Final Results

RNS Number : 2993Q

Goldstone Resources Ltd

29 August 2014

 



GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Final Results for the year ended 28 February 2014

GoldStone (AIM: GRL), the AIM quoted company focused on gold in West and Central Africa, announces its final results for the year ended 28 February 2014.

Chief Executive Officer's Report

Introduction

Since the start of the reporting period, GoldStone's exploration activities have been constrained due to a lack of funding.  Emphasis has been placed on cash conservation, project retention and keeping the Company's licences in good standing.

The downturn in market conditions resulted in a reduction of potential funding sources.  In these circumstances it has been necessary to contemplate the monetisation of any one of our assets.  In a declining market, this is not only potentially value destroying, but also difficult to achieve.  I am however pleased to state that the Company has retained all of its projects and executed meaningful exploration at Sangola and Ngoutou during the reporting period. 

The Board believes each of the Company's licences is in good standing and expects appropriate renewals of those which are currently subject to applications.

Conditional Placement to Stratex

On 21 July 2014 the Company announced a proposed subscription by Stratex International plc ("Stratex") to raise gross proceeds of £1.25 million (the "Subscription").  The Subscription is planned to occur after a 1 for 10 share consolidation and will be for 20,833,333 new ordinary shares at a price of 6 pence per new share (the "Subscription Shares").  Subsequent to the Subscription and share consolidation, Stratex would own approximately 33.5% of the enlarged issued share capital of the Company. 

The Subscription is conditional, inter alia, upon the following terms:

•              the issue of warrants to Stratex to subscribe for 20,833,333 new ordinary shares at a price of 7 pence per share for a period of 18 months from the date of admission of the Subscription shares to trading on AIM ("Admission");

•              the granting of a waiver by the Panel on Takeovers and Mergers of the obligation to make a general offer for the Company (the "Waiver");

•              the approval by the shareholders of the Company in general meeting of the share consolidation, the Waiver and the issue of the Subscription shares;

•              the appointment to the board of Directors (which is to include no more than five directors in total) of two non-executive directors nominated by Stratex, one of whom shall serve as chairman and one independent director also nominated by Stratex; and

•              the approval by Stratex of terms of employment and incentive arrangements of certain Directors and employees of the Company.

The agreement announced on 21 July 2014 also included a condition that Admission should occur by 8.00 a.m. on 30 September 2014.  On 28 August 2014, the Company and Stratex agreed an extension to the Subscription agreement with the effect that Admission must occur by 8.00 a.m. on 31 October 2014.  This will provide both companies with sufficient time to fulfil the conditions precedent to the Subscription agreement.  Unity Mining Limited, the Company's largest shareholder, has undertaken to vote in favour of the resolutions to be proposed at the general meeting.

Senegal (Sangola)

The 471 km² Sangola licence lies in the south-western corner of the prolific Kenieba-inlier gold province.  During April 2013 the Company entered into a joint venture with Randgold Resources Ltd ("Randgold") to explore the licence. 

The joint venture was terminated in April 2014 by Randgold after 10,000m of reverse circulation drilling at four of the eight identified prospects.  The joint venture was terminated because Randgold held the opinion that a potential discovery would not meet their internal investment criteria of yielding "a deposit larger than 3 million ounces at an average grade above 3 g/t".  Randgold noted in the termination notice that in their opinion the permit is "still prospective for smaller or lower grade deposits" than a 3 million ounce deposit at 3 g/t.

The licence area contains four gold-in-soil anomalies identified by GoldStone and four further conceptual regional target areas identified by Randgold.

Randgold commenced drilling operations during June 2013 and concluded the programme in December 2013.  At Thiabedji 17 holes were drilled with the aim of confirming GoldStone's own results from 2012 and at Tiobo 41 holes were drilled comprising four drill lines between 700m and 1.2km apart.  Drilling at the Baraboye gold anomaly was conducted later in 2013 and consisted of 84 holes over four drill lines, which were between 2.7 km and 1.6 km apart.  At Ibel one line consisting of four holes were drilled over the northern portion of the anomaly and one line of nine holes over the southern portion of the anomaly.  None of the conceptual targets were explored by Randgold.  Under the joint venture Randgold was obliged to fund all costs, file all regulatory reports, make payment of prospecting fees and provide GoldStone with an exit report.  

A renewal for the Sangola licence was filed during September 2013 after non-prospective ground comprising approximately 25% of the licence area was relinquished.  The Directors remain confident that the licence will be renewed in due course.

