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, they are satisfied that the Group has or has
access to adequate resources to continue in operational
existence for the foreseeable future.
(cid:2)(cid:14)(cid:14)(cid:24)(cid:29)(cid:23)(cid:28)(cid:20)(cid:23)(cid:18) (cid:10)(cid:24)(cid:21)(cid:20)(cid:14)(cid:20)(cid:16)(cid:27)
2. NEW STANDARDS AND INTERPRETATIONS
These financial statements have been prepared in
accordance with International Financial Reporting Standards
and IFRIC interpretations as adopted by the European Union
and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS. The financial statements
have been prepared under the historical cost convention.
New standards, amendments and interpretations
adopted by the Company
New and/or revised Standards and Interpretations that
have been required to be adopted, and/or are applicable in
the current year by/to the Company, as standards,
amendments and interpretations which are effective for the
financial year beginning on 1 January 2016 do not have a
material effect on the Company financial statements.
New standards, amendments and interpretations not
yet adopted
At the date of authorisation of these financial statements,
the following Standards and Interpretations which have not
been applied in these financial statements, were in issue
but not yet effective for the year presented:
–
–
–
IFRS 9 in respect of Financial Instruments which will be
effective for the accounting periods beginning on or
after 1 January 2018.
IFRS 15 in respect of Revenue from Contracts with
Customers which will be effective for accounting periods
beginning on or after 1 January 2018.
IFRS 16 in respect of Leases which will be effective for
accounting periods beginning on or after 1 January
2019.
There are no other IFRSs or IFRIC interpretations that are
not yet effective that would be expected to have a material
impact on the Company.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
29
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
3. PROPERTY, PLANT AND EQUIPMENT
31 March
2017
Impairment
loss
Cost/
Valuation
FiguresinPoundSterling
31 March
2016
Carrying
value
Cost/ Accumulated
depreciation
Valuation
Carrying
value
Group
Furniture and fixtures
Total
Company
–
–
–
–
–
–
282
282
(282)
(282)
–
–
31 March
2017
Impairment
loss
Cost/
Valuation
31 March
2016
Carrying
value
Cost/ Accumulated
depreciation
Valuation
Carrying
value
Furniture and fixtures
–
–
–
282
(282)
–
Reconciliation of property, plant and equipment
Group
31 March 2017
Opening
balance
Impairment
loss
–
–
–
–
Furniture and fixtures
Reconciliation of property, plant and equipment
Group
31 March 2017
Opening
balance
Impairment
loss
Furniture and fixtures
–
–
Group
31 March 2017
Foreign
Opening
exchange
balance movements
282
–
(282)
–
Group
31 March 2017
Foreign
Opening
exchange
balance movements
282
(282)
Total
–
–
Total
–
Total
–
–
Total
–
30
GALILEO RESOURCES PLC
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
31 March
2017
31 March
2016
Cost/ Accumulated
Valuation depreciation
Carrying
value
Cost/ Accumulated
depreciation
Valuation
Carrying
value
1,473,494
–
1,473,494
2,667,062
–
2,667,062
4. INTANGIBLE ASSETS
Group
Exploration and evaluation
asset – U.S.A.
Reconciliation of intangible assets
Opening
Additions
Disposals
Foreign
Exchange
Impairment
Total
2017
2016
2,667,062
23,969
(2,426,846)
1,209,309
2,487,111
163,701
–
16,250
–
–
1,473,494
2,667,062
The exploration and evaluation asset is a USD denominated asset. It is carried at cost adjusted for any foreign currency movements
during the period under review.
On 30 August 2016, the Company executed an Asset Purchase Agreement (the “Agreement”) with a subsidiary of Waterton
Precious Metals Fund II Cayman, LP (“Waterton”). Under the terms of the Agreement, Waterton has purchased the Company’s
advanced Gabbs gold-copper property in Nevada for a consideration of USD$2.5 million cash. (GBP1.9 million) in cash. The Group
reported a loss on the sale of the property of GBP0.47 million which is mainly attributable to the uplift of the foreign exchange
currency movements prior to the disposal.
The proceeds will be directed towards aggressive exploration of the South African Concordia Copper project. This aligns with the
Company’s strategic decision to reduce exposure to gold exploration and focus instead on exploration and funding of its Concordia
copper project in Namaqualand, Northern Cape Province in South Africa.
The Company retains its greenfield Ferber coppergold property in Nevada. During the latter part of 2016 the Company undertook
an extensive survey of its Ferber property and during this investigation took many chip samples. The results of the samples were
very encouraging to the extent that the Company acquired further ground to enlarge the size of its concession. The Company’s
confidence is such on the Ferber project that it paid for the original license plus extension during the round of license renewals
in August 2017 and the project is now in good standing with the intent to carry out drilling during the coming year.
5. INVESTMENTS IN SUBSIDIARIES
Name of Company
31 March
2017
% voting
power
31 March
2016
% voting
power
31 March
2017
Carrying
amount
31 March
2016
Carrying
amount
Skiptons Global Investments Ltd – Incorporated in British Virgin Islands
100
Galileo Resources SA Proprietary Limited – Incorporated in the
Republic of South Africa
St Vincent Minerals
100
100
Impairment of investment – Skiptons
100
100
–
–
10,166,000
–
100
2,357,599
2,357,599
2,357,599
12,523,599
– (10,166,000)
2,357,599
2,357,599
The carrying amounts of subsidiaries are shown net of impairment losses.
