As filed with
the Securities and Exchange Commission on December 22, 2022
Registration No.
333-
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM F-10
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GALIANO GOLD INC.
(Exact name of Registrant as specified in its charter)
| British
Columbia |
1040 |
Not Applicable |
| (Province or
other jurisdiction |
(Primary Standard Industrial |
(I.R.S. Employer |
| of
incorporation or organization) |
Classification Code Number) |
Identification Number) |
1640 - 1066 West Hastings
Street
Vancouver, British Columbia, Canada V6E 3X1
Telephone: (604) 683-8193
(Address and telephone number of Registrant's principal executive
offices)
Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware
United States 19711
Tel: (302) 738-6680
(Name, address (including zip code) and telephone number (including
area code) of agent for service in the United States)
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Copy to: |
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Matt Badylak, President and Chief
Executive Officer
Matt Freeman, Executive Vice President
and Chief Financial Officer
Galiano Gold Inc.
Suite 1640, 1066 West Hastings Street
Vancouver, British Columbia
Canada V6E 3X1
Telephone: (604) 683-8193 |
Adam M. Givertz
Christian G. Kurtz
Paul, Weiss, Rifkind, Wharton & Garrison LLP
77 King Street West, Suite 3100
Toronto, Ontario
Canada M5K 1J3
Telephone: (416) 504-0520 |
Michelle Audet
Blake, Cassels & Graydon LLP
595 Burrard Street
P.O. Box 49314, Suite 2600,
Three Bentall Centre
Vancouver, British Columbia
Canada V7X 1L3
Telephone: (604) 631-3300 |
Approximate date of commencement of
proposed sale of the securities to the public: From time to time
after this Registration Statement becomes effective.
Province of British Columbia,
Canada
(Principal jurisdiction regulating this offering)
It is proposed that this filing
shall become effective (check appropriate box below):
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[X] |
upon filing with the Commission, pursuant to Rule 467(a) (if in
connection with an offering being made contemporaneously in the
United States and Canada). |
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at some future date (check appropriate box below) |
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pursuant to Rule 467(b) on (date) at (time)
(designate a time not sooner than 7 calendar days after
filing). |
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2. |
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pursuant to Rule 467(b) on (date) at (time)
(designate a time 7 calendar days or sooner after filing) because
the securities regulatory authority in the review jurisdiction has
issued a receipt or notification of clearance on
(date). |
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pursuant to Rule 467(b) as soon as practicable after notification
of the Commission by the Registrant or the Canadian securities
regulatory authority of the review jurisdiction that a receipt or
notification of clearance has been issued with respect hereto. |
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after the filing of the next amendment to this Form (if preliminary
material is being filed). |
If any of the securities being
registered on this form are to be offered on a delayed or
continuous basis pursuant to the home jurisdiction's shelf
prospectus offering procedures, check the following box. [X]
Pursuant to Rule 429 under the
Securities Act, the prospectus contained in this Registration
Statement relates to Registration Statement
333-239109.
PART I
INFORMATION REQUIRED TO BE
DELIVERED TO OFFEREES OR PURCHASERS
SHORT FORM BASE SHELF
PROSPECTUS
| New Issue |
December 21, 2022 |
GALIANO GOLD INC.
US$300,000,000
Common
Shares
Warrants
Subscription Receipts
Units
Debt Securities
Share Purchase
Contracts
This short form base shelf
prospectus relates to the offering for sale from time to time,
during the 25-month period that this prospectus, including any
amendments hereto, remains effective, of the securities of Galiano
Gold Inc. (the "Company", "Galiano", "we" or
"our") listed above in one or more series or issuances, with
a total offering price of such securities, in the aggregate, of up
to US$300,000,000 (or the equivalent thereof in Canadian dollars or
one or more foreign currencies or composite currencies). The
securities may be offered separately or together, in amounts, at
prices and on terms to be determined based on market conditions at
the time of the sale and set forth in an accompanying prospectus
supplement.
In addition, the securities may be
offered and issued in consideration for the acquisition of other
businesses, assets or securities by the Company or a subsidiary of
the Company. The consideration for any such acquisition may consist
of any of the securities separately, a combination of securities or
any combination of, among other things, securities, cash and the
assumption of liabilities.
The common shares of the Company
(the "Common Shares") are listed for trading on the Toronto
Stock Exchange (the "TSX") and the NYSE American ("NYSE
American") under the trading symbol "GAU". On December 20,
2022, being the last complete trading day prior to the date hereof,
the closing price of the Common Shares on the TSX and NYSE American
was C$0.71 and US$0.524, respectively. Unless otherwise specified
in an applicable prospectus supplement, debt securities,
subscription receipts, units, warrants and share purchase contracts
will not be listed on any securities or stock exchange or on any
automated dealer quotation system. There is currently no market
through which our securities, other than our Common Shares, may be
sold and purchasers may not be able to resell such securities
purchased under this short form prospectus. This may affect the
pricing of our securities, other than our Common Shares, in the
secondary market, the transparency and availability of trading
prices, the liquidity of our securities and the extent of issuer
regulation. See "Risk Factors".
We are permitted under a
multijurisdictional disclosure system (the "MJDS") adopted by the
securities regulatory authorities in Canada and the United States
to prepare this prospectus in accordance with Canadian disclosure
requirements, which are different from those of the United States.
We prepare our financial statements in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS"), and such
financial statements are subject to Canadian auditing and auditor
independence standards. As a result, such financial statements may
not be comparable to the financial statements of United States
companies.
i
Acquiring our securities may
subject you to tax consequences both in the United States and
Canada. This prospectus or any applicable prospectus supplement may
not describe these tax consequences fully. You should read the tax
discussion in any applicable prospectus supplement with respect to
any particular offering and consult your own tax advisor with
respect to your own particular circumstances.
Your ability to enforce civil
liabilities under the United States federal securities laws may be
affected adversely because we are incorporated in British Columbia,
Canada, the majority of our officers and directors and certain of
the experts named in this prospectus are Canadian residents, and
the underwriters, dealers or agents named in any prospectus
supplement may be, residents of a country other than the United
States and all of our assets are located outside of the United
States.
NEITHER THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS APPROVED
OR DISAPPROVED THE SECURITIES OFFERED HEREBY, OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
No underwriter has been involved
in the preparation of this prospectus or performed any review of
the contents of this prospectus.
This prospectus constitutes a
public offering of the securities only in those jurisdictions where
they may be lawfully offered for sale and only by persons permitted
to sell the securities in such jurisdiction. All applicable
information permitted under securities legislation to be omitted
from this prospectus that has been so omitted will be contained in
one or more prospectus supplements that will be delivered to
purchasers together with this prospectus. Each prospectus
supplement will be incorporated by reference into this prospectus
for the purposes of securities legislation as of the date of the
prospectus supplement and only for the purposes of the distribution
of the securities to which the prospectus supplement pertains. You
should read this prospectus and any applicable prospectus
supplement carefully before you invest in any securities issued
pursuant to this prospectus.
Our securities may be sold pursuant
to this prospectus through underwriters or dealers or directly or
through agents designated from time to time at amounts and prices
and other terms determined by us. In connection with any
underwritten offering of securities, excluding an "at-the-market
distribution" as defined in National Instrument 44-102 - Shelf
Distributions (an "ATM Distribution"), the underwriters
may over-allot or effect transactions which stabilize or maintain
the market price of the securities offered. Such transactions, if
commenced, may be discontinued at any time. No underwriter or
dealer involved in an ATM Distribution undertaken pursuant to any
prospectus supplement, no affiliate of such an underwriter or
dealer and no person or company acting jointly or in concert with
such an underwriter or dealer will over-allot or effect
transactions which stabilize or maintain the market price of the
securities offered.
This prospectus may qualify an ATM
Distribution. The Company's securities may be sold, from time to
time, in one or more transactions at a fixed price or prices which
may be changed or at market prices prevailing at the time of sale,
at prices related to such prevailing market price or at negotiated
prices, including sales in transactions that are deemed to be ATM
Distributions, including sales made directly on the TSX, NYSE
American or other existing trading markets for the securities. See
"Plan of Distribution".
A prospectus supplement will set
out the names of any underwriters, dealers or agents involved in
the sale of our securities, the amounts, if any, to be purchased by
underwriters, the plan of distribution for such securities,
including the net proceeds we expect to receive from the sale of
such securities, if any, the amounts and prices at which such
securities are sold and the compensation of such underwriters,
dealers or agents.
Investment in the securities
being offered is highly speculative and involves significant risks
that you should consider before purchasing such securities. You
should carefully review the risks outlined in this prospectus
(including any prospectus supplement) and in the documents
incorporated by reference as well as the information under the
heading "Cautionary Note Regarding Forward-Looking Statements" and
consider such risks and information in connection with an
investment in the securities. See "Risk Factors".
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The specific terms of the
securities with respect to a particular offering will be set out in
one or more prospectus supplements and may include, where
applicable: (i) in the case of Common Shares, the number of Common
Shares offered, the offering price and any other specific terms;
(ii) in the case of warrants, the offering price, the designation,
number and terms of the Common Shares or debt securities issuable
upon exercise of the warrants, any procedures that will result in
the adjustment of these numbers, the exercise price, dates and
periods of exercise, the currency in which the warrants are issued
and any other specific terms; (iii) in the case of subscription
receipts, the number of subscription receipts being offered, the
offering price, the procedures for the exchange of the subscription
receipts for Common Shares, debt securities or warrants, as the
case may be, and any other specific terms; (iv) in the case of debt
securities, the specific designation, the aggregate principal
amount, the currency or the currency unit for the debt securities
being offered, the maturity, the interest provisions, the
authorized denominations, the offering price, the covenants, the
events of default, any terms for redemption or retraction, any
exchange or conversion terms, whether the debt securities are
secured, affiliate-guaranteed, senior or subordinated and any other
terms specific to the debt securities being offered; (v) in the
case of units, the designation, number and terms of the Common
Shares, warrants, subscription receipts, share purchase contracts
or debt securities comprising the units; and (vi) in the case of
share purchase contracts, whether the share purchase contracts
obligate the holder to purchase or sell or both purchase and sell
Common Shares, whether the share purchase contracts are to be
prepaid or not or paid in instalments, any conditions upon which
the purchase or sale will be contingent and the consequences if
such conditions are not satisfied, whether the share purchase
contracts are to be settled by delivery, any provisions relating to
the settlement of the share purchase contracts, the date or dates
on which the sale or purchase must be made, whether the share
purchase contracts will be issued in fully registered or global
form and the material income tax consequences of owning, holding
and disposing of the share purchase contracts. Where required by
statute, regulation or policy, and where securities are offered in
currencies other than Canadian dollars, appropriate disclosure of
foreign exchange rates applicable to the securities will be
included in the prospectus supplement describing the
securities.
Michael Price and Judith Mosely,
each a director of the Company, and Greg Collins, Alan Eslake,
Mario E. Rossi, Malcom Titley and Benoni Owusu Ansah, each named as
an expert herein, reside outside of Canada and have appointed
Blakes Vancouver Services Inc., c/o Blake, Cassels & Graydon
LLP located at Suite 2600, 595 Burrard Street, Vancouver, British
Columbia, V7X 1L3, Canada for service of process in Canada. See
"Agent for Service of Process".
Investors should rely only on the
information contained in or incorporated by reference into this
prospectus and any applicable prospectus supplement. We have not
authorized anyone to provide investors with different information.
Information contained on our website shall not be deemed to be a
part of this prospectus (including any applicable prospectus
supplement) or incorporated by reference herein and should not be
relied upon by prospective investors for the purpose of determining
whether to invest in the securities. We will not make an offer of
these securities in any jurisdiction where the offer or sale is not
permitted. Investors should not assume that the information
contained in this prospectus is accurate as of any date other than
the date on the face page of this prospectus, the date of any
applicable prospectus supplement or the date of any documents
incorporated by reference herein.
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TABLE OF CONTENTS
iv
ABOUT THIS PROSPECTUS
You should rely only on the
information contained or incorporated by reference in this
prospectus and any applicable prospectus supplement and on the
other information included in the registration statement of which
this prospectus will form a part. We have not authorized anyone to
provide you with different or additional information. If anyone
provides you with different or additional information, you should
not rely on it. We are not making an offer to sell or seeking an
offer to buy the securities offered pursuant to this prospectus in
any jurisdiction where the offer or sale is not permitted. You
should assume that the information contained in this prospectus and
any applicable prospectus supplement is accurate only as of the
date on the front of such document and that information contained
in any document incorporated by reference is accurate only as of
the date of that document, regardless of the time of delivery of
this prospectus or any applicable prospectus supplement or of any
sale of our securities pursuant thereto. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
Market data and certain industry
forecasts used in this prospectus and any applicable prospectus
supplement, and the documents incorporated by reference in this
prospectus and any applicable prospectus supplement, were obtained
from market research, publicly available information and industry
publications. We believe that these sources are generally reliable,
but the accuracy and completeness of this information is not
guaranteed. We have not independently verified such information,
and we do not make any representation as to the accuracy of such
information.
In this prospectus and any
prospectus supplement, unless otherwise indicated, all dollar
amounts and references to "US$" or "$" are to U.S. dollars and
references to "C$" are to Canadian dollars. This prospectus and the
documents incorporated by reference contain translations of certain
US dollar amounts into Canadian dollars solely for your
convenience. See "Currency Presentation and Exchange Rate
Information".
In this prospectus and in any
prospectus supplement, unless the context otherwise requires,
references to "we", "us", "our" or similar terms, as well as
references to "Galiano" or the "Company", refer to Galiano Gold
Inc. together, where context requires, with our subsidiaries.
CAUTIONARY NOTE TO UNITED STATES
INVESTORS
We are permitted under a
multijurisdictional disclosure system adopted by the securities
regulatory authorities in Canada and the United States to prepare
this prospectus, including the documents incorporated by reference
and any prospectus supplement, in accordance with the requirements
of Canadian securities laws, which differ from the requirements of
United States securities laws. Financial statements included
or incorporated by reference herein have been prepared in
accordance with IFRS and are subject to Canadian auditing and
auditor independence standards and thus may not be comparable to
financial statements of United States companies.
As a British Columbia corporation
and a "reporting issuer" under Canadian securities laws, we are
required to provide disclosure regarding our mineral properties in
accordance with Canadian National Instrument 43-101 Standards of
Disclosure for Mineral Projects ("NI 43-101"). NI 43-101
is a rule developed by the Canadian Securities Administrators that
establishes standards for all public disclosure an issuer makes of
scientific and technical information concerning mineral
projects. In accordance with NI 43-101, we use the terms
mineral reserves and resources as they are defined in accordance
with the CIM Definition Standards on mineral reserves and resources
(the "CIM Definition Standards") adopted by the Canadian
Institute of Mining, Metallurgy and Petroleum. In particular,
the terms "mineral reserve", "proven mineral reserve", "probable
mineral reserve", "mineral resource", "measured mineral resource",
"indicated mineral resource" and "inferred mineral resource" used
in this prospectus and the documents incorporated by reference
herein are Canadian mining terms defined in accordance with CIM
Definition Standards. These definitions differ from the definitions
in the disclosure requirements promulgated by the Securities and
Exchange Commission ("SEC"). Accordingly, information
contained in this prospectus and the documents incorporated by
reference herein may not be comparable to similar information made
public by U.S. companies reporting pursuant to SEC disclosure
requirements.
United States investors are also
cautioned that while the SEC will now recognize "measured mineral
resources", "indicated mineral resources" and "inferred mineral
resources", investors should not assume that any part or all of the
mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves.
Mineralization described using these terms has a greater amount of
uncertainty as to their existence and feasibility than
mineralization that has been characterized as reserves.
Accordingly, investors are cautioned not to assume that any
"measured mineral resources", "indicated mineral resources", or
"inferred mineral resources" that we report are or will be
economically or legally mineable. Further, "inferred
resources" have a greater amount of uncertainty as to their
existence and as to whether they can be mined legally or
economically. Therefore, United States investors are also cautioned
not to assume that all or any part of the inferred resources
exist. In accordance with Canadian rules, estimates of
"inferred mineral resources" cannot form the basis of feasibility
or other economic studies, except in limited circumstances where
permitted under NI 43-101.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
The Company cautions readers
regarding forward-looking statements found in this prospectus
(including the documents incorporated by reference herein) and in
any other statement made by, or on the behalf of the Company.
Generally, forward-looking information can be identified by the use
of forward-looking terminology such as "plans", "expects",
"estimates", "anticipates", or variations of such words and phrases
or statements that certain actions, events or results "may",
"could", or "might" occur. Forward-looking statements are made
based on management's beliefs, estimates and opinions and are given
only as of the date of this prospectus. Such statements may
constitute "forward-looking information" within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities legislation.
Forward-looking statements are
statements not based on historical information and which relate to
future operations, strategies, financial results or other
developments. Forward-looking statements reflect the Company's
current views with respect to expectations, beliefs, assumptions,
estimates and forecasts about the business of the JV (as defined
below) and the Company and the industry and markets in which the JV
and the Company operate. Forward-looking statements include, but
are not limited to, statements with respect to:
• the
future price of gold;
• the
operating plans for the Asanko Gold Mine (the "AGM") under
the Joint Venture (the "JV") between the Company and Gold
Fields Limited ("Gold Fields");
• the
estimation of mineral resources;
• the
reinstatement of mineral reserve estimates;
• the
timing and amount of estimated future production from the AGM,
including production rates and gold recovery;
• operating
costs with respect to the operation of the AGM;
• capital
expenditures that are required to sustain and expand mining
activities;
• the
timing, costs and project economics associated with the JV's
development plans for the AGM;
• cost
savings due to the initiative to review and improve the AGM's
supply chain and procurement processes over the life of mine;
• the
availability of capital to fund the JV's expansion plans and to
fund the Company's contributions to the JV's development plans;
• the
Company's intention to prepare a revised optimized mine plan and a
further updated technical report supporting the new life of mine
plan;
• expected
timing regarding the update of life of mine plan to feasibility
level;
• any
additional work programs to be undertaken by the Company;
• activities
to be completed while mining activities are temporarily
deferred;
• longer‐term
costs savings and a more streamlined and efficient operation going
forward resulting from a workforce restructuring;
• payment
of the severance provision associated with the workforce
restructuring;
• interpretation
of the metallurgical testing results received to date and alignment
with the metallurgical recovery model;
• the
optimization of the AGM's plant performance;
• performance
of stockpiled ore above management's forecast;
• the
next stage of the Company's drilling efforts;
• the
timing of the development of new deposits;
• success
of exploration activities;
• permitting
timelines;
• hedging
practices;
• currency
exchange rate fluctuations;
• requirements
for additional capital;
• operating
cash flows;
• government
regulation of mining operations;
• environmental
risks and remediation measures;
• expected
timing for implementation of the Global Industry Standard on
Tailings Management;
• advancement
and implementation of the Company's climate change adaptation plan
and related energy efficient initiatives;
• alignment
with International Council on Mining and Metals' Mining
Principles;
• unanticipated
reclamation expenses;
• changes
in accounting policies;
• higher
mined grades than plant feed grades;
• title
disputes or claims; and
• limitations
on insurance coverage.
Forward-looking statements are not
guarantees of future performance and involve risks, uncertainties
and assumptions, which are difficult to predict. These
uncertainties and contingencies can affect actual results and could
cause actual results to differ materially from those expressed in
any forward-looking statements made by or on behalf of the Company.
