TIDMGRL
RNS Number : 4416R
Goldstone Resources Ltd
30 June 2020
30 June 2020
GOLDSTONE RESOURCES LIMITED
("GoldStone" or the "Company")
Final Results for the year ended 31 December 2019
GoldStone Resources Limited (AIM: GRL), is pleased to announce
its final results for the year ended 31 December 2019.
Highlights
-- Significant operational and corporate progress achieved with
the objective of recommencing mining and delivering first revenues
from the Akokeri-Homase Gold Project ("AKHM") in the Ashanti Region
of Ghana
-- Reduction in loss for the year to $(655)k (2019: $(1.014)m
and particularly a significant reduction in corporate and
administrative expenses to $543k (2019: $1.014m)
-- AKHM Definitive Economic Plan ("DEP") published, underpinning
highly compelling fundamentals and highlighting potential for low
capex, low opex gold production
-- Ministerial approval for 10-year mining lease for the Homase
South Pit, the first of three planned pits as detailed in the DEP,
received in November 2019 and formally awarded post period end in
February 2020
-- US$4.3 million raised post period end, to take the Company
through to first gold production targeted in Q4 2020
-- Strengthened technical profile of the Board with the
appointment of Dr Orrie Fenn, a highly experienced mining
professional and previous CEO of one of the world's leading mining
contractors, Murray and Roberts
GoldStone's Chief Executive Officer, Emma Priestley, commented:
"The significant and material developments achieved during 2019 and
H1 2020 have laid the foundations for GoldStone to become a gold
producer in the near-term. With a highly compelling Definitive
Economic Plan, an approved mining lease and requisite financing
secured to establish mining operations, we are now approaching the
cusp of becoming a cash generative mining company. Despite the
administrative frustrations that we have recently endured,
GoldStone has now emerged as a robust pre-production company, with
a clear strategy to produce first gold before the end of 2020 and I
believe we are well positioned to deliver meaningful value to
shareholders."
The Annual Report and Accounts will shortly be available to view
and download in full at the Company's web site
www.goldstoneresources.com. Hard copies of the Annual Report and
Accounts are available on request.
For further information, please contact:
GoldStone Resources Limited Tel: +44 (0)7867 785 177 / +233 (0)55
Emma Priestley 581 8855
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Richard Tulloch / James
Bellman
SI Capital Limited Tel: +44 (0)1483 413 500
Nick Emerson
St Brides Partners Ltd Tel: +44 (0)20 7236 1177
Susie Geliher / Catherine
Leftley
Chairman's Report
GoldStone Resources Limited's ("GoldStone" or the "Company")
overarching strategy is to become a low-cost gold producer,
leveraging the considerable skills of our operational team and
partners, to deliver returns to investors.
I am confident that we have the right ingredients to
successfully execute this strategy and we are now making
substantial progress towards achieving this objective with our
Akrokeri-Homase Gold Project ("AKHM") in Ghana.
Importantly, I and the Board believe we are operating in the
right part of the world. AKHM lies in the Ashanti Gold Belt in
Ghana - a highly mineralised and well-recognised mining district,
which boasts one of the world's major gold mines, Obuasi, with a
total historical and current resource in excess of 70 million oz
gold. Our experience of operating in Ghana has also been extremely
positive and we have received significant support from both local
communities and Chiefs, and from governmental authorities. The
spirit of cooperation between mining companies and the Government
of Ghana is clearly evident and engenders the importance of a
successful metals and mining industry for all stakeholders.
Looking specifically at AKHM, we believe it meets all of the
relevant criteria required to host a profitable mining operation.
Located along strike from the aforementioned Obuasi Gold Mine, AKHM
is in an area of known mineralisation and has a proven JORC Code
compliant gold resource of 602,000oz at an average grade of 1.77
g/t. There is significant development potential with the existing
resource covering just a 4km zone of the Homase Trend, including
Homase North, Homase Pit and Homase South; and historical
production from two former mines, the underground mine at Akrokeri,
which produced 75,000 oz gold @ 24 g/t recovered grade in the early
1900s, and the Homase Pit which produced 52,000 oz gold @ 2.5 g/t
recovered grade in 2002/03 by AngloGold Ashanti.
The significant potential economic returns of AKHM were
underpinned by the Definitive Economic Plan ("DEP") which was
approved by the Ghanaian Ministry of Lands and Natural Resources
("MLNR") with the award of the mining lease for the Homase South
Pit at AKHM, as announced on 14 February 2020. The full findings of
the DEP are outlined in the Chief Executive Officer's Report,
though in summary, it sets out compelling economics for the
proposed development of AKHM, with an after-tax Net Present Value
of US$19.5 million (at a 10% discount rate), an after-tax IRR of
143% and an after-tax payback of the initial capital cost within 1
year. Importantly, these economics were calculated using a gold
price of US$1,300 per ounce - at the time of writing, the gold
price has since risen some 34% to approximately US$1,750,
highlighting the considerable upside to these already extremely
attractive financials. Clearly the positive pricing environment
that we are currently experiencing in the gold sector will provide
further potential upside for the Company, however, it is essential
to remember that AKHM is projected to be a low-cost producer and
therefore has the potential for success in a range of gold price
scenarios.
Whilst the DEP set out initial capital costs of approximately
US$6.5 million to bring the Homase South Pit into production, being
the first of the three pits, from pre-stripping through to the Gold
room, we have continued to evaluate the optimum strategy for the
development of AKHM. This has resulted in the decision to postpone
the construction of the elution plant, electrowinning and Gold
Room, thereby reducing the initial capital outlay to approximately
US$3.8 million, minimising the funding required and shortening the
time to achieve production. Accordingly, it is initially intended
that the loaded carbon from the heap leach, will now either be toll
treated by a third party or sold on the international markets.
The approval of the DEP was a major component towards being
awarded the mining lease on the Akrokeri and Homase licences for
the Homase South Pit (the "Mining Lease"), which received
ministerial approval in November 2019 and was announced in February
2020. The Mining Lease, which was issued by the MLNR, is a 10 year
mining lease that, whilst approving the DEP in its entirely,
initially only covers the Homase South Pit and land for the plant
and process operation. As the Company moves forward to develop the
Homase Central Pit and the Homase North Pit, the Mining Lease will
be extended to include these additional pits along the Homase
Trend. The Company is now working closely with the Ghanaian
Minerals Commission and the Environmental Protection Authority to
finalise the environmental permit.
Another major development in us being able to achieve
production, was securing financing for the development of the
Homase South Pit, which was achieved post the year end. GoldStone
was delighted to announce in March 2020 that it had raised US$4.3
million (gross) to finance the advancement into production. US$1.3
million of the funding was by way of the issue of 14% unsecured
bond notes to certain new and existing investors (including major
strategic investors Paracale Gold Limited and BCM Investments
Limited) and US$3.0 million was by way of a 14% secured gold loan
of up to 2,000 troy ounces (the "Gold Loan") from Asian Investment
Management Services Ltd ("AIMS"). I am pleased to note that the
Gold Loan has recently been finalised and we have now drawn down
and received, in aggregate, US$1.05 million under this facility. As
a result of the Gold Loan now being in place, once the final
environmental permit and operational permits have been issued, we
will be in a position to immediately commence mining operations at
the Homase South Pit, utilising contract mining, and construct the
heap leach plant, with the target of achieving our first gold pour
in Q4 2020.
I am delighted with the progress we have made since the
beginning of 2019, however, I am of course cognisant of the
frustrations and concerns of many shareholders, particularly
surrounding GoldStone's temporary suspension from trading on AIM
following an administrative error in 2019 that led to the Company's
Jersey registration being dissolved. The Company was restored to
the Jersey Registrar of Companies on 11 June 2020, with the
dissolution of the Company having been voided, by the Royal Court
of Jersey, which has the effect of the dissolution effectively
never having taken place. This enabled the resumption of trading in
the Company's shares on AIM.
The Board has maintained the focus on fulfilling the Company's
objective of becoming a gold producer in 2020. It is with
considerable optimism therefore, that I look forward to the
remainder of 2020 and what I believe these coming months will
deliver, and in particular to bringing the Homase South Pit into
production as we target first gold in Q4 2020. In addition to the
development of the Homase South Pit, the Company continues to
assess the extent of the exploration work required along the Homase
Trend and at the historic Akrokeri Mine.
On behalf of the Board, I would like to take this opportunity to
thank our shareholders for their continued support. We will
continue to update investors as to our progress towards achieving
our objectives at AKHM, as we look to become a new West African
focussed gold producer in the coming months.
William (Bill) Trew
Non Executive Chairman
29 June 2020
Chief Executive Officer's Report
Operational Update
2019 was a year of significant operational delivery for
GoldStone Resources Limited ("GoldStone" or the "Company"), during
which the Company confirmed and broadened its understanding of the
Akrokeri and Homase Gold Project ("AKHM") in Ghana and identified
both the parameters and route to production for the asset.
Perhaps the most notable development for investors during this
period was the publication of the Definitive Economic Plan ("DEP")
for AKHM which endorsed the Board and management's assertion that
AKHM could host a low-cost, high margin gold mine in the near
term.
The DEP highlighted the following key aspects of the
project:
-- Proposals for a shallow, free dig mining of the
oxide/weathered ore zones at three satellite open pits, showing in
Figure 1 below, lying along the known Homase Trend either side of
the previously mined Homase Pit the (the "Proposed Mine")
-- E stablishing a cyanide heap leach processing facility and
recommendation to use a contract mining method
-- Total initial capital costs (including pre-stripping and
contingency) estimated to be US$6.5 million
-- Overall project economics:
- An after-tax Net Present Value of US$19.5 million (at a 10%
discount rate)
- After-tax IRR of 143% at a gold price of US$1,300 per ounce
(oz)
- After-tax payback of the initial capital cost within 1
year
-- Estimates that the mineable resource from the Proposed Mine
is approximately 82,000 oz of contained gold in the 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 column leach testing at University of Mines
and Technology Tarkwa
- The Company is proposing to use the tailings from the former
Akrokeri Underground Mine ("Akrokeri Tailings") as the base/cushion
layer for the heap leach pads, 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
-- 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
-- Estimates that the heap leach facility will recover, in
total, approximately 72,000 oz of gold, 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
Figure 1: Location of the Proposed Mine, being the three
satellite pits
http://www.rns-pdf.londonstockexchange.com/rns/4416R_1-2020-6-29.pdf
The highly positive findings of the DEP enabled the Board to
confidently move forward with arranging the permits and financing
and, during the period and post, GoldStone made significant
progress on both fronts.
As announced in February 2020, a 10 year mining lease (the
"Mining Lease") on the Akrokeri and Homase Licences for the Homase
South Pit, being the first of the three pits to be brought into
production as outlined in the DEP, and land for the plant and
process operation, in accordance with the Minerals and Mining Act,
2006 (Act 703) (the "Act"), was granted by the Government of Ghana
through Ministerial decree, following ministerial approval in
November 2019. Whilst the Mining Lease initially only relates to
the Homase South Pit, it has approved the DEP in its entirety and
the Mining Lease can therefore, in accordance with the Act, be
renewed and/or extended to include additional pits along the Homase
Trend as the Company's production plans advance.