Galileo holds 100% of the issued share capital in Galileo Resources SA Proprietary Limited, incorporated in the Republic of South
Africa, through its fully owned subsidiary, Skiptons Global Investment Ltd (BVI).
The principal activity of Galileo Resources SA Proprietary Limited is the same as that of Galileo Resources Plc.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
31
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
6. INVESTMENT IN JOINT VENTURES
Name of Company
FiguresinPoundSterling
31 March
2017
% holding
31 March
2016
% holding
31 March
2017
Carrying
amount
31 March
2016
Carrying
amount
Glenover Phosphate (Pty) Ltd (“Glenover”)
33.99
33.99
2,325,144
1,868,370
Galileo’s direct investment in Glenover is 29% and it also has an indirect investment in Glenover through its shareholding in
Galagen of 4.99% resulting in a total economic interest in Glenover of 33.99%. Galileo is currently carrying the BEE in terms of
its interest in Glenover. The carrying amounts of Joint Ventures are shown net of impairment losses. Galileo’s share of the equity
accounted profit/loss for the Joint Venture is recognised from the date of acquisition on 4 July 2011.
Summary of Groups interest in joint venture – South Africa
Carrying value at the beginning of the year
Additional investment
Effect of change in translation currency
Equity accounted loss for the year
Carrying value at year end
The Group’s share of the Joint Venture investment in Glenover
Summary of the Group’s interests in the Joint Venture.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Income
Interest received
Interest paid
Expenses
Taxation
Equity accounted loss for the year
Group
31 March
2017
31 March
2016
1,868,370
2,257,137
–
505,217
(48,443)
–
(356,426)
(32,341)
2,325,144
1,868,370
1,895
881,931
(1,411)
(211,776)
1,081
673,281
(29,964)
(89,948)
670,639
554,450
810
–
(14,883)
(34,370)
–
(48,443)
169
4,468
–
(35,178)
(1,800)
(32,341)
32
GALILEO RESOURCES PLC
7. LOANS TO JOINT VENTURES AND SUBSIDIARIES
Loans to/(from) subsidiaries
Galileo Resources SA Proprietary Limited
Skiptons Global Investment Ltd
St Vincent Minerals
Loans to Joint Ventures
Glenover Phosphate (Pty) Ltd
SHIP – Concordia
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
4,947,826
4,884
(919,178)
4,945,989
3,272
400,867
4,033,532
5,350,128
101,125
538,905
79,457
–
–
203,316
640,030
79,457
203,316
–
–
–
On 6 July 2017, Galileo executed a term sheet with its JV partner Fer-Min-Ore Proprietary Limited (“FMO”), in the Glenover
Phosphate/Rare earth project (the “Glenover Project” or “Project”), to advance the Project to a stage where it obtains a mining
right (“MRA”) from the Department of Mineral Resources (“DMR”) to mine and produce phosphate ( the “Term Sheet”).
One of the terms in the Term Sheet, amongst other, includes Galileo funding the execution of the mining right application
(“MRA”) by way of a loan, convertible to 4% of the equity in Glenover Phosphate Proprietary Limited (“Glenover”). The Company
has engaged a consulting group to execute the MRA.
8. OTHER FINANCIAL ASSETS
Fair value through profit or loss-designated
Galagen – Ordinary shares
Galagen – B Preference shares
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
10
450,431
8
353,913
450,441
353,921
–
–
–
–
–
–
The above non-listed preference share investment represents the “B” class zero percent coupon rate preference shares issued
by Galagen for its investment in Glenover as part of the BBBEE transaction.
Preference share dividends are not receivable as the share are represented by zero percent coupon rate and are only redeemable
after three years.
Loans and receivables
Galagen
This loan bears no interest and has no fixed terms of repayment.
Total other financial assets
Non-current assets
At fair value through profit or loss – designated
Loans and receivables
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
4,163
202,157
4,163
556,078
450,441
4,163
353,921
202,157
454,604
556,078
–
–
–
–
–
198,908
198,908
–
198,908
198,908
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
33
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
8. OTHER FINANCIAL ASSETS (continued)
Fair value hierarchy of financial assets at fair value through profit or loss.
FiguresinPoundSterling
For financial assets recognised at fair value, disclosure is required of a fair value hierarchy, which reflects the significance of the
inputs used to make the measurements.
Level 1 represents those assets, which are measured using unadjusted quoted prices for identical assets.
Level 2 applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly (derived
from prices).
Level 3 applies inputs, which are not based on observable market data.
Level 3 – Class 1 Unlisted ordinary shares
Class 2 Unlisted preference shares
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
10
8
450,431
353,913
450,441
353,921
–
–
–
–
–
–
Reconciliation of financial assets at fair value through profit or loss measured at level 3
Group – 31 March 2017
Class 1 – Unlisted ordinary shares
Class 2 – Unlisted preference shares
Group – 31 March 2016
Class 1 – Unlisted ordinary shares
Class 2 – Unlisted preference shares
Gains or
Foreign
Opening
losses in
exchange
balance movement profit or loss
8
353,913
353,921
2
96,518
96,520
–
–
–
Opening
balance
Foreign
exchange
movement
Gains or
losses in
profit or loss
9
(1)
365,673
(59,563)
365,682
(59,564)
–
47,803
47,803
Total
10
450,431
450,441
Total
8
353,913
353,921
The Group has not reclassified any financial assets from cost or amortised cost to fair value, or from fair value to cost or amortised
cost during the current or prior year.