The JV and Company's actual future results or performance are
subject to certain risks and uncertainties including but not
limited to:
• mineral
resource estimates may change and may prove to be inaccurate;
• mineral
reserves may not be reinstated;
• metallurgical
recoveries may not be economically viable;
• life
of mine ("LOM") estimates are based on a number of factors
and assumptions and may prove to be incorrect;
• actual
production, costs, returns and other economic and financial
performance may vary from the Company's estimates in response to a
variety of factors, many of which are not within the Company's
control;
• AGM
has a limited operating history and is subject to risks associated
with establishing new mining operations;
• sustained
increases in costs, or decreases in the availability, of
commodities consumed or otherwise used by the Company may adversely
affect the Company;
• adverse
geotechnical and geological conditions (including geotechnical
failures) may result in operating delays and lower throughput or
recovery, closures or damage to mine infrastructure;
• the
ability of the Company to treat the number of tonnes planned,
recover valuable materials, remove deleterious materials and
process ore, concentrate and tailings as planned is dependent on a
number of factors and assumptions which may not be present or occur
as expected;
• the
JV's mineral properties may experience a loss of ore due to illegal
mining activities;
• the
Company's operations may encounter delays in or losses of
production due to equipment delays or the availability of
equipment;
• the
outbreak of COVID-19 ("COVID-19") has had a negative impact
on global financial conditions, demand for commodities and supply
chains and could adversely affect the Company's business, financial
condition and results of operations and the market price of the
Common Shares;
• the
Company's operations are subject to continuously evolving
legislation, compliance with which may be difficult, uneconomic or
require significant expenditures;
• the
Company may be unsuccessful in attracting and retaining key
personnel;
• labour
disruptions could adversely affect the Company's operations;
• recoveries
may be lower in the future and have a negative impact on the
Company's financial results;
• the
Company's business is subject to risks associated with operating in
a foreign country;
• risks
related to the Company's use of contractors;
• the
hazards and risks normally encountered in the exploration,
development and production of gold;
• the
Company's operations are subject to environmental hazards and
compliance with applicable environmental laws and regulations;
• the
effects of climate change or extreme weather events may cause
prolonged disruption to the delivery of essential commodities which
could negatively affect production efficiency;
• the
Company's operations and workforce are exposed to health and safety
risks;
• unexpected
costs and delays related to, or the failure of the Company to
obtain, necessary permits could impede the Company's
operations;
• the
Company's title to exploration, development and mining interests
can be uncertain and may be contested;
• geotechnical
risks associated with the design and operation of a mine and
related civil structures;
• the
Company's properties may be subject to claims by various community
stakeholders;
• risks
related to limited access to infrastructure and water;
• the
Company's exploration programs may not successfully reinstate
mineral reserves;
• risks
associated with establishing new mining operations;
• the
Company's revenues are dependent on the market prices for gold,
which have experienced significant recent fluctuations;
• the
Company may not be able to secure additional financing when needed
or on acceptable terms;
• Company
shareholders may be subject to future dilution;
• risks
related to the control of AGM cashflows and operation through a
joint venture;
• risks
related to changes in interest rates and foreign currency exchange
rates;
• risks
relating to credit rating downgrades;
• changes
to taxation laws applicable to the Company may affect the Company's
profitability;
• ability
to repatriate funds;
• risks
related to the Company's internal controls over financial reporting
and compliance with applicable accounting regulations and
securities laws;
• the
carrying value of the Company's assets may change and these assets
may be subject to impairment charges;
• risks
associated with changes in reporting standards;
• the
Company's primary asset is held through a joint venture, which
exposes the Company to risks inherent to joint ventures, including
disagreements with joint venture partners and similar risks;
• the
Company may be liable for uninsured or partially insured
losses;
• the
Company may be subject to litigation;
• damage
to the Company's reputation could result in decreased investor
confidence and increased challenges in developing and maintaining
community relations which may have adverse effects on the business,
results of operations and financial conditions of the JV and the
Company and the Company's share price;
• the
Company may be unsuccessful in identifying targets for acquisition
or completing suitable corporate transactions, and any such
transactions may not be beneficial to the Company or its
shareholders;
• the
Company must compete with other mining companies and individuals
for mining interests;
• risks
related to information systems security threats;
• it
may not be possible to enforce actions against certain directors
and officers of the Company or the experts named in this prospectus
under U.S. federal securities laws;
• the
Company's growth, future profitability and ability to obtain
financing may be impacted by global financial conditions;
• the
Common Shares may experience price and trading volume
volatility;
• the
Company has never paid dividends and does not expect to do so in
the foreseeable future;
• there
may be adverse Canadian tax consequences for a foreign controlled
Canadian company that acquires the securities of the Company;
• the
Company has discretion in the use of the net proceeds from an
offering;
• there
is an absence of a public market for certain of the securities;
• the
debt securities will be structurally subordinated to any
indebtedness of the Company's subsidiaries and the Company's
ability to service indebtedness is dependent on the results of
operations of, and payments received from, its subsidiaries;
• changes
in interest rates or fluctuations in currency markets may cause the
market price or value of the debt securities to decline;
• United
States investors may not be able to obtain enforcement of civil
liabilities against the Company;
• the
debt securities may be unsecured and will rank equally in right of
payment with all of our other existing and future unsecured
debt;
• shareholders
of the Company may be unable to sell significant quantities of
Common Shares into the public trading markets without a significant
reduction in the price of their Common Shares, or at all;
• the
exercise of stock options or the settlement of the share units and
the subsequent resale of such Common Shares in the public market
could adversely affect the prevailing market price and the
Company's ability to raise equity capital in the future at a time
and price which it deems appropriate; and
• the
risk factors described under the heading "Risk Factors" in, or
incorporated by reference in, this prospectus.
Forward-looking statements are
necessarily based upon estimates and assumptions, which are
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
beyond the Company's control and many of which, regarding future
business decisions, are subject to change. Assumptions underlying
the Company's expectations regarding forward-looking statements or
information contained in this prospectus include, among others:
• the
ability of the AGM to continue to operate, produce and ship doré
from the AGM site to be refined during COVID-19 or any other
infectious disease outbreak;
• the
Company and Gold Fields will agree on the manner in which the JV
will operate the AGM, including agreement on development plans and
capital expenditures;
• the
price of gold will not decline significantly or for a protracted
period of time;
• the
Company's ability to raise sufficient funds from future debt or
equity financings to support its operations, and general business
and economic conditions;
• the
global financial markets and general economic conditions will be
stable and prosperous in the future;
• the
AGM will not experience any significant uninsured production
disruptions that would materially affect revenues;
• the
ability of the JV and the Company to comply with applicable
governmental regulations and standards;
• the
mining laws, tax laws and other laws in Ghana applicable to the AGM
and the JV will not change materially, and there will be no
imposition of additional exchange controls in Ghana;
• the
success of the JV and the Company in implementing its development
strategies and achieving its business objectives;
• the
JV will have sufficient working capital necessary to sustain its
operations on an ongoing basis and the Company will continue to
have sufficient working capital to fund its operations and
contributions to the JV; and
• the
key personnel of the Company and the JV will continue their
employment.
The foregoing list of assumptions
cannot be considered exhaustive.
We have also assumed that no
significant events will occur outside of our normal course of
business. Although we believe that the assumptions inherent in the
forward-looking statements are reasonable as of the date of this
prospectus, forward-looking statements are not guarantees of future
performance and, accordingly, undue reliance should not be put on
such statements due to the inherent uncertainty therein. For the
reasons set forth above, prospective investors should not place
undue reliance on forward-looking statements. The Company
undertakes no obligation to update forward-looking information if
these beliefs, estimates and opinions or other circumstances should
change, except as may be required by applicable law.
DOCUMENTS INCORPORATED
BY REFERENCE
Information has been
incorporated by reference in this short form base shelf prospectus
from documents filed with the securities commissions or similar
authorities in Canada and with the SEC in the United
States.
Copies of the documents
incorporated herein by reference may be obtained on request without
charge from the Chief Financial Officer of Galiano Gold Inc., at
Suite 1640, 1066 West Hastings Street, Vancouver, British Columbia,
V6E 3X1 (Telephone 604-683-8193) Attn: Matthew Freeman or by
accessing the disclosure documents through the Internet on the
Canadian System for Electronic Document Analysis and Retrieval
("SEDAR"), at www.sedar.com. Documents filed
with, or furnished to, the SEC are available through the SEC's
Electronic Data Gathering and Retrieval System ("EDGAR"), at
www.sec.gov. The
Company's filings through SEDAR and EDGAR are not incorporated by
reference in the prospectus except as specifically set out
herein.
The following documents, filed with
the securities commissions or similar regulatory authorities in
certain provinces and territories of Canada and filed with, or
furnished to, the SEC are specifically incorporated by reference
into, and form an integral part of, this short form base shelf
prospectus:
• our
annual information form for the year ended December 31, 2021, dated
as at March 29, 2022 and filed on March 29, 2022 (our "2021
AIF");
• our
consolidated financial statements for the years ended December 31,
2021 and 2020 comprised of the consolidated balance sheets as at
December 31, 2021 and 2020 and the consolidated statements of
operations and comprehensive income (loss), cash flows and changes
in equity for the years then ended, and the notes thereto and the
report of the independent registered public accounting firm
thereon, filed on March 29, 2022;
• our
management's discussion and analysis for the years ended December
31, 2021 and 2020, filed on March 29, 2022;
• our
condensed consolidated interim financial statements for the three
and nine months ended September 30, 2022 and 2021 and the notes
thereto, filed on November 9, 2022;
• our
management's discussion and analysis for the three and nine months
ended September 30, 2022 and 2021, filed on November 9, 2022;
• the
management information circular dated April 27, 2022 with respect
to the annual general meeting of our shareholders held on June 2,
2022, filed on May 3, 2022;
• the
material change report filed on February 25, 2022, announcing that
recent gold recovery had been lower than expected at the AGM;
• the
material change report filed on April 1, 2022, announcing that
Fausto Di Trapani was stepping down as Chief Financial Officer of
the Company and being replaced by Matthew Freeman, in line with the
Company's succession plan; and
• the
material change report filed on April 8, 2022, announcing fourth
quarter and full year 2021 operating and financial results for the
Company and the AGM, along with an updated mineral resource
estimate.
Any documents of the type described
in Section 11.1 of Form 44-101F1 Short Form Prospectuses
filed by the Company with a securities commission or similar
authority in any province or territory of Canada subsequent to the
date of this short form base shelf prospectus and prior to the
expiry of this prospectus, or the completion of the issuance of
securities pursuant hereto, will be deemed to be incorporated by
reference into this prospectus.
In addition, to the extent that any
document or information incorporated by reference into this
prospectus is filed with, or furnished to, the SEC pursuant to the
U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the date of this prospectus, such document or
information will be deemed to be incorporated by reference as an
exhibit to the registration statement of which this prospectus will
form a part (in the case of a report on Form 6-K, if and to the
extent expressly provided therein).
A prospectus supplement containing
the specific terms of any offering of our securities will be
delivered to purchasers of our securities together with this
prospectus and will be deemed to be incorporated by reference in
this prospectus as of the date of the prospectus supplement and
only for the purposes of the offering of our securities to which
that prospectus supplement pertains.
Any statement contained in this
prospectus or in a document incorporated or deemed to be
incorporated by reference in this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the
extent that a statement contained herein, in any prospectus
supplement hereto or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. The modifying or superseding
statement need not state that it has modified or superseded a prior
statement or include any other information set forth in the
document that it modifies or supersedes. The making of a modifying
or superseding statement is not to be deemed an admission for any
purposes that the modified or superseded statement, when made,
constituted a misrepresentation, an untrue statement of a material
fact or an omission to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made. Any statement so
modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
Any template version of any
"marketing materials" (as such term is defined in NI 44-101
Short Form Prospectus Distributions) filed after the date of
a prospectus supplement and before the termination of the
distribution of the securities offered pursuant to such prospectus
supplement (together with this prospectus) is deemed to be
incorporated by reference in such prospectus supplement.
Upon our filing of a new annual
information form and the related annual financial statements and
management's discussion and analysis with applicable securities
regulatory authorities during the currency of this prospectus, the
previous annual information form, the previous annual financial
statements and management's discussion and analysis and all interim
financial statements, supplemental information, material change
reports and information circulars filed prior to the commencement
of our financial year in which the new annual information form is
filed will be deemed no longer to be incorporated into this
prospectus for purposes of future offers and sales of our
securities under this prospectus. Upon interim consolidated
financial statements and the accompanying management's discussion
and analysis and material change report being filed by us with the
applicable securities regulatory authorities during the duration of
this prospectus, all interim consolidated financial statements and
the accompanying management's discussion and analysis filed prior
to the new interim consolidated financial statements shall be
deemed no longer to be incorporated into this prospectus for
purposes of future offers and sales of securities under this
prospectus.
References to our website in any
documents that are incorporated by reference into this prospectus
do not incorporate by reference the information on such website
into this prospectus, and we disclaim any such incorporation by
reference.
DOCUMENTS FILED AS PART OF THE
REGISTRATION STATEMENT
The following documents will be
filed with the SEC as part of the registration statement on Form
F-10 of which this prospectus will form a part: (i) the documents
listed under the heading "Documents Incorporated by Reference";
(ii) powers of attorney from our directors and officers, as
applicable; (iii) the consent of KPMG LLP; (iv) the consent of each
expert listed in the exhibit index of the registration statement;
and (v) the form of debt indenture. A copy of the form of warrant
indenture, subscription receipt agreement or statement of
eligibility of trustee on Form T-1, as applicable, will be filed by
post-effective amendment or by incorporation by reference to
documents filed or furnished with the SEC under the Exchange
Act.
ADDITIONAL INFORMATION
A registration statement on Form
F-10 will be filed by the Company with the SEC in respect of the
offering of securities. The registration statement, of which this
short form prospectus will form a part, contains additional
information not included in this short form prospectus, certain
items of which will be contained in the exhibits to such
registration statement, pursuant to the rules and regulations of
the SEC. Our SEC filings are available through EDGAR at
www.sec.gov.
Our Common Shares are registered
under Section 12(b) of the Exchange Act by virtue of being listed
on the NYSE American, and as a result we are required to publicly
file reports and other information with the SEC under the Exchange
Act. Under the MJDS, the Company is permitted to prepare such
reports and other information in accordance with Canadian
disclosure requirements, which are different from United States
disclosure requirements. In addition, as a foreign private issuer,
we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of proxy statements in connection with
meetings of its shareholders, and our officers, directors and
principal shareholders are exempt from the reporting and
short-swing profit recovery rules contained in Section 16 of the
Exchange Act.
CURRENCY PRESENTATION AND
EXCHANGE RATE INFORMATION
Except as otherwise noted in our
2021 AIF and our financial statements and related management's
discussion and analysis of financial condition and results of
operations that are incorporated by reference into this prospectus,
the financial information contained in such documents is expressed
in US dollars. Exchange rates between US dollars and the Canadian
dollar are included below.
The high, low, average and closing
rates for the US dollar in terms of Canadian dollars for each of
the financial periods indicated below, as quoted by the Bank of
Canada, were as follows:
|
|
Nine months ended
September 30, 2022 |
Nine months ended
September 30, 2021 |
Year ended
December 31, 2021 |
Year ended
December 31, 2020 |
|
|
(expressed in Canadian dollars) |
|
High |
1.3726 |
1.2856 |
1.2942 |
1.4496 |
|
Low |
1.2451 |
1.2040 |
1.2040 |
1.2718 |
|
Average |
1.2828 |
1.2513 |
1.2535 |
1.3415 |
|
Closing |
1.3707 |
1.2741 |
1.2678 |
1.2732 |
On December 20, 2022, the daily
exchange rate for the US dollar in terms of Canadian dollars, as
quoted by the Bank of Canada, was US$1.00 = C$1.3621.
THE COMPANY
The following description of the
Company is, in some instances, derived from selected information
about us contained in the documents incorporated by reference into
this prospectus. This description does not contain all of the
information about us and our properties and business that you
should consider before investing in any securities. You should
carefully read the entire prospectus and the applicable prospectus
supplement, including the section entitled "Risk Factors", as well
as the documents incorporated by reference into this prospectus and
the applicable prospectus supplement, before making an investment
decision.
Name, Address and
Incorporation
The Company was incorporated on
September 23, 1999 under the Business Corporations Act (British
Columbia) (the "BCBCA"). The Company completed the
acquisition of PMI Gold Corporation ("PMI") on February 6,
2014 by way of a court approved plan of arrangement transaction.
The Company changed its corporate name to Galiano Gold Inc.
effective April 30, 2020.
The Company's registered and
records office is located at Suite 2600, Three Bentall Centre, 595
Burrard Street, P.O. Box 49314, Vancouver, British Columbia, V7X
1L3. The Company's Canadian head office is located at Suite 1640 -
1066 West Hastings Street, Vancouver, British Columbia, V6E
3X1.
Summary Description of the
Business
The Company's vision is focused on
building a sustainable business capable of long‐term value creation
for its stakeholders through a combination of exploration,
accretive acquisitions and the disciplined deployment of its
financial resources.
The Company's principal asset is
its interest in the JV, which owns the AGM located in Ghana, West
Africa. The Company holds its 45% interest in the AGM through a
50:50 joint venture arrangement stemming from the completion of the
JV formation transaction on July 31, 2018 (the "JV
Transaction"). The Company is the operator and manager of the
JV. The AGM is a multi‐deposit complex, with two main deposits,
Nkran and Esaase, and a number of satellite deposits. The mine has
been developed in phases. The first phase comprised the
construction of a 3 million tonne per annum ("Mtpa")
carbon-in-leach ore processing facility and bringing the first pit,
Nkran, into production ("Phase 1"). Phase 1 was financed in
part by a Definitive Senior Facilities Agreement with Red Kite in
the amount of $150.0 million plus $13.9 million in unpaid interest.
The second phase comprised bringing the Esaase pit into production
and increasing the capacity of the processing plant to 5.4Mtpa.
Gold production commenced in January 2016, commencement of
commercial production was declared on April 1, 2016, and the
operation reached steady‐state production levels by the end of the
second quarter of 2016, which continued through 2021 and into
2022.
Recent Updates
On February 25, 2022, the Company
announced that recent gold recovery had been lower than expected at
the AGM resulting from an increase in gold grades in tailings
product leaving the processing facility and gold recovery had been
negatively impacted. The Company initiated a work program designed
to ascertain the cause of the elevated grade in the tailings
product.
On March 29, 2022, the Company
announced that it would temporarily defer mining operations and
transition to processing existing stockpiles, while technical work
to support a mineral reserve at the AGM is ongoing. Mining
continued at Akwasiso Cut 3 and Esaase Cut 3 until their depletion
in July 2022 and May 2022, respectively, following which, the
process plant is expected to continue to operate at full capacity
(5.8Mtpa) processing a portion of the then existing 9.5Mt of
stockpiles.
On July 8, 2022, the Company
provided an update on metallurgical test work and plant recoveries
at the AGM. Core samples from sixteen diamond drill holes were
tested at an internal laboratory with encouraging results received;
results indicated alignment with the historical metallurgical test
work previously carried out at the Esaase deposit.
On September 8, 2022, the Company
provided details of high-grade mineralization encountered at Nkran
below the existing known resource shell. Furthermore, on August 25,
2022, the Company provided an update on Nkran infill drilling which
indicated several high-grade intervals within and below the
resource shell as described in the 2022 Technical Report (defined
below). The results of these drill programs are being incorporated
into an updated Mineral Resource Estimate.
On September 29, 2022, the Company
provided an update on the independent metallurgical test work
conducted on the Esaase deposit. The program consisted of lab scale
carbon-in-leach bottle roll tests conducted on a total of 8 bulk
composites derived from mineralized drill core increments from the
2022 metallurgical drilling campaign at Esaase. The composites were
selected to represent variations in lithological domains, oxidation
states, visually logged carbon and gold grade. Overall weighted
average gold recoveries of 87% were achieved for the Esaase
deposit. These results support past test work and are in-line with
metallurgical recoveries previously assigned to the Esaase
deposit.
The Company announced that
following an improvement in grade and recoveries, for the nine
months ended September 30, 2022 production at the AGM was 136,252
gold ounces, and revised further its 2022 annual guidance up to
160,000 to 170,000 gold ounces (originally 100,000 to 120,000 gold
ounces and revised in Q2 2022 to 140,000 to 160,000 gold ounces).
The AGM generated $239.3 million in revenue and operating cash
flows of $64.3 million in the same period. As at September 30,
2022, the AGM had cash and cash equivalents of $85.8 million.
Intercorporate
Relationships
The Company has the following
interests in affiliates and subsidiaries:
|
Affiliate name |
Jurisdiction |
Interest |
|
Asanko Gold Ghana Limited |
Ghana |
45% |
|
Adansi Gold Company (GH) Limited |
Ghana |
50% |
|
Asanko Gold Exploration Ghana Limited |
Ghana |
100% |
|
Shika Group Finance Limited |
Isle of Man |
50% |
|
Galiano Gold South Africa (PTY) Ltd. |
South Africa |
100% |
|
Galiano International (Isle of Man) Ltd. |
Isle of Man |
100% |
|
Galiano Gold (Isle of Man) Ltd. |
Isle of Man |
100% |
|
BUK West Africa Limited |
United Kingdom |
100% |
|
Galiano Gold Exploration Mali SARL |
Mali |
100% |
The Company's inter-corporate
relationships with its subsidiaries and affiliates are illustrated
in the chart below:
MINERAL PROPERTIES
The Asanko Gold Mine
The AGM is located in the Amansie
West District of the Ashanti Region of Ghana, West Africa. The AGM
was created in 2014 through the combination of Galiano's (then
Asanko Gold Inc.'s) Esaase Gold Project with PMI's Obotan Gold
Project following our acquisition of PMI in 2014. The AGM is a
multi-deposit complex, with two main deposits, Nkran and Esaase,
and a number of satellite deposits. The Company holds its 45%
interest in the AGM through the JV (a 50:50 joint venture
arrangement with a subsidiary of Gold Fields) following the
completion of the JV formation transaction on July 31, 2018. The
Company is the operator and manager of the JV.
