ANNUAL REPORT
2019
Contents
Annual Financial Statements for the year ended 31 March 2019
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
Holding Company
Galileo Resources Plc
Country of incorporation and domicile
United Kingdom
Nature of business and principal activities
2
3
5
22
31
34
35
36
38
39
46
62
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 2019
1
Corporate Information
Directors
Secretarial
Services
Registered
Office
Auditors
Joint Broker
Joint Broker
Colin Bird – Chairman and CEO
Andrew F Sarosi – Finance and Technical Director
Christopher Molefe – Non-Executive Director
John Richard Wollenberg – Non-Executive Director
Link Company Matters Limited
34 Beckenham Road
Beckenham, Kent, BR3 4TU
United Kingdom
7/8 Kendrick Mews
London, SW7 3HG
South Africa
7 Einstein Street
Highveld Techno Park
Centurion, 0157
Registrars
Banker
Neville Registrars Limited
Neville House, Steelpark Road
Halesowen, B62 8HD
National Westminster Bank Plc
186 Brompton Road
London, SW3 1XJ
Nominated
Advisor
Beaumont Cornish Limited
10th Floor, 30 Crown Place
London, EC2A 4EB
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
Novum Securities Limited
8-10 Grosvenor Gardens
London, SW1W 0DH
Shard Capital Partners LLP
23rd Floor, 20 Fenchurch St
London, EC3M 3BY
Incorporation No: 05679987
2
GALILEO RESOURCES PLC
Strategic Report –
Chairman’s Report
Dear Shareholder
The year under
review has been positive for
the
Company, with the main focus being the Star Zinc Project in
Zambia. We announced in June 2018 a conceptual grade
tonnage estimate, which suggested a potential exploration
target of 485 000 tonnes at 15.4% Zn. This was a very
encouraging result based on original estimations from
previously reported Chartered Consolidated work.
On the 14th of August 2018, we announced that a
second phase of drilling will commence, with a similar size
to the first, scheduling about 1 000m of diamond core
drilling. The intent being to identify, both east and west
extensions to mineralisation, as well as to investigate
certain geophysical anomalies.
The programme was very successful and increased the
tonnage target to between 600 000-900 000 tonnes with an
estimated average grade of 10-12% Zn at above 3% cut off.
it
Following Jubilee Metals Group Plc’s
(“Jubilee”)
acquisition of the Sable Zinc Project at Kabwe, the Company
entered into initial discussions for an offtake agreement.
The obvious benefits for such an agreement would be that
Galileo would not have to build a processing facility at Star
Zinc, thus negating the capital cost of such a facility.
Additionally,
is assumed that since the high-grade
willemite (zinc mineral) ore is easily identified, a selective
high-grade pit could be easily operated by contractors, again
negating the need for capital expenditure on mining
equipment. Thus, processing and mining will require only
modest capital expenditure and the operation could be very
profitable, since operating costs would be low against
projected revenue for high-grade ore feed to the Jubilee’s
Sable Plant.
We have worked on a number of operational scenarios,
and we have selected the base case scenario to be a 6-year
mine life at approximately 60 000 tonnes per annum of
high grade ore being mined by an open cast mining
contractor and transported by road to the Kabwe facility.
The Glenover Phosphate Project has been the subject of
a mining right application, which was submitted 15
November 2017. We await the grant of the mining right.
The prospects for western-produced rare earths, has
improved due to the trade tensions between China and
America. It has become apparent that rare earth supply
being confined to China presents major risk to the free
world, and if one considers that a good proportion of rare
Chairman’s Report
Colin Bird
Chairman
earth use is for military purposes, then the concern is
justified. This concern was very conspicuous in 2011-2013,
but for no apparent reason faded into the background
resulting in the demise of many junior mining companies
with a rare earth focus.
The Glenover Rare Earth Project, had good financial and
technical fundamentals and nothing has changed in this
regard. The objective, however, is to commence operations
on a phosphate operation, utilising the stockpiles and
primary ore sources for a relatively long-life project. The
rare earths will not be lost and will be recovered from the
sludge of a phosphate process plant. Should there be new
demand in the western markets for rare earth products,
then Galileo will re-assess its strategy and processing
circuits to address this new situation.
We look forward to the issuance of the mining right,
which will allow us to enter into definitive plans for the
development of this project.
During the period under review, we have not utilised our
resources on the Nevada based Ferber Project, since Star
Zinc placed great demand on all our available resources,
both financial and people. However, we remain convinced
that the exploration project is well above average and
relative to that, we have maintained the property in good
standing for the year ahead commencing 1 September
2019. The gold exploration activity in Nevada has increased
with many junior and major mining companies sourcing
quality projects. The Ferber position and recent history
the more attractive areas for gold
makes it one of
exploration in Nevada and we consider our holding to be
highly prospective for future joint venture or own work.
The general
the time of writing this report
investment climate for junior resource
companies deteriorated during the period under review and
at
the situation has
deteriorated even further. A combination of trade wars,
Brexit and geopolitical tension has caused this small
company aversion, particularly small resource companies.
The paradox is that major markets continue to break
records, defying the global uncertainties that historically
have led to sharp corrections and occasionally crashes.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
3
Chairman’s Report
I remain very confident, despite the aforementioned, that
metal prices will improve, quite dramatically in the coming
decade and that the small mining resource companies will
have a long-awaited positive run. Exploration discoveries
have been few and far between and major mining
companies’ metal inventories are being depleted without
replacement. This situation generally leads to intense
acquisition activity, which changes the fortunes of the junior
explorer, with some being acquired and most, finding funds
easier for their exploration activities.
The Group reported a loss per share of 0.14 pence
compared to 0.45 pence for the comparative period (2018).
I would like to thank my fellow directors and employees
for their efforts and contribution during a difficult, but
positive period. We assure shareholders that we will apply
best efforts to enhance shareholder value to our portfolio of
projects and look forward to the challenge.
Colin Bird
Chairman
23 August 2019
4
GALILEO RESOURCES PLC
Strategic Report –
Operations Report
Highlights
Period under review
Star Zinc Project Zambia (or “Project”)
●
●
●
conceptual
Independent
tonnage grade models
(“CGT Model”) for Star Zinc deposit developed from the
2-phase drilling programme(1)
CGT Model defines specific high grade willemite (>20%
Zinc (Zn)) domain areas within the deposit, which
potentially could be selectively mined as direct ore feed
to process
Project’s
The
licence
19653-HQ-LEL was renewed on 24 August 2018 for a
further three years(2)
exploration
large-scale
Kashitu Zinc Prospect (“Kashitu”)
● Kabwe Residual Rights, which includes the Kashitu
Prospect, conditionally acquired from BMR Group plc,
(“BMR”)(3). Potential for Kashitu to be larger than Star
Zinc
Glenover Phosphate Project
● Glenover
the
completed
Environmental
Impact
Assessment
(EIA)/EMP Management Programme
it Mining Right Application
(“EMP”) in respect of
(“MRA”). The Department of Mineral Resources (“DMR”)
formally accepted the EIA on 31 May 2018
Post period under review
Star Zinc
●
●
Completed, 21 June 2019, an independent
initial
inferred resource estimate (“IRE”) for the Star Zinc
project in accordance with JORC 2012
of
future
economic
The IRE reports Inferred zinc resources with reasonable
prospects
of
approximately 500 000 tonnes at 16% Zn or 77 000
tonnes of contained metal above a cutoff grade of 2%
Zn, including approximately 340 000 tonnes at 21%
Zn for 72 000 tonnes of metal above a cutoff grade of
8% Zn
extraction
● Negotiations commenced with Jubilee Metals Group plc
(“JMG” or “Jubilee”) for an off-take agreement to supply
future ore from Star Zinc(4)
●
Raised £500 000 in placing, before expenses,
advance Star Zinc
to
● Acquired unconditionally from BMR Group plc (“BMR”),
the remaining 15% of the shares that the Company did
not hold in Enviro Zambia Ltd, thereby increasing the
Company’s ownership in the Star Zinc Project to 95%
with the Zambian government holding the other 5%(5)
Operations Report
Andrew Sarosi
Finance and Technical Director
Kashitu Zinc Prospect (“Kashitu”)
● Kabwe Residual Rights, which includes the Kashitu
Prospect, acquired unconditionally from BMR(5)
Glenover Phosphate Project
● On 5 October 2018, the DMR requested a Record of
Decision (“ROD”) from the Department of Water and
Sanitation (“DWS”) with regard to the MRA related
Waste Management Licence Application. The ROD is
pending final discussions by Glenover Consultants with
DWS in this regard(6)
●
South African major fertilizer producer (“MFP”) completed
the first phase of a 2-phase pilot plant flotation study to
produce a bulk phosphate flotation concentrate for testing
in MFP’s fertilizer processing plant(7)
Notes
(1) CGTs in this report are not reported in compliance with any AIM
Standard,
including JORC (Joint Ore Reserves Committee)
2012/CIM NI (Canadian Institute of Mining, Metallurgy &
Petroleum National Instrument) 43-101 or similar CRIRSCO. A
formal Mineral Resource Estimate has not been prepared at this
time and there is no Standard being reported to in this regard in
this Review. The potential quantity and grade expressed in is
conceptual
in nature and, at this stage, there is insufficient
exploration data to estimate a Mineral Resource Estimate in
accordance with any Standard and it is uncertain whether further
exploration will result in the estimation of Mineral Resources.
(2) Galileo holds 100% interest in Enviro Zambia Ltd (“EZL”), which in
turn holds 95% of its Zambian subsidiary Enviro Processing Zambia
Limited (“EPZL”). Completion of the proposed transfer of Star Zinc’s
large-scale exploration licence 19653-HQ-LEL to EPZL, held by
BMR’s wholly owned subsidiary Enviro Processing Limited is
outstanding and remains subject to Zambian regulatory approval.
(3) Pursuant to a Binding Term Sheet – AIM RNS announcement
31 August 2017. Kabwe Residual Rights forms part of BMR’s
large scale Kabwe Mining Licence (6990-HQ-LML), but excludes
within it, BMR’s small-scale mining licence 7081-HQ-SML, held by
BMR’s JV with Jubilee Metals Group plc (“JMG”) on JV’s Kabwe
Tailings Project.
(4) JMG’s acquisition of Glencore’s Sable zinc refinery for its Kabwe
in Zambia facilitated commencement of
Tailings project
negotiations- AIM RNS 21 March 2019.
(5) Galileo unconditionally acquired – AIM RNS – the Kabwe Residual
Rights, which includes the Kashitu prospect, and the Sale Shares;
being the 15% of the shares in Galileo’s subsidiary Enviro Zambia
Limited that it previously did not own, by way of issue of 24 615
385 Galileo ordinary shares of par 0.1p (“Ordinary Share”). The
Sale Shares increases the Company’s beneficial interest in the Star
Zinc project to 95% (from previous 80.75%) with the Zambian
government holding 5%.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
5
Operations Report
(6) The ROD remains the outstanding issue for the DMR’s decision to
grant Glenover a mining right.
(7) Pursuant to the terms of a Heads of Agreement, Glenover to
formalize a Definitive Supply Agreement (offtake agreement) AIM
– RNS 5 February 2019.
Operations
ZAMBIA
Star Zinc Project (“Star Zinc”)
The Star Zinc deposit is located approximately 20km NNW
of the Zambian capital Lusaka. The project is accessible via
the tarred Great North road with a journey time of
approximately 30 minutes.
The project was discovered and explored historically in the
1960s by Chartered Exploration Ltd. Fifty-nine diamond drill
holes totaling 2 578.5m were drilled. Historic small-scale
mining was reported, from a small apparent open pit
working present on site. The Company believes this open pit
may be a collapsed dome.
To date the Company’s exploration on the deposit comprises
a two phase 56-hole diamond core drilling programme (total
2 220 metres) to depths of 60m. The Company has executed
two independent conceptual tonnage grade (“CGT”) models
of the drilling results and completed an independent initial
inferred resource estimate (“IRE”). The IRE is 500 000
tonnes gross, grading 16% Zn at 2% Zn cut-off and hosting
77 000 t Zn. The IRE at similar grade and cut-off, attributable
to Galileo is 475 000 t and 73 150 t Zn.
The local geology of Star Zinc is complex and forms a varied
stratigraphic sequence of argillite,
limestone, massive
willemite (zinc silicate mineral) zinc ore, massive limestone
and dolomites (Cheta and Lusaka Formations). A broad
west-east trending mineralised dome is the main structural
feature of Star Zinc.
Period under review
●
The Company commissioned an independent conceptual
tonnage grade (“CGT”) model of the Phase 1 drilling
results – for Star Zinc, which demonstrated at nominal
3% Zn cut-off a potential deposit target of 485 000
tonnes grading 15.4% Zn grade 1
●
This CGT model represents an 80% increase in deposit
tonnage with a 14% decrease in grade when compared
to previous CGT modelling (“conservative case”) in 2015
based on historical exploration data 2
● Based on positive recommendations, the Company
undertook and completed a Phase 2 drilling programme,
comprising 26 diamond drill holes that targeted open-
ended areas east-, north-east and southeast of the
known mineralised zone 3
Figure 1: Simple Collar Plan of Star Zinc Depicting entire Phase I (Red Circles) and Phase II (Blue Circles)
with Conceptual Grade Tonnage wireframes after completion of Phase I drilling
6
GALILEO RESOURCES PLC
Operations Report
AMS completed modeling the second CGT (block model)
estimate; AMS’s in-house CGT at various cut-off grades are
presented in Table 1. This CGT (block model) is not
reported in compliance with JORC2012/CIM NI 43-101
or similar CRIRSCO aligned reporting code. AMS issued
its CGT estimate on 8 November 2018, details of which and
recommendations made therein, can be found in the
Company’s RNS announcement of 14 November 2018.