34
GALILEO RESOURCES PLC
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
9. FINANCIAL ASSETS BY CATEGORY
The accounting policies for financial instruments have been applied to the line items below:
Group – 31 March 2017
Fair value
through
Loans and profit or loss
receivables – designated
Other financial assets
Trade and other receivables
4,163
30,522
Cash and cash equivalents
1,110,821
450,441
–
–
Total
454,604
30,522
1,110,821
Group – 31 March 2016
Fair value
through
profit or loss
– designated
Loans and
receivables
202,157
20,453
135,086
353,921
–
–
Total
556,078
20,453
135,086
1,145,506
450,441
1,595,947
357,696
353,921
711,617
Company – 31 March 2017
Fair value
through
Loans and profit or loss
receivables – designated
Total
Company – 31 March 2016
Fair value
through
profit or loss
– designated
Loans and
receivables
Total
Loans to Group companies
5,156,026
Other financial assets
–
Cash and cash equivalents
915,733
6,071,759
–
–
–
–
5,156,026
5,350,128
–
915,733
198,908
136,264
6,071,759
5,685,300
–
–
–
–
5,350,128
198,908
136,264
5,685,300
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
35
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
10. TRADE AND OTHER RECEIVABLES
Prepayments
Other receivables
The directors consider that the carrying amount of trade and other
receivables approximates to fair value.
11. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of:
Cash on hand
Bank balances
Credit quality of cash at bank and short-term deposits, excluding cash
on hand.
The credit quality of cash at bank and short-term deposits, excluding
cash on hand that are neither past due nor impaired can be assessed
by reference to external credit ratings (if available) or historical
information about counterparty default rates:
Credit rating
F1 + (ZAF)
Other
FiguresinPoundSterling
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
23,211
7,311
30,522
15,554
4,899
20,453
–
522
–
–
–
–
–
–
–
460
1,110,821
134,564
915,733
135,804
1,110,821
135,086
915,733
136,264
1,110,821
134,564
915,733
135,804
–
522
–
460
1,110,821
135,086
915,733
136,264
36
GALILEO RESOURCES PLC
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
12. SHARE CAPITAL
Authorised share capital
Unlimited ordinary shares of 0.01 pence (2016: 0.01 pence)
Issued share capital
Reported as at 1 April
Issues for cash
Reported as at 31 March
Reconciliation of share capital:
Ordinary shares of 0.1p
Deferred shares of 4.9p
Share premium
193,752,721
124,502,721 193,752,721
124,502,721
2,121,341
69,250,000
2,121,341
69,250,000
195,874,062
193,752,721 195,874,062
193,752,721
195,874
193,753
195,874
193,753
5,610,634
5,610,634
5,610,634
5,610,634
18,076,986
18,050,570
18,076,986
18,050,570
23,883,494
23,854,957
23,883,494
23,854,957
During the period under review the Company issued 2,121,341 new ordinary shares as follows:
Date
12 April 2016
3 February 2017
Number of ordinary shares
500,000
Purpose of Issue
Settlement of debt
1,621,341
Shares in lieu of director remuneration
Subsequent to the period under review the Company did not issue any new ordinary shares.
13. SHARE-BASED PAYMENTS
Share option group
Outstanding at the beginning of the year
Expired
Issued
Outstanding at the end of the year
During the financial period under review 9,700,000 option were issued.
Outstanding options
Options exercisable at £0.02 on or before 26/01/2022
A summary of options held by directors at year-end is given below.
Name
Colin Bird
Chris Molefe
Richard Wollenberg
Andrew Sarosi
The above options were granted on 27 January 2017 at a strike price of £0.02 per share.
Number
4,495,000
(4,495,000)
9,700,000
9,700,000
Exercise from grant date
9,700,000
Number of options
5,000,000
250,000
750,000
3,000,000
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
37
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
13. SHARE-BASED PAYMENTS (continued)
The options are exercisable at any time during a five-year period from the date of grant. The holders of options may exercise
them at any time up to 26 January 2022. Options are valued using the Black Scholes model, a commonly used option-pricing
model. The calculation of volatility used in the model is based upon the share price and equity instrument movements during
the financial period. The following factors are all taken into consideration when the options are valued:
FiguresinPoundSterling
● Weighted average share price
● Expected volatility
● Expected dividends
● Stock price
● Exercise price
● Option life
● Risk free interest rate
The above model applies to all grants made after 1 October 2011. Share-based payments represent the value of unexercised
share options to directors and employees. The charge for share options to profit and loss amounted to £149,793 (2016: £nil).
14. FOREIGN CURRENCY TRANSLATION RESERVE
Translation reserve comprises exchange differences on consolidation of foreign subsidiaries, foreign exchange profits or losses
on inter-company loan accounts and revaluation of foreign intangibles recognised as part of a business combination.
