Final Results for the year 2017 and Notice of AGM

29 June 2018

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

 

Final Results for the year ended 31 December 2017

and Notice of Annual General Meeting

 

GoldStone Resources Limited (AIM: GRL), the AIM quoted company is pleased to announce its final results for the year ended 31 December 2017.

 

The statements and results below have been extracted from the Company's audited financial statements which will shortly be available to view and download in full at the Company's web site www.goldstoneresources.com. Copies of the Annual Report, together with the notice of the Company's annual general meeting, will be posted to shareholders today.

 

The Company's annual general meeting will be held at the offices of Faegre Baker Daniels LLP, 7 Pilgrim Street, London EC4V 6LB at 11:30 a.m. on 17 July 2018.

 

Overview

·        Implementation of updated company strategy with the intention of delivery first gold production within two years from the Company's Akrokeri-Homase Gold Project in the Ashanti Region of Ghana

·        Introduction of two strategic investors, Paracale Gold Limited and BCM Investments Limited

·        Significant strengthening of both the Board and senior management team to reflect focus on accelerating development and achieving first production

·        Highly encouraging results from exploration work at Homase - which previously produced 52,000 ounces of gold at an at a final recovered average grade of 2.5g/t:

o  Work focussed on expanding the current JORC resource of 602,000oz Au and identifying the optimum route to production

o  Extensive field work carried out to extend the 4km strike at and identify additional high-grade area of mineralisation

o  Historic trenching indicates high grade gold mineralisation, including 15.0 metres @ 6.31 g/t Au which includes 4.5 metres @ 18.23 g/t Au from a trench in the Homase North Resource Zone

·     Reassessment and prioritisation of Akrokeri Mine - which produced ~75,000 oz Au underground at a final recovered average grade of 0.73 ozs/t, equivalent to approximately 24 g/t

o  Current work focussed on accessing the mine

 

GoldStone's Chief Executive Officer, Emma Priestley, commented:

"The work undertaken in 2017 - both on an operational and corporate front - has laid the foundations for gold production at Akrokeri-Homase in the near term.  Our strengthened management team have significant expertise, having planned, built and commissioned multiple gold mines, and with the full support of our new major shareholders, GoldStone has accelerated development of our flagship project towards first gold within two years."

 

Full financial results will be published on Goldstone Resources Limited's website.

 

 

For further information, please contact:

 

GoldStone Resources Limited
Emma Priestley	Tel: +44 (0)7867 785177 / +233 (0)55 581 8855
Strand Hanson Limited
Richard Tulloch / James Bellman	Tel: +44 (0)20 7409 3494
SI Capital Limited
Nick Emerson	Tel: +44 (0)1483 413 500
Citigate Dewe Rogerson
Louise Mason-Rutherford	Tel: +44 (0)20 7282 2932
St Brides Partners Ltd
Susie Geliher / Juliet Earl	Tel: +44 (0)20 7236 1177

 

 

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

 

CHAIRMAN'S REPORT

 

It gives me great pleasure to present my first statement since my appointment as Chairman in October 2017, providing me with the opportunity to share my vision for GoldStone Resources Limited ("GoldStone" or the "Company") in the coming year and longer term.

 

My background, spanning 38 years in the gold mining and engineering industry worldwide, including being closely involved in the design and construction of 23 gold processing plants as Design Engineer and Project Manager and also as a plant owner, has provided me with significant experience and knowledge and I look forward to using this as we seek to move GoldStone towards production.  I believe strongly that GoldStone's Akrokeri-Homase Project ("AKHM") is a very exciting project - a project that will form the foundation of our strategy to build a highly profitable gold mining company.

 

Along strike from one of West Africa's largest gold mines, AngloGold Ashanti's Obuasi Gold Mine which has total historical and current resource in excess of 70 million ounces of gold, AKHM covers an area of known mineralisation, two historically producing mines, Akrokeri and Homase, and has a current JORC Code compliant resource of 602,000 ounces at an average grade of 1.77g/t of gold.  I have spent these initial months working with the team to identify the route to production and I believe significant progress has been made in this regard, as we aim to target production within two years.  In addition the results of recent field work, together with the review of historic data, has provided us with a much greater understanding of the potential for AKHM and I believe there is significant potential for resource expansion around both historic mines.

 

2017 saw GoldStone undergo significant corporate change, most notably through the addition of two major shareholders and various changes to the Board.  The addition of two strategic investors, BCM Investment Limited ("BCM"), one of Africa's largest private contract mining groups, and Paracale Gold Limited ("Paracale"), a mining investment company focused on mineral exploration and mine development opportunities, have provided significant impetus to GoldStone and reflects its evolution as it seeks to move from exploration into being a development and production company.  Following Paracale's investment, I was pleased to join the Board as Non-executive Chairman in October 2017 and I was pleased to subsequently welcome both Angela List, following BCM's investment, and Richard Wilkins as Non-executive Directors, providing additional strength and depth to the Board's experience.