In addition to the Mining Lease, post the period end, the
Company also secured funding of US$4.3 million (gross) for the
development of the Homase South Pit, as detailed in the chairman's
statement and below.
Following receipt of the Mining Lease and funding, and subject
to receipt of the environmental and operational permits, which the
Board expects to be awarded in the next few weeks, we are now able
to move forward towards commencing production, through the ongoing
development of the Homase South Pit and construction of the
associated heap leach facility. The Board currently anticipates
that, subject to receipt of the requisite environmental and
operational permits in the next few weeks, the first gold pour will
be achieved in Q4 2020.
Following finalisation of the funding, as detailed below, the
Company is now able to place a number of significant orders for
plant and equipment, which will enable the Company to further
optimise the Homase South development plan against the economics of
the DEP, and I look forward to updating shareholders in this
regard.
The Mining Lease consists of two licences the Akrokeri
prospecting licence and the Homase prospecting licence. During the
year, the Ghanaian Minerals Commission confirmed that the Akrokeri
prospecting licence, PL6/87, is valid until 23 May 2021 and that
the Homase prospecting licence, RL6/96, is valid until 4 June
2022.
The Akrokeri prospecting licence is held 100% by GoldStone
Akrokeri Limited ("GAL"), GoldStone's wholly owned Ghanaian
subsidiary. Cherry Hill Mining Limited ("Cherry Hill") is currently
the registered holder of the Homase prospecting licence. However,
following agreement being reach with Cherry Hill, following the
granting of the Mining Lease and in accordance with the joint
venture agreement, Cherry Hill has, as announced on 16 March 2020,
agreed to relinquished its remaining 10% interest in the Homase
prospecting licence in exchange for a 2% royalty of gold sales
generated, less all costs and taxes and duties in respect of the
licence. As a result, the Homase prospecting licence is in the
process of being transferred to GAL and GoldStone is awaiting the
formal notification from the Ghanaian Ministry of Mines in this
regard.
As a result, GoldStone now holds a 100% interest in both the
Akrokeri and Homase prospecting licences, pursuant to which
GoldStone will provide the government of Ghana with a 10% free
carried interest and a 5% gross gold royalty as required by the
fiscal regime in Ghana.
With any new mining venture, there will always be direct and
indirect employment associated with the construction period of this
project, which includes service providers. When the mine is in
production, most of the mine personnel will be employed from within
Ghana. We look forward to becoming a significant new employer in
the area and continue discussions with the relevant Chiefs and
appropriate authorities, in order to source and train a workforce
from within the local communities.
Aside from our activities on the Homase Trend, being the initial
area of intended mining, work continues to re-open the historic
Akrokeri Mine, and our activities are focused on re-accessing the
old workings at the mine. Development of the drift continues, at
approximately 30 metres below surface to the north east of Norton
Shaft, to intersect the mineralised zone, which is estimated to be
approximately 20 metres from Norton Shaft. When the workings are
safely accessed, GoldStone expects to gather valuable geological
information and to carry out exploration drilling, with the
ultimate aim of seeking to bring the Akrokeri Mine back into
production.
It is currently the Board's intention that further exploration
is funded from future production cashflows from the AKHM Project.
In the event that this is not feasible, or the Company wishes to
accelerate the exploration programmes, then the Company many need
to raise further funding.
senegal update
GoldStone reviewed the Sangola Licence in 2019, however, the
Board has decided, after careful consideration, that the project
did not meet the criteria for assets that can be advanced towards
production. This licence has therefore been rescinded.
corporate and financial
Losses for the 12 months to 31 December 2019 were US$655k (2018:
Loss of US$1,014k). The financial statements at year end show the
Group's balance sheet, with net assets standing at US$6,892k
against net assets of US$7,591k at the end of the previous year.
This consists predominately of exploration costs for AKHM of
US$8,256k (2018: US$7,769k).
Cash and cash equivalents as at 31 December 2019 were US$90k
(2018: US$337k) and subsequent to this, in March 2020, the Company
announced a US$4.3 million fundraise to finance the commencement of
production at AKHM's Homase South Pit. The overview of the
fundraising was as follows:
-- Issue of 26, 14% unsecured bond notes of US$50,000 each (the
"Bonds") to certain existing and new investors, to raise, in
aggregate, US$1.3 million before expenses
- Paracale Gold Limited ("Paracale") and BCM Investments Limited
("BCM"), the Company's major shareholders, each subscribed for
Bonds with a value of US$0.3 million
- 52 million warrants, exercisable at 3 pence per ordinary share
of 1 penny each in the Company (the "Exercise Price"), to be issued
to the Bond subscribers
- At the date of this report all the Bonds have been issued and
funds received
-- Agreed a 14% secured gold loan of up to 2,000 troy ounces of
gold at a price of US$1,500 per troy ounce, equating to a value of
US$3.0 million before expenses from Asian Investment Management
Services Ltd ("AIMS") (the "Gold Loan"), which was finalised in
June 2020
- An advance of 200 troy ounces (US$0.3 million) was drawn and
received in March 2020
- The Gold Loan was finalised in June 2020, with a further 1,800
troy ounces (US$2.7 million) available to be drawn, of which 500
troy ounces (US$0.75 million) has been drawn and received in June
2020
- 120 million warrants, exercisable at the Exercise Price have
been issued to AIMS
former director's claim
Following a claim against the Company, brought by a former
director (initially announced on 13 October 2016), it was further
announced in December 2018 that the South African Labour Court had
ruled in favour of the former director and awarded him damages of
US$140k plus interest and legal costs. The Company reserves its
position, though has made provision for this in the financial
statements and in October 2019 agreed temporary payment terms with
further settlement discussions ongoing following advice from the
Company's lawyer.
board changes
During the year under review, GoldStone welcomed Dr Orrie Fenn
to the Board. Dr Fenn has considerable experience in the mining,
building materials and construction sectors and was, until
recently, CEO of the underground mining business platform of one of
the world's leading underground mining contractors, Murray and
Roberts. Prior to that, Dr Fenn was the Group Chief Operating
Officer of JSE-listed PPC Limited. He has also previously held the
role as Business Development Manager at Debex, a subsidiary of De
Beers Industrial Diamond Division, which designed and manufactured
specialised equipment and materials for the diamond, coal and gold
mining industries. It is expected that Orrie's extensive experience
will be highly valuable as GoldStone advances towards production at
AKHM.
Also during the period, Mr Richard Lloyd stepped down from the
Board in order to pursue his other business interests. The Board
wishes to thank Richard for his contributions and support to the
Company during his tenure.
working capital management and funding
Following the successful fundraising post the period end as
detailed above, the Company now has sufficient funds to move
towards its goal of achieving production, subject to receipt of the
outstanding permits. The Company prepares regular management
accounts and financial forecasts to monitor and manage working
capital and funding requirements going forward. The accounts and
forecasts are regularly reviewed and challenged by the Board.
In order to assist with working capital management, the
Directors agreed not to draw all their fees in accordance with
their service contracts and as such these fees have been accrued in
the financial statements. The Board is in discussions on how these
fees will be settled in due course. See note 19 to the financial
statement for further details.
risk management
The Board has identified the following as being principal
strategic and operational risks (in no particular order):
a. going concern
As at 31 December 2019, the Group had cash of US$90k . As noted
above, the Company successfully raised US$4.3 million, gross, post
the period end to fund the commencement of initial production at
Homase South. The Board is confident that it will commence gold
production in Q4 2020 supported by the funding supplied by the Gold
Loan and the Bonds, subject to the necessary permits being issued.
Should there be a material delay in the issue of the permits over
and above the Boards current expectations, the Company may need to
secure further funding to meet its contractual obligations as they
fall due.
The Board has reassessed the DEP and determined that the elution
plant, electrowinning and Gold Room are not essential capital costs
at this stage. This reduces the initial capital outlay to
approximately US$3.8 million, allowing the Group to move
immediately into the production phase on receipt of the requisite
permits, which are expected shortly. The Board confirm that, based
on, inter alia, its cashflow forecasts, they are satisfied that the
Group has adequate resources to move into production and continue
in business for the foreseeable future, having regard to the
factors set out in more detail in Note 2b to the financial
statements.
The Group continues to evaluate the exploration required along
the Homase Trend and at the historic Akrokeri Mine. It is currently
the Board's intention that such exploration is funded from future
production cashflow from the AKHM project. In the event that this
is not feasible, or the Group wishes to accelerate these
exploration programmes, then the Company many need to raise further
funding. Although the Board is confident that it will be able to
raise further funding if and when required, there is always a risk
that this may not be possible.
b. development and mining
Development and mining for natural resources is speculative and
involves significant risk . The Group is still awaiting its
environmental and operational permits, without these the production
phase of the AKHM project cannot commence and hence there is a risk
that this might delay the project.
Once production commences, planned production may not be
achieved as a result of unforeseen operational problems, machinery
malfunctions or other disruptions. Operating costs and profits for
commercial production therefore remain subject to variation, such
as gold prices or not achieving the expected recovery rates.
The Board are evaluating each stage of the development and
mining of the Company's project, site by site, in order to mitigate
as far as possible these risks inherent in production. Use of
modern technology and electronic tools assist in reducing risk in
this area. Good employee relations are also key in reducing the
exposure to labour disputes. The Company is committed to following
sound environmental guidelines and practice and is keenly aware of
the issues surrounding each individual project.
c. country and political
GoldStone's projects are in Ghana. Emerging market economies
could be subject to greater risks including legal, regulatory,
economic and political risks and are potentially subject to rapid
change.
The Board routinely monitors political and regulatory
developments in Ghana. The Ghanaian Government continues to be
supportive towards the mining sector, including the improved
policing of small-scale mining operations, thus ensuring controlled
management of neighbouring areas.
In addition, the Company actively engages in dialogue with
relevant Government representatives in order to keep abreast of all
key legal and regulatory developments applicable to areas of
interest. GoldStone maintains internal processes to ensure that it
is wholly compliant with all relevant regulations in order to
maintain its licences. These country risks are further addressed in
notes 2(d)(i) and 3(k) to the financial statements.
d. social, safety and environmental
GoldStone's success depends upon its social, safety and
environmental performance as failures may lead to delays or
suspensions of its activities.
GoldStone takes its responsibilities in these areas seriously
and monitors its performance across these areas on a regular basis.