The AGM was originally intended to
be developed in two phases, with the first phase being largely
based on the Obotan Project originally owned by PMI. It was
envisioned by the Company that the Esaase pit would be assessed for
development in a second phase. The construction of the first phase
was completed in early 2016. Gold production commenced in January
2016, commercial production was declared on April 1, 2016 and the
operation reached steady-state production levels by the end of the
second quarter of 2016. The second phase entailed increasing the
processing capacity of the Obotan processing plant to 5Mtpa, which
was completed in 2018, and the initial development of the Esaase
deposit. Ore from Esaase is trucked via a haul road from Esaase to
Obotan.
A National Instrument 43-101
Technical Report with respect to the AGM, titled "NI 43-101
Technical Report for the Asanko Gold Mine, Ghana" with an effective
date of February 28, 2022 was filed on SEDAR on March 29, 2022 (the
"2022 Technical Report").
RISK FACTORS
Investing in our securities is
speculative and involves a high degree of risk due to the nature of
our business and the present stage of its development. The
following risk factors, as well as risks currently unknown to us,
could materially and adversely affect our future business,
operations and financial condition and could cause them to differ
materially from the estimates described in forward-looking
statements relating to the Company, or its business, property or
financial results, each of which could cause purchasers of our
securities to lose part or all of their investment. The risks set
out below are not the only risks we face; risks and uncertainties
not currently known to us or that we currently deem to be
immaterial may also materially and adversely affect our business,
financial condition, results of operations and prospects. You
should also refer to the other information set forth or
incorporated by reference in this prospectus or any applicable
prospectus supplement, including our 2021 AIF, annual and interim
financial statements, and the related notes, as well as our annual
and interim management's discussion and analysis. A
prospective investor should carefully consider the risk factors set
out below along with the other matters set out or incorporated by
reference in this prospectus.
A summary of the principal risks
that the JV and the Company faces are as follows:
-
the AGM does not currently have any estimated mineral reserves
nor a LOM plan, and it is not a certainty that estimated mineral
reserves or a LOM plan will be declared in the future, or that such
estimated mineral reserves will be able to be economically
exploited by the JV;
-
the Company may not be able to restart mining activities at the
AGM on the timeline currently anticipated, or at all;
-
the value of the JV's mineral resources and the outlook for
profitable mining from its operations is dependent on continued
strong gold prices, and achieving planned production rates and LOM
costs per ounce to mine and produce gold. Gold prices are
historically volatile and gold can be subject to long periods of
depressed prices;
-
the estimation of mineral resources is a subjective process, the
accuracy of which is a function of the quantity and quality of
available data and the assumptions made and judgments used in the
engineering and geological interpretation of that data and such
assumptions and judgment, which may prove unreliable or mistaken.
The JV's estimates of mineral resources may be subject to revision
based on various factors, some of which are beyond its control;
-
mining risks which affect all companies in the industry to
different degrees include the impact and cost of compliance with
environmental regulations and the actions of mining opposition
groups, adverse changes in mining and reclamation laws and
compliance with increasingly complex health and safety rules;
and
-
other general and specific risks detailed from time-to-time in
the Company's quarterly filings, AIFs, annual reports and annual
filings with Canadian securities regulators and the SEC and those
which are discussed below.
Certain of the risk factors below
are drafted solely in reference to the JV. In the event, however,
that Galiano, in the future, obtains an interest in another mineral
property in addition to the AGM, some of risks set out below may be
considered applicable to Galiano as well, to the extent relevant in
the circumstances.
Operational Risks
Mineral resources
Mineral resources are based on
estimates of mineral content and quantity derived from limited
information acquired through drilling and other sampling methods
and require judgmental interpretations of geology, structure, grade
distributions and trends, and other factors. These estimates may
change as more information is obtained. No assurance can be given
that the estimates are accurate or that the indicated level of
metal will be produced. Actual mineralization or formations may be
different from those predicted. Further, it may take many years
from the initial phase of drilling before production is possible,
and during that time the economic feasibility of exploiting a
discovery may change.
In addition, the mineral resource
estimates for the AGM are updated from time to time as the
geological and technical information on the mineralization
increases. These mineral resource updates may result in
reclassification of resources from one category of resources to
another and these reclassifications may have a follow‐on impact on
reserves (if mineral reserves are reinstated). To the extent
that these reclassifications of resources are from a higher
category to a lower category, there may be a resulting negative
impact on related mineral reserves (if mineral reserves are
reinstated). Any reduction of reserves resulting from
reclassification of resources may ultimately impact on project
economics, including net present values and internal rates of
return, and may result in the Company recognizing an impairment of
the value of the AGM. For future projects, these reductions may
impact adversely on production decisions. Mineral resources that
are not mineral reserves do not have demonstrated economic
viability. It cannot be assumed that all or any part of the JV's
mineral resources constitute or will be converted into reserves.
Market price fluctuations of gold as well as increased production
and capital costs, reduced recovery rates or technical, economic,
regulatory or other factors may render the JV's proven and probable
reserves unprofitable to develop at a particular site or sites for
periods of time or may render mineral reserves containing
relatively lower grade mineralization uneconomic. Successful
extraction requires safe and efficient mining and processing. Any
of these factors may require the JV to reduce its mineral
resources, which could have a negative impact on the financial
results of the JV and the Company.
Failure to obtain or maintain
necessary permits or government approvals, revocation of those
permits and approvals, regulatory changes affecting necessary
permits or government approvals, or environmental concerns could
also cause the JV to reduce its reserves. There is also no
assurance that the JV will achieve indicated levels of gold
recovery or obtain the prices for gold production assumed in
determining the amount of such reserves. Anticipated levels of
production may be affected by numerous factors, including mining
conditions, labour availability and relations, weather and supply
shortages.
Mineral reserves
On March 29, 2022, the AGM reported
an updated mineral resource estimate and did not declare mineral
reserves on the AGM property as a result of the then current
metallurgical uncertainty of the material mined from Esaase. As a
result, the AGM does not currently contain any proven or probable
mineral reserves. There is no assurance that the Company will
declare a mineral reserve at the AGM in the future, and it is
possible that, as a result of the Company's ongoing work and other
conditions (including broader economic conditions, such as gold
price, over which the Company has no control), that the Company may
not be able to declare a mineral reserve at the AGM without
undertaking significant capital expenditures at the AGM and/or
temporarily suspending its operations at the AGM. Even if the
presence of mineral reserve at the AGM are established, the
economic viability of the AGM may not justify further
exploitation.
Metallurgical recoveries
On February 25, 2022, the Company
reported detecting an increase in gold grades in tailings product
leaving the processing facility at the AGM. The assays indicated
total gold grades of approximately 0.40g/t in tailings product,
which is higher than the historic and expected total gold grade in
tailings of approximately 0.10g/t. Consequently, gold recovery has
been negatively impacted. The AGM's NI 43-101 Technical Report
effective December 31, 2019 (and amended and restated on June 9,
2020) described areas of the Esaase pit that were expected to yield
lower recovery, and it is possible that material mined from these
areas may be causing the lower recovery. However, given the volume
and consistency of the material yielding lower recovery, the
Company is working to better understand the cause(s), magnitude and
impact of the observed lower recovery.
There is no assurance that the
Company will ascertain the cause of lower recoveries at the AGM or
be able to return recoveries at the AGM to an economic level
without undertaking significant capital expenditures at the AGM
and/or temporarily suspending its operations at the AGM.
On September 29, 2022, the Company
provided an update on the independent metallurgical test work
conducted on the Esaase deposit. The program consisted of lab scale
carbon-in-leach bottle roll tests conducted on a total of 8 bulk
composites derived from mineralized drill core increments from the
2022 metallurgical drilling campaign at Esaase. The composites were
selected to represent variations in lithological domains, oxidation
states, visually logged carbon and gold grade. Overall weighted
average gold recoveries of 87% were achieved for the Esaase
deposit. These results support past test work and are in-line with
metallurgical recoveries previously assigned to the Esaase
deposit.
Operating plan for 2022
On March 29, 2022, the Company
announced that it would be temporarily deferring mining operations
and transitioning to processing existing stockpiles, while
technical work to support a mineral reserve at the AGM is ongoing.
Mining continued at Akwasiso Cut 3 and Esaase Cut 3 until their
depletion, following which the process plant is expected to
continue to operate at full capacity (5.8Mtpa) processing a portion
of the then existing 9.5Mt of stockpiles.
The Company will incur costs
associated with temporarily deferring its mining operations during
2022, and may be unsuccessful in processing remaining stockpiles
economically, or at all, which may have a material adverse impact
on the AGM's production and revenues and the Company's financial
condition. Additionally, the Company's ability to restart mining
operations at the AGM efficiently or economically, or at all, and
the timing therefor, is uncertain and cannot be predicted with
confidence. The Company may experience delays and disruptions in
ceasing or restarting mining operations at the AGM, which may in
turn delay the AGM's return to steady‐state operations. In the
event that the Company is unable to resume mining operations prior
to it processing the stockpiles at the AGM, the Company may be
required to shutdown or significantly curtail its operations at the
AGM, which may have a material adverse impact on the AGM's
production and revenues, and the Company's financial condition.
There is no assurance that the Company will be able to restart its
mining operations at the AGM.
In connection with the Company's
operating plan for 2022, the Company may undertake measures to
preserve cash resources, including suspension of discretionary
spending and other legal means to reduce and minimize contractual
spending. Any extended suspension of operations or disruption in
production at the AGM resulting from the Company's proposed
operating plan for 2022 could jeopardize the Company's financial
position and impact its ability to meet its ongoing
obligations.
Life of mine plans
Galiano does not currently have a
LOM estimate for the AGM as the AGM was not in a position to
declare mineral reserves as a result of metallurgical uncertainty
of the material mined from Esaase. An update to mineral reserves is
expected following the drilling program and metallurgical test work
completed at the AGM in the third quarter of 2022, to enable the
production of a new LOM estimate expected to be completed in Q1
2023. There is no assurance that the Company will be able to
declare a mineral reserve at the AGM in the future, and as such,
the Company may not, in the future, produce a new LOM estimate for
the AGM.
As the AGM did not declare a
mineral reserve, management considered this an impairment
indicator, and the AGM recognized an impairment charge of $153.2
million as at December 31, 2021, of which the Company recognized
its interest of $68.9 million (or 45% of $153.2 million) as part of
the Company's share of the net loss related to the JV.
The Company's management considered
that the above noted impairment considerations identified at the JV
level were also applicable to the carrying value of the Company's
equity investment in the AGM JV. As a result, the Company
recognized a reduction in the fair value of its preference shares
of $7.5 million and an impairment charge against the carrying value
of the Company's equity investment in the JV of $7.6 million during
the fourth quarter of 2021.
LOM estimates are based on a number
of factors and assumptions and may prove to be incorrect. In
addition, LOM plans, by design, may have declining grade profiles
and increasing rock hardness and mine life could be shortened if
the JV increases production, experiences increased production costs
or reduced recoveries or if the price of gold declines
significantly. In the event the Company produces a LOM plan for the
AGM, it will be updated from time‐to‐time to reflect current
geological, technical and economic information and the JV's plans
for the operation of the AGM may change materially from planned
operations as set out in any such LOM plan.
The publishing of a LOM plan, or
any change thereto, could negatively impact the operations and
financial condition of the JV and the AGM, or the share price of
the Company, including pursuant to the recognition by the Company
of further impairment charges with respect to the JV and the
Company's interest therein.
Production costs
The Company's public disclosures,
including the documents incorporated by reference herein, contain
estimates of future production, operating costs, capital costs,
estimates of future all in sustaining costs per ounce of gold and
other economic and financial measures with respect to existing
mines and certain development stage projects. These estimates may
change and/or the JV or the Company may be unable to achieve them.
Actual production, costs, returns and other economic and financial
performance may vary from the estimates depending on a variety of
factors, many of which are not within the JV's or the Company's
control. These factors include, but are not limited to:
• actual
ore mined varying from estimates of grade, tonnage, dilution, and
metallurgical and other characteristics;
• short‐term
operating factors such as the need for sequential development of
ore bodies and the processing of new or different ore grades from
those planned;
• mine
failures, slope failures or equipment failures;
• industrial
accidents;
• natural
phenomena such as inclement weather conditions, floods, droughts,
rock slides and earthquakes;
• the
outbreak of pandemics, including COVID-19;
• encountering
unusual or unexpected geological conditions;
• changes
in power costs and potential power shortages;
• exchange
rate and commodity price fluctuations;
• shortages
of principal supplies needed for operations, including explosives,
fuels, water and equipment parts;
• labour
shortages or strikes;
• litigation;
• terrorism;
• civil
unrest and protests;
• restrictions
or regulations imposed by governmental or regulatory
authorities;
• permitting
or licensing issues; or
• shipping
interruptions or delays.
Failure to achieve production or
cost estimates or material increases in costs could have a material
adverse effect on the future cash flows, profitability, results of
operations and financial condition of the JV and Company.
Limited history of mining
operations
The AGM has limited history of
mining operations. As a result, the JV (and consequently Galiano)
is subject to all of the risks associated with establishing new
mining operations including: the timing and cost, which can be
considerable, of the construction of mining facilities; the
availability and costs of skilled labour and mining equipment; the
availability and costs of appropriate smelting and/or refining
arrangements; the need to obtain necessary environmental and other
governmental approvals and permits, and the timing of those
approvals and permits; and, the availability of funds to finance
construction and development activities. It is common in new mining
operations to experience unexpected problems and delays during
construction, development, and mine start‐up. Such operations are
subject to all the hazards and risks normally encountered in the
exploration for, and development and production of gold and other
precious or base metals, including unusual and unexpected
geological formations, seismic activity, rock bursts, fires,
cave‐ins, flooding and other conditions involved in the drilling
and removal of material as well as industrial accidents, labour
force disruptions, fall of ground accidents in underground
operations, and force majeure factors, any of which could result in
damage to, or destruction of, mines and other producing facilities,
damage to person or property, environmental damage, delays,
increased production costs, monetary losses and possible legal
liability. Milling operations are subject to hazards such as
equipment failure or failure of retaining dams around tailings
disposal areas, which may result in environmental pollution and
consequent liability. In addition, delays in the commencement of
mineral production often occur.
Consumables
The profitability of the JV (and
consequently of Galiano) is affected by the market prices and
availability or shortages of commodities which are consumed or
otherwise used in connection with the JV's operations. Prices of
such commodities also can be subject to volatile price movements,
which can be material and can occur over short periods of time, and
are affected by factors that are beyond the JV's control.
Operations consume significant amounts of energy and are dependent
on suppliers or governments to meet these energy needs and to allow
declines in oil prices to filter through to the JV. In some cases,
no alternative source of energy is available. An increase in the
cost, or decrease in the availability, of construction materials
may affect the timing and cost of the JV's development project. If
the costs of certain commodities consumed or otherwise used in
connection with the JV's operations were to increase significantly,
and remain at such levels for a sustained period of time, this
would have a material adverse impact on the JV and the Company.
Costs at any particular mining location are also subject to
variation due to a number of factors, such as changing ore grade,
changing metallurgy and revisions to mine plans in response to the
physical shape and location of the ore body or due to operational
or processing changes. Reported costs may also be affected by
changes in accounting standards. A material increase in costs at
any significant location could have a significant effect on the
JV's capital expenditures, production schedules, profitability and
operating cash flow.
Extraction
A number of factors can affect the
JV's ability to extract ore efficiently in the quantities that it
has budgeted, including, but not limited to:
• ground
conditions;
• geotechnical
conditions;
• geological
conditions;
• chemical
effects;
• efficiency;
and
• scheduling.
These factors may result in a less
than optimal operation and lower throughput or lower recovery,
which may affect the JV's production schedule. There is no
assurance that, in planning and budgeting at the AGM, the Company
or the JV have foreseen and/or accounted for every possible factor
that might cause a project to be subject to suboptimal operation,
and such suboptimal operation could have an effect on business,
results of operations and financial condition of the JV and the
Company and on the share price of the Company.
Processing
A number of factors could affect
the JV's ability to process ore in the tonnages budgeted, the
quantities of the metals and deleterious materials that are
recovered and the ability to efficiently handle material in the
volumes budgeted, including, but not limited to:
• the
presence of oversized material at the crushing stage;
• material
showing breakage characteristics different to those planned;
• material
with grades outside of planned grade range;
• the
presence of deleterious materials in ratios different than
expected;
• material
drier or wetter than expected, due to natural or environmental
effects; and
• viscosity/density
different than expected.
The occurrence of any of the above
could affect the ability of the JV to treat the number of tonnes
planned, recover valuable materials, remove deleterious materials
and process ore, concentrate and tailings as planned. This may
result, among other things, in lower throughput, lower recovery
and/or more downtime which may have an adverse effect on future
cash flow, results of operations and financial condition of the JV
and the Company.
Equipment malfunctions
The JV's various operations may
encounter delays in or losses of production due to the delay in the
delivery of equipment, key equipment or component malfunctions or
breakdowns, damage to equipment through accident or misuse,
including potential complete write‐off of damaged units, or delay
in the delivery or the lack of availability of spare parts, which
may impede maintenance activities on equipment. In addition,
equipment may be subject to aging, if not replaced, or through
inappropriate use or misuse and may become obsolete. Any one of
these factors could adversely impact the operations, profitability
and financial results of the JV and Company.
Infectious diseases
The outbreak of COVID‐19 has had a
negative impact on global financial conditions. In addition,
outbreaks or the threat of outbreaks of viruses or other infectious
diseases or similar health threats, such as COVID‐19, could also
cause operational and supply chain delays and disruptions
(including as a result of governmental regulation and prevention
measures), labour shortages and shutdowns or the inability to sell
precious metals.
At this time, the Company cannot
accurately predict what effects COVID‐19 or the outbreak of other
infectious diseases will have on mining operations or financial
results, including as a result of uncertainties relating to the
ultimate geographic spread of the virus, the severity of the
disease, the duration of the outbreak, and the length of the travel
restrictions and business closures that have been or may be imposed
by the governments of impacted countries. The widespread health
crisis caused by COVID‐19, or the occurrence of other similar
health crises, and the adverse economic and financial impacts
arising therefrom, could adversely affect the Company's business,
financial condition and results of operations and the market price
of the Company's common shares.
Legislative changes
The JV and Company, respectively,
is subject to continuously evolving legislation, including, but not
limited to, the areas of labour, environment, land titles, mining
practices, closure and rehabilitation requirements and taxation.
Compliance with these laws may require significant expenditures. If
the JV or Company is unable to comply fully, they may be subject to
enforcement actions or other liabilities, or its image may be
harmed, all of which could materially affect operating costs, delay
or curtail operations or cause the JV or Company to be unable to
obtain or maintain required permits. There can be no assurance that
the JV or Company has been or will be at all times in compliance
with all applicable laws regulations, that compliance will not be
challenged or that the costs of complying with current and future
laws and regulations will not materially or adversely affect the
business, operations or results of the Company or the JV.
New laws, regulations and
administrative interpretations, amendments to existing laws and
regulations or administrative interpretations, or more stringent
enforcement of existing laws, regulations and administrative
interpretations, whether in response to changes in the political or
social environment the Company and JV operates in or otherwise,
could have a material and adverse effect on the future cash flows,
results of operations and financial condition of the Company and
JV.
Key employees
The ability of the JV and the
Company to effectively manage its corporate, exploration and
operations teams, as applicable, depends in large part on the
ability of the JV and Company to attract and retain key individuals
in management positions and as senior leaders within the
organization. The success of the Company and JV also depends on the
technical expertise of its professional employees. The JV and
Company face competition for qualified management, professionals,
executives and skilled personnel from other companies. There can be
no assurance that the JV or Company will continue to be able to
compete successfully with its competitors in attracting and
retaining senior leaders, qualified management and technical talent
with the necessary skills and experience to manage its current
needs. The length of time required to recruit key personnel and
fill a position may be longer than anticipated. The failure to
attract and retain capable leaders and key management professionals
as well as qualified talent to manage the existing operations and
projects effectively could have a material adverse effect on the
business, financial condition and/or operational results of the JV
and Company.
Labour disruptions
The JV is dependent on its
workforce and the workforce of its contractors to extract and
process minerals. Relations between the JV and its employees, as
well as between contractors and their employees, may be impacted by
changes in labour relations which may be introduced by, among other
things, employee groups, unions and the relevant governmental
authorities in whose jurisdictions the JV carries on business.
