TIDMGRL
RNS Number : 2400D
Goldstone Resources Ltd
28 June 2021
28 June 2021
GOLDSTONE RESOURCES LIMITED
("GoldStone" or the "Company")
Final Results for the year ended 31 December 2020
GoldStone Resources Limited (AIM: GRL), is pleased to announce
its final results for the year ended 31 December 2020.
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.
Highlights
-- The Homase Mine within the Akokeri-Homase Gold Project
("AKHM") was awarded its Environmental Permit, Water Permit and
Operating Permits. The Group commenced mining operations in May
2021, and commissioned the dry plant for the Heap Leach operation
and is awaiting the final inspection by the Minerals Commission
before gold processing can commence.
-- Mining and stacking remain on schedule with 160kt of ore
having been mined and stockpiled and 40Kt stacked on the heap leach
pad to date.
-- Losses for the 12 months to 31 December 2020 were US$610k
(2019: Loss of US$655k and with net assets standing at US$10,845k
against net assets of US$6,892k at the end of the previous year.
This consists predominately of exploration costs for AKHM of
US$14,340k (2019: US$8,256k).
-- The Group completed a resource expansion programme to further
define and extend the mineable resource down-dip at Homase South to
a vertical depth of approximately 80 metres, and further
metallurgical testwork was carried out. The results increased the
minable resource of the southern pits, by 86,900 ounces of gold at
depth, representing a 257% increase on the previous estimate of
33,800 ounces of gold, within the existing JORC defined
resource.
-- US$2.7 million raised post period end through the exercise of
Warrants, to meet ongoing costs associated with the ramp up of
operations at the Homase Mine.
For further information, please contact:
GoldStone Resources Limited
Bill Trew / Emma Priestley Tel: +44 (0)1534 487 757
Strand Hanson Limited
James Dance / James Bellman Tel: +44 (0)20 7409 3494
S. P. Angel Corporate Finance
LLP
Ewan Leggat / Charlie Bouverat Tel: +44 (0)20 3470 0501
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICERS REPORT
The chairman and chief executive officer present their report
for Goldstone Resources Limited ("Goldstone" or the "Company") and
its subsidiaries (together "the Group") for the year ended 31
December 2020.
The Board has continued with its focus on fulfilling the Group's
objective of becoming a gold producer, with production expected to
commence in Q3 2021, despite the setbacks that COVID-19 put on the
development of the Group's Homase Mine, which is set within its
Akrokeri-Homase Gold Project ("AKHM") in Ghana. The Group
maintained momentum and it is with considerable optimism therefore,
that the Board look forward to the remainder of 2021 and what it
believes these coming months will deliver as the Group nears the
production of gold.
The Board would like to take this opportunity to thank the
shareholders for their continued support. The Board will continue
to update investors as to the Group's progress towards achieving
its objectives at both the Homase Mine and Akrokeri. The
operational update of the Group for the period ending 31 December
2020 is set out below.
operational update
The financial year ended 31 December 2020 proved to be a period
of exceptional progress for the Group, in particular, the award of
the Mining Lease for the Homase Mine held by its 100% Ghanaian
subsidiary GoldStone Akrokeri Limited.
Though the COVID 19 pandemic has caused delays, the Group has,
post period end, secured its Environmental Permit, Water Permit and
Operating Permit, enabling mining to commence in May 2021.
Work at the Group's other mine, the Akrokeri Mine continues,
most notably, with the identification of further historical
exploration results that strengthen the Board's decision to re-open
the mine.
The Group's financial position was further strengthened during
the year by the successful debt financing of US$4.3 million
comprising a US$3.0 million Gold Loan and US$1.3 million Corporate
Bonds. A further US$900,000 was raised in December 2020 on the
exercise of warrants. The Group's cash deposits stood at US$701,384
at 31 December 2020 compared to US$90,128 at 31 December 2019.
These funds have been used to further develop the Homase Mine to
production.
Homase Mine update
T he Homase Mine, set within its AKHM project in Ghana, consists
of five open pits, targeting the oxide resource to a vertical depth
of 30 metres , as detailed in the D efinitive E conomic P lan,
dated June 2019, ("DEP"). This includes the historic Homase Main
Pit, see Figure 1, which produced 52,500 oz gold at an average
grade of 2.5g/t Au in 2002/03 by AngloGold Ashanti.
http://www.rns-pdf.londonstockexchange.com/rns/2400D_1-2021-6-27.pdf
Figure 1: Location of the Homase Mine and Akrokeri Mine
During 2020 a 10 year Mining Lease (the "Lease") incorporating
land for plant and process operation was issued by the M inistry of
L ands and N atural R esources ("MLNR") . This covers the southern
parts of the site. Whilst the Lease initially only relates to the
southern pits , the DEP has been approved by the relevant
authorities in Ghana in its entirety and the Lease can therefore be
renewed and/or extended to include additional pits along the Homase
Trend as the Group's production plans advance.