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
Exchange differences on consolidation of foreign subsidiaries
419,408
631,555
Foreign exchange profits or losses on inter-company loan accounts
(861,446)
(2,122,279)
Foreign intangibles recognised as part of a business combination
134,484
(188,852)
(307,554)
(1,679,576)
–
–
–
–
–
–
–
–
15. OTHER FINANCIAL LIABILITIES
Held at amortised cost
Fer-Min-Ore
Loans
Non current liabilities
At amortised cost
Current liabilities
16. TRADE AND OTHER PAYABLES
Trade and other payables
Accrued expense
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
7
4,009
4,016
5
2,687
2,692
4,016
2,692
–
–
–
–
–
–
–
–
277,876
116,095
189,857
100,865
14,234
45,171
393,971
290,722
59,405
34,786
29,853
64,639
38
GALILEO RESOURCES PLC
17. FINANCIAL LIABILITIES BY CATEGORY
The accounting policies for financial instruments have been applied to the line items below:
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
Other financial liabilities
Trade and other payables
Group – 31 March 2017
Group – 31 March 2016
Financial
liabilities at
amortised
cost
4,016
Financial
liabilities at
amortised
cost
2,692
Total
4,016
Total
2,692
393,971
393,971
290,772
290,772
397,987
397,987
293,414
293,414
Company – 2017
Company – 2016
Financial
liabilities at
amortised
cost
Financial
liabilities at
amortised
cost
Total
Total
Trade and other payables
59,405
59,405
64,639
64,639
18. OPERATING LOSS
Operating loss for the year is stated after accounting for the following:
Operating lease charges
Premises contractual amounts
Employee costs – including management
Auditors Remuneration – refer note 21.
Directors Remuneration – refer note 28.
19. INVESTMENT REVENUE
Interest revenue
Bank interest
Interest preference shares
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
50,772
308,493
83,050
161,784
35,400
308,493
49,637
161,784
781
–
781
775
47,803
48,578
781
–
781
775
–
775
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
39
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
20. TAXATION
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense.
Accounting loss
(1,388,697)
(419,294)
(705,815)
(380,800)
Tax at the applicable tax rate of 20% (2016: 20%)
(277,739)
(83,925)
(141,163)
(76,160)
Tax effect of adjustments on taxable income
Expenses not allowed for tax purposes
Tax losses carried forward
123,811
153,928
–
29,959
–
83,925
111,204
76,160
–
–
–
–
No provision has been made for 2017 tax as the Group has no taxable income. The estimated tax loss available for set off against
future taxable income is £1,756,243 (2016: £1,602,315). The Group has not reflected a deferred tax asset in respect of the losses
carried forward as the Group is not expected to generate taxable profits in the foreseeable future.
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
15,000
12,500
15,000
15,000
12,500
15,000
12,500
12,500
Group – 31 March2016
21. AUDITORS’ REMUNERATION
Current year – parent
Total fees
22. OTHER COMPREHENSIVE INCOME
Components of other
comprehensive income
Gross
Group – 31 March 2017
Tax
Net
Gross
Tax
Net
Exchange differences through
other comprehensive income
1,372,022
–
1,372,022
(364,872)
–
(364,872)
40
GALILEO RESOURCES PLC
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
23. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is determined by dividing profit or loss attributable to the ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year.
Basic earnings per share was based on a loss of £1,388,697 (2016: loss of £419,627) and a weighted average number of ordinary
shares of 194,525,720 (2016: 148,691,077).
Group
31 March
2017
31 March
2016
Reconciliation of loss attributable to equity holders of the parent to loss for the year
Profit or loss for the year attributable to equity holders of the parent
(16,675)
(784,499)
Adjusted for:
Foreign exchange movements during the year
Loss for the year
Loss per share
(1,372,022)
(364,872)
(1,388,697)
(419,627)
Basic and diluted loss per share (pence)
(0.7)
(0.3)
24. CASH USED IN OPERATIONS
Loss before taxation
Adjustments for:
Loss from equity accounted investments
Investment revenue
Loss on sale of intangible asset
Finance Costs
Share based payment
Other non-cash items
Changes in working capital:
Trade and other receivables
Trade and other payables
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
(1,388,697)
(419,627)
(705,815)
(380,800)
48,443
32,341
–
(781)
(48,578)
(781)
–
(775)
469,259
–
149,793
–
2
–
–
–
149,793
(25,264)
(24,682)
(10,069)
103,249
(132)
343
–
–
(5,234)
(751)
–
–
–
–
–
(654,067)
(459,601)
(562,037)
(382,326)
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
41
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
25. COMMITMENTS
The Group had no material commitments at the year-end date.
26. RELATED PARTY BALANCES AND TRANSACTIONS
Loan accounts – owed by related parties
Glenover
SHIP – Concordia
Amounts paid – to related parties
Lion Mining Finance Ltd (“LMF”).
Galileo paid rent and administrative service cost to LMF. Colin Bird
is a director of both Galileo and LMF.
