Goldstone Resources Regulatory News (GRL)

18 Aug 2006 15:24

Goldstone Resources Ltd18 August 2006 GOLDSTONE RESOURCES LTD("GoldStone" or the "Company") ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006 Chief Executive's Report I am setting out below a review of GoldStone's activities during the year ended28 February 2006, which incorporates an update on the current status of theCompany's projects. GOLD PROGRAMME IN GUYANA The gold reconnaissance drilling programme was completed in June 2005. A totalof 12,285 metres of core was recovered from 56 drill sites. Assay resultsindicated that 54 gold-bearing palaeoplacer layers were intersected. The six most prospective palaeoplacer layers intersected were evaluated by meansof three-dimensional stratigraphic analysis, projected to surface andsubsequently investigated late in 2005 by means of surface mapping and soilgeochemistry of the overburden. The leached and heavily vegetated nature of the mountainous terrain in LeaseArea 'A' did not respond to this approach and therefore the only recourse wouldbe to drill numerous shallow boreholes along the periphery of these subcrops.However, in view of the low tenor of gold intersections made during the overalldrilling programme in Lease Area 'A', the Board has concluded that thelikelihood of finding economical grades is poor and consequently has decided toterminate any further exploration in that area. The soil geochemistry procedure in the pediment surrounding the Roraima plateauin Lease Area 'B' was more successful, indicating a 2km-wide anomalous zonesouthwest of a gold-bearing palaeoplacer previously intersected by a drill hole.Twelve shallow drill holes subsequently drilled during the 2nd quarter of 2006across and down this interpreted trend did not intersect any gold, demonstratingthe sporadic nature of the mineralization encountered in this distal Roraimalocation. In view of these results, the Company has withdrawn its prospecting licenceapplications and has therefore ceased the gold exploration programme in Guyana. BAUXITE In September 2005, GoldStone entered into an option agreement with BHP Billitonover the Company's bauxite interests in Guyana. An initial programme waslaunched to explore the bauxite potential in the lease areas. This programmehas confirmed the deposits previously identified by GoldStone and further, moredetailed, sampling is planned. FINANCING The Company carried out a placing in October 2005 which raised £2,042,500. Cashresources are currently approximately US$2.9 million. BOARD We are saddened by the recent death of Mike Christie, a non-executive directorof the Company. He played an important role in the development of GoldStone andwill be greatly missed. APPROVAL Dr Lawrie Minter, who holds a PhD in Palaeoplacer Sedimentology, has reviewedand approved the content of this announcement. SUMMARY The results from the gold exploration programme have clearly been disappointingand the Board is convinced that it is in shareholders' best interests not toundertake any further exploration. The bauxite exploration continues under the terms of the agreement with BHPBilliton, which is funding the programme. The Company has significant cash resources and the Board is currently reviewingthe potential acquisition of an alluvial diamond project. Further informationwill be announced as appropriate. Nico van der HovenChief Executive18 August 2006 PROFIT AND LOSS ACCOUNT Note Year ended 28 Year ended 28 February February 2006 2005 $ $ Turnover - -Exploration expenses (2,498,919) (4,336,090) Gross loss (2,498,919) (4,336,090) Management fee income 55,556 -Other operating expenses (1,361,673) (2,158,287)Interest receivable 87,161 166,912 OPERATING LOSS FOR THE FINANCIAL YEAR (3,717,875) (6,327,465) Balance brought forward - (deficit) (9,259,562) (2,932,097) Balance carried forward - (deficit) (12,977,437) (9,259,562) Loss per ordinary shareBasic (cents per share) 1 (3.8) (8.8) BALANCE SHEETS 28 February 28 February 2006 2005 $ $ FIXED ASSETSTangible assets 135,826 461,468 CURRENT ASSETSDebtors and prepayments 394,563 2,529Cash at bank 3,321,151 3,866,591 3,715,714 3,869,120CREDITORS: amounts falling due within one year Amounts due to group companies - (40,499)Creditors and accruals (69,831) (485,005) (69,831) (525,504) Net current assets 3,645,883 3,343,616 TOTAL ASSETS LESS CURRENT LIABILITIES 3,781,709 3,805,084 CAPITAL AND RESERVESShare capital 2,354,482 1,122,982Share premium 13,849,554 11,386,554Capital contribution reserve 555,110 555,110Profit and loss account - (deficit) (12,977,437) (9,259,562) EQUITY SHAREHOLDERS' FUNDS 3,781,709 3,805,084 CASH FLOW STATEMENT Year ended 28 Year ended 28 February February 2006 2005 $ $ Net cash outflow from operating activities (4,460,469) (4,863,028) Returns on investment and servicing of financeInterest received 87,154 166,912Capital expenditure and financial investmentsPurchase of fixed assets (5,362) (690,656)Sale of fixed assets 250,000 - (4,128,677) (5,386,772)FinancingIssue of shares net of expenses and capital contribution 3,583,237 9,252,180 (Decrease)/increase in cash (545,440) 3,865,408 Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the period (545,440) 3,866,591Net funds brought forward 3,866,591 1,183 Net funds carried forward 3,321,151 3,866,591 Reconciliation of operating loss to net cash outflow fromoperating activitiesOperating loss (3,717,875) (6,327,465) Adjusted for: Depreciation & impairment loss 81,004 237,614Finance raising costs 111,263 827,820Interest received (87,155) (166,912)(Increase)/decrease in debtors (392,034) 316,409(Decrease)/increase in creditors (455,672) 249,506 Net cash outflow from operating activities (4,460,469) (4,863,028) NOTES 1. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the losses attributable toordinary shareholders by the weighted average number of ordinary shares in issueafter the placing on the AIM. Diluted earnings per share is calculated usingthe weighted average number of ordinary shares in issue as adjusted to assumeconversion of all dilutive potential ordinary shares. FRS 14: Earnings Per Share ('EPS'), requires presentation of diluted EPS when acompany could be called upon to issue shares that would decrease net profit orincrease net loss per share. For a loss making company with outstandingwarrants, net loss per share would only be increased by the exercise of out-ofthe-money warrants. Since it seems inappropriate to assume that option holderswould act irrationally, no adjustments has been made to diluted EPS forout-of-the-money warrants. 2006 2005 $ $ Earnings per share Loss attributable to share holders (3,717,875) (6,327,465) No. Weighted average number of ordinary shares 96,608,315 62,400,000 Basic loss per share (cents) (3.8) (8.8) 2. The financial statements incorporated in the annual report and accounts for the year ended 28 February 2006, from which the information in this announcement has been extracted, have been prepared in United States Dollars under the historical cost convention and in accordance with accounting standards applicable in the United Kingdom. 3. The annual report and accounts are expected to be posted to shareholders during week commencing 21 August 2006. Copies of the annual report and accounts will be available for a period of one month from the offices of Hanson Westhouse LLP, 12th Floor, One Angel Court, London EC2R 7HJ. 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