Galileo Resources PLC Regulatory News (GLR)

Galileo Resources Plc

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

8 September 2014

Audited Results for the year ended 31 March 2014

Notice of AGM

Galileo (AIM: GLR), the exploration and development mining company, announces its audited results for the year ended 31 March 2014.

Highlights

The Glenover Project, South Africa

· Project more clearly defined by optimisation work with Dorfner Anzaplan (Anzaplan), metallurgical consultant

· Completion of the optimization test work at Anzaplan on the sulphuric acid process

· Completion of testwork to pre-feasibility level using alternative nitric-acid process

· Demonstrated significantly potentially better metallurgical results and economics than the process using sulphuric acid

· Management assessing the overall financial impact and optimizing the Project definition

· Company intends to consolidate onthe advances made including securing the necessary strategic fertiliser and funding partnerships to move project towards production and commissioning a full project pre-feasibility study. Glenover Phosphate Pty Ltd (Glenover) iscurrently considering bids for this study

St Vincent Minerals Acquisition

· Acquisition completed in May 2014 - assets includethe resource-estimate level Gabbs gold-copper property, located in Nye County, Nevada, USA and a number of other gold-copper properties, Nevada, USA, including Ferber Property in Elko County

· The Company executed two Exploration Lease and Option to PurchaseAgreements to consolidate its Ferber position in July 2014

Colin Bird, Chairman of Galileo, commented: "The period under review has been a period of significant progression for the Company, consolidating our Glenover Rare Earth/Phosphate project in South Africa as well as the post year end completion of the acquisition of the St Vincent Minerals portfolio which includes the Gabbs copper/gold project in Nevada.

"The former two projects now represent the core assets within the Group and we believe respectively represent a significant strategic investment in Glenover which is well placed in both the phosphate and rare earth arenas and the Gabbs resource, which has the potential to become a world class copper/gold asset."

A copy of this announcement is available on the Company's website www.galileoresources.com. You can also follow Galileo on Twitter: @GalileoResource.

For further information, please contact:

Chairman's Report

The year under review was one of consolidation of our interests in the Glenover Rare Earth/Phosphate Project and the post year end acquisition of St. Vincent Minerals Inc. (Acquisition), the owner of significant Nevada, USA based copper and gold interests.

The Glenover Project was more clearly defined by optimisation work with Anzaplan, the German metallurgical consultant. Further work with Guangzhou Research Institute in China was completed and announced during the year. This work primarily involved the use of nitric acid as opposed to sulfuric acid and demonstrated that a viable alternative processing route was available. The major benefits of the nitric acid route are that, in the process it produces some high demand, valuable nitrogen and calcium based fertiliser products.

It is the view of the board that Glenover represents a significant strategic investment which is well placed in both, the phosphate and rare earth evolving project arenas. Like all projects, irrespective of commodity, the driving economic force is of course the price of the commodity. Currently there exists some considerable uncertainty in the forward pricing of rare earth products whilst phosphates remain reasonably predictable against supply/demand fundamentals. To its benefit, Glenover has a basket of rare earth, some of which is identified as critical rare earth, and as such should be well positioned in any future rare earth price progression.

In previous Chairman's reports I have mentioned the extreme difficulties that smaller resource companies are experiencing in financing work to release the values contained in their assets. The year under review was no better than the previous five years and many companies began facing distress as opposed to difficulties. The consequence of this was that quality project availability was better than seen for many years. The board therefore decided to balance country and commodity risk by acquiring assets which fitted the Glenover model. The Glenover model had prior abundant technical information and positive studies, which mitigated the high level of risk associated with conceptual exploration. After reviewing many opportunities at desktop level, Galileo identified St. Vincent Minerals Inc. as a prime target, fitting this model, mainly because of its exploration history, location and prospectivity.

The main project, detailed later, is in the south of Nevada known as Gabbs. This project is maturing and has the potential to be considered as a "world class" copper/gold project. It became apparent in March of this year that considerable gold potential existed near one of our projects known as Ferber which is only 12 km from a rapidly evolving exploration site owned by Pilotgold, listed in Toronto. The whole property package of St. Vincent Minerals Inc. represents exciting prospects in what is considered to be one of the world's most friendly jurisdictions for exploration and mining. The mining world in general is not well considered by major investors and there is much talk about the "commodity super cycle " being over. We are seeing significant consolidation and disposal of production capability by the major mining companies. This is being driven by the need to provide the necessary investment returns to shareholders and to give shareholders and the investing world the confidence of focus.

