Goldstone Resources Ltd Completion of DEP for Akrokeri-Homase Gold Project (5669D)

TIDMGRL

RNS Number : 5669D

Goldstone Resources Ltd

27 June 2019

27 June 2019

GOLDSTONE RESOURCES LIMITED

("GoldStone" or the "Company")

Completion of Definitive Economic Plan

and update for Akrokeri-Homase Gold Project

GoldStone Resources Limited (AIM: GRL) is pleased to announce that the results from the Definitive Economic Plan ("DEP") at its Akrokeri-Homase Gold Project ("AKHM") has now been submitted to the Ghanaian Minerals Commission for their review and approval. This is an important step as it demonstrates the viability for a low cost mining operation, as the Company seeks to move rapidly towards establishing its first operating mine within the Homase Trend.

The DEP sets out the basis for a low cost heap leach processing facility to process material from three satellite open pits, shown at Plan 1, lying along the known Homase Trend, either side of the previously mined Homase Pit, (the "Proposed Mine") to generate cash flows to fund the further development of AKHM.

DEP Highlights

   --        The shallow, free dig mining of the oxide/weathered ore zones only at the Proposed Mine 

-- Based on establishing a cyanide heap leach processing facility and recommends using a contract mining method

-- Total initial capital costs (including pre-stripping and contingency) estimated to be US$6.5 million

   --        Summary economics 
   -   An after-tax Net Present Value of US$19.5 million (at a 10% discount rate) 
   -   An after-tax IRR of 143% at a gold price of US$1,300 per ounce (oz) 
   -   An after-tax payback of the initial capital cost within 1 year 

-- The DEP estimates that the mineable resource from the Proposed Mine is approximately 82,000 oz of contained gold in oxide ore with a projected 82% recovery from 2.17 million tonnes of oxide ore at an average grade of 1.2 g/t gold (the "Mineable Resource")

   -   Mineable resource is part of the AKHM JORC Resource of 602,000 oz 

- Recovery based on proven by column leach testing at University of Mines and Technology Tarkwa ("UMaT")

- The Company is proposing to also place tailings from the former Akrokeri Underground Mine ("Akrokeri Tailings"), which the Company estimates to include approximately 91,000 tonnes at an average grade of 2.27 g/t gold, equating to approximately 6,500 oz of contained gold with a recovery of 73%. Recovery rate based on bottle roll test-work completed by ALS Laboratories Kumasi

-- The DEP estimates that the total plant feed from the Proposed Mine and the Akrokeri Tailings will be approximately 2.26 million tonnes with an average grade of 1.2 g/t gold giving total ounces to the plant of approximately 88,500 oz

- The DEP estimates that the heap leach facility will recover, in total, approximately 72,000 oz, giving an overall Life of Mine ("LOM") recovery of approximately 81%

-- Proposed LOM projected to be five years, with an average all-in cost, that includes capital plus cash costs, of US$852/oz

- LOM capital cost, including sustaining capital costs, estimated to be US$8.4 million

-- With the DEP having now been submitted, the Environmental Impact Assessment ("EIA") will be finalised and submitted along with the mining lease application

-- On receipt of approval from the Ministry of Mines for the Proposed Mine and subject to funding, GoldStone will seek to quickly move to commence production to generate near term cash flows

-- There will be direct and indirect employment associated with the construction period of the Proposed Mine, including service providers. Once in production, it is anticipated that the majority of the Proposed Mine personnel will be employed from within Ghana

Emma Priestley Chief Executive Officer commented:

"The Proposed Mine is a small project with robust economics that benefit from straight forward metallurgy, excellent recovery rates and minimal stripping ratio.

"The Proposed Mine has the potential to generate cash flows to support the continued development of AKHM, as we seek to significantly increase the existing JORC Resource at AKHM to support a potential larger mining operation. Importantly, it will also boost the local economy, create employment in the region and generate revenues for the country when fully operational."

Further information

The Company, together with its consultant, MAED (UK) Limited ("MAED"), have prepared a detailed DEP for the Proposed Mine and the Akrokeri Tailings, which sets out the basis for a very attractive project using a cyanide heap leach recovery process. GoldStone is seeking to implement a contract mining methodology for the Proposed Mine, as this will minimise initial capital costs and reduces the overall risk for the Company.

The DEP presents positive economics, with key financial indicators, based on anticipated future gold prices and capital and operating cost estimates, that justify advancing the Proposed Mine to a construction stage. Major parameters to note are:

1. The recovery of 82% for the ore from the Mineable Resource has been used and is based on testwork carried out by UMaT using column leach testing rather than using the bulk heap leach test recovery of 87.5%, announced on 2 May 2019. The reason for this is that there is a possibility that the bulk heap leach test results may have been affected due to the presence of coarse gold.

