Gold Loan Agreement Finalised

22 June 2020

 

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

 

Gold Loan Agreement Finalised

 

GoldStone Resources Limited (AIM: GRL), the West and Central Africa focused gold exploration and development company quoted on AIM, is pleased to announce that further to the announcements of 16 March 2020 and 30 April 2020, the Company has now entered into the formal loan agreement with Asian Investment Management Services Ltd ("AIMS") ("Loan Agreement") for a facility totalling US$3 million (the "Gold Loan"), of which US$0.3 million has already been drawn down and advanced to the Company.

 

This Gold Loan, together with the US$1.3 million raised pursuant to the 14% unsecured bond notes detailed in the announcement of 16 March 2020 (the "Bonds"), should allow the Company to continue to finance the advancement of its Akrokeri-Homase Gold Project ("AKHM" or the "Project") into production, with gold expected to be produced in Q4 2020.

 

Summary

·    14% secured Gold Loan of up to 2,000 troy ounces of gold at a price of US$1,500 per troy ounce, equating to a value of US$3.0 million (c.£2.4 million) before expenses from AIMS pursuant to the Loan Agreement

-  200 troy ounces (US$300,000) has already been drawn down and was advanced to the Company in March 2020

·    The remaining 1,800 troy ounces (US$2.7 million) is available to be drawn down in tranches of not less than 500 troy announces (US$750,000), subject to the Company's requirements

-  The Company has already requested drawdown of a further tranche of 500 troy ounces (US$750,000)

·    Security has been granted to AIMS by way of a pledge over the share capital of the Company's wholly owned Ghanaian subsidiary, GoldStone Akrokeri Limited ("GAL"), which holds and will hold the Company's AKHM licences, which will become enforceable should the Company be in default of its repayment obligations under the Loan Agreement (the "Pledge")

·    120 million warrants, exercisable at 3 pence (the "Exercise Price") per ordinary share of 1 penny each in the Company ("Ordinary Share"), have been issued to AIMS

·    The Gold Loan, together with the Bonds, will enable the Company to move forward towards commencing production, through the ongoing development of the open pit mine at the Homase South Pit and construction of the associated heap leach facility

-  The Board currently anticipates first gold to be produced in Q4 2020

 

Emma Priestley, CEO of GoldStone, commented:

"I am very excited to announce the formalisation of the Gold Loan.  This allows us to move forward with bringing the Homase South Pit into production, with the first gold expected to be produced in Q4 2020.

 

"I look forward to updating shareholders as we progress the development of AKHM and move into production and achieve cashflows during 2020."

 

 

 

Further information

 

Gold Loan

Further to the conditional term sheet entered into between AIMS and the Company as announced on 16 March 2020 (the "Term Sheet"), the Company is pleased to have now entered into the Loan Agreement, which allows the Company to move forward with the development of the Homase South Pit.

 

The main terms of the Loan Agreement and Pledge are summarised below.

·        The Company and AIMS, a fund management and advisory business based in Malaysia, have entered into the Loan Agreement in respect of the Gold Loan.

·        The principal amount of the Gold Loan is 2,000 troy ounces of gold, which at a fixed price of US$1,500 per troy ounce equates to US$3.0 million.

-  The Company has already drawn down 200 troy ounces, equating to US$300,000, of the principal amount of the Gold Loan.

-  Following entering into the Loan Agreement, the Company has already requested drawdown of a further tranche of 500 troy ounces, equating to US$750,000, of the principal amount of the Gold Loan.

·        The principal amount drawn under the Gold Loan will be repayable in such number of troy ounces as has been drawn under the Gold Loan or in cash, at the election of AIMS, 15 months from the date of the Loan Agreement (the "Maturity Date") (or earlier in the case of an event of default by the Company).

·        The Gold Loan will accrue interest at 14% per annum, which is payable quarterly in arrears.  Interest on the Gold Loan may be paid in gold, such amount based on the then current prevailing gold price, or in cash, at the election of AIMS.  After 31 December 2020, if any interest is not paid when due, it will attract a default rate of interest of 17% per annum from the due date until the date of payment.

·        If the Company repays the Gold Loan within six months of the date of the Loan Agreement, it must pay AIMS the full amount of interest which would have accrued on the amount borrowed had it been outstanding for the entire six-month period, less any interest already paid.

·        The Company has granted 120 million warrants to AIMS to subscribe for 120 million Ordinary Shares, which will be exercisable at the Exercise Price until 2 June 2022 (the "Warrants").  The Warrants will not be admitted to trading on AIM and will be non-transferrable.

·        The Gold Loan is secured by way of a pledge over the Company's equity in GAL, the Company's wholly owned Ghanaian subsidiary which holds and will hold the Company's licences in the AKHM project.  Should the Company default on repayment of the Gold Loan or any interest due on it, AIMS will be able to enforce the Pledge and call for the transfer to it of the issued share capital of this subsidiary.

·        The Gold Loan is non-transferrable, without the consent of the Company.

·        The Company will pay the reasonable costs of AIMS, including legal costs, incurred in relation to the Gold Loan, including in respect of the Loan Agreement and related security documentation.