When the Group received the formal approval from the MLNR for
the transfer of the Homase prospecting licence from Cherry Hill
Mining Limited , a joint venture partner of the Group, to GoldStone
Akrokeri Limited (" GAL ") , the Company's wholly owned Ghanaian
subsidiary, the Ghanaian Minerals Commission encouraged the Group
to expand its mining lease area. The Group submitt ed an
application to expand the area to include the n orth ern pits along
the Homase Trend , and was informed by the MLNR that the
application was approved on 3 December 2020 with the recommendation
for the grant of the expanded Lease and this is now awaiting the
ratification by the relevant Ghanaian Ministerial bodies.
The Group has been investing in the plant and equipment, the
land and crop compensation, and the identification of contractors
to undertake the mining, so that on receipt of the relevant
permits, the Group w ould be able to immediately commence mining
operations at the Homase Mine, utilising contract mining.
In parallel with the se activities the Group also completed a
resource expansion programme to further define and extend the
mineable resource down-dip at Homase South to a vertical depth of
approximately 80 metres, and further metallurgical testwork was
carried out. The positive results were announced on 12 November
2020 , and increased the minable resource of the southern pits, by
86,900 ounces of gold at depth, representing a 257% increase on the
previous estimate of 33,800 ounces of gold, within the existing
JORC define resource, see Table 1.
Table 1: Homase South Pit - Mineable resource variation with a
cut-off 0.5g/t
June 2019 October 2020
Grade (ounces of gold) (ounces of gold)
(Average)
---------- ------------ ----------------- -----------------
Oxides 1.2g/t 33,800 49,200
---------- ------------ ----------------- -----------------
Fresh ore 1.3g/t - 71,500
---------- ------------ ----------------- -----------------
Note: The mineable resource is a non-JORC compliant resource
Following the increase in mineable resource and the optimisation
review, the Group is in the process of updating the DEP and will
update the market in during the course of the next few months.
post period end
The Group was awarded its Environmental Permit, Water Permit and
Operating Permits. The Group commenced mining operations in May
2021, following the pre-stripping and clearing of the Homase Mine
site. The daily mining rate and the growth in the primary and
secondary run-of-mine stockpiles are performing at the targeted
levels in the following schedule.
Table 2: 2021 Planned Mining Schedule
Units May Jun Jul Aug Sept Oct Nov Dec
Pit to Stockpile kt 79.4 75.8 96.8 90.3 88.5 89.4 91.2 89.4
-------- ------- ------ ------- ------- ------- ------ ------- -------
Gold Grade Au g/t 1.8 1.6 1.5 1.4 1.2 1.1 0.9 1.1
-------- ------- ------ ------- ------- ------- ------ ------- -------
Total Mined Material kt 301.7 333.6 348.5 340.1 341.7 141.5 339.9 339.9
-------- ------- ------ ------- ------- ------- ------ ------- -------
Strip Ratio 2.8 3.4 2.6 2.8 2.6 0.5 2.3 2.7
------- ------ ------- ------- ------- ------ ------- -------
As announced on 13 May 2021, the planned gold production for the
first eight months from commencement of mining now exceeds the
Group's original guidance of 14,400 ounces per annum, stated in the
DEP, to produce some 25,000 ounces of gold, at a total cash cost,
pre-tax, of under US$600per ounce for the thirty metre pit. These
figures indicate the cash cost per ounce will lie within the lower
quartile of industry cost standards.
Accordingly, the Group expects to increase the planned
production rate to around 50,000 ounces of gold per annum, which
would represent an increase of more than 300% from the original
production schedule.
The first two cells of the heap leach pad, which will comprise a
total of seven cells, have been commissioned, enabling stacking,
which commenced at an initial rate of 100 tonnes per hour and has
been ramped up to a target of 200 tonnes per hour / c.2,500 tonnes
per day. The Group has commissioned the necessary dry plant for the
Heap Leach operation and is awaiting the final inspection by the
Minerals Commission before gold processing can commence. Mining and
stacking remain on schedule with 160kt of ore having been mined and
stockpiled and 40Kt stacked on the heap leach pad to date.
The Group is continuing to review the options available for
extracting saleable gold from the loaded carbon it is producing,
including toll treatment or expanding its own processing facility
to include an elution plant and gold room.
Akrokeri Mine update
During the period, the Group continued reassessing the former
mine workings and former artisanal mine workings, building the
database with historical exploration work and consolidating
historical geological reports that reference not just the Akrokeri
Mine but also the several other historical exploration targets in
the vicinity of the Akrokeri Mine.
T he Group intends to commence a drilling programme, subject to
funding, to start to define a resource associated with the Akrokeri
mineralisation with the intention of bringing the Akrokeri Mine
back into production.
corporate and financial
Losses for the 12 months to 31 December 2020 were US$610k (2019:
Loss of US$655k). The financial statements at year end show the
Group's balance sheet, with net assets standing at US$10,845k
against net assets of US$6,892k at the end of the previous year.