The changing exploration sector again provides many opportunities for the smaller cap mining resource sector with access to capital being the main hurdle. The forecast for mid and long term base metal requirements coupled with lower exploration success will inevitably lead to a financing renaissance for our sector, a rebirth which is long awaited and overdue. My past experience tells me that when forecasters are professing the end of cycles, they are more likely just about to begin and I remain cynical of such sweeping generalisations in a rapidly changing and developing world.

Consistent with the decision to broaden the commodity and country base, it was decided to abandon any further interest in the Company's other various rare earth projects in southern Africa.

During the period under review the Company lost £4,164,494 which represents 4.7 pence per ordinary share compared to a loss of £1,839,828 2013 and loss per share of 2.2 pence per ordinary share for the comparative period.

I would like to thank my fellow board members and management for their hard work and support during a year of better understanding for Glenover and the exciting new acquisition of St. Vincent. I sincerely hope that the coming year identifies a suitable major partner for Glenover and allows us to add value to our Nevada project portfolio to the benefit of all shareholders.

Operations Report

Summary

Galileo's (Company) key asset is the Glenover Rare Earth project, (the Glenover Project or the Project) held through its shareholding in Glenover. The project is Black Economic Empowered (BEE) through a 26% ownership by Galagen (Pty) Ltd in Glenover.

Galileo's funding of the project has driven the feasibility agenda, resulting in both a SAMREC-compliant resource statement (Annual report 2013) and during the period under review a Preliminary Economic Assessment (PEA), proving that the project is both technically feasible and economically an attractive investment using a process based on sulphuric acid and tested at Anzaplan in Germany.

The Company through Glenover continued to optimise the Anzaplan testwork (now completed) against key assumptions made in the PEA.

Galileo funded further testwork on Glenover ore to pre-feasibility level at Guangzhou Research Institute of Non-ferrous Metals (GZRINM) in China using an alternative process based on nitric acid, which has demonstrated significantly potentially better metallurgical results and economics than the process using sulphuric acid.

The Company commenced seeking and continues to seek a strategic partner to advance this Project to feasibility study level.

In the period under review the Company agreed to acquire Toronto (Ontario) SVM by way of issuing 21,650,000 new Galileo ordinary shares of par 5p (Galileo Shares) at a strike rice of 11p in exchange for the entire issued share capital of SVM. SVM's assets include a resource-estimate level Gabbs gold-copper property (Gabbs Property) in Nye County and a number of other properties in Nevada, USA

Brian Gavin ex President and CEO of SVM, was appointed CEO elect of Galileo with special responsibility for US operations, replacing Colin Bird, who remains executive chairman of the Company.

The Company elected not to pursue the Nkombwa Hill rare earth project (Nkombwa) in Zambia and other rare-earth opportunities in Mozambique and Spain under its earn-in agreement with Rare Earth International Limited and so holds no further interest in these projects.

The Glenover Project

Glenover holds the prospecting rights to a large concession containing phosphates and other potentially economic minerals in the North West Province of South Africa. Within the license area is an open pit, formerly mined for phosphates by Gold Fields of South Africa Ltd for approximately 20 years (ceasing in the early 1980's) and subsequently acquired by Fer-Min-Ore. Historical data suggested that the phosphate and surrounding rocks contained Rare Earth Elements (REEs), which was confirmed by Glenover's sampling, during 2012, of the previously mined "low" phosphate grade stockpiles on surface.

The concession area is a large pyroxenite and carbonatite intrusion, which globally, outside of China, is a much sought after geological environment for hosting potential REE deposits.

The surface stockpiles, which contain significant quantities of REEs, constitute a major potential benefit to the Company, as these stockpiles represent potential feed for immediate processing without mining cost.

Glenover has applied for the renewal of the prospecting rights, which application is pending approval from the South African Department of Mineral Resources (DMR).

