Operational and Exploration Update

25 March 2022

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Operational and Exploration Update

GoldStone Resources Limited (AIM: GRL) is pleased to provide an operational update in relation to mining and production activities at the Homase Mine and exploration activities at the former Akrokeri Underground Mine.

Overview

·    Gold production began at Homase Mine this year, with 1,717 troy ounces of gold produced and sold to date, realising an average price of US$1,907 per oz.

·    Gold loan repayments from first gold of US$1.1m, via the delivery of 610 troy ounces to Asia Investments Management Services Limited ("AIMS"), resulting in the interest rate being taken out of default.

·    Construction was completed for the initial stage of the mine, which includes crushing, sizing, agglomeration and stacking unit, three Heap Leach Pads, a Carbon-in-Column Plant, and an Elution and Gold Room, for a total investment of US$15 million including overheads.

·    Start-up agglomeration issues have now been resolved and gold recovery from the heap leach pads has increased to over 65%, with the latest in situ test work indicating that the leach recovery of 82% will be achieved over a 12-month period.

·    An additional crushing, agglomeration and stacking circuit is currently being built to improve productivity and heap stacking flexibility, using existing cash resources.

·    2022 production target of approximately 20,000 oz gold.

·    Homase Mine is continuing to progress its capital efficient mine and expects to achieve a cash cost of around US$840 per oz for the remainder of 2022, with an all in sustaining cost of US$970 per ounce.

·    Exploration is being ramped up within the Homase and Akrokeri Licences.

·    Diamond drilling to commence around Akrokeri Underground Mine during March 2022.

·    Grade Control drilling is now underway at the third pit along the Homase Trend.

Following the announcement of 4 January 2022 relating to the agglomeration issues at Homase, which impacted initial gold recoveries, the Company has carried out a programme of detailed test work and cost analysis in order to further understand the leach kinetics within the heap and therefore optimise the recovery the remaining contained gold.

As part of this work programme, the agglomeration and crushing circuit has been reconfigured to handle the excess clay encountered and the greater than expected amount of silt originating from the oxide orebody's phyllitic content. A modified screening system will also shortly be installed to control the feed sizing, with the fines (<3mm) being removed and fed initially to a gravity recovery circuit.  The test work indicates that the gravity recovery circuit should recover between 14% and 24% of the contained gold, whilst reducing leaching costs and improving cashflow.

A number of other modifications have been and are being undertaken to increase the oxygen levels in the heap to improve the efficiency of recovery.

Concurrent with the preparation of Cell 3 of the Heap Leach to receive agglomerated ore, the Company is building an additional 1,000 tonne per day (tpd) crushing, agglomeration and stacking circuit, which will double stacking capacity to 2,000 tpd and is due to be commissioned during Q2 2022.

The Company expects to have stacked some 550,000 tonnes of agglomerated ore by the financial year end, which will be fed from the first two pits within the Homase Mine.  Mining at the third shallow pit is  currently planned to commence during H1 2023.

Test work on the Heap Leach Pads from 2021 has identified that there is some 88.9kg (2,858 troy ounces) of unrecovered gold.   These results meant the Company has had to remove and re-stack some of the material on the heaps, in order to recover this contained gold, under the improved conditions detailed above, which is expected to occur during Q2 2022.

Test work on the gold recovery was undertaken during the period January-March 2022 on the restacked agglomerated ore and fresh agglomerated ore, with results showing the improved recovery rate of 65% for this period.  

Gold Production and 2022 guidance

The Company has, to date, poured 1,717 troy ounces of gold (1,308 troy ounces in January and 409 troy ounces at the beginning of March).

With the improved dry plant and agglomeration modifications outlined above, the expected gold production for the remainder 2022 is expected to be between 18,500 and 23,500 oz of gold, leading to the Company's full year production guidance of approximately 20,000 oz of gold.

Costs

Due the changes detailed above, this has resulted in an increase in the estimated all-in-costs to USD870 per ounce.  The addition of exploratory drilling has increased the all in sustaining costs to USD970 per ounce.  It is hoped that as the year progresses we will improve on these figures.

Mineable Resource

The current available mineable resource from the first two pits within the Homase Mine is estimated by management to be 304,000 tonnes @ 1.7g/t of oxide ore, from which some 210,000 tonnes have been mined to date, and 640,000 tonnes @ 1.25g/t of oxide ore, which is an update from the mineable resource announced 12 November 2020.  The mineable resource is within the confines of the 602,000oz JORC (2012) resource previously announced.