This consists predominately of exploration costs for AKHM of
US$14,340k (2019: US$8,256k).
As the Group has moved into the production phase post year end,
amortisation of the exploration asset will be applied going
forward.
Cash and cash equivalents as at 31 December 2020 were US$701k
(2019: US$90k), which included the proceeds from the exercise of
warrants in December by Asian Investment Management Services Ltd
("AIMS") to subscribe for a total of 30,000,000 new Ordinary Shares
of 1 penny each in the capital of the Company being issued at the
exercise price of 3 pence per share, for a total subscription price
of GBP900,000 ( US$1,125,250 ).
In conjunction with this, the Board agreed to defer payment of
the interest due on 31 December 2020 pursuant to the gold loan with
AIMS announced on 22 June 2020 (the "Gold Loan") to 31 March 2021
in order to preserve cash within the Company. Accordingly, the
interest due on the outstanding balance of the Gold Loan will
accrue at a rate of 17 per cent., as opposed to 14 per cent., for
the period from 31 December 2020 to 31 March 2021. AIMS agreed by
way of a deed of variation to the Gold Loan agreement that the
deferment of such interest payment will not trigger an event of
default under the agreement.
Subsequent to this, in March 2021, the Company agreed a further
deferment of the AIMS gold loan interest payment to 30 June 2021.
In consideration of the deferment, 2,000,000 new Ordinary Shares
were issued to AIMS. Also, in March 2021 AIMS exercised 40,000,000
warrants for new Ordinary Shares of 1 penny each in the capital of
the Company at a price of 3 pence per share. The warrant exercise
provided GBP1,200,000, (C. US$1,680,000) of additional funding to
the Company. On 17 March 2021 the Company agreed to extend the
initial term for 20 of its unsecured bonds of US$50,000 each in
issue to 15 June 2021.
In June 2021, Paracale Gold Ltd ("Paracale") exercised, in
aggregate, warrants to subscribe for 32,352,377 new Ordinary Shares
of 1 penny each in the capital of the Company, comprising,
20,352,377 new Ordinary Shares at a price of 1.2 pence per Ordinary
Share (the "Warrant Conversion Exercise") and 12,000,000 new
Ordinary Shares at a price of 3 pence per Ordinary Share (the "Cash
Warrant Exercise"). The Warrant Conversion Exercise was set against
the related US$ 1,224,000 loan provided to the Company by Paracale
on 28 December 2018, which accrues interest at a daily compound
rate of 6%. Accordingly, the amount due in respect of the Warrant
Conversion Exercise of GBP244,229 (c.USD$344,362) was satisfied by
reducing the total amount of principal and interest outstanding
under the loan to USD$1,036,558. The Cash Warrant Exercise was
satisfied in cash and provided GBP360,000, (C. US$ 507,598) of
additional funding to the Company.
Following this, AIMS exercised, in aggregate, a further
50,000,000 warrants to subscribe for new Ordinary Shares of 1 penny
each in the capital of the Company at a price of 3 pence per
Ordinary Share, which provided GBP1,500,000 (C. US$2,114,991) of
additional funding to the Company. Also in June 2021 a bond holder
exercised 4,000,000 warrants to subscribe for new Ordinary Shares
of 1 penny each in the capital of the Company at a price of 3 pence
per Ordinary Share, which provided GBP120,000 (C.US$169,199) of
additional funding to the Company.
former director's claim
Following the 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. In January 2021, The Company
agreed to issue 1,800,000 new Ordinary Shares of 1p each in the
Company to the former director, which have a value of GBP163,800
(approximately US$222,768) at the closing middle market price of
the Company's Ordinary Shares on 15 January 2021, which, in
addition to US$22,500 already paid in cash, represented a full and
final settlement of the damages awarded to him by the South African
courts. The Company has been indemnified against any future claims
by the former director of the Company.
working capital management and funding
Following the exercise of warrants, post the period end as
detailed above, the Company now has sufficient funds to move
towards its goal of achieving gold production and is in discussions
with its shareholders which advanced the gold loan interest
repayment that falls due on 30 June 2021. 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 2020, the Group had cash of US$701,384k (2019
US$90,128) . As noted above, the Company has successfully raised
US$4.5million, gross, post the period end to fund the commencement
of initial production at the Homase Mine. The Board is confident
that it will commence gold production in 2021. Should there be a
material delay in the delivery of gold production, over and above
the Boards current expectations, the Company may need to secure
further funding to meet its contractual obligations, in particular
the secured Gold Loan that matures on the 30 September 2021, as
they fall due.
The Board is confident that, based on, inter alia, its cashflow
forecasts and the continued financial support of its shareholders,
they are satisfied that the Group has adequate resources to move
towards gold 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 awaiting the final
inspection of the Minerals Commission to commence gold production.
The delay represents a risk that might delay the commencement of
gold production.
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 Group'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 Group 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 Group 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
The Group's success depends upon its social, safety and
environmental performance as failures may lead to delays or
suspensions of its activities.
