10 April 2024

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Interim Results for the six months ended 30 June 2023

GoldStone Resources Limited (AIM: GRL), the AIM quoted gold exploration and development company focused on bringing the Homase Mine within its Akrokeri-Homase Gold Project ("AKHM") in Ghana into production, announces its unaudited interim results for the six-month period ended 30 June 2023 (the "Period").

Chief Executive Officer's Statement

In H1 2023, the Board was mindful of the need to expand the Company's Homase Mine which produced and sold 5,155 troy ounces of gold in 2022 (against a target of 7,000 oz) realising an average price of US$1,727 per oz and revenues of US$8.9m.  Therefore, it quickly became apparent that significant optimisation work was required in order to enhance recoveries due to agglomeration issues.

To undertake this, further investment was required and a convertible loan note was entered into on 27 January 2023 with Blue Gold International Limited ("BGL") in the nominal amount of £2,400,000 (the "Loan Notes") which is due for redemption on 30 November 2024.  At the election of BGL, the Loan Notes (together with accrued interest to date) may be converted (in whole or in part) at any time prior to redemption into new ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") at a conversion price of £0.0325 per share.  BGL has also received warrants to subscribe for up to 60,000,000 Ordinary Shares at a price of £0.04 per share exercisable at any time until 26 January 2025. 

The proceeds from the Loan Notes contributed towards the purchase of plant and equipment, including a radial stacker, to assist in reducing the operating costs of the operation, increase production, and improve the recovery rate of the heap leach operation, which during 2022 yielded 65% of the contained gold delivered to the heap. 

The team immediately commenced detailed test work and cost analysis to further understand the leach kinetics in order to optimise the recovery of the remaining contained gold in the heap. This work informed the reconfiguration of the agglomeration and crushing circuit to handle the excess clay encountered and the greater than expected amount of silt originating from the oxide orebody's fragile phyllitic content. A modified screening system has been designed and built to control the feed sizing, which has allowed for the oversize >80mm to be removed from the circuit thus allowing for more consistency within the agglomeration drum.

This work programme improved recoveries from the heap leach operation, however our ability to regain some lost ground from our initial production target has been further frustrated by a very extreme and prolonged rainy season, which significantly curtailed stacking from June to October 2023.  Production for the year to 31 December 2023 was 95,497 tonnes of ore, agglomerated and stacked, averaging 1g/t Au with 1,275.25 oz of gold bullion sold at an average price USD1,969.82/oz. This was a disappointing result for us, however, the practical and learned experiences should ensure that our production trajectory improves going forward.  

As shareholders will be aware, the current available mineable resource from the first pit within the Homase Mine was estimated by management to be 304,000 tonnes @ 1.7g/t of oxide ore. From the second pit, it is estimated by management that there is 640,000 tonnes @ 1.1g/t of oxide ore, which was derived from the update regarding the mineable resource announced on 12 November 2020. The mineable resource is within the confines of the 602,000oz JORC (2012) resource previously announced. 

Exploration

The Akrokeri Licence is a primary exploration focus of our geological team, and they are working tirelessly with the aim of adding a significant deposit to GoldStone. The exploration centred on the former Akrokeri Underground Mine and along strike from it. During the period and post period end, our operational team continue with the reassessment of the former mine workings and artisanal mine workings, building the database with historical exploration work and consolidating historical geological reports that reference not just the Akrokeri Mine but also other historical exploration targets in the vicinity of the Akrokeri Mine. 

The main ore body at Akrokeri is a lenticular quartz-carbonate vein, in places with parallels, within a substantial mineralized structural corridor, trending north and dipping to the west at about 70°. It lies on the eastern contact of a massive granitoid within Birimian-age meta-sedimentary units, predominantly phyllites that dip steeply north-west. The contained gold mineralisation occurs as coarse visible gold and is also associated with pyrite, arsenopyrite, and galena in the vein-quartz and in altered wallrocks.