2. Tailings from the former Akrokeri Mine that closed in 1909, are positioned in various places in the vicinity of the town. These tailings have been re-worked by artisanal miners over the past century. GoldStone undertook an auger programme in Q2 2018 and the results favourably presented three blocks of viable mineralised zones to a depth of three metres with an average grade of 2.27 g/t. The Company's internal estimated tonnes of these three zones is approximately 91,000 tonnes. ALS Laboratories in Kumasi, carried out the assays as well as conducting bottle roll tests on the tailings material, which indicated an overall recovery of 73%, which is a key indicator that the tailings are amenable to the cyanide heap leach process to be used by the Company. It is intended to utilise the Akrokeri Tailings as the base/cushion layer for the heap leach pads, with the Company estimating it will recover up to 5,000 oz gold from these tailings over the LOM.

It is MAED's opinion that the exploration and engineering test work carried out to date, together with the extensive historical operational data from the main Homase open pit ("Homase Main") mined by Ashanti Goldfields Corporation ("AGC") in the early 2000s, support the development of the Proposed Mine as detailed in the DEP.

The historical recoveries recorded by AGC from the Homase Main were reportedly 47% higher than expected over a two-year mining period. This was believed to be as a result of small high grade pay shoots that are typically encountered in this area, as well as the presence of coarse gold. We previously stated that there was a potential for a gravity recoverable gold circuit to accommodate the coarse gold. However, the DEP has shown that this would not be cost effective initially, as the quantums of the coarse gold cannot be accurately predicted despite their existence. The grades used in the DEP are therefore considered by the Board to be conservative, with the potential for higher grades to be encountered over the LOM, thereby increasing the overall recovery rate.

The DEP recommends that additional geological exploration and metallurgical test work continues in parallel with developments to further improve the AKHM database and to delineate additional resources, and it is the Company's intention to consider such additional work going forward. Both GoldStone and MAED are confident that significant additional resources will become available as the project advances and that the additional work will also increase the average grade of the Proposed Mines, as was the case when AGC mined Homase Main.

Plan 1: Location plan of Proposed Mine

http://www.rns-pdf.londonstockexchange.com/rns/5669D_1-2019-6-26.pdf

Next Steps

With the DEP having been completed and submitted, the Company will now seek to complete and finalise the EIA. Once the Ghanaian Minerals Commission has reviewed the DEP, the Company will then submit the environmental permit application in tandem with the mining lease application.

GoldStone looks forward to keeping shareholders updated on its progress in this regard.

Akrokeri Underground Mine

We are pleased to report that operations continue with the re-opening of the former Akrokeri Mine, which was abandoned in 1909 due to a sudden in-rush of water.

We have accessed the former workings through the North shaft and have progressed past Level 1 of the old mine, at a depth of 100 feet (30 metres). Whilst the clearing out of old rails, wood and debris continued within the shaft itself, due to excessive side wall failures collapsing into the shaft that appeared to be from the Level 1 station and possibly from the "back" of the Level 1 drift, albeit within close proximity to the shaft, a decision was taken to put any further work in North Shaft on hold due to safety concerns.

It is obvious that Level 1 has fully collapsed at least within the vicinity of the shaft and that any further rehabilitation work will be time consuming and costly.

Work via the Norton Shaft also continues with the development of a drift at approximately 30 metres below surface to the north east of the Norton Shaft to intersect the mineralised zone, which is estimated to be approximately 20 metres from the Norton Shaft. The drift has advanced to 15 metres and due to the uncertain ground conditions slowing the development progress, we anticipate intersecting the mineralised zone within the next few weeks.

Adubriem and Krodua Anomalies

Further exploration work through trenching was carried out on the parallel mineralised gold structures to the Homase Trend, these being the Adubriem and Krodua anomalies. The results prove the existence of the anomalies. However, the main Homase Trend is the more viable deposit for current exploitation purposes. These parallel zones remain as potential satellite deposits in the future, although further exploration work will be required.

Information in 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:

 
 GoldStone Resources Limited 
 Emma Priestley                Tel: [phone] 
 
  Strand Hanson Limited 
 Richard Tulloch / James       Tel: [phone] 
  Bellman 
 
  SI Capital Limited 
 Nick Emerson                  Tel: [phone] 
 
  St Brides Partners Ltd 
 Susie Geliher / Juliet        Tel: [phone] 
  Earl 
 

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.

- ENDS-

About GoldStone Resources Limited

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

The Company is focused on developing the Akrokeri- Homase project in south-western Ghana, which hosts a JORC Code compliant 602,000 oz 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. 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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June 27, 2019 02:00 ET (06:00 GMT)