Galantas Gold Regulatory News (GAL)

GALANTAS GOLD CORPORATION

TSXV & AIM : Symbol GAL

GALANTAS INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

22nd AUGUST 2012 : Galantas Gold Corporation (the Company) is pleased to announce its interim results for the six months ended June 30th 2012 and second quarter results for the three months ended 30 June 2012.

Financial Highlights

Highlights of the 2012 second quarter's and first six months results, which are expressed in Canadian Dollars, are:

Sales revenues for the six months ended June 30, 2012 amounted to CDN$ 2,928,126 (2011: CDN$ 4,468,713) with sales revenues for the three months ended June 30, 2012 amounted to CDN$ 1,902,980 (Q2 2011: CDN$ 3,266,572). This reduction in sales revenues due to the lower level of metal produced and shipped during the quarter primarily due to the processing of lower grade ore. Sales revenues increased in Q2 compared with Q1 2012 mainly as a result of first quarter revenues being adversely impacted by lower production in addition to a downward revision on December 2011 revenues arising from an over estimation of concentrate grades on December shipments.

Cost of sales for the six months ended June 30, 2012 amounted to CDN$ 2,013,811 (2011: CDN$ 2,374,153). Cost of sales for the three months ended June 30, 2012 amounted to CDN $ 993,304 (Q2 2011: CDN$ 1,345,291). There was a decrease in various production costs at the Omagh mine during the second quarter including production wages reflecting the reduced number of personnel arising from the rationalisation programme, Oil and Fuel costs, Repairs and servicing costs and usage of Consumables. General administrative costs for the six months ended June 30, 2012 amounted to CDN$ 852,514 (2011: CDN$ 991,350). There was a non-cash gain of CDN$ 190,624 ( 2011: CDN$ Nil) during the second quarter of 2012 following the extinguishment of the Company's convertible debenture debt.

The Net Loss for the six months ended June 30, 2012, amounted to CDN$ 99,655 (2011: Net Income CDN$ 719,399). The cash generated from operating activities for the first half of 2012 amounted to CDN$ 253,003 (2011: $ 1,208,784). The cash generated from operating activities continued to contribute towards the cost of the exploration drilling programme at the Omagh mine.

The Net Income for the three months ended June 30, 2012, amounted to CDN$ 543,734 (2011 Q2: CDN$ 1,039,384) and the cash generated from operating activities in the second quarter of 2012 amounted to CDN$ 556,321 (2011 Q2: CDN$ 1,358,594).

The Company had cash balances at June 30, 2012 of CDN$ 2,976,819 compared to CDN$ 4,240,081 at December 31, 2011. The working capital deficit at June 30, 2012 amounted to CDN$ 472,142 which compared with a deficit of CDN$ 536,142 at December 31, 2011.

Production

Production for comparative quarters is summarised below:-

Production at the Omagh mine during the three months ended June 30, 2012, while above production levels achieved during both the first quarter of 2012, was significantly below production levels of the second and subsequent quarters of 2011 due primarily to the processing of lower grade ore. As a result of the lower grade ore, gold equivalent production for the six months ended June 30, 2012 was 2,251 ounces (2011: 2,829 ounces).

The main mine production focus during the second quarter has been on the open pit mining of the Kearney and Kerr veins together with the processing of ore from the low grade stockpile. Production from Kearney was restricted due to limitations in the disposal of surplus rock which had been stockpiled over a period of time and has now reached capacity levels which has impacted negatively on production from the Kearney open pit.

Ore mined from Kearney north during the quarter produced lower than expected grades due to both lower grade of ore mined and narrower than expected widths which led to excessive dilution of the mined ore. Mining from the Kerr veins during the quarter was reasonably successful with two of the veins mined being of high grade with the remaining two being more problematical.

During the second quarter the mill was fed with a combination of lower grade ore which was blended with ore from Kearney and Kerr. However production was hampered by the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled. Production was also hampered during the quarter by unplanned downtime in the plant which continued to be problematical.