In August 2022, we commenced a Diamond Drilling programme at Akrokeri to advance high-priority gold targets towards production. Akrokeri benefits from both the right geological setting, being approximately 12km NNE and along strike from the Obuasi Mine, owned by AngloGold Ashanti Ltd, and its potential is supported by verified accounts of historical production, reported to be some 75,000 ounces of gold from approximately 104,000 tons (94,347 tonnes) of ore, equating to an average recovered grade equivalent to approximately 24g/t.  A total of 20 diamond drillholes were drilled, totaling 1,979.5 metres, 14 probing the southern extension of the South Shaft of the former Akrokeri Mine and the remaining six holes around the North Shaft, which sits half a kilometre north of the South Shaft. 

The assays completed and announced on 5 April 2023 showed there is a significant mineralised lode hosting gold at 4.1m @ 11.01 g/t, including 1m @ 41.04 g/t in hole 22AKDD002. This gold-bearing zone has been defined over a distance of approximately 360 metres southwards from the South Shaft, at which point it appeared that there may be a significant fault that displaces the zone westwards. The results from this exploration programme provided an explanation as to why the southern extension had not been identified at the surface in the past and has provided a basis to continue exploring this part of the historical mine area. 

In addition, an area, approximately 2km south of the South Shaft, hosts sulphide-rich sheared metasediments which were identified from the interpretation of the drilling results and assays, this underpins the probability that this southern area has considerable potential and merits further systematic exploration.  These results give strong grounds for continued exploration and further core drilling at Akrokeri.

The Company continues to review all current and historical data derived from the exploration program at Akrokeri, and from continued exploration along the Homase Trend, including targeted soil geochemistry from soil and auger sampling.

Results from exploration at the Homase trend confirmed anomalies that demonstrate a new mineralised zone to the west of the main Homase orebody and also shows further extension along strike to the north and south of the known Homase Trend.

Corporate and Financial Review

Losses from operations for the six months to 30 June 2023 were US$3.1 million (H1 2022: loss of US$0.3 million). 

The financial statements at the end of the Period show the Group's balance sheet, with net assets standing at US$8.6 million (H1 2022: US$16.0 million).

Cash and cash equivalents as at 30 June 2023 were US0.3 million (as at 30 June 2022: US$0.9 million).

On 3 January 2024, the Company announced a standstill agreement with AIMSL in respect of its Gold Loan agreement (the "Standstill Agreement").   This Standstill Agreement, which was necessary due to the inability to complete a negotiation on an extension within the appropriate timeframe, provided the Company with the potential to defer repayment of the gold loan until 29 June 2024. 

 As announced on 10 April 2024, the Company has conditionally raised £1.82 million before expenses by way of the Subscription of, in aggregate, 182,000,000 new Ordinary Shares at a price of 1 penny per Subscription Share together with one warrant per Subscription Share to subscribe for a further new Ordinary Share at an exercise price of 2 pence during the period of 24 months from the date of Admission (the "Warrants") (the "Subscription").

The net proceeds of the Subscription will be used to partially settle the Company's overdue creditor balances in line with payment plans agreed with the Company's major creditors, to progress the Company's strategy of developing and improving production at its Homase Mine in Ghana and for general working capital purposes.

As also announced on 10 April 2024, the Company has entered into an agreement (the "Amendment Agreement") with AIMSL in respect of the Gold Loan Agreement to extend the Standstill Period under terms of the Standstill Agreement dated 29 December 2023, to 31 December 2025.  Pursuant to the Amendment Agreement, AIMSL has also agreed to accept settlement of the interest accrued under the Gold Loan Agreement to 31 December 2023 by the issue to AIMSL of 101,803,680 new Ordinary Shares (the "Conversion Shares"). Following and subject to issue of the Conversion Shares, the outstanding balance in respect of the Gold Loan and accrued interest will be reduced to the principal of 1,871.43 troy ounces and will accrue interest at 14% from 1 January 2024.

Outlook

It is with cautious optimism that I look forward to 2024. 2023 was a difficult period of hard-won lessons, but these lessons will be valuable as we go into H2 2024.

I would like to take this opportunity to thank our shareholders for their patience and continued support, and I look forward to reporting on our progress moving forward.

Emma Priestley

Chief Executive Officer

For further information, please contact:

Consolidated statement of financial position

as at 30 June 2023

Consolidated statement of comprehensive income

for the 6 months ended 30 June 2023