Since completing the positive PEA of the Project, Glenover in which the Company now holds 33.99% interest, continued with and completed optimisation work on its sulphuric acid processing route. It also commissioned testwork by GZRINM in China on an alternative ore processing route involving bulk rare earth-phosphate flotation and nitric acid as the rare-erath and phosphate lixiviant for the concentrate. An advantage of this route over the PEA sulphuric acid route, is that the reagents consumed in the process are converted into saleable nitrogen and calcium based phosphate fertilizer products.

Glenover advanced all the critical metallurgical test work to Pre-Feasibility Study (PFS) status.

Sulphuric acid process

The Company completed the optimization test work at Anzaplan on the sulphuric acid process, in December 2013, against key assumptions made in the PEA and aimed at improving project fundamentals by increasing the recovery of the phosphate component in the ore to sealable fertilizer product and streamlining the flow sheet.

Nitric Acid Process

Glenover completed the GZRINM test work to prefeasibility-study level in December 2013 with positive results. The Company directors believe this test work has added significant value toboth its investment in Glenoverand the GlenoverProject.

The nitric acid process could potentially produce more highly saleable products, than those from the sulphuric acid process, which former process includes mixed rare earth oxides, nitro-phosphate and calcium nitrate fertilisers. Internal project finance studies suggest that Glenovercould be viable from these fertiliser products alone thus making the cost of rare earth oxide production potentially much lower than previously anticipated.

The results also indicate that niobium can be recovered, which providesGlenover with the potential to an additional increased high value by-product, if economically viable to process.

GZRINM Test Results Highlights

The highlights of the GZRINM metallurgy referred to by Glenover as the Nitrophos-Rare Earth (NPRE) process,are as follows:

Project Summary

The Company and Glenover have now completed the major phase of its PFS-levelmetallurgy. This included both the update and optimisation of the previous Preliminary Economic Assessment (PEA) metallurgy work carried out by Anzaplan, as well asthe alternative PFS-level process metallurgy by GZRINM. Both programmes were completed in December 2013. Keyimprovements made to the previously reported PEA flow sheet (7March 2013), which was based on whole-ore sulphuric acid cracking process (Anzaplan), include the potential economic value-add recovery of 93% of the phosphate in the ore into PK (phosphate-potassium) a granular fertiliser product.

The GZRINM metallurgy developed over 14 months provides a potentially superior and well-understood process, that offers the market potentially highly saleable product packages - Phosphate fertiliser, mixed Rare Earth Oxides(REO), a value-addcalcium nitrate by-product and the certainty of Niobium (Nb) credits,if commercially recoverable, from the Nb-REO intermediate concentrate (Nb-REO).

Based on the NPREProcess work data, Glenover internally completed basic project operational economics, which suggest that Glenover could potentially be a very low / near zero cost rare earth producer i.e. Glenover could be viable from the production of fertiliser products only, while still operatingthe rare earth recovery circuit.

The Company's logistical studies highlight potentially optimal construction of a processing facility on the east coast of (Natal) in South Africa, which Glenover believes should simplify its ore and reagent logistics and provide a suitable and cost effective location relative to potentialexport markets. In order to secure an ore-to-coast logistics solution, Glenoveris in discussions with a local coal mining entity, which is in the process of constructing a railline in the Waterberg that is set to pass within20 kilometres of the Glenovermine site.

As far as its markets are concerned, Glenover intends selling its fertiliser products into the Southern African, East African and Indian markets and marketing its Rare Earths globally. With respect to the latter, discussions are in progress on collaborating with a strategic Rare Earth processing and marketing corporation with an established refinery. A letter of interest has recently been signed with this entity.

Going Forward - 2014

The PEA and subsequent optimization work covered all aspects of a proposed Rare Earth/phosphate operation and the Company intends to rework the PEA to assess the overall financial impact per se and against the results from the Chinese process route in order to select the final route for project definition.

During 2014, the Company intends to consolidate on the advances made including securing the necessary strategic fertiliser and funding partnerships to move the Glenover project towards production and commissioning a full project pre-feasibility study. Glenover is currentlyconsidering bids for this study.

St Vincent MineralsInc. Acquisition

During the period under review with difficult market and financing conditions prevailing, the Company assessed other opportunities in the smaller resources company sector, which the directors believed presented unprecedented value and identified a gold-copper opportunity in the prolific and mining-friendly state of Nevada USA.

