Ghanaian Joint Venture

RNS Number : 9622A

Goldstone Resources Ltd

19 October 2009

 



GOLDSTONE RESOURCES LIMITED

("GoldStone" or "the Company")

GOLD EXPLORATION JOINT VENTURE: HOMASE, GHANA

The Directors of GoldStone are pleased to announce that the Company has entered into a joint venture agreement ("Joint Venture Agreement") with Cherry Hill Mining Company Ltd ("Cherry Hill"), a Ghanaian company, to develop the Homase Prospecting License ("the Homase License"). 

The Homase License

The Homase License is wholly owned by Cherry Hill and forms the subject of the Joint Venture Agreement. The license area falls in the Bekwai District of the Ashanti Region in Ghana c. 15km from the town of Obuasi.  It is approximately 115 square kilometres in extent and lies c. 15km north-east of Anglo-Gold Ashanti's fifty million ounce Obuasi Mine.

Regionally the Homase License is located within the well mineralised Ashanti Gold Belt where more than seventy million ounces of gold have been discovered.  The Directors believe the Homase License covers the same structure that controlled the formation of the Obuasi gold deposit which has been exploited at surface and underground over the last 100 years.  Shea Gold Limited ("Shea"), a subsidiary of Dominion Mining Limited, a previous explorer in the area, targeted this structure within the Homase License and drilled more than 130 boreholes during 1998, 1999 and 2000 to quantify the continuous gold mineralisation along a three kilometre strike length.

Some of the most significant intersects drilled by Shea are listed below:

HOLE	FROM (m)	TO (m)	WIDTH (m)*	AU GRADE (g/t)
98HMRC010	20	46	26	2.9
98HMRC011	0	24	24	1.8
98HMRC035	0	22	22	3.8
98HMRC050	1	13	12	4.2
98HMRC051	16	23	7	7.3
99HMRC071	40	54	14	7.3
99HMRC075	20	46	26	4.0
99HMRD072	76	82	6	19.7
99HMRD165	100	123	23	6.2

*The widths given in the table do not reflect the true widths of the mineralisation.

Ashanti Goldfields ("AG") acquired the Homase License from Shea Limited during 2001 for a production based consideration of approximately US$550,000 and mined ore from two pits ("Homase Pits") during 2002 and 2003.  The mining was limited to a strike length of 800 metres of the three kilometre mineralised zone.  The ore was trucked to AG's nearby Obuasi oxide processing plant and approximately 40,000 ounces of gold mainly from the oxide portion of the mineralized zone were recovered at a reported recoverable grade varying between 2.6 and 2.7 g/t.  AG stopped mining operations in the Homase License area during 2003 at a time when the gold price was between US$320 and US$380 per ounce at a reported operating cost per ounce of US$220 and $280.

The Directors believe the close proximity of the Homase License area to the modern mining town of Obuasi will simplify the sourcing of the required exploration and mining skills as well as the equipment needed to advance this exploration property.  

From geological information and historicial data currently available to the Company, the Directors believe the Homase License is prospective because:

• A code compliant gold resource may be achievable after limited due diligence drilling and mainly based on historical drill data;

• The mineralisation in the Homase Pits area appears to extend below (down dip of) the pit and appears not to have been tested to its full extent;

• Shea has demonstrated that the mineralisation continues north along strike of the Homase Pits and requires further investigation; and 

• The Homase License area also contains several additional targets at various stages of exploration that deserve further follow up. For some of these targets Shea reported gold intersections in boreholes and trenches while other targets consist of gold in soil anomalies.

Exploration Strategy

GoldStone believes that the Obuasi gold deposit and the Homase Pits have the same style of hydrothermal mineralisation and lie on the same controlling structure. The mineralisation at Obuasi is well understood with extensive research published on it. The Company intends to utilise an exploration strategy that is most suitable for this type of mineralisation and will focus its exploration on:

• compiling historical drill information into a three dimensional model to quantify any potential gold resource; 

• drilling inclined boreholes to: 

• • test the extent of high grade mineralisation below the current Homase Pits and whether future exploitation would be better suited to deeper open pit or underground mining methods;
  • test if the mineralisation along strike of the Homase Pits is suitable for open pit mining, and 

  • follow up on the regional targets identified by previous holders of the licence. 

The directors of GoldStone consider that the Company currently has sufficient funds to quantify a potential code compliant gold resource and to undertake confirmatory drilling. 

