1st Quarter Results

GALANTAS GOLD CORPORATION

TSXV & AIM : Symbol GAL

GALANTAS REPORTS RESULTS FOR THE QUARTER ENDED MARCH 31, 2014

May 28th, 2014: Galantas Gold Corporation (the 'Company') is pleased to announce its annual financial results for the Quarter ended March 31, 2014.

Financial Highlights

The Net Loss for the Quarter ended March 31, 2014 amounted to $ 501,200 which compared with a Net Loss of $ 440,554 for the Quarter ended March 31, 2013. Highlights of the first quarter 2014 results, which are expressed in Canadian Dollars, are:

Sales revenues for the quarter ended March 31, 2014 amounted to CDN$ Nil (2013: CDN$ 364,676). Following the suspension of production during the fourth quarter of 2013 due primarily to lower concentrate gold grade coupled with falling gold prices, there were no shipments of concentrates sales from the mine during the first quarter. The Company is presently reviewing the economics of continuing production through the processing of tailings cells.

Cost of sales for the quarter ended March 31, 2014 amounted to CDN$ 77,234 (2013: CDN$ 397,588). There was a decrease in various production costs at the Omagh mine during the quarter following the suspension of production during 2013. 

The Net Loss for the quarter ended March 31, 2014, amounted to CDN$ 502,100 (2013: Net Loss CDN$ 440,554). The cash loss generated from operating activities before changes in non-cash working capital for the first quarter of 2014 amounted to CDN$ 519,533 (2013: $ 239,907). The cash loss generated from operating activities after changes in non-cash working capital for 2014 amounted to CDN$ 62,262 (2013: CDN$ 85,235). The Company's cash balances March 31, 2014 amounted to CDN$ 59,616 which compared with CDN$ 823,661 at March 31, 2013. The Company working capital deficit at March 31, 2014 amounted to CDN$ 4,468,576 which compared with a deficit of CDN$ 2,722,908 at March 31, 2013.

Subsequent to March 31, 2014 Galantas completed a private placement financing for aggregate gross proceeds of approximately UK£ 516,500. Pursuant to the offering, an aggregate of 10,330,000 units were sold at a price of UK£ 0.05/CDN$0.09375 per common share. Each unit is comprised of one common share and one common share purchase warrant. In addition an application for a shares for debt exchange of 15,125,140 common shares for CDN$ 756,257 of the Company's debt was made to the TSX Venture Exchange subsequent to quarter end.

Production

Production at the Omagh mine remains suspended awaiting planning consent to continue operations underground. Due to continued delays in the planning process, management had to make significant redundancies in the workforce, alongside other cost reduction measures.

During the first quarter of 2014 the Company commenced pilot tests with regards to the processing of tailing cells filled during the earlier operation of the mine. The results confirm pre-existing data that indicated the tailings contain between 0.5g/t gold and 1 g/t gold and meet European Union standards for definition as inert material. A low energy cost processing solution, based upon a Knelson CD12 centrifugal gravity concentrator, which was already utilized in the gold processing plant in a secondary role, was successfully pilot tested as a prime re-treatment component for flotation tailings. The tailings do not require comminution (crushing and grinding) for re-processing by this method. Concentrate grades produced by the pilot study were higher than grades for flotation concentrate from mined vein material. Further test-work has produced anomalous results regarding percentage recovery and this is to be further investigated. The Company is presently reviewing the economics of continuing production through the processing of tailings cells as the size of the existing Knelson concentrator, whilst large enough to test the process, is not large enough to satisfactorily operate the process at the scale required for robust economics at present gold prices. The economics of acquiring a larger concentrator unit and ancillary equipment is subject to satisfactory recoveries being confirmed and the parallel assessment of other low power treatment methodologies is also being carried out.