The Group takes its responsibilities in these areas seriously
and monitors its performance across these areas on a regular basis.
As the Homase Mine continues towards production, the Group 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 the Licences, has been sanitation
and drinking water, and improving the school facilities,
maintaining the buildings and providing school uniforms. The Group
continues to build on the community relationships to assist the
smallholder farmers and ensuring a "community first" approach when
recruiting. These schemes benefit both the communities and the
investors in which the Group will be operating.
e. coronavirus impact
The Coronavirus pandemic still has had a significant impact on
the operations of many businesses both in Ghana and globally. The
Group has experienced delays to operations during the year, but has
followed government requirements and health guidelines while
focusing on protecting the well-being of the employees and local
communities and within its supply chain. The Group is committed to
a safe working environment and has implemented monitoring and
preventative measures to mitigate the impact of COVID-19 on its
workforce and stakeholders to develop a COVID safe environment that
adheres to health and Government advice and restrictions.
Emma Priestley
chief executive officer
27 June 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
2020
in united states dollars note 31 December 2020 31 December
2019
--------------------------------- ----- ----------------- -------------
Assets
non-current assets
property, plant and equipment 8 491,208 24,314
intangible assets - exploration
and evaluation 9 14,339,772 8,256,380
================================= ===== ================= =============
total non-current assets 14,830,980 8,280,694
================================= ===== ================= =============
current assets
trade and other receivables 11 2,145,576 162,864
cash and cash equivalents 12 701,384 90,128
================================= ===== ================= =============
total current assets 2,846,960 252,992
================================= ===== ================= =============
total assets 17,677,940 8,533,686
================================= ===== ================= =============
Equity
share capital - ordinary
shares 13 3,913,963 3,484,580
share capital - deferred
shares 13 6,077,013 6,077,013
share premium 13 28,080,853 27,222,084
foreign exchange reserve 13 (82,149) (52,061)
capital contribution
reserve 13 555,110 555,110
13,
share options reserve 15 3,535,197 229,688
accumulated deficit 13 (31,234,911) (30,624,816)
total equity 10,845,076 6,891,598
================================= ===== ================= =============
Liabilities
non-current liabilities
Borrowings 16 1,300,000 1,168,997
================================= ===== ================= =============
non-current liabilities 1,300,000 1,168,997
================================= ===== ================= =============
current liabilities
trade and other payables 17 1,001,998 473,091
Borrowings 16 4,530,866 -
current liabilities 5,532,864 473,091
================================= ===== ================= =============
total liabilities 6,832,864 1,642,088
================================= ===== ================= =============
total equity and liabilities 17,677,940 8,533,686
================================= ===== ================= =============
The accounting policies and notes form part of these
consolidated financial statements. The consolidated financial
statements were approved by the Board of directors on 27 June
2021.
Signed on behalf of the Board of directors.
Emma Priestley
chief executive officer
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
2020
year ended year ended
31 December 31 December
in united states dollars note 2020 2019
----------------------------------- ------- ------------- -------------
continuing operations
administrative expenses (577,153) (542,559)
=================================== ======= ============= =============
operating loss 6 (577,153) (542,559)
=================================== ======= ============= =============
finance costs 7 (32,942) (112,221)
loss before and after tax from
continuing operations (610,095) (654,780)
items that may be reclassified
subsequently to profit and loss:
foreign exchange translation
movement (30,088) (52,061)
=================================== ======= ============= =============
total comprehensive loss for
the year (640,183) (706,841)
=================================== ======= ============= =============
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 (0.002) (0.003)
The accounting policies and notes form part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2020
share share
capital capital foreign capital share
in united note ordinary deferred share exchange contribution options accumulated total
states dollars shares shares premium reserve reserve reserve deficit equity
--------------- ------ ---------- ---------- ----------- ---------- ------------- ---------- ------------- -----------
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 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
=============== ====== ========== ========== =========== ========== ============= ========== ============= ===========
Total loss for
the year - - - - - - (610,095) (610,095)
=============== ====== ========== ========== =========== ========== ============= ========== ============= ===========
translation
movement - - - (30,088) - - - (30,088)
=============== ====== ========== ========== =========== ========== ============= ========== ============= ===========
total
comprehensive
loss
for the year - - - (30,088) - - (610,095) (640,183)
warrants
granted in
period 15 - - - - - 3,305,509 - 3,305,509
warrants
exercised in
period 15 405,084 - 810,168 - - - - 1,215,252
=============== ====== ========== ========== =========== ========== ============= ========== ============= ===========
share issue 13 24,299 - 48,601 - - - - 72,900
=============== ====== ========== ========== =========== ========== ============= ========== ============= ===========
Balance as at
31 December
2020 3,913,963 6,077,013 28,080,853 (82,149) 555,110 3,535,197 (31,234,911) 10,845,076
--------------- ------ ---------- ---------- ----------- ---------- ------------- ---------- ------------- -----------
The accounting policies and notes form part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEARED 31 DECEMBER
2020
year ended year ended
31 December 31 December
in united states dollars note 2020 2019
----------------------------------------------------------- ------- ------------- -------------
cash flow from operating activities
operating loss for the year (577,153) (542,559)
adjusted for:
* depreciation 8 14,617 11,140
* non cash settlement of director fees 19 - 6,972
* foreign exchange differences (30,088) (52,061)
25,737 -
* provisions
changes in working capital:
- -
* (decrease)/increase in trade and other receivables
* increase in trade and other payables 329,937 15,827
net cash used in operating activities (236,950) (560,681)
============================================================ ======= ============= =============
cash flow from investing activities
capitalisation of exploration costs 9 (4,185,534) (486,659)
acquisition of property, plant
and equipment 8 (481,511) -
net cash used in investing activities (4,667,045) (486,659)
============================================================ ======= ============= =============
cash flow from financing activities
proceeds from loan 16 3,000,000 800,000
proceeds from bond issue 16 1,300,000 -
proceeds from share issue 13 1,215,251 -
net cash generated from financing
activities 5,515,251 800,000
============================================================ ======= ============= =============
net decrease in cash and cash equivalents 611,256 (247,340)
============================================================ ======= ============= =============
cash and cash equivalents at beginning
of the year 12 90,128 337,468
============================================================ ======= ============= =============
cash and cash equivalents at end
of the year 12 701,384 90,128
============================================================ ======= ============= =============
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 2020 (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 revenues as the Group moves towards gold
production, existing cash resources and available facilities.
