Goldstone Resources Regulatory News (GRL)

12 November 2020

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Results of Recent Drilling and Metallurgical Test Work

Increase in Mineable Resources by 257%

Update on Permits for the Homase South Pit

GoldStone Resources Limited (AIM: GRL), the AIM quoted gold exploration and development company focused on bringing its Akrokeri-Homase Gold Project ("AKHM") into production, is pleased to announce the results of the recent infill RC drilling programme at the Homase South Pit announced on 17 July 2020, together with the results of the associated metallurgical work.

The objective of the drilling programme and metallurgical work was to seek to increase the quantum and confidence in the mineable resource at depth in the Homase South Pit. In addition, the Company completed further metallurgical test work on samples from the drilling in order to demonstrate the similarity between the minable resources in the Homase South Pit and those set out in the feasibility study completed by Ashanti Goldfields Corporation Ltd ("AGC") (AngloGold Ashanti Ltd) in 2001 in respect of the Homase Main Pit (the "AGC Feasibility Study"), which was subsequently mined by AGC in 2002 and 2003.

The GoldStone Board is therefore confident, based on its extensive experience and the substantial increase in the mineable resource determined by the programme, that the Homase South Pit can be significantly extended at depth and mined economically. Accordingly, the Company will seek to update the Definitive Economic Plan ("DEP"), announced 27 June 2019, to reflect the increased mineable resource.

The Company also provides an update in respect of progress regarding the permits required to commence production at the Homase South Pit.

Highlights

· Positive results from the drilling programme at the Homase South Pit

- increased the mineable resource by 86,900 ounces of gold at depth, representing a 257% increase on the previous estimate of 33,800 ounces of gold, within the existing JORC resource

- the AGC Feasibility Study, assessed both the oxide/weathered zone and underlying largely sulphidic mineral zone ("fresh ore") and concluded that both were predominantly non-refractory

- confirmed the potential to expand the Homase South Pit at depth, exploiting both the oxide ore and the underlying fresh ore

- further demonstrated geological and grade continuity within the Homase Trend, including parallel zones within the fresh ore

- as per the DEP, the open pit will be free dig, though below the 30 metre deep weathered zone, different mining methods may be required

· The metallurgical test work corroborates the test work completed by AGC in 2001 before developing the Homase Main Pit, in that the fresh ore is non refractory and is amenable to rapid leach recovery

· The Company plans to update the DEP, including upgrading its mine plan, to substantially increase the production output and processing rates for the Homase South Pit based on the 257% uplift in the mineable resource as a result of the drilling programme, as well as add to the wider previously estimated JORC resource

· Continued dialogue with Ghanaian Environmental Protection Agency ("EPA") regarding the issue of the Environmental Permit and with the Minerals Commission on the operational permits for the Homase South Pit, despite delays arising due to the COVID-19 pandemic

- the Company will, upon receipt of the permits, be able to immediately commence operations, with an estimated timeline for the first gold pour being within two months of such grant

· The Company has submitted an application for the expansion of the mining lease area within the existing exploration licence areas

· Community mining areas within the Akrokeri Exploration Licence have been inaugurated by The Honorable Kwaku Asomah-Cheremeh, Ghanaian Minister of Lands and Natural Resources

Drilling programme

The infill Reverse Circulation ("RC") drilling programme at the Homase South Pit consisted of 22 holes totalling 2,444 metres. The programme sought to further define and extend the mineable resource down-dip at the Homase South Pit to a vertical depth of approximately 60 metres.

As defined in the DEP, the South Pit is targeting the oxide resource known to extend to a vertical depth of 30 metres, based on previous drilling completed by Goldstone in 2011-2012 which defined the Company's existing JORC resource of 602,000 ounces of gold with an overall grade of 1.77g/t. The recent drilling programme confirmed continuity of the mineralised zone well below 30 metres, where it also returned multiple grades of up to 2.5g/t, in both the transitional ore zone (approximately 5 metres deep) and the underlying fresh ore zone, thus confirming the potential for considerable expansion of the planned pit.

