Proposed Acquisition

Goldstone Resources Ltd
03 April 2007

                          GOLDSTONE RESOURCES LIMITED


     PROPOSED ACQUISTION OF AN INTEREST IN THE SWARTDORING DIAMOND PROJECT





The Directors of GoldStone Resources ('GoldStone' or the 'Company') announce
that the Company has conditionally agreed to acquire a 70 per cent. interest in
Xanadu Mining (Pty) Limited ('Xanadu Mining') from GeoQuest Holdings Limited ('
GeoQuest') (the 'Acquisition').



Xanadu Mining has, through its wholly-owned subsidiaries GrindStone Mining (Pty)
Limited ('GrindStone Mining') and Multi-Direct Mining (Pty) Limited ('
Multi-Direct Mining'), filed applications for prospecting rights over the
Swartdoring Diamond Project, all of which have been accepted by the Department
of Minerals and Energy ('DME') in the Republic of South Africa.  Under the
acquisition agreement dated 2 April 2007 (the 'Acquisition Agreement'),
GoldStone has conditionally agreed to acquire a 70 per cent. interest in Xanadu
Mining from GeoQuest in consideration of the issue of 50,640,000 consideration
shares ('Consideration Shares').  At the mid-market price of 1.1 pence per share
at the close of business on 2 April 2007, the Consideration Shares have a value
of £557,040.



GeoQuest holds 40,000,000 ordinary shares of 1p each in the Company (the '
Ordinary Shares'), representing approximately 30.6 per cent. of the existing
Ordinary Shares.  In addition, each of the Directors has an interest in the
share capital of GeoQuest which, in aggregate, represent 32.2 per cent. of the
share capital of GeoQuest.  The Acquisition is therefore classified as a related
party transaction under the AIM Rules.  A related party transaction for an AIM
company does not ordinarily require the approval of shareholders, however, the
Directors considered it appropriate in this case.



The Acquisition is conditional, inter alia, on the passing of a resolution at an
extraordinary general meeting to be held on 19 April 2007 (the 'EGM').  A
circular will be sent to shareholders today including notice of the EGM (the '
Circular').



Sir Michael Oliver, the independent director, having consulted with Hanson
Westhouse Limited, the Company's nominated adviser, considers the Acquisition to
be in the best interests of the Company and shareholders as a whole.



Background to the Acquisition



GoldStone was admitted to AIM in March 2004 with the objective of continuing the
exploration of two areas in Guyana in order to find economically mineable gold
palaeoplacers.



Having undertaken an extensive exploration and evaluation programme, the Company
successfully discovered 21 palaeoplacers exhibiting similar geological
characteristics to the Witwatersrand, an area in South Africa from which an
estimated 50,000 tonnes of gold, or more than 40 per cent. of total worldwide
gold production, has been derived.



While a number of the palaeoplacers were found to contain anomalous quantities
of gold, the low tenor of the intersections made during the drilling programme
led to the Directors concluding that the likelihood of finding economical grades
was remote.  Furthermore the Directors felt that high drilling costs made
continued detailed exploration of the palaeoplacers prohibitive.  A decision was
taken in August 2006 to cease all gold exploration in Guyana.



A lateritic bauxite deposit is also located within permit areas held by the
Company.  In September 2005, GoldStone entered into an option agreement with BHP
Billiton ('BHPB') over the bauxite interests.  BHPB launched an initial
programme which confirmed the deposits previously identified by GoldStone.
Further, more detailed sampling is planned.  In September 2006, BHPB paid to
GoldStone the fee of US$100,000 which is required to maintain the option until 6
June 2007.  In the event that BHPB elects to exercise the option after that
date, further amounts would become payable to GoldStone.



GoldStone currently has cash resources of approximately US$3.0 million.  With
the cessation of the gold exploration programme and the option agreement in
place with BHPB over the bauxite interests, the Directors decided to seek a new
project for the Company.  The criteria for the new project were that it should
be relatively low risk and would provide early cash flow to the Company.  The
Directors believe that the Swartdoring Diamond Project has the potential to
fulfil these criteria thereby rebuilding value for Shareholders.



Independent Valuation of the Swartdoring Diamond Project



An independent valuation report on the Swartdoring Diamond Project has been
undertaken by Snowden Mining Industry Consultants (Pty) Ltd ('Snowden').  In
Snowden's opinion, the project value is between US$4 million and US$20 million,
with a preferred value of US$12 million.  On the basis of the preferred value, a
70 per cent. interest would have a value of US$8.4 million.  The full text of
Snowden's report is set out in the Circular.



The Swartdoring Diamond Project



Background



The Swartdoring diamond deposit is a preserved diamondiferous palaeochannel of
the Swartdoring river in the Northern and Western Cape Provinces of South
Africa.  The first permissions for the exploration of the area, which consists
of a number of farms, were granted in 1997 to GrindStone Mining by the DME.