The 2011 production figures and metal contents are provisional and subject to averaging or umpiring provisions under the concentrate off - take agreement detailed in a press release dated October 3, 2007. The detailed results and Management Discussion and Analysis (MD&A) are available on www.sedar.com and www.galantas.com and the highlights in this release should be read in conjunction with the detailed results and MD&A. The MD&A provides an analysis of comparisons with previous periods, trends affecting the business and risk factors.

Exploration

The major focus of exploration activities in 2012 has been the 15,000 metre drilling programme with approximately 10,500 metres having being drilled since the programme commenced in 2011.

The drilling program, with six drills operational, continued during the second quarter of 2012 when nineteen additional holes were drilled covering 3,852 metres of exploration drilling mainly on the Kearney and Joshua veins with significant intersects being identified at depth. There were four holes drilled on the Kearney vein, thirteen on the Joshua vein and two holes were drilled north of Kerr to target induced polarization anomalies. Drilling at Kearney is being carried out with the objective of gaining a more accurate picture of the zone of mineralization for the purpose of underground development. Drilling on Kearney during the quarter was mainly at depth from off-site locations. Drilling on Joshua focused on the North and Central Joshua veins during the second quarter. On the North vein the strike has been further increased by 70 m during the second quarter and the proven depth of mineralisation on the northern section has increased by 40 m to a vertical depth of 115 m. The northern boundary of the site has now been reached and the rig has now moved onto south Joshua to target the vein at depth. Drilling on the Central Joshua vein was also successful and strengthened the view of a westerly dipping vein in this region with high grade mineralisation at depth.

Further phases of channel sampling continued on the Kearney, Joshua and Kerr veins during the quarter. Assay results released to date from both the drilling and channel sampling programme have been encouraging with significant gold intersections being identified as previously announced. Assay results from this programme will continue to be announced as and when they are received. The encouraging exploration results to date, has enabled a further expansion of the program to receive active ongoing consideration.

An independent, National Instrument 43-101 compliant, Mineral Resource Estimate and Preliminary Economic Assessment for Galantas Gold Corporation's Omagh gold deposit in Northern Ireland, prepared by ACA Howe International Ltd, has been filed with SEDAR and is available on the Company's website.  The study was summarised in a press release dated 3rd July 2012. A further assessment is scheduled after the 15,000 metre drilling program is complete.

Planning

Discussions with the regulatory authorities in Northern Ireland continued during the second quarter of 2012. While permission is still awaited regarding three of the four planning applications submitted to the planning service authorities in 2011 progress was made during the second quarter with permission expected to be granted in the near future. Two of the applications are in connection with proposals to drill boreholes to determine mineralization at depth on the Kearney and Joshua veins. The fourth application is in connection with the construction of a lower portal structure and truncated adit for underground mining on the Kearney vein. Permission has already been granted for the renovation and construction of passing bays for the removal of surplus rock in order to make additional ore available for mining.

A permitting application for an underground mine, with accompanying Environmental Impact Assessment (EIA), was lodged with the Planning Service, Department of Environment Northern Ireland (DOENI) on Friday 6th June 2012. The EIA builds on some 13 years of detailed monitoring that has taken place on the Omagh site. Nine independent consultants have studied their areas of specialism related to the proposal and their reports form the body of the Assessment. The EIA covers Air Quality and Dust, Cultural Heritage, Flora and Fauna, Flood Risk and Drainage, Geology, Hydrogeology and Hydrology, Geotechnical, Landscape and Visual Amenity, Noise and Vibration, Socio-economic, Transportation and Traffic, which were the areas for study identified in guidance from the Planning Service (DOENI).

Roland Phelps, President & CEO, Galantas Gold Corporation commented, "The Preliminary Economic Assessment carried out by ACA Howe, which shows high Internal Rates of Return and low cash cost of production, in a politically stable jurisdiction, confirms our confidence in the Omagh property. We expect to continue to further invest in drilling and infra-structure, moving to a more detailed feasibility with the goal of establishing an underground operation around a target production of 50,000 ounces per year of gold in concentrate. Discussions have already been initiated with potential lenders to gauge interest in development loan finance opportunities, with encouraging results."