Based on a the current gold price and prevailing mining costs in Ghana, the Company is confident that the mineable resource for the Homase South Pit, being the resource confined within the Homase South Pit that the Board believes can be mined after taking into account economic parameters including price and cost of production, now stands at 120,700 ounces of gold, representing a 257% increase, from the 33,800 ounces of gold stated in the DEP, see Table 1.

Table 1: Homase South Pit - Mineable resource variation with a cut-off 0.5g/t

Note: The mineable resource is a non-JORC compliant resource

Of the 22 RC holes, 21 intersected the targeted mineralised zone (see Table 2). All assays were undertaken by ALS Laboratories ("ALS") in Kumasi, Ghana, with all necessary protocols relating to chain of custody and QA/QC being observed. Visible gold appears to be more common in the deeper parts of the mineralised zone and, consequently, the Board believes it is likely that the cumulative head grade will exceed the modelled resource and hence the total recovered gold will exceed the projected mineable resource of 120,700 ounces of gold.

Table 2: 2020 RC drilling programme - Results of significant intersections that will be used to increase the mineable resource of the Homase South Pit

The increased mineable resource comprises 304,000 tonnes of oxide and 421,000 tonnes of fresh ore. The oxide ore is naturally non-refractory, and the original test work on the largely sulphidic mineral zone within the fresh ore in the Homase Main Pit by AGC in 2001 demonstrated that it is also, predominantly, non-refractory. These early results have been confirmed by the bottle roll test work completed by ALS on samples from the recent drilling programme, the details of which are set out below.

Whilst the Company's current focus remains on developing the Homase South Pit in line with the DEP within the existing Mining Lease, the Board believes that these results will enable the Company, in the future, to extend the original 30 metre deep open pit to a depth of 80 metres (see Fig.1), using a mining envelope defined by a 0.5 g/t Au cut-off.

As per the DEP, the stripping ratio is projected to be 10:1, though, subject to geotechnical considerations, this may eventually be reduced by steepening the pit walls within the fresh ore material. With regards to the open pit mining method below the 30 metre weathered zone, different mining methods may be required. The Company therefore plans to update the DEP, using the new data available from this programme.

Figure 1. Proposed expansion of the Homase South Pit showing the infill RC drill holes combined with 2011-2012 drill data

http://www.rns-pdf.londonstockexchange.com/rns/0463F_1-2020-11-11.pdf

Metallurgical Test Work

The AGC Feasibility Study demonstrated that the oxide ore leached very rapidly, returning final gold recoveries of 85-93%, and that the fresh ore also leached satisfactorily, yielding 80-85% gold recovery.

The Company determined that the oxide ore is non-refractory, as announced on 2 May 2019, and therefore undertook the metallurgical test work on the fresh ore within the Homase South Pit to confirm the non-refractory nature of the ore.

For the ALS study, ten composite samples of the fresh ore were taken from various drillholes, within the infill drill programme to assess whether the material in the Homase South Pit was comparable to that exploited by Ashanti Goldfields in the Homase Main Pit in 2002-2003. Bottle roll test work with gold solution recovery was employed, as it provides an estimate of potential gold recovery by leaching of a crushed ore.

The ten samples were selected to cover a range in vertical depths to ensure representativity, and gold contents were determined by fire assay analysis (refer to Table 3). The average head grade of the ten samples was 5.12 g/t Au, comparable to the 6.95 g/t Au head grade for the fresh ore material tested by AGC in 2001.

Table 3: Analytical scheme and average head grade Au test results for the fresh ore from the drilling programme

It should be noted that these bottle roll leach tests do not represent the absolute recovery that will occur during leaching, though they do provide a strong indication of the ease or difficulty in the leaching of gold-bearing material. Further work will be undertaken as the pit depth increases to seek to identify the optimum parameters required to consistently deliver around 90% recoveries by heap-leaching, although the Company may decide to proceed with a Carbon in Leach plant in the future.

