Goldstone Resources Regulatory News (GRL)

29 June 2018

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Final Results for the year ended 31 December 2017

and Notice of Annual General Meeting

GoldStone Resources Limited (AIM: GRL), the AIM quoted company is pleased to announce its final results for the year ended 31 December 2017.

The statements and results below have been extracted from the Company's audited financial statements which will shortly be available to view and download in full at the Company's web site www.goldstoneresources.com. Copies of the Annual Report, together with the notice of the Company's annual general meeting, will be posted to shareholders today.

The Company's annual general meeting will be held at the offices of Faegre Baker Daniels LLP, 7 Pilgrim Street, London EC4V 6LB at 11:30 a.m. on 17 July 2018.

Overview

· Implementation of updated company strategy with the intention of delivery first gold production within two years from the Company's Akrokeri-Homase Gold Project in the Ashanti Region of Ghana

· Introduction of two strategic investors, Paracale Gold Limited and BCM Investments Limited

· Significant strengthening of both the Board and senior management team to reflect focus on accelerating development and achieving first production

· Highly encouraging results from exploration work at Homase - which previously produced 52,000 ounces of gold at an at a final recovered average grade of 2.5g/t:

o Work focussed on expanding the current JORC resource of 602,000oz Au and identifying the optimum route to production

o Extensive field work carried out to extend the 4km strike at and identify additional high-grade area of mineralisation

o Historic trenching indicates high grade gold mineralisation, including 15.0 metres @ 6.31 g/t Au which includes 4.5 metres @ 18.23 g/t Au from a trench in the Homase North Resource Zone

· Reassessment and prioritisation of Akrokeri Mine - which produced ~75,000 oz Au underground at a final recovered average grade of 0.73 ozs/t, equivalent to approximately 24 g/t

o Current work focussed on accessing the mine

GoldStone's Chief Executive Officer, Emma Priestley, commented:

"The work undertaken in 2017 - both on an operational and corporate front - has laid the foundations for gold production at Akrokeri-Homase in the near term. Our strengthened management team have significant expertise, having planned, built and commissioned multiple gold mines, and with the full support of our new major shareholders, GoldStone has accelerated development of our flagship project towards first gold within two years."

Full financial results will be published on Goldstone Resources Limited's website.

For further information, please contact:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

CHAIRMAN'S REPORT

It gives me great pleasure to present my first statement since my appointment as Chairman in October 2017, providing me with the opportunity to share my vision for GoldStone Resources Limited ("GoldStone" or the "Company") in the coming year and longer term.

My background, spanning 38 years in the gold mining and engineering industry worldwide, including being closely involved in the design and construction of 23 gold processing plants as Design Engineer and Project Manager and also as a plant owner, has provided me with significant experience and knowledge and I look forward to using this as we seek to move GoldStone towards production. I believe strongly that GoldStone's Akrokeri-Homase Project ("AKHM") is a very exciting project - a project that will form the foundation of our strategy to build a highly profitable gold mining company.

Along strike from one of West Africa's largest gold mines, AngloGold Ashanti's Obuasi Gold Mine which has total historical and current resource in excess of 70 million ounces of gold, AKHM covers an area of known mineralisation, two historically producing mines, Akrokeri and Homase, and has a current JORC Code compliant resource of 602,000 ounces at an average grade of 1.77g/t of gold. I have spent these initial months working with the team to identify the route to production and I believe significant progress has been made in this regard, as we aim to target production within two years. In addition the results of recent field work, together with the review of historic data, has provided us with a much greater understanding of the potential for AKHM and I believe there is significant potential for resource expansion around both historic mines.

2017 saw GoldStone undergo significant corporate change, most notably through the addition of two major shareholders and various changes to the Board. The addition of two strategic investors, BCM Investment Limited ("BCM"), one of Africa's largest private contract mining groups, and Paracale Gold Limited ("Paracale"), a mining investment company focused on mineral exploration and mine development opportunities, have provided significant impetus to GoldStone and reflects its evolution as it seeks to move from exploration into being a development and production company. Following Paracale's investment, I was pleased to join the Board as Non-executive Chairman in October 2017 and I was pleased to subsequently welcome both Angela List, following BCM's investment, and Richard Wilkins as Non-executive Directors, providing additional strength and depth to the Board's experience.