●
●
The highlights of this second CGT included:
Exploration Target at above 3% Zn cut off is estimated
as being between 600 000 and 900 000 t with an
estimated average grade of 10% to 12% Zn,
containing an estimated 90 000 to 110 000 t Zn
metal
The new Model applied bulk density measurements to
specific Zn grade and not to a global value as previous
CGT modeling had done, which has resulted in a more
realistic grade-tonnage relationship
●
Phase 2 drilling increased significantly Star Zinc’s non-
JORC CGT estimate over that published on 4 June 2018.
the
Wireframe models of
mineralisation remains potentially open ended to
east/south east
the deposit
suggest
● Additional specific domains created by the Model
identified areas for potential to mine selectively high
grade Willemite
● A second independent CGT block model estimate using
the chemical analyses from Phase 1 and pXRF (portable
X-ray Fluorescence) spectrometry data from Phase 2
drilling
Table 1 Summary of ASM In-House Grade Tonnage Estimate*
Cutoff Grade (COG)
Zn%
30
20
15
12
10
5
3
2
1
0
* Volume, tonnes and metal are rounded to 2 significant figures. Density in t/m3.
Volume
4 000
25 000
45 000
65 000
85 000
210 000
270 000
300 000
320 000
320 000
Tonnes
13 000
90 000
160 000
220 000
290 000
670 000
840 000
930 000
980 000
1 000 000
Density
3.63
3.63
3.25
3.25
3.25
3.15
2.83
2.83
2.81
2.81
Grade
Zn%
33
26
23
20
18
12
10
9
9
9
Table 2 Phase 1 drill programme results (mineralised holes)
Hole_ID
SZDD001
SZDD002
SZDD003
SZDD004
Dip
-90
-90
-90
-90
From
(m)
0
0
20
38.7
0
32
37
0
8
9
Approx.
True
Width
(m)
1
46
18
2.3
4
1
1
2
12.5
6
Width
(m)
1
46
16
2.3
4
1
2
2
12.5
6
To
(m)
1
46
36
41
4
33
39
2
20.5
15
Zn%
(wtd.
ave.)
0.8
15.8
38.86
23.37
0.61
0.72
0.59
2.69
11.03
21.28
Ge
ppm
(wtd.
Ave.)
2
16.65
38.13
30.35
0.9
0.5
0.5
4.5
11.72
21.5
Zn Metal
(tonnes)
4 000
24 000
35 000
44 000
51 000
78 000
85 000
88 000
88 000
88 000
Ag
ppm
(wtd.
ave.)
2
10.69
13.1
31.65
4
10
1
4.25
8.63
12.92
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
7
Operations Report
Hole_ID
SZDD005
SZDD006
SZDD007
SZDD008
SZDD009
SZDD010
SZDD012
SZDD013
SZDD014
SZDD015
SZDD016
SZDD017
SZDD019
SZDD020
Dip
-90
-90
-90
-90
-90
-90
-55
-55
-55
-55
-55
-50
-55
-55
From
(m)
0
0
5
12
14
26
30
0
11
4
47
49
9
0
11
23
27
0
41
0
29
31
0
25
26
29
0
22
22
0
5
29
7
9
35
41
0
44
0
31
32
Approx.
True
Width
(m)
19
1
1
9
6
24
1
20
1
7
7
3
8
4.8
2.9
21.1
15.4
7.7
6.7
6.7
24.0
20.2
2.9
6.7
1.0
2.9
17.3
14.4
10.6
2.6
8.7
23.6
0.9
1.7
1.7
7.9
8.6
14.4
3.8
23.0
7.7
Width
(m)
19
1
1
9
6
24
1
20
1
7
7
3
8
5
3
22
16
8
7
7
25
21
3
7
1
3
18
15
11
3
10
27
1
2
2
9
9
15
4
24
8
To
(m)
19
1
6
21
20
50
31
20
12
11
54
52
17
5
14
45
43
8
48
7
54
52
3
32
27
32
18
37
33
3
15
56
8
11
37
50
9
59
4
55
40
Zn%
(wtd.
ave.)
3.22
21.69
10.85
14.6
20.82
2.54
18.7
1.62
16.77
0.53
6.4
11.96
3.25
0.59
2.74
23.54
30.85
0.57
1.08
0.6
21.73
25.1
0.75
10.65
11.38
20.28
2.23
19.82
23.95
0.41
4.36
9.94
12.94
12.31
28.76
20
0.59
2.03
0.51
6.21
14.3
Ge
ppm
(wtd.
Ave.)
5.42
24
11
8.66
12.33
3.29
2.2
1
14
1.86
8.86
17.33
2.5
2
4.33
22.27
29
2.25
0.57
1.57
18.96
21.67
1.16
11.57
14
20.6
3.39
26.13
29.64
1.16
7.35
11.8
23
22
51
21.7
1.55
1.67
2.5
9.29
18.9
Ag
ppm
(wtd.
ave.)
***173***
6
4
23.9
24.5
9.38
7
22.35
11
5.86
21.86
41.67
19
2.6
9.33
20.41
26
3.5
5.14
3.86
16.48
17.76
2.33
29.28
29
48.7
5.86
37.8
35.36
2.66
29.6
17.8
28
96.5
30.5
36.7
4.89
2.33
6.25
13.4
20.66
8
GALILEO RESOURCES PLC
Dip
-55
-55
-60
-60
-60
-60
From
(m)
1
28
48
61
0
13
3
13
17
0
14
0
12
18
Approx.
True
Width
(m)
6.7
4.8
1.0
1.9
22.5
7.8
18.2
0.9
2.6
25.1
11.3
3.5
13.0
1.7
Width
(m)
7
5
1
2
26
9
21
1
3
29
13
4
15
2
To
(m)
8
33
49
63
26
22
24
14
20
29
27
4
27
20
Zn%
(wtd.
ave.)
0.56
2.63
0.74
3.6
4.86
10.69
5.02
11.24
10.8
8.29
15.4
1.78
4.72
10.45
Operations Report
Ge
ppm
(wtd.
Ave.)
2
6
0.5
1.25
1.75
2.7
2.19
2
3.33
5.53
8.85
3.75
1
2
Ag
ppm
(wtd.
ave.)
4
23
3
47
5.34
8.6
8.04
7
11.3
11.69
18.69
4
10.4
6.5
Hole_ID
SZDD021
SZDD022
SZDD023
SZDD024
SZDD025
SZDD026
Analysis by Accredited Intertek Genalysis Laboratory Services: Zn and Ge by Peroxide fusion finish with ICP-OES/MS; Ag by 4-Acid digestion with
MS. Analyses subject QA/QC quality assurance/checks
Table 3 Phase 2 drill programme results (mineralised holes)
Hole_ID
SZDD029
SZDD029
SZDD029
SZDD030
SZDD030
SZDD030
SZDD031
SZDD031
SZDD031
SZDD032
SZDD032
SZDD032
SZDD033
SZDD034
SZDD034
SZDD035
SZDD036
SZDD036
SZDD036
SZDD036
SZDD038
SZDD038
Dip
80
55
60
60
50
60
60
60
55
From
(m)
3
7
12
0
14
21
0
5
18
0
10
12
0
11.5
13
16
0
7.4
13
18
35
35.7
Approx.
true
width
(m)
1.0
1.0
1.0
8.2
18.8
9.8
1.7
21.7
0.9
4.3
10.4
6.1
9.2
4.9
1.7
4.3
0.9
1.1
11.4
2.6
16.4
8.7
Width
(m)
1
1
1
10
23
12
2
25
1
5
12
7
12
5.5
2
5
1
1.25
13
3
17
9
To
(m)
4
8
13
10
37
33
2
30
19
5
22
19
12
17
15
21
1
8.65
26
21
52
44.7
Zn_% Ge_ppm Ag_ppm
11
13
6
6.8
4.39
5.25
4.5
8.96
33
3.8
16.66
22.14
6.08
8.18
7.5
2.75
3
12
18.69
12.66
9.28
13.81
0.51
0.43
0.41
4.27
15.47
26.21
0.45
2.98
10.78
0.46
14.32
22.69
1.4
9.38
23.1
2.4
1.45
0.97
6.7
23.59
11.93
21.12
0.5
2
1
6.45
14.39
23.16
2
1.92
8
2.8
14.96
24.28
2.625
9.55
23
0.5
3
2
11.05
45.4
10.82
18.78
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
9
Operations Report
Hole_ID
SZDD039
SZDD039
SZDD039
SZDD040
SZDD040
SZDD040
SZDD040
SZDD041
SZDD041
SZDD041
SZDD042
SZDD042
SZDD042
SZDD043
SZDD043
SZDD043
SZDD044
SZDD044
SZDD044
SZDD045
SZDD045
SZDD045
SZDD046
SZDD046
SZDD047
SZDD047
SZDD047
SZDD047
SZDD047
SZDD048
SZDD048
SZDD048
SZDD049
SZDD049
SZDD050
SZDD050
SZDD051
SZDD052
SZDD052
SZDD052
SZDD052
10
Dip
55
55
55
65
55
55
55
80
60
55
55
60
60
60
From
(m)
0
35
44
0
14
23
25
13
34
36
0
23
23.93
0
15
17.33
0
30.45
31
0
16
17
0
0
0
0
3.25
3.25
11
0
27
32
0
24
0
10
0
0
3
11.8
21
Approx.
true
width
(m)
4.4
15.5
5.7
5.7
16.7
10.9
7.4
12.3
9.8
6.3
8.2
6.4
3.3
15.6
5.5
2.9
1.3
0.9
5.2
10.6
2.5
3.2
1.0
1.7
0.9
6.7
6.7
0.9
3.4
17.2
12.3
5.4
7.4
21.7
11.3
18.2
2.6
7.6
13.2
0.9
Width
(m)
5.4
17
6.25
7
3
20
13
9
15
12
7
9
7.07
4
19
6.67
3.6
1.62
1.07
6.3
13
3
3.22
1
2
1
7.75
7.75
1
4.2
21
15
6.6
9
25
13
21
3
8.8
15.2
1
To
(m)
5.4
52
50.25
7
17
43
38
22
49
48
7
32
31
4
34
24
3.6
32.07
32.07
6.3
29
20
3.22
1
2
1
11
11
12
4.2
48
47
6.6
33
25
23
21
3
11.8
27
22
Zn_% Ge_ppm Ag_ppm
1.41
3.88
12.62
13.42
21.33
31.58
3.49
2.75
2
1.33
11.05
15.2
14.92
21.92
6.37
13.8
21.84
22.84
23.36
27.58
5.28
3.29
105.41
17.65
89.09
22.12
2.75
3.75
14.96
12.06
16.23
28.45
4.44
4.22
5.62
26.46
8
38
5.48
3.16
7.92
9.92
17.67
26
3.93
10.76
7
27
5.5
15.5
25
5
14.23
40.16
14.23
40.16
2
5
2.76
4.52
20.81
20.57
25.87
27.8
4.15
3.03
0.56
1.44
1.846
12.12
1.31
18.38
1.91
1.32
4.27
5.93
5.19
8.25
6.57
5.87
4
11
0.6
14.28
33.85
1.87
0.97
20.11
29.02
4.45
17.94
21.82
1.56
12.04
14.74
0.78
11.48
29.9
1.65
18.09
26.06
0.711
5.13
18.05
3.96
11.21
7.23
13.59
27.49
27.49
3.88
0.69
21.7
29.73
1.05
0.67
12.41
21.84
1.048
2.06
3.17
5.66
10.32
GALILEO RESOURCES PLC
Operations Report
Diamond core drilling
Very coarse grained massive/semi-massive willemite
with hematite (specularite) and calcite
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
11
Operations Report
A portion of the western face of the open pit
The Company commissioned an independent consultant
(“Consultant”) to develop a conceptual tonnage grade
(“CGT”) model based on the Company’s drilling results. The
CGT model demonstrated a potential deposit target of 485
000 tonnes grading 15.4% Zn grade and at a nominal 3%
Zn cut-off – (see table 4 and Consultant cautionary note
below)
The CGT model represents an 80% increase in deposit
mass with a 14% decrease in grade when compared to
previous CGT modelling (“conservative case”) in 2015 based
on historical exploration data (see table 5).
Statistical analysis of the drill data and field reports
indicated a mixed mineralised population: a population of
medium grade (“MG”) material 3% to 20% Zn and a
population of high grade (“HG”) >20% Zn material. The HG
material was dominated by massive willemite material
logged in drill holes.
The HG domain (see Figure 2) forms a core of high-grade
material in both the east and west limb of the deposit. Five
MG and two HG domains were modeled; MG1-5 and HG1-
2 respectively.
12
GALILEO RESOURCES PLC
Operations Report
Figure 2: Domain wireframes in 3D, viewed obliquely towards the northwest.
HG domains in purple, MG domains in red
Table 4: Conceptual grade tonnage model
Domain
MG5
MG4
MG3
MG2
MG1
HG2
HG1
TOTAL
Tonnes
t
9 000
9 000
188 000
83 000
30 000
104 000
61 000
485 000
Grade
Zn %
5.1
8.3
8.4
7.4
13.2
31.2
24.8
15.4
Volume and tonnes are rounded to 3 significant figures; metal is rounded to 2 significant figures. Note: the above CGT calculation has not been
prepared in accordance with any Reporting Standard and therefore should be treated with caution at this stage and should not be relied upon.