As AKHM develops towards production, the Company is strengthening
its relationships with the communities living within the concession
areas and close to the projects. The immediate focus for each of
the villages within our Licences, has been sanitation and drinking
water, and improving the school facilities, maintaining the
buildings and providing school uniforms. The Company continues to
build on the community relationships to assist the smallholder
farmers and ensuring we have a "community first" approach when
recruiting. These schemes benefit both the communities and the
investors in which the Company will be operating.
coronavirus impact
The Coronavirus pandemic has had a significant and immediate
impact on the operations and funding of many businesses both in
Ghana and globally. However, mining was named an essential service
by the President of Ghana, so GoldStone employees are moving the
Akrokeri Homase Projects forward without delay. To protect the
health and safety of its employees and the local community, the
Company, in concert with community leaders, has developed an
innovative plan that minimises employee-to-employee contact and
virtually eliminates contact with the community at large, while
allowing the Company to proceed with the development programme. The
Company has closely examined the supply chain and is confident that
all necessary equipment and supplies will be readily available for
the development programme.
Emma Priestley
Chief Executive Officer
29 June 2020
Directors' report
The directors present their report and consolidated financial
statements (the "financial statements") for GoldStone Resources
Limited ("GoldStone" or the "Company") and its subsidiaries
(together "the Group") for the year ended 31 December 2019.
incorporation
The Company was incorporated in Jersey as a private company
under the Companies (Jersey) Law 1991 on 17 April 1998. The Company
was changed from a private company to a public company on 16 March
2004. The Company was successfully admitted to trading on the AIM
market of the London Stock Exchange on 25 March 2004. As of 31
December 2019, the Company has an issued share capital of
250,050,253 ordinary shares of 1 pence each (December 2018:
249,707,991 ordinary shares).
principal activity and review of business
The Company's principal activity is that of a holding company.
The Group's principal activity is development and exploration of
gold and associated elements at the Group's Akrokeri-Homase Gold
Project ("AKHM") in Ghana. The directors are currently active in
seeking to commence production at and to continue to explore the
prospects at AKHM. A review of the Group's performance and
indications of likely future development is included in the Chief
Executive Officer's report.
going concern
The financial statements have been prepared assuming the Group
and Company will continue as a going concern. In assessing whether
the going concern assumption is appropriate, the directors have
taken into account all available information for the foreseeable
future; in particular for the 12 months from the date of approval
of these financial statements. This assessment includes
consideration of future plans, expenditure commitments in place,
cost reduction measures that can be implemented and permitting
requirements.
Accordingly, the directors believe that the Group has sufficient
funds to progress the development of AKHM and to move into initial
production. The Group also continues to evaluate the exploration
required along the Homase Trend and at the historic Akrokeri Mine.
It is currently the Board's intention that such exploration is
funded from future production cashflow from the AKHM project. In
the event that this is not feasible, or the Group wishes to
accelerate these exploration programmes, then the Company many need
to raise further funding. The directors believe that such funds are
likely to come from further equity issues, specifically in relation
to the exercise of warrants held by existing shareholders.
The sensitivities around the timing of permits being awarded and
the availability of future funding have been incorporated into the
financial forecasts produced by the Board in assessing going
concern. However, the directors are confident that the necessary
permits will be attained shortly and funding will be available, if
and when required. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
results and dividends
The loss for the financial year is set out in the consolidated
statement of comprehensive income. The directors do not recommend a
dividend for the year ended 31 December 2019 (year ended 31
December 2018: US$ nil).
events after the reporting period
See note 22 and the chairman's and chief executive officer's
reports.
directors
The directors of the Company, who served during the year and to
the date of this report, are as set out on page 2 of the Report and
Accounts.
The directors' shareholdings are as follows:
Number of shares held
directly as at 31 December
2019 and
Director 29 June 2020 Percentage shareholding
Emma Priestley 2,711,546 1.1%
Richard Lloyd* 1,473,038 0.6%
Bill Trew** 4,000,000 1.6%
Angela List*** - -
Total 8,184,584 3.3%
* Mr Lloyd was a director up until his resignation on 2 August
2019 and the above represents his total shareholding at that
date.
** Mr Trew is a director and shareholder of Paracale Gold
Limited, which currently holds 70,352,377 ordinary shares in
GoldStone representing 28.14% of its currently issued share
capital. Together with his interest held directly Bill Trew and
Paracale Gold Limited have an interest, in aggregate, 74,352,377
ordinary shares, representing 29.74% of the Company's currently
issued share capital.
*** Mrs List is a director of BCM Investment Limited, which has
an interest in 50,000,000 ordinary shares representing
approximately 20.02% of the Company's issued share capital.
No director held any share options at the year-end (2018:
Nil).
major shareholdings
As at 29 June 2020, the Company had been notified of the
following interests in the Company's ordinary share capital:
Name Number of shares % shareholding
Paracale Gold Limited 70,352,377 28.1%
BCM Investments Limited 50,000,000 20.0%
RAB Capital Limited 11,400,000 4.6%
Mr Michael Joseph 10,252,256 4.1%
Somercourt Investments Limited 8,000,000 3.2%
corporate governance
The Company is committed to high standards of corporate
governance and seeks to continually evaluate its policies,
procedures and structures to ensure that they are fit for
purpose.
In order to protect the interests of its shareholders and other
stakeholders, the Board has adopted the Quoted Companies Alliance
(QCA) Corporate Governance Code for Small and Mid-Size Quoted
Companies (the "QCA Code").
The Board is assisted by an Audit and Compliance Committee and a
Remuneration Committee. The Audit and Compliance Committee
comprises Richard Wilkins, as Chair, and Orrie Fenn. The
Remuneration Committee comprises Richard Wilkins, as Chair, Bill
Trew, Orrie Fenn and Emma Priestley.
During the year, the Audit and Compliance Committee received and
reviewed reports from the executive director and external auditors
relating to the interim and annual accounts and the accounting and
internal control systems in use throughout the Group. It should be
noted that GoldStone's temporary suspension from trading on AIM
followed an administrative error in 2019 that led to the Company's
Jersey registration being dissolved. The Company was restored to
the Jersey Registrar of Companies on 11 June 2020, by the Royal
Court of Jersey, with the dissolution of the Company having been
voided, which has the effect of the dissolution effectively never
taken place. This enabled the resumption of trading in the
Company's shares on AIM. Clearly this was highly irregular, however
the Board has been rigorous in its implementation of necessary
protocols to ensure the same or similar issues do not happen
again.
The objectivity and independence of the external auditors was
safeguarded by reviewing the auditor's formal declarations,
monitoring relationships between key audit staff and the Company
and tracking the level of non-audit fees payable to the
auditors.
The Audit and Compliance Committee met twice during the year, to
review the annual accounts and the interim accounts. The Committee
reviewed with the independent auditor its judgements as to the
acceptability of the Company's accounting policies.
Since the year end, the Audit and Compliance Committee has met
further with the auditor to consider the 2019 financial statements.
In particular, the Committee discussed areas of judgement and the
significant audit risks. The Audit and Compliance Committee also
monitors the auditor firm's independence from the Company's
management and has now been tasked with monitoring the Company's
compliance pertaining to its Jersey registration and filing
obligations.
The Remuneration Committee met independently of the executive
director once in the year.
The directors' report in respect of corporate governance
compliance and issues arising, is set out in the separate Corporate
Governance Report.
financial instruments
The Group's operations expose it to a variety of financial risks
that include credit risk, liquidity risk, foreign exchange risk and
interest rate risk. The Group has in place a risk management
programme that seeks to contain, where appropriate, exposures in
these financial risks in order to limit any negative impact on the
Group's financial performance and financial position.
The Board maintains responsibility for monitoring financial risk
and setting the policies that are implemented by the Group's
finance function. The department has a policy and procedures manual
that sets out specific guidelines to manage interest rate risk and
credit risk, and circumstances where it would be appropriate to use
financial instruments to manage these.
Details on the Group's exposure to foreign exchange risk, credit
risk, liquidity risk and interest rate risk are shown in note 18 to
the financial statements.
provision of information to auditor
The directors who held office at the date of this report confirm
that, so far as they are individually aware, there is no relevant
audit information of which the Company's auditors are unaware and
the directors have taken all the steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
auditor
DSG Chartered Accountants has expressed their willingness to
continue in office.
Approved by the Board of Directors
and signed on behalf of the Board
Emma Priestley
Director
29 June 2020
Corporate Governance Report
The corporate governance arrangements that the Board has adopted
are designed to ensure that the Company delivers medium and
long-term value to its shareholders and that shareholders have the
opportunity to express their views and expectations for the Company
in a manner that encourages open dialogue with the Board.
It should be noted that four of the directors are shareholders
(direct and indirectly) in the Company, and therefore, their own
medium to long-term interests are directly linked to the medium and
long-term value of the Company, and as such the interests of the
directors are directly aligned with those of the shareholders.
The Quoted Company Alliance ("QCA") Code sets out 10 corporate
governance principles that should be applied by companies wishing
to follow the QCA Code. These are listed below, with a short
explanation of how the Company applies each of the principles
together with an explanation of any divergence from these
principles should there be any. Save as set out below, there are no
exceptions to report for the current or previous financial
years.
principle 1 - business model and strategy
The Company is focussed on operations in Ghana and, in
particular, the Ashanti Gold Belt, which is recognised as a
pro-mining, geopolitically stable jurisdiction. The directors
intend to develop the flagship Akrokeri-Homase Gold Project ("AKHM"
or the "Project") in stages, thereby enabling sound management of
the development of the mine in a manner that is professional and
efficient. In addition, the Company reviewed the Senegal project in
2019 and concluded that it did not meet the criteria of being a
near term development project, the licence has therefore been
rescinded. The Company is assisted in its work by internationally
recognised mineral consultants where appropriate.
principle 2 - understanding shareholder needs and
expectations
As noted above, four of the directors are also shareholders and
therefore their interests are aligned with the Company's wider
shareholder base. The Company strives to maintain a close
relationship with its shareholders. The Company regularly updates
its website, participates in podcasts and investor presentations,
attends mining conferences and releases news flow and operational
updates. Shareholders are also encouraged to attend the Annual
General Meeting.
principle 3 - consider wider stakeholder and social
responsibilities
The Board recognises that the long-term success of the Company
is reliant upon efforts of the employees of the Group and its
contractors, advisers, suppliers, regulators and other
stakeholders, including the local communities where the projects
are located. The Board of the Company and the senior management of
its operating subsidiaries make every effort to ensure that all
stakeholders are communicated with effectively, that contractual
terms are compiled with, and that employees, in particular, are
afforded a safe and enjoyable working environment and are
remunerated appropriately. At the AKHM site, in Ghana, the Company
engages with the local communities on a regular basis, via meetings
with the local dignitaries and other officials, including project
site visits and, at the State level, ongoing communication is
maintained with the relevant regulatory authorities.
principle 4 - risk management
The Board has overall responsibility for the determination of
the Company's risk management objectives and policies. The overall
objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Company's
competitiveness and flexibility. The Board is assisted in achieving
this by the Company's Audit and Compliance Committee. After
consultation with the Company's external auditors, an internal
audit function is not considered necessary or practical due to the
size of the Company. Close day-to-day control is exercised by the
executive director and these are shared with the Board. This
position will be reviewed on an annual basis by the Board in
consultation with the Audit and Compliance Committee and the
external auditors. The Group also takes out relevant insurance as
appropriate.
principle 5 - a well-functioning board of directors
The Board consists of one executive director and four
non-executive directors, two of which are independent non-executive
directors. The directors comprise a combination of corporate,
financial and technical experience.
