Galantas Gold Enters Into Binding Term Sheet for Joint Venture With Ocean Partners UK Limited to Develop Omagh Gold Project in Northern Ireland

Galantas Gold Corporation will joint venture its Omagh Gold Project in Northern Ireland with Ocean Partners UK Limited, exchanging approximately US$14 million in existing loans for an 80% interest in the subsidiaries that own the project. Ocean Partners will invest an initial US$3 million for exploration and restart plans, with an option for an additional US$5 million investment; Galantas will retain a 20% interest and focus on its Gairloch project in Scotland. The transaction, which constitutes a fundamental change in business, is subject to shareholder approval and other conditions, and is expected to recommence production amid rising gold prices while strengthening Galantas' balance sheet.

Analysis

Galantas Gold Corporation has entered into a binding term sheet with Ocean Partners UK Limited to joint venture its Omagh Gold Project, whereby Ocean Partners will acquire an 80% interest in the project's holding subsidiaries by exchanging approximately US$14 million in existing loans. This transaction is positioned as a "turning point" by Galantas' CEO, aimed at strengthening the company's balance sheet and enabling a restart of the Omagh Project amid rising gold prices, with Ocean Partners committing an initial US$3 million for exploration and restart activities, and an option for a further US$5 million. Galantas will retain a 20% interest, free-carried on the initial US$3 million investment, and has an option to convert this to a 3.00% net smelter return royalty. The deal, deemed a "fundamental change in business" and occurring while Galantas acknowledges "serious financial difficulty," will allow the company to shift its primary focus and resources towards advancing its Gairloch gold and copper project in Scotland. Concurrently, major shareholder Melquart Limited plans to convert approximately US$1.06 million of debt and accrued interest into equity at US$0.06 per share, which will increase its holding to roughly 35.4% of Galantas. Both the Ocean Partners joint venture and the Melquart debt conversion are subject to shareholder approvals, including disinterested shareholder consent due to related-party considerations and non-arm's length transaction rules, with a special meeting scheduled for August 5, 2025. Post-transaction, the Omagh Project assets, which incurred losses of £3.5 million on an asset base of £17.3 million in FY2023, will be de-consolidated from Galantas' financial statements.

Key Decisions for Investors

• Consider the significant financial restructuring for Galantas, where substantial debt reduction and external funding for the Omagh Project are secured in exchange for an 80% project stake, potentially unlocking value in a rising gold price environment.
• Closely monitor the outcome of the shareholder votes on August 5, 2025, as approval is critical for the execution of both the Omagh JV and the Melquart debt conversion, which collectively aim to stabilize the company's financial position.
• Re-evaluate Galantas' investment profile based on its reduced but carried interest in the Omagh Project, or potential Net Smelter Royalty, and the enhanced focus on the exploration potential of the Gairloch Project in Scotland.
• Factor in the dilutive effect of the Melquart debt conversion alongside its benefit of further balance sheet improvement and strategic alignment with a key shareholder.