Labour disruptions at the JV's properties could have a material
adverse impact on its business, results of operations and financial
condition and that of the Company. A number of the JV's employees
are represented by labour unions under various collective labour
agreements, which are subject to renegotiation and renewal at or
near the termination of these contracts. In addition, existing
labour agreements may not prevent a strike or work stoppage at the
JV's facilities in the future. Any work stoppage or strike by union
or other employees could have a material adverse effect on the JV
and Company's earnings and financial condition.
Political and legal
risks
Mining investments are subject to
the risks normally associated with any conduct of business in
foreign and/or emerging countries, and may be impacted by global
events, including:
• political
risks;
• war,
terrorism and civil disturbance risks, such as the ongoing conflict
in Ukraine;
• risks
related to changes in laws or policies of particular countries,
including those relating to royalties, duties, imports, exports and
currency;
• risks
in respect of the cancellation or renegotiation of contracts;
• the
risk of the imposition of royalties, net profits payments, tax
increases or other claims by government entities, including
retroactive claims;
• the
risk of expropriation and nationalization; and
• the
risk of delays in obtaining or the inability to obtain necessary
governmental permits or the reimbursement of refundable tax from
fiscal authorities.
The conflict in the Ukraine and the
global response to this conflict as it relates to sanctions, trade
embargos and military support has resulted in significant
uncertainty as well as economic and supply chain disruptions.
Should this conflict expand beyond Ukraine, or should other
geopolitical disputes and conflicts emerge in other regions, this
could result in a material adverse effect on the Company.
Other risks include the potential
for fraud and corruption by suppliers, personnel or government
officials which may implicate the JV or the Company, compliance
with applicable anti‐corruption laws, including the U.S. Foreign
Corrupt Practices Act of 1977, the Canadian Corruption of Foreign
Public Officials Act or other similar laws of other jurisdictions,
by virtue of the JV and the Company operating in jurisdictions that
may be vulnerable to the possibility of bribery, collusion,
kickbacks, theft, improper commissions, facilitation payments,
conflicts of interest and related party transactions and the JV or
the Company's possible failure to identify, manage and mitigate
instances of fraud, corruption, or violations of its code of
conduct and applicable regulatory requirements.
There is also the risk of increased
disclosure requirements, including those pursuant to the Dodd‐Frank
Wall Street Reform and Consumer Protection Act; currency
fluctuations; restrictions on the ability of local operating
companies to sell gold offshore for U.S. dollars, and on the
ability of such companies to hold U.S. dollars or other foreign
currencies in offshore bank accounts; import and export
regulations, including restrictions on the export of gold or on the
import, for further gold processing; limitations on the
repatriation of earnings or on the ability of the JV and the
Company to assist in minimizing its expatriate workforce's exposure
to double taxation in both the home and host jurisdictions; and
increased financing costs.
These risks may limit or disrupt
operating mines or projects, restrict the movement of funds, cause
the JV and the Company to have to expend more funds than previously
expected or required, or result in the deprivation of contract
rights or the taking of property by nationalization or
expropriation without fair compensation, and may materially
adversely affect the financial position and/or results of
operations of the JV and Company. In addition, the enforcement by
the JV and Company of its legal rights in foreign countries,
including rights to exploit its properties or utilize its permits
and licenses and contractual rights may not be recognized by the
court systems in such foreign countries or enforced in accordance
with the rule of law.
It is possible that a current or
future government of any country in which the Company or the JV has
mining projects or operations may adopt substantially different
policies or take arbitrary action which might halt exploration or
production, nationalize assets or cancel contracts and/or mining
and exploration rights and/or make changes in taxation treatment
any of which could have a material and adverse effect on the future
cash flows, earnings, results of operations and/or financial
condition of the JV and Company.
Contractors
The JV uses contractors at the AGM
for some of its mining activities. As a result, operations at the
AGM are subject to a number of risks, some of which will be outside
of the JV's control, including:
• negotiating
agreements with contractors on acceptable terms;
• securing
mining contractor services upon a restart of mining operations;
• the
inability to replace a contractor and its operating equipment in
the event that either party terminates the agreement;
• reduced
control over such aspects of operations that are the responsibility
of the contractor;
• failure
of a contractor to perform under its agreement with the JV;
• interruption
of operations in the event that a contractor ceases its business
due to insolvency or other unforeseen events;
• failure
of a contractor to comply with applicable legal and regulatory
requirements, to the extent that it is responsible for such
compliance; and
• problems
of a contractor with managing its workforce, labour unrest or other
employment issues.
In addition, the JV may incur
liability to third parties as a result of the actions of a
contractor. The occurrence of one or more of these risks could have
a material adverse effect on the business, results of operations
and financial condition of the JV and Company.
Mining dangers
Mining operations generally involve
a high degree of risk. The JV's operations are subject to all the
hazards and risks normally encountered in the exploration,
development and production of gold, including: unusual and
unexpected geological formations; seismic activity; cave‐ins or
slides; flooding; pit wall failure; periodic interruption due to
inclement or hazardous weather conditions; and other conditions
involved in the drilling and removal of material, any of which
could result in damage to, or destruction of, mines and other
producing facilities, personal injury or death, damage to property,
environmental damage and possible legal liability. Milling
operations are subject to hazards such as fire, equipment failure
or failure of retaining dams around tailings disposal areas, which
may result in environmental pollution and consequent liability.
Environmental and health and
safety issues
Routine safety inspections are
conducted across the AGM site with any non‐conformances reported
through the safety, health & environment management system.
Weekly inspections are conducted at the mining contractor
workshops, fuel depot, process plant, and other external areas as
required. With regards to the Tailings Storage Facility
("TSF"), the JV employs a series of monitoring boreholes
around the perimeter of the TSF, which are regularly monitored for
ground water contamination. The TSF is inspected on a daily basis
for signs of stress or damage and to ensure structural integrity.
It is also audited every quarter, including for structural
integrity, by independent third‐party consultants and their report
is submitted to the Ghanaian Environmental Protection Agency (the
"Ghanaian EPA").
Although the JV monitors its mining
and disposal sites for potential environmental hazards, there is no
assurance that it has detected, or can detect all possible risks to
the environment arising from the business and operations. The JV
expends significant resources to comply with environmental laws,
regulations and permitting requirements, and expects to continue to
do so in the future. Failure to comply with applicable
environmental laws, regulations and permitting requirements may
result in injunctions, damages, suspension or revocation of permits
and imposition of penalties. There is no assurance that:
• the
JV has been or will be at all times in compliance with such laws,
regulations and permitting requirements, or with any new or amended
laws, regulations and permitting requirements that may be imposed
from time to time;
• the
JV's compliance with such laws, regulations and permitting
requirements, or with any new or amended laws, regulations and
permitting requirements that may be imposed from time to time, will
not be challenged; or
• the
costs of compliance with such laws, regulations and permitting
requirements, or with any new or amended laws, regulations and
permitting requirements that may be imposed from time to time, will
be economical and will not materially or adversely affect the JV's
future cash flow, results of operations and financial
condition.
The JV may be subject to
proceedings in respect of alleged failures to comply with
increasingly strict environmental laws, regulations or permitting
requirements or of posing a threat to or of having caused hazards
or damage to the environment or to persons or property. While any
such proceedings are in process, the JV could suffer delays or
impediments to or suspension of development and construction of
projects and operations and, even if the JV is ultimately
successful, the JV may not be compensated for the losses resulting
from any such proceedings or delays.
There may be existing environmental
hazards, contamination or damage at the JV's mines or projects that
the JV may be unaware of. The JV may also be held responsible for
addressing environmental hazards, contamination or damage caused by
current or former activities at its mine sites or projects or
exposure to hazardous substances, regardless of whether or not
hazard, damage, contamination or exposure was caused by the
activities of the JV or by previous owners or operators of the
property.
Any finding of liability in such
proceedings could result in additional substantial costs, delays in
the exploration, development and operation of the JV's properties
and other penalties and liabilities related to associated losses,
including, but not limited to:
• restrictions
on or suspension of the activities of the JV;
• loss
of rights, permits and property, including loss of the JV's ability
to operate in that country or generally;
• completion
of extensive remedial cleanup or paying for government or
third‐party remedial cleanup;
• premature
reclamation of operating sites; and
• seizure
of funds or forfeiture of bonds.
The costs of complying with any
orders made or any cleanup required and related liabilities from
such proceedings or events may be significant and could have a
material adverse effect on the business, results of operations,
financial condition of the JV and the Company and the share price
of the Company.
In Ghana, the JV is required to
submit, for government approval, a reclamation plan for each of its
mining sites that establishes the JV's obligation to reclaim
property after minerals have been mined from the site. Further, the
JV is required to provide security to the Ghanaian EPA for the
performance by the JV of its reclamation obligations in respect of
the Abirem, Abore and Adubea mining leases. Although the JV has
currently made provision for certain of its reclamation
obligations, there is no assurance that these provisions will be
adequate in the future.
Climate change
The Company acknowledges climate
change and that increased environmental regulation resulting
therefrom may adversely affect the operations of the JV and
Company. The effects of climate change or extreme weather events
may cause prolonged disruption to the delivery of essential
commodities which could negatively affect production
efficiency.
There is no assurance that the
response of the JV and the Company to the risks posed by climate
change and the corresponding legislation and regulation will be
effective and the physical risks of climate change will not have an
adverse effect on the JV's operations and profitability.
Health and safety risks -
Pandemics
The JV and its workforce are
exposed to pandemics such as malaria, dengue, COVID-19, chikungunya
and other diseases. Such pandemics and diseases represent a serious
threat to maintaining a skilled workforce in the mining industry in
Africa and is a major healthcare challenge for the JV.
As a result of such pandemics and
workplace accidents due to the inherent dangers of mining
operations, there can be no assurance that the JV will not lose
members of its workforce or see its workforce productivity reduced
or incur medical costs, which could have a material and adverse
effect on the future cash flows, earning, results of operations and
financial condition of the JV and the Company.
Permitting
The operation, exploration and
development projects of the JV require licenses and permits from
various governmental authorities to exploit its properties, and the
process for obtaining and renewing licenses and permits from
governmental authorities often takes an extended period of time and
is subject to numerous delays, costs and uncertainties. Any
unexpected delays or costs or failure to obtain such licenses or
permits associated with the permitting process could delay or
prevent the execution of the AGM's development plans or impede the
operation of a mine, which could adversely impact the JV's and the
Company's operations, profitability and financial results. Such
licenses and permits are subject to change in various
circumstances. Failure to comply with applicable laws and
regulations may result in injunctions, fines, suspensions or
revocations of permits and licenses, and other penalties. There can
be no assurance that the JV has been or will be at all times in
compliance with all such laws and regulations and with its licenses
and permits or that the JV has all required licenses and permits in
connection with its operations. The JV may be unable, on a timely
basis, to obtain, renew or maintain in the future all necessary
licenses and permits that may be required to explore and develop
its properties, maintain the operation of mining facilities and
properties under exploration or development or to otherwise
maintain continued operations.
The JV's ability to obtain and
maintain required permits and approvals and to successfully
operate, in particular, may be adversely impacted by real or
perceived detrimental events associated with the JV's activities or
those of other resource companies affecting the environment, human
health and safety of the surrounding communities. Delays in
obtaining or failure to obtain, renew, or retain government permits
and approvals may adversely affect the JV's operations, including
its ability to explore or develop properties, commence production
or continue operations.
Land title
The validity of exploration,
development and mining interests and the underlying mineral claims,
mining claims, mining leases, tenements and other forms of land and
mineral tenure held by the JV, which fundamentally constitute the
JV's property holdings, can be uncertain and may be contested and
the JV's properties are subject to various encumbrances, including
royalties.
Acquisition of title to mineral
properties is a very detailed and time‐consuming process, and the
JV's title to its properties may be affected by prior unregistered
encumbrances, agreements or transfers, or undetected defects.
Although the JV has attempted to acquire satisfactory title to its
properties, some risk exists that some titles, particularly title
to exploration and undeveloped properties, may be defective. A
successful challenge to the JV's title to its properties could
result in the JV being unable to operate on its properties as
anticipated or being unable to enforce its rights with respect to
its properties which could have a material adverse effect on the JV
and the Company. The JV may further need to acquire other title,
such as surface title, easements or rights of way, which may
encroach on the title to property of third parties. There is no
guarantee that such further title, easements or rights of way
necessary for the JV's operations may be acquired by the JV and the
failure to acquire same, or to acquire the same in a timely
fashion, may materially impede the JV's operations.
Geotechnical
Mining, by its very nature,
involves the excavation of soils and rocks. The stability of the
ground during and after excavation involves a complicated
interaction of static and dynamic stresses (including induced
stresses such as blasting), gravity, rock strength, rock structures
(such as faults, joints, and bedding), groundwater pressures and
other geo‐mechanical factors.
Additionally, excavated ore and
waste may be deposited in dumps or stockpiles, or used in the
construction of tailings dams and roads or other civil structures,
which may be very large. These dumps, stockpiles, dams, etc. may
also be subject to geotechnical failure due to over‐steepening,
seismically induced destabilization, water saturation, material
degradation, settling, overtopping, foundation failure or other
factors.
The JV employs internal
geotechnical experts, external consultants and third‐party
reviewers and auditors who use industry‐standard engineering data
gathering, analyses, techniques and processes to manage the
geotechnical risks associated with the design and operation of a
mine and the related civil structures. However, due to unforeseen
situations and to the complexity of these rock masses and large
rock and soil civil structures, geotechnical failures may occur at
the AGM which could result in the temporary or permanent closure of
all or part of a mining operation and/or damage to mine
infrastructure, equipment or facilities, which materially impacts
mineral production and/or results in additional costs to repair or
recover from such geotechnical failures and the resulting
damage.
Community risk
Maintaining a positive relationship
with the communities in which the JV operates is critical to
continuing the successful operation of the AGM as well as
construction and development of existing and new projects.
Community support for mining operations is a key component of a
successful mining venture.
As a mining business, the JV and
the Company may come under pressure in the jurisdictions in which
it operates, or will operate in the future, to demonstrate that
other stakeholders (including employees, communities surrounding
operations and the countries in which the JV and the Company
operate) benefit and will continue to benefit from the JV's and the
Company's commercial activities, and/or that it operates in a
manner that will minimize any potential damage or disruption to the
interests of those stakeholders. The JV and the Company may face
opposition with respect to current and future development and
exploration projects which could materially adversely affect the
business, results of operations, financial condition of the JV and
the Company and the Company's share price.
Surrounding communities may affect
or threaten the security of the mining operations through the
restriction of access of supplies and the workforce to the mine
site or the conduct of artisanal mining at or near the mine sites.
The material properties of the JV may be subject to the rights or
asserted rights of various community stakeholders, including
indigenous people, through legal challenges relating to ownership
rights or rights to artisanal mining. The JV is exposed to
artisanal and illegal mining activities in close proximity to its
operations that may cause environmental issues and disruptions to
the operations and relationships with governments and local
communities.
Ghana is experiencing an increase
in the levels and mechanization of illegal mining activities which,
if left unchecked, may result in the misappropriation of ore from
the JV's tenements. The JV, in coordination with the military
and police, attempts to exclude illegal mining from our mineral
properties, but such efforts may not always be successful. Failure
to secure the JV's mineral properties from illegal miners could
have a material adverse effect on the future cash flows,
profitability, results of operations and financial condition of the
JV and the Company.
Infrastructure and water
access
The JV's operations are carried out
in geographical areas which lack developed infrastructure and are
subject to various other risk factors, including the availability
of sufficient water supplies. Mining, processing, development and
exploration activities depend, to one degree or another, on
adequate infrastructure. Reliable roads, bridges, power sources and
water supply are important determinants which affect capital and
operating costs. Lack of such infrastructure or unusual or
infrequent weather phenomena, sabotage, terrorism, government or
other interference in the maintenance or provision of such
infrastructure could adversely affect the operations, financial
condition and/or results of operations of the JV and the
Company.
The JV's failure to obtain needed
water permits, the loss of some or all of the JV's water rights for
any of its mines or shortages of water due to drought or loss of
water permits could require the JV to curtail or close mining
production and could prevent the JV from pursuing expansion
opportunities.
Exploration and Development
Risks
Exploration
Gold and other metal exploration is
highly speculative in nature, involves many risks and is often not
productive; there is no assurance that the JV will be successful in
its exploration efforts.
The JV's ability to declare mineral
reserves is dependent on a number of factors, including the
geological and technical expertise of the JV's management and
exploration teams, the quality of land available for exploration
and other factors. Once gold mineralization is discovered, it can
take several years of exploration and development before production
is possible, and the economic feasibility of production can change
during that time.
Substantial expenditures are
required to carry out exploration and development activities to
establish proven and probable mineral reserves and determine the
optimal metallurgical process to extract the metals from the
ore.
Once the JV has found ore in
sufficient quantities and grades to be considered economic for
extraction, metallurgical testing is required to determine whether
the metals can be extracted economically. There may be associated
metals or minerals that make the extraction process more
difficult.
There is no assurance that the
further work on the Esaase geology and metallurgy will re‐instate
mineral reserves. Failure to re‐instate the mineral reserves could
have an adverse effect on the JV and the Company.
Mine development
The execution of the AGM's
development plans will require the development and operation of
various mining pits, the resettlement of villages, upgrades to the
existing haul road and TSF lifts. As a result, the JV and the
Company is and shall continue to be subject to many of the risks
associated with establishing new mining operations including:
• the
availability of funds to finance construction and development
activities;
• the
receipt of required governmental approvals and permits;
• the
availability and costs of skilled labour and contractors and the
ability of key contractors to perform services in the manner
contracted for;
• unanticipated
changes in grade and tonnage of ore to be mined and processed;
• unanticipated
adverse geotechnical conditions;
• incorrect
data on which engineering assumptions are made;
• potential
increases in construction and operating costs due to changes in the
cost of fuel, power, materials, skilled labour, security and
supplies;
• adequate
access to the site and unanticipated transportation costs or
disruptions; and
• potential
opposition or obstruction from non‐governmental organizations,
environmental groups, terrorists or local groups which may delay or
prevent development activities.
Any delay in the performance of any
one or more of the contractors, suppliers, consultants or other
persons on which the AGM is dependent in connection with its
development plans, a delay in or failure to receive the required
governmental approvals and permits in a timely manner or on
reasonable terms, or a delay in or failure in connection with the
completion and successful operation of the operational elements in
connection with the JV's development plans could delay or prevent
the development of the mine as planned.
Risks Relating to the Value
of Securities
Market price of Common
Shares
The Common Shares are publicly
traded and are subject to various factors that have historically
made the Common Share price volatile. The market price of the
Common Shares has experienced, and may continue to experience,
significant volatility, which may result in losses to investors.
The market price of the Common Shares may increase or decrease in
response to a number of events and factors, including: operating
performance and the performance of competitors and other similar
companies, volatility in metal prices, the public's reaction to
news releases on developments at mines and other properties,
material change reports, other public announcements and the
Company's filings with the various securities regulatory
authorities, changes in earnings estimates or recommendations by
research analysts who track the Common Shares or the shares of
other companies in the resource sector, changes in general economic
and/or political conditions, the number of Common Shares to be
publicly traded after an offering of Common Shares, the arrival or
departure of key personnel and acquisitions, strategic alliances or
joint ventures involving the Company's or its competitors.
In addition, the global stock
markets and prices for mining company shares have experienced
volatility that often has been unrelated to the operating
performance of such companies. These market and industry
fluctuations may adversely affect the market price of the Common
Shares, regardless of its operating performance. The variables
which are not directly related to the Company's success and are,
therefore, not within the Company's control, include developments
that affect the market for mining company shares, the breadth of
the public market for the Common Shares and the attractiveness of
alternative investments.
The effect of these and other
factors on the market price of the Common Shares on the exchanges
on which they trade has historically made the price of the Common
Shares volatile and suggest that the Common Share price will
continue to be volatile in the future.
Liquidity of Common
Shares
Shareholders of the Company may be
unable to sell significant quantities of Common Shares into the
public trading markets without a significant reduction in the price
of their Common Shares, or at all. There can be no assurance that
there will be sufficient liquidity of the Common Shares on the
trading market, and that the Company will continue to meet the
listing requirements of the TSX or the NYSE American or achieve
listing on any other public listing exchange.
Volatility
In recent years, the securities
markets have experienced a high level of price and volume
volatility, and the market price of securities of many companies
has experienced wide fluctuations, which have not necessarily been
related to the operating performance, underlying asset values or
prospects of such companies. There can be no assurance that such
fluctuations will not affect the price of the Company's securities,
and the price may decline below their acquisition cost. As a result
of this volatility, investors may not be able to sell their
securities at or above their acquisition cost.