The Company also employs a Chief Operating Officer ("COO") who
is also the chief operating officer of the Company's principal
subsidiary in Ghana. The COO is entitled to attend Board meetings.
The Board meets quarterly by telephone conference call and in
person once a year, where possible. The Company considers that, at
this stage of its development, and given the current size of its
Board, it is not necessary to establish a formal Nominations
Committee. This position will also be reviewed annually by the
Board.
Richard Wilkins and Orrie Fenn are considered to be independent
non-executive directors and Richard Wilkins chairs both the Audit
and Compliance Committee and the Remuneration Committee. Bill Trew
represents the Company's strategic and main shareholder, Paracale,
and is therefore not considered to be an independent director.
Angela List, a non-executive Director of the Company, represents
the second strategic shareholder BCM Investments Limited (BCM), and
is accordingly also deemed not to be independent. The Board will
review further appointments as the Group's scale and complexity
grows.
The Company reports annually on the number of Board and
Committee meetings that have been held and the attendance record of
individual directors. During the year, five conference call, Board
meetings were held. The attendance of the directors was as
follows:
number of Board meetings each director attended
number of Board
meetings in Richard Bill Angie
2019 Emma Priestley Lloyd Trew List Richard Wilkins
5 5 2 4 4 5
Orrie Fenn was appointed to the Board in September 2019, and
attended one Board meeting in 2019.
The commitment required from the non-executive directors is 4
days per calendar month, on average and Emma Priestley is full
time.
principle 6 - appropriate skills and experience of the
directors
The Board consists of five directors, including Bill Trew, a
qualified mechanical engineer with significant experience in the
mining industry, and Emma Priestley a qualified mineral surveyor
and mining engineer. Angela List and Richard Wilkins are qualified
accountants. Orrie Fenn holds a doctorate in engineering.
The Company believes that the current balance of skills within
the Board, as a whole, reflects a broad and appropriate range of
commercial, technical and professional skills relevant to the
mining sector and the successful development of the Company within
that sector. Brief bios of each of the directors and officers are
set out on the Company's website. In accordance with each
professional discipline that the director holds, each complies with
CPD (Continued Professional Development) for that profession.
principle 7 - evaluation of board performance
In accordance with the AIM Rules for Companies, GoldStone
departs from the QCA Code in relation to this principle.
As GoldStone's Board is small and extremely focussed on
implementing the Company's strategy, the Board will closely monitor
the need for formal performance evaluation, in light of Principle 7
of the QCA Code, as the Company develops.
principle 8 - corporate culture
The Company recognises the importance of promoting an ethical
corporate culture, interacting responsibly with all stakeholders
and the communities and environments in which the Group operates.
The Board considers this to be essential if medium and long-term
value is to be delivered. The directors consider that, at present,
the Group has an open culture facilitating comprehensive dialogue
and feedback, particularly with regard to environmental and related
issues and relevant to the ongoing successful development of the
Company. The Group also participates in local community projects
within the Ashanti region and seeks to be regarded as a good
corporate citizen within its spheres of operation.
principle 9 - maintenance of governance structures and
processes
The Board will review annually the effectiveness of its
corporate governance structures and processes, which includes
Jersey and UK regulatory obligations. The Board currently considers
that the balance between executive and non-executive directors,
including the independent directors, and the roles of the Audit and
Compliance Committee and the Remuneration Committee are appropriate
for the Company's size and stage of development. The members and
responsibilities of each Committee are set out on the Company's
website.
The Company has also implemented a code for directors and
employees dealings in shares which is appropriate for a company
whose shares are traded on AIM and is in accordance with the
requirements of the Market Abuse Regulations which came into effect
in 2016.
Principle 10 - shareholder c ommunication
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders. The directors
will continue to meet with and receive calls from shareholders,
large and small, institutional and private, as appropriate. The
Company will continue to keep its website up to date, participate
in podcasts and investor presentations, attend mining conferences,
and to release news flow and operational updates as
appropriate.
Signed on behalf of the Board of Directors
Emma Priestley
Director
29 June 2020
Statement of Directors' Responsibility
The directors are responsible for preparing the consolidated
financial statements (the "financial statements") for GoldStone
Resources Limited ("GoldStone" or the "Company") and its
subsidiaries (together the "Group") for the year ended 31 December
2019 in accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the directors must not
approve the financial statements unless they are satisfied, they
give a true and fair view of the state of affairs of the Group and
of the profit or loss of the Group for that period. The directors
are also required to prepare the financial statements in accordance
with the rules of the London Stock Exchange for companies trading
securities on AIM.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and Group and enable them to
ensure that the financial statements comply with the Companies
(Jersey) Law 1991. They are also responsible for safeguarding the
assets of the Company and Group and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website. Legislation in Jersey governing the preparation and
dissemination of financial information differs from legislation in
other jurisdictions.
Signed on behalf of the Board of Directors
Emma Priestley
Director
29 June 2020
INDEPENT AUDITOR'S REPORT TO MEMBERS OF GOLDSTONE RESOURCES
LIMITED
Opinion
We have audited the financial statements of GoldStone Resources
Limited (the "Company") and its subsidiaries (together "the Group")
for the year ended 31 December 2019, which comprise the
Consolidated Statement of Financial Position, Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Cash Flows and the
notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 December 2019 and of the Group's loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
-- have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
and Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material uncertainties related to going concern
We draw attention to note 2b to the financial statements which
indicates, in common with many businesses engaged in exploration
and development activities prior to the production and sale of
minerals, that the Group may require additional funding and/or
facilities within 12 months from the date on which the financial
statements are authorised for issue in order to fully develop its
business plan. The directors are confident that should funding be
required it will be available, however at the approval of these
financial statements it is not certain that this will be the
case.
In order for the Group to enter into the production phase of the
project, certain permits still need to be issued. At the date of
this report these have not yet been awarded. The directors
understand they are be received shortly, however at the approval of
these financial statements it is not certain that this will be the
case.
The above conditions highlight material uncertainties which may
cast significant doubt about the ability of the Group to continue
as a going concern. Our opinion is not modified in respect of this
matter.
Overview of our audit approach
Key
audit * Carrying value and appropriate capitalisation of
matters intangible assets.
Audit
scope * We have performed a full scope audit of GoldStone
Akrokeri Limited, the component which holds the
exploration and evaluation assets.
* No component auditors or firms were involved in
reporting for the purposes of the consolidated
opinion.
=========================================================
Materiality
* Overall Group materiality of US$170,000 (2018:
US$160,000) based on 2% of gross assets.
=========================================================
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on; the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Carrying value and appropriate capitalisation of intangible assets
The Group's carrying value of intangible assets as at 31 December
2019 was US$8.3million, which comprises of exploration and evaluation
costs on the Akrokeri-Homase Gold Project ("AKHM"). There is the
risk that these assets have been incorrectly capitalised in accordance
with IFRS 6 and that there are indicators of impairment as at
31 December 2019.
How we addressed the key audit matter in the audit
We performed the following procedures to address the risk:
* Confirmed that the Group has title to the applicable
licences;
* Reviewed and performed substantive testing of
capitalised cost including consideration of
appropriateness for capitalisation under IFRS 6;
* Assessed the AKHM project during the year and post
year end to confirm progress; and
* Considered the requirements for an impairment review
to be undertaken based in accordance with IFRS 6.
An overview of the scope of our audit
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the Group structure and
the accounting processes and controls in place.
The Group financial statements are a consolidation of two
components; the Company and its main subsidiary GoldStone Akrokeri
Limited ('GAL'). GAL was considered to be a significant component
and a full scope audit of the financial information has been
performed. For the Company, we performed audit procedures on
specific accounts within that component that we considered had the
potential for greatest impact on the financial statements, either
because of the size of these accounts or their risk profile.
Audits of the components were performed at a materiality level
calculated by reference to a proportion of Group materiality
appropriate to the relative scale of the business concerned.
We conducted the audit of all components, as set out above, of
the business and no component auditors were used during the audit
process. Local auditors are engaged for local financial statement
filing purposes.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statements line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Group materiality Group materiality Basis for materiality
2019 2018
US$170,000 US$160,000 2% of gross assets
================== ======================
Our calculation of materiality increased from the prior year,
due to the increase in the Group's gross assets. We consider gross
assets to be the most significant determinant of the Group's
financial position and performance used by the shareholders, with
the key financial balances being intangible exploration and
evaluation assets and cash and cash equivalents. The going concern
of the Group is dependent on its ability to fund operations going
forward, as well as on the valuation of its assets, which represent
the underlying value of the Group.
Whilst Group materiality was set at US$170,000, materiality for
significant components was set at US$136,000 and performance
materiality was set at 50% of materiality. We applied the concept
of materiality at both planning and performing the audit, and in
evaluating the effect of misstatements.
We agreed with the Audit and Compliance Committee that we would
report to the Committee all individual audit differences identified
during our audit in excess of US$8,500 (2018: US$8,000).
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the Group financial statements does
not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance or conclusion thereon. In connection with our audit of
the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies (Jersey) law 1991 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the Group's financial statements are not in agreement with
the accounting records and returns; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal controls as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and Company's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Company or its subsidiaries or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements, as a whole, are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at:
http://www.frc.org.uk/auditorsresponsibilities . This description
forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Jean Ellis, B.A., F.C.A, C.T.A. (Senior Statutory Auditor)
Castle Chambers
For and on behalf of DSG 43 Castle Street
29 June 2020 Liverpool, L2 9TL
Consolidated Statement of Financial Position
in united states dollars note 31 December 2019 31 December
2018
--------------------------------- ----- ----------------- -------------
Assets
non-current assets
property, plant and equipment 8 24,314 35,454
intangible assets - exploration
and evaluation 9 8,256,380 7,769,721
================================= ===== ================= =============
total non-current assets 8,280,694 7,805,175
================================= ===== ================= =============
current assets
trade and other receivables 11 162,864 229,688
cash and cash equivalents 12 90,128 337,468
================================= ===== ================= =============
total current assets 252,992 567,156
================================= ===== ================= =============
total assets 8,533,686 8,372,331
================================= ===== ================= =============
Equity
share capital - ordinary
shares 13 3,484,580 3,480,430
share capital - deferred
shares 13 6,077,013 6,077,013
share premium 13 27,222,084 27,219,262
foreign exchange reserve 13 (52,061) -
capital contribution
reserve 13 555,110 555,110
13,
share options reserve 15 229,688 229,688
accumulated deficit 13 (30,624,816) (29,970,036)
total equity 6,891,598 7,591,467
================================= ===== ================= =============
Liabilities
non-current liabilities
borrowings 16 1,168,997 324,000
================================= ===== ================= =============
non-current liabilities 1,168,997 324,000
================================= ===== ================= =============
current liabilities
trade and other payables 17 473,091 456,864
================================= ===== ================= =============
current liabilities 473,091 456,864
================================= ===== ================= =============
total liabilities 1,642,088 780,864
================================= ===== ================= =============
total equity and liabilities 8,533,686 8,372,331
================================= ===== ================= =============
The accounting policies and notes form part of these
consolidated financial statements.