To this end, the Company agreed to acquire the entire issued share capital of Toronto (Ontario) incorporated SVM whose assets include the Gabbs Propertylocated in Nye County, Nevada, USA and a number of other gold-copper properties, Nevada, USA, including Ferber Property in Elko County, The Acquisition, valued at CDN$4.3 million, was agreed by way of a share exchange, issuing 21,650,000 Galileo Shares at a strike rice of 11p pursuant to a Business Combination Agreement (Business Combination) signed on28 January 2014 between Galileo, its special purpose wholly-owned Canadian subsidiary 2404119Ontario Inc. (Subco) and SVM including an Amalgamation Agreement betweenSVM and Subco under the Ontario Business Corporations Act.

The resulting Galileo shareholders agreed to have an 8-monthslock-up period, during which these shares may not be disposed of without the prior written consent of Galileo (not to be unreasonably withheld or delayed).

Gabbs Property Acquired

Gabbs Property, Nye County, Nevada

The Gabbs Property is located in the Fairplay Mining District, on the southwest flank of the Paradise Range, about 9 km (5.6 miles) south-southwest of the town of Gabbs, Nye County, Nevada. The Gabbs Property consists of 355 unpatented lode claims and 1 patented lode claim which constitute a 28-square kilometre contiguous claim block, which contains at least three separate mineralised Au-Cu porphyries and one epithermal gold prospect.

Interpretation of extensive geophysical surveys over theGabbs Property postulates the potential for a major porphyry feeder source at depth for these separate mineralised zones.

Geology

The Gabbs Property is underlain by a stratigraphic sequence of intermediate volcanic rocks and shallow marine sediments that are intruded by a large mafic to ultramafic igneous gabbroic complex.

Monzonite bodies intrude the Triassic units and gabbroic complex. These intrusive bodies are extremely significant as they host porphyry style Au-Cu mineralization found at the Sullivan, Lucky Strike and Gold Ledge mineralized areas on the property. The Car Body prospect by comparison is classified as an epithermal gold system.

Overlying the pre-Tertiary (Triassic) rocks are thick sequences of Tertiary intermediate and felsic volcanic rocks.

Gabbs Resource

SVM completed a 2,400 metre (7,875 feet) drilling programme consisting of 10 reversecirculation (RC) holes in March- April of 2011. The goal of this drilling was to expandthe area of known mineralization at the Lucky Strike area (6 holes) and test geophysic IP (induced polarisation) anomalies (4 holes) identified by previous owner, Newcrest.  Gold mineralization was encountered in 7 of 10 holes. Highlights of the three most interesting holes include extension of the mineralization 2,000 feet (610 metres) at Lucky Strike and encountering mineralization in a new area identified by an IP anomaly south of the Sullivan mineralized zone.

Theindependently preparedInferred Mineral Resource estimate (details of which are available on the Company's website www.galileoresources.com.) is based on 494 drill hole records, consisting of 397 historical drill holes, 87 drill holes completed by Newcrest and ten RC drill holes recently completed by St. Vincent. Thehistorical drill holes do not meet NI43-101 and CIM guidelines forthe public reporting of a mineral resource. Historical drill holes were therefore used only to define the extent of the mineralized deposits, and historical assay grades were not incorporated into the mineral resource estimate. The Mineral Resource estimate for the Gabbs Property is reported at a cut-off grade of 0.40 g/t Au for the oxide deposits and 0.30 g/t Au for the non-oxide deposits (see Table 1). A summary of the mineral resource sensitivity is presented in Table 2.

Table 1 Resource Estimate

(1) Mineral Resources, which are not mineral reserves, donot have demonstrated economicviability. Environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues maymaterially affect the estimateof Mineral Resources.

(2) The quantity and grade of reported Inferred Mineral Resources are uncertainin nature and there has been insufficient exploration to define these Inferred Mineral Resources as an Indicated or Measured Mineral P&E Mining Consultants Inc. iii St. Vincent MineralsInc. Gabbs Au-Cu Property Report No. 220 Resource, and it is uncertainif further exploration will result in upgrading them toan Indicated or Measured Mineral Resource category.

(3) Mineral Resources were estimated using the CanadianInstitute of Mining, Metallurgy and Petroleum ("CIM"), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared bythe CIM Standing Committee on ReserveDefinitions and adopted by CIM Council

(4) Mineral Resources are reported within a conceptual pit shell.