Securities of mining companies have
experienced substantial volatility in the past, often based on
factors unrelated to the financial performance or prospects of the
companies involved. These factors include macroeconomic
developments in the countries where these companies carry on
business and globally, and market perceptions of the attractiveness
of particular industries. The price of the securities of the
Company is also likely to be significantly affected by short‐term
changes in commodity prices, other precious metal prices or other
mineral prices, currency exchange fluctuation and the political
environment in the countries in which the Company does business and
globally.
In the past, following periods of
volatility in the market price of a company's securities,
shareholders have often instituted class action securities
litigation against those companies. Such litigation, if instituted,
could result in substantial costs and diversion of management
attention and resources, which could significantly harm the
Company's profitability and reputation.
Dilution from exercise of
outstanding stock options or settlement of share units
The Company has outstanding stock
options representing a right to receive Common Shares upon vesting
and the exercise of the stock options. In addition, the Company has
outstanding share units, representing a right to receive Common
Shares on vesting and satisfaction of the settlement conditions.
The exercise of the stock options or the settlement of the share
units and the subsequent resale of such Common Shares in the public
market could adversely affect the prevailing market price of the
Common Shares and the Company's ability to raise equity capital in
the future at a time and price which deems it appropriate. The
Company may also enter into commitments in the future which would
require the issuance of additional Common Shares or may grant share
purchase warrants and the Company is expected to grant additional
stock options and share units. Any share issuances from the
Company's treasury will result in immediate dilution to existing
shareholders' percentage interest in the Company.
Financial Risks
The Company's growth, future
profitability and ability to obtain financing may be impacted by
global financial conditions
In recent years, global financial
markets have been characterized by extreme volatility impacting
many industries, including the mining industry. Global financial
conditions remain subject to sudden and rapid destabilizations in
response to future economic shocks, as government authorities may
have limited resources to respond to future crises. A sudden or
prolonged slowdown in the financial markets or other economic
conditions, including but not limited to, consumer spending,
employment rates, business conditions, inflation, fuel and energy
costs, consumer debt levels, lack of available credit, the state of
the financial markets, interest rates and tax rates, may adversely
affect the Company's growth and profitability. Future economic
shocks may be precipitated by a number of causes, including, but
not limited to, material changes in the price of oil and other
commodities, the volatility of metal prices, governmental policies,
geopolitical instability, war, terrorism, the devaluation and
volatility of global stock markets, natural disasters and the
current outbreak of COVID‐19 and any future emergence and spread of
pathogens. Any sudden or rapid destabilization of global economic
conditions could impact the Company's ability to obtain equity or
debt financing in the future on terms favourable to the Company or
at all. In such an event, the Company's operations and financial
condition could be adversely impacted.
Gold price fluctuations
The JV's revenues depend in part on
the market prices for gold. Gold prices fluctuate widely and are
affected by numerous factors beyond the JV's control including
central bank lending, sales and purchases of gold, producer hedging
activities, expectations of inflation, the level of demand for gold
as an investment, speculative trading, the relative exchange rate
of the U.S. dollar with other major currencies, interest rates,
global and regional demand, political and economic conditions and
uncertainties, industrial and jewelry demand, production costs in
major gold producing regions and worldwide production levels. The
aggregate effect of these factors is impossible to predict with
accuracy. Although the JV has from time to time entered into
hedging instruments to manage the AGM's exposure to gold price
risk, the JV may not do so in future. Fluctuations in gold prices
may materially and adversely affect the financial performance or
results of operations of the JV and the Company.
Insufficient financing
To fund growth, the JV and the
Company may choose to secure necessary capital through loans or
other forms of financing. The availability of this capital is
subject to general economic conditions and lender and investor
interest in the JV and the Company and their respective
projects.
In addition, the JV and the Company
may seek funding to further its search and exploration for new
mineral deposits and their development. Financing may not be
available when needed or, if available, may not be available on
terms acceptable to the JV or the Company. Failure to obtain any
financing that may become necessary for the development plans of
the JV and the Company may result in a delay or indefinite
postponement of exploration, development or production on any or
all of the properties of the JV and the Company.
Shareholder dilution
The adequacy of the Company's
capital structure is assessed on an ongoing basis and adjusted as
necessary after taking into consideration the Company's strategic
plans, market and forecasted gold prices, the mining industry,
general economic conditions and associated risks. In order to
maintain or adjust its capital structure, the Company may adjust
its capital spending, issue new Common Shares, purchase Common
Shares for cancellation pursuant to normal course issuer bids,
issue new debt or reimburse existing debt. The constating documents
of the Company allow it to issue, among other things, an unlimited
number of Common Shares for such consideration and on such terms
and conditions as may be established by the board of directors of
the Company, in many cases, without the approval of shareholders.
The Company cannot predict the size of future issuances of Common
Shares or the issue of securities convertible into Common Shares of
Galiano or the effect, if any, that future issuances and sales of
the Common Shares will have on the market price of its Common
Shares. Any transaction involving the issue of previously
authorized but unissued Common Shares or securities convertible
into Common Shares would result in dilution to present and
prospective holders of Common Shares.
Control of AGM cash flows and
operation through a joint venture
Positive cash flows from the AGM
are not within the Company's exclusive control as the disposition
of cash from the AGM is governed by the Joint Venture Agreement
that governs the management of the JV, effective July 31, 2018 (the
"JVA"). The JVA provides that "Distributable Cash" will be
calculated and distributed quarterly, if available. "Distributable
Cash" means an amount to be calculated at each calendar
quarter‐end, as being the lesser of (i) cash and cash equivalents
which are projected at that time to be surplus to all the JV
companies taken together, after providing for all amounts
anticipated to be required to be paid during a period of least the
ensuing two calendar quarters in order to pay the net obligations
(net of anticipated revenues during such two subsequent quarters)
which will arise out of the operations contemplated by the current
approved program and budget while also providing for retention of a
reasonable amount of cash and cash equivalents for working capital,
contingencies and reserves, all of which factors shall be
considered by the management committee of the JV; and (ii) the
maximum amount permissible for distributions to shareholders of a
particular JV company at that time in accordance with applicable
law and the terms of any third party loan or other agreement in
effect which limits distributions from the JV companies.
Distributable cash is to be paid out by the JV in certain priority,
and is generally paid first to interest and principal of loans,
second to redemption of the preferred shares issued by the JV (of
which shares each partner held 132.4 million preferred shares as of
September 30, 2022) and finally as dividends on common shares of
the JV companies (which the JV partners own 45:45 with the
Government of Ghana holding 10%). As a result, despite cash flows
from the AGM accruing to the JV, in certain circumstances,
including wherein the JV is expected to incur costs in respect of
work programs to be undertaken at the AGM or principal and interest
payments are owing by the JV, Galiano may not be able to realize on
all or any part of this cash flow, which may have a negative impact
on the financial condition, results of operations or share price of
the Company. See section "Corporate Risks ‐ Risks associated with
joint ventures" below.
Interest rates
Globally, central banks have
implemented or indicate that they intend to implement increases to
the interest rate charged to commercial banks in the short term to
combat inflationary pressures. Increases in interest rates could
cause the Company's cost of capital to increase, which in turn may
affect the feasibility of financing future development projects. In
addition, the Company's financial results are affected by movements
in interest rates, as it forms an important factor in the
estimation of the fair value of certain assets and liabilities of
the JV and the Company.
Foreign currency and foreign
exchange
The JV receives revenue from
operations in US dollars but incurs a portion of its operating
expenses and costs in foreign currencies including Ghanaian Cedis,
South African Rand, and Canadian dollars. Similarly, the Company
raises its capital in Canadian dollars and US dollars, as
applicable, yet incurs expenses in foreign currencies including the
Euro and British Pound. Each of these currencies fluctuates in
value and is subject to its own country's political and economic
conditions and the JV and the Company are therefore subject to
fluctuations in the exchange rates between the US dollar, the
Canadian dollar and these currencies. These fluctuations could have
a material effect on the future cash flow, business, results of
operations and financial condition of the JV and the Company and on
the share price of the Company. Foreign currency fluctuations may
also lead to higher‐than‐anticipated construction, development and
other costs. The JV and the Company do not currently hedge against
currency exchange risks, although they may do so from time to time
in the future.
Credit rating downgrade
Any debt issued by the JV or the
Company may have a non‐investment grade rating, and any rating
assigned could be lowered or withdrawn entirely by a rating agency
if, in that rating agency's judgment, future circumstances relating
to the basis of the rating, such as adverse changes, so warrant.
Consequently, real or anticipated changes in the credit ratings of
the JV and the Company will generally affect the market value of
any debt of the JV and the Company. Additionally, credit ratings
may not reflect the potential of risks relating to the structure of
any debt of the JV and the Company. Any future lowering of the
ratings for the JV and the Company likely would make it more
difficult or more expensive to obtain debt financing.
Taxation
The JV and the Company have
operations and conduct business in a number of different
jurisdictions and are subject to the taxation laws of each such
jurisdiction. These taxation laws are complicated and subject to
changes and are subject to review and assessment in the ordinary
course. Any such changes in taxation law or reviews and assessments
could result in higher taxes being payable by the JV and the
Company, which could adversely affect profitability. Taxes and
other local laws and requirements may also adversely affect the
ability of the JV and the Company to repatriate earnings and
otherwise deploy assets. In addition, the JV and the Company are
subject to routine tax audits by various tax authorities. Tax
audits may result in additional tax, interest payments and
penalties which, if levied, would negatively affect the financial
condition and operating results of the JV and the Company.
Tax consequences for foreign
controlled Canadian companies
Certain adverse tax considerations
may be applicable to a shareholder that is a corporation resident
in Canada and is, or becomes, controlled by a non-resident
corporation for the purposes of the "foreign affiliate dumping"
rules in the Income Tax Act (Canada). Such shareholders should
consult their tax advisors with respect to the consequences of
acquiring the securities of the Company.
Repatriation of funds
The Company may need to repatriate
funds from foreign affiliates to service indebtedness or fulfill
the Company's business plans, in particular in relation to ongoing
expenditures at development assets unrelated to the JV. Galiano may
not be able to repatriate funds, or may incur tax payments or other
costs when doing so, as a result of a change in applicable law or
tax requirements at local subsidiary levels, and such costs could
be material.
Financial Reporting
Risks
Inadequate controls over
financial reporting
The Company assessed and tested,
for its 2021 fiscal year, its internal control procedures in order
to satisfy the requirements of Section 404 of the Sarbanes‐Oxley
Act ("SOX"). SOX requires an annual assessment by management
of the effectiveness of the Company's internal control over
financial reporting. In 2021, the Company elected not to obtain an
attestation report from the Company's independent auditors
addressing the effectiveness of the Company's internal controls
over financial reporting resulting from its status as an "Emerging
Growth Company" under the U.S. Securities Act of 1933, as amended
(the "U.S. Securities Act"). The Company's failure to satisfy the
requirements of Section 404 of SOX on an ongoing and timely basis
could result in the loss of investor confidence in the reliability
of its financial statements and/or regulatory sanctions, which in
turn could harm the Company's business and negatively impact the
trading price of its Common Shares or market value of its other
securities. In addition, any failure to implement required new or
improved controls, or difficulties encountered in their
implementation could harm the Company's operating results or cause
it to fail to meet its reporting obligations.
Moreover, the Company's management
does not expect that its internal control over financial reporting
will prevent or detect all errors and all fraud. Any such errors or
fraud could cause the Company to be required to amend its financial
statements, result in regulatory sanction and/or liability, any of
which could harm the Company's financial results, results of
operation, business or share price.
Public company
obligations
The Company's business is subject
to evolving corporate governance and public disclosure regulations
that have increased both the Company's compliance costs and the
risk of non‐compliance. Any non‐compliance with these regulations
could have an adverse effect on the Company's share price.
The Company is subject to changing
rules and regulations promulgated by a number of U.S. and Canadian
governmental and self‐regulated organizations, including the SEC,
the Canadian Securities Administrators, the NYSE American, the TSX,
and the International Accounting Standards Board. These rules and
regulations continue to evolve in scope and complexity and many new
requirements have been created in response to laws enacted by the
U.S. Congress, making compliance more difficult and uncertain.
Carrying value of assets
The carrying value of the assets of
the JV and the Company is compared to internal estimates of their
estimated fair value to assess how much value can be recovered
based on current events and circumstances. The fair value estimates
of the JV and the Company are based on numerous assumptions and are
adjusted from time to time and the actual fair value, which also
varies over time, could be significantly different than these
estimates.
If there are no mitigating
valuation factors and the JV and the Company do not achieve their
valuation assumptions, or they experience a decline in the fair
value of their reporting units, it could result in an impairment
charge, which could have an adverse effect on the JV and the
Company.
Change in reporting
standards
Changes in accounting or financial
reporting standards may have an adverse effect on the financial
condition and results of operations of the JV and the Company in
the future.
Corporate Risks
Risk associated with joint
ventures
Since the conclusion of the JV
Transaction on July 31, 2018, the Company's primary asset is held
through a joint venture arrangement with Gold Fields, which exposes
the Company to various additional risks. The existence or
occurrence of one or more of the following circumstances and events
could have a material adverse impact on the Company's profitability
or the viability of the Company's interest in the AGM, which could
have a material adverse impact on the Company's future cash flows,
earnings, results of operations and financial condition:
• disagreements
with the JV partners on how to operate the AGM and whether and how
to develop the AGM;
• inability
to exert influence over certain strategic decisions made in respect
of the AGM's development plans;
• inability
of the Company to meets its own obligations under the JVA;
• inability
of the Company to make its required contributions under the JVA
which may result in dilution to the Company's interest in the
JV;
• inability
of partners to meet their obligations to the JV, joint operation of
the AGM or third parties;
• decisions
under the dispute resolution provisions of the JVA may not be
resolved in the Company's favour; and
• litigation
between partners regarding the JV or matters in respect of the
joint operation of the AGM.
In addition, the Company is
currently the manager of the JV operations for which it receives
fees under the Services Agreement in respect of the AGM for direct
services and supervised activities, capped at $7.1 million per year
(originally $6.0 million, but adjusted annually for inflation). The
Company is obliged to provide services to a professional standard
and to otherwise comply with the obligations of the Services
Agreement. If the Company were to fail to meet the required
standards and obligations under the Services Agreement, or were
diluted pursuant to the JVA, it could be removed as manager and
would lose entitlement to these fees.
The Company's inability to control
the JV may impact adversely on the ability of the Company to raise
funds to fund its contributions to the JV, which may ultimately
result in dilution to the Company's interest in the JV.
Insurance and uninsured
risks
Where economically feasible and
based on availability of coverage, a number of operational,
financial and political risks are transferred to insurance
companies. The availability of such insurance is dependent on the
past insurance losses and records of the JV and the Company and
general market conditions. Available insurance does not cover all
the potential risks associated with a mining company's operations.
The JV and the Company may also be unable to maintain insurance to
cover insurable risks at economically feasible premiums, insurance
coverage may not be available in the future or may not be adequate
to cover any resulting loss, and the ability to claim under
existing policies may be contested. Moreover, insurance against
risks such as the validity and ownership of unpatented mining
claims and mill sites and environmental pollution or other hazards
as a result of exploration and production is not generally
available to the JV or the Company or to other companies in the
mining industry on acceptable terms. As a result, the JV and the
Company might become subject to liability for environmental damage
or other hazards for which it is completely or partially uninsured
or for which it elects not to insure because of premium costs or
other reasons. Losses from these events may cause the JV and the
Company to incur significant costs that could have a material
adverse effect upon the financial condition and/or results of
operations of the JV and the Company.
Litigation
The JV and the Company may be
subject to litigation arising in the normal course of business and
may be involved in disputes with other parties, including
governments and its workforce, in the future which may result in
litigation. The causes of potential future litigation cannot be
known and may arise from, among other things, business activities,
environmental laws, volatility in stock price, failure to comply
with disclosure obligations or the presence of illegal miners or
labour disruptions at its mine sites. The results and costs of
litigation cannot be predicted with certainty. If the JV or the
Company is unable to resolve these disputes favourably, it may have
a material adverse impact on the financial performance, cash flow
and results of operations of the JV and the Company.
In the event of
a dispute involving the foreign operations of the Company's
affiliates, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in
subjecting foreign persons to the jurisdiction of courts in Canada.
The Company's ability to enforce its rights or its potential
exposure to the enforcement in Canada or locally of judgments from
foreign courts could have an adverse effect on its future cash
flows, earnings, results of operations and financial condition.
Reputational
risk
Damage to Galiano's reputation can
be the result of the actual or perceived occurrence of any number
of events, and could include any negative publicity, whether true
or not. Galiano and the JV do not have control over how they are
perceived by others. Any reputation loss could result in decreased
investor confidence and increased challenges in developing and
maintaining community relations which may have adverse effects on
the business, results of operations and financial condition of the
JV and the Company and the Company's share price.
Acquisitions
The Company may pursue the
acquisition or disposition of producing, development or advanced
stage exploration properties and companies. The search for
attractive acquisition opportunities and the completion of suitable
transactions are time consuming and expensive, and may be
unsuccessful. The Company's success in its acquisition activities
depends on its ability to identify suitable acquisition candidates,
negotiate acceptable terms for any such acquisition, obtain
necessary regulatory approvals and integrate the acquired
operations successfully with those of the Company or the JV. Any
acquisition that the Company may choose to complete may be of a
significant size, may change the scale of the Company's business
and operations and may expose the Company to new geographical,
political, operational, financial and geological risks. For
example:
• there
may be a significant change in commodity prices after the Company
has committed to complete an acquisition and established the
purchase price or share exchange ratio;
• a
material ore body may prove to be below expectations;
• the
Company may have difficulty integrating and assimilating the
operations and personnel of any acquired companies, realizing
anticipated synergies, maximizing the financial and strategic
position of the combined enterprise, and maintaining uniform
standards, policies and controls across the organization;
• the
integration of the acquired business or assets may disrupt the
Company's ongoing business and its relationships with employees,
suppliers and contractors; and
• the
acquired business or assets may have unknown liabilities which may
be significant.
Competitors
The Company competes with other
mining companies and individuals for mining interests on attractive
exploration properties and the acquisition of mining assets,
including competitors with greater financial, technical or other
resources. This may increase the risk of higher costs when
acquiring suitable claims, properties and assets or of even making
such acquisitions on terms acceptable to the Company. There can be
no assurance that the Company will be able to compete successfully
with its competitors in acquiring such properties and assets.
Information systems security
threats
The Company and the JV are reliant
on the continuous and uninterrupted operation of their information
technology ("IT") systems. User access and security of all
IT systems can be critical elements to the operations of the
Company and the JV. Protection against cyber security incidents,
cloud security and security of all of the IT systems of the JV and
the Company are critical to the operations of the JV and the
Company. Any IT failure pertaining to availability, access or
system security could result in disruption for personnel and could
adversely affect the reputation, operations or financial
performance of the JV and the Company.
The IT systems of the JV and the
Company could be compromised by unauthorized parties attempting to
extract business sensitive, confidential or personal information,
corrupting information or disrupting business processes or by
inadvertent or intentional actions by the employees or vendors of
the JV and the Company. A cyber security incident resulting in a
security breach or failure to identify a security threat could
disrupt business and could result in the loss of business
sensitive, confidential or personal information or other assets, as
well as litigation, regulatory enforcement, violation of privacy or
securities laws and regulations, and remediation costs.
If any of the foregoing events, or
other negative events in respect of the IT systems of the Company
or the JV not described herein occur, the business, financial
condition or results of operations of the JV and the Company could
suffer. In that event, the market price of the Company's securities
may decline and investors could lose part or all of their
investment.
The Company has never paid
dividends and may not do so in the foreseeable future
The Company has not declared or
paid any regular dividends on its Common Shares. The Company's
current business plan requires that for the foreseeable future, any
future earnings be reinvested to finance the growth and development
of its business. The Company does not intend to pay cash dividends
on the Common Shares in the foreseeable future. The Company will
not declare or pay any cash dividends until such time as its cash
flow exceeds its capital requirements and will depend upon, among
other things, conditions then existing including earnings,
financial condition, restrictions in financing arrangements,
business opportunities and conditions and other factors, or the
Company's Board determines that its shareholders could make better
use of the cash. In addition, the Company's ability to declare and
pay dividends may be affected by the Ghanaian government's exchange
controls.
Discretion over use of
proceeds
The Company intends to allocate the
net proceeds it will receive from an offering as described under
"Use of Proceeds" in this prospectus and the applicable prospectus
supplement; however, the Company will have discretion in the actual
application of the net proceeds. The Company may elect to allocate
the net proceeds differently from that described in "Use of
Proceeds" in this prospectus and the applicable prospectus
supplement if the Company believes it would be in the Company's
best interests to do so. The Company's investors may not agree with
the manner in which the Company chooses to allocate and spend the
net proceeds from an Offering. The failure by the Company to apply
these funds effectively could have a material adverse effect on the
business of the Company.