 

Similarly, our operational management team was significantly strengthened by the appointment of Darryl Norton as Chief Operating Officer in August 2017.  Darryl is now based in Ghana full-time, has been the Technical Director for MAED Ltd for over 30 years and has personally overseen the development of a number of highly successful gold plants in West Africa and Asia.  Darryl has a specific mandate to accelerate development activities on the ground and I am confident that he will advance AKHM and achieve production within two years.

 

Outlook

 

Our significantly strengthened management team, led by CEO Emma Priestley, has continued to unlock value through its development activities on the ground at AKHM during 2017, and in the year to date, and it is the Board's intention, subject to funding, to continue to accelerate this work during the remainder of 2018.

 

We look forward to delivering further news in the coming months as we work to achieve our target of realising production within the Company, whilst simultaneously proving-up the wider resource potential of the entire AKHM project in order to establish a long-term, sustainable gold production project.

 

 

W Trew

Chairman

28 June 2018

 

 

CHIEF EXECUTIVE OFFICER'S REPORT

 

 

2017 saw GoldStone achieve several operational objectives, which advanced the Company's strategy to commence production at our flagship Akrokeri-Homase Project in the near term.

 

Building on the encouraging drilling results announced in 2016, the Company undertook a review of all of the available historic data on the existing JORC Code compliant resource for AKHM.  This review has significantly increased confidence of a mineable resource within the oxide zone of the Homase trend, which runs for over 8 km (the "Homase Trend") from the historic Akrokeri underground mine (the "Akrokeri Mine") to the north of the Homase open pit (the "Homase Pit").

 

As previously announced, the Company has completed a deep trenching programme in conjunction with a reverse circulation ("RC") infill drill programme on the known oxide zone of the JORC Resource to progress the pit definition programme for the proposed pit, initially identified as AK01 North and South.  It consisted of 26 holes for a total of 1,470 metres, to progress to pit modelling.  The assay results from the RC programme, announced on 9 November 2017, exceeded expectations, with the arithmetic average of the grades being 1.8g/t over a 10.5 metre drilling width (approximately 7 metres true width) within the mineralised zone of the proposed pit (sample cut-off 0.5g/t) within the Akrokeri licence, south of the Homase Pit, along strike in the Homase Trend.  The continuous strike length over the proposed pit is approximately 1,500 metres, compared to the approximately 700 metres strike length of the Homase Pit which was mined by Ashanti Goldfields Limited ("AGF") between 2002 and 2003 and produced 52,452oz gold at an average recovered grade of 2.85g/t.

 

Preliminary metallurgical testwork was carried out upon the trenching samples for the proposed pit by The University of Mines and Technology (UMaT) in Tarkwa, Ghana to assess the amenability of the oxide mineralisation to processing.  The results, announced on 11 December 2017, verified that the oxide zone is extremely amenable to both the heap leach and to CIL gold recovery processes.  This preliminary test work, also demonstrated that almost 90% of the recoverable gold via the heap leach method is achieved within the first 15 days of leaching.  Thus indicating that a scale up to mine operation would be very successful.

 

These preliminary steps provided the data to initiate the pit design for the proposed pit and the platform for the scoping study to proceed towards with an application for a mining permit.

 

This programme was undertaken in conjunction with the continued review by the Company of the historical database for the Akrokeri and Homase licences.  It is an extensive database which is growing as the Company continues to identify and collate historic data from previous holders of the licences.  The additional information, including from AngloGold Ashanti Limited's archive, provided GoldStone with the historical production and processing data for the Homase Pit when they operated it between 2001 to 2003.  The Company also acquired historical data from the Ghanaian Minerals Commission and British Archives, pertaining to the former Akrokeri Mine, owned by Akrokeri (Ashanti) Mines Limited, which operated in the early 1900s.

 

The review of historical data showed that the Homase Pit, produced 52,452oz gold, which was significantly in excess of AGF's original estimate of 35,799oz gold, reported in AGF's Homase Pit Mining Reconciliation June 2002-03.  According to AGF's mining reconciliation figures, there was a significant increase in tonnage and minor increases in grade and density compared to the original estimates.  The differences are between the ore reserve model (based on pre-production drilling) and the grade control model (based on more closely spaced drilling during production).

 

One of the features that resulted in the higher recovery of gold from the Homase Pit was the higher than anticipated widths in the upper zones of the mineralisation, which caused a mushroom effect, i.e. near-surface gold mobilisation and re-deposition.