(5) Inverse distance weighting of capped composite grades within grade envelopes was used

for estimation.

(6) Composite grade capping of 5.00 g/t Au and 9000 ppm Cu was implemented prior to 

estimation.

(7) A bulk density of 2.70 t/m3 was used for tonnage calculations.

(8) A two-year, November 30, 2011 trailing average copper price of US$3.70/lb and a gold price of $1,350.00/oz were used along with an oxide process cost of $6.50/tonne, a sulphide process cost of $9.50/tonne and G&A costs of $2.25/tonne.

(9) An oxide Aurecover of 50% and a sulphide Au recovery of 90% were used

(10) Resources were estimated within an optimized pit shell utilizing pit slopes of 45 degrees

and mining costs of $1.50/tonne of rock.

(11) The conversion factor for AuEq: Au+Cu*1.67/10,000. 

Table 2 Summary - Sensitivity To Cut-Off Of Gabbs Resource Estimate

Post Balance Sheet Events

Following further negotiations with SVM and review of SVM's other US properties, including the prospective Ferber gold -copper property ("Ferber') and pursuant to SVM shareholder meeting and agreement for the Acquisition on 15 May 2014, the Company closed the Acquisition with the issue of 26,195,538 Galileo Shares 5p shares at a strike price of 9p, in exchange for the entire issued share capital of SVM, including converted SVM shares for loan notes held by SVM shareholders. SVM shareholders hold 22.88% of the enlarged issued share capital of Galileo following the Acquisition.

On 21 July 2014, the Companythrough SVM, executed two Exploration Lease and Option to PurchaseAgreements to consolidate its Ferber position. These agreements increased the Company's position in Ferber from 88 unpatented mining claims covering circa 1,760 acres to 102 unpatented and 21 patentedmining claims, which now cover circa 2,377 contiguous acresat Ferber.

Ferber Property, Elko County, Nevada

The Ferber property is a historic producer of gold and copper and hosts widespread gold and copper mineralisation. Galileo is reviewing available data on the property in light of recent major golddiscoveries in eastern Nevada at Long Canyon and, more recently, at Kinsley Mountain. Ferber is approximately 12 kilometres (km) east of Kinsley Mountain. The Ferber property is located about 25 miles south of Wendover in Elko County Nevada and approximately 20 kilometres east of the Kinsley Mountains. The Ferber claim block (Ferber Flat) comprises 88 unpatented lode claims.

Galileo's Land Position at Ferber

SVMacquired a 100% interest in 88 unpatented mining claims (approximately 1,760 acres) at Ferber in 2010 from Newcrest Resources Inc. To consolidate mineral ownership at Ferber, SVM recently signed an Exploration Lease and Option to Purchase Agreement covering 14 unpatented claims (approximately 280 acres) and a separate Exploration Lease and Option to Purchase Agreement covering approximately 337 acres of patented mining claims. The two Exploration Lease and Option to Purchase Agreements give SVM an option topurchase the properties with a netsmelter royalty (NSR) (subjectto a partial buy back at the rate of $1m per 1%) retained to the seller. All annual paymentsand purchase payments to the landowners are credits against any eventual purchase and the on-going annual and quarterly advance payments (which increase steadily over a ten year period) will be against payments under the NSR arrangements, which are in line with industry standard-arrangements.

Exploration Strategy at Ferber

Recent new gold discoveries in the nearby regionprovide strong evidence for a mineralised system at Ferber, whichmakes the property a compelling target forreinterpretation and subsequent exploration.

SVM geologists, following site visits and on-going review of all data, have identified many geologic similarities with these nearby discoveries and are formulating a near-term exploration programme.

SVM geologists are currently conducting a thorough review of the newly acquired lands and geologic information in order to formulate a near-term exploration plan. Likely exploration activities include geologic mapping, datacompilation, soil and rock geochemical sampling as well as ground geophysics in order to move rapidly to the drilling stage.