Gabon projects (Oyem and Ngoutou)

The Oyem and Ngoutou licences were drilled during the period under review and both hold the potential to host significant gold mineralisation.  Both licences contain 15km long gold-in-soil anomalies with favourable geophysics and significant artisanal gold workings.

Three diamond drilled holes (totalling 535m) were completed along two drill traverses, targeting a small portion of the 15km long Ngoutou gold-in-soil anomaly.  Best results included 16m @ 1.3 g/t gold (including 2m @ 5.6 g/t) and 33.5m @ 0.4 g/t in hole 13NGDD001 and 32m @ 0.4 g/t in hole 13NGDD002.

Approximately 400m of the 15km long Oyem gold-in-soil anomaly were drill tested and high grade gold mineralisation in a 120m wide deformational zone was encountered along two drill lines.  Best results included 2m @ 5.3 g/t (including 1m @ 9.5 g/t) in the first drill line and 2.2m @ 4.5 g/t (including 1m at 9.1 g/t) in the second drill line.

Under the terms of a co-existence agreement concluded early in 2013, Ferrex plc undertook exploration work in the southerly part of the Oyem licence which included a nine hole diamond drilling programme directed at both iron and gold and a 400m by 100m spaced soil sampling programme focused exclusively at gold around the area of interest.  Results of the drilling tested negative for gold mineralisation and results from the soil sampling programme are still outstanding. 

Under the terms of the co-existence agreement with Ferrex, GoldStone will receive a 1% royalty on any iron ore produced by Ferrex.

On 4 July 2014 the Company was informed that both its licences in Gabon have been renewed until 28 May 2017.

Ghana projects

The Homase/Akrokerri project is located in the heart of the Ashanti Gold Belt in Ghana and adjoins AngloGold Ashanti's Obuasi permit.  The Company announced a resource of 405,600oz in June 2010 from historical drilling results and increased this by a further 196,400oz in August 2012.  The JORC-compliant total resource is now 10.6 million tonnes at an average grade of 1.77 g/t for 602,000oz.

GoldStone owns 65% of the Homase licence and may attain an 85% interest upon successful completion of a feasibility study of any nature over the area.  The Company owns 100% of the Akrokerri licence.

At the Manso Amenfi project, over which GoldStone has a joint venture with Asasemu Mining Limited, a trenching programme commenced over prospective gold anomalies, some of which trend parallel to nearby well known gold-bearing structures.  A total of 48 trenches totalling 2,247m have been excavated and samples taken at 2m intervals.  The results have been received, but were found to be inconclusive.  Due to the financial position of the Company, decisions on future exploration work have been put on hold until sufficient funding has been secured.

The Minerals Commission of Ghana has recommended renewal for a two year period in respect of the Homase, Akrokerri and Manso Amenfi licences subject to Ministerial approval, which is expected to be received in due course. 

Funding

In July 2013 the Company raised £359,500 through a placing at 1p per share and a further £500,000 at 1.5p per share in September 2013.  On 21 July 2014, the Company announced the conditional subscription agreement with Stratex, further details of which are set out above.

During February 2013, in an endeavour to conserve funds, the Executive Directors and the operational management agreed to defer 50% of their salaries and to convert such deferred salaries into shares at a price to be determined by the Remuneration Committee at an appropriate time. 

Takeover Code

From 30 September 2013 certain changes to the UK City Code on Takeovers and Mergers (the "City Code") were implemented, the effect of which is that the Company is now subject to the City Code.

Changes to the Board

On 13 November 2013 Bill Geier resigned as a non-executive director of the Company and was replaced by Ben Hill.  Both directors are appointees of GoldStone's largest shareholder Unity Mining Ltd.

Outlook

In the current financial climate under which exploration companies operate, the focus of all small cap explorers should be to build value of its most prospective projects, especially those with near term production potential, before the expected upturn arrives.  The funds raised through the Stratex subscription will provide the Company with sufficient cash resources to conduct meaningful exploration at Homase/Akrokerri, keep the most prospective projects in good standing and allow the Company to investigate other measures of funding, if practicable and expedient.  Exploration at Homase/Akrokerri will be directed at potentially adding shallow oxide resources, metallurgy drilling (to define the metallurgical possibilities), mine studies to advance our understanding of the optimum production capacity of the Homase resource and a number of boreholes to test the potential of the recognised high grade shoots at depth. 