The Group had available cash of US$701k as at 31 December 2020.
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 31 December 2020, all the Bonds have been issued raising
funds of US$1.3 million before expenses. In addition, the Gold Loan
had been fully drawn down and received. The Board is confident that
it will commence gold production in Q3 2021 supported by the
further funding supplied by the exercise of warrants in respect of
the Gold Loan and the Bonds (see note 22).
Should there be a material delay in the final inspection for the
commencement of gold production over and above the Board's current
expectations, the Company may need to secure further funds to meet
its contractual obligations, in particular the secured Gold Loan
that matures on the 30 September 2021, as they fall due.
At the date of this report the ability of the Group and Company
to meet its short-term financial commitments is dependant on the
timing of the commencement of the gold production and the ongoing
financial support of the shareholders. Having made appropriate
enquiries of the shareholders, the directors are confident that the
ongoing financial support will be forthcoming, albeit at the date
of approval of these financial statements, this is not legally
committed.
The Board is therefore confident that with the continued support
of the shareholders, the Group and Company can meet all its
contractual obligations as they fall due for the foreseeable
future. Therefore, the Board believes it is appropriate to adopt
the going concern assumption.
(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 2020.
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 2020. None of the standards have an
impact on the Group financial statements:
-- Amendments to References to Conceptual Framework in IFRS Standards
-- Definition of a Business (Amendments to IFRS 3)
-- Definition of Material (Amendments to IAS 1 and IAS 8)
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39, and IFRS 7)
-- Extension of the Temporary Exemptions from Applying IFRS 9 (Amendments to IFRS 4)
(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 (dates
stated below for accounting periods beginning on or after such
date).
-- Covid-19 Related Rent Concessions 1 June 2020
(Amendment to IFRS 16)
-- Interest Rate Benchmark Reform Phase 2 1 January 2021
(Amendments to IFRS 9, IAS 3, IFRS 7, IFRS 4, and IFRS 16)
-- Covid-19 Related Rent Concessions beyond 30 June 2021 1 April
2021
(Amendments to IFRS 16)
-- Onerous Contracts - Cost of Fulfilling a Contract 1 January
2022
(Amendments to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020 1 January
2022
-- Property, Plant and Equipment: Proceeds before intended use 1
January 2022
(Amendments to IAS 16)
-- Reference to the Conceptual Framework 1 January 2022
(Amendments to IFRS 3)
-- IFRS 17 Insurance Contracts 1 January 2023
-- Classification of liabilities as current or non-current 1
January 2023
(Amendments to IAS 1)
-- Disclosure of Accounting Policy 1 January 2023
(Amendments to IAS 1 and IFRS Practice Statement 2)
-- Definition of Accounting Estimate 1 January 2023
(Amendment to IAS 8)
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 2020
total per consolidated
income statement/financial
in united states dollars exploration corporate position
-------------------------------- ------------ ------------ ----------------------------
reportable segment expenditure - (610,095) (610,095)
================================ ============ ============ ============================
reportable segment (loss) - (610,095) (610,095)
================================ ============ ============ ============================
reportable segment assets 14,359,654 3,318,286 17,677,940
================================ ============ ============ ============================
reportable segment liabilities (504,905) (6,327,959) (6,832,864)
================================ ============ ============ ============================
Included within exploration assets are intangible assets of
US$14,339,772, which are held in Ghana.
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.