Similarly, our operational management team was significantly strengthened by the appointment of Darryl Norton as Chief Operating Officer in August 2017. Darryl is now based in Ghana full-time, has been the Technical Director for MAED Ltd for over 30 years and has personally overseen the development of a number of highly successful gold plants in West Africa and Asia. Darryl has a specific mandate to accelerate development activities on the ground and I am confident that he will advance AKHM and achieve production within two years.

Outlook

Our significantly strengthened management team, led by CEO Emma Priestley, has continued to unlock value through its development activities on the ground at AKHM during 2017, and in the year to date, and it is the Board's intention, subject to funding, to continue to accelerate this work during the remainder of 2018.

We look forward to delivering further news in the coming months as we work to achieve our target of realising production within the Company, whilst simultaneously proving-up the wider resource potential of the entire AKHM project in order to establish a long-term, sustainable gold production project.

W Trew

Chairman

28 June 2018

CHIEF EXECUTIVE OFFICER'S REPORT

2017 saw GoldStone achieve several operational objectives, which advanced the Company's strategy to commence production at our flagship Akrokeri-Homase Project in the near term.

Building on the encouraging drilling results announced in 2016, the Company undertook a review of all of the available historic data on the existing JORC Code compliant resource for AKHM. This review has significantly increased confidence of a mineable resource within the oxide zone of the Homase trend, which runs for over 8 km (the "Homase Trend") from the historic Akrokeri underground mine (the "Akrokeri Mine") to the north of the Homase open pit (the "Homase Pit").

As previously announced, the Company has completed a deep trenching programme in conjunction with a reverse circulation ("RC") infill drill programme on the known oxide zone of the JORC Resource to progress the pit definition programme for the proposed pit, initially identified as AK01 North and South. It consisted of 26 holes for a total of 1,470 metres, to progress to pit modelling. The assay results from the RC programme, announced on 9 November 2017, exceeded expectations, with the arithmetic average of the grades being 1.8g/t over a 10.5 metre drilling width (approximately 7 metres true width) within the mineralised zone of the proposed pit (sample cut-off 0.5g/t) within the Akrokeri licence, south of the Homase Pit, along strike in the Homase Trend. The continuous strike length over the proposed pit is approximately 1,500 metres, compared to the approximately 700 metres strike length of the Homase Pit which was mined by Ashanti Goldfields Limited ("AGF") between 2002 and 2003 and produced 52,452oz gold at an average recovered grade of 2.85g/t.

Preliminary metallurgical testwork was carried out upon the trenching samples for the proposed pit by The University of Mines and Technology (UMaT) in Tarkwa, Ghana to assess the amenability of the oxide mineralisation to processing. The results, announced on 11 December 2017, verified that the oxide zone is extremely amenable to both the heap leach and to CIL gold recovery processes. This preliminary test work, also demonstrated that almost 90% of the recoverable gold via the heap leach method is achieved within the first 15 days of leaching. Thus indicating that a scale up to mine operation would be very successful.

These preliminary steps provided the data to initiate the pit design for the proposed pit and the platform for the scoping study to proceed towards with an application for a mining permit.

This programme was undertaken in conjunction with the continued review by the Company of the historical database for the Akrokeri and Homase licences. It is an extensive database which is growing as the Company continues to identify and collate historic data from previous holders of the licences. The additional information, including from AngloGold Ashanti Limited's archive, provided GoldStone with the historical production and processing data for the Homase Pit when they operated it between 2001 to 2003. The Company also acquired historical data from the Ghanaian Minerals Commission and British Archives, pertaining to the former Akrokeri Mine, owned by Akrokeri (Ashanti) Mines Limited, which operated in the early 1900s.

The review of historical data showed that the Homase Pit, produced 52,452oz gold, which was significantly in excess of AGF's original estimate of 35,799oz gold, reported in AGF's Homase Pit Mining Reconciliation June 2002-03. According to AGF's mining reconciliation figures, there was a significant increase in tonnage and minor increases in grade and density compared to the original estimates. The differences are between the ore reserve model (based on pre-production drilling) and the grade control model (based on more closely spaced drilling during production).

One of the features that resulted in the higher recovery of gold from the Homase Pit was the higher than anticipated widths in the upper zones of the mineralisation, which caused a mushroom effect, i.e. near-surface gold mobilisation and re-deposition.

AGF also reported pinching and swelling within the mineralised structure. This is a consistent feature throughout the Homase/Obuasi shear system. Ore shoots at the nearby Obuasi mine are characterised by tight echelon lenses. If these are repeated within the proposed pit on the Akrokeri licence, there is potential for increased gold content to continue at depth.