·        The Loan Agreement contains certain representations and warranties from the Company to AIMS, which must be repeated at each draw down.  If such representations and warranties are no longer true, AIMS can refuse to make further funds available.

 

 

·        If certain events occur prior to the Maturity Date, including if an insolvency event occurs in relation to the Company or GAL, or if the Company defaults in paying any interest when due on the Gold Loan, or if any representation or warranty given by the Company was untrue or misleading at the date it was given, AIMS may terminate the Loan Agreement and require the Gold Loan (together with all interest due thereon) to be repaid immediately.

 

Project Update

The Gold Loan, together with the Bonds, will enable the Company to move forward towards commencing production, through the ongoing development of the Homase South Pit and construction of the associated heap leach facility.  The Board currently anticipates that, subject-to receipt of the requisite environmental permit in the next few weeks, the first gold pour will be achieved in Q4 2020.

 

The application for the requisite environmental permit in respect of the Homase South Pit has been submitted to the Minerals Commission and Environmental Protection Authority in Ghana is now in the final stages and the Board expects it to be awarded in the next few weeks.  Upon receipt, the Company will immediately be able to start initial mining operations, using contract mining for the Homase South open Pit.

 

Following finalisation of the Gold Loan, the Company is now able to place a number of significant orders for plant and equipment, which will enable the Company to further optimise the Homase South development plan against the economics of the DEP, announced on 27 June 2019, and the Company looks forward to updating shareholders in this regard.

 

The Takeover Code

The exercise of the Warrants to be issued to AIMS may give rise to certain considerations under the Takeover Code ("Code").  Brief details of the Panel on Takeovers and Mergers (the "Panel"), the Code and the protections they afford are described below.

 

The Code is issued and administered by the Panel.  The Code applies to all takeover and merger transactions, however effected, where the offeree company has its registered office in the United Kingdom, the Channel Islands or the Isle of Man and, inter alia, whose securities are admitted to trading on a multilateral trading facility in the United Kingdom (such as AIM).  The Company is therefore subject to the Code.

 

Rule 9 of the Code requires that any person who acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Code) in shares which, taken together with shares in which persons acting in concert with him are interested, carry 30% or more of the voting rights of a company which is subject to the Code, will normally be required to make a general offer to all of the remaining shareholders to acquire their shares (a "Mandatory Offer").

 

Similarly, when any person, together with any persons acting in concert with him, is interested in shares which, in aggregate, carry not less than 30% of the voting rights of such a company but not more than 50% of such voting rights, a Mandatory Offer will normally be required if any further interests in shares are acquired by any such person, or any person acting in concert with him.  A Mandatory Offer under Rule 9 of the Code must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares in the company during the 12 months prior to the announcement of the offer.

 

Rule 9 of the Code further provides, inter alia, that where any person who, together with persons acting in concert with him, holds over 50% of the voting rights of a company and acquires an interest in shares which carry additional voting rights, then they will not normally be required to make a Mandatory Offer to the other shareholders to acquire their shares.  However, the Panel may deem an obligation to make an offer to have arisen on the acquisition by a single member of a concert party of an interest in shares sufficient to increase his individual interest to 30% or more of a company's voting rights, or, if he already holds more than 30% but less than 50%, an acquisition which increases his interest in shares carrying voting rights in that company.

 

Under the Code, a concert party arises where persons acting together pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of, or to frustrate the successful outcome of an offer for a company, subject to the Code.  Control means an interest, or interests, in shares carrying, in aggregate, 30% or more of the voting rights of a company, irrespective of whether such interest or interests give de facto control.

 

AIMS will, pursuant to the Warrants, have the potential to increase its aggregate interest in shares carrying voting rights in the Company up to a maximum of 120,000,000 Ordinary Shares representing, assuming that no other new Ordinary Shares have been issued, approximately 32.4% of the voting rights in the then enlarged issued share capital of the Company which, without a waiver of the obligations under Rule 9, would oblige AIMS and anyone in concert with it to make a Mandatory Offer under Rule 9 in certain circumstances.

 

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.

 

- ENDS-

 

For further information, please contact:

 

GoldStone Resources Limited
Emma Priestley	Tel: +44 (0)20 7236 1177
Strand Hanson Limited
Richard Tulloch / James Bellman	Tel: +44 (0)20 7409 3494
SI Capital Limited
Nick Emerson	Tel: +44 (0)1483 413 500

 

 

About GoldStone Resources Limited

 

GoldStone Resources Limited (AIM: GRL) is an AIM quoted exploration and development company with projects in Ghana and Senegal that range from grassroots exploration to development.

 

The Company is focused on developing the Akrokeri-Homase project in south-western Ghana, which hosts a JORC Code compliant 602,000 oz gold resource at an average grade of 1.77 g/t.  The existing resource is confined to a 4km zone of the Homase Trend, including Homase North, Homase Pit and Homase South.

 

The project hosts two former mines, the Akrokerri Ashanti Mine Ltd, which produced 75,000 oz gold at 24 g/t recovered grade in the early 1900s, and the Homase Pit which AngloGold Ashanti developed in 2002/03 producing 52,000 oz gold at 2.5 g/t recovered.  It is the Company's intention to build a portfolio of high-quality gold projects in Ghana, with a particular focus on the highly prospective Ashanti Gold Belt.