6. expenses by nature
The operating loss is stated after charging:
year ended year ended
31 December 31 December
in united states dollars 2020 2019
----------------------------------- ------------- -------------
auditor's remuneration in respect
of audit of the
financial statements
* current auditor 26,200 26,200
depreciation 14,617 11,140
foreign exchange difference 172,832 1,969
===================================== ============= =============
7. finance cost
year ended year ended
31 December 31 December
in united states dollars 2020 2019
-------------------------------- ------------- -------------
interest charged on borrowings 13,209 44,997
finance charges on borrowings 19,733 67,224
---------------------------------- ------------- -------------
total 32,942 112,221
================================== ============= =============
8. property , plant and equipment
31 December 2020 31 December 2019
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 73,368 (67,303) 6,065 67,696 (64,509) 3,187
office equipment 111,672 (108,567) 3,105 109,202 (108,047) 1,155
field/geological
equipment 101,168 (62,953) 38,215 66,667 (60,795) 5,872
motor vehicles 477,444 (38,191) 439,253 38,576 (29,046) 9,530
total 768,222 (277,014) 491,208 286,711 (262,397) 24,314
==================== ======== ============== ========= ======== ============== =========
reconciliation of property, plant and equipment - 31 December
2020
in united states carrying value carrying value
dollars opening balance additions depreciation ending balance
-------------------- ----------------- ---------- ------------- ----------------
gold samples 4,570 - - 4,570
computer equipment 3,187 5,672 2,794 6,065
office equipment 1,155 2,470 520 3,105
field/geological
equipment 5,872 34,501 2,158 3,714
motor vehicles 9,530 438,868 9,145 473,754
total 24,314 481,511 14,617 491,208
==================== ================= ========== ============= ================
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
===================== ================= ========== ============= ================
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 2018 7,769,721
Additions 486,659
-------------------------------- ------------
balance as at 31 December 2019 8,256,380
Additions 6,083,392
-------------------------------- ------------
balance as at 31 December 2020 14,339,772
-------------------------------- ------------
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
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
2020 2019
-------------------------- ------------ ------------
other receivables 2,145,576 162,864
Total 2,145,576 162,864
========================== ============ ============
Other receivables include US$1,852,791 (2019: US$162,484) in
respect of the fair value of share warrants issued in the current
and 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
2020 2019
-------------------------- ------------ ------------
sterling 620,961 6
US dollars 72,939 81,969
ghana cedis 7,484 8,153
Total 701,384 90,128
========================== ============ ============
13. capital and reserves
(a) share capital
31 December 31 December
2020 2019
---------------------------------------------- -------------- --------------
ordinary shares
called up, allotted and fully paid
281,785,967 ordinary shares of 1 pence
each
(2019: 250,050,253) GBP2,817,859 GBP2,500,503
converted to united states dollars
at date of issue $3,913,963 $3,484,580
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 2019: 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 2019: 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 2020 Opening balance 250,050,253 $3,484,581 $27,222,084
10 July 2020 Shares at 4.2p share 1,735,714 GBP17,357 GBP55,543
Converted to United States
Dollars at date of issue - $24,299 $48,601
18 December Shares at 3.0p share 30,000,000 GBP300,000 GBP600,000
2020
Converted to United States
Dollars at date of issue - $405,083 $810,168
31 December
2020 Closing balance 281,785,967 3,913,963 28,080,853
(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.
The Company has not concluded any share repurchases since its
incorporation.
(d) dividends
No dividends were proposed or declared during the period under
review (2019: Nil).
(e) 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 2020 was based on the losses attributable to ordinary
shareholders of US$610,095 (2019: US$654,780), and an average
number of ordinary shares in issue of 252,004,667 (2019:
249,849,584).
in united states dollars 31 December 31 December
2020 2019
-------------------------------------- ------------ ------------
loss attributable to shareholders (610,095) (654,780)
weighted average number of ordinary
shares 252,004,667 249,849,584
basic and diluted earnings per share (0.002) (0.003)
======================================= ============ ============
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
2020 2019
--------------------- ------------ ------------
Warrants 182,352,377 40,352,377
====================== ============ ============
15. share based payment arrangements
At 31 December 2020, 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 2020 (2019: same).
(b) reconciliation of outstanding share options
There are no options outstanding at 31 December 2020 (2019:
same).
(c) warrants
On 19 March 2020 the Company granted warrants of 52,000,000,
with an exercise price of 3 pence, exercisable at any time during
the period to 22 June 2022 in consideration of the issue of
corporate bonds see note 16 for further details.
The Company granted warrants of 120,000,000 with an exercise
price of 3 pence on 22 June 2020, exercisable at any time during
the period to 22 June 2022, in consideration of a gold loan 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
2020 2020 2019 2019
-------------------- ------------- ----------------- ------------- -----------------
outstanding as at
1 January 40,352,377 1.2p 40,352,377 1.2p
granted during the
year 172,000,000 3.0p - -
exercised during
the year (30,000,000) 3.0p - -
outstanding at 31
December 182,352,377 2.6p 40,352,377 1.2p
==================== ============= ================= ============= =================
exercisable at 31
December 182,352,377 2.6p 40,352,377 1.2p
==================== ============= ================= ============= =================
The warrants outstanding at 31 December 2020 have a weighted
exercise price of 2.6p (2019: 1.2p) and a weighted average life of
1.5 years (2019: 2.4 years).