Recent Discoveries Close To Ferber

Recent Carlin-type gold discoveries at Long Canyon and Kinsley Mountain have opened up an important new exploration frontier in eastern Nevada. The Long Canyon property was discovered and defined between2005-2011 by a Fronteer- AuEx joint venture and is reported to host an estimated 2.2million ounces of gold. Newmont Mining purchased the property in 2011 for $2.33 billion dollars.  At Kinsley Mountain, a former producer of gold controlled by "Pilot Gold" (listedon the Toronto Stock Exchange), a reinterpretation of the regional and local geology and subsequent drilling has revealed high grade gold up to 21.3g/t over 29 metres (m) and 10.5g/t over 42.7 m. (Note: Galileo has no ownership interest in either Long Canyon or Kinsley Mountain).

Geology and Mineralisation at Ferber

The Ferber District consists of a multi-phase Tertiary igneous complex intruding Permian carbonates. Marble and skarn are developed at the margin of the intrusive complex. USGS Rock chip sampling has shown copper The Ferber property is underlain by a stratigraphic sequence of Pennsylvania-Permian age carbonate units thought to include the Rib Hill Formation, Riepe Spring Formation, Ferguson Mountain Formation, and possibly the Pequop Formation. The sedimentary units are intruded and domed by a multi-phase diorite-quartz monzonite Tertiary-aged igneous complex. The intrusivecomplex has anexposed footprintof 6.1 km east-westby 1.6 km north-south. A contact metamorphic marble and calc-silicate zone are found at the marginof the intrusive complex. Theproject area isintersected by a number east-west, north-northwest and north-east trending faults.

Historic Activity at Ferber

Historical drilling in the district in the mid-late 1990's reported mineralization in metamorphosed sedimentary rocks and intrusive. Intercepts included:

11 metres of 0.53g/t Au in contact metamorphosed rocks

5 metres of 2.15g/t Au in oxidized intrusive

5 metres of 0.718% Cu (oxide) in intrusive

26 metres of 0.415% Cu (oxide) in contact zone

12 metres of 0.832% Cu (oxide) in contact zone

Active exploration by others in the nearby Kinsley Mountains has recently reported, inter alia, " that infill and step-out drilling at Kinsley Mountain's Western Flank target continues to intersect high grade gold mineralization, including 21.3 grams per tonne gold ("g/t Au") over 29.0 metres. The upper portion of this intercept, including an interval grading 46.4 g/t Au over 4.9 metres, is oxidized, similar to other nearby drill holes with high grade zones of oxidation." 1.

Kinsley Mountain hosts near-surface mineralization similar to other Carlin-style, sediment-hosted gold systems. 2

1 (http://www.pilotgold.com/news/pilot-gold-reports-213-gt-gold-over-290-metres-western-flank-kinsley-mountain)

2 Pilot Gold NEWS RELEASE 14-14 April 23, 2014

CONSOLIDATED AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS 31 MARCH 2014

These financialstatements were approved by the directors and authorised for issue on 5 September 2014 and are signed on their behalf by:

5 September 2014

Company number: 05679987

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2014

All operatingexpenses and operating losses relate to continuingactivities.

STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 MARCH 2014

Statement of Directors' Responsibilities for the year ended 31 March 2014

· The directors are required in terms of the Companies Act 2006 to maintain adequate accounting records and are responsible for the content and integrity of the consolidated annual financial statements and related financial information included in this report. It is their responsibility to ensure that the consolidated annual financial statements fairly present the state of affairs of the Group as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with the applicable UK laws.

· The consolidated annual financial statements are prepared in accordance with International Financial reporting standards (IFRS) and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates. The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

· The directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the consolidated annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

· The going concern basis has been adopted in preparing the consolidated annual financial statements. The directors have no reason to believe that the Group will not be a going concern in the foreseeable future, based on forecasts and available cash resources. These consolidated annual financial statements support the viability of the company. the directors have reviewed the Group's financial position at the balance sheet date and for the period ending on the anniversary of the date of approval of these financial statements and they are satisfied that the Group has, or has access to, adequate resources to continue in operational existence for the foreseeable future.

Colin Bird Chairman

Brian Gavin Chief Executive Officer

Andrew Francis Sarosi Finance & Technical Director

J Richard Wollenberg Non-Executive director

Christopher Molefe Non-Executive Director

NOTES TO THE FINANCIAL STATEMENTS

1. Basis of preparation

The consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards IFRIC interpretations issued by the International Accounting Standards Board and the Companies Act 2006. The consolidated annual financial statements have been prepared on the historical cost basis, except for certain financial instruments at fair value, and incorporate the principal accounting policies set out below. Cost is based on the fair values of the consideration given in exchange for assets and they are presented in Pound Sterling. The accounting policies applied are consistent with those of the previous period.

