Operational Update, Bond Settlement and Gold Loan

12 July 2021

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Operational Update

Settlement of Unsecured Bond Notes

Extension of Gold Loan Interest Payment

GoldStone Resources Limited (AIM: GRL), the West Africa focused gold exploration and development company quoted on AIM, is pleased to announce an operational update and agreements reached with creditors.

Irrigation approval

Further to its announcement of 13 May 2021, the Company has received approval from the Minerals Commission to start irrigation and leaching of ore placed on the heap leach pad at the Homase Mine.  The Company remains on track to achieve the target production of 25,000 ounces of gold for the first eight months of production, with first gold pour expected to occur in Q3 2021.

Bond settlement

The Company has reached agreement for settlement of its twenty outstanding unsecured bonds of US$50,000 each (the "Bonds") with the holders of the Bonds (the "Bondholders").

The offer has been accepted by all Bondholders, who have agreed to full and final settlement of the Bonds in exchange for the issue of, in aggregate, 12,000,000 new ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") (the "Bond Settlement Shares") (the "Bond Settlement Agreement").  Verbal agreement has been received from BCM Investments Limited ("BCM"), which will be allotted its 3,600,000 Bond Settlement Shares immediately following signature of a written Bond Settlement Agreement. A further announcement will be made in due course.

Settlement of the Bonds on the terms of the Bond Settlement Agreement is deemed to be in the best interests of the Company and all shareholders, as it avoids the issue of, in aggregate, 20,000,000 new warrants to subscribe for Ordinary Shares at an exercise price of 3 pence per share, as well as the payment of interest at a rate of 14% on the principal amounts outstanding. 

Gold Loan

The Company is also pleased to announce that Asia Investments Management Services Limited ("AIMS") has agreed a further extension to the timing of payment of interest on the US$3 million secured gold loan announced on 22 June 2020 (the "Gold Loan"), in relation to which an extension to 30 June 2021 was agreed on 1 March 2021 due to delays experienced in respect of requisite operational permits being issued.  

AIMS has now agreed with the Company that all unpaid and accrued interest associated with the Gold Loan to 30 June 2021 must be repaid by 31 August 2021 (the "Extension").  Interest will continue to accrue on the outstanding interest payment at the default rate of 17% until payment is made.  

Admission and Total Voting Rights

The Bond Settlement Shares will rank pari passu with the existing Ordinary Shares and application will be made immediately for 8,400,000 of the Bond Settlement Shares to be admitted to trading on AIM ("Admission").  It is expected that Admission will become effective and dealings in these new Ordinary Shares will commence at 8.00 a.m. on 16 July 2021.

On Admission, Paracale Gold Limited ("Paracale Gold"), which currently holds 102,704,754 Ordinary Shares in GoldStone, representing 24.93% of the Company's current issued share capital, will hold 106,304,754 Ordinary Shares representing 25.29% of the Company's enlarged share capital.

Upon Admission, the Company's issued ordinary share capital will consist of 420,338,344 Ordinary Shares with one voting right each. The Company does not hold any Ordinary Shares in treasury, therefore the total number of Ordinary Shares and voting rights in the Company on Admission will be 420,338,344. With effect from Admission, this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Emma Priestley, CEO of GoldStone, commented:

"I am delighted that the Bond Holders and AIMS have been supportive to the Company to avoid impacting the Company's operational progress, allowing us to continue to focus on moving towards our target of near-term gold production."

Related Party Transactions

AIMS, Paracale Gold and BCM are substantial shareholders of the Company, holding 29.62%, 24.93% and 12.14% respectively, and are therefore related parties of the Company as defined in the AIM Rules for Companies ("AIM Rules").

Accordingly, the Bond Settlement Agreement entered into with Paracale Gold and the Extension of the Gold Loan with AIMS, are deemed to be related party transactions pursuant to Rule 13 of the AIM Rules and the independent directors, being Emma Priestley, Richard Wilkins and Orrie Fenn, consider, having consulted with the Company's nominated adviser, Strand Hanson Limited, that the terms and conditions of the Bond Settlement and Extension are fair and reasonable insofar as the shareholders of the Company are concerned.  BCM is a significant shareholder in the Company and the entering into of the Bond Settlement Agreement with BCM will be a related party transaction.

- ENDS-

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About GoldStone Resources Limited

GoldStone Resources Limited (AIM: GRL) is an AIM quoted exploration and development company with projects in Ghana 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.

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.