The consolidated financial statements were approved by the Board
of Directors on 29 June 2020.
Signed on behalf of the Board.
Emma Priestley
Chief Executive Officer
Consolidated Statement of Comprehensive Income
year ended year ended
31 December 31 December
in united states dollars note 2019 2018
----------------------------------- ------- ------------- -------------
continuing operations
administrative expenses (542,559) (1,014,322)
=================================== ======= ============= =============
operating loss 6 (542,559) (1,014,322)
=================================== ======= ============= =============
finance costs 7 (112,221) -
loss before and after tax from
continuing operations (654,780) (1,014,322)
items that may be reclassified
subsequently to profit and loss:
foreign exchange translation (52,061) -
movement
=================================== ======= ============= =============
total comprehensive loss for
the year (706,841) (1,014,322)
=================================== ======= ============= =============
loss per share from operations
basic and diluted losses per
share attributable to the equity
holders of the company during
the year (expressed in cents
per share) 14 (0.003) (0.004)
The accounting policies and notes form part of these
consolidated financial statements.
Consolidated Statement of Changes in Equity
share share
capital capital foreign capital share
in united states note ordinary deferred share exchange contribution options accumulated total
dollars shares shares premium reserve reserve reserve deficit equity
------------------ ------ ---------- ---------- ----------- ---------- ------------- --------- ------------- ------------
balance as at 31
December
2017 3,480,430 6,077,013 27,219,262 - 555,110 90,650 (29,046,364) 8,376,101
================== ====== ========== ========== =========== ========== ============= ========= ============= ============
total
comprehensive
loss
for the year - - - - - - (1,014,322) (1,014,322)
options/warrants
expired
or lapsed in the
year 15 - - - - - (90,650) 90,650 -
share warrants
granted
in the year 15 - - - - - 229,688 - 229,688
balance as at 31
December
2018 3,480,430 6,077,013 27,219,262 - 555,110 229,688 (29,970,036) 7,591,467
================== ====== ========== ========== =========== ========== ============= ========= ============= ============
total loss for
the year - - - - - - (654,780) (654,780)
translation
movement - - - (52,061) - - - (52,061)
================== ====== ========== ========== =========== ========== ============= ========= ============= ============
total
comprehensive
loss
for the year - - - (52,061) - - (654,780) (706,841)
================== ====== ========== ========== =========== ========== ============= ========= ============= ============
issue of ordinary
shares 13 4,150 - 2,822 - - - - 6,972
balance as at 31
December
2019 3,484,580 6,077,013 27,222,084 (52,061) 555,110 229,688 (30,624,816) 6,891,598
================== ====== ========== ========== =========== ========== ============= ========= ============= ============
The accounting policies and notes form part of these
consolidated financial statements.
Consolidated Statement of Cashflows
year ended year ended
31 December 31 December
in united states dollars note 2019 2018
----------------------------------------------------------- ------- ------------- -------------
cash flow from operating activities
operating loss for the year (542,559) (1,014,322)
adjusted for:
* depreciation 8 11,140 11,151
* non cash settlement of director fees 13 6,972 -
(52,061) -
* foreign exchange differences
changes in working capital:
* (decrease)/increase in trade and other receivables - 3,220
* increase in trade and other payables 15,827 397,138
net cash used in operating activities (560,681) (602,813)
============================================================ ======= ============= =============
cash flow from investing activities
capitalisation of exploration costs 9 (486,659) (968,894)
acquisition of property, plant
and equipment 8 - (40,882)
net cash used in investing activities (486,659) (1,009,776)
============================================================ ======= ============= =============
cash flow from financing activities
proceeds from loan 16 800,000 324,000
net cash generated from financing
activities 800,000 324,000
============================================================ ======= ============= =============
net decrease in cash and cash equivalents (247,340) (1,288,589)
============================================================ ======= ============= =============
cash and cash equivalents at beginning
of the year 12 337,468 1,626,057
============================================================ ======= ============= =============
cash and cash equivalents at end
of the year 12 90,128 337,468
============================================================ ======= ============= =============
The accounting policies and notes form part of these
consolidated financial statements.
Notes to the Consolidated Financial Statements
1. reporting entity
The consolidated financial statements for the year ended 31
December 2019 (the "financial statements") comprise GoldStone
Resources Limited (the "Company") and its subsidiaries, set out in
note 20, (together referred to as the "Group").
The Company is quoted on the AIM market of the London Stock
Exchange and is incorporated and domiciled in Jersey (Channel
Islands). The address of its registered office is 2(nd) Floor,
International House, 41 The Parade, St. Helier, Jersey, JE2 3QQ.
The Company's principal activity is that of a holding company. The
Group's principal activity is exploration and mining of gold and
associated elements.
2. basis of preparation
(a) statement of compliance and basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union, including International
Accounting Standards ("IAS") and interpretations issued by the IFRS
Interpretations Committee. The financial statements have been
prepared under the historical cost convention as modified for
financial assets carried at fair value. The accounting policies
adopted are set out below.
The preparation of consolidated financial statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and reported amounts in the financial statements. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions or estimates are significant to the
financial statements, are disclosed in note 2(d).
(b) going concern
The financial statements have been prepared assuming the Group
and Company will continue as a going concern. In assessing whether
the going concern assumption is appropriate, the directors have
taken into account all available information for the foreseeable
future; in particular for the 12 months from the date of approval
of these financial statements. This assessment included
consideration of future plans and associated expenditure, existing
cash resources and available facilities and licence and permit
requirements.
The Group had available cash of US$90k as at 31 December 2019
and in March 2020, the Company announced a fundraising of up to
US$4.3 million, gross, to support GoldStone commencing production
at the Akrokeri-Homase Gold Project ("AKHM"). The funding included
26, 14% unsecured bond notes ("Bonds") of US$50,000 each to be
issued to certain new and existing investors along with 52 million
warrants over the ordinary share capital of the Company to be
issued to the Bond subscribers. In addition, US$3.0 million was
secured by way of a 14% secured gold loan of up to 2,000 troy
ounces from Asian Investment Management Services Ltd ("AIMS") (the
"Gold Loan"). In addition, AIMS was issued 120 million warrants
over the ordinary share capital of the Company.
As at 29 June 2020, all the Bonds have been issued raising funds
of US$1.3 million before expenses. In addition, US$1.05 million of
the Gold Loan had been drawn down and received. The Board is
confident that it will commence gold production in Q4 2020
supported by the funding supplied by the Gold Loan and the Bonds,
subject to the necessary permits being issued. Should there be a
material delay in the issue of the permits over and above the
Boards current expectations, the Company may need to secure further
funding to meet its contractual obligations as they fall due.
The Board has reassessed the DEP and determined that the elution
plant, electrowinning and Gold Room are not essential capital costs
at this stage. This reduces the initial capital outlay to
approximately US$3.8 million, allowing the Group to move
immediately into the production phase on receipt of the requisite
permits, which are expected shortly. The Board confirm that, based
on, inter alia, its cashflow forecasts, they are satisfied that the
Group has adequate resources to move into production and continue
in business for the foreseeable future.
The Group continues to evaluate the exploration required along
the Homase Trend and at the historic Akrokeri Mine. It is currently
the Board's intention that such exploration is funded from future
production cashflow from AKHM. In the event that this is not
feasible, or the Group wishes to accelerate these exploration
programmes, then the Company many need to raise further
funding.
The directors believe that the funds are likely to come from
further equity issues, specifically in relation to the exercise of
warrants held by existing shareholders. The sensitivities around
the timing of permits being awarded and the availability of future
funding have been incorporated into the financial forecasts
produced by the Board in assessing going concern. However, the
directors are confident that the necessary permits will be attained
shortly and funding will be available, if and when required. The
directors therefore believe the going concern basis is
appropriate.
(c) functional and presentational currency
Items included in the financial statements of each of the
Group's subsidiaries are measured using the currency of the primary
economic environment in which the entity operates (its functional
currency). These consolidated financial statements are presented in
United States Dollars, which is the functional and presentational
currency of the Group.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at the balance
sheet date.
Exchange differences arising on the settlement of monetary items
and on the retranslation of monetary items are included in the
statement of comprehensive income for the period.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
expressed in United States Dollars using exchange rates prevailing
at the balance sheet date. Income and expense items are translated
at the average exchange rates for the period. Exchange differences
arising if any, are classified as other comprehensive income and
are transferred to the Group's translation reserve.
When the settlement of monetary items receivable from or payable
to a foreign operation is neither planned nor likely in the
foreseeable future, foreign currency gains and losses arising from
such items are considered to form part of a net investment in
foreign operations and are recognised in other comprehensive
income, and presented in the exchange reserve in equity.
(d) use of estimates and judgements
In the application of the Group's accounting policies, the
directors are required to make judgements, estimates and
assumptions about the carrying amount of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimates are revised if the revision affects only that period, or
in a period of the revision and future periods if the revision
affects both current and future periods.
The following are the key estimates and judgements that have a
significant risk of resulting in a material adjustment within the
next year:
(i) valuation of exploration and evaluation expenditure
The value of the Group's exploration and evaluation expenditure
will be dependent upon the success of the Group in discovering
economic and recoverable mineral resources, especially in the
countries of operation where political, economic, legal, regulatory
and social uncertainties are potential risk factors.
The future revenue flows relating to these assets is uncertain
and will also be affected by competition, relative exchange rates
and potential new legislation and related environmental
requirements.
The ability of the Group to continue operating within Ghana is
dependent on a stable political environment which is uncertain
based on the history of the country. This may also impact the
Group's legal title to assets held which would affect the valuation
of such assets.
(ii) valuation of share warrants
The fair value of share warrants is calculated using the
Black-Scholes model. The model requires a number of inputs to
calculate the fair value of the warrants. Volatility is based on
the Group's trading performance and the risk-free rate is
determined using a 3-year UK government bond. The directors have
reviewed the underlying inputs and are happy that these appear
reasonable.
3. significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements. When necessary, adjustments are made to the
financial statements of subsidiaries to bring their accounting
policies in line with those used by other members of the Group.
(a) basis of consolidation
The consolidated financial statements consolidate the financial
statements of the Company and the financial statements of its
subsidiary undertakings made up to 31 December 2019.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies. All intra-group assets and
liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on
consolidation.