Joint ventures will be considered for some of our projects.  This includes Sangola where we now have extensive data from Randgold's exploration activities as well as the projects in Gabon.  If momentum is gained through our relationship with Stratex, there may also be some corporate activity around acquiring smaller deposits in and around Homase/Akrokerri to provide the project with critical mass or by acquiring or partnering on assets from funding-stressed companies in West Africa.

Jurie Wessels

Chief Executive Officer

Enquiries

GoldStone Resources Limited	[phone]
Jurie Wessels
WH Ireland Limited	[phone]
Tim Feather
Nick Field

Consolidated Statement of Financial Position

as at 28 February 2014

in United States dollars			28 February 2014		28 February 2013
Assets
Property, plant and equipment			32,676		47,685
Non-current assets			32,676		47,685
Trade and other receivables			17,976		148,274
Cash and cash equivalents			619,095		631,855
Current assets			637,071		780,129
Total assets			669,747		827,814
Equity
Share capital			6,340,370		5,259,165
Share premium			24,110,882		23,844,234
Capital contribution reserve			555,110		555,110
Share options reserve			605,808		605,808
Accumulated deficit			(31,250,496)		(29,554,655)
Total equity			361,674		709,662
Liabilities
Trade and other payables			308,073		118,152
Current and total liabilities			308,073		118,152
Total equity and liabilities			669,747		827,814

Consolidated Statement of Comprehensive Income

as at 28 February 2014

in UnitedStates dollars			Year ended 28 February 2014		Year ended 28 February 2013
Continuing operations
Sundry income			49,450		34,249
Exploration expenses			(709,620)		(5,151,628)
Other expenses			(1,036,654)		(1,368,987)
Results from operating activities			(1,696,824)		(6,486,366)
Finance income			983		4,916
Net finance cost			983		4,916
Loss before tax			(1,695,841)		(6,481,450)
Loss from continuing operations			(1,695,841)		(6,481,450)
Other comprehensive income			0		0
Total comprehensive loss for the year			(1,695,841)		(6,481,450)
Loss per share
Basic loss per share			(0.004)		(0.020)
Diluted loss per share			(0.004)		(0.020)

Consolidated Statement of Cash Flow

for the year ended 28 February 2014

in United States dollars			Year ended 28 February 2014		Year ended 28 February 2013
Cash flow from operating activities
Loss for the year			(1,695,841)		(6,481,450)
adjusted for:
-      depreciation			18,332		19,603
-      interest received			(983)		(4,916)
-      share options granted to directors and employees during the year			0		96,465
-      profit on sale of motor vehicle			(2,485)		0
Changes in:
-      trade and other receivables			130,298		(148,274)
-      trade and other payables			189,922		(421,302)
Net cash used in operating activities			(1,360,757)		(6,939,874)
Cash flow from investing activities
Interest received			983		4,916
Disposal of property, plant and equipment			4,396		0
Acquisition of property, plant and equipment			(5,235)		(30,216)
Net cash used in / (from) investing activities			144		(25,300)
Cash flow from financing activities
Proceeds from issue of ordinary share capital			1,347,853		24,331
Net cash from financing activities			1,347,853		24,331
Net decrease in cash and cash equivalents			(12,760)		(6,940,843)
Cash and cash equivalents at beginning of the year			631,855		7,572,698
Cash and cash equivalents at end of the year			619,095		631,855

NOTES

1.      FINANCIAL INFORMATION

The financial information set out above does not constitute the Company's statutory accounts for the year ended 28 February 2014, but is derived from those accounts.  The auditors have reported on those accounts; their report was unqualified, but drew attention to the following matters by way of emphasis without qualifying their report as follows:

"Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 2b to the financial statements concerning the company's ability to continue as a going concern.  The deal with Stratex International plc for subscription of shares which is conditional upon certain terms is expected to be completed by 31 October 2014 and is expected to secure funding for exploration projects.  This coupled with steps being undertaken by management to reduce both exploration and non-exploration expenditure in order to maintain adequate financial resources and preserve available cash by reducing the monthly cash burn rate while future funding is considered, along with the other matters explained in note 2b to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern.  The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern."

2.      ANNUAL REPORT

The annual report and accounts for the year ended 28 February 2014 will be posted to shareholders on 29 August 2014 and will be available from the Company's website at www.goldstoneresources.com shortly.

 

END

 

 

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