The comparative figures for the financial year ended 31 March 2014 are not the Company's statutory accounts for that financial year but the consolidated accounts. Those accounts have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not give any reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under sections 498 (2) or (3) of the Companies Act 2006, relating to the accounting records of the company.

2. Basis of consolidation

The consolidated annual financial statements incorporate the annual financial statements of the Company and all entities, including special purpose entities, which are controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries are included in the consolidated annual financial statements from the effective date of acquisition to the effective date of disposal. Adjustments are made when necessary to the annual financial statements of subsidiaries to bring their accounting policies in line with those of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately from the Group's interest therein, and are recognised within equity. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance being recognised for non- controlling interest. Transactions, which result in changes in ownership levels, where the Group has control of the subsidiary both before and after the transaction are regarded as equity transactions and are recognised directly in the statement of changes in equity. The difference between the fair value of consideration paid or received and the movement in non-controlling interest for such transactions is recognised in equity attributable to the owners of the parent.

Where a subsidiary is disposed of and a non-controlling shareholding is retained, the remaining investment is measured to fair value with the adjustment to fair value recognised in profit or loss as part of the gain or loss on disposal of the controlling interest.

3. Segmental analysis

All investments in subsidiaries and associates that were operational at year end, operate in one geographical location being South Africa, and are organised into one business unit from which the Group's expenses are incurred and future revenues are expected to be earned, being for the exploration for and extraction of its mineral assets through direct and indirect holdings. The reporting on these investments to the Board focuses on the use of funds towards the respective projects and the forecasted profit earnings potential of the projects. Following the acquisition of the Gabbs project the Group will have another segment to report on being Gold.

Business segments

The Group's business is the exploration and development of rare earths, aggregates and potentially Iron ore and Manganese.

Geographical segments

An analysis of the loss on ordinary activities before taxation and net assets is given below:

4. Taxation

Major components of the tax expense

Reconciliation of the tax expense

Reconciliation between accounting profit and tax expense:

Accounting loss (4,164,494) (1 839 828)

Tax at the applicable tax rate of

20% (2012: 20%) (367 966) (367 187)

Tax effect of adjustments on taxable income:

Expenses not allowed for tax purposes 704,969 4,013

Subsidiaries operating in other tax

jurisdictions 41,569 166,063

Tax losses carried forward 86,361 197,890

No provision has been made for 2014 tax as the Group has no taxable income. The estimated tax loss available for set off against future taxable income is £1,406,233 (2013: £974,428). The Group has not reflected a deferred tax asset in respect of the losses carried forward as the Group is not expected to generate taxable profits in the foreseeable future.

5. Earnings per share

Basic earnings per share

Basic earnings per share is determined by dividing profit or loss attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Where there is a discontinued operation, earnings per share is determined for both continuing and discontinued operations.

Basic earnings per share was based on a loss of £4,164,494 (2013: £1,839,828) and a weighted average number of ordinary shares of £88,307,183 (2013: £84,049,649).

In the determination of dilutedearnings per share, profit or loss attributable to the equity holders of the parent and the weightedaverage number of ordinaryshares are adjusted for the effects of all dilutive potential ordinaryshares. Where there is a discontinued operation, diluted earningsper share is determined for both continuing and discontinued operations. Diluted earnings per share are equal to earnings per share because there are no dilutivepotential ordinaryshares in issue.

6. Intangible assets

Galileo's key asset is the Glenover Rare Earth Project, held through its shareholding in Glenover Phosphate (Pty) Limited ("Glenover"), which is a joint venture with Fer-Min-ore (Pty) Limited. The Project is Black Economic Empowered ("Bee") through a 26% ownership by Galagen (Pty) Limited in Glenover.

The intangible asset of £6.6 million (2013: £8.3 million) represents the value attached to assets identified in a subsidiary of Skiptons Global Investment Limited (BVI) a wholly owned subsidiary of Galileo, namely Glenover, situated in South Africa. Glenover is a joint venture company which is currently evaluating a Rare Earth/Phosphate project in South Africa.