Table 5: Comparison between 2015 and 2018 conceptual model results
(at a nominal 3% Zn cut-off)
2015 Conservative Casea
2015 Pragmatic Casea
2018 CGT
% difference from Conservative case 2015
% difference from Pragmatic case 2015
Tonnes
t
269 081
386 278
485 000
80%
26%
Grade
% Zn
18.0
17.6
15.4
-14%
-13%
Note a: The conceptual Grade tonnage work completed in 2015 produced two models, representing “conservative” and “pragmatic” cases.
Consultant Cautionary note: A formal Mineral Resource Estimate has not been prepared at this time and in this regard, there is no Standard
being reported in this Review. The potential quantity and grade expressed in this review is conceptual in nature and, at this stage, there is
insufficient exploration data to estimate a Mineral Resource Estimate in accordance with any Standard and it is uncertain whether further
exploration will result in the estimation of Mineral Resources.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
13
Operations Report
The
Company
commissioned
Namibian-based
independent Earthmaps Consulting cc (“Earthmaps”) to
review Star Zinc’s historical geophysics gravity data
(“Review”) over selected profiles across the Star Zinc
deposit with the following aims:
i.
ii.
to test whether
the willemite-franklinite zinc
mineralisation recently intersected in the drilling
programme has a response in the gravity data; and
to identify any additional zinc exploration targets either
beneath the mineralisation already known to date or in
the immediate vicinity of the Star Zinc deposit.
The Review highlighted new drillhole positions to test
gravity highs to the west, northeast and southeast of the
Star Zinc mineralised domain for zinc mineralisation.
Post Period Under Review
In May 2019, the Company and independent consulting
group Addison Mining Services Ltd (“AMS”) completed an
initial inferred resource estimate(a) on Star Zinc. The Inferred
estimate utilized data for all drill holes completed by
Galileo with the final drillhole being completed on the 9th
of December 2018. The final drillhole database used for
estimation included 52 drill holes for 2 220m of drilling of
which 1 412m were assayed over 1 433 samples. All drill
core was logged for geology, core recovery and rock quality
designation.
The estimated grade tonnage curves and tabulations for
the in-pit material are shown in Figure 3, Table 6 and Table
7. Material below a 2% Zn cut off grade is not considered
to have a reasonable prospect of economic extraction and
is not considered part of the Resource.
The Inferred Resource block model ranges from surface to
approximately 40m below surface over a length of
approximately 300m from east to west and 20m to 100m
from north to south. Thickness is typically between 5m and
25m. Figure 4 to Figure 5, show the Inferred Resource
blocks, in cross section and in plain view.
Table 6: Summary of Resources by Status
Category
Gross
Net Attributable
Operator
Tonnes
(millions)
Grade
(g/t)
Contained
Metal
Tonnes
(millions)
Grade
(g/t)
Contained
Metal
Mineral
resources
per asset
Measured
Indicated
Inferred
Sub-total
Total
500 000
500 000
16
16
77 000
475 000
77 000
475 000
16
16
73 150
Galileo
73 150
1. Mineral resources are reported using a 2% Zn cut-off. Figures may not sum due to rounding. The contained metal is determined by the
estimated tonnage and grade.
2.
Source: Mr J.N. Hogg, MSc. MAIG Principal Geologist for AMS, an independent Competent Person within the meaning of the JORC (2012)
code and qualified person under the AIM guidance note for mining and oil & gas companies.
14
GALILEO RESOURCES PLC
Star Zinc – Grade Tonnage Curves
Operations Report
Figure 3: Star Zinc, estimated grade tonnage curves for material inside conceptual pit shell.
Table 7: Gross grade tonnage tables for material inside conceptual pit shell. Material below a
Cut-off grade of 2% Zn is not considered to have a reasonable prospect of economic
extraction and is not considered part of the Resource. See notes below for further
explanation.
Star Zinc Gross Inferred Resource Grade Tonnage Table
Cut-off grade
15
12
10
8
7
6
5
4
3
2
1
0
Volume
73 000
91 000
98 000
99 000
100 000
100 000
100 000
110 000
120 000
160 000
170 000
170 000
Tonnes
250 000
310 000
330 000
340 000
340 000
340 000
340 000
370 000
400 000
500 000
540 000
550 000
Density
3.5
3.4
3.4
3.4
3.4
3.4
3.4
3.3
3.3
3.2
3.1
3.1
Av Zn
Grade %
24
22
22
21
21
21
21
20
19
16
14
14
Contained
Zn Metal
61 000
69 000
72 000
72 000
72 000
72 000
72 000
73 000
75 000
77 000
78 000
78 000
1. All material is classified as Inferred Category. Numbers are rounded to reflect that fact that an estimate has been made, and as such totals
may vary.
2.
Zn grades are in situ grades, no estimation of reserves have been made, resources which are not reserves do not have demonstrated
economic viability.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
15
Operations Report
Figure 4: Inferred Resource blocks, cross section looking north.
Figure 5: Inferred Resource blocks, plan view.
16
GALILEO RESOURCES PLC
The estimate, using a preliminary open-pit optimisation
method, highlighted a high grade hypogene Inferred Zn
resource with reasonable prospects of economic extraction
of approximately 500 000 tonnes at 16% zinc for 77 000
tonnes of contained metal above a cutoff grade of 2%
Zinc. This included approximately 340 000 tonnes at
21% zinc for 72 000 tonnes of metal above a cutoff
grade of 8%.
The Company believes the resource of 500 000 tonnes
at 16% zinc, is potentially suitable for direct shipping
material as Run Of Mine ore to the zinc process/refinery
facility at Kabwe, located approximately 120km north of the
Project.
The resource model defined a clear boundary between a
high-grade (>8% Zn) domain (see Figure 6) and a low-
grade (<8% Zn) zone. All the +8% Zn high grade resource
blocks, fell within the preliminary pit shell generated for the
purpose of outlining resources with reasonable prospects of
economic extraction.
This clear division of high-grade and low-grade domains
confirmed the previously announced (14 November 2018)
indications of the occurrence of a distinct core of high grade
massive willemite (zinc silicate) mineralisation in both the
eastern and western limbs of the deposit.
Operations Report
Mineralised hypogene material outside of the preliminary
pit shell remains an Exploration Target(b) estimated as being
between approximately 85 000 and 180 000 tonnes
with an estimated average grade of 3% to 5% Zn.
Similarly, a portion of the mineralised near surface
secondary supergene material remains an Exploration Target
estimated as being between approximately 13 000 and
77 000 tonnes with an estimated average grade of 3%
to 5% Zn.
The Company is encouraged to fast track the Project
development and intends to apply in due course for a
mining permit to include among other things, undertaking
requisite economic and engineering studies for a shallow
open-pit mining operation and finalising an off-take
agreement for direct shipping ore.
(a) reported in accordance with JORC 2012.
(b) Potential grade of the Exploration Target is conceptual in nature:
there is insufficient processing and ore sorting data to report as a
Mineral Resource at this time. It is uncertain if further technical
studies and exploration will result in the estimation of a Mineral
Resource.
Figure 6: Inferred Resource blocks >8%, plan view.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
17
Operations Report
Kashitu Prospect (“Kashitu”)
Kashitu is located in the SE corner of BMR’s 100% owned
Kabwe ML site in Zambia. The area is considered
prospective, due to elevated zinc-in-soil values, which could
be amenable to zinc extraction via leaching technologies,
similar to that proposed for Kabwe Tailings Recovery Project.
Historical soil sampling by Billiton (now BHP) has recorded
zinc values greater than 15 000 ppm Zn (1.5% Zn) over a
1.2km by 0.3km NW verging area, which is in close
proximity to the historical workings. Reportedly high-grade
surficial willemite was extracted from the historical
workings and fed in to the main historical Kabwe Mine
plant, during its operation.
An interpretation of existing RAB (Rotary Air Blasting), RC
(Reverse Circulation) and diamond drilling has refined the
area of potential interest and is likely associated with an
ENE-trending structure containing steeply dipping, high-
grade willemite veins.
Operations
Period Under Review
The Company executed a binding and exclusive Heads of
Terms (“Kashitu Agreement”)a, to acquire, conditionally,
from BMR Group plc (“BMR”), 1) the Kabwe Residual
Rights, which includes Kabwe Mining Licence (6990-HQ-
LML) (“Kabwe ML”) but excludes BMR’s small-scale licence
7081-HQ-SML (“Kabwe Tailings Recovery Project”) situated
within Kabwe ML, and 2) the remaining 15% of the shares,
that Galileo currently did not hold in BMR’s subsidiary Enviro
Zambia Ltd (“EZL”). EZL owns 95% of Enviro Processing
Zambia Ltd, the entity to which the Star Zinc project licence
is still to be transferred from the holder, BMR’s subsidiary
Enviro Processing Limited (the “Acquisition”).
The Kabwe Residual Rights include the Kashitu Zinc
willemite exploration prospect (“Kashitu”).
a
Shareholders are referred to the Company’s RNS of 13 September
2018 for details of the Kashitu Agreement.
Post Period Under Review
Pursuant to the Kashitu Agreement, the Company, on
24 June 2019, served a Notice of Completion of the
to Complete the Acquisition
Conditions Precedent
(“Completion”) and issued 9 615 385 Galileo ordinary
shares at 0.52p in lieu of the cash consideration of £50 000
payable on Completion.
South Africa
Glenover Project (or “Project”)
The Glenover Project is situated in the Limpopo Province
of the Republic of South Africa.
The Project deposit is a complex circular carbonatite/
pyroxenite plug intruded into sedimentary shale and arenite
rocks of the Waterberg Group and is prominently visible as
a major circular feature on satellite images of the area. The
majority of the mineral assets are located on the farm
Glenover 371 LQ. This includes a large open pit mine and
stockpiles of high, medium and low-grade
various
phosphate-bearing material. Historical exploitation of the
phosphate content in the Glenover deposit resulted in the
formation of a series of stockpiles, which contain high levels
of phosphate and varying amounts of rare earth elements
(“REEs”).
Period Under Review
Glenover completed and submitted the EIA/EMP, which
the DMR accepted on 31 May 2018 and has up to 107 days
from date of acceptance in which to evaluate the
submission.
Glenover executed a Heads of Agreement (“Heads”) with
a major fertiliser producer (“MFP”) for the supply of
phosphate rock (“Phosphate Rock”) for testing in MFP’s
phosphate production facility (“Testing”). The terms of the
Heads include among other
things, MFP agreeing to
undertake a 2-phase pilot plant phosphate flotation study
(“Study”) on Glenover ore in order ultimately produce a bulk
phosphate flotation concentrate (“Phosphate Rock”) for
testing.
This Study is pursuant to the terms of the Heads of
Agreement with a major fertilizer producer agreeing to
undertake the Study in order to ultimately produce a bulk
phosphate flotation concentrate for testing in its fertilizer
processing plant.
The first phase of the Study (in two parts) comprising ore
variability flotation and flotation water
tests, were
completed during the period under review with satisfactory
results.
On the basis of the results, the MFP provisionally offered
and Glenover accepted an offtake agreement (“Provisional
Offtake Agreement”) for future Glenover Phosphate Rock. A
definitive offtake agreement is still subject to satisfactory
outcome of second phase of the Study.
In the meantime, the MFP continued to review the results
in relation to the logistics and options for transport of the
phosphate rock to their processing facility, before
committing to second phase of the Study.
On 5 October 2018, the DMR requested, in respect of
Glenover’s MRA, a Record of Decision (“ROD”) from the
Department of Water and Sanitation (“DWS”) in terms of
Section 49 (2) of the National Environmental Management:
Waste Act, 2008 for waste related activities which overlaps
with some of Section 21(g) water uses for which a Water
Use Licence application was submitted in terms Section 40
of the National Water Act, 1998. This ROD remains the
outstanding issue for the DMR’s adjudication on granting a
Mining Right for the Project.
18
GALILEO RESOURCES PLC
Operations Report
Concordia Copper Project (“Concordia” or
“Project”)
Period Under Review
application in heavy medium separation process, with the
potential for reducing the acid consuming dolomite in the
ore.
The Company retains a 15% holding in the Project. The
majority owner and operator of the Project namely SHIP
Copper Pty Ltd carried out no exploration on the Project.
Preliminary metallurgical testwork indicates that the ore
is amenable to acid leaching with more than 90% of the
zinc leached into solution.
USA Nevada
Ferber Property
The Ferber property is a historic producer of gold and
copper. It hosts widespread gold and copper mineralisation.
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 recognizing geochemical
zoning, delineating district-scale structure and understanding
the stratigraphy. Integrating these three components should
serve as a vector to quality exploration targets.
Period under Review
The Company carried out no exploration on the property
and continued to seek JV/farm-out partners for the project.
Project Descriptions
Star Zinc
The Star Zinc project is a historical, high-grade zinc (“Zn”)
open pit mine that operated intermittently in the 1950s to
1990s. The Zn mineral is predominantly willemite (zinc
silicate) hosted in mainly limestone and dolostone
(dolomitic rock).
An independently verified non-JORC compliant hard rock
resource statement has estimated 275 166 tonnes @
20.2% Zn with a cut-off grade of 14% Zn (“pragmatic
case”) based on approximately 59 historical diamond drill
holes totalling 2 578m. At a cut-off grade of 12% Zn, the
non-JORC resource tonnage increases by 18% to 325 941
tonnes @19.1% Zn (11% increase in Zn metal).
In addition, karstic fill deposits and red soil are locally
heavily mineralised with detrital willemite and supergene
zinc minerals, which may provide further potential increase
to the known resource.
Mineralisation is interpreted to form two shallowly
dipping lenses east and west of the open pit, mineralisation
of which is around 40m deep, based on the independent
model used for the resource calculation.