(b) financial instruments
(i) non-derivative financial assets
The Group recognises loans and receivables at fair value on the
date that they are originated. All other financial assets are
recognised initially on the trade date, which is the date that the
Group becomes party to the contractual provisions of the
instrument.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all the risks and rewards of ownership of the
financial asset are transferred. Any interest in such transferred
financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount
presented in the statement of financial position when, and only
when, the Group has a legal right to offset the amounts and intends
either to settle them on a net basis or to realise the asset and
settle the liability simultaneously. The Group classifies
non-derivative financial assets into the following categories:
loans and receivables and cash and cash equivalents.
Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active market. Such
assets are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition,
loans and receivables are measured at amortised cost using the
effective interest method, less any impairment losses. Loans and
receivables comprise trade and other receivables.
Cash and cash equivalents comprise bank balances only.
(ii) non-derivative financial liabilities
The Group recognises financial liabilities initially on the
trade date, which is the date that the Group becomes a party to the
contractual provisions of the instrument. The Group derecognises a
financial liability when its contractual obligations are
discharged, cancelled or expire.
The Group classifies non-derivative financial liabilities into
trade and other payables.
(iii) share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of the ordinary shares are
recognised as a deduction from equity, net of tax effects.
(iv) deferred shares
Deferred shares are classified as equity and held in the capital
contributions reserve account.
(c) share based payments
The fair value of warrants and the employee share option scheme
is calculated at the grant date using the Black-Scholes model. The
resulting cost is charged to the statement of comprehensive Income
over the vesting period or in line with the services provided in
consideration for the issue.
(d) property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any recognised impairment loss. Depreciation is
charged so as to write off the cost or valuation of assets over
their estimated lives, using the straight-line method, unless
otherwise indicated, on the following bases:
Gold samples no depreciation charged
Computer equipment over three years
Office equipment over four years
Field/geological equipment over four years
Motor vehicles over four years
The carrying value of tangible fixed assets is reviewed for
impairment when events or changes in circumstances indicate that
the carrying value may not be recoverable. The gain or loss arising
on the disposal or retirement of an asset is determined as the
difference between the sale proceeds and the carrying amount of the
asset is recognised in income.
(e) intangible assets - exploration and evaluation
The Group capitalises expenditure in relation to exploration and
evaluation of mineral assets when the beneficial or legal rights to
ownership of these assets are obtained. Expenditure included in the
initial measurement of exploration and evaluation assets and which
are classified as intangible assets, relate to the acquisition of
rights to explore, topographical, geological, geochemical and
geophysical studies, exploratory drilling, trenching, sampling and
activities to evaluate the technical feasibility and commercial
viability of extracting a mineral resource.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances suggest that the carrying amount of an
asset may exceed its recoverable amount. The assessment is carried
out by allocating exploration and evaluation assets to cash
generating units, which are based on specific projects or
geographical areas. Whenever the exploration for and evaluation of
mineral resources does not lead to the discovery of commercially
viable quantities of mineral resources or the Group has decided to
discontinue such activities of that unit, the associated
expenditures are written off to profit or loss.
Once commercially viable reserves are established and
development is sanctioned, exploration and evaluation assets are
transferred to development assets and once commercial production
commences amortisation will be applied.
(f) impairment of financial assets
A financial asset is impaired if there is objective evidence of
impairment as a result of one or more events that occurred after
the initial recognition of the asset, and that loss event(s) had an
impact on the estimated future cash flows of that asset that can be
estimated reliably.
The Group considers evidence of impairment for financial assets
measured at amortised cost at both a specific asset and collective
level.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate. Losses
are recognised in the statement of comprehensive income.
The carrying amount of the Group's non-financial assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated. An impairment loss is
recognised if the carrying amount of an asset exceeds its
recoverable amount.
(g) capital management
The primary objective of the Group's capital management is to
optimally execute its exploration objectives and, if feasible, to
safeguard the Group's ability to continue as a going concern, so
that it can provide returns for shareholders.
The Group manages its capital structure and makes adjustments to
it, in light of changes in economic conditions, exploration results
and the need for further exploration capital. To maintain or adjust
the capital structure, the Group may issue new shares. The Group
considers its capital structure to consist of issued equity.
The Group is not subject to externally imposed capital
requirements.
(h) taxation
Current and deferred tax is charged or credited in the statement
of comprehensive income, except when it relates to items charged or
credited directly to equity, in which case the related tax is also
dealt with in equity. Current tax is calculated on the basis of the
tax laws enacted or substantively enacted at the reporting date in
the countries where the Company and its subsidiaries operate.
Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are generally
recognised for all deductible temporary differences to the extent
that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised,
except for differences arising on investments in subsidiaries where
the Group is able to control the timing of the reversal of the
difference and it is probable that the difference will not reverse
in the foreseeable future.
Recognition of the deferred tax assets is restricted to those
instances where it is probable that a taxable profit will be
available against which the difference can be utilised.
Deferred tax is calculated based on rates enacted or
substantively enacted at the reporting date and expected to apply
when the related deferred tax asset is realised or liability
settled.
(i) operating leases
Payments made under operating leases are recognised in the
statement of comprehensive income on a straight-line basis over the
term of the lease.
(j) finance cost
Finance costs are recognised in the profit and loss period in
which they are incurred.
(k) risk management
The main financial risks facing the Group are the availability
of adequate funding, movements in interest rates and fluctuations
in foreign exchange rates. Constant monitoring of these risks
ensures that the Group is protected against any potential adverse
effects of such risks so far as it is possible and foreseeable. The
Group only deals with high-quality banks. It does not hold
derivatives, trade in financial instruments or engage in hedging
instruments.
The Group's continued future operations depends on the ability
to raise sufficient working capital. Management monitors its cash
and future funding requirements through the use of on-going cash
flow forecasts. All cash, with the exception of that required for
immediate working capital requirements, is held on short term
deposit.
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the South African Rand, the Ghana Cedi's and
Sterling. Foreign exchange risk arises from future commercial
transactions and net investments in foreign operations. The Group
does not hedge its exposure to foreign currencies and recognises
the profits and losses resulting from currency fluctuations as and
when they arise. The Group's liquidity risk is monitored through
cash flow forecasts.
4. adoption of new and revised standards
(a) new and amended standards
The amendments and interpretations listed below apply for the
first time from 1 January 2019. None of the standards have an
impact on the Group financial statements:
-- IFRS 16 - "Leases"
-- IFRIC Interpretation 23 - "Uncertainty over Income Tax Treatments"
-- Amendments to IFRS 9 - "Prepayment Features with Negative Compensation"
-- Amendments to IAS 28 - "Long-term Interests in Associates and Joint Ventures"
-- Amendments to IAS 19 - "Plan Amendment, Curtailment or Settlement"
-- Annual IFRS Improvement Process
o IFRS 3 Business Combinations - "Previously held Interests in a
joint operation"
o IFRS 11 Joint Arrangements - "Previously held Interests in a
joint operation"
o IAS 12 Income Taxes - "Income tax consequences of payments on
financial instruments classified as equity"
o IAS 23 Borrowing Costs - "Borrowing costs eligible for
capitalisation"
(b) new standards in issue but not yet effective
The new and amended standards and interpretations that are
issued, but not yet effective are disclosed below.
The Group intends to adopt these new and amended standards and
interpretations, if applicable, when they become effective.
-- IFRS 17 - "Insurance Contracts"
-- Amendments to IFRS 3 - "Definition of a Business"
-- Amendments to IAS 1 and IAS 8 - "Definition of Material"
IFRS 17 - "Insurance Contracts" is not applicable to the Group
as it does not issue insurance contracts.
Where relevant, the Group evaluates the effect of new Standards,
amendments to published Standards and Interpretations issued but
not effective, on the presentation of the financial statements. The
directors have assessed there to be no material impact on the
financial statements.
5. operating segments
The Group has two reportable segments, exploration and
corporate, which are the Group's strategic divisions. For each of
the strategic divisions, the Group's CEO, deemed to be the Chief
Operating Decision Maker ("CODM"), reviews internal management
reports on at least a monthly basis. The results are then
subsequently shared with the Board. The Group's reportable segments
are:
Exploration and Evaluation: the exploration operating segment is
presented as an aggregation of the Homase and Akrokeri licences
(Ghana). Expenditure on exploration activities for each licence is
used to measure agreed upon expenditure targets for each licence to
ensure the licence clauses are met.
Corporate: the corporate segment includes the holding company
costs in respect of managing the Group. There are varying levels of
integration between the corporate segment and the combined
exploration activities, which include resources spent and accounted
for as corporate expenses that relate to furthering the exploration
activities of individual licences.
information about reportable segments for the year ended 31
December 2019
total per consolidated
income statement/financial
in united states dollars exploration corporate position
-------------------------------- ------------ ------------ ----------------------------
reportable segment expenditure - (654,780) (654,780)
================================ ============ ============ ============================
reportable segment (loss) - (654,780) (654,780)
================================ ============ ============ ============================
reportable segment assets 8,321,000 212,686 8,533,686
================================ ============ ============ ============================
reportable segment liabilities (32,314) (1,609,774) (1,642,088)
================================ ============ ============ ============================
Included within exploration assets is property, plant and
equipment of US$24,314 and intangible assets of US$8,256,380, which
are held in Ghana.
information about reportable segments for the year ended 31
December 2018
total per consolidated
income statement/financial
in united states dollars exploration Corporate position
-------------------------------- ------------ ------------ -----------------------------
reportable segment expenditure - (1,014,322) (1,014,322)
================================ ============ ============ =============================
reportable segment (loss) - (1,014,322) (1,014,322)
================================ ============ ============ =============================
reportable segment assets 7,827,398 544,933 8,372,331
================================ ============ ============ =============================
reportable segment liabilities (30,247) (750,617) (780,864)
================================ ============ ============ =============================
Included within exploration assets is property, plant and
equipment of US$35,454 and intangible assets of US$7,769,721, which
are held in Ghana.