A single gold dissolution kinetic test was carried out on the respective samples in order to establish the baseline gold leaching kinetics. Leaching was carried out for 72 hours with pulp samples drawn at intervals of 0, 2, 6, 24, 48 and 72 hours of cumulative leaching time. The recoveries and average head assay grade obtained are presented in Table 4 and the leaching kinetics are illustrated in Figure 2.

Table 4: Summary metallurgical results of the bottle roll tests results for the fresh ore from the drilling programme

The ALS bottle roll test work is a first step towards understanding the leachability of the primary ore. Table 4 shows that 60% of test samples returned encouraging recoveries between 84% to 94% and the remaining 40% of the samples gave recoveries between 61% to 78% for a 72 hour leach time. These recoveries demonstrate that the fresh ore is highly leachable and is non-refractory.

The corresponding fresh ore tested by AGC in 2001 was non refractory with reported gold dissolutions of 82% and 79.1% for 16 and 24 hours of leach time respectively, providing a good level of corroboration with the results of the test work undertaken by GoldStone.

Figure 2: Gold recovery from bottle roll leaching of the fresh ore from the drilling programme

http://www.rns-pdf.londonstockexchange.com/rns/0463F_2-2020-11-11.pdf

Further metallurgical test work will be undertaken in this regard, as the Homase South Pit develops, to ensure optimum recoveries depending on the material being mined, and this will necessarily be underpinned by tight grade control.

Permit Update

We continue to liaise closely with the EPA regarding the issue of the Environmental Permit and with the Minerals Commission on the operational permits for the Homase South Pit, though the COVID-19 pandemic has caused delays in this regard. The Company is, however, upon receipt of the permits, in a position to immediately commence operations, with an estimated timeline for the first gold pour being within two months of such grant.

The Company has now submitted an additional application for the expansion of the mining lease area within the existing exploration licence areas. This follows the Ministerial approval of the transfer of the Homase Licence to GoldStone, announced 30 June 2020, to accommodate the North and Central pits defined in the DEP. The expansion will take the existing mining lease area from 1.6Km2 to 6.8Km2. A corresponding application to the EPA will be submitted for this expansion, as the baseline data has already been reviewed for the area designated within the DEP.

Ghanaian Community Mining Initiative

In line with the Governments' initiative for Community Mining Programmes in Ghana, aimed at formalising mining in selected communities across the region and ultimately in the country, GoldStone has, in conjunction with the Mineral Commission, allocated two areas within the Akrokeri Exploration Licence for the Community. The areas were inaugurated on 2 November 2020 by the Minster of Lands and Natural Resources, who attended the ceremony arranged by GoldStone Akrokeri Ltd.

Emma Priestley, CEO of GoldStone, commented: 

"We are very pleased with the results from the drilling programme at the Homase South Pit, which has increased the mineable resource by over 250% and gives us the potential to expand the pit to a depth of 80 metres. The results from these drillholes exceeded our expectations of the extent of the near-surface mineralisation and confirmed our expectations of the grade increasing at depth, which is in line with the results for Ashanti Goldfields' 2001 feasibility report for the Homase Main Pit. We look forward to updating our mining model in the DEP and expect to substantially increase both expected production and output.

"As previous confirmed, we are ready to commence mining operations once the permits have been issued, as we seek to bring GoldStone into production, and we look forward to keeping you updated as we seek to move the project forward."

Competent Person

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.

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 ("MAR").

About GoldStone Resources Limited

GoldStone Resources Limited (AIM: GRL) is an AIM quoted exploration company with projects in Ghana, Senegal, and Gabon that range from grassroots to advanced exploration.

The Company is focused on developing the Homase-Akrokerri project in south-western Ghana, which hosts an existing 602,000 oz gold JORC Code compliant resource at an average grade of 1.77g/t, along strike from the Obuasi Gold Mine, one of the World's major gold mines with a total historical and current resource in excess of 70 million ounces of gold. 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.