Galileo Resources : Unaudited interim results for the six months ended 30 September 2021 31 December 2021 Galileo Resources plc – Interim Report 30Dec2021 .pdf Portable Document File (PDF) 387Kb | 19 pages

Galileo Resources PLC

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

Unaudited interim results for the six months ended 30 September 2021

Galileo (AIM: GLR), the exploration and development mining company, announces its unaudited interim results for the six-month period ended 30 September 2021. A copy of the interim results is available on the Company's website, www.galileoresources.com.

Operational Highlights

BOTSWANA - Kalahari Copperbelt

Period under review

On 2 August 2021 the Company announced that had it entered into a variation agreement dated 30 July 2021 (the "First Variation Agreement") with ASX listed Sandfire Resources Limited (ASX:SFR) ("Sandfire") in relation to its conditional licence sale agreement (the "Licence Sale Agreement") with Sandfire.

The Parties entered into the First Variation Agreement to facilitate the continuity of exploration expenditure on the Included Licences and to amend the list of Included Licences and Excluded Licences. The key commercial terms of the First Variation Agreement were to make the following variations to the Licence Sale Agreement:

• Change the long stop date for the meeting of the conditions from 31 July 2021 to 31 August 2021;
• Sandfire to at completion of the Licence Sale Agreement, reimburse Galileo up to US$500,000 of exploration expenditure incurred by Galileo in relation to licence obligations of certain
  Included Licences being transferred to Sandfire (the "Reimbursed Exploration Expenditure");
• Sandfire's US$4,000,000 Exploration Commitment under the Licence Sale Agreement to be reduced by the amount of the Reimbursed Exploration Expenditure;
• PL 368/2018 which was due to expire on 30 September 2021 to be removed from the list of Included Licences to be transferred to Sandfire as this licence is, with the agreement of Sandfire, being relinquished; and
• Removing the option for Sandfire to elect to pay the Success Payment under the Licence Sale Agreement by issuing Sandfire shares to Galileo which means the Success Payment if due will be paid in cash.

On 1 September 2021, the Company announced that it had entered into a second variation agreement (the Second Variation Agreement) with Sandfire in relation to the Licence Sale Agreement to extend the long stop date to 15 September 2021 to facilitate the completion of the processes to obtain Ministerial Consent.

The Licence Sale Agreement transaction was completed on 22 September 2021.

Post period under review

On 8 November 2021 the Company provided an update on progress of a drilling campaign on the Kalahari Copper Belt licences, with more than 5,000 metres (m) of mixed core and reverse circulation drilling ('RC') completed on five of the Kalahari Copper Belt exploration licences. This included work on both the Company's retained licences and the Sandfire Agreement Licences (see RNS dated 16 September 2021), with the agreement of Sandfire Resources. Amongst the results reported were:

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• Drilling on the Sandfire Agreement Licences intersected visible copper mineralisation at 242.7m in core hole BDDD004 on PL366/2018 in the form of vein-hosted chalcopyrite.
• Galileo drilled in two of its retained licences, PL40/2018 and PL253/2018, with most holes intersecting the target D'kar/Ngwako Pan Fm. One hole intersected a 6.32m interval of 2-5%fine-grained disseminated pyrite at the target horizon level which it was considered might represent a hydrothermal mineral system lateral to a copper occurrence.
• RC drilling was ongoing on PL253/2018 and diamond drilling had commenced on PL39/2018 with the aim of testing an extensive airborne EM target on this property, focussed on the margins of a regional scale dome feature.

ZAMBIA

Kashitu

Period under review

The Company has continued to make plans for a drilling programme at the Kashitu zinc project. Site visits were undertaken to establish the suitability of several potential drill sites, with the focus on initial testing of a high-grade willemite zinc silicate vein zone which has been partially mined previously in a small open pit.

The aim is to undertake the programme, subject to access constraints during the rainy season.

Star Zinc

Period under review

The Company received an amount of US$50K from Siege Mining Limited under the agreement signed on 4 March 2021 in relation to the ceding of ownership and operation of the Star Zinc Project.

Shinganda Project

Post period under review

On 7 December 2021 the Company announced that it had entered into an Option and Joint Venture agreement with Garbo Resource Solutions Ltd ("Garbo"), a private special purpose UK company established to hold the Shinganda copper-gold property located in Central Zambia. The property is held as a large-scale exploration licence No. 22990-HQ-LEL, covering an area of 186.76km2, by Garbo Resource Zambia Ltd., which is 99.4% owned by Garbo. The principal terms of the agreement are as follows:

• The option agreement gives Galileo the right to earn an initial 51% interest in the Shinganda copper-gold project in central Zambia, subject to any necessary Zambian regulatory approval, by spending US$0.5m on exploration and evaluation over two years.
• The Company can subsequently increase its interest through entering into a Joint Venture to develop a mining operation, ranging from 65% interest for a large deposit of greater than 1Mt of contained copper equivalent, up to an 85% interest in a smaller deposit of less than 200,000 tonnes of contained copper equivalent.

The project area covers part of a major 10km structural trend with two previously developed small-scale open pit copper-gold mines. Very limited historic drilling on the property is reported to have intersected

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1.07% Cu over a true width of 28.3m at shallow depth within supergene copper oxides. Drilling on the structure off-property to the west by Vale S.A. recorded 2m @ 3.93% Cu, 1.72 g/t Au.