6. expenses by nature
The operating loss is stated after charging:
year ended year ended
31 December 31 December
in united states dollars 2019 2018
----------------------------------- ------------- -------------
auditor's remuneration in respect
of audit of the
financial statements
* previous auditor - 24,195
* current auditor 26,200 25,000
depreciation 11,140 11,151
foreign exchange difference 1,969 41,505
===================================== ============= =============
7. finance cost
year ended year ended
31 December 31 December
in united states dollars 2019 2018
------------------------------- ------------- -------------
interest charged on borrowings 44,997 -
finance charges on borrowings 67,224 -
------------------------------- ------------- -------------
total 112,221 -
=============================== ============= =============
8. property , plant and equipment
31 December 2019 31 December 2018
in united states accumulated carrying accumulated carrying
dollars cost depreciation value cost depreciation value
-------------------- -------- -------------- --------- -------- -------------- ---------
gold samples 4,570 - 4,570 4,570 - 4,570
computer equipment 67,696 (64,509) 3,187 67,696 (61,200) 6,496
office equipment 109,202 (108,047) 1,155 109,202 (107,470) 1,732
field/geological
equipment 66,667 (60,795) 5,872 66,667 (58,185) 8,482
motor vehicles 38,576 (29,046) 9,530 38,576 (24,402) 14,174
total 286,711 (262,397) 24,314 286,711 (251,257) 35,454
==================== ======== ============== ========= ======== ============== =========
reconciliation of property, plant and equipment - 31 December
2019
in united states carrying value carrying value
dollars opening balance additions depreciation ending balance
-------------------- ----------------- ---------- ------------- ----------------
gold samples 4,570 - - 4,570
computer equipment 6,496 - (3,309) 3,187
office equipment 1,732 - (577) 1,155
field/geological
equipment 8,482 - (2,610) 5,872
motor vehicles 14,174 - (4,644) 9,530
total 35,454 - (11,140) 24,314
==================== ================= ========== ============= ================
reconciliation of property, plant and equipment -31 December
2018
in united states carrying value carrying value
dollars opening balance additions depreciation ending balance
-------------------- ----------------- ---------- ------------- ----------------
gold samples 4,570 - - 4,570
computer equipment 494 9,559 (3,557) 6,496
office equipment 658 2,308 (1,234) 1,732
field/geological
equipment - 10,439 (1,957) 8,482
motor vehicles - 18,576 (4,402) 14,174
==================== ================= ========== ============= ================
total 5,722 40,882 (11,151) 35,454
==================== ================= ========== ============= ================
9. intangible assets - exploration and evaluation
The Group's intangible assets comprise wholly of exploration and
evaluation assets in respect of AKHM in Ghana.
in united states dollars 31 December
-------------------------------- ------------
balance as at 31 December 2017 6,800,827
Additions 968,894
balance as at 31 December 2018 7,769,721
Additions 486,659
================================ ============
balance as at 31 December 2019 8,256,380
================================ ============
Impairment of the above is considered in relation to the
impairment indicators listed within IFRS 6. The key estimate in
relation to AKHM is in respect of the mineral resource's potential.
Details of AKHM can be found on the Group's website.
10. taxation
(a) current and deferred tax
The Company is subject to Jersey income tax at the rate of 0%.
The Group is also registered for income tax purposes with the South
African Revenue Service. Due to the loss making position of the
Group in all jurisdictions there is no tax charge and no deferred
tax asset has been recognised in the current or prior periods due
to uncertainty of future profits. As a result, no reconciliation
has been prepared.
11. trade and other receivables
in united states dollars 31 December 31 December
2019 2018
-------------------------- ------------ ------------
other receivables 162,864 229,688
total 162,864 229,688
========================== ============ ============
Other receivables relate to the fair value of share warrants
issued in the prior period.
12. cash and cash equivalents
The cash and cash equivalents balance at the year-end was made
up of balances in the following currencies:
in united states dollars 31 December 31 December
2019 2018
-------------------------- ------------ ------------
sterling 6 58,385
US dollars 81,969 270,260
ghana cedis 8,153 8,823
total 90,128 337,468
========================== ============ ============
13. capital and reserves
(a) share capital
31 December 31 December
2019 2018
---------------------------------------------- -------------- --------------
ordinary shares
called up, allotted and fully paid
250,050,253 ordinary shares of 1 pence
each
(2018: 249,707,991) GBP2,500,503 GBP2,497,080
converted to united states dollars
at date of issue $3,484,580 $3,480,430
deferred shares
called up, allotted and fully paid
in issue at 1 January GBP3,730,772 GBP3,730,772
in issue at 31 December - fully paid
414,530,304 (December 2018: 414,530,304)
deferred 0.9 pence shares GBP3,730,772 GBP3,730,772
============================================== ============== ==============
converted to united states dollars
at date of issue $6,077,013 $6,077,013
Authorised
1,000,000,000 (December 2018: 1,000,000,000)
authorised ordinary 1 pence shares GBP10,000,000 GBP10,000,000
================================================ ============== ==============
During the year the Company issued the following 1 pence fully
paid shares:
Number of Nominal Share premium
Shares Value
---------------- ---------------------------- ------------ ----------- --------------
1 January 2019 Opening balance 249,707,991 $3,480,431 $27,219,262
2 August 2019 Shares at 1.68p share 342,262 GBP3,423 GBP2,327
Converted to United States
Dollars at date of issue - $4,150 $2,822
31 December
2019 Closing balance 250,050,253 $3,484,581 $27,222,084
(b) ordinary shares
Each holder of ordinary shares is entitled to receive dividends
as declared from time to time and is entitled to one vote per share
at meetings of the Company.
(c) deferred shares
Each holder of deferred shares shall not be entitled to receive
notice of, attend or vote at any meeting of the Company (other than
a meeting of the holder of the deferred shares), shall not be
entitled to any dividends or other distributions (whether on a
winding up of the Company or otherwise). On a winding up of the
Company, each deferred share shall confer upon its holder the right
to receive an amount equal to the nominal amount paid up on such
deferred share.
(d) issue and consolidation of ordinary shares
During the year, the Company issued a total of 342,262 (2018:
nil) new 1p ordinary shares, all of which rank pari passu with the
existing ordinary shares. The shares were issued at a price of
1.68p per share. The total value received for the share issuance
was US$6,972 (2018: US$ nil).
The Company has not concluded any share repurchases since its
incorporation.
(e) dividends
No dividends were proposed or declared during the period under
review (2018: Nil).
(f) description and purpose of reserves
(i) share capital
Share capital consists of amounts subscribed for share capital
at nominal value .
(ii) share premium
Share premium consists of amounts subscribed for share capital
in excess of nominal value.
(iii) foreign exchange reserve
Cumulative gains and losses on translating the net assets of
overseas operations to the presentation currency.
(iv) capital contribution reserve
Capital contribution reserve consists of deferred shares
classified as equity.
(v) share options reserve
Share options and warrants reserve consists of the fair value of
options and warrants outstanding at the year end.
(vi) accumulated deficit
Accumulated deficit reserve represents the cumulative net gains
and losses recognised in the consolidated statement of
comprehensive income.
14. earnings per share
The calculation of basic and diluted earnings per share at 31
December 2019 was based on the losses attributable to ordinary
shareholders of US$654,780 (2018: US$1,014,322), and an average
number of ordinary shares in issue of 249,849,584 (2018:
249,707,991).
in united states dollars 31 December 31 December
2019 2018
-------------------------------------- ------------ ------------
loss attributable to shareholders (654,780) (1,014,322)
weighted average number of ordinary
shares 249,849,584 249,707,991
basic and diluted earnings per share (0.003) (0.004)
======================================= ============ ============
The Group has the following instruments which could potentially
dilute basic earnings per share in the future:
in number of shares 31 December 31 December
2019 2018
--------------------- ------------ ------------
Warrants 40,352,377 40,352,377
====================== ============ ============
15. share based payment arrangements
At 31 December 2019, the Group has the following share-based
payment arrangements.
(a) share option programmes (equity-settled)
The Group has adopted an Option Scheme in order to incentivise
key management and staff. Pursuant to the option scheme, a duly
authorised committee of the board of the Company may, at its
discretion, grant options to eligible employees, including
directors, of the Company or any of its subsidiaries, to subscribe
for shares in the Company at a price not less than the higher of
(i) the closing price of the shares of the Company on the Stock
Exchange on the date of grant of the particular option or (ii) the
nominal value of the shares.
There were no market conditions within the terms of the grant of
the options therefore the main vesting condition for all the
options awarded was that the director or employee remained
contracted to the Group at the date of exercise.
The conditions relating to the grants of the share option
programmes are as follows:
The terms relating to the grants of the share option programmes
are that on exercise date, the receiver of the options must still
be employed by the Company, or in the case of the receiver being
retrenched or retired, before three months thereafter, or in the
case of the death of the receiver, before six months
thereafter.
There were no such options granted during the year ended 31
December 2019 (2018: same).
(b) reconciliation of outstanding share options
There are no options outstanding at 31 December 2019 (2018:
same).
(c) warrants
There have been no warrants granted or exercised during the
period under review.
On 27 December 2018, the Company granted 40,352,377 warrants
with an exercise price of 1.2p exercisable from 28 December 2018 up
to 2 June 2022; see note 16 for further details.
All ordinary shares issued (excluding deferred shares) pursuant
to the exercise of warrants rank pari passu in all respects with
the ordinary shares.
The fair value of the warrants issued was measured based on the
Black-Scholes formula. Expected volatility was estimated by
considering historical volatility of the Company's share price over
the period commensurate with the expected return.
reconciliation of outstanding warrants
the number and weighted average exercise prices
number of weighted average number of weighted average
warrants exercise price warrants exercise price
31 December 31 December 31 December 31 December
2019 2019 2018 2018
---------------------- ------------- ----------------- --------------- -----------------
outstanding as
at 1 January 40,352,377 1.2p 80,352,377 3.5p
expired or cancelled
during the year - - (80,352,377) 3.5p
granted during
the year - - 40,352,377 1.2p
outstanding at
31 December 40,352,377 1.2p 40,352,377 1.2p
====================== ============= ================= =============== =================
exercisable at
31 December 40,352,377 1.2p 40,352,377 1.2p
====================== ============= ================= =============== =================
The warrants outstanding at 31 December 2019 have an exercise
price of 1.2p (2018: 1.2p) and a weighted average life of 2.4 years
(2018: 3.4 years).
(d) measurement of fair value
The inputs used in measuring the fair values of the warrants at
grant date were as follows:
warrants
27 December 2018
---------------------------------------------- -----------------
share price at grant 1.20p
warrant exercise price 1.20p
expected life of warrants from exercise date 3.4 years
expected volatility 51.6%
expected dividend yield 0.00%
risk free rate 0.74%
fair value per warrant 0.67p
US$:GBP exchange rate used 1.2469
=============================================== =================
The risk free rate has been determined based on 3 year UK
government bonds.
Total fair value as considered in the share options and warrants
reserve was US$229,688 (2018: US$229,688).
(e) expense recognised in statement of comprehensive income
The fair value of the warrants issued on 27 December 2018 has
been reflected within trade and other receivables and are being
released to the statement of comprehensive income over the period
of the loan facility; see note 11 and 16 for further details. The
expense recognised during the year was US$67,224 (2018:
US$nil).
16. borrowings
31 December
in united states dollars 31 December 2019 2018
-------------------------- ----------------- ------------
shareholder loan 1,168,997 324,000
Total 1,168,997 324,000
========================== ================= ============
The Company entered into a loan agreement with Paracale Gold
Limited ("Paracale"), the Company's major shareholder, in December
2018, for a loan of up to US$1,224k.
The loan will accrue interest at 6.0% per annum, compounded
daily against the loan's outstanding balance, until it is repaid. A
total of US$1,124k had been drawn as at 31 December 2019, with the
remaining US$100K drawn post year end. The loan will be repaid in
full on or before 2 June 2022.