A number of sub vertical structures recognised in pit
outcrop suggests possibility of both vertical and horizontal
control of Zn mineralisation. The Willemite at Star Zinc,
fluoresces a bright green in short wave UV light, a mineral
characteristic that may find an application in optical sorting.
Willemite is denser (3.9 g/cm3) than the dolomitic
(2.9 g/cm3) host rock, a characteristic that could have an
The Company has committed to undertake an 18-month
work programme (“Programme”) at a cost of US$250 000
using reasonable endeavours to complete a preliminary
economic assessment of Star Zinc (“PEA”). This expenditure
was exceeded during the period under
review and
consequently Galileo has earned in an 85% direct interest
in the Project.
Kashitu
The Kashitu prospecting area (“Kashitu” or “Area”) is
located in the SE corner of Zambia and within BMR Group
plc’s (BMR) larger prospecting licence 6990-HQ-LML, at its
100% owned Kabwe site in Zambia (Figure 7).
Kashitu is considered prospective, due to elevated zinc-in-
soil values, which could be amenable to zinc extraction via
beneficiation and innovative leaching technologies,
currently being deployed in a new re-processing plant
through a JV between Jubilee Metals Group plc and BMR at
the Kabwe mine for Kabwe mine tailings.
Historical soil sampling by BHP Billiton has recorded zinc
values greater than 15 000 ppm (1.5%) Zn, over a 1.2
kilometre (km) by 0.3km NW verging area and in close
proximity to historical workings (Figure 8).
It is understood that high grade surficial Willemite was
extracted from the historical workings and fed in to the
main Kabwe plant, during its operation.
An interpretation of existing RAB, RC and diamond drilling
has defined the area of potential
interest and is likely
associated with an ENE-trending structure containing steeply
dipping, high-grade willemite veins.
The Acquisition includes access to a very large exploration
data base,
including all historic exploration drilling on
KLM/Kashitu by Zamanglo, Billiton (now BHP) and Teal. This
historical exploration identified a central 300m x 400m
mineralised core in Kashitu with grades of up to 40% Zn
and 17g/t silver.
BMR (2016) auger sampling (183 holes) on Kashitu to
2m depths, delineated three open ended distinct surficial
(unconsolidated surface) mineralised zones to the S, E and
W of the mineralised core, with samples assaying up to
21% Zn in a 400m x 130m high-grade zone consistently
assaying >2.5% Zn in every sample.
Galileo intends to use this database and most recent
exploration to focus,
initially amongst other things, on
developing a geological and mineralisation model for
further exploration.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
19
Operations Report
Kashitu
Figure 7 Location Kashitu within 6990-HQ-LML
Figure 8. The above historical prospecting on Kashitu highlights: a) BHP RAB drilling – orange dots,
b) BHP RC drilling – green dots, c) historic diamond drilling – orange triangles, d) Zn-in-Soil anomalism –
red outline > 15 000 ppm Zn, and, old workings – black outline. Current objective includes defining an area
of near-surface anomalism within the target area highlighted by the soil-geochemistry
20
GALILEO RESOURCES PLC
Kashitu & Mining Potential
There are three targets at Kashitu, in possible order of
preference:
–
–
Lateritic enrichment at the soil-rock interface (which
may or may not come to surface)
Vein-style willemite with possible inclusions of zinc
sulphides, mainly sphalerite
– Massive pipe-like ore bodies, such as Kabwe
Lateritic enrichments have been exploited at the project
in the past, at the near-by Foundry/Airfield prospect,
historical open- cut mining with a pit measuring 235m long
x 30m wide x 3m deep exploited a 0.5-2m thick, near-
surface, supergene residual accumulation of Zinc oxides up
to 15-20% Zinc, mainly smithsonite and hemimorphite, at
the close of the Kabwe mine operation.
Glenover Phosphate
The Glenover Project is located approximately 88km
north of Thabazimbi in the Limpopo Province of South Africa.
The prospecting right covers a surface area of 15 802ha. The
majority of the mineral assets are located on the farm
Glenover 371 LQ. This includes a large open pit mine as well
as various stockpiles of high, medium and low-grade
phosphate bearing material. Historical exploitation of the
phosphate content in the Glenover deposit resulted in the
formation of a series of stockpiles, which contain high levels
of phosphate and contain varying amounts of rare earth
elements (“REEs”). The presence of these elements has
been confirmed by sampling programmes undertaken by
Gold Fields of South Africa Limited (“GFSA”) and by Fer-Min-
Ore (Pty) Ltd (“FMO”).
The Glenover
carbonatite is a complex circular
carbonatite/pyroxenite plug intruded into sedimentary
shale and arenite rocks of the Waterberg Group and is
prominently visible as a major circular feature on satellite
images of the area. Thickness estimates for the Waterberg
Group range from 2 700m to more than 7 000m. The
deposit comprises a central iron rich breccia surrounded by
a pyroxenite plug in to which carbonatite has intruded as a
series of dykes and cone sheets. The iron rich breccia has
been mined out.
Operations Report
Exploitation has historically focused on the phosphate
content of the deposit and the potential of the surrounding
deposits. The primary apatite is a solid solution of fluoro-
apatite and a form of iron known as martite, which is
hydrothermally modified magnetite. Martite is partially
magnetic and is less soluble in acid than magnetite. The
primary apatite varies in colour from light grey to dark grey
as the concentration of martite varies. The second volcanic
event fragmented the primary apatite core into small pieces
and injected secondary apatite into the fissures. The
secondary apatite is considered to be the pure form of
apatite and is light pink in colour. Other visible minerals
occurring in the ore body, including magnetite and silica,
are found in lower concentrations.
Ferber
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 6.1km east-west by 1.6km 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
gold
mineralisation occur 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. Reported historic drilling by
Royal Gold in the 1990s encountered the following
intercepts on lands at Ferber:
northeast
trending
Copper
faults.
and
●
●
●
●
●
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 0.72% Cu (oxide) in intrusive
26.2 m of 0.41% Cu (oxide) in contact zone
12.3 m of 0.83% Cu (oxide) in contact zone
Andrew Sarosi
Finance and Technical Director
23 August 2019
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
21
Directors’ Report
Directors’ Report
1. REVIEW OF ACTIVITIES
Commodity risk
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.
Principal activities
Galileo Resources Plc (AIM: GLR) is an opportunity driven
company whose model
is to acquire large data bases
generated by major companies and abundant for strategic,
corporate, technical and other reasons, which do not
necessarily reflect the potential value of the project. The
current main focus is on the Star Zinc project in Zambia close
to Lusaka. Significant zinc intersections have been made in
a recent drilling Programme and the fundamentals point
towards a developing zinc mine.
Business review
The function of the business review is to provide a
balanced and comprehensive review of
the Group’s
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 34 to 61.
A review of the Group’s operations during the year ended
31 March 2019 and future developments are contained in
the Strategic Report on pages 3 to 21.
Financial review
The Group reported a net loss of £416 784 (2018: loss of
taxation. Basic loss is
£1 026 891) before and after
0.14 pence (2018: loss of 0.45 pence) per share.
Risk review
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:
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 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, rare earth
elements (REEs) 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 and US Dollar 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
three 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.
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 offtake 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.
22
GALILEO RESOURCES PLC
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
explore. Mineral exploration and development of the
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,
Directors’ Report
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,
Zambia and 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,
labour
rates of exchange, environmental protection,
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’ report). The politics of 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.
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.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
23
Directors’ Report
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. Up to the date of this report the
Group raised £ 500,000 before expenses and the Company
has no external debt or overdrafts. The directors have further
reviewed the Group’s cash flow forecast, and in light of this
review and the financial position at the date of this report,
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 11 and 31 for details on
subsequent events.
4. DIRECTORS’ SHAREHOLDING ANALYSIS
Directors’ direct and indirect interests in the ordinary shares of the Company as at period end were as follows:
Beneficial owner
Colin Bird
Andrew Sarosi
John Richard Wollenberg
The Cardiff Property Plc*
At 31 March 2019
At 31 March 2018
Shares
% holding
Shares
% holding
49 435 000
16.23
49 435 000
10 000
5 221 341
900 000
0.00
1.71
0.30
10 000
5 221 341
900 000
19.42
0.00
2.05
0.35
*John Richard Wollenberg and his family are 45.22% shareholders in the Cardiff Property Plc
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*
Shares
% holding
55 435 000
10 000
5 821 341
900 000
12.81
0.00
1.35
0.21
24
GALILEO RESOURCES PLC
Directors’ Report
Colin Bird holds 55 435 000 ordinary shares of 1 pence each or 12.81% 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 year end and at the date of this report were as follows:
At 31 March 2019
At 31 March 2018
Beneficial owner
Colin Bird
Andrew Sarosi
John Richard Wollenberg
Chris Molefe
Options
5 000 000
3 000 000
750 000
250 000
Options
5 000 000
3 000 000
750 000
250 000
Refer to note 27 for directors’ emoluments.
5. CAPITAL STRUCTURE AND MAJOR SHAREHOLDERS
The Company did not issue any new ordinary shares during the period under review. Post the period under review the
Company issued new ordinary shares as follows:
Date
2 May 2019
27 June 2019
27 June 2019
27 June 2019
Number of
ordinary shares
100 000 000
15 000 000
9 615 385
3 600 000
Issue price
0.50p
1.15p
0.52p
0.50p
Purpose of issue
Placing for cash
Acquisition*
Acquisition*
Settlement of debt
*Acquisition of further interest in (EZL) subsidiary
Allotment of shares
Pre-emption rights
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 £100 517.
in
This authority may be renewed for five years but,
common with modern corporate governance practice, it is
your directors’ intention that the resolution be limited to
one year and that its renewal be proposed at each annual
general meeting.
Major shareholders
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 £304 597.
first
The Directors are aware of the following substantial shareholdings of 3% or more of the share capital of 304 596 562
ordinary shares at 31 March 2019:
Ordinary shares of 1p each
Colin Bird
Peel Hunt Holdings Limited
Jim Nominees Limited
Hargreaves Lansdown (Nominees) Ltd
Interactive Investor Services Nominees Ltd
Hargreaves Lansdown (Nominees) Ltd
Barclays Direct Investing Nominees Ltd
Wealth Nominees Ltd
HSDL Nominees Ltd
HSBC Global Custody Nominee (UK) Ltd
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
Number
49 435 000
45 901 653
29 623 092
17 881 993
14 838 821
11 492 772
11 285 858
10 173 138
9 686 877
9 348 667
%
16.23
15.07
9.73
5.87
4.87
3.77
3.71
3.34
3.18
3.07
25
Directors’ Report
6. DIVIDENDS
No dividends were declared or paid to shareholders
during the year under review.
7. DIRECTORS
There were no changes to the board during the period
under review or up to the date of this report. 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.
8. SECRETARY
The secretary of the Company is Link Company Matters
Limited, a division of Link Asset Services with address;
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 Corporate Governance
The QCA Code sets out 10 principles that should be
applied. These are listed below together with a short
explanation of how the Company applies each of the
principles:
Principle One
Business Model and Strategy
The Board has concluded that the highest medium and
long-term value can be delivered to its shareholders by the
adoption of a single strategy for the Company. The Company
is developing its portfolio of resource companies in South
Africa, Zambia and USA. The Company continues to hold
significant stakes in these projects and companies and
remains actively involved with their development. The
Company will continue to seek to grow the businesses
organically and will seek out
further complementary
acquisitions that create enhanced value.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is
committed to maintaining good
communication and having constructive dialogue with its
shareholders. The Company keeps its private shareholders
and institutional
investors informed with regular RNS
statements and its executive directors meet with
shareholders during the year with opportunities to discuss
issues and provide feedback. In addition, all shareholders
are encouraged to attend the Company’s Annual General
Meeting. Investors also have access to current information
on
website,
http://www.galileoresources.com/ and via Colin Bird,
Chairman/CEO who is available to answer investor relations
enquiries.
Company
through
the
its
Principle Three
Considering wider stakeholder and social responsibilities
The Board recognises that the long term success of the
Company is reliant upon the efforts of the employees of the
Company and its contractors, suppliers, regulators and other
stakeholders. The Board has put in place a range of
processes and systems to ensure that there is close
oversight and contact with its key resources and
relationships. There is an open and confidential dialogue
with each person in the Company.to help ensure successful
two-way communication with agreement on goals, targets
and aspirations of the employee and the Company. This
feedback process helps to ensure the Company can respond
to new issues and opportunities that arise to further the
success of employees and the Company. The Company has
its
on-going relationships with a broad range of
stakeholders and provides them with the opportunity to
raise issues and provide feedback to the Company.
Principle Four
Risk Management
In addition to its other roles and responsibilities, the Audit
and Compliance Committee is responsible to the Board for
ensuring that procedures are in place and are being
implemented effectively to identify, evaluate and manage
the significant
risks faced by the Company. The risk
assessment matrix below sets out those risks, and identifies
their ownership and the controls that are in place. This
matrix is updated as changes arise in the nature of risks or
the controls that are implemented to mitigate them. The
Audit and Compliance Committee reviews the risk matrix
and the effectiveness of scenario testing on a regular basis.
The following principal risks and controls to mitigate them,
have been identified:
26
GALILEO RESOURCES PLC
Directors’ Report
Activity
Risk
Impact
Control(s)
Management
Recruitment and retention
of key staff
Reduction in operating
capability
Regulatory
adherence
Breach of rules
Censure or withdrawal of
authorisation
Strategic
Damage to reputation
Inability to secure new
capital or clients
Inadequate disaster
recovery procedures
Loss of key operational
and financial data
Financial
Liquidity, market and credit risk
Exploration
Inappropriate controls and
accounting policies
Investing cash and resources
in projects which may not
provide a return
Inability to continue as
going concern
Reduction in asset values
Incorrect reporting of assets
Reduction in asset value.