Xanadu Mining, through its subsidiaries, has invested approximately US$500,000
in the development of the Swartdoring Diamond Project since 1997.  In order to
advance the project, the Directors estimate that an investment of approximately
US$500,000 will be required to fund direct exploration expenses.  The
exploration will be conducted in order to complete a mining feasibility study on
the inferred resource of the project.



The subsurface channel, which is buried beneath surficial sand cover, ranges
from 400 to 2,000 metres in width and occupies an area of 1,345 hectares.  This
area has been explored by means of outcrop mapping, ground-penetrating radar,
630 reverse circulation drill holes, and by bulk-sample excavations at each end
of the reach.



An inferred resource of 12 million tonnes of loose, uncemented, diamond-bearing
gravel, interpreted from drill hole records, lies beneath loose to slightly
cemented sandy overburden at an average stripping ratio of 12.4.  There is a
possibility to extend this resource to approximately 49 million tonnes of
diamond-bearing gravel after analysis of results from further drilling work and
bulk sampling operations.



Sampling at the eastern end of the preserved palaeochannel has recovered 220
stones weighing a total of 177.73 cts, equivalent to an average size of 0.81 cts
/stone.  The last parcel of stones was classified as very good gem quality,
weighed 16.98 cts, and was valued at US$343/ct in 1998.  This equates to
approximately US$450 in current day terms.  The largest stone in this parcel
weighed 3.48 cts.



Sampling at the western end of the preserved palaeochannel recovered 131 stones
weighing a total of 68.49 cts, equivalent to an average size of 0.525 cts.  The
largest stone recovered was 11.60 cts.



Statistical analysis of the gravel bulk sampling results for samples collected
at either end of the palaeochannel indicates an average grade of 3.2 cpht for
both ends of the palaeochannel.



Summary of Previous Exploration Results


Grade (inferred)                                    3.18 cts per 100 tonnes

Stone quality                                       Size range = 0.2 to 11.6 cts
                                                    Average size = 0.81 cts
                                                    Value (2005) = US$475 per ct.

Tonnage (inferred)                                  12 million tonnes

Equating to in situ                                 360,000 cts

Value in situ:                                      US$181 million



Potential


In arriving at the in situ value set out above, the potential of the upper
gravels and the gravels from the mid-channel section have not been taken into
consideration.  Although drill records show the existence of upper gravels and
the continuation of basal gravels in the mid-channel area, these gravels have
not been bulk sampled and tested and were therefore excluded from the inferred
resource calculation described above.  There are, however, no geological reasons
why the grade and tonnage of the mid-section of the palaeochannel would differ
substantially from what was found on the eastern and western ends of the
channel.



Upper Gravels Tonnage (estimated)      20 million tonnes

Mid-Channel (not fully explored)       17 million tonnes



Exploration Objectives



Further exploration in order to complete a feasibility study on the inferred
resource of 12 million tonnes of diamond bearing gravel is necessary.  This
would require the completion of percussion drilling over and bulk sampling of
the eastern and western sections of the channel.  From drill log interpretation,
the channel-reach will be subdivided into separate fluvial environments, each of
which will then be bulk sampled.  Reverse circulation drilling will be used to
delineate the final position of drill sites and a wide diameter drill will be
used to extract bulk samples of gravel from those parts of the channel.  The
bulk sampling would aim to get representative values of grades in various
environments and will assist in determining the global and regional gravel
tonnage and diamond value.  Drill records of the entire channel will also be
used to determine the average stripping ratio.



A financial feasibility study will be made upon receipt of bulk sampling data.
If this part of the project appears feasible, further commercialisation of the
project will take place, which may entail the development of a mine thereon or a
sale thereof.



Should this be successful it may also encourage a later exploration phase of the
diamond bearing basal and upper gravels in the mid-channel section. If so,
similar percussion drilling and bulk sampling techniques will be applied to the
mid-channel section in order to enable a separate feasibility study thereon. The
untested upper gravels in the eastern and western-channel areas will be
determined from results obtained during the planned exploration.



Company Structure and Current Status of Authorisations



GrindStone Mining and Multi-Direct Mining were formed for the purpose of
exploring the Swartdoring Diamond Project.  The companies are wholly-owned
subsidiaries of Xanadu Mining.  GeoQuest currently owns approximately 70 per
cent. of the issued share capital of Xanadu.



The first permissions for the exploration of this project were granted in 1997
by the DME and GrindStone Mining and Multi-Direct Mining have held a number of
permissions since then.  The DME has granted a prospecting right to Multi-Direct
Mining over one of the farms situated in the Western Cape and it is expected
that the prospecting right will be notarially executed shortly.  The
applications of GrindStone Mining over certain properties in the Western and
Northern Cape Provinces have also been accepted and it is expected that these
prospecting rights will be granted soon.