Exploration

Exploration during the first quarter was restricted to surface sampling to conserve cash funds. Results were received for samples taken within the licences 3039, 3040 & 3235, which are located in the Republic Of Ireland, bordering the Company's Northern Ireland OM4 licence. Nineteen float, outcrop and stream sediment samples were collected from areas closely associated with major fault systems. The largest gold anomaly was identified in a stream sediment sample (0.37 g/t) taken from a NE tributary to Lough Derg. The general drainage for this area is derived from parts of the OM4 catchment. Further samples have been collected in the vicinity of anomalous results and from licence area 2315.

Key pathfinder element anomalies have been discovered for float, outcrop and soil samples collected within the OM4 Magheranageeragh target. Gold, Arsenic, Lead, Zinc and Copper anomalies were detected in a central area and specific element associations are identified which point towards a local mineral source. Analysis of geochemistry in combination with pH readings were performed this quarter. Under some circumstances this may assist in locating buried mineralization, in this case the method has helped to constrain an important area of interest. Further sampling and the examination of alternate influences are required before mineralization can be confirmed.

Official documents for two new licence areas in the ROI were received during the quarter. These licences encompass 47.8 km2 in the Manorhamilton region, 15 km east of Sligo town. The geological inlier is composed partially of rocks from the Dalradian group, and has a general trend of SW to NE. Importantly, NE trending faults are dominant and one major structure correlates with the Omagh Thrust. Historical records indicate the occurrence of Gold in this area. The duration of the licence is six years, with renewal and reports required every second year. These bring the total number of licences held by OML to 11, with a total coverage of 766.5 km2.

Technical detail of the exploration status of all licences is to be included in the upcoming NI.43-101 Technical Report.

During 2012 ACA Howe International Ltd (Howe UK) completed an Interim Resource to Canadian National Instrument NI 43-101 compliant mineral resource estimate and a Preliminary Economic Assessment for the Omagh Gold Project (see press release dated July 3, 2012). This report, filed in August 2012, which was based on drilling results and analyses received to June 2012, identified all resources discovered at that date. An updated resource estimate was prepared by the Company during the second quarter of 2013 based on drilling results received to May 5, 2013 (see press release dated June 12, 2013). The drilling program was mainly targeted to increase the amount of measured and indicated resources related to the potential development of anunderground mine. When compared to the resource estimate prepared in 2012 there has been a 50% increase in resources classified as measured and indicated from a total of 95,300 troy ounces gold (2012) to 142,533 troy ounces gold (2013) and a 28% increase in resources classified as inferred, from 231,000 troy ounces gold (2012) to 295,599 troy ounces gold (2013). The overall increase was 34%. Galantas subsequently filed an updated Technical Report on SEDAR in July 2013. 

Work continued during the first quarter of 2014 on updating the 2013 resource estimate to incorporate results from drill holes subsequent to May 2013 and not included previously. Also the main veins were re-strung to incorporate the new drill data and accommodate a revised cut-off grade and minimum mining width parameters. Importantly, the Joshua and Kearney drill intersects were strung to individual channels, this time consuming process has incorporated all of the available assay data in order to make a more informed assessment of grade continuity and vein geometry. The improved statistical assessment is expected to allow some category upgrading in that portion of the resource affected.

Based upon the updated technical analysis, work is also well advanced on the drafting of a revised NI 43-101 report. The work is expected to allow the delineation of mining reserves, following the completion of a detailed mining plan, mining schedule and comprehensive cost estimates, based upon underground working of the Joshua and Kearney veins.