(d) measurement of fair value
The inputs used in measuring the fair values of the warrants at
grant date were as follows:
warrants warrants warrants
19 March 22 June 27 December
2020 2020 2018
-------------------------------- ---------- ---------- ------------
share price at grant 2.10p 4.20p 1.20p
warrant exercise price 3.00p 3.00p 1.20p
expected life of warrants from 2.3 years 2.0 years 3.4 years
exercise date
expected volatility 63.74% 65.71% 51.6%
expected dividend yield 0.00% 0.00% 0.00%
risk free rate 0.27% (0.05)% 0.74%
fair value per warrant 0.56p 1.96p 0.67p
US$:GBP exchange rate used 1.27258 1.24785 1.2469
================================ ========== ========== ============
The risk free rate has been determined based on 3 year UK
government bonds.
Total fair value recognised in the share options and warrants
reserve in respect of warrants issued in the year was US$3,305,509
(2019: nil).
(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 is being
released and initially capitalised as part of the exploration
asset, over the period of the loan facility; see note 11 and 16 for
further details. The amount capitalised during the year was
US$67,400 (2019: US$67,224).
The fair value of the warrants issued on 19 March 2020 has been
reflected within trade and other receivables and is being released
and initially capitalised as part of the exploration asset over the
period of the bond facility, see note 11 and 16 for further
details. The amount capitalised during the year was US$295,000.
The fair vale of value of the warrants issued on 22 June 2020
has been reflected within trade and other receivables and is being
released and initially capitalised as part of the exploration asset
over the period of the gold loan facility, see note 11 and 16 for
further details. The amount capitalised during the year was
US$1,252,328.
16. borrowings
31 December
in united states dollars 31 December 2020 2019
-------------------------- ----------------- ------------
shareholder loan 1,346,642 -
gold loan 3,184,224 -
========================== ================= ============
current borrowing 4,530,866 -
========================== ================= ============
shareholder loan - 1,168,997
bonds 1,300,000 -
========================== ================= ============
non-current borrowing 1,300,000 1,168,997
-------------------------- ----------------- ------------
Total 5,830,866 1,168,997
========================== ================= ============
Shareholder loan
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 2020. 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.
Gold loan
The Company entered into a loan agreement with Asian Investment
Management Services Limited ("AIMS") in June 2020, for a 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. The
loan was fully drawn by 31 December 2020.
The gold loan accrues interest at 14.0% per annum, compounded
daily against the loan's outstanding balance, until it is repaid.
The gold loan will be repaid in full on or before 19 September
2021.
In consideration of entering into the loan agreement AIMS were
issued with 120,000,000 warrants to subscribe for such number of
Ordinary Shares at an exercise of 3.0 pence per share (the
"Exercise Price"), at any time during the period through to 22 June
2022. This resulted in an increase in the share option reserve and
other receivables of US$2.9 million in the period. In December
2020, AIMS had exercised 30,000,000, of their warrants. (see note
15)
Bonds
In March 20202 the Company issued twenty-six unsecured bond
notes of US$50,000 each to certain existing and new investors,
raising, in aggregate, US$1.3 million before expenses. Paracale
Gold and BCM, the Company's major shareholders, each subscribed for
six bonds with a value of, in aggregate, US$0.3 million
respectively.
In conclusion of entering into the Bonds, a total of 52,000,000
warrants were issued to subscribe for such number of Ordinary
Shares at the Exercise Price, at any time during the period through
to 22 June 2022 (see note 15). This led to an increase in the share
option reserve and other receivables of US$371K in the period.
17. trade and other payables
31 December
in united states dollars 31 December 2020 2019
-------------------------- ----------------- ------------
trade payables 570,391 49,928
other payables 242,289 218,436
accruals 189,318 204,727
Total 1,001,998 473,091
========================== ================= ============
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
2020 rate 2020 2019 rate 2019
--------------------------- ------------- ----------- ------------- -----------
Sterling to US dollars 1.284 1.380 1.276 1.312
South African Rand to
US dollars 0.061 0.070 0.069 0.071
Ghana Cedis to US dollars 0.176 0.170 0.185 0.175
=========================== ============= =========== ============= ===========
A strengthening (weakening) of GBP, ZAR or GHS against all other
currencies at 31 December 2020 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 2020 2020 2019 2019
------------------------------- --------------------- ----------- --------------------- -------------
sterling 13% (2019: 13%) - - - -
south african rand 20% (2019: - - - -
20%)
ghana cedis 10% (2019: 10%) 192,036 (192,036) 39,343 (39,343)
Total 192,036 (192,036) 39,343 (39,343)
=============================== ===================== =========== ===================== ===========
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
2020 2019
--------------------------------------------------- ------------ --- ------------
Director's remuneration: executive - E
Priestley 68,750 87,890
Director's remuneration (accrued): executive
- E Priestley (*) 51,250 32,500
Director's remuneration: non-executive
- R Lloyd - 700
Director's remuneration (shares); non-executive
- R Lloyd - 6,972
Director's remuneration: non-executive
- R Wilkins 12,000 5,650
Director's remuneration (accrued): non-executive
- R Wilkins (*) - 6,500
Director's remuneration: non-executive
- W Trew 5,000 13,537
Director's remuneration: (accrued): non-executive 7,000 -
- W Trew
Director's remuneration: non-executive
- A List 12,000 7,263
Director's remuneration (accrued): non-executive
- A List (*) - 6,500
Director's remuneration: non-executive 1,500 -
- O Fenn
Director's remuneration (accrued): non-executive
- O Fenn (*) 10,500 2,000
total 168,000 169,512
=================================================== ============ === ============
(*) Represents the value of accrued fees for the period 31
December 2019 to 31 December 2020 for each director.
