Galantas Enters Into a Credit Facility With Kenglo One Limited to Finance Expanded Drilling Program
Posted on March 10, 2011 at 10:00 AM EST
TORONTO, ONTARIO--(Marketwire - March 10, 2011) -
Galantas Gold Corporation (TSX VENTURE:GAL)(AIM:GAL) (the "Company"), with a 100% interest in Ireland's only operating gold-mine, has today entered into a convertible unsecured loan agreement (the "Loan Agreement") with Kenglo One Limited of Jersey, Channel Islands ("Kenglo"). The loan amount agreed to be advanced under the Loan Agreement is GBP 1,250,000 (the "Loan"). The Loan Agreement remains subject to the approval of the TSX Venture Exchange ("TSXV").
The Loan carries interest of 2% per annum above the base rate of Barclays Bank plc. The Loan shall become repayable upon exercise by Kenglo of the previously issued warrants of the Company held by Kenglo (the "Warrants"), subject to the terms of the Warrants and the Loan Agreement. If the Warrants are not exercised by Kenglo by the applicable expiry dates of the Warrants (being June 8, 2012 and July 22, 2012, as applicable), the Company shall issue shares ("Loan Shares") to Kenglo, in lieu of a cash repayment of the Loan, in accordance with the terms of the Loan Agreement. The number of Loan Shares to be issued upon the Loan conversion shall be determined in accordance with the terms of the Loan Agreement, subject to the minimum conversion price of Cdn$0.10 per share. The Loan Shares will be subject to a four month resale restriction period imposed under the policies of the TSXV and applicable securities legislation. There are no finder's fees or any bonus (whether in the form of cash or securities) payable in connection with the Loan Agreement.
Kenglo is presently an "insider" of the Company within the meaning of the applicable securities laws (see Kenglo's early warning report filed on SEDAR on July 28, 2010 for details of Kenglo's holdings in the Company). Kenglo is also a Substantial Shareholder as defined under the AIM Rules for Companies. As a result, the Loan Agreement is a "related party transaction" under Multilateral Instrument 61-101 -Protection of Minority Security Holders in Special Transactions ("MI 61-101") and the AIM Rules for Companies. The Company relied on Section 5.5(a) of MI 61-101 for exemptions from the formal valuation requirement and Section 5.7(1)(a) of MI 61-101 for exemptions from the minority shareholder approval requirement of MI 61-101 as the fair market value of the transactions involving the related party did not exceed 25% of the Company's market capitalization as of the time the transactions contemplated under the Loan Agreement were agreed to.
The directors of the Company, after having carefully reviewed and considered the terms of the Loan, have approved the Loan Agreement. The directors have also consulted with the Company's nominated adviser and, following these consultations, believe the terms of the Loan Agreement to be fair and reasonable insofar as the shareholders of the Company are concerned.
The funds under the Loan Agreement will be used to expand the current drilling program, as described below.
Following a recent channel sampling program, one core-drilling rig has arrived on site. The rig is contracted for a program of a minimum of 2,000 metres of core, though this is likely to be expanded to 5,000 metres of core. A second and third rig is being organised. The combined drilling program is expected to be approximately 300 metres of core per week (after operator training) and total up to 15,000 metres of core.
The drilling part of the exploration program will concentrate on the Joshua and Kearney Veins. These veins are located (for the most part) within freehold land owned by the Company's operating subsidiary. The Kearney vein has planning consent for an open pit, which is being currently worked. The drilling programme will provide data for a potential underground operation based upon both of these veins. The Kearney Vein has been drilled with a partial fence of holes at around 220m deep and the program is looking to enlarge the vertical and horizontal extent of the Kearney resource base. The Joshua Vein has been sparsely drilled with only 17 holes on vein to a maximum depth of 157 metres. The program is looking to extend the depth and northern extent of the Joshua vein with a view to the possibility of working part of it by a shallow open pit.
A Planning Application related to an underground development is at the pre-planning consultation stage. The Company already has an existing Environmental Impact Assessment related to its current working and this is being brought up to date with data provided by continuous monitoring of the existing operation.
This release has been approved by Roland Phelps, President & CEO, a qualified person under National Instrument 43-101 - Standards of Disclosure for Mineral Projects, who is responsible for the technical information in this disclosure.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including drilling and exploration program estimates, for the Omagh Gold project. Forward-looking statements are based on estimates and assumptions made by Galantas in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Galantas believes are appropriate in the circumstances. Many factors could cause Galantas' actual results, the performance or achievements to differ materially from those expressed or implied by the forward-looking statements or strategy, including: contractor performance, drilling rate, gold price volatility; discrepancies between actual and estimated production; actual and estimated metallurgical recoveries; mining operational risk; regulatory restrictions including environmental regulatory restrictions and liability; risks of sovereign involvement; speculative nature of gold exploration; dilution; competition; loss of key employees; additional funding requirements; planning and other permitting issues; and defective title to mineral claims or property. These factors and others that could affect Galantas' forward-looking statements are discussed in greater detail in the section entitled, "Risk Factors", in Galantas' Management Discussion & Analysis of the financial statements of Galantas and elsewhere in documents filed from time to time with the Canadian provincial securities regulators and other regulatory authorities. These factors should be considered carefully, and persons reviewing this press release should not place undue reliance on forward-looking statements. Galantas has no intention and undertakes no obligation to update or revise any forward-looking statements in this press release, except as required by law.Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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