LONDON (Alliance News) - GoldStone Resources Ltd Friday said its pretax loss narrowed in its last financial year, as exploration costs fell because it didn't have the funds needed to conduct a big programmme for much of the year, and it said it was considering joint ventures for some of its projects to help fund them.
Like peers, the gold explorer has been hit hard by the sharp fall in the gold price. The knock-on effect has been that explorers and junior miners have struggled to raise new funding. GoldStone responded by focusing on cash conversion, keeping its licenses in good standing, and avoiding selling any projects.
Its pretax loss narrowed to USD1.7 million in the year to February 28, from the USD6.5 million loss it reported a year earlier, as exploration expenses fell to USD709,620, from USD5.2 million. It didn't earn any revenue.
Last month, the company said it planned to raise gross proceeds of GBP1.25 million through a share subscription by Stratex International PLC. That will follow a proposed 1 for 10 share consolidation. Stratex will end up owning roughly a third of GoldStone if the deal is completed.
"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," the company said in Friday's statement.
It said it is also considering joint ventures for some of its projects, including Sangola, where it now has extensive data from Randgold's exploration activities, as well as its 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," the company added.
The company's projects include majority stakes in the Homase and Akrokerri project in Ghana, a joint venture with a Ghanaian company to develop the Manso Amenfi project in the country, full ownership of the Ngoutou and Oyem permits in Gabon, and the Sangola licence in Senegal, which was a joint venture with Randgold Resources PLC until Randgold pulled out earlier in the year.
GoldStone did manage to drill the Oyem and Ngoutou licences during its last financial year. The Ngoutou project's best results included 16 metres at 1.3 grams per tonne of gold, including 2 metres at 5.6 grams per tonne, 33.5 metres at 0.4 grams per tonne and 32 metres at 0.4 grams per tonne.
The Oyem project's best results included 2 metres at 5.3 grams per tonne, including 1 metre at 9.5 grams per tonne and 2.2 metres at 4.5 grams per tonne, including 1 metre at 9.1 grams per tonne. Under the terms of a co-existence agreement, GoldStone will receive a 1% royalty on any iron ore produced by partner Ferrex at Oyem.
GoldStone shares were down 4.4% at 0.43 pence Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Goldstone Resources (GRL)