Strategic Alliance and Placin

RNS Number : 5158L

Goldstone Resources Ltd

07 May 2010

 



GOLDSTONE RESOURCES LIMITED

("GoldStone" or "the Company")

Strategic Alliance and Placing

GoldStone, the AIM quoted exploration company focused on gold in Ghana, Senegal and Gabon, is pleased to announce that it has entered into a strategic alliance with Bendigo Mining Limited (ASX: BDG) ("Bendigo"), a mid-tier Australian gold producer who has also subscribed for 32,704,166 ordinary shares (the "Placing Shares") in the Company at a premium of 45% to the closing price of GoldStone on 6 May 2010 (the "Placing"). 

STRATEGIC ALLIANCE AND PLACING

Under the terms of the strategic alliance, the parties have agreed that:

-       Bendigo will subscribe for 32,704,166 ordinary shares in GoldStone at a price of 6.5p per share which will raise £2,125,771.  The Placing price per share represents a 45% premium to the closing price of GoldStone on 6 May 2010.  The Placing price was agreed on the basis of a 7 day volume weighted average price prior to execution of the Alliance agreement.

-       Bendigo will not be entitled to dispose of any of their interest in the Placing Shares for a period of 12 months.

-       GoldStone will issue non tradable and non transferrable warrants to Bendigo in two tranches.  The first tranche of warrants will entitle Bendigo to subscribe for 10,901,389 shares in GoldStone at 8.5 pence per share between 18 and 30 months from the date of issue of the warrants and the second tranche will entitle Bendigo to subscribe for 10,901,389 shares at 11.5p per share between 24 and 36 months from the date of issue of the warrants.

Following the Placing, Bendigo will hold 20% of the issued share capital of GoldStone.  Also under the terms of the strategic alliance, GoldStone has agreed to offer Bendigo a seat on the board of the Company and has also entered into a technical services agreement with Bendigo.  The terms of the technical services agreement specify that Bendigo is to provide support to GoldStone in respect of any development and mining of GoldStone's exploration assets. 

Admission of the Placing Shares to trading on AIM is expected to occur at 8.00 a.m. on 13 May 2010.  Following the Placing, there will be 163,520,829 ordinary shares of 1p each in issue.

Jurie Wessels, Chief Executive of GoldStone, commented: "We are extremely pleased that through this transaction GoldStone has gained a mid-tier miner with a strong balance sheet as a long term investor who is prepared to make a significant investment in the Company at a material premium to the market price.  We believe that Bendigo shares the optimism we have for our West African assets and that the alliance will add considerable value as we endeavour to advance our exploration projects into open cast or underground mining operations."

Rod Hanson, Managing Director and Chief Executive of Bendigo commented: "We are very excited to enter into this alliance with GoldStone and believe it provides a low risk expansion into West Africa, which is one of the most attractive locations for new gold discoveries globally.  We believe that GoldStone has the right people in the right place and has done an excellent job in assembling a strong portfolio of exploration assets in Ghana and Senegal.  Our plan is for a long term relationship in which GoldStone and Bendigo will grow and prosper together in West Africa."

BACKGROUND TO BENDIGO

Bendigo is an Australian gold producer which produced 36,927 oz of gold during the financial year ending 30 June 2009.  It will fund the Placing from existing cash reserves, which totalled A$57.4 million as at 31 March 2010.  Bendigo is planning to produce 80,000 to 90,000 oz of gold in the financial year ending 30 June 2010 from its two underground gold mines, the Henty Gold Mine on the West Coast of Tasmania and the Kangaroo Flat Mine in Bendigo, Victoria.  The Henty Gold Mine has produced in excess of one million ounces of gold at an average grade of over 11 g/t gold.  Bendigo acquired the mine in July 2009 and plans to produce 40,000 to 50,000 oz of gold during FY10.  A significant exploration programme has commenced with the aim of increasing the mine's life.  The Kangaroo Flat Mine is located in the Bendigo Goldfield, Australia's second largest goldfield having produced some 22 million ounces of gold, to an average depth of 750 metres.  Production of around 30,000 to 40,000 oz gold is planned for FY10.  Exploration is continuing beneath and along from historic mines on the richest lines of mineralisation within the goldfield.  Bendigo's aim is to grow rapidly over the next five years.  Bendigo regards West Africa as a key area for gold exploration and mining and believes it to be strategically important to have a meaningful position in this attractive region.

For more information please visit www.goldstoneresources.com

Enquiries:

GoldStone Resources Ltd	[phone]
Jurie Wessels (Chief Executive Officer)
Westhouse Securities Limited	[phone]
Tim Feather / Matthew Johnson
Walbrook PR	[phone]
Ben Knowles / Leah Kramer

 

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