The review of the historic Akrokeri data, indicates that exploration activity started in the 1890s when two shafts were sunk at the Akrokeri Mine site. Production started in 1904, and the underground mine produced some 75,000 ounces of gold from about 104,000 tons of ore, with a recovered grade of about 0.73oz/tonne, equivalent to 24g/t. However, due to a high inflow of water, the mine was closed in 1909.

Drilling around the old Akrokeri Mine was undertaken in 1996 by Birim Goldfields Ltd ("Birim"), comprising nine Diamond Drill ("DD") holes totalling 2,000 metres and subsequently in 2008, Pan African Resources Plc ("PAR") drilled 10 DD holes totalling some 3,200 metres, these holes have accurate spatial data. These holes were located north and south of Akrokeri town along the known quartz vein. Analysis presented that the core from four of the DD holes drilled by PAR were not assayed and that the logging from both the Birim and the PAR programmes was incomplete. The Company has now completed the re-logging and is proceeding to assay these PAR cores.

Senegal

We are encouraged by the recent acquisition of the raw drill data from the programme undertaken by Randgold Plc in 2012, on the Sangola project in Senegal and these results are currently being reviewed. The title to the licences are maintained and upon a satisfactory review of data, the Company will apply for the extension of the exploration licence.

Gabon

Whilst GoldStone maintains the title to the two licences in Gabon, Oyem and Ngoutou, the Board has agreed, after careful consideration, due to the expected mandatory expenditure as defined in the former exploration licence agreement, to rescind these licences. This takes into account that the licences are at an early stage with limited value and accordingly, do not fit in with our focus of seeking to prioritise assets that can be advanced towards production.

Ghana

Whilst GoldStone has maintained a joint venture agreement with Asasemu Mining, a Ghanaian company (15% GoldStone: 85% Asasemu Mining), to develop the Manso Amenfi Prospecting Licence, the Board has agreed, after careful consideration, due to the expected mandatory expenditure as defined in the former joint venture agreement, to rescind the agreement with the licence holder. This takes into account that the licence is at an early stage with limited value and accordingly, does not fit in with our focus of seeking to prioritise assets that can be advanced towards production.

Former Director Claim

As announced on 13 October 2016, there is an outstanding claim by a former director of the Company. Legal advice has been sought and at the current time no estimate is available as to the likelihood or potential value of damages to the Company in respect of this claim. The Board believes there is no merit in the claim and the amount due is not considered to be of significance. The case will be heard in the South African Labour Court.  This has been disclosed as a contingent liability in the financial statements.

Working capital management and Funding

During 2017, the Company secured a £0.4 million convertible loan (the "Loan") with Paracale Gold Limited ("Paracale"), on 3 April 2017, of which £0.2million was drawn down immediately and with the approval of the resolutions at the Annual General Meeting ("AGM") held on 2 June 2017, the second tranche of £0.2 million was drawn down in full. Subsequently the Loan plus accrued interest was converted into 40,352,377 new ordinary shares of 1p each in the capital of the Company ("Ordinary Shares").

Pursuant to the Loan, the Company issued Paracale warrants to subscribe for up to 40,352,377 of new Ordinary Shares, exercisable at a price of 2 pence per share before 10 August 2019.

In September 2017, the Board announced that GoldStone had raised £1.5 million gross by way of a subscription for 100,000,000 new Ordinary Shares at 1.5 pence per share with new and existing shareholders. The fundraising welcomed BCM Investment Limited ("BCM") to our shareholder register, with Paracale also participating and thereby increasing its interest in the Company. The Board values the support and credentials of both Paracale and BCM, and remains confident that both will be long-term strategic investors and stakeholders in the Company, as it moves towards its goal of achieving production from AKHM within two years.

Risk management

The Board has identified the following as being principal strategic and operational risks (in no particular order):

Going concern

As at 27 June 2018, the Company had cash of US$730,490. The directors consider the Company has sufficient funds to meet its corporate overheads for the next 12 months, but will seek funding to meet its development aims.

The Board has, therefore, adopted the going concern basis, and remains confident that it will raise the funding as and when required. Further details on their assumptions and their conclusion thereon are included in the statement of going concern included in note 1b to the financial statements.

Exploration and Development

Exploration and development for natural resources is speculative and involves significant risk. Drilling and operating risks include geological, geotechnical, seismic factors, industrial and mechanical incident, technical failures, labour disputes and environmental hazards.