The degree of risk reduces
substantially when a project
moves from the exploration
phase to the development
phase.
Stimulating and safe
working environment
Balancing salary with
longer term incentive plans
Strong compliance regime
instilled at all levels of the
Company
Effective communications
with shareholders and out
joint venture partners.
Robust compliance
Secure off-site storage
of data
Robust capital management
policies and procedures
Appropriate authority and
investment levels as set by
the Board and Investment
Policies
Audit and Compliance
Committee
Management addresses
this risk by using its
skills, experience and local
knowledge to select
with best endeavours
to explore the most
promising areas
have
established
procedures,
The Directors
as
represented by this statement, for the purpose of providing
a system of internal control. An internal audit function is
not considered necessary or practical due to the size of the
Company and the close day to day control exercised by the
executive directors. However, the Board will continue to
monitor the need for an internal audit function. The Board
works closely with and has regular ongoing dialogue with
the Company’s financial manager, Ms C de Beer and has
established appropriate reporting and control mechanisms
to ensure the effectiveness of its control systems.
Principle Five
A Well Functioning Board of Directors
As at the date hereof the Board comprises, the Chairman
and CEO Colin Bird, Technical and Finance Director, Andrew
Sarosi and two non-Executive Directors, Christopher Molefe
and Richard Wollenberg of whom the latter is independent.
The Company’s portfolio of natural resource projects is not
extensive. The present scale of corporate activity in this
regard would not justify the separation of the roles of
chairman and CEO and the Company considers its two non-
executive directors are sufficient for its current range of
activities. However, the Company reviews its governance
policy annually having due regard to the intent of Principle
5 and the Company’s development. Biographical details of
the current Directors are set out on within Principle Six
below. Executive and non-executive directors are subject to
re-election at intervals of no more than three years. The
letters of appointment of all Directors are available for
inspection at the Company’s registered office during normal
business hours. All
the Non-Executive Directors are
considered to be part time but are expected to provide as
much time to the Company as is required. The Board elects
a Chairman to chair every meeting: normally this would be
Colin Bird.
The Board endeavours to meet on a monthly basis. It has
established an Audit and Compliance Committee and a
Remuneration Committee, particulars of which appear
hereafter. The Board has agreed that appointments to the
Board are made by the Board as a whole and so has not
created a Nominations Committee. The non-executive
Directors are considered to be part time but are expected
to provide as much time to the Company as is required. The
Board considers that
this is appropriate given the
Company’s current stage of operations. It shall continue to
monitor the need to match resources to its operational
performance and costs and the matter will be kept under
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
27
Directors’ Report
review going forward. The Board notes that the QCA
recommends a balance between executive and non-
executive Directors and recommends that there should be
two independent non-executives. As noted above the
Board will review annually further appointments as the
Company’s scale and operational complexity grows.
Attendance at Board and Committee Meetings
The Company reports annually on the number of Board
and committee meetings held during the year and the
attendance record of individual Directors. To date in the
current financial year the Directors have a near 100% record
of attendance at such meetings. The Directors meet
formally and informally both in person and by telephone.
Principle Six
Appropriate Skills and Experience of the Directors
The Board currently consists of four directors. In addition,
the Company has employed the outsourced services of Link
Company Matters Limited to act as the Company Secretary.
The Company believes that the current balance of skills
in the Board as a whole reflects a very broad range of
commercial and professional skills across geographies and
industries and each director has experience in public
markets.
The Board recognises that it currently has a limited
diversity and this will form a part of any future recruitment
consideration, if the Board concludes that replacement or
additional directors are required.
The Board shall review annually the appropriateness and
opportunity for continuing professional development
whether formal or informal.
Colin Bird
Executive Chairman & Chief Executive Officer
Colin Bird has a Diploma in Mining Engineering, is a
Fellow of the Institute of Materials, Minerals and Mining
and is a certified mine manager both in the UK and in the
United States of America. The formative part of his career
was spent with the National Coal Board in the UK and
thereafter he moved to the Zambia Consolidated Copper
Mines and then to South Africa to work in a management
position with Anglo American Coal. On his return to the UK
he was Technical and Operations Director of Costain Mining
Limited, which involved responsibility for gold mining
operations in Argentina, Venezuela and Spain.
In addition to his coal mining activities he has been
involved in the management of mining nickel, copper, gold
and other diverse mineral operations. He has founded and
floated several public companies in the resource sector and
served on resource company boards in the UK, Canada and
South Africa. Notably he was on the board of Kiwara Plc
which was successfully sold to First Quantum Plc in February
2010. In addition, he currently serves as Chairman (non-
executive) of Jubilee Metals Group Plc, – an AIM listed
platinum exploration company with operations in South
Africa and Zambia – and of other several publicly quoted
resource companies.
Andrew Francis Sarosi
Executive Director – Finance & Corporate Development
Technical Director
B.Sc. Metallurgy, M.Sc.
Witwatersrand, MIMMM
(Eng.) University of
the
Andrew holds a B.Sc. Metallurgy and M.Sc. Engineering,
University of Witwatersrand and is a member of The
Institute of Materials, Minerals and Mining. He has more
than 10 years corporate and 30 years operational
experience.
Andrew is a mineral processing engineer and consultant
with 40 years experience in mineral processing research
and development, process and plant design, management
of pilot to full scale operations and troubleshooting in gold,
silver, tungsten, tin, copper, and zinc and diamond ore
processing in Saudi Arabia, Ethiopia, South Africa, Botswana
and the United Kingdom.
Between 1978 and 1985 Andrew was the senior
metallurgist for the Amax Hemerdon Tungsten-Tin project in
the UK (currently in production under Wolf Minerals plc). In
1986 and 1995 he was mill superintendent at Mahd Ad’
Dahab Gold Silver Copper Zinc Mine in Saudi Arabia
including research and process design of the zinc flotation
extension to the mine. From 1990 to 1992 he consulted for
Mackay and Schnellmann Limited as adviser
to the
Ethiopian Mineral Resources Development Corporation’s
Lega Dembi Mine Project. From 1996 he set up as an
independent consultant. Since 2002 he has served on
several resource company’s Boards in UK, South Africa,
Canada and Australia including Jubilee Metals Group plc
(formerly Jubilee Platinum plc) the latter to June 2018
J Richard Wollenberg
Non-Executive Director
Richard Wollenberg, was, between 1981 and 1996, an
investment consultant with Brown Shipley Stockbroking
Limited and has over the past 25 years, been actively
involved in a number of corporate acquisitions, mergers and
capital re-organisations of public and private companies.
Mr Wollenberg is currently Chairman and Chief Executive
Officer of The Cardiff Property Plc, a quoted property
investment and development company and is a non-
executive director of Aquila Services Group Plc.
He was also a non-executive director of Kiwara Plc
alongside Colin Bird.
Christopher (Chris) Molefe
Non-Executive Director
B.Com (Unin); Post graduate diploma (University of
Cape Town)
Mr. Molefe was formerly the Chief Executive of Royal
Bafokeng Resources (Pty) Limited and is presently the Non-
Executive Chairman of Merafe Resources Limited, a publicly
listed company on the JSE Securities Exchange, a non-
executive Director of Capital Oil (Pty) Ltd and Jubilee Metals
Group Plc.
28
GALILEO RESOURCES PLC
Directors’ Report
Mr. Molefe has held several positions in corporate
banking and industry for the previous 20 years.
Principle Nine
Maintenance of Governance Structures and Processes
He commenced his career as Group Human Resource
Manger at Union Carbide Africa Corporation. His subsequent
positions include being the Manager of Corporate Affairs at
Mobil Oil Southern Africa (Pty) Limited; an Executive
Director at Black Management Forum; a Financial Analyst at
Chase Manhattan Bank; the Marketing Manager at African
Bank Limited; an Executive Manager at Transnet (Propnet)
(Pty) Limited; and an Executive Director at Dipapatso Media
(Pty).
Ultimate authority for all aspects of the Company’s
activities rests with the Board and the respective
responsibilities of the chairman and chief executive officer
(currently a combined role) arising as a consequence of
delegation by the Board. The chairman is responsible for
the effectiveness of the Board, while the Board has
delegated management of the Company’s business and
primary contact with shareholders to the executive officers
of the Company.
Principle Seven
Evaluation of Board Performance
Internal evaluation of the Board, the Committee and
individual Directors is to be undertaken on an annual basis
in the form of peer appraisal and discussions to determine
the effectiveness and performance in various as well as the
Directors’ continued independence.
The results and recommendations resulting from the
appraisals for the directors shall identify the key corporate
and financial targets that are relevant to each Director and
their personal targets in terms of career development and
training. Progress against previous targets shall also be
assessed where relevant.
Principle Eight
Corporate Culture
impact
behave.
this will
corporate
The Board recognises that their decisions regarding
strategy and risk will impact the corporate culture of the
the
Company as a whole and that
performance of the Company. The Board is aware that the
tone and culture set by the Board will greatly impact all
aspects of the Company as a whole and the way that
employees
governance
The
arrangements that the Board has adopted are designed to
ensure that the Company delivers long-term value to its
shareholders and that shareholders have the opportunity
to express their views and expectations for the Company in
a manner that encourages open dialogue with the Board.
The Board is very aware that the tone and culture set by the
Board will greatly impact all aspects of the Company as a
whole and the way that employees behave. A large part of
the Company’s activities is centred upon what needs to be
an open and respectful dialogue with employees, clients
and other stakeholders. Therefore, the importance of sound
ethical values and behaviours is crucial to the ability of the
Company successfully to achieve its corporate objectives.
The Board places great import on this aspect of corporate
life and seeks to ensure that this flows through all that the
Company does. The directors consider that at present the
Company has an open culture facilitating comprehensive
dialogue and feedback and enabling positive and
constructive challenge. The Company has adopted, with
effect from the date on which its shares were admitted to
AIM, a code for Directors’ and employees’ dealings in
securities which is appropriate for a company whose
securities are traded on AIM and is in accordance with the
requirements of the Market Abuse Regulation which came
into effect in 2016.
Audit and Compliance Committee
This
the committee.
the financial performance of
The Audit and Compliance Committee is chaired by
Christopher Molefe with Richard Wollenberg as the other
member of
committee has
responsibility for monitoring the quality of internal controls
the
and ensuring that
Company is properly measured and reported. It receives
reports from the executive management relating to the
interim accounts and from the executive management and
auditors relating to the annual accounts and the accounting
the
and internal control systems in use throughout
Company. The Audit and Compliance Committee meets not
less than twice in each financial year and it has unrestricted
access to the Company’s auditors.
Remuneration Committee
The Remuneration Committee comprises Richard
Wollenberg as chairman and Christopher Molefe as the
other member of
the committee. The Remuneration
Committee reviews the performance of the executive
directors and employees and makes recommendations to
the Board on matters relating to their remuneration and
terms of employment. The Remuneration Committee also
considers and approves the granting of share options
pursuant to the share option plan and the award of shares
in lieu of bonuses pursuant to the Company’s Remuneration
Policy.
Nominations Committee
The Board has agreed that appointments to the Board
will be made by the Board as a whole and so has not
created a Nominations Committee.
Non-Executive Directors
The Board has adopted guidelines for the appointment of
non-Executive directors, which are in place and which are
being observed. These provide for the orderly rotation and
re-election of the directors in accordance with the articles
of association of the Company.
In accordance with the Companies Act 2006, the Board
complies with: a duty to act within their powers; a duty to
promote the success of the Company; a duty to exercise
independent judgement; a duty to exercise reasonable
care, skill and diligence; a duty to avoid conflicts of interest;
a duty not to accept benefits from third parties and a duty
to declare any interest in a proposed transaction or
arrangement.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
29
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
financial
statements. However, any system of internal financial
control can provide only reasonable, and not absolute,
assurance against material misstatement or loss.
the consolidated annual
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.
13. RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in note 25.
14. 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 28.
15. POLITICAL AND CHARITABLE CONTRIBUTIONS
The Group made no charitable donations (2018: £Nil)
and no political donations (2018: £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 31 to 33.
The Group and Company annual financial statements set
out on pages 34 to 61, which have been prepared on the
going-concern basis, were approved by the Board and
signed on its behalf by:
Colin Bird
Chairman
23 August 2019
Directors’ Report
Principle Ten
Shareholder Communication
is
committed
The Board
to maintaining
good
communication and having constructive dialogue with its
shareholders. The Company keeps its private shareholders and
institutional investors informed with regular RNS statements
and its executive directors meet with shareholders during the
year with opportunities to discuss issues and provide feedback.
In addition, all shareholders are encouraged to attend the
Company’s Annual General Meeting. Investors also have access
to current information on the Company through its website,
http://www.galileoresources.com/ and via Colin Bird,
Chairman/CEO who is available to answer investor relations
enquiries.
The Company, when relevant, shall include in its annual
report, any matters of note arsing from the audit or
remuneration committees.
financial
12. DIRECTORS’ RESPONSIBILITIES AND APPROVAL
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
annual
and related financial
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.
statements
a
strong
on maintaining
The consolidated annual
financial statements are
prepared in accordance with International Financial
Reporting Standards
(“IFRS”) and are based upon
appropriate accounting policies consistently applied and
supported by reasonable and prudent judgements and
they are
estimates. The directors acknowledge that
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 of risk management in the Group is on
identifying, assessing, managing and monitoring all known
forms of risk 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.