 

AGF also reported pinching and swelling within the mineralised structure.  This is a consistent feature throughout the Homase/Obuasi shear system.  Ore shoots at the nearby Obuasi mine are characterised by tight echelon lenses.  If these are repeated within the proposed pit on the Akrokeri licence, there is potential for increased gold content to continue at depth.

 

The review of the historic Akrokeri data, indicates that exploration activity started in the 1890s when two shafts were sunk at the Akrokeri Mine site.  Production started in 1904, and the underground mine produced some 75,000 ounces of gold from about 104,000 tons of ore, with a recovered grade of about 0.73oz/tonne, equivalent to 24g/t.  However, due to a high inflow of water, the mine was closed in 1909.

 

Drilling around the old Akrokeri Mine was undertaken in 1996 by Birim Goldfields Ltd ("Birim"), comprising nine Diamond Drill ("DD") holes totalling 2,000 metres and subsequently in 2008, Pan African Resources Plc ("PAR") drilled 10 DD holes totalling some 3,200 metres, these holes have accurate spatial data.  These holes were located north and south of Akrokeri town along the known quartz vein.  Analysis presented that the core from four of the DD holes drilled by PAR were not assayed and that the logging from both the Birim and the PAR programmes was incomplete.  The Company has now completed the re-logging and  is proceeding to assay these PAR cores. 

 

Senegal

 

We are encouraged by the recent acquisition of the raw drill data from the programme undertaken by Randgold Plc in 2012, on the Sangola project in Senegal and these results are currently being reviewed.  The title to the licences are maintained and upon a satisfactory review of data, the Company will apply for the extension of the exploration licence.

 

Gabon

 

Whilst GoldStone maintains the title to the two licences in Gabon, Oyem and Ngoutou, the Board has agreed, after careful consideration, due to the expected mandatory expenditure as defined in the former exploration licence agreement, to rescind these licences.  This takes into account that the licences are at an early stage with limited value and accordingly, do not fit in with our focus of seeking to prioritise assets that can be advanced towards production.

 

Ghana

 

Whilst GoldStone has maintained a joint venture agreement with Asasemu Mining, a Ghanaian company (15% GoldStone: 85% Asasemu Mining), to develop the Manso Amenfi Prospecting Licence, the Board has agreed, after careful consideration, due to the expected mandatory expenditure as defined in the former joint venture agreement, to rescind the agreement with the licence holder.  This takes into account that the licence is at an early stage with limited value and accordingly, does not fit in with our focus of seeking to prioritise assets that can be advanced towards production.

 

Former Director Claim

 

As announced on 13 October 2016, there is an outstanding claim by a former director of the Company. Legal advice has been sought and at the current time no estimate is available as to the likelihood or potential value of damages to the Company in respect of this claim.  The Board believes there is no merit in the claim and the amount due is not considered to be of significance.  The case will be heard in the South African Labour Court.  This has been disclosed as a contingent liability in the financial statements.

 

Working capital management and Funding

 

During 2017, the Company secured a £0.4 million convertible loan (the "Loan") with Paracale Gold Limited ("Paracale"), on 3 April 2017, of which £0.2million was drawn down immediately and with the approval of the resolutions at the Annual General Meeting ("AGM") held on 2 June 2017, the second tranche of £0.2 million was drawn down in full.  Subsequently the Loan plus accrued interest was converted into 40,352,377 new ordinary shares of 1p each in the capital of the Company ("Ordinary Shares").

 

Pursuant to the Loan, the Company issued Paracale warrants to subscribe for up to 40,352,377 of new Ordinary Shares, exercisable at a price of 2 pence per share before 10 August 2019.

 

In September 2017, the Board announced that GoldStone had raised £1.5 million gross by way of a subscription for 100,000,000 new Ordinary Shares at 1.5 pence per share with new and existing shareholders.  The fundraising welcomed BCM Investment Limited ("BCM") to our shareholder register, with Paracale also participating and thereby increasing its interest in the Company.  The Board values the support and credentials of both Paracale and BCM, and remains confident that both will be long-term strategic investors and stakeholders in the Company, as it moves towards its goal of achieving production from AKHM within two years.

 

Risk management

 

The Board has identified the following as being principal strategic and operational risks (in no particular order):

 

Going concern

 

As at 27 June 2018, the Company had cash of US$730,490.  The directors consider the Company has sufficient funds to meet its corporate overheads for the next 12 months, but will seek funding to meet its development aims.

 

The Board has, therefore, adopted the going concern basis, and remains confident that it will raise the funding as and when required. Further details on their assumptions and their conclusion thereon are included in the statement of going concern included in note 1b to the financial statements.