The exploration and evaluation asset is a South African Rand denominated asset. It is carried at cost adjusted for any foreigncurrency movementsduring the period under review.

No amortisation is recognised in respectof exploration expenditure. Amortisation of evaluation asset will start once miningcommences on the related exploration and evaluation asset. The period of amortisation will be the estimatedlife of the mine.

The carrying amount of the exploration and evaluation asset identified, on acquisition as part of the purchase price allocation, is treated as assets of Glenover. The asset must be expressed in the functional currency of the foreign operation and is translated at the closing rate at the end of each reporting period. As at 31 March 2014 this amount represented £6.63 million (2013:£8.3 million). The translation difference of £1.7 million (2013: £1.9 million) was allocated to a foreign currency translation reserve through other comprehensive income. This reserve forms part of equity.

7. Investment in joint venture

Galileo's direct investment in Glenover is 29% and it also has an indirect investmentin Glenover through its shareholding in Galagen of 4.99% resulting in a total economicinterest in Glenover of 33.99%. Galileois currently carrying the BEE in terms of its interestin Glenover. The shareholders are currentlyreviewing the funding of the BEE interestin the project.The carrying amounts of Joint ventures are shown net of impairment losses.Galileo's share of the equity accountedprofit/loss for the Joint Venture is recognised from the date of acquisition on 4 July 2011. Galileo's portion of the loss in the joint venture for the period under review amounted to £38 843 (2013: £113 039).

8. Other financial assets

Included in other financial assets, at fair value through profit or loss, is a listed investment in Praetorian of £310 000 (2013: 1 500 000) which is carried at its quoted value on 31 March 2014 and approximates its fair value at that date. The investment in Praetorian Resources was reclassified as a current asset as the investment disposed subsequent to the period under review.

Also included in other financial assets is a non-listed preference share investment of £324 255 (2013: £352 958) which represents the "B" class zero% coupon rate preference shares issued by Galagen for its investment in Glenover as part of the BBBEE transaction.

Preference share dividends are not receivable as the share are represented by zero percent coupon rate and are only redeemable after 3 years under the following terms:

The terms and conditions of the B Preference Shares state that "for so long as any A Preference Shares remain outstanding, the Company shall be obliged, in priority to and before any provision for, or payment of, any Distribution on any other class of Share in the capital of the Company which does not rank pari passu with the B Preference Shares, to utilize 70% of the balance of the Glenover Distributions after the Distribution payable to the A Preference Shares, to redeem the B Preference Shares pro rata with the Holders of all other B Preference Shares; and after there are no further A Preference Shares outstanding, the Company shall be obliged, in priority to and before any provision for, or payment of, any Distribution on any other class of Share in the capital of the Company which does not rank pari passu with the B Preference Shares, to utilise 70% of all Glenover Distributions to redeem the B Preference Shares pro rata with the Holders of all other B Preference Shares". The fair value of this preference share investment is estimated by discounting expected future cash flows using an appropriate market related discount rate assessed at 15%.

9. Share based payments

By option certificates dated 1 September 2011, each of the following directors, key management and advisors were granted options to subscribe at a price of 23 pence per share for a number of ordinary shares of 5 pence each:

No charge has been recognised in the Statement of Comprehensive Income for the period under review, as the options vested on Admission to trading on AIM on 26 September 2011.

10. Auditors' Report

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 31 March 2013 but is derived from those accounts. Statutory accounts for 2013 have been delivered to the registrar of companies, and those for 2014 will be delivered in due course. The auditor has reported on those accounts; his reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying his report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

11. Availability of the Annual Report

This information has been extracted from the Company's Audited Annual Report for the year ended 31 March 2014, copies of which will be mailed to shareholders on 5 September 2013 and a copy will also be available to shareholders and members of the public in hard copy and free of charge, from the Company's London office at 4th floor 2 Cromwell Place, London SW7 2JE, United Kingdom. Alternatively a downloadable version will be available from 2 September 2013 from Company's website: www.galileoresources.com.

12. Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of Galileo will be held at the Pelham Hotel, 15 Cromwell Place, London, SW7 2LA on 30 September 2014 at 11:00 a.m.