27. EMPLOYEE COST
Salaries and wages
Total
Average number of employees
FiguresinPoundSterling
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
101,125
536,450
79,457
–
–
203,316
–
–
42,480
35,400
42,480
35,400
8,040
8,040
1
6,960
6,960
1
8,040
8,040
1
6,960
6,960
1
28. DIRECTORS’ AND PRESCRIBED OFFICER’S EMOLUMENTS
Executive
2017
Colin Bird
Andrew Sarosi
2016
Colin Bird
Andrew Sarosi
Non executive
2017
Christopher Molefe
Richard Wollenberg
2016
Christopher Molefe
Richard Wollenberg
Directors’
fees
26,875
26,250
53,125
25,000
25,000
50,000
15,000
15,000
30,000
15,000
15,000
30,000
42
GALILEO RESOURCES PLC
28. DIRECTORS’ AND PRESCRIBED OFFICER’S EMOLUMENTS (continued)
Directors’ interests in the Company’s share option scheme at the date of this report were as follows:
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
Beneficial owner
Colin Bird
Andrew Sarosi
John Richard Wollenberg
Chris Molefe
At 31 March 2017(1)
At 31 March 2016(2)
Options
5,000,000
3,000,000
750,000
250,000
Options
500,000
250,000
2,500,000
900,000
(1)= These options were granted to the directors 27 January 2017 at a strike price of £0.02 per share.
(2)= These options were granted to the directors on 1 October 2011 and have since expired.
In addition to the remuneration disclosed above and included in operating expenses for the period under review is an amount
of £138,983 being the share based payment expense recognised in relation to options granted to directors as follows:
Beneficial owner
Colin Bird
Andrew Sarosi
John Richard Wollenberg
Chris Molefe
Total
2017
Executive management
2016
Executive management
29. RISK MANAGEMENT
Capital risk management
At 31 March 2017
Share based
payment expense
77,213
46,327
11,582
3,861
138,983
Emoluments
78,000
78,000
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholder and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital.
The capital structure of the Group consists of debt, which includes the borrowings (excluding derivative financial liabilities)
disclosed in note 12, cash and cash equivalents disclosed in note 11 and equity as disclosed in the statement of financial position.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholder, return
capital to shareholder, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
43
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
29. RISK MANAGEMENT (continued)
Financial risk management
FiguresinPoundSterling
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group’s financial performance. Risk management is carried out under policies approved by the
Board. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The
Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign
exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and
investment of excess liquidity.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions.
The Group’s risk to liquidity is a result of the funds available to cover future commitments. The Group manages liquidity risk
through an ongoing review of future commitments and credit facilities.
Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored.
The table below analyses the Group’s financial liabilities and net settled derivative financial liabilities into relevant maturity
groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances
as the impact of discounting is not significant.
Group
At 31 March 2017
Trade and other payables
Other financial liabilities
At 31 March 2016
Trade and other payables
Other financial liabilities
Company
At 31 March 2017
Trade and other payables
At 31 March 2016
Trade and other payables
Interest rate risk
Less than
1 year
Between 2
and 5 years
393,971
–
–
4,016
Less than
1 year
Between 2
and 5 years
290,722
–
–
2,692
Less than
1 year
59,405
Less than
1 year
64,639
The Group’s interest rate risk arises from cash held and short-term deposits.
The Company does not face any significant interest rate risk as it has no borrowings.
44
GALILEO RESOURCES PLC
29. RISK MANAGEMENT (continued)
Credit risk
Credit risk consists mainly of cash deposits, cash equivalents, and trade debtors. The Company only deposits cash with major banks
with high quality credit standing and limits exposure to any one counterparty.
Financial assets exposed to credit risk at year-end were as follows:
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
FiguresinPoundSterling
Financial instrument
Trade and other receivables
Cash and cash equivalents
Other financial assets
Group
Company
31 March
2017
31 March
2016
31 March
2017
31 March
2016
30,522
1,110,821
454,604
20,453
135,086
556,078
–
915,733
–
–
136,264
198,908
Loans to Group companies and other related entities
–
–
5,156,026
5,350,128
Foreign exchange risk
The Group is exposed to fluctuations in foreign currencies arising from having deposits in various currencies as well as the
purchase of goods and services in currencies other than the Group’s measurement currency.
Galileo Group operates internationally and the USD exposed to foreign exchange risk arising from various currency exposures
primarily with respect to the ZAR, the CAD, the USD and Pound Sterling. Galileo Group is exposed to currency risk on cash reserves,
deposits received, trade receivables, and trade payables. The most significant of these being the inter-company loans, which it
holds with its subsidiaries Galileo Resources SA (ZAR) and St Vincent Minerals (CAD and USD).
Profit is less sensitive to movement in Pound Sterling exchange rates in 2017 than 2016 hence the significant adjustment to the
fair value of the intangible assets.
The Group does not hedge its foreign exchange on funding of projects as management is of the opinion that it would not have
reduced these foreign currency fluctuations. Currency movements mainly include movements that arise as a result of South
African Rand denominated projects that are revalued at each period end.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.
Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings
denominated in the relevant foreign currencies.
The table below classifies the Group’s foreign currency risk between the different functional currencies as at year-end, and the
respective balance thereof:
Exchange rates used for conversion of foreign items were:
ZAR : £ (Average)
ZAR : £ (Spot)
USD : £ (Average)
USD : £ (Spot)
1 : 0.0548
1 : 0.0597
1 : 0.7676
1 : 0.8007
(2016: 1 : 0.0485)
(2016: 1 : 0.0469)
(2016: 1 : 0.6637)
(2016: 1 : 0.6959)
The Group reviews its foreign currency exposure, including commitments on an ongoing basis.
30. GOING CONCERN
The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis
presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the ordinary course of business.