30
GALILEO RESOURCES PLC
Independent Auditors’ Report
Independent Auditors’ Report
TO THE MEMBERS OF GALILEO RESOURCES PLC
Opinion
We have audited the financial statements of Galileo Resources Plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 March 2019 which comprise the Group and Parent Company Statements of Financial
Position, Statements of Comprehensive Income , Statements of Changes in Equity, Statements of Cash Flows, and the
related notes 1 to 31, including the significant accounting policies in note 1.
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.
In our opinion:
●
●
●
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as
at 31 March 2019 and of the Group’s and the Parent Company’s loss for the year then ended;
the financial statements 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and the parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to
you where:
●
●
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Company’s ability to continue to adopt the going concern basis of accounting for a period
of at least twelve months from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial report
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have
determined the matters described below to be the key audit matters to be communicated in our report.
Impairment of Non-Current Assets
The Group’s various mineral resource projects are carried at cost less any impairment provision in the Statement of
Financial Position as Non-Current Assets either as Intangible assets , Investment in Joint Ventures and Associates ,related
loans and other financial assets .The Intangible assets comprise of Acquisition and Development Expenditure at the Ferber
project in Nevada , USA and the Star Zinc project in Zambia ; the Joint Venture and Associates Assets comprise the Glenover
Phosphate Rare-Earth project and the Concordia project in South Africa with other financial assets comprising a further
equity share of the Associate and its project portfolio. The combination of these assets represents significant value on the
Group statement of financial position as at 31 March 2019.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
31
Independent Auditors’ Report
Management and the Board are required to ensure that only costs which meet the IFRS criteria of an asset and accord
with the Group’s accounting policy are capitalised within Development Expenditure assets. Additionally in accordance with
the requirements of IFRS , Management and the Board are required to assess whether there is any indication of impairment
of these assets.
Given the significance of the non-current assets on the Group’s statement of financial position and the significant
management judgement involved in the determination and the assessment of the carrying values of these assets there
is an increased risk of material misstatement.
How the Matter was addressed in the Audit
The procedures included, but were not limited to, assessing and evaluating management’s assessment of whether any
impairment indicators have been identified within the Group’s non-current assets, the indicators being:
●
●
●
Expiring or imminently expiring concessions, licences or rights;
Projections of declining gold, copper, phosphates and rare earth minerals prices and/or declining demand;
Projections of increased future capital costs or operating costs.
In addition, we reviewed, considered and discussed the directors‘ impairment reviews and the assessment of any
impairment charge to be incurred in the accounting period to 31 March 2019.
We further reviewed the potential future plans for the projects in respect of funding, viability and development.
We also assessed the related disclosures included in the financial statements.
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of
materiality to both focus our testing and to evaluate the impact of any misstatements identified. Based on professional
judgement, we determined overall materiality for the group financial statements as a whole to be £88,500, this being
1.5% of Group Total Assets.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
●
●
32
the information given in the Directors‘ Report and Strategic Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the Directors ‘Report and Strategic Report have been prepared in accordance with applicable legal requirements.
GALILEO RESOURCES PLC
Independent Auditors’ Report
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit
we have not identified material misstatements in the Directors‘ Report and Strategic Report. We have nothing to report
in respect of the following matters in relation to which 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 require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement
whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
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 an auditor’s report 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.
Rowan J Palmer
(SeniorStatutoryAuditor)
For and on behalf of Chapman Davis LLP
Chartered Accountants and Statutory Auditors
London
United Kingdom
23August2019
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
33
Statements of Financial Position
as at 31 March 2019
FiguresinPoundSterling
Group
Company
Note(s)
31 March
2019
31 March
2018
31 March
2019
31 March
2018
2,855,856
–
2,156,507
444,004
402,751
1,380,085
–
3,268,236
284,396
458,131
–
3,630,567
–
5,388,512
–
–
2,357,599
797,338
5,192,154
–
5,859,118
5,390,848
9,019,079
8,347,091
42,920
1,075
43,995
41,218
539,301
580,519
10,624
2,804
13,428
10,624
425,089
435,713
5,903,113
5,971,367
9,032,507
8,782,804
25,440,319
461,554
(20,580,601)
24,945,319
729,772
(20,163,817)
25,440,319
1,197,614
(18,685,660)
24,945,319
1,197,614
(18,356,104)
5,321,272
5,511,274
7,952,273
7,786,829
Assets
Non-current assets
Intangible assets
Investment in subsidiaries
Investment in joint ventures
Loans to joint ventures, associates
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
3
4
5
6
7
9
10
11
14
–
3,846
3,846
–
3,579
3,579
856,081
–
856,081
838,857
–
838,857
157,118
995,975
Total liabilities
581,841
460,093
1,080,234
15
577,995
456,514
224,153
Total equity and liabilities
5,903,113
5,971,367
9,032,507
8,782,804
These financial statements were approved by the directors and authorised for issue on 23 August 2019 and are signed
on their behalf by:
Colin Bird
Company number: 05679987
Andrew Sarosi
34
GALILEO RESOURCES PLC
Statements of Comprehensive Income
for the year ended 31 March 2019
FiguresinPoundSterling
Note(s)
Revenue
Operating expenses
Operating loss
Investment revenue
Impairment losses recognised
(Loss)/profit from equity
accounted investments
Loss for the year
Other comprehensive income:
Exchange differences on translating
foreign operations
Total comprehensive loss for the year
Loss per share in pence (basic)
17
18
5
21
22
Group
Company
31 March
2019
–
(404,303)
31 March
2018
–
(624,631)
31 March
2019
–
(329,705)
31 March
2018
–
(725,951)
(404,303)
(624,631)
(329,705)
(725,951)
3,993
–
180
(525,870)
(16,474)
123,430
149
–
–
180
(138,316)
–
(416,784)
(1,026,891)
(329,556)
(725,771)
(268,218)
(160,288)
–
–
(685,002)
(1,187,179)
(329,556)
(725,771)
(0.14)
(0.45)
All operating expenses and operating losses relate to continuing activities.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
35
Statements of Changes in Equity
as at 31 March 2019
FiguresinPoundSterling
Group
Balance at 1 April 2017
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Issue of shares net of issue costs
Total contributions by and distributions to owners of
Company recognised directly in equity
Balance at 1 April 2018
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Share
capital
Share
premium
Total share
capital
5,806,508
18,076,986
23,883,494
–
–
–
–
–
–
–
–
–
58,723
1,003,102
1,061,825
58,723
1,003,102
1,061,825
5,865,231
19,080,088
24,945,319
–
–
–
–
–
–
–
–
–
Issue of shares net of issue costs
50,000
445,000
495,000
Total contributions by and distributions to owners of
Company recognised directly in equity
Balance at 31 March 2019
50,000
445,000
495,000
5,915,231
19,525,088
25,440,319
Company
Balance at 1 April 2017
Loss for the year
Total comprehensive loss for the year
Issue of shares net of issue costs
Total contributions by and distributions to owners of
Company recognised directly in equity
Balance at 1 April 2018
Loss for the year
Total comprehensive loss for the year
Issue of shares net of issue costs
Total contributions by and distributions to owners of
Company recognised directly in equity
Balance at 31 March 2019
Note(s)
Share
capital
Share
premium
Total share
capital
5,806,508
18,076,986
23,883,494
–
–
–
–
–
–
58,723
1,003,102
1,061,825
58,723
1,003,102
1,061,825
5,865,231
19,080,088
24,945,319
–
–
–
–
–
–
50,000
445,000
495,000
50,000
445,000
495,000
5,915,231
19,525,088
25,440,319
11
11
11
36
GALILEO RESOURCES PLC
(
(
(
(
–
–
–
–
–
–
–
–
–
–
–
–
(
-
–
–
–
–
-
(
–
–
–
–
(
(
(
(
O
Foreign
currency
transaction
reserve
(307,554)
–
(160,288)
(160,288)
–
–
(467,842)
–
(268,218)
(268,218)
–
–
Merger
reserve
1,047,821
–
–
–
–
–
Share based
payment
reserve
149,793
(1,026,891)
–
–
–
–
1,047,821
149,793
–
–
–
–
–
-
–
–
–
–
FiguresinPoundSterling
Total
reserves
Accumulated
loss
Total
equity
890,060
(19,136,926)
5,636,628
(1,026,891)
(160,288)
-
–
-
(160,288)
(160,288)
(1,026,891)
(1,187,179)
–
–
–
–
729,772
-
(268,218)
(268,218)
(20,163,817)
(416,784)
–
(416,784)
–
–
–
–
1,061,825
1,061,825
5,551,274
(416,794)
(268,218)
(685,002)
495,000
495,000
5,321,272
(736,060)
1,047,821
149,793
461,554
(20,580,601)
Foreign
currency
transaction
reserve
Merger
reserve
Share based
payment
reserve
Total
reserves
Accumulated
loss
Total
equity
–
–
–
–
–
–
–
–
–
–
–
13
1,047,821
149,793
1,197,614
(17,630,333)
7,450,775
–
–
–
–
–
–
–
–
–
–
–
–
(725,771)
(725,771)
–
–
1,047,821
149,793
1,197,614
(18,356,104)
–
–
–
–
–
–
–
–
–
–
–
–
(329,556)
(329,556)
–
–
1,047,821
149,793
1,197,614
(18,685,660)
(725,771)
(725,771)
1,061,825
1,061,825
7,786,829
(329,556)
(329,556)
495,000
495,000
7,952,274
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
37
Statements of Cash Flows
for the year ended 31 March 2019
FiguresinPoundSterling
Group
Company
Note(s)
31 March
2019
31 March
2018
31 March
2019
31 March
2018
Cash flows from operating activities
Cash used in operations
Investment Revenue
23
18
(302,518)
3,993
(598,676)
180
(262,670)
149
(500,546)
180
Net cash from operating activities
(298,525)
(598,496)
(262,521)
(500,366)
Cash flows from investing activities
Additions to intangible assets
Sale of intangible asset
Cost of joint ventures acquired
Net movement on group company loans
(575,093)
–
–
(159,608)
(67,275)
–
(797,338)
(170,236)
–
–
(475,630)
(179,134)
–
–
(797,338)
(254,765)
6
Net cash flows from investing activities
(734,701)
(1,034,849)
(654,764)
(1,052,103)
Cash flows from financing activities
Proceeds from share issues
495,000
1,061,825
495,000
1,061,825
Net cash flows from financing activities
495,000
1,061,825
495,000
1,061,825
Total cash movement for the year
Cash at the beginning of the year
(538,226)
539,301
(571,520)
1,110,821
(422,285)
425,089
(490,644)
915,733
Total cash at end of the year
10
1,075
539,301
2,803
425,089
38
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. These annual financial statements were approved
by the board of directors on 23 August 2019.
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
and after
the transaction, are regarded as equity
transactions and are recognised directly in the statement of
changes in equity.
The difference between the fair value of consideration
paid or received and the movement in non-controlling
interest
for such transactions is recognised in equity
attributable to the owners of the parent.
Where a subsidiary is disposed of and a non-controlling
shareholding is retained, the remaining investment is
measured to fair value with the adjustment to fair value
recognised in profit or loss as part of the gain or loss on
disposal of the controlling interest.
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.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
39
Accounting Policies
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
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
if an investment
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.
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 12 – 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
40
GALILEO RESOURCES PLC
period. The quoted market price used for financial assets
held by the Group is the current bid price.
1.4 Investment in subsidiaries
Company annual financial statements
Accounting Policies
The fair value of financial instruments that are not traded
in an active market (for example, over
the counter
derivatives) is determined by using valuation techniques.
The Group uses a variety of methods and makes
assumptions that are based on market conditions existing at
the end of each reporting period. Quoted market prices or
dealer quotes for similar instruments are used for long-term
debt. Other techniques, such as estimated discounted cash
flows, are used to determine fair value for the remaining
financial instruments. The fair value of interest rate swaps
is calculated as the present value of the estimated future
cash flows. The fair value of forward foreign exchange
contracts is determined using quoted forward exchange
rates at the end of the reporting period.
The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is
available to the Group for similar financial instruments.
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
purposes of
testing, exploration and
evaluation assets are allocated to cash-generating units
(“CGU”) to which the exploration activity related.
impairment
that
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 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:
●
●
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
Exploration and evaluation assets are carried forward in
accumulated impairment.
the balance sheet under intangible assets.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
41
Accounting Policies
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 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,
fellow subsidiaries,
joint ventures and
subsidiaries,
associates and are recognised initially at fair value plus
direct transaction costs.
Financial liabilities measured at amortised cost
Loans to Group companies are classified as loans and
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.
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
to the extent
that
42
GALILEO RESOURCES PLC
Accounting Policies
asset or liability in a transaction which at the time of the
transaction, affects neither accounting profit nor taxable
profit (tax loss).
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.
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
transaction, affects neither accounting profit nor taxable
profit (tax loss).
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
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
to
substantially all
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
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.
Any contingent rents are expensed in the period they are
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.
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
conditions) are not
taken into consideration when
the equity instruments
determining the fair value of
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
the amount
transaction amount so that, ultimately,
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.
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).
If the share based payments vest immediately the
services received are recognised in full.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
43
Accounting Policies
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
constructive obligation to make such payments as a result
of past performance.
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;
the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
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.
Service fees included in the price of the product are
recognised as revenue over the period during which the
service is performed.
1.14 Translation of foreign currencies
Functional and presentation currency
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, US Dollar and Canadian
Dollar by applying to the foreign currency amount and the
spot exchange rate between the functional currency and
the foreign currency at the date of the transaction.