The directors are evaluating each stage of the development of its projects site by site in order to mitigate as far as possible these risks inherent in exploration. Use of modern technology and electronic tools assist in reducing risk in this area. Good employee relations is also key in reducing the exposure to labour disputes. The Company is committed to following sound environmental guidelines and practice and is keenly aware of the issues surrounding each individual project.

Country and political

GoldStone's projects are in Ghana and Senegal. Emerging market economies could be subject to greater risks including legal, regulatory, economic and political risks and are potentially subject to rapid change.

The Board routinely monitors political and regulatory developments in its countries of interest. Since the elections in Ghana, in December 2016, the Government have shown positive steps towards the mining sector, the improved policing of illegal small-scale mining operations, and improvement of the licence approval system. The Government are currently reviewing the tax and royalty rates towards precious metals. In addition, the Company actively engages in dialogue with relevant Government representatives in order to keep abreast of all key legal and regulatory developments applicable to its areas of interest. GoldStone maintains the internal processes in place to ensure that it is wholly compliant with all relevant regulations in order to maintain its licences within each country. These country risks are further addressed in notes 2(d)(ii) and 3(j) to the financial statements.

Social, Safety and Environmental

GoldStone's success may depend upon its social, safety and environmental performance as failures can lead to delays or suspensions of its activities.

GoldStone takes its responsibilities in these areas seriously and monitors its performance across these areas on a regular basis. As AKHM develops through drilling, metallurgical and engineering studies, we are strengthening our relationships with the communities living within the concession areas and close to the projects. The immediate focus has been sanitation and drinking water for each of the schools within our concession areas and the Company continues to build on the community relationships in order to build a co-operative with the smallholder farmers and out-grower schemes with the communities. These schemes benefit both the communities in which we will be operating and our investors into the agricultural programmes.

Well-Positioned to advance AKHM towards production

Following the work undertaken in 2017 and the strengthened Management and Board appointments, GoldStone is now strongly positioned to accelerate development at AKHM as we target initial production from AKHM within two years. We will continue to update the market throughout the remainder of 2018, detailing our strategy to achieve near term production, and also report on our operational successes as we move closer to this goal.

I would like to thank Neil Gardyne who stepped down as Non-executive Chairman in October 2017. Neil guided the Company through a period of transition and I wish him well with his endeavours going forward. I would also like to thank shareholders for their ongoing support as we move GoldStone towards production and I look forward to developing the Company with my fellow Board members, management team and the Company's advisers over the course of 2018 and into 2019.

Emma Priestley

Chief Executive Officer

28 June 2018

Consolidated statement of financial position

As at 31 December 2017

Consolidated statement of comprehensive income

For the year ended 31 December 2017

Consolidated statement of changes in equity

For the year ended 31 December 2017

Consolidated statement of cash flows

For the year ended 31 December 2017

Notes to the consolidated financial statements

1. Basis of preparation

(a) statement of compliance and basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations (IFRS IC) as adopted by the European Union applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified for financial assets carried at fair value.

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts in the financial statements. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements, are disclosed in Note 2(d) and Note 3.

(b) going concern

The financial statements have been prepared assuming the Group and Company will continue as a going concern. In assessing whether the going concern assumption is appropriate, the directors have taken into account all available information for the foreseeable future; in particular for the 12 months from the date of approval of these financial statements. This assessment included consideration of future plans, expenditure commitments in place, cost reduction measures that can be implemented, licence requirements and the ability of the directors to raise further funds going forward.

As at 27 June 2018, the Company had cash of US$730,490. The directors consider the Company has sufficient funds to meet its corporate overheads for the next 12 months, but will seek funding to meet its development aims. The Board has, therefore, adopted the going concern basis, and remains confident that it will raise the funding as and when required.

Should the Group be unable to continue trading, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities which might arise and to classify fixed assets as current.

2. Operating segments

The Group has two reportable segments, exploration and corporate, which are the Group's strategic divisions. For each of the strategic divisions, the Group's CEO, deemed to be the Chief Operating Decision Maker ("CODM"), reviews internal management reports on at least a monthly basis. The Group's reportable segments are:

Exploration and Development: the exploration operating segment is presented as an aggregation of the Homase and Akrokeri licences (Ghana) and the Sangola licence (Senegal). Expenditure on exploration activities for each licence is used to measure agreed upon expenditure targets for each licence to ensure the licence clauses are met.