The Company has undertaken geotechnical drilling within the first two pits, which is currently being assessed, and subject to the results and subsequent permitting, this could allow these pits to extend into the fresh ores down to -80 metres, for a further 585,700 tonnes @ 1.7g/t and 1,261,600 tonnes @ 1.1g/t of fresh ore.

The Company has commenced grade control drilling for the third pit within the Homase Mine, in order to determine the pit planning and expanding the mineable resource inventory. The environmental permitting process has also commenced.

Exploration

The Company has undertaken further geochemical soil sampling programmes within the Homase and Akrokeri Licence areas (the "Licences"), as infill and to seek parallel zones of mineralisation, following the programme carried out in 2018.  Several anomalies have been identified, Figure 1, and the area at Adubriem has had two exploratory diamond drill holes, which are currently being logged and assayed.

Figure 1: Plan of Geochemistry Soil Anomalies

http://www.rns-pdf.londonstockexchange.com/rns/9876F_1-2022-3-24.pdf

A review was undertaken at a former artisanal mining area (see Figure 2) in the Akrokeri town, which identified veins within the quartz trending in a North-South direction.  Channel sampling was carried out in the shallow artisanal workings, with assays set out in Table 1 below, assays were undertaken at ALS Laboratories, Kumasi.

Table 1: Channel Sampling Results from Artisanal Workings

*Channel 3 is the end of the trench, where the artisanal workers were following the vein.

Figure 2: Former Artisanal Workings at Akrokeri Town

http://www.rns-pdf.londonstockexchange.com/rns/9876F_1-2022-3-24.pdf

The Company has commenced a drilling and trenching programme at and around the former Akrokeri Underground Mine, the Company will update the Market as the programme progresses.

Emma Priestley, CEO of Goldstone, commented:

"Starting a new Gold Mine is never easy, and the team on site has worked tirelessly to achieve Homase's full potential to benefit our patient shareholders. I am pleased to report that our efforts over the past few months have brought us to an important turning point in the evolution of our production process.  Our team has re-engineered the mine and heap leach, focussing on enhancing production efficiencies and supervision to minimise dilution and improve gold recovery.  The turnaround supports our previously announced production target for 2022 and will provide a very solid foundation for production growth over the coming years.

"Looking forward to the longer-term delivery of our growth objectives, Akrokeri remains a key pillar of our strategy with a drill and trench programme finally underway, we look forward to developing the exploration in the coming weeks.  As shareholders will recall, Akrokeri is a previously producing mine with demarcated targets for future shallow open pit mining, which we are confident will lead to future growth of production.

"I look forward to providing further updates in due course, as we improve on the production at Homase and commence drilling at Akrokeri during Q2 2022."

Competent Person's Statement

The technical information within this announcement has been reviewed and approved by Klaus Kappenschneider, an independent geologist with 30 years' experience in gold mining, exploration and resource estimation.  Klaus is a member of the Association of Professional Geoscientist of Ontario (APGO), is a Competent Person (JORC, SAMREC, PEMREC) and a Qualified Person (NI 43- 101) and accordingly, is a qualified person as required under the AIM Rules.

**ENDS**

For further information, please contact:

About GoldStone Resources Limited

GoldStone Resources Limited (AIM: GRL) is an AIM quoted low debt, emerging gold producer via its 100% owned Homase Mine, which started production in 2021. GRL has one of the lowest debt to equity ratios of any emerging gold producer and when at full planned production of approximately 2,000oz per calendar month GRL expects an AISC of approximately USD970oz. Target for full production is mid-2022.

Located ~15km north-west of AngloGold Ashanti's Obuasi mine, in the mineral-rich and highly prospective Ashanti Goldbelt.  Homase Mine is a series of shallow open pits producing approximately 20 - 24,000oz pa of gold, with a recently commissioned CIC treatment plant, for the heap leach operation.  First gold was poured in November 2021, and the Company will be ramping up production during H1 2022. 

The Homase Mine, hosts a JORC Code compliant 602,000 oz gold resource at an average grade of 1.77 g/t. This is confined to a 4km strike length, which the Company plans to explore, along strike and down dip, in order to expand on the known resource.  The mine was formerly operated by AngloGold Ashanti in 2002/03 producing 52,000 oz gold at 2.5 g/t recovered. 

The Company also hosts the former underground Akrokerri Ashanti Mine, which produced 75,000 oz gold at 24 g/t recovered grade in the early 1900s.  It is the Company's intention to commence exploration of this former mine in the near future.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).