●
●
●
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
it is probable that the economic benefits associated with
the transaction will flow to the Group; and
At the end of the reporting period:
44
GALILEO RESOURCES PLC
Accounting Policies
Cash flows arising from transactions in a foreign currency
are recorded in South African Rand, US Dollar and Canadian
Dollar by applying to the foreign currency amount the
exchange rate between the functional currency and the
foreign currency at the date of the cash flow.
Investments
associates
in subsidiaries,
joint ventures and
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.
The results and financial position of a foreign operation
are translated into the functional currency using the
following procedures:
The Group has applied the following standards and
amendments for the first time for their annual reporting
period commencing 1 April 2018:
● IFRS 9 Financial Instruments
● IFRS 15 Revenue from Contracts with Customers
No retrospective adjustments were required following
the adoption of IFRS 9 and IFRS 15.
On 1 April 2018 (the date of initial application of IFRS 9),
the Group’s management assessed which business models
apply to the financial assets held by the Group and classified
instruments into the appropriate IFRS 9
its financial
categories. No reclassifications were required.
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 16 in respect of Leases which will be effective for
accounting periods beginning on or after 1 January 2019.
● IFRS 17 Insurance Contracts (effective date 1 January
2021).
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.
●
●
●
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
the
translated at exchange rates at
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.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
45
Notes to the Financial Statements
3. INTANGIBLE ASSETS
Group
Exploration and evaluation
asset – U.S.A.
Exploration and evaluation
asset – Zambia
FiguresinPoundSterling
Group
31 March
2019
Company
31 March
2018
Cost/ Accumulated
Valuation depreciation
Carrying
value
Cost/ Accumulated
depreciation
Valuation
Carrying
value
1,582,888
1,272,968
2,855,856
–
–
–
1,582,888
1,380,085
1,272,968
2,855,856
–
–
–
–
–
1,380,085
–
–
Reconciliation of intangible assets -Group 2019
2019
Exploration and evaluation asset – U.S.A.
Exploration and evaluation asset – Zambia
2018
Opening
Additions
Foreign
Exchange
Total
1,380,085
–
99,462
1,272,968
103,341
–
1,582,888
1,272,968
1,380,085
1,372,430
103,341
2,855,856
1,473,494
67,275
(160,684)
1,380,085
The exploration and evaluation asset based in the U.S.A. is a USD denominated asset and the exploration and evaluation asset
based in Zambia is a ZMW denominated asset. Both assets are carried at cost adjusted for any foreign currency movements during
the period under review.
The Company’s intangible in the U.S.A. is greenfield Ferber copper/gold property in Nevada. Refer to the Geology and
Mineralisation of Ferber on page 21 of the operations report.
The Company’s intangible in Zambia is its Star Zinc Project.
The Star Zinc deposit is located approximately 20km NNW of the Zambian capital Lusaka. The project is accessible via the tarred
Great North road with a journey time of approximately 30 minutes. The project was discovered and explored historically in the
1960s by Chartered Exploration Ltd. Fifty nine diamond drill holes totaling 2 578.5m were drilled. Historic small-scale mining was
reported, from a small apparent open pit working present on site. The Company believes this open pit may be a collapsed dome.
The local geology of Star Zinc is complex and forms a varied stratigraphic sequence of argillite, limestone, massive willemite (zinc
silicate mineral) zinc ore, massive limestone and dolomites (Cheta and Lusaka Formations). A broad west-east trending
mineralised dome is the main structural feature of Star Zinc.
46
GALILEO RESOURCES PLC
4. INVESTMENTS IN SUBSIDIARIES
Name of Company
Skiptons Global Investments Limited –
Incorporated in British Virgin Islands
Skiptons Global Investments Limited –
Incorporated in British Virgin Islands
Galileo Resources SA Proprietary Limited –
Incorporated in the Republic of South Africa
St Vincent Minerals
Enviro Zambia Limited (Star Zinc Project)
Notes to the Financial Statements
FiguresinPoundSterling
31 March
2019
% voting
power
31 March
2018
% voting
power
31 March
2019
Carrying
amount
31 March
2018
Carrying
amount
100
100
100
100
85
100
100
100
–
–
–
–
–
–
100 2,357,599
2,357,599
– 1,272,968
–
3,630,567
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 wholly owned subsidiary, Skiptons Global Investment Limited (BVI). The principal activity of Galileo Resources
SA Proprietary Limited is the same as that of Galileo Resources Plc.
As previously announced on 28 February 2018, Galileo, on having spent a further USD250 000 on the Star Zinc Project, earned
in an additional 34% beneficial interest to take its aggregate interest to 85% in Star Zinc, which is to be realised by way of an
85% equity stake in Enviro Zambia Limited ("EZL"), a joint venture company incorporated between BMR and Galileo. Following
Galileo’s increased interest in EZL, Galileo’s investment in EZL is accounted for as a subsidiary. Post the period under review and
on 27 June 2019, Galileo acquired the remaining share capital of EZL.
5. INVESTMENT IN JOINT VENTURES AND ASSOCIATES
Name of Company
31 March
2019
% holding
31 March
2018
% holding
31 March
2019
Carrying
amount
31 March
2018
Carrying
amount
Glenover Phosphate (Proprietary) Limited (“Glenover”)
Enviro Zambia Limited (“Star Zinc Project”)
33.99
–
33.99 2,156,507
–
85.00
2,470,898
797,338
2,156,507
3,268,236
Glenover
Galileo’s direct investment in Glenover is 29% and it also has an indirect investment in Glenover through its shareholding in
Galagen Proprietary Limited, a special purpose vehicle incorporated to hold the BEE shareholding in the Glenover project, of
4.99% resulting in a total interest in Glenover of 33.99%. 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.Refer to page 21 of the Operations Report for details of the Glenover project.
Enviro Zambia Limited
At 31 March 2018 Galileo’s interest in Enviro Zambia Limited (“EZL”) was accounted for as an investment in joint venture. Galileo
subsequently gained control over EZL and increased its interest in the company to 85%. Refer to note 4 for details of investment
in subsidiaries. Post the period under review and on 27 June 2019, Galileo acquired the remaining share capital of EZL.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
47
Notes to the Financial Statements
5. INVESTMENT IN JOINT VENTURES AND ASSOCIATES (continued)
Summary of investment in joint venture – Glenover
Carrying value at the beginning of the year
Effect of change in translation currency
Equity accounted (loss)/profit 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 paid
Expenses
Loan forgiveness pursuant to revised funding arrangements
Taxation
FiguresinPoundSterling
Group
31 March
2019
31 March
2018
2,470,898
2,325,144
(297,917)
(16,474)
22,324
123,430
2,156,507
2,470,898
516
697,658
(8,888)
92,369
781,655
93
(340)
(16,227)
–
–
282
892,758
(2,849)
(86,638)
803,553
3,057
(4,869)
(26,589)
151,831
–
Equity accounted (loss)/profit for the year
(16,474)
123,430
Made up as follows:
Loss from operations
Loan forgiveness pursuant to revised funding arrangements
(16,474)
–
(28,401)
151,831
(16,474)
123,430
48
GALILEO RESOURCES PLC
6. LOANS TO/(FROM) JOINT VENTURES, ASSOCIATES AND SUBSIDIARIES
Notes to the Financial Statements
FiguresinPoundSterling
Loans to/(from) subsidiaries
Galileo Resources SA Proprietary Limited
Skiptons Global Investment Limited
St Vincent Minerals
Loans to subsidiaries are interest free, unsecured and has
no repayment terms.
Loans to joint ventures and associates
Glenover
SHIP – Concordia
Non-current assets
Non-current liabilities
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
–
–
–
–
– 5,051,102
7,374
–
(856,081)
–
4,970,516
6,155
(838,857)
– 4,202,395
4,137,814
294,588
149,416
133,454
150,942
191,720
138,316
77,167
138,316
444,004
284,396
330,036
215,483
444,004
–
284,396 5,388,512
(856,081)
–
5,912,154
(838,857)
444,004
284,396 4,532,431
4,353,297
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
49
Notes to the Financial Statements
7. OTHER FINANCIAL ASSETS
Fair value through profit or loss-designated
Galagen – Ordinary shares
Galagen – B Preference shares
FiguresinPoundSterling
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
9
399,054
10
453,926
399,063
453,936
–
–
–
–
–
–
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
2019
31 March
2018
31 March
2019
31 March
2018
3,688
4,195
3,688
4,195
399,063
3,688
453,936
4,195
402,751
458,131
–
–
–
–
–
–
–
–
–
–
Fair value hierarchy of financial assets at fair value through profit or loss.
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
Galagen – Ordinary shares
Galagen – B Preference shares
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
9
399,504
10
453,936
399,513
453,936
–
–
–
–
–
–
50
GALILEO RESOURCES PLC
7. OTHER FINANCIAL ASSETS (continued)
Reconciliation of financial assets at fair value through profit or loss measured at level 3
Group – 31 March 2019
Notes to the Financial Statements
FiguresinPoundSterling
Galagen – Ordinary shares
Galagen – B Preference shares
Group – 31 March 2018
Galagen – Ordinary shares
Galagen – B Preference shares
Gains or
Foreign
Opening
losses in
exchange
balance movement profit or loss
10
453,926
(1)
(54,422)
453,926
(54,423)
–
–
–
Opening
balance
10
450,431
450,441
Foreign
exchange
movement
Gains or
losses in
profit or loss
–
3,495
3,495
–
–
–
Total
9
399,504
399,513
Total
10
453,926
453,936
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.
8. FINANCIAL ASSETS BY CATEGORY
The accounting policies for financial instruments have been applied to the line items below:
Group – 31 March 2019
Fair value
through
Loans and profit or loss
receivables – designated
Other financial assets
Trade and other receivables
Cash and cash equivalents
3,688
42,920
1,075
399,054
–
–
Group – 31 March 2018
Fair value
through
profit or loss
– designated
Loans and
receivables
4,195
41,218
539,301
453,936
–
–
Total
458,131
41,218
539,301
Total
402,742
42,920
1,075
47,683
399,054
446,737
584,714
453,936
1,038,650
Company – 31 March 2019
Fair value
through
Loans and profit or loss
receivables – designated
Total
Company – 31 March 2018
Fair value
through
profit or loss
– designated
Loans and
receivables
Total
Loans to Group companies
Other financial assets
Cash and cash equivalents
5,388,512
10,624
2,804
5,401,940
–
–
–
–
5,388,512
10,624
2,804
5,192,154
10,624
425,089
5,401,940
5,627,867
–
–
–
–
5,192,154
10,624
425,089
5,627,867
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
51
Notes to the Financial Statements
9. TRADE AND OTHER RECEIVABLES
Prepayments
Trade receivables
Other receivables
FiguresinPoundSterling
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
23,205
2,090
17,625
42,920
20,680
3,401
17,137
41,218
–
–
10,624
10,624
–
–
10,624
10,624
The directors consider that the carrying amount of trade and other receivables approximates to fair value.
10. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of:
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)
11. SHARE CAPITAL
Authorised share capital
Unlimited ordinary shares of 0.01 pence (2018: 0.01 pence)
Issued share capital
Reported as at 1 April 2018
Share issues
Reported as at 31 March 2019
Reconciliation of share capital:
Ordinary shares of 0.1p
Deferred shares of 4.9p
Share premium
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
1,075
1,075
539,301
539,301
2,804
2,804
425,089
425,089
1,075
1,075
539,301
539,301
2,804
2,804
425,089
425,089
254,596,562 195,874,062 254,596,562 195,874,062
50,000,000
58,722,500
50,000,000
58,722,500
304,596,562 254,596,562 304,596,562 254,596,562
304,597
254,597
304,597
254,597
5,610,634
5,610,634
5,610,634
5,610,634
19,525,088
19,080,088
19,525,088
19,080,088
25,440,319
24,945,319
25,440,319
24,945,319
52
GALILEO RESOURCES PLC
11. SHARE CAPITAL (continued)
During the period under review the Company issued new ordinary shares as follows:
Date
17 April 2018
Number of ordinary shares
50,000,000
Post the period under review the Company issued new ordinary shares as follows:
Date
2 May 2019
27 June 2019
27 June 2019
Number of ordinary shares
100,000,000
24,615,385
3,600,000
*Acquisition of further interest in (EZL) subsidiary
12. SHARE-BASED PAYMENTS
Share option group
Outstanding at the beginning of the year
Outstanding at the end of the year
During the financial period under review no new options 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
Notes to the Financial Statements
FiguresinPoundSterling
Purpose of Issue
Placing for cash
Purpose of Issue
Placing for cash
Acquisition*
Settlement of debt
Number
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
The above options were granted on 27 January 2017 at a strike price of £0.02 per share.
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:
● 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 £ Nil (2018: £Nil).
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
53
Notes to the Financial Statements
13. 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.
FiguresinPoundSterling
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
Exchange differences on consolidation of foreign subsidiaries
Foreign exchange profits or losses on inter-company loan accounts
Foreign intangibles recognised as part of a business combination
554,297
(1,402,733)
112,376
205,481
(750,862)
77,539
(736,060)
(467,842)
14. OTHER FINANCIAL LIABILITIES
Held at amortised cost
Fer-Min-Ore
Loans
Non-current liabilities
At amortised cost
Current liabilities
15. TRADE AND OTHER PAYABLES
Trade and other payables
Accrued expense
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6
3,840
3,846
7
3,572
3,579
3,846
3,579
408,412
169,583
299,549
156,965
54,570
169,583
153
156,965
577,995
456,514
224,153
157,118
16. FINANCIAL LIABILITIES BY CATEGORY
The accounting policies for financial instruments have been applied to the line items below:
Other financial liabilities
Trade and other payables
Trade and other payables
Loans from group companies
Group –
31 March 2019
Group –
31 March 2018
Financial
liabilities at
amortised
cost
Total
3,846
577,995
3,846
577,995
Financial
liabilities at
amortised
cost
3,579
Total
3,579
456,514
456,514
581,841
581,841
460,093
460,093
Company – 2019
Company – 2018
Financial
liabilities at
amortised
cost
Financial
liabilities at
amortised
cost
Total
224,153
856,081
224,153
856,081
157,118
838,857
Total
157,118
838,857
1,080,234 1,080,234
995,975
995,975
54
GALILEO RESOURCES PLC
17. OPERATING LOSS
Operating loss for the year is stated after accounting for the following:
Operating lease charges
Premises contractual amounts
Employee costs – including management
Profit on exchange differences
18. INVESTMENT REVENUE
Interest revenue
Bank interest
19. TAXATION
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense.