Terms of the Acquisition



Under the terms of the Acquisition Agreement, GoldStone has conditionally agreed
to purchase a 70 per cent. interest in Xanadu Mining from GeoQuest.
Additionally, under the terms of the agreement, GeoQuest will assign to
GoldStone 70 per cent. of the inter-company debt owed by Xanadu to GeoQuest
comprising of the amount as at 28 February 2006 and stated in the financial
statements and expenses approved by GoldStone and incurred in the normal course
of business. On completion the debt will amount to approximately £760,000.  The
consideration payable at completion will be the issue and allotment of
50,640,000 Consideration Shares to GeoQuest.  At the mid-market price of 1.1
pence per Ordinary Share at the close of business on 2 April 2007, the
Consideration Shares have a value of £557,040.



The Acquisition is conditional, inter alia, on:



  • The passing of the Resolution by Shareholders which would grant the
    Directors authority to issue the Consideration Shares;



  • The granting and notarial execution of prospecting rights over all the
    farms comprising the Swartdoring Diamond Project by the DME in favour of
    GrindStone Mining and Multi-Direct Mining;



  • The successful listing of GoldStone on the AltX (the Alternative Exchange
    of the Johannesburg Stock Exchange), further information on which is set out
    below;



  • The approval of the Acquisition by the South African Reserve Bank; and



  • The passing of a special resolution by the members of GeoQuest approving
    the Acquisition Agreement.



Completion of the Acquisition will not take place until satisfaction of all of
the conditions, which must occur before 30 October 2007.  The Acquisition
Agreement contains certain warranties given by GeoQuest to GoldStone.



On completion of the Acquisition, GeoQuest will hold 90,640,000 Ordinary Shares,
representing 49.95 per cent. of the enlarged share capital.  The Directors
understand that the directors of GeoQuest intend that, at the time of the
listing of GoldStone on AltX and completion of the Acquisition, GeoQuest will be
liquidated and the directors of GeoQuest will declare a dividend in specie
comprising the distribution of the Ordinary Shares held by GeoQuest to its
shareholders.



Following this distribution, the shareholders in GeoQuest will hold 90,640,000
Ordinary Shares, representing 49.95 per cent. of the enlarged share capital.
The approximate anticipated interests of the Directors in the Company, all of
which arise as a result of the dividend expected to be paid by GeoQuest, are as
follows:


Director                                                                            No. of       Percentage

                                                                           Ordinary Shares

Sir Michael Oliver                                                               1,599,915              0.9
Nico van der Hoven                                                              16,271,417              9.0
Dr. Lawrie Minter                                                                7,705,241              4.2
Jurie Wessels                                                                    3,576,291              2.0

                                                                                29,152,864             16.1



Listing on AltX and SARB approval



As set out above, the Acquisition is conditional, inter alia, on a listing of
GoldStone on the AltX.



The Directors are of the opinion that a listing on the AltX would open new
avenues for fund raising for the Company and will provide improved liquidity for
the Company's shareholders at a relatively low cost.  In addition, an AltX
listing will allow the Company to invest in the South African Democratic
Community, a region that is well known for its exploration opportunities.



South Africa, in common with many other countries, operates a policy of exchange
control, which is administered by the South African Reserve Bank (the 'SARB').
During November 1999 and June 2003, the SARB approved the injection of funds
originating from GeoQuest in South Africa into GoldStone in order to fund
GoldStone's exploration activities.  During June 2003 the SARB also approved the
expatriation by GeoQuest from South Africa of sufficient funds in order to
finance the flotation of GoldStone on AIM.  On 31 August 2006 GeoQuest applied
for permission from the SARB to sell the Swartdoring Diamond Project to
GoldStone.  This application was refused because in terms of current exchange
control policy, the acquisition of the Swartdoring Diamond Project would amount
to a 'loop structure', namely an acquisition of property inside the SADC by a
foreign (non-South African) entity originally financed by a South African
company.  Under this SARB policy, GoldStone is precluded from investing or
acquiring any assets within the borders of the SADC.  Further submissions and
proposals were made by GeoQuest and GoldStone to the SARB in order to allow
GoldStone to acquire assets in the SADC and it was resolved during March 2007
that the SARB would favourably consider an application by GoldStone to invest in
the SADC if GoldStone is listed on the AltX.





An electronic copy of the Circular can be downloaded from the Company's website,
www.goldstoneresources.com.





Enquiries:


GoldStone Resources Ltd                                        00 27 21 794 4004
Nico van der Hoven (Chief Executive Officer)


Hanson Westhouse Limited                                           0113 246 2610
Tim Feather / Matthew Johnson




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