Negative Cash Flow from
Operating Activities
The Company had negative cash flow
from operating activities for the financial year ended December 31,
2021, and may continue to experience negative cash flow from
operations in the foreseeable future. The Company has incurred net
losses in the past and may incur losses in the future unless it can
derive sufficient revenues from its business. Such future losses
could have an adverse effect on the market price of the Company's
securities, which could cause investors to lose part or all of
their investment.
Absence of a public market for
certain of the securities
There is no public market for the
debt securities, warrants, subscription receipts, securities
purchase contracts or units and, unless otherwise specified in the
applicable prospectus supplement, the Company does not intend to
apply for listing of the debt securities, warrants, subscription
receipts, securities purchase contracts or units on any securities
exchanges. If the debt securities, warrants, subscription receipts,
securities purchase contracts or units are traded after their
initial issuance, they may trade at a discount from their initial
offering prices depending on prevailing interest rates (as
applicable), the market for similar securities and other factors,
including general economic conditions and our financial condition.
There can be no assurance as to the liquidity of the trading market
for the debt securities, warrants, subscription receipts, share
purchase contracts or units, or that a trading market for these
securities will develop at all.
Unsecured debt
securities
The Company carries on its business
through corporate subsidiaries, and the majority of its assets are
held in corporate subsidiaries. The Company's results of operations
and ability to service indebtedness, including the debt securities,
are dependent upon the results of operations of these subsidiaries
and the payment of funds by these subsidiaries to the Company in
the form of loans, dividends or otherwise. Unless otherwise
indicated in the applicable prospectus supplement, the Company's
subsidiaries will not have an obligation to pay amounts due
pursuant to any debt securities or to make any funds available for
payment on debt securities, whether by dividends, interest, loans,
advances or other payments. In addition, the payment of dividends
and the making of loans, advances and other payments to the Company
by its subsidiaries may be subject to statutory or contractual
restrictions. Unless otherwise indicated in the applicable
prospectus supplement, the indenture will not limit the Company's
ability or the ability of its subsidiaries to incur indebtedness.
Unless otherwise indicated in the applicable prospectus supplement,
such indebtedness of the Company's subsidiaries would be
structurally senior to the debt securities. As such, in the event
of the liquidation of any subsidiary, the assets of the subsidiary
would be used first to repay the obligations of the subsidiary,
including indebtedness and trade payables, prior to being used by
the Company to pay its indebtedness, including any debt securities.
See "Description of Debt Securities".
Effect of changes in interest
rates on debt securities
Prevailing interest rates will
affect the market price or value of the debt securities. The market
price or value of the debt securities may decline as prevailing
interest rates for comparable debt instruments rise, and increase
as prevailing interest rates for comparable debt instruments
decline.
Effect of fluctuations in
foreign currency markets on debt securities
Debt securities denominated or
payable in foreign currencies may entail significant risk. These
risks include, without limitation, the possibility of significant
fluctuations in the foreign currency markets, the imposition or
modification of foreign exchange controls and potential liquidity
in the secondary market. These risks will vary depending upon the
currency or currencies involved and will be more fully described in
the applicable prospectus supplement.
Enforcement of civil liabilities
by U.S. investors
The enforcement by investors of
civil liabilities under the United States federal or state
securities laws may be affected adversely by the fact that the
Company is governed by the BCBCA, that the majority of the
Company's officers and directors are residents of Canada, and that
all, or a substantial portion of their assets and the Company's
assets, are located outside the United States, and that certain of
the experts named in this prospectus (including the documents
incorporated herein by reference) are residents of Canada or reside
outside of the United States. It may not be possible for investors
to effect service of process within the United States on certain of
the Company's directors and officers, or certain of the experts
named in this prospectus (including the documents incorporated
herein by reference), or enforce judgments obtained in the United
States courts against the Company or certain of the Company's
directors and officers, or certain of the experts named in this
prospectus (including the documents incorporated herein by
reference) based upon the civil liability provisions of United
States federal securities laws or the securities laws of any state
of the United States. There is some doubt as to whether a judgment
of a United States court based solely upon the civil liability
provisions of United States federal or state securities laws would
be enforceable in Canada against the Company or its directors and
officers, or certain of the experts named in this prospectus
(including the documents incorporated herein by reference). There
is also doubt as to whether an original action could be brought in
Canada against the Company or its directors and officers, or
certain of the experts named in this prospectus (including the
documents incorporated herein by reference) to enforce liabilities
based solely upon United States federal or state securities
laws.
USE OF PROCEEDS
Unless we otherwise indicate in a
prospectus supplement relating to a particular offering, we
currently intend to use the net proceeds from the sale of our
securities for general corporate and working capital requirements,
including to fund ongoing operations and/or working capital
requirements, to repay indebtedness outstanding from time to time,
to complete future acquisitions or for other corporate purposes as
set forth in the prospectus supplement relating to the offering of
the securities.
The Company had negative cash flow
from operating activities for the financial year ended December 31,
2021. To the extent that the Company has negative cash flow from
operating activities in future periods, the Company may need to use
a portion of the proceeds from any offering to fund such negative
cash flow. See "Risk Factors - Negative Cash Flow from Operating
Activities."
More detailed information regarding
the use of proceeds from the sale of securities, including any
determinable milestones at the applicable time, will be described
in a prospectus supplement. We may also, from time to time, issue
securities otherwise than pursuant to a prospectus supplement to
this prospectus. All expenses relating to an offering of securities
and any compensation paid to underwriters, dealers or agents, as
the case may be, will be paid out of the proceeds from the sale of
such securities, unless otherwise stated in the applicable
prospectus supplement.
CONSOLIDATED
CAPITALIZATION
Since September 30, 2022, the date
of our financial statements for the most recently completed
financial period, there have been no material changes in our
consolidated share or debt capital.
PRIOR SALES
Information in respect of our
Common Shares that we issued within the previous twelve month
period, including Common Shares that we issued upon the exercise of
options or the vesting of share units granted under our equity
incentive plans, will be provided as required in a prospectus
supplement with respect to the issuance of securities pursuant to
such prospectus supplement.
TRADING PRICE AND VOLUME
The Common Shares are listed and
posted for trading on the TSX and the NYSE American under the
symbol "GAU". Trading price and volume information for the
Company's securities will be provided as required in each
prospectus supplement to this prospectus.
EARNINGS COVERAGE
If we offer debt securities having
a term to maturity in excess of one year under this prospectus and
any applicable prospectus supplement, the applicable prospectus
supplement will include earnings coverage ratios giving effect to
the issuance of such securities.
DESCRIPTION OF SHARE
CAPITAL
Our authorized share capital
consists of an unlimited number of Common Shares. As of the date of
this short form prospectus, we had 224,943,453 Common Shares issued
and outstanding. In addition, as of the date of this short form
prospectus, there were 8,497,170 Common Shares issuable upon the
exercise of outstanding stock options, at a weighted average
exercise price of C$1.04, and nil Common Shares issuable upon the
exercise of outstanding share units, for a total of 233,440,623
Common Shares issued and outstanding on a fully-diluted basis.
Common Shares
All of our Common Shares rank
equally as to voting rights, participation in a distribution of the
assets of the Company on a liquidation, dissolution or winding-up
of the Company and entitlement to any dividends declared by the
Company. The holders of our Common Shares are entitled to receive
notice of, and to attend and vote at, all meetings of shareholders
(other than meetings at which only holders of another class or
series of shares are entitled to vote). Each Common Share carries
the right to one vote. In the event of the liquidation, dissolution
or winding-up of the Company, the holders of our Common Shares will
be entitled to receive, on a pro rata basis, all of the assets
remaining after the payment by the Company of all of its
liabilities, subject to the rights of holders of other classes
ranking in priority to our Common Shares with respect to such
assets. The holders of our Common Shares are entitled to receive
any dividends declared by the Company in respect of the Common
Shares, subject to the rights of holders of other classes ranking
in priority to our Common Shares with respect to the payment of
dividends, on a pro rata basis. The Common Shares do not carry any
pre-emptive, redemption or conversion rights, nor do they contain
any sinking or purchase fund provisions. Provisions as to the
creation, modification, amendment or variation of such rights or
such provisions are contained in the BCBCA and the articles of the
Company.
Dividend Policy
The Company has no fixed dividend
policy and has not declared or paid any dividends to date on our
Common Shares. Subject to the BCBCA, the actual timing, payment and
amount of any dividends declared and paid by the Company will be
determined by and at the sole discretion of Galiano's board of
directors from time to time based upon, among other factors, the
Company's cash flow, results of operations and financial condition,
the need for funds to finance ongoing operations and exploration
and such other considerations as the board of directors in its
discretion may consider or deem relevant.
DESCRIPTION OF DEBT
SECURITIES
In this
section describing the debt securities, the terms "Company" and
"Galiano" refer only to Galiano Gold Inc. without any of its
subsidiaries.
The following description of the
terms of debt securities sets forth certain general terms and
provisions of debt securities in respect of which a prospectus
supplement may be filed. The particular terms and provisions of
debt securities offered by any prospectus supplement, and the
extent to which the general terms and provisions described below
may apply thereto, will be described in the prospectus supplement
filed in respect of such debt securities. Prospective investors
should rely on information in the applicable prospectus supplement
if it is different from the following information.
Debt securities may be offered
separately or in combination with one or more other securities of
the Company. The Company may, from time to time, issue debt
securities and incur additional indebtedness other than through the
issue of debt securities pursuant to this prospectus.
The debt securities will be issued
under one or more indentures (each, a "Trust Indenture"), in
each case between the Company and a financial institution or trust
company organized under the laws of Canada or any province thereof
and authorized to carry on business as a trustee and, if
applicable, a trustee that satisfies the requirements of the U.S.
Trust Indenture Act of 1939, as amended (each, a "Trustee").
To the extent applicable, the Trust Indenture will be subject to
and governed by the U.S. Trust Indenture Act of 1939, as amended. A
copy of the form of the Trust Indenture to be entered into will be
filed with the SEC as an exhibit to the registration statement of
which this prospectus will form a part. The description of certain
provisions of the Trust Indenture in this section is not intended
to be complete and is qualified in its entirety by reference to the
provisions of the Trust Indenture.
The following description sets
forth certain general terms and provisions of the debt securities
and is not intended to be complete. The particular terms and
provisions of the debt securities and a description of how the
general terms and provisions described below may apply to the debt
securities will be included in the applicable prospectus
supplement. The following description is subject to the detailed
provisions of the applicable Trust Indenture. Accordingly,
reference should also be made to the applicable Trust Indenture, a
copy of which will be filed by the Company with the securities
commissions or similar regulatory authorities in applicable
Canadian offering jurisdictions, after it has been entered into,
and will be available electronically at www.sedar.com and on EDGAR at
www.sec.gov.
General
The applicable Trust Indenture will
not limit the aggregate principal amount of debt securities that
may be issued under such Trust Indenture and will not limit the
amount of other indebtedness that the Company may incur. The
applicable Trust Indenture will provide that the Company may issue
debt securities from time to time in one or more series and may be
denominated and payable in U.S. dollars, Canadian dollars or any
foreign currency. Unless otherwise indicated in the applicable
prospectus supplement, the debt securities will be unsecured
obligations of the Company.
The Company may specify a maximum
aggregate principal amount for the debt securities of any series
and, unless otherwise provided in the applicable prospectus
supplement, a series of debt securities may be reopened for
issuance of additional debt securities of such series. The
applicable Trust Indenture will also permit the Company to increase
the principal amount of any series of the debt securities
previously issued and to issue that increased principal amount.
Any prospectus supplement for debt
securities supplementing this prospectus will contain the specific
terms and other information with respect to the debt securities
being offered thereby, including, but not limited to, the
following:
-
the designation, aggregate principal amount and authorized
denominations of such debt securities;
-
whether payment on the debt securities will be senior or
subordinated to other liabilities or obligations of the
Company;
-
whether the payment of the debt securities will be guaranteed by
any other person;
-
the date or dates, or the methods by which such dates will be
determined or extended, on which the Company may issue the debt
securities and the date or dates, or the methods by which such
dates will be determined or extended, on which the Company will pay
the principal and any premium on the debt securities and the
portion (if less than the principal amount) of debt securities to
be payable upon a declaration of acceleration of maturity;
-
whether the debt securities will bear interest, the interest rate
(whether fixed or variable) or the method of determining the
interest rate, the date from which interest will accrue, the dates
on which the Company will pay interest and the record dates for
interest payments, or the methods by which such dates will be
determined or extended;
-
the place or places the Company will pay principal, premium, if
any, and interest, if any, and the place or places where debt
securities can be presented for registration of transfer or
exchange;
-
whether and under what circumstances the Company will be required
to pay any additional amounts for withholding or deduction for
Canadian taxes with respect to the debt securities, and whether and
on what terms the Company will have the option to redeem the debt
securities rather than pay the additional amounts;
-
whether the Company will be obligated to redeem or repurchase the
debt securities pursuant to any sinking or purchase fund or other
provisions, or at the option of a holder, and the terms and
conditions of such redemption;
-
whether the Company may redeem the debt securities at its option
and the terms and conditions of any such redemption;
-
the denominations in which the Company will issue any registered
and unregistered debt securities;
-
the currency or currency units for which debt securities may be
purchased and the currency or currency units in which the principal
and any interest is payable or if payments on the debt securities
will be made by delivery of Common Shares or other property;
-
whether payments on the debt securities will be payable with
reference to any index or formula;
- if
applicable, the ability of the Company to satisfy all or a portion
of any redemption of the debt securities, any payment of any
interest on such debt securities or any repayment of the principal
owing upon the maturity of such debt securities through the
issuance of securities of the Company or of any other entity, and
any restriction(s) on the persons to whom such securities may be
issued;
-
whether the debt securities will be issued as global securities
(defined below) and, if so, the identity of the depositary for the
global securities;
-
whether the debt securities will be issued as unregistered
securities (with or without coupons), registered securities or
both;
-
the periods within which and the terms and conditions, if any, upon
which the Company may redeem the debt securities prior to maturity
and the price or prices of which the debt securities are
payable;
-
any events of default or covenants applicable to the debt
securities;
-
any terms under which debt securities may be defeased, whether at
or prior to maturity;
-
whether the holders of any series of debt securities have special
rights if specified events occur;
-
the terms, if any, for any conversion or exchange of the debt
securities for any other securities;
-
rights, if any, on a change of control;
-
provisions as to modification, amendment or variation of any rights
or terms attaching to the debt securities;
-
the Trustee or Trustees under the Trust Indenture pursuant to which
the debt securities are to be issued;
-
whether the Company will undertake to list the debt securities of
the series on any securities exchange or automated interdealer
quotation system; and
-
any other terms, conditions, rights and preferences (or limitations
on such rights and preferences) including covenants and events of
default which apply solely to a particular series of the debt
securities being offered which do not apply generally to other debt
securities, or any covenants or events of default generally
applicable to the debt securities which do not apply to a
particular series of the debt securities.
The Company reserves the right to
include in a prospectus supplement specific terms pertaining to the
debt securities which are not within the options and parameters set
forth in this prospectus. In addition, to the extent that any
particular terms of the debt securities described in a prospectus
supplement differ from any of the terms described in this
prospectus, the description of such terms set forth in this
prospectus shall be deemed to have been superseded by the
description of such differing terms set forth in such prospectus
supplement with respect to such debt securities.
Unless stated otherwise in the
applicable prospectus supplement, no holder of debt securities will
have the right to require the Company to repurchase the debt
securities and there will be no increase in the interest rate if
the Company becomes involved in a highly leveraged transaction or
has a change of control.
The Company may issue debt
securities bearing no interest or interest at a rate below the
prevailing market rate at the time of issuance, and offer and sell
these securities at a discount below their stated principal amount.
The Company may also sell any of the debt securities for a foreign
currency or currency unit, and payments on the debt securities may
be payable in a foreign currency or currency unit. In any of these
cases, the Company will describe certain Canadian federal income
tax consequences and other special considerations in the applicable
prospectus supplement.
Unless otherwise indicated in the
applicable prospectus supplement, the Company may issue debt
securities with terms different from those of debt securities
previously issued and, without the consent of the holders thereof,
reopen a previous issue of a series of debt securities and issue
additional debt securities of such series.
Ranking and Other
Indebtedness
Unless otherwise indicated in an
applicable prospectus supplement, the debt securities will be
direct unsecured obligations of the Company. The debt securities
will be senior or subordinated indebtedness of the Company as
described in the applicable prospectus supplement. If the debt
securities are senior indebtedness, they will rank equally and
ratably with all other unsecured indebtedness of the Company from
time to time issued and outstanding which is not subordinated. If
the debt securities are subordinated indebtedness, they will be
subordinated to senior indebtedness of the Company as described in
the applicable prospectus supplement, and they will rank equally
and ratably with other subordinated indebtedness of the Company
from time to time issued and outstanding as described in the
applicable prospectus supplement. The Company reserves the right to
specify in a prospectus supplement whether a particular series of
subordinated debt securities is subordinated to any other series of
subordinated debt securities.
The Board may establish the extent
and manner, if any, to which payment on or in respect of a series
of debt securities will be senior or will be subordinated to the
prior payment of our other liabilities and obligations and whether
the payment of principal, premium, if any, and interest, if any,
will be guaranteed by any other person and the nature and priority
of any security.
Registration of Debt
Securities
Debt Securities in Book Entry
Form
Unless otherwise indicated in an
applicable prospectus supplement, debt securities of any series may
be issued in whole or in part in the form of one or more global
securities ("Global Securities") registered in the name of a
designated clearing agency (a "Depositary") or its nominee
and held by or on behalf of the Depositary in accordance with the
terms of the applicable Trust Indenture. The specific terms of the
depositary arrangement with respect to any portion of a series of
debt securities to be represented by a Global Security will, to the
extent not described herein, be described in the prospectus
supplement relating to such series. The Company anticipates that
the provisions described in this section will apply to all
depositary arrangements.
Upon the issuance of a Global
Security, the Depositary or its nominee will credit, in its
book-entry and registration system, the respective principal
amounts of the debt securities represented by the Global Security
to the accounts of such participants that have accounts with the
Depositary or its nominee ("Participants"). Such accounts
are typically designated by the underwriters, dealers or agents
participating in the distribution of the debt securities or by the
Company if such debt securities are offered and sold directly by
the Company. Ownership of beneficial interests in a Global Security
will be limited to Participants or persons that may hold beneficial
interests through Participants. With respect to the interests of
Participants, ownership of beneficial interests in a Global
Security will be shown on, and the transfer of that ownership will
be effected only through records maintained by the Depositary or
its nominee. With respect to the interests of persons other than
Participants, ownership of beneficial interests in a Global
Security will be shown on, and the transfer of that ownership will
be effected only through records maintained by Participants or
persons that hold through Participants.
So long as the Depositary for a
Global Security, or its nominee, is the registered owner of such
Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the debt
securities represented by such Global Security for all purposes
under the applicable Trust Indenture and payments of principal,
premium, if any, and interest, if any, on the debt securities
represented by a Global Security will be made by the Company to the
Depositary or its nominee. The Company expects that the Depositary
or its nominee, upon receipt of any payment of principal, premium,
if any, or interest, if any, will credit Participants' accounts
with payments in amounts proportionate to their respective
beneficial interests in the principal amount of the Global Security
as shown on the records of such Depositary or its nominee. The
Company also expects that payments by Participants to owners of
beneficial interests in a Global Security held through such
Participants will be governed by standing instructions and
customary practices and will be the responsibility of such
Participants.
Conveyance of notices and other
communications by the Depositary to direct Participants, by direct
Participants to indirect Participants and by direct and indirect
Participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Owners of beneficial interests in a
Global Security will not be entitled to have the debt securities
represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of such
debt securities in certificated non-book-entry form, and will not
be considered the owners or holders thereof under the applicable
Trust Indenture, and the ability of a holder to pledge a debt
security or otherwise take action with respect to such holder's
interest in a debt security (other than through a Participant) may
be limited due to the lack of a physical certificate.
No Global Security may be exchanged
in whole or in part for debt securities registered, and no transfer
of a Global Security in whole or in part may be registered, in the
name of any person other than the Depositary for such Global
Security or any nominee of such Depositary unless: (i) the
Depositary is no longer willing or able to discharge properly its
responsibilities as depositary and the Company is unable to locate
a qualified successor; (ii) the Company at its option elects, or is
required by law, to terminate the book-entry system through the
Depositary or the book-entry system ceases to exist; or (iii) if
provided for in the Trust Indenture, after the occurrence of an
event of default thereunder (provided the Trustee has not waived
the event of default in accordance with the terms of the Trust
Indenture), Participants acting on behalf of beneficial holders
representing, in aggregate, a threshold percentage of the aggregate
principal amount of the debt securities then outstanding advise the
Depositary in writing that the continuation of a book-entry system
through the Depositary is no longer in their best interest.