Accounting loss
Tax at the applicable tax rate of 19% (2018: 19%)
Tax effect of adjustments on taxable income
Expenses not allowed for tax purposes
Tax on equity accounted profits
Tax losses carried forward
Notes to the Financial Statements
FiguresinPoundSterling
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
25,200
148,858
5,847
30,507
181,854
18,294
25,200
106,900
5,847
30,507
181,854
18,294
3,993
3,993
180
180
149
149
180
180
(416,784)
(79,189)
(1,026,891)
(195,109)
(329,556)
(62,616)
(725,771)
(131,721)
5,373
(3,130)
76,946
–
99,915
23,452
71,742
–
4,352
–
58,264
26,280
–
105,441
–
–
No provision has been made for 2019 tax as the Company has no taxable income. The estimated tax loss available for set off
against future taxable income is £1,904,931 (2018: £1,827,985). The Company has not reflected a deferred tax asset in respect
of the losses carried forward as the Company is not expected to generate taxable profits in the foreseeable future.
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
20,455
24,870
6,500
19,300
Group – 31 March 2018
20. AUDITORS’ REMUNERATION
Current year
21. OTHER COMPREHENSIVE INCOME
Components of other
comprehensive income
Gross
Group – 31 March 2019
Tax
Net
Gross
Tax
Net
Exchange differences through
other comprehensive income
(268,218)
–
(268,218)
(160,288)
–
(160,288)
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
55
Notes to the Financial Statements
22. 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 £416,874 (2018: loss of £1,026,891) and a weighted average number of ordinary
shares of 302,952,726 (2018: 227,388,473).
FiguresinPoundSterling
Group
31 March
2019
31 March
2018
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
(685,002)
(1,187,179)
Adjusted for:
Foreign exchange movements during the year
Loss for the year
Loss per share
Basic loss per share (pence)
23. CASH USED IN OPERATIONS
Loss before taxation
Adjustments for:
Profit/(loss) from equity accounted investments
Investment revenue
Impairment of loans to group companies and associates
Other non-cash items
Changes in working capital:
Trade and other receivables
Trade and other payables
24. COMMITMENTS
The Group had no material commitments at the year-end date.
268,218
160,288
(416,784)
(1,026,891)
(0.14)
(0.45)
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
(416,784)
(1,026,891)
(329,556)
(725,771)
16,474
(3,993)
–
(17,994)
(123,430)
(180)
525,870
(25,892)
–
(149)
–
–
–
(180)
138,316
–
(1,702)
121,481
(10,696)
62,543
–
67,035
(10,624)
97,713
(302,518)
(598,676)
(267,670)
(500,546)
56
GALILEO RESOURCES PLC
Notes to the Financial Statements
FiguresinPoundSterling
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
25. RELATED PARTY BALANCES AND TRANSACTIONS
Loan accounts – owed by related parties
Glenover
SHIP – Concordia
Amounts paid – to related parties
Lion Mining Finance Limited (“LMF”).
294,587
149,416
133,454
150,942
191,720
138,316
77,167
138,316
30,240
36,360
30,240
36,360
Galileo paid rent and administrative service cost to LMF. Colin Bird is a director of both Galileo and LMF.
Refer to note 27 for details of directors remuneration and note 11 for details of options granted to directors.
26. EMPLOYEE COST
Salaries and wages
Average number of employees
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
8,400
9,200
8,400
9,200
1
1
1
1
27. DIRECTORS’ AND PRESCRIBED OFFICER’S EMOLUMENTS
Group and Company
Executive
2019
Colin Bird
Andrew Sarosi
2018
Colin Bird
Andrew Sarosi
Non-executive
2019
Christopher Molefe
Richard Wollenberg
2018
Christopher Molefe
Richard Wollenberg
Directors’
fees
Charge for
the year
Share(1)
based
payment
32,500
30,000
62,500
35,000
32,500
67,500
15,000
15,000
30,000
15,000
15,000
30,000
–
–
–
–
–
–
–
–
–
–
–
–
Total
32,500
30,000
62,500
35,000
32,500
67,500
15,000
15,000
30,000
15,000
15,000
30,000
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
57
Notes to the Financial Statements
27. DIRECTORS’ AND PRESCRIBED OFFICER’S EMOLUMENTS (continued)
At year end an amount of £137,083 (2018: £121,250) was accrued towards outstanding director fees payable as follows:
FiguresinPoundSterling
At 31 March 2019
At 31 March 2018
Colin Bird
Andrew Sarosi
Richard Wollenberg
Chris Molefe
Total
48,333
47,500
37,500
3,750
137,083
43,750
43,750
33,750
–
121,250
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 2019
At 31 March 2018
Options
5,000,000
3,000,000
750,000
250,000
Options
5,000,000
3,000,000
750,000
250,000
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
Executive management
77,958
85,620
36,000
56,155
28. RISK MANAGEMENT
Capital risk management
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 cash and cash equivalents disclosed in note 10 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.
Financial risk management
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.
58
GALILEO RESOURCES PLC
Notes to the Financial Statements
FiguresinPoundSterling
28. RISK MANAGEMENT (continued)
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 2019
Trade and other payables
Other financial liabilities
At 31 March 2018
Trade and other payables
Other financial liabilities
Company
At 31 March 2019
Trade and other payables
At 31 March 2018
Trade and other payables
Less than
1 year
Between 2
and 5 years
577,995
–
–
3,846
Less than
1 year
Between 2
and 5 years
456,514
–
–
3,579
Less than
1 year
224,153
Less than
1 year
157,118
Interest rate risk
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.
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:
Financial instrument
Trade and other receivables
Cash and cash equivalents
Other financial assets
Loans to Group companies and other related entities
Group
Company
31 March
2019
31 March
2018
31 March
2019
31 March
2018
42,920
1,075
402,751
–
41,218
539,301
458,131
10,624
2,804
–
– 5,388,512
10,624
425,089
–
5,192,154
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
59
Notes to the Financial Statements
FiguresinPoundSterling
28. RISK MANAGEMENT (continued)
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, the ZMW 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).
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 : 0.0555
1 : 0.0529
1 : 0.0729
1 : 0.0689
(2018: 1 : 0.0581)
(2018: 1 : 0.0601)
(2018: 1 : 0.7546)
(2018: 1 : 0.7134)
The Group reviews its foreign currency exposure, including commitments on an ongoing basis.
29. 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.
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.
30. SEGMENTAL REPORTING
Business unit
The Company’s investments in subsidiaries and associates, that were operational at year-end, operate in two geographical
locations being South Africa, Zambia 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.
60
GALILEO RESOURCES PLC
Notes to the Financial Statements
30. SEGMENTAL REPORTING ON INCOME AND LOSSES ATTRIBUTABLE TO VARIOUS OPERATIONAL
SEGMENTS (continued)
Geographical segments
An analysis of the loss before taxation is given below:
Rare earths, aggregates and iron ore and manganese
Gold, Copper
Corporate costs and impairments South Africa and
Loss before taxation
South Africa
USA
United Kingdom
31 March
2019
Loss from
operating
31 March
2018
Loss from
operating
activities (£) activities (£)
(16,474)
(793)
(399,517)
123,430
(292,352)
(857,969)
(416,784)
(1,026,891)
Corporate
Corporate Gold/Copper
(UK) (South Africa) (South Africa)
Zinc
Zambia
Total
330,036
2,673,225
1,582,887
1,272,968
5,859,117
13,428
–
3,469
(6)
27,037
(3,840)
(233,988)
(34,925)
(309,089)
–
–
–
43,995
(3,846)
(577,995)
109,477
2,641,764
1,296,996
1,272,968
5,321,272
Non-current Assets
Current Assets
Non-current liabilities
Current liabilities
Net assets
31. EVENTS POST BALANCE SHEET
Issue of shares post year end
31.1
31.1.1 On 2 May 2019, Galileo raised £500 000 in placing, before expenses, to fund its operations and advance its Star Zinc
project.
31.1.2 On 24 June 2019 Galileo announced that, pursuant to the Binding Heads of Terms (“Binding Heads”) (as announced on
13 September 2018) and more specifically paragraph 13.2 therein, it has exercised its right, at its sole election and risk,
to proceed with the acquisition of the Kabwe Residual Rights, including the Kashitu Zinc willemite exploration prospect
("Kashitu Zinc") and the remaining 15% of the shares, that Galileo currently does not hold in Enviro Zambia Limited (the
"Sale Shares") (together the "Acquisition") (even if the terms of the Transaction documents have not yet been agreed),
by giving notice in writing (the "Completion Notice") to the BMR Group plc ("BMR") to proceed.
The consideration for the Acquisition comprises a cash component of £50,000 and the issuance of 15,000,000 Galileo
ordinary shares ("Consideration Shares") of par 0.1p ("Ordinary Share") to BMR at a price of 1.15p per Ordinary Share.
Also, in terms of the Binding Heads, Galileo has elected and BMR has agreed to the issuance of 9,615,385 Galileo ordinary
shares priced at 0.52p ("Additional Consideration Shares'') in lieu of the £50,000 cash payment.
As a result of the Acquisition, Galileo increased its interest in Enviro Zambia Limited from 85% to 100%. Enviro Zambia
Limited owns 95% of Enviro Processing Zambia Limited, to which Star Zinc's large-scale exploration license 19653-HQ-
LEL remains to be transferred, subject to Zambian regulatory approval, from a wholly owned subsidiary of BMR, Enviro
Processing Limited.
Pursuant to the above, 24,615,385 new Galileo shares were allotted and admitted to AIM on 27 June 2019.
31.1.3 On 27 June 2019 Galileo issued 3,600,000 new ordinary shares in lieu of broker fees priced at 0.50p per Ordinary Share.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
61
Notice of Annual General Meeting
Notice of Annual General Meeting
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 17 September 2019 at
14:00 p.m., for the following purposes:
To consider and, if deemed fit, to pass resolutions 1 – 7 as
ordinary resolutions and resolutions 8 – 9 as special resolutions.
provided that the Company may, at any time before such
expiry, make an offer or enter into an agreement which would
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.
ORDINARY BUSINESS
Resolution number 1
To receive the reports of the directors and auditors and the
financial statements for the year ended 31 March 2019 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 7
In accordance with the Disclosure and Transparency Rules this
resolution must now be passed to allow the Company to use
electronic forms of communication. Your Board is proposing
that they should be given authority to supply documents and
make information to members available on the website. Before
the Company can communicate with a member by means of
website communication, the relevant member must be asked
individually to agree that the Company may send or supply
documents or information to him/her by means of the
website. The Company must either have received a positive
response or have received no response with the period of 28
days, beginning with the date on which the request was sent.
Shareholders can complete the form enclosed with the Notice
and return it to the address indicated on the form. The
Company will notify the member (either in writing, or by other
permitted means) when a relevant document or information is
placed on the website and a member can always request a
hard copy version of the document or information.
Resolution number 5
To authorise the Directors to determine auditors’ remuneration
for the year ended 31 March 2019.
SPECIAL BUSINESS
Resolution number 8
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) 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
(ii) to exercise all the powers of the Company to allot and
make offers to allot relevant securities up to an aggregate
nominal amount £100 517 (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)
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
is earlier)
Company or 30 September 2020 (whichever
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) shall be limited to the allotment of equity securities up to
an aggregate nominal amount of £304 597 representing
100% of the Company’s issued share capital; and
(b) 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.
62
GALILEO RESOURCES PLC
Resolution number 9
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 2020.
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
Registeredoffice:
7/8 Kendrick Mews
London, SW7 3HG
23 August 2019
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, Steelpark Road, Halesowen, B62 8HD 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 Limited,
Neville House, Steelpark Road, Halesowen, B62 8HD no later than
14:00 p.m. on 13 September 2019.
(6) Pursuant
the Uncertificated Securities
Regulations 2001 as amended the Company specifies that only
to Regulation 41 of
Notice of Annual General Meeting
those shareholders registered in the Register of Members of the
Company as at 14:00 p.m. on 13 September 2019 (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 Annual General
Meeting until the conclusion of the Annual General Meeting.
(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 ‘CREST Proxy
Instruction’) must 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 Limited (ID: 7RA11) no
later than 14:00 p.m. on 13 September 2019. 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 22 August 2019, being the last practicable date before the
date of this Notice there were 432,811,947 ordinary shares in
issue, each with equal voting rights. The total number of voting
rights in the Company as at 22 August 2019, being the last
practicable date before the date of this Notice is 432,811,947.
Holders of ordinary shares are entitled to attend, speak and vote,
either in person or by proxy, at General Meetings of the Company.
ANNUAL REPORT AND ACCOUNTS – 31 March 2019
63
For your notes
Printed by Michael Searle & Son Limited
64
GALILEO RESOURCES PLC
www.galileoresources.com