The ability of the Company to continue as a going concern is dependent on a number of factors. The most significant of these is
that the directors continue to procure funding for the ongoing operations for the Company and that the operations have the
continued support of the holding company.
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
45
(cid:8)(cid:24)(cid:28)(cid:16)(cid:27) (cid:28)(cid:24) (cid:28)(cid:19)(cid:16) (cid:4)(cid:20)(cid:23)(cid:13)(cid:23)(cid:14)(cid:20)(cid:13)(cid:21) (cid:12)(cid:28)(cid:13)(cid:28)(cid:16)(cid:22)(cid:16)(cid:23)(cid:28)(cid:27)
30. GOING CONCERN (continued)
The directors have also considered the Group’s ability to fund its planned projects and general operating costs. They consider the
Group as sufficiently funded and anticipate that as projects come on line, the new cash raised will be sufficient to further develop
current and future planned projects and provide adequate working capital. Throughout the development of projects, executive
management and the directors will monitor the timing and funding requirements of each project to ensure that the Group
remains a going concern.
31. SEGMENTAL REPORTING ON INCOME AND LOSSES ATTRIBUTABLE TO VARIOUS
OPERATIONAL SEGMENTS
Business unit
The Company’s investments in subsidiaries and associates, that were operational at year-end, operate in two geographical
locations being South Africa and USA, and are organised into one business unit, namely Mineral Assets, from which the Group’s
expenses are incurred and future revenues are expected to be earned. This being the exploration for and extraction of its mineral
assets through direct and indirect holdings. The reporting on these investments to the board focuses on the use of funds towards
the respective projects and the forecasted profit earnings potential of the projects.
Geographical segments
An analysis of the loss on ordinary activities before taxation and net assets is given below:
Rare earths, aggregates and iron ore and manganese
Gold, Copper
Corporate costs
Total
31 March
2017
Loss from
operating
31 March
2016
Loss from
operating
activities (£) activities (£)
(48,443)
(630,044)
(32,341)
(44,324)
(710,270)
(342,962)
(1,388,697)
(419,627)
South Africa
USA
South Africa
and United
Kingdom
32. SUBSEQUENT EVENTS
32.1 Glenover Phosphate (Pty) Ltd - Agreement to Advance Project
On 6 July 2017, Galileo executed a term sheet with its JV partner Fer-Min-Ore Proprietary Limited ("FMO"), in the Glenover
Phosphate/Rare earth project (the "Glenover Project" or "Project"), to advance the Project to a stage where it obtains a mining
right ("MRA") from the Department of Mineral Resources ("DMR") to mine and produce phosphate ( the "Term Sheet").
One of the terms in the Term Sheet, amongst other, includes Galileo funding the execution of the mining right application
("MRA") by way of a loan, convertible to 4% of the equity in Glenover Phosphate Proprietary Limited ("Glenover"). The Company
has engaged a consulting group to execute the MRA.
Refer to page 7 of this report for more detail on the agreement.
32.2 Concordia Project Update
On 11 August 2017, Galileo advised that its decision to turn the Concordia project to account for the benefit of the JV parties,
and to increase the Company’s interest in the project by way of issue of Galileo ordinary shares to its JV partner, is pending the
outcome of the continuing assessment and results from intended completion of the programme with the remaining committed
funds. JV partner, SHIP claims the Company should dilute to a 15% interest in terms of the Co-operation and Joint Venture
Agreement (“Agreement”). This claim is not supported by the Agreement given that no decision has been made by the Company
to turn the project to account.
Galileo has also informed SHIP that in its opinion, the Company owns 51% of the Concordia project and has not yet had the
opportunity to make a decision on the most appropriate way forward in terms of Galileo’s options. This is fully provided for in
the agreement as are other matters, which give Galileo full protection on its current 51% interest in the project.
46
GALILEO RESOURCES PLC
Notice of Annual General Meeting
(cid:8)(cid:24)(cid:28)(cid:20)(cid:14)(cid:16) (cid:24)(cid:17) (cid:2)(cid:23)(cid:23)(cid:29)(cid:13)(cid:21) (cid:5)(cid:16)(cid:23)(cid:16)(cid:26)(cid:13)(cid:21) (cid:7)(cid:16)(cid:16)(cid:28)(cid:20)(cid:23)(cid:18)
Notice is hereby given that the Annual General Meeting of
Galileo Resources Plc will be held at Fladgate LLP, 16 Great
Queen Street, London, WC2B 5DG, on 26 September 2017 at
14:00 p.m., for the following purposes:
or might require relevant securities to be allotted after such
expiry and the directors may allot relevant securities pursuant
to any such offer or agreement; as if the authority conferred
hereby had not expired.
To consider and, if deemed fit, to pass resolutions 1 – 6 as
ordinary resolutions and resolutions 7 – 8 as special resolutions.
ORDINARY BUSINESS
Resolution number 1
To receive the reports of the directors and auditors and the
financial statements for the year ended 31 March 2017 for the
Group and the Company.
Resolution number 2
To re-elect Colin Bird as a Director of the Company.
Resolution number 3
To re-elect Richard Wollenberg as Director of the Company.
Resolution number 4
To confirm the appointment of Chapman Davis LLP as statutory
auditor of the Company from the conclusion of this meeting to
the conclusion of the next shareholder meeting, at which the
reports of
the directors and auditors and the financial
statements are laid before the Company.