If one of the foregoing events
occurs, such Global Security shall be exchanged for certificated
non-book-entry debt securities of the same series in an aggregate
principal amount equal to the principal amount of such Global
Security and registered in such names and denominations as the
Depositary may direct.
The Company, any underwriters,
dealers or agents and any Trustee identified in an accompanying
prospectus supplement, as applicable, will not have any liability
or responsibility for (i) records maintained by the Depositary
relating to beneficial ownership interests in the debt securities
held by the Depositary or the book-entry accounts maintained by the
Depositary, (ii) maintaining, supervising or reviewing any records
relating to any such beneficial ownership interests, or (iii) any
advice or representation made by or with respect to the Depositary
and contained in this prospectus or in any prospectus supplement or
Trust Indenture with respect to the rules and regulations of the
Depositary or at the direction of Depositary Participants.
Unless otherwise stated in the
applicable prospectus supplement, CDS Clearing and Depository
Services Inc. or its successor will act as Depositary for any debt
securities represented by a Global Security.
Debt Securities in Certificated
Form
A series of the debt securities may
be issued in definitive form, solely as registered securities,
solely as unregistered securities or as both registered securities
and unregistered securities. Unless otherwise indicated in the
applicable prospectus supplement, unregistered securities will have
interest coupons attached.
In the event that the debt
securities are issued in certificated non-book-entry form, and
unless otherwise indicated in the applicable prospectus supplement,
payment of principal, premium, if any, and interest, if any, on the
debt securities (other than a Global Security) will be made at the
office or agency of the Trustee or, at the option of the Company,
by the Company by way of cheque mailed or delivered to the address
of the person entitled at the address appearing in the security
register of the Trustee or electronic funds wire or other
transmission to an account of the person entitled to receive such
payments. Unless otherwise indicated in the applicable prospectus
supplement, payment of interest, if any, will be made to the
persons in whose name the debt securities are registered at the
close of business on the day or days specified by the Company.
At the option of the holder of debt
securities, registered securities of any series will be
exchangeable for other registered securities of the same series, of
any authorized denomination and of a like aggregate principal
amount and tenor. If, but only if, provided in an applicable
prospectus supplement, unregistered securities (with all unmatured
coupons, except as provided below, and all matured coupons in
default) of any series may be exchanged for registered securities
of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor. In such event, unregistered
securities surrendered in a permitted exchange for registered
securities between a regular record date or a special record date
and the relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest,
and interest will not be payable on such date for payment of
interest in respect of the registered security issued in exchange
for such unregistered security, but will be payable only to the
holder of such coupon when due in accordance with the terms of the
Trust Indenture. Unless otherwise specified in an applicable
prospectus supplement, unregistered securities will not be issued
in exchange for registered securities.
The applicable prospectus
supplement may indicate the places to register a transfer of the
debt securities in definitive form. Except for certain restrictions
to be set forth in the Trust Indenture, no service charge will be
payable by the holder for any registration of transfer or exchange
of the debt securities in definitive form, but the Company may, in
certain instances, require a sum sufficient to cover any tax or
other governmental charges payable in connection with these
transactions.
DESCRIPTION OF WARRANTS
General
This section describes the general
terms that will apply to any warrants for the purchase of Common
Shares, or equity warrants, or for the purchase of debt securities,
or debt warrants.
We may issue warrants independently
or together with other securities, and warrants sold with other
securities may be attached to or separate from the other
securities. Warrants will be issued under one or more warrant
agency agreements to be entered into by us and one or more banks or
trust companies acting as warrant agent.
The Company will deliver an
undertaking to the securities regulatory authority in each of the
provinces and territories of Canada, except Québec, that it will
not distribute warrants that, according to their terms as described
in the applicable prospectus supplement, are "novel" specified
derivatives within the meaning of Canadian securities legislation,
separately to any member of the public in Canada, unless the
offering is in connection with and forms part of the consideration
for an acquisition or merger transaction or unless such prospectus
supplement containing the specific terms of the warrants to be
distributed separately is first approved by or on behalf of the
securities commissions or similar regulatory authorities in each of
the provinces of Canada where the warrants will be distributed.
This summary of some of the
provisions of the warrants is not complete. The statements made in
this prospectus relating to any warrant agreement and warrants to
be issued under this prospectus are summaries of certain
anticipated provisions thereof and do not purport to be complete
and are subject to, and are qualified in their entirety by
reference to, all provisions of the applicable warrant agreement.
You should refer to the warrant indenture or warrant agency
agreement relating to the specific warrants being offered for the
complete terms of the warrants. A copy of any warrant indenture or
warrant agency agreement relating to an offering or warrants will
be filed by the Company with the securities regulatory authorities
in the applicable Canadian offering jurisdictions and the United
States after we have entered into it, and will be available
electronically on SEDAR at www.sedar.com.
The applicable prospectus
supplement relating to any warrants that we offer will describe the
particular terms of those warrants and include specific terms
relating to the offering.
Original purchasers of warrants (if
offered separately) will have a contractual right of rescission
against us in respect of the exercise of such warrant. The
contractual right of rescission will entitle such original
purchasers to receive, upon surrender of the underlying securities
acquired upon exercise of the warrant, the total of the amount paid
on original purchase of the warrant and the amount paid upon
exercise, in the event that this prospectus (as supplemented or
amended) contains a misrepresentation, provided that: (i) the
exercise takes place within 180 days of the date of the purchase of
the warrant under the applicable prospectus supplement; and (ii)
the right of rescission is exercised within 180 days of the date of
purchase of the warrant under the applicable prospectus supplement.
This contractual right of rescission will be consistent with the
statutory right of rescission described under section 131 of the
Securities Act (British Columbia), and is in addition to any
other right or remedy available to original purchasers under
section 131 of the Securities Act (British Columbia) or
otherwise at law.
In an offering of warrants, or
other convertible securities, original purchasers are cautioned
that the statutory right of action for damages for a
misrepresentation contained in the prospectus is limited, in
certain provincial and territorial securities legislation, to the
price at which the warrants, or other convertible securities, are
offered to the public under the prospectus offering. This means
that, under the securities legislation of certain provinces and
territories, if the purchaser pays additional amounts upon
conversion, exchange or exercise of such securities, those amounts
may not be recoverable under the statutory right of action for
damages that applies in those provinces or territories. The
purchaser should refer to any applicable provisions of the
securities legislation of the purchaser's province or territory for
the particulars of these rights, or consult with a legal
advisor.
Equity Warrants
The particular terms of each issue
of equity warrants will be described in the applicable prospectus
supplement. This description will include, where applicable:
• the
designation and aggregate number of equity warrants;
• the
price at which the equity warrants will be offered;
• the
currency or currencies in which the equity warrants will be
offered;
• the
date on which the right to exercise the equity warrants will
commence and the date on which the right will expire;
• the
number of Common Shares that may be purchased upon exercise of each
equity warrant and the price at which and currency or currencies in
which the Common Shares may be purchased upon exercise of each
equity warrant;
• the
terms of any provisions allowing or providing for adjustments in
(i) the number and/or class of shares that may be purchased, (ii)
the exercise price per share or (iii) the expiry of the equity
warrants;
• whether
we will issue fractional shares;
• whether
we have applied to list the equity warrants or the underlying
shares on a stock exchange;
• the
designation and terms of any securities with which the equity
warrants will be offered, if any, and the number of the equity
warrants that will be offered with each security;
• the
date or dates, if any, on or after which the equity warrants and
the related securities will be transferable separately;
• whether
the equity warrants will be subject to redemption or call and, if
so, the terms of such redemption or call provisions;
• material
U.S. and Canadian federal income tax consequences of owning the
equity warrants;
• any
terms, procedures and limitations relating to the transferability,
exchange or exercise of the equity warrants; and
• any
other material terms or conditions of the equity warrants.
Debt Warrants
The particular terms of each issue
of debt warrants will be described in the related prospectus
supplement. This description will include, where applicable:
• the
designation and aggregate number of debt warrants;
• the
price at which the debt warrants will be offered;
• the
currency or currencies in which the debt warrants will be
offered;
• the
designation and terms of any securities with which the debt
warrants are being offered, if any, and the number of the debt
warrants that will be offered with each security;
• the
date or dates, if any, on or after which the debt warrants and the
related securities will be transferable separately;
• the
principal amount and designation of debt securities that may be
purchased upon exercise of each debt warrant and the price at which
and currency or currencies in which that principal amount of debt
securities may be purchased upon exercise of each debt warrant;
• the
date on which the right to exercise the debt warrants will commence
and the date on which the right will expire;
• the
minimum or maximum amount of debt warrants that may be exercised at
any one time;
• whether
the debt warrants will be subject to redemption or call, and, if
so, the terms of such redemption or call provisions;
• material
U.S. and Canadian federal income tax consequences of owning the
debt warrants;
• whether
we have applied to list the debt warrants or the underlying debt
securities on an exchange;
• any
terms, procedures and limitations relating to the transferability,
exchange or exercise of the debt warrants; and
• any
other material terms or conditions of the debt warrants.
Prior to the exercise of their
warrants, holders of warrants will not have any of the rights of
holders of the securities subject to the warrants.
DESCRIPTION OF UNITS
Galiano may issue units, which may
consist of one or more of Common Shares, warrants or any other
security specified in the relevant prospectus supplement. Each unit
will be issued so that the holder of the unit is also the holder of
each of the securities included in the unit. In addition, the
relevant prospectus supplement relating to an offering of units
will describe all material terms of any units offered, including,
as applicable:
• the
designation and aggregate number of units being offered;
• the
price at which the units will be offered;
• the
designation, number and terms of the securities comprising the
units and any agreement governing the units;
• the
date or dates, if any, on or after which the securities comprising
the units will be transferable separately;
• whether
we will apply to list the units or any of the individual securities
comprising the units on any exchange;
• material
U.S. and Canadian income tax consequences of owning the units,
including, how the purchase price paid for the units will be
allocated among the securities comprising the units; and
• any
other material terms or conditions of the units.
DESCRIPTION OF SUBSCRIPTION
RECEIPTS
We may issue subscription receipts
separately or in combination with one or more other securities,
which will entitle holders thereof to receive, upon satisfaction of
certain release conditions (the "Release Conditions") and
for no additional consideration, Common Shares, warrants, debt
securities or any combination thereof. Subscription receipts will
be issued pursuant to one or more subscription receipt agreements
(each, a "Subscription Receipt Agreement"), the material
terms of which will be described in the applicable prospectus
supplement, each to be entered into between the Company and an
escrow agent (the "Escrow Agent") that will be named in the
relevant prospectus supplement. Each Escrow Agent will be a
financial institution organized under the laws of Canada or a
province thereof and authorized to carry on business as a trustee.
If underwriters or agents are used in the sale of any subscription
receipts, one or more of such underwriters or agents may also be a
party to the Subscription Receipt Agreement governing the
subscription receipts sold to or through such underwriter or
agent.
The following description sets
forth certain general terms and provisions of subscription receipts
that may be issued hereunder and is not intended to be complete.
The statements made in this prospectus relating to any Subscription
Receipt Agreement and subscription receipts to be issued thereunder
are summaries of certain anticipated provisions thereof and are
subject to, and are qualified in their entirety by reference to,
all provisions of the applicable Subscription Receipt Agreement.
Prospective investors should refer to the Subscription Receipt
Agreement relating to the specific subscription receipts being
offered for the complete terms of the subscription receipts. We
will file a copy of any Subscription Receipt Agreement relating to
an offering of subscription receipts with the applicable securities
regulatory authorities in Canada and the United States after it has
been entered into it.
General
The prospectus supplement and the
Subscription Receipt Agreement for any subscription receipts that
we may offer will describe the specific terms of the subscription
receipts offered. This description may include, but may not be
limited to, any of the following, if applicable:
• the
designation and aggregate number of subscription receipts being
offered;
• the
price at which the subscription receipts will be offered;
• the
designation, number and terms of the Common Shares, warrants and/or
debt securities to be received by the holders of subscription
receipts upon satisfaction of the Release Conditions, and any
procedures that will result in the adjustment of those numbers;
• the
Release Conditions that must be met in order for holders of
subscription receipts to receive, for no additional consideration,
the Common Shares, warrants and/or debt securities;
• the
procedures for the issuance and delivery of the Common Shares,
warrants and/or debt securities to holders of subscription receipts
upon satisfaction of the Release Conditions;
• whether
any payments will be made to holders of subscription receipts upon
delivery of the Common Shares, warrants and/or debt securities upon
satisfaction of the Release Conditions;
• the
identity of the Escrow Agent;
• the
terms and conditions under which the Escrow Agent will hold all or
a portion of the gross proceeds from the sale of subscription
receipts, together with interest and income earned thereon
(collectively, the "Escrowed Funds"), pending satisfaction
of the Release Conditions;
• the
terms and conditions pursuant to which the Escrow Agent will hold
the Common Shares, warrants and/or debt securities pending
satisfaction of the Release Conditions;
• the
terms and conditions under which the Escrow Agent will release all
or a portion of the Escrowed Funds to the Company upon satisfaction
of the Release Conditions;
• if
the subscription receipts are sold to or through underwriters or
agents, the terms and conditions under which the Escrow Agent will
release a portion of the Escrowed Funds to such underwriters or
agents in payment of all or a portion of their fees or commissions
in connection with the sale of the subscription receipts;
• procedures
for the refund by the Escrow Agent to holders of subscription
receipts of all or a portion of the subscription price of their
subscription receipts, plus any pro rata entitlement to interest
earned or income generated on such amount, if the Release
Conditions are not satisfied;
• any
contractual right of rescission to be granted to initial purchasers
of subscription receipts in the event that this prospectus, the
prospectus supplement under which such subscription receipts are
issued or any amendment hereto or thereto contains a
misrepresentation;
• any
entitlement of Galiano to purchase the subscription receipts in the
open market by private agreement or otherwise;
• whether
we will issue the subscription receipts as global securities and,
if so, the identity of the depository for the global
securities;
• whether
we will issue the subscription receipts as unregistered bearer
securities, as registered securities or both;
• provisions
as to modification, amendment or variation of the Subscription
Receipt Agreement or any rights or terms of the subscription
receipts, including upon any subdivision, consolidation,
reclassification or other material change of the Common Shares,
warrants or other Galiano securities, any other reorganization,
amalgamation, merger or sale of all or substantially all of the
Company's assets or any distribution of property or rights to all
or substantially all of the holders of Common Shares;
• whether
we will apply to list the subscription receipts on any
exchange;
• material
U.S. and Canadian federal income tax consequences of owning the
subscription receipts; and
• any
other material terms or conditions of the subscription
receipts.
Original purchasers of subscription
receipts will have a contractual right of rescission against us in
respect of the conversion of the subscription receipts. The
contractual right of rescission will entitle such original
purchasers to receive the amount paid on original purchase of the
subscription receipts upon surrender of the underlying securities
gained thereby, in the event that this prospectus (as supplemented
or amended) contains a misrepresentation, provided that: (i) the
conversion takes place within 180 days of the date of the purchase
of the subscription receipts under this prospectus; and (ii) the
right of rescission is exercised within 180 days of the date of
purchase of the subscription receipts under this prospectus. This
contractual right of rescission will be consistent with the
statutory right of rescission described under section 131 of the
Securities Act (British Columbia), and is in addition to any
other right or remedy available to original purchasers under
section 131 of the Securities Act (British Columbia) or
otherwise at law.
Rights of Holders of
Subscription Receipts Prior to Satisfaction of Release
Conditions
The holders of subscription
receipts will not be, and will not have the rights of, shareholders
of Galiano. Holders of subscription receipts are entitled only to
receive Common Shares, warrants and/or debt securities on exchange
of their subscription receipts, plus any cash payments, if any, all
as provided for under the Subscription Receipt Agreement and only
once the Release Conditions have been satisfied. If the Release
Conditions are not satisfied, holders of subscription receipts
shall be entitled to a refund of all or a portion of the
subscription price therefor and their pro rata share of interest
earned or income generated thereon, if provided for in the
Subscription Receipt Agreement, all as provided in the Subscription
Receipt Agreement.
Escrow
The Subscription Receipt Agreement
will provide that the Escrowed Funds will be held in escrow by the
Escrow Agent, and such Escrowed Funds will be released to the
Company (and, if the subscription receipts are sold to or through
underwriters or agents, a portion of the Escrowed Funds may be
released to such underwriters or agents in payment of all or a
portion of their fees in connection with the sale of the
subscription receipts) at the time and under the terms specified by
the Subscription Receipt Agreement. If the Release Conditions are
not satisfied, holders of subscription receipts will receive a
refund of all or a portion of the subscription price for their
subscription receipts, plus their pro-rata entitlement to interest
earned or income generated on such amount, if provided for in the
Subscription Receipt Agreement, in accordance with the terms of the
Subscription Receipt Agreement. Common Shares, warrants and or debt
securities may be held in escrow by the Escrow Agent and will be
released to the holders of subscription receipts following
satisfaction of the Release Conditions at the time and under the
terms specified in the Subscription Receipt Agreement.
Modifications
The Subscription Receipt Agreement
will specify the terms upon which modifications and alterations to
the subscription receipts issued thereunder may be made by way of a
resolution of holders of subscription receipts at a meeting of such
holders or consent in writing from such holders. The number of
holders of subscription receipts required to pass such a resolution
or execute such a written consent will be specified in the
Subscription Receipt Agreement.
The Subscription Receipt Agreement
will also specify that we may amend any Subscription Receipt
Agreement and the subscription receipts without the consent of the
holders of the subscription receipts to cure any ambiguity, to
cure, correct or supplement any defective or inconsistent provision
or in any other manner that will not materially and adversely
affect the interests of the holders of outstanding subscription
receipts or as otherwise specified in the Subscription Receipt
Agreement.
DESCRIPTION OF SHARE PURCHASE
CONTRACTS
We may issue share purchase
contracts, representing contracts obligating holders to purchase
from or sell to us, and obligating us to purchase from or sell to
the holders, a specified number of Common Shares, as applicable, at
a future date or dates, and including by way of instalment.
The price per Common Share and the
number of Common Shares, as applicable, may be fixed at the time
the share purchase contracts are issued or may be determined by
reference to a specific formula or method set forth in the share
purchase contracts. We may issue share purchase contracts in
accordance with applicable laws and in such amounts and in as many
distinct series as we may determine.
The share purchase contracts may be
issued separately or as part of units consisting of a share
purchase contract and beneficial interests in debt securities, or
debt obligations of third parties, including U.S. treasury
securities or obligations of our subsidiaries, securing the
holders' obligations to purchase the Common Shares under the share
purchase contracts, which we refer to in this prospectus as share
purchase units. The share purchase contracts may require the
Company to make periodic payments to the holders of the share
purchase units or vice versa, and these payments may be unsecured
or refunded and may be paid on a current or on a deferred basis.
The share purchase contracts may require holders to secure their
obligations under those contracts in a specified manner.
Holders of share purchase contracts
are not shareholders of Galiano. The particular terms and
provisions of share purchase contracts offered by any prospectus
supplement, and the extent to which the general terms and
provisions described below may apply to them, will be described in
the prospectus supplement filed in respect of such share purchase
contracts. This description will include, where applicable: (i)
whether the share purchase contracts obligate the holder to
purchase or sell, or both purchase and sell, Common Shares, as
applicable, and the nature and amount of those securities, or the
method of determining those amounts; (ii) whether the share
purchase contracts are to be prepaid or paid in instalments; (iii)
any conditions upon which the purchase or sale will be contingent
and the consequences if such conditions are not satisfied; (iv)
whether the share purchase contracts are to be settled by delivery,
or by reference or linkage to the value or performance of Common
Shares; (v) any acceleration, cancellation, termination or other
provisions relating to the settlement of the share purchase
contracts; (vi) the date or dates on which the sale or purchase
must be made, if any; (vii) whether the share purchase contracts
will be issued in fully registered or global form; (viii) the
material income tax consequences of owning, holding and disposing
of the share purchase contracts; and (ix) any other material terms
and conditions of the share purchase contracts including, without
limitation, transferability and adjustment terms and whether the
share purchase contracts will be listed on a stock exchange.