 

Exploration and Development

 

Exploration and development for natural resources is speculative and involves significant risk.  Drilling and operating risks include geological, geotechnical, seismic factors, industrial and mechanical incident, technical failures, labour disputes and environmental hazards.

 

The directors are evaluating each stage of the development of its projects site by site in order to mitigate as far as possible these risks inherent in exploration.  Use of modern technology and electronic tools assist in reducing risk in this area.  Good employee relations is also key in reducing the exposure to labour disputes. The Company is committed to following sound environmental guidelines and practice and is keenly aware of the issues surrounding each individual project.

 

Country and political

 

GoldStone's projects are in Ghana and Senegal. Emerging market economies could be subject to greater risks including legal, regulatory, economic and political risks and are potentially subject to rapid change. 

 

The Board routinely monitors political and regulatory developments in its countries of interest.  Since the elections in Ghana, in December 2016, the Government have shown positive steps towards the mining sector, the improved policing of illegal small-scale mining operations, and improvement of the licence approval system.  The Government are currently reviewing the tax and royalty rates towards precious metals.  In addition, the Company actively engages in dialogue with relevant Government representatives in order to keep abreast of all key legal and regulatory developments applicable to its areas of interest.  GoldStone maintains the internal processes in place to ensure that it is wholly compliant with all relevant regulations in order to maintain its licences within each country. These country risks are further addressed in notes 2(d)(ii) and 3(j) to the financial statements.

 

Social, Safety and Environmental

 

GoldStone's success may depend upon its social, safety and environmental performance as failures can lead to delays or suspensions of its activities. 

 

GoldStone takes its responsibilities in these areas seriously and monitors its performance across these areas on a regular basis.  As AKHM develops through drilling, metallurgical and engineering studies, we are strengthening our relationships with the communities living within the concession areas and close to the projects.  The immediate focus has been sanitation and drinking water for each of the schools within our concession areas and the Company continues to build on the community relationships in order to build a co-operative with the smallholder farmers and out-grower schemes with the communities.  These schemes benefit both the communities in which we will be operating and our investors into the agricultural programmes.

 

Well-Positioned to advance AKHM towards production

 

Following the work undertaken in 2017 and the strengthened Management and Board appointments, GoldStone is now strongly positioned to accelerate development at AKHM as we target initial production from AKHM within two years.  We will continue to update the market throughout the remainder of 2018, detailing our strategy to achieve near term production, and also report on our operational successes as we move closer to this goal.

 

I would like to thank Neil Gardyne who stepped down as Non-executive Chairman in October 2017.  Neil guided the Company through a period of transition and I wish him well with his endeavours going forward.  I would also like to thank shareholders for their ongoing support as we move GoldStone towards production and I look forward to developing the Company with my fellow Board members, management team and the Company's advisers over the course of 2018 and into 2019.

 

 

Emma Priestley

Chief Executive Officer

28 June 2018

 

 

 

 

 

 

 

 

Consolidated statement of financial position

As at 31 December 2017

 

in united states dollars				2017		2016
assets
non-current assets
property, plant and equipment				5,722		6,809
intangible assets - exploration	3			6,800,827		6,344,127
non-current assets				6,806,549		6,350,936
current assets
trade and other receivables				3,220		239
cash and cash equivalents				1,626,057		135,572
current assets				1,629,277		135,811
total assets				8,435,826		6,486,747
equity
share capital - ordinary shares	5			3,480,430		1,526,658
share capital - deferred shares	5			6,077,013		6,077,013
share premium	5			27,219,262		26,495,336
capital contribution reserve				555,110		555,110
share options reserve				90,650		49,447
accumulated deficit				(29,046,364)		(28,250,029)
total equity				8,376,101		6,453,535
liabilities
current liabilities
trade and other payables				59,725		33,212
current and total liabilities				59,725		33,212
total equity and liabilities				8,435,826		6,486,747

 

 

 

 

 

 

Consolidated statement of comprehensive income

For the year ended 31 December 2017

 

in united states dollars			year ended 31 December 2017		year ended 31 December 2016
continuing operations
other income			-		1,758
exploration expenses			-		(370)
administrative expenses			(805,854)		(838,127)
operating loss	5		(805,854)		(836,739)
finance income			410		1,865
net finance income			410		1,865
loss before tax			(805,444)		(834,874)
tax expense			-		-
loss for the year from continuing operations			(805,444)		(834,874)
other comprehensive income			-		-
total comprehensive loss for the year			(805,444)		(834,874)
earnings per share from operations
basic and diluted earnings per share attributable to the equity holders of the company during the year (expressed in US$ per share)	6		(0.005)		(0.011)