Resolution number 5
To authorise the Directors to determine auditors’ remuneration
for the year ended 31 March 2017.
Resolution number 6
That the Directors be generally and unconditionally authorised,
pursuant to and in accordance with section 551 of the
Companies Act 2006 of the United Kingdom (‘the Act’), in
substitution for all previous powers granted to them
thereunder, (but without prejudice to the continuing power of
the directors):
(i)
(ii)
to allot shares in the Company or grant rights, warrants
or options to subscribe for, or convert any relevant
security into shares in the Company (together “Relevant
Securities”) pursuant to an offer or agreement made by
the Company before the date that this resolution is
passed; and
to exercise all the powers of the Company to allot and
make offers to allot
relevant securities up to an
aggregate nominal amount £64,638 (representing
approximately 33% of the total issued share capital of
the Company, as at the last practicable date prior to the
publication of the Notice of meeting)
SPECIAL BUSINESS
Resolution number 7
Resolved that, subject to the passing of resolution 6, the
directors be and they are hereby empowered in substitution
for any such power previously granted pursuant to section 570
and section 573 of the Companies Act 2006 to allot equity
securities (as defined in section 560 of that Act) for cash
pursuant to the authority referred to in resolution 6 above, as
if section 561(1) of that Act or any pre-emption provisions
contained in the articles of association of the Company or
otherwise did not apply to any such allotment, provided that
this power:
(a)
(b)
shall be limited to the allotment of equity securities up
to an aggregate nominal amount of £195,874
representing 100% of the Company’s issued share
capital; and
shall expire on the date of the next Annual General
Meeting of the Company or 15 months from the passing
of this resolution, whichever is the earlier, save that the
Company may before such expiry make an offer or
agreement which would or might
require equity
securities to be allotted after such expiry and the board
may allot equity securities in pursuance of such an offer
or agreement as if the power conferred hereby had not
expired.
Resolution number 8
This resolution seeks Shareholder approval to authorise the
Company to, at its discretion, issue shares to directors in lieu of
directors’ deferred remuneration and allowances over the
period to 30 September 2018.
Shares issued in lieu of directors’ remuneration will be issued
on a quarterly basis for services that have been provided to
the Company during that quarter (payment in arrears). The
shares shall be issued at a price representing the quarterly
average weighted share price.
If Shareholder approval is not obtained, directors’ remuneration
will accrue on a non-cash basis to the directors. The shares will
be issued at the average share price over the quarter during
which the services have been rendered.
By order of the board
such authority shall, unless previously renewed, extended,
revoked or varied by the Company in general meeting, expire
on the conclusion of the next Annual General Meeting of the
Company or 30 September 2018 (whichever
is earlier)
provided that the Company may, at any time before such
expiry, make an offer or enter into an agreement which would
Registeredoffice:
1st Floor
7/8 Kendrick Mews
London, SW7 3HG
31 August 2017
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
47
(cid:8)(cid:24)(cid:28)(cid:20)(cid:14)(cid:16) (cid:24)(cid:17) (cid:2)(cid:23)(cid:23)(cid:29)(cid:13)(cid:21) (cid:5)(cid:16)(cid:23)(cid:16)(cid:26)(cid:13)(cid:21) (cid:7)(cid:16)(cid:16)(cid:28)(cid:20)(cid:23)(cid:18)
NOTES
(1) A member of the Company may appoint one or more
proxies to attend, speak and vote instead of the member.
A proxy of a member need not also be a member. A
member may appoint more than one proxy, provided that
each proxy is appointed to exercise the rights attached to
a different share.
(2) The instrument appointing a proxy, and the power of
attorney or other authority (if any) under which it is
signed, or a notarially certified copy of that power or
authority, must be deposited with the Company’s
Registrars, Neville Registrars Limited, Neville House, 18
Laurel Lane, Halesowen, West Midlands, B63 3DA no less
than 48 hours (excluding non-business days) before the
time for holding the meeting. A Form of Proxy
accompanies this document for use by members.
(3) Completion of the Form of Proxy will not preclude a
member from attending and voting in person.
(4) A corporation which is a member of the Company may
authorise a person (who need not be a member of the
Company) to act as its representative to attend, speak and
vote (on a show of hands or a poll) on its behalf. Holders
of ordinary shares are entitled to attend and vote at
General Meetings of the Company. On a vote by a show of
hands, every member who is present has one vote and
every proxy present who has been duly appointed by a
member entitled to vote has one vote, unless the proxy
has been appointed by more than one member and has
been instructed by more than one member to vote for the
resolution and by one or more members to vote against
the resolution, in which case the proxy has one vote for
and one against. On a poll vote, every member who is
present in person or by proxy has one vote for every
ordinary share of which he/she is the holder.
(5) To be valid this proxy must be completed and signed and
sent or delivered to the Company’s Registrars, Neville
Registrars Ltd, Neville House, 18 Laurel Lane, Halesowen,
West Midlands, B63 3DA no later than 14:00 p.m. on
22 September 2017.
(6) Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001 as amended the Company specifies that
only those shareholders registered in the Register of
Members of
the Company as at 14:00 p.m. on
22 September 2017 (the “Specified Time”) shall be
entitled to attend or vote at the Annual General Meeting
in respect of the number of shares registered in their
names at that time. Changes to entries on the relevant
register of members (the “Register”) for certificated or
uncertificated shares of the Company after the Specified
Time shall be disregarded in determining the rights of any
person to attend or vote at the Annual General Meeting.