In consideration of entering into the loan agreement, Paracale,
were issued with 40,352,377 warrants to subscribe for such number
of 1p ordinary shares at an exercise price of 1.2p per share, at
any time during the period through to 2 June 2022. See note 15 for
further details.
17. trade and other payables
31 December
in united states dollars 31 December 2019 2018
-------------------------- ----------------- ------------
trade payables 49,928 102,928
other payables 218,436 217,487
accruals 204,727 136,449
Total 473,091 456,864
========================== ================= ============
Other payables includes an amount due to Mr Schloemann, a former
director of the Company, for damages of US$140,000 plus interest
and legal fees.
18. financial instruments
(a) financial risk management
The Group's principal financial instruments comprise of cash,
receivables and payables including the various loans and bonds.
Financial risk management of the Group is governed by policies and
guidelines described in the Group's Financial Reporting Memorandum
approved by the Board. Group policies and guidelines cover interest
rate risk, foreign currency risk, credit risk and liquidity risk.
The objective of financial risk management is to contain, where
appropriate, exposures in these financial risks to limit any
negative impact on the Group's financial performance and financial
position.
(b) credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty fails to meet its contractual obligations.
The maximum credit risk exposure relating to financial assets is
represented by their carrying value as at the consolidated
statement of financial position date. The Group's exposure to
significant concentration on credit risk on trade and other
receivables is considered low.
(c) liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset when they fall due. Ultimate responsibility for
liquidity risk management rests with the Board, which has
established an appropriate liquidity risk management framework for
the management of the Group's liquidity management requirements.
The Group manages liquidity risk by continuously monitoring
forecast and actual cash flows, and by preserving cash resources
through minimising the cash burn out rate achieved through cost
reduction. The financial liabilities of the Group are mainly
creditors which are payable on demand, hence it is the opinion of
the board that an analysis of liabilities by maturity dates is not
appropriate.
(d) market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates and interest rates will affect the Group's
income or the value of its holding in financial instruments. The
objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimising the
return.
(i) foreign currency risk
Currency risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. The Group has cash assets denominated in
Sterling, United States Dollars South African Rand, Ghana Cedis and
incurs liabilities for its working capital expenditure in one of
these denominations. Payments are made in Sterling (GBP), United
States Dollars (US$), South African Rand (ZAR) and Ghana Cedis
(GHS), or Euro at the pre-agreed price and converted (if necessary)
as soon as payment needs to occur. Currency conversions and
provisions for expenditure are only made as soon as debts are due
and payable. The Group is therefore exposed to currency risk in so
far as its liabilities are incurred in South African Rand and
Ghanaian Cedi and fluctuations occur due to changes in the ZAR/GBP,
ZAR/US$ and GHS/US$ exchange rates. The Group's policy is not to
enter into any currency hedging transactions.
The directors consider currency risk to be manifested in the
expenditure made on a day to day basis in Sterling, South African
Rand, Ghanaian Cedi and US Dollars. The directors have undertaken a
policy of holding cash raised in Sterling and US Dollars and to
convert funds to South African Rand and Ghanaian Cedi as and when
required.
The exchange rates converted to United States Dollars affecting
the Group were as follows:
reporting reporting
average rate date spot average rate date spot
2019 rate 2019 2018 rate 2018
--------------------------- ------------- ----------- ------------- -----------
Sterling to US dollars 1.276 1.312 1.336 1.274
South African Rand to
US dollars 0.069 0.071 0.076 0.070
Ghana Cedis to US dollars 0.185 0.175 0.213 0.206
=========================== ============= =========== ============= ===========
A strengthening (weakening) of GBP, ZAR or GHS against all other
currencies at 31 December 2019 would have affected the measurement
of financial instruments denominated in a foreign currency and
increased (decreased) equity and profit or loss by the amounts
shown below. This analysis is based on foreign currency exchange
rate variances that the Group considered to be reasonably possible
at the end of the reporting period. The analysis assumes that all
other variables, in particular interest rates, remain constant. The
sensitivity analysis includes only outstanding foreign currency
denominated financial assets and liabilities and adjusts this
translation at year end for a percentage change in foreign currency
rate thus indicating the potential movement in equity.
equity equity
equity strengthening weakening equity strengthening weakening
in united states dollars 2019 2019 2018 2018
------------------------------- --------------------- ----------- --------------------- -------------
sterling 13% (2018: 13%) - - - -
south african rand 20% (2018: - - - -
20%)
ghana cedis 10% (2018: 10%) 39,343 (39,343) 70,213 (70,213)
Total 39,343 (39,343) 70,213 (70,213)
=============================== ===================== =========== ===================== ===========
The percentage change in foreign currency rate used to adjust
the translation of outstanding foreign currency denominated
financial assets and liabilities is in the opinion of the directors
appropriate.
(ii) interest rate risk
The risks caused by changes in interest rates are minimal since
the Group's only interest bearing financial asset pertains to cash.
At the end of the prior year the Group entered into a loan
arrangement with Paracale as detailed in note 16. The interest rate
is fixed at 6% for the duration of the term of the loan. The Group
is therefore not subject to a significant amount of risk due to
fluctuations in the prevailing levels of market interest rates and
as such has not prepared a sensitivity analysis.
19. related parties
The key management personnel is considered to be only the
directors. Details of their remuneration are disclosed below.
salaries and other short-term benefits - detail:
in united states dollars 31 December 31 December
2019 2018
-------------------------------------------------- ------------ --- ------------
Director's remuneration: executive - E
Priestley 87,890 131,888
Director's remuneration (accrued): executive 32,500 -
- E Priestley (*)
Director's remuneration: non-executive
- R Lloyd 700 30,153
Director's remuneration (shares); non-executive
- R Lloyd 6,972 -
Director's remuneration: non-executive
- R Wilkins 5,650 15,527
Director's remuneration (accrued): non-executive 6,500 -
- R Wilkins (*)
Director's remuneration: non-executive
- W Trew 13,537 24,000
Director's remuneration: non-executive
- A List 7,263 15,527
Director's remuneration (accrued): non-executive 6,500 -
- A List (*)
Director's remuneration (accrued): non-executive 2,000 -
- O Fenn (*)
total 169,512 217,095
================================================== ============ === ============
(*) Represents the value of accrued fees for the period 31
December 2018 to 31 December 2019 for each director.
The total amount payable to the highest paid director in respect
of emoluments was US$120,390 (2018: US$131,888). No directors
exercised any share options during the year (2018: nil).
Richard Lloyd resigned as a director on 2 August 2019; the above
represents his remuneration up until this date. The Board agreed to
settle any accrued and deferred fees owing to Richard Lloyd, at the
date of his resignation, through the issue of new ordinary shares,
of US$6,972 (GBPGBP5,750), see note 13 for further details.
Orrie Fenn was appointed as a director on 2 September 2019.
E Priestley's remuneration was paid to Santon Consultancy
Services Limited, a company in which she is a director. R Wilkins's
remuneration was paid to KSJ Investments Limited, a company in
which he is a director.
During the prior year, the Company entered into a loan agreement
for an amount up to US$1,224k with Paracale, the Company's major
shareholder and a company in which Bill Trew, the Company's
chairman, is interested. At year end the balance was US$1,169k
(2018: US$324k), being funds drawn down as at 31 December 2019
included interest accrued to date of US$45k- see note 7 and 16 for
further details.
During the year, the Company engaged MAED (UK) Limited ("MAED")
to undertake the Definitive Economic Plan ("DEP") report. MAED is a
related party, as it is wholly owned by the Company's non-executive
chairman Bill Trew.
20. group entities
Details of the Group's subsidiaries at the end of the reporting
period are as follows:
country of ownership ownership
incorporation interest interest
and operation principal activity 2019 2018
----------------------------- ---------------- -------------------- ---------- ----------
Development
and exploration
of gold and
associated
GoldStone Akrokeri Limited Ghana elements 100% 100%
============================= ================ ==================== ========== ==========
GoldStone Homase Limited Ghana Dormant 90% (*) 90% (*)
============================= ================ ==================== ========== ==========
GoldStone Resources Limited
Gabon S.A.R.L. Gabon Dormant 100% 100%
============================= ================ ==================== ========== ==========
(*) Held indirectly via GoldStone Akrokeri Limited
Under Article 105(11) of the Companies (Jersey) Law 1991, the
directors of the holding company need not prepare separate accounts
(i.e. company only accounts) if consolidated accounts for the
Company are prepared, unless required to do so by the members of
the Company by ordinary resolution. The members of the Company have
not passed a resolution requiring separate accounts and, in the
directors' opinion, the Company meets the definition of a holding
company. As permitted by the law, the directors have elected not to
prepare separate accounts.
21. ultimate controlling party
The directors believe that there is no ultimate controlling
party of the Group.
22. subsequent events
Post the year end, GoldStone has made significant progress,
being awarded the Mineral Lease for the Homase South Pit, announced
on 14 February 2020, to which the application for the environmental
permit has been submitted and is expected to be awarded in the
coming weeks.
As announced on 16 March 2020, the Company has agreed with its
joint venture partner for the Homase prospecting licence, Cherry
Hill Mining Company Limited, for it to relinquish its 10% equity
stake in lieu of a 2% sales royalty, less all costs and taxes and
duties in accordance with the joint venture agreement. GoldStone is
waiting for the Ghanaian Ministry of Lands and Natural Resources to
conclude the process of transferring the Homase licence to its
wholly owned Ghanaian subsidiary, GoldStone Akrokeri Limited.
GoldStone was temporary suspended from trading on AIM following
an administrative error in 2019 that led to the Company's Jersey
registration being dissolved. The Company was restored to the
Jersey Registrar of Companies on 11 June 2020, by the Royal Court
of Jersey, with the dissolution of the Company having been voided,
which has the effect of the dissolution effectively never taken
place. This enabled the resumption of trading in the Company's
shares on AIM.
Also in March, the Company successfully raised US$4.3 million,
gross, comprising the issue of 26, 14% unsecured bond notes of
US$50,000 each to certain existing and new investors, to raise, in
aggregate, US$1.3 million (the "Bonds"). 52 million warrants,
exercisable at 3 pence per ordinary share (the "Exercise Price") of
1 penny each in the Company ("Ordinary Share"), were issued to the
Bond subscribers.
In addition, a 14% secured loan was agreed with Asian Investment
Management Services Ltd (the "Gold Loan"), of up to 2,000 troy
ounces of gold at a price of US$1,500 per troy ounce, equating to a
value of US$3.0 million, with 120 million warrants, exercisable at
the Exercise Price also being issued to AIMS. The Gold Loan was
finalised in June 2020 and, in aggregate, 700 troy ounces (US$1.05
million) has already been drawn and received by the Company. The
Gold Loan and the Bonds, will, subject to receipt of the requisite
environmental and operational permits, enable the Company to start
mining the Homase South Pit and to construct the associated heap
leach plant.
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 rns@lseg.com or visit www.rns.com.
END
FR KKCBNOBKDAAB
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