Joint Venture Agreement

The Company has entered into a Joint Venture agreement ("the Agreement") with Cherry Hill under the terms of which the Company has the right to earn an interest in the Homase License subject to it financing exploration expenditure and making payment of participation monies to Cherry Hill in pre-agreed phases.  The phases are summarized as follows:

• A tenement due diligence phase of up to one month to receive confirmation from the Ghanaian  Minerals Commission that the Homase License is in good standing and that it may be the subject of the Agreement. Once confirmation is received by GoldStone, payment of a participation fee of US$15,000 will be made to Cherry Hill by GoldStone.

• A geological and further legal due diligence phase of up to five months, primarily in order to allow GoldStone to obtain, collate, interpret and assess available historical data. No exploration expenditure is committed to and no participation fees will be paid at commencement of this phase. 

• Exploration expenditure will commence with a geological target generation phase which must be conducted within an additional 12 months. Participation fees of US$16,000 are payable to Cherry Hill by Goldstone at commencement of this phase and the Company must spend no less than US$200,000 on exploration work in order to acquire a provisional 10% interest in the Homase License, which will become permanent as soon as GoldStone acquires a 51% interest.

• A further exploration phase potentially comprising a preliminary drill programme and regional exploration is to be conducted over a maximum period of an additional 12 months with the right to earn a total provisional interest of 25% after having spent an additional amount of US$500,000 on exploration work.  Participation fees of US$20,000 are payable to Cherry Hill by GoldStone at commencement of this phase.

• After expending a further amount of no less than US$800,000 on exploration work over a maximum period of an additional 12 months or upon defining a code compliant inferred resource of any magnitude (whichever occurs the earliest), the Company will earn a permanent interest of 51% in the Homase License. Participation fees of US$24,000 will be payable to Cherry Hill by GoldStone at commencement of this phase.  

• A minimum of US$1 million on exploration work must be expended by GoldStone during the next phase or a pre-feasibility study conducted over any defined resources (whichever comes earliest but within an additional 12 month period) in order to earn a permanent 65% interest in the Homase license.  Participation fees of US$30,000 will be payable to Cherry Hill by GoldStone at commencement of this phase.

• Following the pre-feasibility study, if a successful Feasibility study is conducted over the area within an additional period of 24 months, the Company will have earned an interest of 85% in the Homase license.  Participation fees of US$60,000 are payable to Cherry Hill by GoldStone at commencement of this phase.

The Agreement also determines that if exploration targets are achieved in less time than the maximum time periods above, the surplus shall be credited towards subsequent phases.  In addition GoldStone has the right to withdraw from the Joint Venture agreement at any time by giving three months written notice without penalty provided that it will retain no interest in the Homase License if it withdraws before acquiring a permanent interest of 51% and provided further that all technical reports generated by GoldStone on the Homase License are disclosed to Cherry Hill.  The Agreement envisions the creation of a Joint Venture Company upon commencement of a development programme, to whom the Homase License and/or any ensuing mining licenses will be transferred in proportion to the respective interests held by GoldStone and Cherry Hill.

In terms of Ghanaian law the Government of Ghana is entitled to a 10% free carried interest in any mining ventures and Ghana's Minerals Act stipulates a mining royalty of not more than 6% or less than 3% of the total revenue obtained from mining operations.  The Corporate tax rate for Ghanaian Companies and for income derived from Ghana is 25% and dividends attracts a withholding tax of 8%. 

Approval

Dr. Hendrik Schloemann, who holds a PhD in geochemistry, has reviewed and approved the geological content of this announcement.

In addition, the technical content of this announcement has been reviewed by Mr. Simon Meadows Smith, Managing Director of SEMS Exploration Services Ltd., which is a West African based firm of consulting geologists and surveyors.  Mr. Meadows Smith is a member of the Institute of Materials, Minerals and Mining (IOM3), holds a degree in geology and has over twenty years' experience working in the Pre-Cambrian terrains of West Africa and Western Australia primarily in the exploration for gold.  Mr. Meadows Smith was also the Exploration Manager at Shea during the drilling activity referred to in this announcement and has a detailed knowledge of Shea's exploration work and results.

For more information please visit www.goldstoneresources.com

Enquiries:

GoldStone Resources Ltd	[phone]
Jurie Wessels (Chief Executive Officer)
Hendrik Schloemann (Exploration Director)
Hanson Westhouse Limited	[phone]
Tim Feather / Matthew Johnson

 

END

 

 

JVEUWSARKKRRAUA