Should the Annual General Meeting be adjourned to a
time not more than 48 hours after the Specified Time, that
time will also apply for the purpose of determining the
entitlement of shareholders to attend and vote (and for
the purpose of determining the number of votes they may
cast) at the adjourned Annual General Meeting. Should
the Annual General Meeting be adjourned for a longer
period, to be so entitled, shareholders must have been
entered on the Register at the time which is 48 hours
(excluding non-business days) before the time fixed for
the adjourned Annual General Meeting or, if the Company
gives notice of the adjourned Annual General Meeting, at
the time specified in the Notice.
(7) There are no Directors’ service contracts of more than one
year’s duration.
(8) Copies of Contracts of Service and letters of appointment
(including indemnities) between any director and the
Company or its subsidiaries are available for inspection at
the registered office of the Company during normal
business hours and will also be available for inspection at
the place of
the
conclusion of the Annual General Meeting.
the Annual General Meeting until
Proxy
‘CREST
Instruction’) must
(9) CREST members who wish to appoint a Proxy or Proxies
through the CREST electronic Proxy appointment service
may do so for the Annual General Meeting and any
adjournment thereof by using the procedures described in
the CREST manual. CREST personal members who have
appointed a voting service provider(s) should refer to their
CREST sponsor or voting service provider(s), who will be
able to take the appropriate action on their behalf. In order
for a Proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message
(a
be properly
authenticated in accordance with CRESTCO’s specifications
and must contain the information required for such
instructions, as described in the CREST manual. All
messages relating to the appointment of a Proxy or an
instruction to a previously appointed proxy must be
transmitted so as to be received by Neville Registrars
than 14:00 p.m. on
Limited (ID: 7RA11) no later
22 September 2017. Normal
system timings and
limitations will apply in relation to the input of CREST Proxy
Instructions. It is therefore the responsibility of the CREST
member concerned to take such action as shall be
necessary to ensure that a message is transmitted by
means of the CREST system by any particular time. In this
connection, CREST members and, where applicable their
CREST sponsor(s) or voting service provider(s) are referred,
in particular, to those sections of the CREST manual
concerning practical limitations of the CREST system and
timings. The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001
as amended.
(10) As at 30 August 2017, being the last practicable date
before the date of this Notice there were 195,874,062
ordinary shares in issue, each with equal voting rights. The
total number of voting rights in the Company as at
30 August 2017, being the last practicable date before the
date of this Notice is 195,874,062. Holders of ordinary
shares are entitled to attend, speak and vote, either in
person or by proxy, at General Meetings of the Company.
48
GALILEO RESOURCES PLC
Form of Proxy
(Incorporated and Registered in England and
Wales with Registered Number 5679987)
I/We being (a) member(s) of the Company and entitled to vote at the Annual General Meeting hereby appoint the chairman of
the meeting
or
(see note 1 below) as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting to be held at Fladgate
LLP, 16 Great Queen Street, London, WC2B 5DG on 26 September 2017 at 14:00 p.m. and at any adjournment thereof, as indicated
below:
I
T
S
N
A
G
A
D
L
E
H
H
T
I
W
R
O
F
Resolutions (*Special Resolutions)
1
2
3
4
5
6
To receive the reports of the directors and auditors and the financial statements for the year ended
31 March 2017 for the Group and the Company.
To re-elect Colin Bird as a Director of the Company.
To re-elect Richard Wollenberg as Director of the Company.
To confirm the appointment of Chapman Davis LLP as statutory auditor of the Company.
To authorise the directors to determine auditors’ remuneration for the year ended 31 March 2017.
To authorise the directors to allot and grant options over shares in accordance with section 551 of the
Companies Act 2006.
7* To empower the directors to allot equity securities
8* To authorise the Company to, at its discretion, issue shares to directors in lieu of remuneration
Signed ...................................................................................................................................................................... Date ........................
Name(s) ..........................................................................................................................................................................................................
Notes:
1. Should a member wish to nominate any other person, strike out “the chairman of the meeting or” and insert the name of
the alternative proxy who need not be a member of the Company.
2. Please indicate with an X in the boxes above how you wish your votes to be cast. In the absence of any specific direction,
the proxy will vote or abstain as he/she thinks fit.
3. An appointment by a corporation must be under the common seal (if any) or, if none, under the hand of a duly authorised
officer.
4. Any one of the joint holders may attend or appoint a proxy to attend at the meeting but the vote of the senior present, in
person or by proxy, will be accepted to the exclusion of the other. Seniority shall be determined by the order in which the
names stand in the register of shareholders in respect of the joint holding.
5.
To be valid this proxy must be deposited at the registered office of Neville Registrars Ltd at Neville House, 18 Laurel Lane,
Halesowen, West Midlands, B63 3DA at least 48 hours (excluding non-business days) before the time appointed for holding
the meeting or adjourned meeting (as the case may be).
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
49
For your notes
50
GALILEO RESOURCES PLC
For your notes
ANNUAL REPORT AND ACCOUNTS – 31 March 2017
51
For your notes
52
GALILEO RESOURCES PLC
Printed by Michael Searle & Son Limited
www.galileoresources.com