Goldstone Resources Regulatory News (GRL)

30 December 2022

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Operational Update

GoldStone Resources Limited (AIM: GRL) is pleased to provide an operational update in relation to mining and production activities at the Homase Mine and exploration activities at the former Akrokeri Underground Mine.

Overview

· 5,153 troy ounces of gold produced and sold to date from the Homase Mine, realising an average price of US$1,794 per oz for revenues of US$9.3m.

· Gold loan repayments from gold via the delivery of 675 troy ounces to Asia Investments Management Services Limited ("AIMS"), have been delivered.

· 2022 production target of 7,000 ounces of gold (RNS: 30 September 2022) not yet achieved, but the shortfall ounces remain within the heap at various stages of recovery.

· Further improvements being made to the dry plant to improve gold recovery from the current recovery rate of approximately 65%.

· Pit 1 and Pit 2 increase in available mineable resource demonstrated from geotechnical drilling which would strongly improve economic performance.

· Further drill results from Q4 diamond drill programme at the former high grade Akrokeri Mine expected in early Q1 2023.

Emma Priestley, Chief Executive Officer of Goldstone, commented:

"GoldStone continues to make progress with mining and production activities at Homase as it lays the foundations for an expanded mining operation through the development of proximal priority targets, which are being reviewed and include the high-grade Akrokeri Underground Mine.

"We continue to move in the right direction in terms of our production, however, notwithstanding this, there remains room for improvement in recovery rates and we have seen significant volatility in the supply and pricing of consumables, reagents, structural steel, heavy equipment, and fuel, all of which are required for constructing and maintaining a modern mining operation. This creates challenges in estimating capital and operating costs, particularly when estimating future costs. We think it is well understood that the current unreliable situation has arisen largely from a combination of Covid-19, the war in Ukraine, and global inflation. While we are all growing increasingly frustrated by citing these as factors which prompt manufacturing and delivery delays, it appears to be a reality that we must accept in the short term at least.

"Whilst the Company expects these challenging factors to continue into Q1 2023, we also fully expect to continue to overcome them as well as improving our processing and extraction to improve recovery rates. Our outlook for the Company remains positive and we are striving to accelerate development in 2023."

Further Information

The Company announces that the Homase Mine has produced and sold 5,153 troy ounces of gold to date, realising an average price of US$1,794 per oz for revenues of US$9.3m. From this, gold loan repayments from gold via the delivery of 675 troy ounces to Asia Investments Management Services Limited ("AIMS"), were delivered.

The 5,153 ounces of gold produced does not include the estimated 192 ounces of gold, amounting to some USD350,000, that were stolen in the robbery, announced 29 June 2022, in relation to which investigations are on-going with the target of pursuing charges on those responsible.

The 2022 production target of 7,000 troy ounces of gold, as announced 30 September 2022, has not yet been achieved, but the shortfall ounces remain within the heap at various stages of recovery. The Company has had some persistent agglomeration delays, further to the 24 March 2022 announcement, which continue to be causing some shortfall in recovery, this together with inclement weather which has affected the stacking of the material and the overall recovery of gold. The recovery rate to date has remained at approximately 65%. The Company continues to test and assess agglomeration methods to resolve and improve recovery factor. Testwork is showing very high recovery potential (in excess of 80%) and the Company is currently making further improvements to the dry plant, particularly the screening and application of cement into the agglomeration plant, to improve recovery rates.

Notwithstanding the processing challenges, experienced during 2022, external factors have materially disrupted development and production, with supply shortages and volatile markets for currency and consumables being affected by inflation in Ghana which was reported to be running at 50.3% in November 2022 (Source: 2022; tradingeconomics.com/ghana/inflation-cpi). Staff recruitment, due to skill shortages, has also presented difficulties, as we migrate from being a development company into managing steady production and building on it. These issues are being shared by the industry as a whole and are likely to continue in the short term.

The mine has not yet achieved consistent positive site-level cash flow, with an average All-in Cost ("AIC") of US$1,369 per ounce average for 2022, which is primarily due to a lower-than-expected production rate and ongoing inflationary pressures mentioned above, in particular in relation to fuel, spares, consumables and reagents. The Company is currently reviewing the operating costs for possible cuts and increased efficiency.

The Company is taking proportionate and appropriate steps to improve 2023 production at Homase Mine, by increasing production and expanding the mineable resource. This is combined with extensive training and recruitment to establish an in-country team of seasoned committed local professionals who will be capable of taking the mine through and beyond the development phase by expanding and improving all areas of production.