Galileo plans to review past exploration data followed by a drilling programme focussed on testing the tenor and extent of the shallow copper/gold mineralisation indicated by previous drilling and nearby mining. Historic grab sampling in an exploration pit towards the south of the Project area by Vale S.A., with reported assay values of 10.45% Cu, 11g/t Au, will also be followed up in the field by Galileo for confirmation purposes.

Luansobe Copper Project

Post period under review

On 30 December 2021, the Company announced that it had entered into a Joint Venture Agreement (the "JV Agreement") on 29 December 2021 with Statunga Investments Limited (the "Vendor"), a private Zambian company owns the Luansobe Project comprising small-scale exploration licence No. 28340- HQ-SEL, covering an area of 918 Hectares granted on 16 February 2021 and with its initial 4-year term expiring on 15 February 2025.

The Luansobe area is situated some 15km to the northwest of Mufulira Mine in the Zambian Copperbelt which produced well over 9Mt of copper metal during its operation. It forms part of the northwestern limb of the northwest - southeast trending Mufulira syncline and is essentially a strike continuation of Mufulira, with copper mineralisation hosted in the same stratigraphic horizons. At the Luansobe prospect mineralisation occurs over two contiguous zones, dipping at 20-30 degrees to the northeast, over a strike length of about 3km and to a vertical depth of at least 1,250m.

The JV Agreement provides Galileo the right to earn an initial 75% interest in a special purpose joint venture company (the "JV Company") to be established under Zambia law to, with Ministerial Consent, acquire the Licence, and the technical information and other information and assets related to the Luansobe Project by making an initial payment of US$200,000 and a second payment of US$200,000 in the initial period from the date of the JV Agreement by 20 February 2022 (the "Initial JV Period") and issuing 5,000,000 Galileo shares to the Vendor. Based on the closing price share price of 0.98 pence on 29 December 2021 the last practicable date prior to this issue of this announcement, the aggregate consideration will be approximately £350,000.

During the Initial JV Period the Company will conduct further due diligence in relation to the Luansobe Project and may at its sole discretion at any time prior to the end of the Initial JV Period give notice to the Vendor that it has decided not to proceed with the Joint Venture.

The Company has undertaken to commence raw data investigation of the technical information available in relation to the Project and devise an exploration programme for the Luansobe Project, which in their opinion maximise the value of the Luansobe Project with a view to completing a Project Feasibility Study within 18 months of 20 February 2022.

SOUTH AFRICA

Glenover Phosphate Project ("Glenover")

Period under review

The Company continued to support Glenover in its application for a mining licence. Golder Associates completed a revised waste management facility design for environmental authorisation for the project

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which was submitted to the South African Department of Water and Sanitation. A Record of Decision was awaited in order to finalise Glenover's mining right.

Post period under review

The Company announced on 9 December 2021 that;

• Glenover in which Galileo has a 29% direct shareholding and a 4.99% indirect shareholding held via Galagen Proprietary Limited who are the BEE partner of Galileo entered into an Asset sale agreement with JSE Limited listed Afrimat Limited (JSE: AFT) ("Afrimat") for ZAR 250M (approx. £11.64m) of certain deposits of phosphate rock located at the Glenover Mine and mining rights to mine the Vermiculite Deposit at the Glenover Mine (the "Asset Sale Agreement").
  o ZAR 215.1M (approx. £10m) of the Asset Sale Agreement consideration is unconditional and is anticipated to result in a dividend of ZAR42M (approx. approx. £1.97M) being paid to Galileo by 28 February 2022 in respect of its 29% direct shareholding in Glenover; and
  o ZAR34.9M (approx. £1.64m ) of the Asset Sale Agreement consideration is conditional on the issue of a vermiculite mining licence to Glenover and is anticipated to result in a dividend to Galileo of Afrimat Shares worth approximately ZAR10M (approx.£0.47K) in Q3 2022 in respect of its 29% direct shareholding in Glenover.
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• Glenover also entered into a conditional sale of shares agreement between Afrimat, Glenover and the shareholders of Glenover including Galileo Resources SA (Pty) Ltd the Company's wholly owned South African subsidiary under which Glenover has the option to acquire the sale of shares in and shareholders loans made to Glenover for ZAR300M (approx. £14m) which is expected to complete by 15 June 2023 if the option is exercised ("Conditional Share Sale Agreement").
  Galileo's 29% share of the gross Conditional Share Sale Agreement consideration in respect of its 29% direct shareholding in Glenover is ZAR87M (approx. £4.1m)

NEVADA

Ferber gold-copper project

Post period under review

Galileo initiated a project review aimed at identifying drill targets to test both skarn-typegold-copper occurrences and small-scale workings and Carlin-type gold occurrences on the 100% held property. Several priority drill sites were highlighted, with drill testing now planned for early in 2022.

FUNDRAISING

Period under review

• The Company issued 133 666 664 new ordinary shares to raise £ 2 million before expenses

www.galileoresources.com

Beaumont Cornish Limited

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Statement of Responsibility for the six months ended 30 September 2021

The directors are responsible for preparing the consolidated interim financial statements for the six months ended 30 September 2021 and they acknowledge, to the best of their knowledge and belief, that:

• the consolidated interim financial statements for the six months ended 30 September 2021 have been prepared in accordance with IAS 34 - Interim Financial Reporting, as adopted by the EU;
• based on the information and explanations given by management, the system of internal

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

• the going concern basis has been adopted in preparing the consolidated interim financial

statements and the directors of Galileo have no reason to believe that the Group will not be a going concern in the foreseeable future, based on forecasts and available cash resources;

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