The total amount payable to the highest paid director in respect
of emoluments was US$120,000 (2019: US$120,390). No directors
exercised any share options during the year (2019: nil).
Bill Trew's remuneration is paid to Oxus Mining Limited, a
company in which he is a director.
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 2018, 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$1,346k
(2019: US$1,169k), being funds drawn down as at 31 December 2020
included interest accrued to date of US$177k- see note 7 and 16 for
further details.
On 16 March 2020 the Company entered into a bond agreement with
Paracale and BCM, for 6, 14% bonds of US$50K each. In addition
12,000,000 warrants over 1.0p Ordinary Shares of the Company were
awarded to both parties at 3.0p each. Bill Trew is a director and
shareholder of Paracale and A List is a director of BCM.
During the year, MAED (UK) Limited ("MAED") began undertaking
the update of the Definitive Economic Plan ("DEP") report which was
originally prepared in 2019 by them. This was an agreed review
under the original engagement between MAED and the Company. 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 2020 2019
----------------------------- ---------------- -------------------- ---------- ----------
Development
and exploration
of gold and
associated
GoldStone Akrokeri Limited Ghana elements 100% 100%
============================= ================ ==================== ========== ==========
GoldStone Homase Limited Ghana Dormant 100%(*) 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
On 18 January 2021, the Company announced that it had reached
agreement with a former director of the Company, for the full and
final settlement of damages awarded by the South African Labour
Court in December 2018.
The Company agreed to issue 1,800,000 new Ordinary Shares of
1pence each in the Company to the former director in respect of the
claim. The shares issued had a value of GBP163,800 (US$227,768)
which in addition to an amount of US$22,500 already paid to the
former director, represented full and final settlement of the
claim.
On 12 February 2021, the Company announced that the Ghanaian
Environmental Protection Agency had granted the Environmental
Permit for the Group's Homase South Pit within the AKHM Project.
The Environmental Permit has allowed the Group to proceed towards
the production phase of the Project.
On 19 February 2021, the Company announced it had been awarded
the necessary permits for the Group's Homase South Pit within the
AKHM Project to progress the production phase of the Project.
On 1 March 2021, the Company agreed with Asian Investment
Management Services Limited ("AIMS") to a further deferral of the
gold loan interest payment, previously deferred to 31 March 2021,
to 30 June 2021. AIMS exercised 40,000,000 of warrants over new
Ordinary Shares of 1penny in the capital of the Company at a price
of 3pence per Ordinary Share and in consideration the Company
issued 2,000,000 Ordinary Shares to AIMS.
On 17 March 2021, the Company agreed to extend the initial term
for 20 of its unsecured bonds of US$50,000 each in issue to 15 June
2021.
On 13 May 2021, the Company announced that mining and ore
stacking at the Homase Mine within the AKHM Project had
commenced.
On 1 June 2021, the Company announced that Paracale Gold Limited
("Paracale") had exercised 32,352,377 warrants to subscribe for new
Ordinary Shares of 1penny each in the Company comprising 20,352,377
new Ordinary Shares at a price of 1.2pence per Ordinary Share and
12,000,000 new Ordinary Shares at a price of 3pence per Ordinary
Share, made GBP244,229 (US$344,362) of the funds raised was used to
settle part of the loan to the Company from Paracale in December
2018. The remaining GBP360,000 (US$507,598) of the funds raised
provided additional funding to the Company.
On 2 June 2021, AIMS exercised warrants to subscribe for
50,000,000 new Ordinary Shares of 1penny each in the capital of the
Company at a price of 3pence per Ordinary Share, providing
GBP1,500,000 ( US$2,114,911) of additional funding to the
Company.
On 8 June 2021, the Company announced an exercise of 4,000,000
warrants by a bond holder to subscribe for new Ordinary Shares of
1penny each in the capital of the Company at a price of 3pence per
Ordinary Share, providing an additional GBP120,000 ( US$169,119) of
additional funding to the Company.
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