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

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including revenues and cost estimates, for the Omagh Gold project. Forward-looking statements are based on estimates and assumptions made by Galantas in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Galantas believes are appropriate in the circumstances. Many factors could cause Galantas' actual results, the performance or achievements to differ materially from those expressed or implied by the forward looking statements or strategy, including: gold price volatility; discrepancies between actual and estimated production, actual and estimated metallurgical recoveries; mining operational risk; regulatory restrictions, including environmental regulatory restrictions and liability; risks of sovereign involvement; speculative nature of gold exploration; dilution; competition; loss of key employees; additional funding requirements; planning and other permitting issues; and defective title to mineral claims or property. These factors and others that could affect Galantas's forward-looking statements are discussed in greater detail in the section entitled "Risk Factors" in Galantas' Management Discussion & Analysis of the financial statements of Galantas and elsewhere in documents filed from time to time with the Canadian provincial securities regulators and other regulatory authorities. These factors should be considered carefully, and persons reviewing this press release should not place undue reliance on forward-looking statements. Galantas has no intention and undertakes no obligation to update or revise any forward-looking statements in this press release, except as required by law.

Galantas Gold Corporation Issued and Outstanding Shares total 256,210,395.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Condensed Consolidated Interim Financial Statements (Expressed in Canadian Dollars)

(Unaudited)Three and Six Months Ended June 30, 2012

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

Going concern (note 1)Contingent liability (note 16)Subsequent event (note 17)

These condensed consolidated interim financial statements have been prepared on a going concern basis which contemplates that Galantas Gold Corporation (the "Company") will be able to realize assets and discharge liabilities in the normal course of business. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. The Company's future viability depends on the consolidated results of the Company's wholly-owned subsidiary Cavanacaw Corporation ("Cavanacaw"), the ability of the Company to obtain future financing and to recover its investment in Omagh Minerals Limited ("Omagh"). Cavanacaw has a 100% shareholding in Omagh which is engaged in the acquisition, exploration and development of gold properties, mainly in Omagh, Northern Ireland.

As at December 31, 2001, studies performed on Omagh's mineral property confirmed the existence of economically recoverable reserves. As at July 1, 2007, the mineral property was in the production stage and the directors believe that the capitalized development expenditures will be fully recovered by the future operation of the mine. The recoverability of Omagh's capitalized development costs is thus dependent on the ability to secure financing, future profitable production or proceeds from the disposition of the mineral property. While the Company is expending its best efforts in this regard, the outcome of these matters can not be predicted at this time.

As at June 30, 2012 , the Company had a deficit of $25,679,495 (December 31, 2011 - $25,571,040). Management is confident that it will be able to secure the required financing to enable the Company to continue as a going concern. However, this is subject to a number of factors including market conditions. These condensed consolidated interim financial statements do not reflect adjustments to the carrying values of assets and liabilities, the reported expenses and financial position classifications used that would be necessary if the going concern assumption was not appropriate. Such adjustments could be material.

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

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

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

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

The Company's common shares are listed on the TSX Venture Exchange (the "Exchange") and London Stock Exchange AIM under the symbol GAL. The primary office is located at 360 Bay Street, Suite 500, Toronto, Ontario, Canada, M5H 2V6.

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

The policies applied in these condensed interim consolidated financial statements are based on IFRSs issued and outstanding as of August 17, 2012, the date the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these condensed interim consolidated financial statements as compared with the most recent annual financial statements as at and for the year ended December 31, 2011. Any subsequent changes to IFRS that are given effect in the Company's annual financial statements for the year ending December 31, 2012 could result in restatement of these condensed interim financial statements.

New standards not yet adopted and interpretations issued but not yet effective

There are no relevant changes in accounting standards applicable to future periods other than as disclosed in the most recent annual consolidated statements as at and for the year ended December 31, 2011.