Permitting

Discussions continued with the planning services in Northern Ireland during the first quarter of 2014 with regards to the planning application for an underground mine plan and accompanying Environmental Statement which were submitted to the Planning Services in 2012. Shareholders may see progress on the public planning portal at http://epicpublic.planningni.gov.uk/PublicAccess/zd/zdApplication/application_detailview.aspx?caseno=M6QQVVSV30000

Roland Phelps, President & CEO, Galantas Gold Corporation, commented, "Discussions are on-going with Planning Services on the underground mine proposal and road improvements (i.e. passing bays). Additional information has been submitted in relation to passing bays and we are awaiting confirmation from Planning Services that there are no further outstanding issues in this regard. Once confirmation is received, the application is expected to move to a determination of that matter. The underground mine proposal is nearing a conclusion also and we await confirmation that clarifications submitted in April are acceptable. A decision on the underground mine is expected to follow a decision on the passing bays. We have requested a further meeting with Planning Service to confirm a determination timeframe for both elements but the Company has been advised by its consultants that, due to bureaucratic delays, the time-line for planning determination may now be in the second half of 2014, although the date is undefined because it is in the hands of other parties. "

The detailed results and Management Discussion and Analysis (MD&A) are available on www.sedar.com and www.galantas.com and the highlights in this release should be read in conjunction with the detailed results and MD&A. The MD&A provides an analysis of comparisons with previous periods, trends affecting the business and risk factors.

Qualified Person

The financial components of this disclosure has been reviewed by Leo O' Shaughnessy (Chief Financial Officer) and the production, exploration and permitting components by Roland Phelps (President & CEO), qualified persons under the meaning of NI. 43-101. The information is based upon local production and financial data prepared under their supervision.

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 revenues and cost 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: gold price volatility; discrepancies between actual and estimated production, actual and estimated metallurgical recoveries and throughputs; mining operational risk, geological uncertainties; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign involvement; speculative nature of gold exploration; dilution; competition; loss of or availability of key employees; additional funding requirements; uncertainties regarding planning and other permitting issues; and defective title to mineral claims or property. These factors and others that could affect Galantas's 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.

Enquiries

Galantas Gold Corporation Jack Gunter P.Eng - ChairmanRoland Phelps C.Eng - President & CEOEmail: [email protected]Website: www.galantas.comTelephone: +44 (0) 2882 241100

Charles Stanley Securities (AIM Nomad & Broker)

Mark Taylor

Telephone +44 (0)20 7149 6000

NOTICE TO READER

The accompanying unaudited condensed interim consolidated financial statements of Galantas Gold Corporation (the "Company") have been prepared by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not been reviewed by the Company's auditors.

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Going concern (note 1)Contingent liability (note 16)Events after the reporting period (note 18)

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

The notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

These unaudited condensed interim consolidated financial statements have been prepared on a going concern basis which contemplates that Galantas Gold Corporation (the "Company") will be able to realize assets and discharge liabilities in the normal course of business. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern.

The Company's future viability depends on the consolidated results of the Company's wholly-owned subsidiary Cavanacaw Corporation ("Cavanacaw"). Cavanacaw has a 100% shareholding in Omagh Minerals Limited ("Omagh") which is engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland. Omagh has an open pit mine, which is in production and reported as property, plant and equipment and an underground mine which is in the exploration stage and reported as exploration and evaluation assets. The production at the open pit mine was suspended later in 2013 due to falling grades and gold prices.

The going concern assumption is dependent upon the ability of the Company to obtain the following:

Should the Company be unsuccessful in securing the above, there would be significant uncertainty over the Company's ability to continue as a going concern.

As at March 31, 2014, the Company had a deficit of $28,620,161 (December 31, 2013 - $28,118,061). Management is confident that it will be able to secure the required financing to enable the Company to continue as a going concern (see note 18(ii)). However, this is subject to a number of factors including market conditions.

These unaudited condensed interim consolidated financial statements do not reflect adjustments to the carrying values of assets and liabilities, the reported expenses and financial position classifications used that would be necessary if the going concern assumption was not appropriate. These adjustments could be material.

The Company was formed on September 20, 1996 under the name Montemor Resources Inc. on the amalgamation of 1169479 Ontario Inc. and Consolidated Deer Creek Resources Limited. The name was changed to European Gold Resources Inc. by articles of amendment dated July 25, 1997. On May 5, 2004, the Company changed its name from European Gold Resources Inc. to Galantas Gold Corporation. The Company was incorporated to explore for and develop mineral resource properties, principally in Europe. In 1997, it purchased all of the shares of Omagh which owns a mineral property in Northern Ireland, including a delineated gold deposit. Omagh obtained full planning and environmental consents necessary to bring its property into production.