Original purchasers of share
purchase contracts will be granted a contractual right of
rescission against the Company in respect of the conversion,
exchange or exercise of such share purchase contract. The
contractual right of rescission will entitle such original
purchasers to receive the amount paid upon conversion, exchange or
exercise, upon surrender of the underlying securities gained
thereby, in the event that this prospectus (as supplemented or
amended) contains a misrepresentation, provided that: (i) the
conversion, exchange or exercise takes place within 180 days of the
date of the purchase of the convertible, exchangeable or
exercisable security under this prospectus; and (ii) the right of
rescission is exercised within 180 days of the date of the purchase
of the convertible, exchangeable or exercisable security under this
prospectus. This contractual right of rescission will be consistent
with the statutory right of rescission described under section 131
of the Securities Act (British Columbia), and is in addition
to any other right or remedy available to original purchasers under
section 131 of the Securities Act (British Columbia) or
otherwise at law.
PLAN OF DISTRIBUTION
We may issue our securities offered
by this prospectus for cash or other consideration (i) to or
through underwriters, dealers, placement agents or other
intermediaries, (ii) directly to one or more purchasers or (iii) in
connection with acquisitions of assets or shares or another entity
or company. The consideration for an acquisition of assets or
shares of another entity or company may consist of any of the
securities covered hereby separately, a combination of such
securities, or any combination of, among other things, securities,
cash or the assumption of liabilities.
Each prospectus supplement with
respect to our securities being offered will set forth the terms of
the offering, including:
• the
person offering the securities;
• the
name or names of any underwriters, dealers or other placement
agents;
• the
number and the purchase price of, and form of consideration for,
our securities;
• any
proceeds to the Company from such sale; and
• any
commissions, fees, discounts and other items constituting
underwriters', dealers' or agents' compensation.
Our securities may be sold, from
time to time, in one or more transactions at a fixed price or
prices which may be changed or at market prices prevailing at the
time of sale, at prices related to such prevailing market price or
at negotiated prices, including sales in transactions that are
deemed to be ATM Distributions, including sales made directly on
the TSX, NYSE American or other existing trading markets for the
securities. The prices at which the securities may be offered may
vary as between purchasers and during the period of distribution.
If, in connection with the offering of securities at a fixed price
or prices, the underwriters have made a bona fide effort to
sell all of the securities at the initial offering price fixed in
the applicable prospectus supplement, the public offering price may
be decreased and thereafter further changed, from time to time, to
an amount not greater than the initial offering price fixed in such
prospectus supplement, in which case the compensation realized by
the underwriters will be decreased by the amount that the aggregate
price paid by purchasers for the securities is less than the gross
proceeds paid by the underwriters to the Company.
Only underwriters named in the
prospectus supplement are deemed to be underwriters in connection
with our securities offered by that prospectus supplement.
Under agreements which may be
entered into by the Company, underwriters, dealers and agents who
participate in the distribution of our securities may be entitled
to indemnification by the Company against certain liabilities,
including liabilities under the U.S. Securities Act and applicable
Canadian securities legislation, or to contribution with respect to
payments which such underwriters, dealers or agents may be required
to make in respect thereof. The underwriters, dealers and agents
with whom we enter into agreements may be customers of, engage in
transactions with, or perform services for, the Company in the
ordinary course of business.
No underwriter or dealer involved
in an ATM Distribution, no affiliate of such underwriter or dealer
and no person acting jointly or in concert with such underwriter or
dealer has over-allotted, or will over allot, our securities in
connection with an ATM Distribution of our securities or effect any
other transactions that are intended to stabilize the market price
of our securities during an ATM Distribution. In connection with
any offering of our securities other than in an ATM Distribution,
the underwriters may over-allot or effect transactions which
stabilize or maintain the market price of our securities offered at
a level above that which might otherwise prevail in the open
market. Such transactions, if commenced, may be discontinued at any
time.
CERTAIN INCOME TAX
CONSIDERATIONS
The applicable prospectus
supplement may describe certain Canadian federal income tax
consequences to an investor who is a non-resident of Canada or to
an investor who is a resident of Canada of acquiring, owning and
disposing of any of our securities offered thereunder. The
applicable prospectus supplement may also describe certain U.S.
federal income tax consequences of the acquisition, ownership and
disposition of any of our securities offered thereunder by an
initial investor who is a U.S. person (within the meaning of the
U.S. Internal Revenue Code of 1986), including, to the extent
applicable, such consequences relating to debt securities payable
in a currency other than the US dollar, issued at an original issue
discount for U.S. federal income tax purposes or containing early
redemption provisions or other special items. Investors should read
the tax discussion in any prospectus supplement with respect to a
particular offering and consult their own tax advisors with respect
to their own particular circumstances.
LEGAL MATTERS
Certain legal matters related to
our securities offered by this prospectus will be passed upon on
our behalf by Blake, Cassels & Graydon LLP, with respect to
matters of Canadian law, and Paul, Weiss, Rifkind, Wharton &
Garrison LLP, with respect to matters of United States law.
AUDITORS, TRANSFER AGENT AND
REGISTRAR
The auditors of the Company are
KPMG LLP, Chartered Professional Accountants, Floor 11, 777
Dunsmuir St, Vancouver, BC V7Y 1K3. KPMG LLP has confirmed that
they are independent with respect to the Company within the meaning
of the relevant rules and related interpretations prescribed by the
relevant professional bodies in Canada and any applicable
legislation or regulation, and that they are independent
accountants with respect to the Company under all relevant U.S.
professional and regulatory standards.
The transfer agent and registrar
for the Company's Common Shares in Canada is Computershare Investor
Services Inc. at its principal offices in Vancouver, British
Columbia and Toronto, Ontario.
AGENT FOR SERVICE OF
PROCESS
Michael Price and Judith Mosely,
each a director of the Company, and Greg Collins, Alan Eslake,
Mario E. Rossi, Malcolm Titley and Benoni Owusu Ansah, each named
as an expert herein, reside outside of Canada.
Each of the above individuals has
appointed Blakes Vancouver Services Inc., c/o Blake, Cassels &
Graydon LLP, located at Suite 2600, 595 Burrard Street, Vancouver,
British Columbia, V7X 1L3, Canada as his or her agent for service
of process in Canada. Purchasers are advised that it may not be
possible for investors to enforce judgments obtained in Canada
against any such person, even though they have each appointed an
agent for service of process.
INTEREST OF EXPERTS
Richard Miller, Greg Collins, Eric
Chen, Alan Eslake, Mario E. Rossi, Malcolm Titley and Benoni Owusu
Ansah are the authors responsible for the preparation of the 2022
Technical Report. Additionally, Mr. Miller has prepared, supervised
the preparation of or reviewed certain parts of this short form
prospectus and the documents incorporated by reference herein that
are of a scientific or technical nature.
To the knowledge of the Company,
none of these experts, except Messrs. Miller, Chen and Eslake, held
at the time they prepared or certified such statement, report or
valuation, received after such time or will receive any registered
or beneficial interest, direct or indirect, in any securities or
other property of the Company or one of the Company's associates or
affiliates. As at the date hereof, Messrs. Miller, Chen and Eslake
hold collectively 906,000 stock options of the Company issued to
them in respect of their employment with the Company.
Other than Mr. Miller, Mr. Chen and
Mr. Eslake, who are currently employed by Galiano or the JV, none
of the aforementioned persons are currently expected to be elected,
appointed or employed as a director, officer or employee of the
Company or of any associate or affiliate of the Company.
ENFORCEABILITY OF CIVIL
LIABILITIES
We are a company incorporated under
the BCBCA. The majority of our directors and officers and the
experts named in this prospectus, are residents of Canada or
otherwise reside outside the United States, and all or a
substantial portion of their assets may be, and all of the
Company's assets are, located outside the United States. As such,
it may be difficult for holders of securities who reside in the
United States to effect service within the United States upon those
directors, officers and experts who are not residents of the United
States. It may also be difficult for holders of securities who
reside in the United States to realize in the United States upon
judgments of courts of the United States predicated upon our civil
liability and the civil liability of our directors, officers and
experts under United States federal securities laws. We have been
advised that a judgment of a U.S. court predicated solely upon
civil liability under U.S. federal securities laws or the
securities or "blue sky" laws of any state within the United
States, would likely be enforceable in Canada if the United States
court in which the judgment was obtained has a basis for
jurisdiction in the matter that would be recognized by a Canadian
court for the same purposes. We have also been advised, however,
that there is substantial doubt whether an action could be brought
in Canada in the first instance on the basis of liability
predicated solely upon U.S. federal securities laws.
We will file with the SEC,
concurrently with the registration statement of which this
prospectus is a part, an appointment of agent for service of
process on Form F-X. Under the Form F-X, we will appoint Puglisi
& Associates as our agent for service of process in the United
States in connection with any investigation or administrative
proceeding conducted by the SEC, and any civil suit or action
brought against or involving us in a U.S. court arising out of or
related to or concerning the offering of securities under this
prospectus.
PART II
INFORMATION NOT REQUIRED TO BE
DELIVERED TO
OFFEREES OR PURCHASERS
Indemnification of Directors and
Officers.
The Registrant is subject to the
provisions of the Business Corporations Act (British
Columbia) (the "Act").
Under Section 160 of the Act, and
subject to Section 163 of the act, an individual who:
-
is or was a director or officer of
the Registrant,
-
is or was a director or officer of another corporation (i) at a
time when the corporation is or was an affiliate of the Registrant,
or (ii) at the request of the Registrant, or
-
at the request of the Registrant,
is or was, or holds or held a position equivalent to that of, a
director or officer of a partnership, trust, joint venture or other
unincorporated entity,
and includes, in most instances,
the heirs and personal or other legal representatives of that
individual (collectively, an "eligible party"), may be
indemnified by the Registrant against a judgment, penalty or fine
awarded or imposed in, or an amount paid in settlement of, a
proceeding (an "eligible penalty") in which, by reason of
the eligible party being or having been a director or officer of,
or holding or having held a position equivalent to that of a
director or officer of, the Registrant or an associated
corporation, (a) the eligible party is or may be joined as a party,
or (b) the eligible party is or may be liable for or in respect of
a judgment, penalty or fine in, or expenses related to, the
proceeding ("eligible proceeding") to which the eligible
party is or may be liable. Section 160 of the Act also permits the
Registrant to pay the expenses actually and reasonably incurred by
an eligible party in respect of the eligible proceeding.
Under Section 161 of the Act, the
Registrant must, after the final disposition of an eligible
proceeding, pay the expenses actually and reasonably incurred by an
eligible party in respect of that proceeding if the eligible party
(a) has not been reimbursed for those expenses, and (b) is wholly
successful, on the merits or otherwise, in the outcome of the
proceeding or is substantially successful on the merits in the
outcome of the proceeding.
Under Section 162 of the Act, and
subject to Section 163 of the Act, the Registrant may pay, as they
are incurred in advance of the final disposition of an eligible
proceeding, the expenses actually and reasonably incurred by an
eligible party in respect of that proceeding; provided the
Registrant must not make such payments unless it first receives
from the eligible party a written undertaking that, if it is
ultimately determined that the payment of expenses is prohibited by
Section 163, the eligible party will repay the amounts
advanced.
Under Section 163 of the Act, the
Registrant must not indemnify an eligible party against eligible
penalties to which the eligible party is or may be liable or pay
the expenses of an eligible party in respect of that proceeding
under Sections 160(b), 161 or 162 of the Act, as the case may be,
if any of the following circumstances apply:
-
if the indemnity or payment is made
under an earlier agreement to indemnify or pay expenses and, at the
time that the agreement to indemnify or pay expenses was made, the
Registrant was prohibited from giving the indemnity or paying the
expenses by its memorandum or articles;
-
if the indemnity or payment is made
otherwise than under an earlier agreement to indemnify or pay
expenses and, at the time that the indemnity or payment is made,
the Registrant is prohibited from giving the indemnity or paying
the expenses by its memorandum or articles;
-
if, in relation to the subject
matter of the eligible proceeding, the eligible party did not act
honestly and in good faith with a view to the best interests of the
Registrant or the associated corporation, as the case may be;
or
-
in the case of an eligible
proceeding other than a civil proceeding, if the eligible party did
not have reasonable grounds for believing that the eligible party's
conduct in respect of which the proceeding was brought was
lawful.
If an eligible proceeding is
brought against an eligible party by or on behalf of the Registrant
or by or on behalf of an associated corporation, the Registrant
must not either indemnify the eligible party against eligible
penalties to which the eligible party is or may be liable in
respect of the proceeding, or pay the expenses of the eligible
party under Sections 160(b), 161 or 162 of the Act, as the case may
be, in respect of the proceeding.
Under Section 164 of the Act, and
despite any other provision of Part 5, Division 5 of the Act and
whether or not payment of expenses or indemnification has been
sought, authorized or declined under Part 5, Division 5 of the Act,
the Supreme Court of British Columbia may order the Registrant to
indemnify the eligible party or to pay some or all of the eligible
party’s expenses.
Under Section 165 of the Act, the
Registrant may purchase and maintain insurance for the benefit of
an eligible party or the heirs and personal or other legal
representatives of the eligible party against any liability that
may be incurred by reason of the eligible party being or having
been a director or officer of, or holding or having held a position
equivalent to that of a director or officer of, the Registrant or
an associated corporation.
The articles of a company may
affect its power or obligation to give an indemnity or pay
expenses. As indicated above, this is subject to the overriding
power of the Supreme Court of British Columbia under Section 164 of
the Act.
Under the articles of the
Registrant, subject to the provisions of the Act, the Registrant
must indemnify a director or former director of the Registrant and
the heirs and legal personal representatives of all such persons
against all eligible penalties to which such person is or may be
liable, and the Registrant must, after the final disposition of an
eligible proceeding, pay the expenses actually and reasonably
incurred by such person in respect of that proceeding. Each
director is deemed to have contracted with the Registrant on the
terms of the indemnity contained in the Registrant's articles. The
failure of a director or officer of the Registrant to comply with
the Act or the articles of the Registrant does not invalidate any
indemnity to which such person is entitled under the Registrant's
articles.
Under the articles of the
Registrant, the Registrant may purchase and maintain insurance for
the benefit of any person or his or her heirs or legal personal
representatives against any liability incurred by such party as a
director, officer, employee or agent or person who holds or held an
equivalent position.
Underwriters, dealers or agents who
participate in a distribution of securities registered hereunder
may be entitled under agreements to be entered into with the
Registrant to indemnification by the Registrant against certain
liabilities, including liabilities under the United States
Securities Act of 1933, as amended, and applicable Canadian
securities legislation, or to contribution with respect to payments
which such underwriters, dealers or agents may be required to make
in respect thereof.
Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended
(the "U.S. Securities Act") may be permitted to directors, officers
or persons controlling the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that in the opinion of
the U.S. Securities and Exchange Commission such indemnification is
against public policy as expressed in the U.S. Securities Act and
is therefore unenforceable.
EXHIBITS
Exhibit
No. |
Description |
|
|
|
|
4.1 |
Annual Information Form of the Registrant for the year ended
December 31, 2021, dated as of March 29, 2022 (incorporated by
reference from Exhibit 99.5 to the Registrant's Annual Report on
Form 40-F filed with the Commission on March 30, 2022 (the "Form
40-F")) |
| |
|
|
4.2 |
Audited Consolidated Financial
Statements of the Registrant for the years ended December 31, 2021
and 2020, and the notes thereto and the report of the independent
registered public accounting firm thereon (incorporated by
reference from Exhibit 99.6 to the Form 40-F) |
| |
|
|
4.3 |
Management's Discussion and Analysis of the Registrant for the
years ended December 31, 2021 and 2020 (incorporated by reference
from Exhibit 99.7 to the Form 40-F) |
| |
|
|
4.4 |
Condensed Consolidated Interim Financial Statements of the
Registrant for the three and nine months ended September 30, 2022
and 2021 and the notes thereto (incorporated by reference from
Exhibit 99.1 to the Registrant's Form 6-K furnished to the
Commission on November 9, 2022) |
| |
|
|
4.5 |
Management's Discussion and Analysis of the Registrant for the
three and nine months ended September 30, 2022 and 2021
(incorporated by reference from Exhibit 99.2 to the Registrant's
Form 6-K furnished to the Commission on November 9, 2022) |
| |
|
|
4.6 |
Management Information Circular dated April 27, 2022 with respect
to the Registrant's annual meeting of shareholders held on June 2,
2022 (incorporated by reference from Exhibit 99.2 to the
Registrant's Form 6-K furnished to the Commission on May 4,
2022) |
| |
|
|
4.7 |
Material Change Report dated April 8, 2022, (incorporated by
reference from Exhibit 99.1 to the Registrant's Form 6-K furnished
to the Commission on April 11, 2022) |
| |
|
|
4.8 |
Material Change Report dated
April 1, 2022 |
| |
|
|
4.9 |
Material Change Report
dated February 25, 2022 |
| |
|
|
5.1 |
Consent of KPMG LLP |
| |
|
|
5.2 |
Consent of Blake, Cassels
& Graydon LLP |
| |
|
|
5.3 |
Consent of Richard
Miller |
| |
|
|
5.4 |
Consent of Greg
Collins |
| |
|
|
5.5 |
Consent of Eric Chen |
| |
|
|
5.6 |
Consent of Alan
Eslake |
| |
|
|
5.7 |
Consent of Mario E.
Rossi |
| |
|
|
5.8 |
Consent of Malcolm
Titley |
| |
|
|
5.9 |
Consent of Benoni Owusu
Ansah |
| |
|
|
6.1 |
Powers of Attorney
(included on the signature pages hereto) |
| |
|
|
7.1 |
Form of Trust Indenture (incorporated by reference from Exhibit 7.1
to the Registrant's Form F-10 filed with the Commission on December
29, 2017) |
| |
|
|
|
107 |
Filing Fee Table |
|
PART III
UNDERTAKING AND CONSENT TO
SERVICE OF PROCESS
Item 1. Undertaking.
The Registrant undertakes to make
available, in person or by telephone, representatives to respond to
inquiries made by the Commission staff, and to furnish promptly,
when requested to do so by the Commission staff, information
relating to the securities registered pursuant to this Form F-10 or
to transactions in said securities.
Item 2. Consent to Service of
Process.
|
(a) |
Concurrently with the filing of this Registration Statement on Form
F-10, the Registrant is filing with the Commission a written
irrevocable consent and power of attorney on Form F-X. |
|
|
|
|
(b) |
Any
change to the name or address of the agent for service of the
Registrant will be communicated promptly to the Commission by
amendment to Form F-X referencing the file number of this
Registration Statement. |
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements
for filing on Form F-10 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British
Columbia, Country of Canada, on the 21st day of
December, 2022.
|
|
GALIANO GOLD INC.
|
| |
|
| |
|
|
|
By: |
/s/ Matt Badylak
|
|
|
Name:
|
Matt Badylak
|
|
|
Title:
|
President and Chief Executive Officer
|
POWERS OF ATTORNEY
Each person whose signature appears
below constitutes and appoints Matt Badylak and Matt Freeman, and
each of them, either of whom may act without the joinder of the
other, as his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this
Registration Statement and to file the same, with all exhibits
thereto and other documents in connection therewith, with the U.S.
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, each acting alone, or their
substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the
U.S. Securities Act, this Registration Statement has been signed by
or on behalf of the following persons in the capacities indicated
on the 21st day of December, 2022.
|
Signature |
|
Title |
|
|
|
|
|
/s/ Matt Badylak |
|
President, Chief Executive Officer and Director |
| Matt
Badylak |
|
|
|
|
|
|
|
/s/ Matt Freeman |
|
Executive Vice President and Chief Financial |
| Matt
Freeman |
|
Officer |
|
|
|
|
|
/s/ Paul N. Wright |
|
Chairman and Director |
| Paul
N. Wright |
|
|
|
|
|
|
|
/s/ Gordon J. Fretwell |
|
Director |
| Gordon
J. Fretwell |
|
|
|
|
|
|
|
/s/ Judith Mosely |
|
Director |
| Judith
Mosely |
|
|
|
|
|
|
|
/s/ Dawn Moss |
|
Director |
| Dawn
Moss |
|
|
|
|
|
|
|
/s/ Michael Price |
|
Director |
|
Michael Price |
|
|
|
|
|
|
|
/s/ Greg Martin |
|
Director |
| Greg
Martin |
|
|
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of
Section 6(a) of the Securities Act of 1933, as amended, the
undersigned has signed this Registration Statement, solely in its
capacity as the duly authorized representative of the Registrant in
the United States, on the 21st day of December,
2022.
|
|
|
PUGLISI & ASSOCIATES |
|
|
|
|
|
|
|
|
|
|
By: |
/s/ Donald J. Puglisi |
|
|
Name: |
Donald
J. Puglisi |
|
|
Title: |
Managing Director |
Galiano Gold (AMEX:GAU)
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