The additional agglomeration and stacking circuit is being built to improve productivity and heap stacking, using existing cash resources. To date, the Company has had an average stacking rate of some 15,000 tonnes pcm onto the heap leach pads. The Company is aiming to have doubled the rate of production level by June 2023. 

To date, some 202,000 tonnes @ 1.5g/t of oxide ore has been mined and stacked on the heap leach pads. This equates to approximately 9,742 ounces of contained gold, on the life of mine recovery of 82% this should yield 7,988 ounces of gold. The Company is currently reviewing the material on the heap leach pads with testwork, in order to re-assess the economics of re-handling it. This is in conjunction with mining the remaining oxide ores from the first pit of the Homase Mine, some 120,000 tonnes at an average grade of 1.6 g/t, which will require a further push-back of the pit walls to access the ore in the hanging wall and pit bottom.

At all stages of the development of the Homase mine, ESG & Sustainability considerations were given high priority. The Company has provided significant employment opportunities and is generating business for local suppliers and entrepreneurs. The Board remains mindful GoldStone is operating in a rural area with villages surrounding the mine and is determined to make every effort to ensure that the Company is a good neighbours and a good long-term stewards of the local environment.

Mineable Resource

From the geotechnical drilling undertaken earlier in 2022 within the first two pits, taking the pits 1 and 2 down to approximately of 120 metres and 80 metres respectively, initial assessment has shown that a tightening of the slope angles is possible, allowing a reduction of the stripping ratio from 10:1 (12 November 2020) to 7.4:1 in pit 1 and around 6:1 in pit 2. This strongly improves economic viability, and the Company can report that there is an increase in the available mineable resource, as estimated by the Company, is set out in Table 1.

Table 1 - Management Estimates for the Mineable Resource within Pits 1 and 2

From the grade control drilling, carried out to 40 metres for the pits north of the original open pit mined by AngloGold Ashanti in 2002/03, the mineable resource has been assessed, by the Company in Pit 4 and Pit 3, which is an extension of Pit 4, , and the Company's estimates for these northern Pits along the Homase Trend and are set out in Table 2 below.

Table 2 - Management Estimates for the Mineable Resource within Pits 3 to 6

The above tables set out the latest management estimates for the mineable resource, which has increased from those announced at 24 March 2022 and 12 November 2020. The mineable resource is within the confines of the 602,000oz JORC (2012) resource previously announced.

The locations of the Pits are set out at Figure 1 below:

Figure 1: Homase Mine - Pit Locations

Wardell Armstrong International Ltd. have been appointed to undertake an independent review of the mineable resource and mine planning of the Homase Mine, which includes an independent review of the Grade Control drilling at the third pit along the Homase Trend which was completed earlier this year, which is expected to be completed in Q1 2023. 

Exploration

Diamond drilling commenced at Akrokeri Underground Mine with the initial drilling results, announced 27 September 2022, confirming the continuity of the mineralised zone at vertical depths of between 36 metres and 65 metres and extending a minimum of 180m beyond the known southern limit of the mine. The results from the remainder of the drill programme are currently being reviewed, the Company expects this review to be competed within the first few weeks of 2023.

The Company has undertaken further geochemical soil sampling programmes within the Homase and Akrokeri Licence areas, as infill and to seek parallel zones of mineralisation, following the programme carried out in 2018. The anomalies that were identified and announced in the 24 March 2022 are being explored with further soil sampling and augering. 

Competent Person's Review

The technical information within this announcement has been reviewed and approved by Klaus Kappenschneider, an independent geologist with 30 years' experience in gold mining, exploration and resource estimation. Klaus is a member of the Association of Professional Geoscientist of Ontario (APGO), is a Competent Person (JORC, SAMREC, PEMREC) and a Qualified Person (NI 43- 101) and accordingly, is a qualified person as required under the AIM Rules.

**ENDS**

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About GoldStone Resources Limited

GoldStone Resources Limited (AIM: GRL) is an AIM quoted mining and development company with projects in Ghana that range from grassroots exploration to production.

The Company is focused on developing the Akrokeri-Homase project in south-western Ghana, which hosts a JORC Code compliant 602,000oz gold resource at an average grade of 1.77 g/t. The existing resource is confined to a 4km zone of the Homase Trend, including Homase North, Homase Pit and Homase South.

The project hosts two former mines, the Akrokerri Ashanti Mine Ltd, which produced 75,000 oz gold at 24 g/t recovered grade in the early 1900s, and the Homase Pit which AngloGold Ashanti developed in 2002/03 producing 52,000 oz gold at 2.5 g/t recovered. Production is currently focussed on the Homase Mine however it is the Company's intention to build a portfolio of high-quality gold projects in Ghana, with a particular focus on the highly prospective Ashanti Gold Belt.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).