Corporate: the corporate segment includes the holding company costs in respect of managing the Group. There are varying levels of integration between the corporate segment and the combined exploration activities, which include resources spent and accounted for as corporate expenses that relate to furthering the exploration activities of individual licences.

information about reportable segments for the year ended 31 December 2017

information about reportable segments for the year ended 31 December 2016

reconciliation of reportable segment revenues, profit or loss, assets and liabilities, and other material items

reconciliation of reportable segment revenues, profit or loss, assets and liabilities, and other material items

3. Intangible assets - exploration

The Group's Intangible assets comprise wholly of exploration assets in respect of the Homase-Akrokeri project in Ghana.

Impairment of the above is considered in relation to the impairment indicators listed within IFRS 6. The key estimate in relation to the project is in respect of the mineral resources potential. Details of this potential can be found on www.goldstoneresources.com/exploration-main/homase-akrokerri-project-main.html.

4. Taxation

(a) current tax

(b) deferred tax

The Company is subject to Jersey income tax at the rate of 0%. The Group is also registered for income tax purposes with the South African Revenue Service. Due to the loss making position of the Group in all jurisdictions there is no tax charge and no deferred tax asset has been recognised in the current or prior periods due to uncertainty of future profits. As a result no reconciliation has been prepared.

5. Capital and reserves

(a) share capital

(a) share capital (continued)

During the year the Company issued the following ordinary 1 pence fully paid shares:

(b) ordinary shares

Each holder of ordinary shares is entitled to receive dividends as declared from time to time, and is entitled to one vote per share at meetings of the Company.

(c) deferred shares

Each holder of deferred shares shall not be entitled to receive notice of, attend or vote at any meeting of the Company (other than a meeting of the holder of the Deferred shares), shall not be entitled to any dividends or other distributions (whether on a winding up of the Company or otherwise). On a winding up of the Company, each deferred share shall confer upon its holder the right to receive an amount equal to the nominal amount paid up on such deferred share.

(d) issue and consolidation of ordinary shares

During the year, the Company issued a total of 147,421,628 (2016: 40,000,000) new ordinary shares, all of which rank pari passu with the existing ordinary shares. The shares (which had a par value of 1.0p each) were issued at a price from 1.44p to 2.08p per share. The value received for the share issuance was US$2,677,698 (2016: US$1,295,764).

The Company has not concluded any share repurchases since its incorporation.

(e) dividends

No dividends were proposed or declared during the period under review (2016: Nil).

(f) description and purpose of reserves

(i) share capital

Share capital consists of amounts subscribed for share capital at nominal value.

(ii) share premium

Share premium consists of amounts subscribed for share capital in excess of nominal value.

(iii) capital contribution reserve

Capital contribution reserve consists of deferred shares classified as equity.

(iv) share options reserve

Share options and warrants reserve consists of the fair value of options and warrants outstanding at the year end.

(v) accumulated deficit

Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

6. Earnings per share

The calculation of basic and diluted earnings per share at 31 December 2017 was based on the losses attributable to ordinary shareholders of US$805,444 (2016: US$834,874), and an average number of ordinary shares in issue of 154,385,042 (2016: 79,832,253).

The Group has the following instruments which could potentially dilute basic earnings per share in the future:

7. Subsequent events

GoldStone has continued with assessing the former Akrokeri Mine and accessing the old workings. This has included a review and re-logging of historic diamond core ("DD") holes drilled under or adjacent to the former mine. As announced on 7 June 2018, the review confirmed mineralised intercepts of up to 1.0 metre at 51.01 g/t Au. Two further DD holes identified from 2012 programme, indicated gold bearing quartz intersections in the footwall of the mine and the Company is currently assaying four historic DD holes drilled by Pan African Resources Plc which were not assayed at the time. These results that have not been previously disclosed to the market, have assured the Company that the Akrokeri Mine, together with the Homase Pit, provide two highly prospective targets within GoldStone's licences

The Company also undertook a soil geochemistry programme to identify the wider resource potential of AKHM. This was carried out in combination with a review of the historical geochem and trenching programmes and has highlighted the Homase Trend, an >8 km gold-in-soil anomaly which runs from the historic Akrokeri Mine to north of the Homase Pit. The Company has commenced a scoping study to better define the oxide resource potential of the Homase Trend to the north and south of the Homase Pit.

The 2018 soil programme also defined a gold in soil anomaly for 2.4 km south of the Akrokeri Mine and delineated parallel mineralised gold structures which may provide further mineral resource upside potential following evaluation work.

The Group's financial statements were approved by the directors on 28 June 2018.

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