The Company entered into an agreement on April 17, 2000, approved by shareholders on June 26, 2000, whereby Cavanacaw, a private Ontario corporation, acquired Omagh. Cavanacaw has established an open pit mine to extract the Company's gold deposit near Omagh. Cavanacaw also has developed a premium jewellery business founded on the gold produced under the name Galántas Irish Gold Limited ("Galántas").

As at July 1, 2007, the Company's Omagh mine began production.

The Company's operations include the consolidated results of Cavanacaw and its wholly-owned subsidiaries Omagh and Galántas.

The Company's common shares are listed on the TSX Venture Exchange and London Stock Exchange AIM under the symbol GAL. The primary office is located at 36 Toronto Street, Suite 1000, Toronto, Ontario, Canada, M5C 2C5.

Statement of compliance

The Company applies International Financial Reporting Standards ["IFRS"] as issued by the International Accounting Standards Board ["IASB"] and interpretations issued by the International Financial Reporting Interpretations Committee ["IFRIC"]. These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements.

The policies applied in these unaudited condensed interim consolidated financial statements are based on IFRSs issued and outstanding as of May 22, 2014 the date the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim consolidated financial statements as compared with the most recent annual consolidated financial statements as at and for the year ended December 31, 2013. Any subsequent changes to IFRS that are given effect in the Company's annual consolidated financial statements for the year ending December 31, 2014 could result in restatement of these unaudited condensed interim consolidated financial statements.

Change in accounting policies

IAS 32 - Financial Instruments, Presentation ("IAS 32") was effective for annual periods beginning on or after January 1, 2014. IAS 32 was amended to clarify that the right of offset must be available on the current date and cannot be contingent on a future date. At January 1, 2014, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements.

Recent accounting pronouncements

IFRS 9 - Financial Instruments ("IFRS 9") was issued by the IASB in October 2010 and will replace IAS 39 - Financial Instruments: Recognition and Measurement ("IAS 39"). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9. IFRS 9 will be effective for accounting periods beginning January 1, 2018. The Company is currently assessing the impact of this pronouncement.

Prepaid expenses includes advances for consumables and for construction of the passing bays in the Omagh mine.

The following is an aged analysis of accounts receivable:

Refer to note 13 for inventory movement.

Exploration and evaluation assets are expenditures for the underground mining operations in Omagh. The proposed underground mine is dependent on the ability of the Company to obtain the necessary planning permission.

The Company's decommissioning liability is as a result of mining activities at the Omagh mine in Northern Ireland. The Company estimated its decommissioning liability at March 31, 2014 based on a risk-free discount rate of 1% (December 31, 2013 - 1%) and an inflation rate of 1.50% (December 31, 2013 - 1.50%) . The expected undiscounted future obligations allowing for inflation are GBP 330,000 and based on management's best estimate the decommissioning is expected to occur over the next 5 to 10 years. On March 31, 2014, the estimated fair value of the liability is $555,810 (December 31, 2013 - $528,810). Changes in the provision during the period ended March 31, 2014 are as follows:

As required by the Crown in Northern Ireland, the Company is required to provide a bond for reclamation related to the Omagh mine in the amount of GBP 301,579 (December 31, 2013 - GBP 300,000), of which GBP 265,000 was funded as of March 31, 2014 and reported as long-term deposit of $488,395 (December 31, 2013 - $467,116).

Accounts payable and other liabilities of the Company are principally comprised of amounts outstanding for purchases relating to exploration costs on exploration and evaluation assets, general operating activities, amounts payable for financing activities and professional fees activities.

The following is an aged analysis of the accounts payable and other liabilities: