GRL Goldstone Resources Limited

 

In united states dollars		note	year ended 31 December 2022		year ended 31 December 2021	year ended 31 December 2018
cash flow from operating activities
operating loss for the year before and after tax			(674,413)		(1,523,095)	(1,014,322)
adjusted for:
-      finance costs		8	511,533		728,887
-      depreciation		9	272,404		71,300	11,151
-      gold loan settlement			(1,191,427)		-
-      director and senior management fees			245,839		-
-      foreign exchange differences			812,410		164,170	-
-      changes in working capital			645,290		(462,499)
net cash generated by/(used in) operating activities			621,636		(1,021,237)	(602,813)
cash flow from investing activities
capitalisation of exploration costs		10	-		(746,640)	(968,894)
acquisition of property, plant and equipment		9	(1,593,787)		(4,872,653)	(40,882)
net cash used in investing activities			(1,593,787)		(5,619,293)	(1,009,776)
cash flow from financing activities
repayment from bond issues		19	-		(300,000)
proceeds from share issues		16	748,939		6,575,670
net cash generated from financing activities			748,939		6,275,670	324,000
net decrease in cash and cash equivalents			(223,212)		(364,860)	(1,288,589)
cash and cash equivalents at beginning of the year		14	336,524		701,384	1,626,057
cash and cash equivalents at end of the year		14	113,312		336,524	337,468

 

 

 

 

 

in united states dollars	year ended 31 December 2021		cash flows	other non-cash changes	year ended 31 December 2022
net cash:
cash at bank and in hand	336,524	(223,212)		-	113,312
debt:
shareholder loan	(742,587)	-		742,587	-
gold loan	(3,769,500)	-		863,238	(2,906,262)
derivative	(728,770)	-		(176,995)	(905,765)
bonds	(300,000)	-		300,000	-
	(5,540,857)	-		1,728,830	(3,812,027)
net debt:	(5,204,333)	(223,212)		1,728,830	(3,698,715)

 

Other non-cash changes relate to the repayment of the shareholder loan and bonds via the issue of new Ordinary Shares in the year and the gold loan is repaid out of gold sales; see note 19 for further details.

 

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 2022 (the "financial statements") comprise GoldStone Resources Limited (the "Company") and its subsidiaries, set out in note 23, (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 Group's annual report is for the year ended 31 December 2022 and includes the consolidated financial statements of the Group prepared in accordance with UK-adopted International Accounting Standards.-

The consolidated financial statements have been prepared using accounting policies set out in note 3 which are consistent with all applicable UK-adopted International Accounting Standards.

 

The consolidated financial statements have been prepared under the historical cost convention except for the treatment of share-based payments and derivatives.  The consolidated financial statements are presented in United States Dollars ("$").

 

The preparation of consolidated financial statements in conformity with UK-adopted International Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts in the consolidated financial statements.  The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the consolidated 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 for at least twelve months from the date of approval of these financial statements.  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 has recommenced gold production, and is building production up with existing cash resources and available facilities.

 

The Group had available cash of US$113k as at 31 December 2022 (2021: US$337k).

 

AIMSL, who hold the secured Gold Loan of US$3.0 million, supported the Group by agreeing to a number of deferments of interest payments throughout 2021 and 2022, continues to support the Company. Post Period End, the Company has entered into a standstill agreement to 31 December 2025, the conditions which have been agreed to, included a repayment plan to repay the loan from month 7, a change in leadership of the Chairman and operational team at the Homase mine.  The Standstill Agreement allowed for the Company to renegotiate the terms, announced 10 April 2024, whereby, an agreement has been made with AIMSL in respect of the Gold Loan Agreement to extend the Standstill Period under terms of the Standstill Agreement dated 29 December 2023, to 31 December 2025.  AIMSL have also agreed to convert and settle the interest accrued to 31 December 2023 by the issue of new Ordinary Shares

 

 

The Company continues to actively pursue funding proposals and/or similar potential solutions to enable the Company to seek to extend, renegotiate or refinance the outstanding secured Gold Loan and the provision of additional working capital, but there can be no guarantee that such an agreement can be reached or additional working capital provided. On 10 April 2024, the Company announced an extension to the Standstill Agreement, to 31 December 2025, and agreed to convert and settle the interest accrued to 31 December 2023 by the issue of ordinary Shares.  If the Gold Loan cannot be repaid or rescheduled prior to 31 December 2025, security over the Company's primary assets could potentially be enforced. 

 

The Company's Ordinary Shares will remain suspended from trading on AIM until such time as it has satisfied the requirements of AIM Rule 19 with respect to publication of its 2022 Accounts and AIM Rule 18 with regard to publication of its interim results for the six-month period to 30 June 2023, which were required to be published by 30 September 2023.  On 3 January 2024, the Company announced that following the execution of the standstill agreement, the Board was pursuing various avenues to seek to raise additional funding to provide working capital for the group's operational development and to settle various balances due to the Company's outstanding creditors in order to facilitate publication of the 2022 Accounts and Interim Results on a going concern basis.

 

The Group commenced commercial production in January 2022. This was later than previously anticipated due to permitting issues and then with the operational setbacks, production has not been delivering the expected revenues.  With the CLN investment in January 2023, this enabled the Company to invest in new plant and equipment to help improve and increase the production and staking onto the Heap Leach. Mining and Staking recommenced in June 2023 and the cashflow projections are based upon increasing the production and staking, which will improve in 2024, which in turn will improve revenues. 2023 gold produced and sold amounted to approximately 1,250 ounces of gold bullion.

 

The financial models and projections prepared by the Board, in order to monitor cash flow, demonstrate that the Group, in common with many businesses engaged in the early stages of development will require additional funds and/or funding facilities in order to fully develop its business, which is a follow on from the delays and problems encountered with production and permitting, and for the exploration to expand the resource. With continued support from the Group and Companies shareholders, the directors are confident that the Group and Company are able to meet their liabilities as they fall due.

 

At the date of this report the Board is, therefore, confident of the ability of the Group and Company to continue mining and make the on-going operational improvements, as announced in January 2023. The Board is 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 and therefore, the Board believes it is appropriate to continue to adopt the going concern basis.

 

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.  In April 2024, the Company announced a conditional Subscription of 182,000,000 new ordinary shares at the closing offer price of 1 penny per ordinary share. The Subscription Shares shall have one warrant attached with an exercise price of 2 pence for a period of 24 months from the date of admission. In addition, the Company has agreed an extension of the Standstill Agreement until 31 December 2025, as announced on 10 April 2024 and for the conversion of the accrued interest to 31 December 2023 to be converted in addition to the conditional Subscription.

 

(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)            impairment of property, plant and equipment

The assessment of property, plant and equipment for any internal and external indications of impairment involves judgement.  Each reporting period, the Group assesses whether there are any indicators of impairment, if indicated then a formal estimate of the recoverable amount is performed and an impairment loss recognised to the extent that the carrying amount exceeds recoverable amount.  Recoverable amount is determined as the value in use.  Determining whether the projects are impaired requires an estimation of the recoverable value of the individual areas to which value has been ascribed.  The value in use calculation requires the entity to estimate the future cash flows expected to arise from the projects in order to calculate present value. 

 

(ii)           production start date

The Group assesses the stage of the mine under construction to determine when the mine moves into production stage.  The criteria used to assess the start date are determined based on the complexities and operational status of the mine.  The Group considers various criteria to assess when the mine is commercially operational and should be reclassified from Assets under construction to 'Producing Mines' or 'Property plant and equipment.' Some of the criteria will include, but not limited to the following:

·    completion of a reasonable period of testing the mine plant and equipment;

·    completion of the commissioning period;

·    ability to produce metal in a saleable form;

·    ability to sustain ongoing production of metal; and

·    ability to be able to export product for commercial sale.

 

When a mine construction project moves into the production stage, the capitalisation of certain mine construction costs cease and costs are either regarded as inventory or expenses except for costs that qualify for capitalisation relating to mining assets.  This is also the point at which the depreciation/amortisation recognition criteria commences.  The Group considers that the above criteria was met in the year and the asset was transferred from Assets under construction to a Producing Mine.

 

(iii)          inventory

Net realisable tests are performed at least annually and represent the future sale price of the product based on prevailing spot metal prices at the reporting date, less estimated costs to complete production and bring the product to sale.

 

Stockpiles are measure by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces based on assay data and estimated recovery percentage based on expected processing method. 

 

The Company had paused mining in Q4 2022 as Pit 1 had reached the limit of the accessible free dig oxide ore.  The mine planning of Pit 2 was being undertaken and consultation with the local communities to ensure smooth operations for the future, therefore the ore on the rompad had been depleted at the year end.

 

 

 

 

(iv)         ore reserves and resources

Ore reserves are estimates of the amount of ore that can economically and legally be extracted from the mine.  The Group estimates its ore reserves and mineral resources, based on information compiled by appropriately qualified person relating to the geological data on the size, depth and share of the ore body and requires complex geological judgments to interpret the data.  The estimation of recoverable reserves is based upon factors such as estimates of foreign exchanges rates, commodity prices, future capital requirements and production costs along with geological assumptions and judgements made in estimating the size and grade of the ore body.  Changes in the reserve or resource estimates may impact upon the carrying value of exploration and evaluation asses, mine properties, property plant and equipment provision for rehabilitation and depreciation/amortisation charges.

 

(v)          mine rehabilitation provision

The Group assesses its mine rehabilitation provision annually.  Significant estimates and assumptions are made in determining the provision for the mine rehabilitation as there are numerous factors that will affect the ultimate liability payable.  These factors include estimates of the extent and cost of rehabilitation activities, technological changes, regulatory changes, and changes in discount rates.  Those uncertainties may result in future actual expenditure differing from the amounts currently provided.  The provision at the reporting date represents managements best estimate of the present value of the rehabilitation provision.  

 

(vi)         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.

 

(vii)        gold bullion loan

A loan repayable in gold bullion is recorded as a revenue transaction as the extracted gold used in settlement would otherwise generate income. A currency value is placed on repayments based on pre agreed US$ value per ounce.

 

3.      significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

 

(a)       basis of consolidation

The consolidated financial statements comprise the financial statements of the Group as at 31 December 2022. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

 

·    power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); 

·    exposure, or rights, to variable returns from its involvement with the investee; and 

·    the ability to use its power over the investee to affect its returns.

 

 

 

(a)       basis of consolidation

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

·    the contractual arrangement with the other vote holders of the investee;

·    rights arising from other contractual arrangements; and

·    the Group's voting rights and potential voting rights.

 

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

 

All intra-group transactions, balances, income and expenses are eliminated on consolidation. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.

 

(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 and cash on hand.

 

(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) gold loan

The gold loan is initially valued at cost on day one and then revalued at spot rate at each financial year end.  This gives rise to an embedded swap which is recorded separately in the financial statements as a financial derivative but is part of the overall gold loan.

 

(iv) 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 any tax effects.

 

(v) deferred shares

Deferred shares are classified as equity and held in the capital contribution reserve.

 

(c)       share based payments

The Group has applied the requirements of IFRS 2 - 'Share based payment.' IFRS 2 has been applied to all grants of equity instruments.  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.  Fair value at the date of issue is recognised in the share option reserve and then transferred to the profit and loss reserve once warrants have been exercised.

 

(d)       property, plant and equipment

Upon completion of mine construction, the assets initially charged to 'Assets under construction' are transferred to 'Plant and equipment and motor vehicles' or 'Producing mines.'  Items of 'Plant and equipment and motor vehicles' and 'Producing Mines' are stated at cost, less accumulated depreciation and accumulated impairment losses.

 

During the construction period expenditure directly attributable to the construction of each individual asset is capitalised as 'Assets under construction' up to the period when the asset is ready to be put into operation.  When an asset is put into operation it is transferred to 'Plant and equipment and motor vehicles' or 'Producing mines.' Additional capital cost incurred subsequent to the date of commencement of operation of the asset are charged directly to 'Plant and equipment motor vehicles' or 'Producing mines', i.e. where the asset itself was transferred.

 

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the rehabilitation obligation and, for qualifying assets, borrowing costs.  The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.

 

When a mine construction project moves into production stage, the capitalisation of certain mine construction costs ceases and costs are either regarded as inventory or expensed, except for costs which qualify for capitalisation relating to mining asset additions or improvements, underground mine development or mineable reserve development.  Accumulated mine development costs within producing mines are depreciated on a units-of-production basis over the economically viable reserves of the mine. 

 

 

 

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 property, plant and equipment 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 statement of comprehensive income.

 

(e)       intangible assets - exploration and evaluation

The costs of exploration properties and leases, which include the cost of acquiring prospective properties and exploration rights and costs incurred in exploration and evaluation activities, are capitalised as intangible assets as part of exploration and evaluation assets.

 

Exploration and evaluation assets are carried forward during the exploration and evaluation stage and are assessed for impairment in accordance with indicators of impairment set out in IFRS 6 - 'Exploration for and Evaluation of Mineral Resources.'

 

In circumstances where a property is abandoned, the cumulative capitalised costs relating to the property are written off in the period.  No amortisation is charged prior to commencement of production.

 

Once commercially viable reserves are established and development is sanctioned, exploration and evaluation assets are transferred to assets under construction.

 

When commercial production commences, exploration, evaluation and development costs previously capitalised are transferred to property, plant and equipment and depreciated. 

 

Exploration and evaluation costs incurred after commercial production start date in relation to evaluation of potential mineral reserves and resources that are expected to result in increase of reserves are capitalised as evaluation and exploration assets within intangible assets.  Once there is evidence that reserves are increased, such costs are tested for impairment and transferred to producing mines.

 

(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 based on useful economic life.

 

 

 

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.

 

For trade receivables and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECL's, as permitted by IFRS 9.  Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.   

 

(g)          provisions

(i)            general

Provisions are recognised when (a) the Group has a present obligation (legal or constructive) as a result of a past event and (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.  If the effect of the time value of money is material, provisions are discounted using a risk free rate that reflects, where appropriate, the risks specific to the liability.  When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

 

(ii)           rehabilitation provision

The Group records the present value of estimated costs of legal and constructive obligations required to restore the operating locations in the period in which the obligation is incurred.  The nature of these restoration activities include dismantling and removing structures, rehabilitating mines, dismantling operating facilities, closure of plant and waste sites and restoration, reclamation and revegetation of affected areas.

 

The obligation generally arises when the asset is installed or environment is disturbed at the production location.  When the liability is initially recognised, the present value of the estimated cost is capitalised by increasing the carrying amount of the related mining asset to the extent that it was incurred prior to the production of related ore.  Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. 

 

The periodic unwinding of the discount is recognised in the Group statement of comprehensive income as a finance cost.  Additional disturbances or changes in rehabilitation costs will be recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur.  Any reduction in the rehabilitation liability and therefore any deduction from the rehabilitation asset may not exceed the carrying amount of that asset.  If it does, any excess over the carrying value is taken immediately to the Group statement of comprehensive income.

 

If the change in estimate results in an increase in the rehabilitation liability and therefore an addition to the carrying value of the asset, the Group is required to consider whether this is an indication of impairment of the asset as whole and test for impairment in accordance with IAS 36.

 

 

(h)          related parties

For the purposes of the consolidated financial statements, the following parties are considered to be related:

·    Where one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions;

·    Entities under common control; and

·    Key management personnel.

 

In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.

 

Related parties may enter into transactions which unrelated parties might not and transactions between related parties may not be effected on the same terms, condition and amounts as transaction between unrelated parties.  It is the nature of transactions with related parties that they cannot be presumed to be carried out on an arm's length basis.

 

(i)            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.

 

(j)        inventories

Metal in circuit consists of in-circuit material at properties with milling or processing operations and ore awaiting refinement, all valued at the lower of average cost and net realisable value.  In-process inventory costs consist of direct production costs (including mining, crushing, and processing and site administration costs) and allocated indirect costs (including depreciation, depletion and amortisation of producing mines and mining interests).

 

Ore stockpiles consist of stockpiled ore, ore on surface and crushed ore, all valued at the lower of average cost and net realisable value.  Ore stockpile costs consist of direct production costs (including mining, crushing and processing and site administration costs) and allocated indirect costs (including depreciation, depletion and amortisation of producing mines and mining interests).

 

 

 

Finished goods consist of dore bars that have been refined and assayed and are in the form that allows them to be sold.  Finished goods valued at the lower of average cost and net realisable value.  Finished goods cost consist of direct production costs (including mining, crushing and processing and site administration costs) and allocated indirect costs (including depreciation, depletion and amortisation of producing mines and mining interests).

 

(k)       finance cost

Borrowing costs directly relating to the acquisition, construction or production of a qualifying capital project under construction are capitalised and added to the project cost during construction until such time the asset are considered substantially ready for intended use i.e. commercial production.  When funds are borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred.

 

Any general borrowing costs are recognised in the statement of comprehensive income of the period in which they are incurred.

 

(l)        revenue

The Group is principally engaged in the business of producing gold and silver bullion concentrate.  Revenue from contracts with customers is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods.

 

4.         adoption of new and revised standards

(a)       new and amended standards

The following standards and amendments were applicable for annual financial statements beginning on or after 1 January 2022:

·    Amendments to IAS 37, IFRS 3, IAS 16, IFRS 1, IFRS 9 and IAS 41.

 

The above amendments had no impact on the consolidated financial statements of the Group.

 

(b)       new standards in issue but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective up to the date of issuance of the Group's consolidated financial statements 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 IAS 1 : Classification of Liabilities as Current or Non-Current;

·    Amendments to IAS 8: Definition of accounting estimates;

·    Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies; and

·    Amendments to IAS 12: Deferred Tax related to assets and liabilities arising from a single transaction.

 

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.         revenue

The Group's revenue consists of sales of gold and silver bullion to a third party refiner.

in united states dollars	31 December 2022	31 December 2021
gold bullion concentrate	8,894,210	-
silver bullion concentrate	8,339	-
Total	8,902,549	-

 

Sales of gold and silver bullion were made to one main customer, Metalor Technologies SA, the Group's gold and silver refiners, who are based in Switzerland. The gold bullion concentrate figure includes US$1,191,427 used to repay the Gold Loan Facility, set out in the Consolidated Statement of Cash Flows and in note 19.

6.         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, Evaluation and production: 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 2022

in united states dollars	exploration	corporate	total per consolidated statement of comprehensive income/statement of financial position
reportable segment revenue	8,902,549	-	8,902,549
reportable segment cost of sales	(5,746,204)	-	(5,746,204)
reportable segment expenditure	(2,169,216)	(1,661,542)	(3,830,758)
reportable segment profit/(loss)	987,129	(1,661,542)	(674,413)
reportable segment non- current assets	19,967,587	-	19,967,587
reportable segment current assets	1,080,570	17,586	1,098,156
reportable segment liabilities	(4,196,956)	(4,084,045)	(8,281,001)

 

 

information about reportable segments for the year ended 31 December 2021

in united states dollars	exploration	corporate	total per consolidated statement of comprehensive income/statement of financial position
reportable segment expenditure	(1,236,963)	(286,132)	(1,523,095)
reportable segment (loss)	(1,236,963)	(286,132)	(1,523,095)
reportable segment non- current assets	21,280,257	-	21,280,257
reportable segment current assets	2,277,860	274,760	2,552,620
reportable segment liabilities	(2,066,460)	(5,770,902)	(7,837,362)

 

7.         expenses by nature

in united states dollars	31 December 2022	31 December 2021
cost of sales
community, environmental and H&S costs	239,291	-
engineering and maintenance	457,183	-
mining costs	2,314,661	-
processing costs	2,442,833	-
human resource costs	292,236	-
Total	5,746,204	-

 

in united states dollars	31 December 2022	31 December 2021
administrative expenses
finance and administration costs	3,319,225	794,208
Total	3,319,225	794,208

 

The operating loss is stated after charging:

 

in united states dollars			year ended  31 December 2022		year ended  31 December 2021
auditor's remuneration in respect of audit of the financial statements
-      group auditor -      subsidiary auditor			50,645 9,450		30,000 2,900
depreciation			272,404		71,300
foreign exchange difference			812,410		164,170

 

 

8.            finance costs

 

in united states dollars			year ended  31 December 2022		year ended  31 December 2021
loan derivative and interest			511,533		728,887
Total			511,533		728,887

 

 

9.         property, plant and equipment

 

31 December 2022
in united states dollars	cost	accumulated depreciation	accumulated exchange movement	carrying value
producing mine*	21,680,553	(142,600)	(2,510,256)	19,027,697
gold samples	4,570	-	-	4,570
computer equipment	96,904	(75,169)	-	21,735
office equipment	119,759	(112,343)	-	7,416
field/geological equipment	1,236,388	(234,051)	(123,797)	878,540
motor vehicles	84,184	(56,555)	-	27,629
Total	23,222,358	(620,718)	(2,634,053)	19,967,587

 

			31 December 2021
in united states dollars			cost	accumulated depreciation	carrying value
assets under construction*			20,408,816		20,408,816
gold samples			4,570	-	4,570
computer equipment			74,468	(68,263)	6,205
office equipment			117,182	(110,115)	7,067
field/geological equipment			953,231	(125,529)	827,702
motor vehicles			70,304	(44,407)	25,897
Total			21,628,571	(348,314)	21,280,257

 

reconciliation of property, plant and equipment - 31 December 2022

in united states dollars	carrying value opening balance	additions			depreciation		exchange movement		transfer		carrying value ending balance
assets under construction*	20,408,816		-	-				(20,408,816)		-
producing mine*	-		1,271,737	(142,600)		(2,510,256)		20,408,816		19,027,697
gold samples	4,570		-	-				-		4,570
computer equipment	6,205		22,436	(6,906)		-		-		21,735
office equipment	7,067		2,577	(2,228)				-		7,416
field/geological equipment	827,702		283,157	(108,522)		(123,797)		-		878,540
motor vehicles	25,897		13,880	(12,148)		-		-		27,629
Total	21,280,257		1,593,787	(272,404)		(2,634,053)		-		19,967,587

 

reconciliation of property, plant and equipment -31 December 2021

in united states dollars	carrying value opening balance				additions	depreciation	transfer		carrying value ending balance
assets under construction*			-	5,322,404		-		15,086,412		20,408,816
gold samples		4,570		-		-		-		4,570
computer equipment		6,065		1,100		(960)		-		6,205
office equipment		3,105		5,510		(1,548)		-		7,067
field/geological equipment		38,215		444,923		(12,558)		357,122		827,702
motor vehicles		439,253		-		(56,234)		(357,122)		25,897
total		491,208		5,773,937		(71,300)		15,086,412		21,280,257
*  Includes a provision for rehabilitation costs of $821,622 (2021: $901,284). Exchange losses on opening assets of $2,634,053 were recognised in the financial statements.

 

10.       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 2020	14,339,772
additions transfer to assets under construction (see note 9)	746,640 (15,086,412)
balance as at 31 December 2021 and 2022	-

 

Once commercially viable reserves are established and development is sanctioned, exploration and evaluation assets are transferred to assets under construction.  This took place in 31 December 2021 see Note 9 for further details.

 

11.       taxation

             current and deferred tax

 

The Company is subject to Jersey income tax at the rate of 0%. The subsidiary is registered for income tax purposes with the Ghana 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 the uncertainty and timing of future profits. As a result, no reconciliation has been prepared. The Company should be registered for UK Corporation Tax and management are currently in the process of registering it for such.

 

12.       trade and other receivables

 

in united states dollars	31 December 2022	31 December 2021
trade receivables	405,414	-
other receivables	465,054	257,013
Total	870,468	257,013

 

Other receivables include US$ nil (2021: US$27,955) in respect of the fair value of share warrants issued in the relevant period.

 

13.       inventory

 

in united states dollars	31 December 2022	31 December 2021
gold in circuit	-	602,097
gold on hand	-	1,142,276
ore stockpile	85,098	214,710
consumables	29,278	-
Total	114,376	1,959,083

 

At the Homase Mine Heap Leach Operation, from the process recovery sheet, it has been calculated that there is 66.3 kilos of gold, 2,134 ounces, that is still within the heap leach process circuit, this is classed as "Gold in Process" ("GIP"). This GIP is currently locked within the heap leach circuit.  This is due to previous operational issues, including inefficient screening, agglomeration and stacking methods, as such, there will be limited recovery from this GIP gold until a new process method is introduced. The current JORC Resource, at 602,000 ounces is between measured, indicated and inferred.  The Resource which was calculated in 2012, and requires infill drilling, to reduce the wide spacing within the Resource, to bring the JORC Resource to modern parameters.

 

In order to incorporate the GIP, a Revised Resource was calculated for the Statement 31 December 2022. It was noted that in 2022, 5,155 ounces of gold were sold to Metalor Technologies SA. The GIP is 66.3 kilos of gold, 2,134 ounces, that is locked within the heap leach process circuit, requires a new process method to liberate it, it was agreed to classify this GIP as an inferred resource. Therefore, the Revised Resource Statement 31 December 2022, calculated to 2012 Standards, stands as:

 

	Tonnage Tonnes (million)	Grade (Au g/t)	Contained Gold Ounces
Inferred JORC Resource	10.6	1.64	602,000
2022 Ounces Deducted	0.2	1.53	5,155
Sub-Total Inferred	10.4	1.64	596,845
GIP	0.21	1.34	2,134
2022 Inferred Resource	6.23	1.77	598,979

 

14.          cash and cash equivalents

The cash and cash equivalents balance at the year-end consists of balances in the following currencies:

 

in united states dollars	31 December 2022	31 December 2021
sterling	5,557	78,372
US dollars	55,170	218,818
ghana cedis	52,585	39,334
Total	113,312	336,524

 

 

15.       provision for rehabilitation

 

in united states dollars	31 December 2022	31 December 2021
1 January	901,284	-
additions	-	901,284
movement in discount rate	(79,622)	-
Total	821,622	901,284

 

The Group has a liability for restoration, rehabilitation and environmental costs arising from its mining operations. Estimates of the cost of this work including reclamation costs, close down and pollution control are made on an ongoing basis, based on the estimated life of the mine. The provision represents the net present value of the best estimate of the expenditure required to settle the obligation to rehabilitate any environmental disturbances caused by mining operations.

 

16.     capital and reserves

(a)       share capital

			31 December 2022	31 December 2021
ordinary shares
called up, allotted and fully paid
496,190,047 ordinary shares of 1 penny each (31 December 2021: 459,033,996)			£4,961,901	£4,590,340
converted to united states dollars at date of issue			$6,836,778	$6,383,213
deferred shares
called up, allotted and fully paid
in issue at 1 January			£3,730,772	£3,730,772
In issue at 31 December - fully paid 414,530,304 (31 December 2021: 414,530,304) deferred 0.9 pence shares			£3,730,772	£3,730,772
converted to united states dollars at date of issue			$6,077,013	$6,077,013
Authorised
1,000,000,000 (31 December 2021: 1,000,000,000) authorised ordinary 1 penny shares			£10,000,000	£10,000,000

 

During the year the Company issued the following 1 penny fully paid shares:

		Number of Shares	Nominal Value	Share premium
1 January 2022	Opening balance	459,033,996	$6,383,213	$33,535,384
28 June 2022	Shares at 3p share	14,000,000	£140,000	£280,000
	Converted to United States Dollars at date of issue	-	$180,653	$355,410
13 July 2022	Shares at 3p share	6,000,000	£60,000	£120,000
	Converted to United States Dollars at date of issue	-	$71,233	$142,465
	Shares at 7p share	3,600,000	£36,000	£216,000
	Converted to United States Dollars at date of issue *	-	$42,740	$256,437
19 July 2022	Shares at 6.55p share	9,802,821	£98,028	£544,057
	Converted to United States Dollars at date of issue **	-	$117,026	$649,495
18 October 2022	Shares at 5.9p share	3,753,230	£37,532	£183,908
	Converted to United States Dollars at date of issue	-	$41,913	$203,926
31 December 2022	Closing balance	496,190,047	$6,836,778	$35,143,117

 

*During the year, six bond notes held by Nguvu Holdings Limited were redeemed in shares (note 19).

** The outstanding balance on the Paracale loan of US$766,521 was converted into 9,802,821 new Ordinary Shares (the ''Conversion Shares'') at a price of 6.55p per Ordinary Share.  Following the Loan Conversion, there are no outstanding loans or warrants held by Paracale (note 19).

 

(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 (2021: 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.  As there are no share options and warrants outstanding as at year end, the whole balance has been transferred to accumulated deficit.

 

(vi) accumulated deficit

Accumulated deficit reserve represents the cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

 

17.          earnings per share

The calculation of basic and diluted earnings per share at 31 December 2022 was based on the losses attributable to ordinary shareholders of US$674,413 (2021: US$1,523,095), and an average number of ordinary shares in issue of 474,744,043 (2021: 353,369,120).

 

		31 December 2022		31 December 2021
loss attributable to shareholders (in US$)		(674,413)		(1,523,095)
weighted average number of ordinary shares		474,744,043		353,369,120
basic and diluted earnings per share (in US$)		(0.001)		(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 2022		31 December 2021
Warrants		-		26,000,000

Please refer to note 25 as a potentially diluting instrument has been issued post year end.

 

18.          share based payment arrangements

At 31 December 2022, 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 years ended 31 December 2022 or 31 December 2021.

 

(b)       reconciliation of outstanding share options

There are no options outstanding at 31 December 2022 or 31 December 2021.

 

(c)           warrants

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 using the Black-Scholes model. 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 warrants 31 December 2022	weighted average exercise price 31 December 2022	number of warrants 31 December 2021	weighted average exercise price 31 December 2021
outstanding as at 1 January	26,000,000	3.0p	182,352,377	2.6p
granted during the year	-	-	-	-
lapsed during the year	(6,000,000)	-
exercised during the year	(20,000,000)	3.0p	(156,352,377)	2.5p
outstanding at 31 December	-	-	26,000,000	3.0p
exercisable at 31 December	-	-	26,000,000	3.0p

 

There are no warrants outstanding as at 31 December 2022.  In the prior year the weighted exercise price was 3.0p and weighted average life was 0.5 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 2020	22 June 2020	27 December 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 exercise date	2.3 years	2.0 years	3.4 years
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$ nil (2021: US$ 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 19 for further details.  The amount capitalised during the year was US$nil (2021: US$67,100).

 

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 19 for further details.  The amount capitalised during the year was US$nil (2021: US$75,130).

 

The fair 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 19 for further details.  The amount capitalised during the year was US$nil (2021: US$1,682,615).

 

19.       borrowings

 

in united states dollars	31 December 2022	31 December 2021
shareholder loan	-	742,587
gold loan loan derivative bonds	2,906,262 905,765 -	3,769,500 728,770 300,000
current borrowing	3,812,027	5,540,857

 

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$1.2 million.

 

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.  At 31 December 2022, Paracale had exercised all its warrants.

 

During the year the outstanding balance on the Paracale loan of $766,521 was converted into 9,802,821 new Ordinary Shares (the ''Conversion Shares'') at a price of 6.55p per Ordinary Share.  Following the Loan Conversion, there are no outstanding loans or warrants held by Paracale.

 

Gold Loan

The Company entered into a loan agreement with AIMSL 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.  AIMSL and the Company agreed during 2021 to a further extension to the timing of payment of the principal and interest on the Gold Loan, to 19 September 2021 (being the maturity date of the Gold Loan) (the ''Extension''), although at the default interest rate of 17%.  Interest therefore accrued at the default rate of 17%.

In January 2022, a payment of 19kg of gold was made in order to repay the interest due for October, November, and December 2021.  The payment was against the principal and accrued interest, with the interest paid in full and reducing the principal from 2,000 oz to 1,924.61 oz.

It was further agreed with AIMSL that in order to enable the Company to efficiently manage shipments, it would not be deemed an event of default if the monthly payments set out in the Company's announcement on 20 September 2021 were not made at the end of each month.

On 29 September 2022, it was agreed with AIMSL to vary the terms of the Agreement as follows:

·    the date for repayment of the Gold Loan shall be extended to 30 September 2023 (the ''Revised Term'') and the Maturity Date stated in Schedule 1 of the Agreement shall be amended accordingly; and

·    interest shall continue to accrue on the Gold Loan at the non-default rate of 14% per annum until the date of repayment.

On 3 January 2024, the Company announced a Standstill Agreement with AIMSL which provided the Company with the potential to defer repayment of the gold loan until 29 June 2024, this has subsequently been extended to 31 December 2025. 

The outstanding principal of the Gold Loan stands at 1,871.31oz, with accrued interest to date of 578.43oz, as at 30 December 2023.  A total of 675 oz (21 kilos) of gold has been paid to AIMSL in respect of the Gold Loan, to the date of signing this report.

Bonds                                                              

In March 2020 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 Nguvu Holdings Limited (formerly BCM Investments Limited) the Company's major shareholders, each subscribed for six bonds with a value of, in aggregate, US$0.3 million respectively.  During the year, the remaining six bond notes held by Nguvu Holdings Limited were redeemed in shares.  When 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.  During the year 20,000,000 warrants were redeemed and 6,000,000 expired.

 

20.       trade and other payables

 

in united states dollars	31 December 2022	31 December 2021
trade payables other payables accruals	1,513,058 971,948 1,162,346	882,045 302,738 210,438
Total	3,647,352	1,395,221

 

21.      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 its main customer 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 as the main customer is reputable and the company has a strong relationship in place.

 

(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 and Ghanaian Cedis and incurs liabilities for its working capital expenditure in one of these denominations.  Payments are made in Sterling (GBP), United States Dollars (US$) and Ghanaian Cedis (GHS), or Euro at the pre-agreed price and converted (if necessary) as soon as payment needs to occur.  Currency conversions and provisions for expenditure are only made as soon as debts are due and payable.  The Group is therefore exposed to currency risk in so far as its liabilities are incurred in South African Rand and Ghanaian Cedi and fluctuations occur due to changes in the GHS/US$ 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, 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 Ghanaian Cedi as and when required.

 

The exchange rates converted to United States Dollars affecting the Group were as follows:

 

	average rate 2022	reporting date spot rate 2022	average rate 2021	reporting date spot rate 2021
Sterling to US dollars	1.229	1.210	1.376	1.353
Ghanaian Cedis to US dollars	0.110	0.101	0.157	0.162

 

A strengthening (weakening) of GBP or GHS against all other currencies at 31 December 2022 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.

 

in united states dollars	equity strengthening 2022	equity weakening 2022	equity strengthening 2021	equity weakening 2021
ghanaian cedis 10% (2021: 10%)	1,569,844	(1,569,844)	2,298,000	(2,298,000)
Total	1,569,844	(1,569,844)	2,298,000	(2,298,000)

 

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. The Group had a loan arrangement with Paracale as detailed in note 19.  The interest rate was fixed at 6% for the duration of the term of the loan; this balance has been settled in full in the year.  The Group also has a loan agreement with AIMSL.  The interest rate is fixed at 14% or 17%.  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.

 

22.          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 2022		31 December 2021
Director's remuneration: executive - E Priestley - cash	77,500		65,500
Director's remuneration: executive - E Priestley - shares	24,500		-
Director's remuneration (accrued fee): executive - E Priestley	25,500		54,500
Director's remuneration (accrued BIK): executive - E Priestley	28,125		-
Director's remuneration: non-executive - R Wilkins - cash	-		-
Director's remuneration: non-executive - R Wilkins - shares	6,000		-
Director's remuneration (accrued fee): non-executive - R Wilkins	9,000		12,000
Director's remuneration (accrued BIK): non-executive - R Wilkins	3,750
Director's remuneration: non-executive - W Trew - cash	-		-
Director's remuneration: (accrued fee): non-executive - W Trew	27,000		24,000
Director's remuneration: (accrued BIK): non-executive - W Trew	6,750
Director's remuneration: non-executive - A List - cash	-		-
Director's remuneration: non-executive - A List - shares	6,000		-
Director's remuneration (accrued fee): non-executive - A List	9,000		12,000
Director's remuneration (accrued BIK): non-executive - A List	3,750
Director's remuneration: non-executive - O Fenn - cash	-		-
Director's remuneration: non-executive - O Fenn - shares	12,000		-
Director's remuneration (accrued fee): non-executive - O Fenn	9,000		12,000
Director's remuneration (accrued BIK): non-executive - O Fenn	3,750
total	251,625		180,000

 

The total amount payable to the highest paid director in respect of emoluments was US$127,500 (2021: US$120,000).  No directors exercised any share options during the year (2021: nil).

 

Bill Trew's remuneration is paid to Oxus Mining Limited, a company in which he is a director and sole shareholder. Nothing was paid in the year and has all been accrued.

 

E Priestley's remuneration was paid to Santon Consultancy Services Limited, a company in which she is a director and sole shareholder.

 

R Wilkins's remuneration was paid to KSJ Investments Limited, a company in which he is a director.  R Wilkins owns 90% of the parent company that in turn owns 100% of KSJ Investments Limited. 

During the year, certain of the Company Directors agreed to convert, in aggregate US$239,250 of outstanding fees accrued and unpaid to 30 June 2022 into 3,653,230 new Ordinary Shares at a conversion price of 5.9p, being the mid-market closing price of the Company's Ordinary Shares on 11 October 2022.

 

Name	Number of Ordinary Shares Currently Owned	Number of Fee Conversion Shares	Resultant Shareholding in the Company	Percentage of the issued Share Capital of the Company
Angela List	59,600,000*	320,660	59,920,660	12.08%
Emma Priestley	2,711,546	2,485,112	5,196,658	1.05%
Richard Wilkins	-	320,660	320,660	0.06%
Orrie Fenn	-	526,798	526,798	0.11%

 

* Held by Nguvu Holdings Limited, a company of which Angela List is a director and shareholder.

 

During 2018, the Company entered into a loan agreement for an amount up to US$1,224k with Paracale, the Company's major shareholder and a company in which Bill Trew, a non-executive director (resigned 2 April 2024), holds an interest in.  At 31 December 2022 the balance was US$ nil (2021: US$743k), which includes interest accrued to date of US$ nil (2021: US$19k)- see note 19 for further details.

 

On 16 March 2020 the Company entered into a bond agreement with Paracale and Nguvu Holdings Limited (formerly BCM Investments Limited), 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 Nguvu Holdings Limited (formerly BCM Investments Limited) see note 19 for further details.

 

MAED (UK) Limited (''MAED'') is a related party, as it is wholly owned by Bill Trew.  At the year-end there is an amount owing to MAED of US$329,288 (2021: US$266,109), for services provided during the financial year.

 

23.          group entities

Details of the Group's subsidiaries at the end of the reporting period are as follows:

 

	country of incorporation and operation	principal activity	ownership interest 2022	ownership interest 2021
GoldStone Akrokeri Limited	Ghana	Development and exploration of gold and associated elements	100%	100%
GoldStone Homase Limited	Ghana	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.

 

24.       ultimate controlling party

 

The directors consider that there is no ultimate controlling party of the Group.

 

25.       subsequent events

 

Since the period end, on 27 January 2023, the parent Company, GRL, issued convertible loan notes to Blue Gold International Limited, ("BGL") in the nominal amount of £2,400,000 (the "Loan Notes") which are due for redemption on 30 November 2024. 

 

As with all equity and debt raised by GRL, all monies are intended for GAL only as this is the sole subsidiary trading company.  As such, every time monies are raised there is a subsequent intercompany loan taken out between the two companies.

 

At the election of BGL, the Loan Notes (together with accrued interest to date) may be converted (in whole or in part) at any time prior to redemption into new ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") at a conversion price of £0.0325 per share.  BGL also received warrants to subscribe for up to 60,000,000 Ordinary Shares at a price of £0.04 per share exercisable at any time until 26 January 2025 (the "Warrants").

  

Summary terms of the Loan Notes

·    Issue of £2,400,000 unsecured convertible loan notes due for redemption on 30 November 2024;

·    The Loan Notes are denominated in units of £10,000, are unsecured and will attract interest at a rate of 8 per cent per annum, compounded daily until redemption or conversion;

·    The Loan Notes, including accrued interest, are convertible at any time prior to cash redemption, at the holder's election, into new Ordinary Shares at a price of £0.0325 per Ordinary Share (the "Conversion Shares");

·    BGL shall also receive Warrants to subscribe for up to 60,000,000 new Ordinary Shares at a price of 4 pence per Ordinary Share at any time during the 2-year period following the grant date; and

·    Pursuant to the Loan Note agreement, BGL has the right to appoint a non-executive director to the Board, subject, inter alia, to the consent of the Company's Nominated Adviser with respect to suitability.

 

The proceeds from the Loan Notes will also contribute towards the expansion of the Company's Homase Mine, seeking to increase production and improvement of the recovery of the heap leach operation, which is currently yielding 65% of the contained gold delivered to the heap.  The proceeds will also contribute towards the purchase of plant and equipment to assist in reducing the operating costs of the operation.  The Company also reviewed the exploration programme along strike and down dip of the current JORC resource, as well as exploring the anomalies that were identified, referred to in the 24 March 2022 announcement, with the soil sampling and auguring programme. 

 

The accrued and unpaid fees to 31 December 2022 due to Bill Trew, Non-Executive Director of the Company (resigned 1 April 2024) during the year, amount to £52,650, were converted into 1,442,465 new Ordinary Shares at a conversion price of 3.65p, being the mid-market closing price of the Company's Ordinary Shares on 30 January 2023, this was the latest practicable date prior to this announcement (the "Director Fee Conversion Shares"). The Director Fee Conversion Shares were issued to Oxus Mining Limited, a Company solely owned and controlled by Bill Trew, whose direct and indirect resulting beneficial interest in the Company's Ordinary Shares following the issue of the Director Fee Conversion Shares will be as shown below.

 

 

Name	Number of Ordinary Shares Currently Owned	Number of Fee Conversion Shares	Resultant Shareholding in the Company	Percentage of the issued Share Capital of the Company
William (Bill) Trew	129,656,575	1,442,465	131,099,040*	26.30%

 

* Of which, 125,656,575 Ordinary Shares are held by Paracale Gold Limited, a company of which Mr William Trew is a director and a significant shareholder, 4,000,000 are held directly by Mr Trew and 1,442,465 Ordinary Shares, being the Director Fee Conversion Shares, will be held by Oxus Mining Limited.

 

On 5 April 2023, the Company provided a comprehensive update on the diamond drilling undertaken in 2022 at the former Akrokeri Underground Mine ("AUM") and the soil and auger geochemical programmes within the Akrokeri and Homase prospecting licences, ("AKHM").

 

This diamond drilling programme at AUM, confirmed the Company's belief that the Akrokeri mineralization occupies a significant structural corridor that extends to both the south and north of the historical underground mine, with Significant Intercepts 2022/23 diamond drilling including:  

 

·    22AKDD001: 6.50 metres @ 1.63 g/t from 7.7 metres, including 3.5 metres @ 2.35 g/t;

·    22AKDD002: 4.10 metres @ 11.01g/t from 46.0 metres, including 1 metre @ 41.04g/t;

·    22AKDD003: 3.60 metres @ 5.77g/t from 69.4 metres, including 1 metre @ 12.06g/t;

·    22AKDD006: 5.74 metres @ 3.43g/t from 55.66 metres, including 1.1 metres @ 15.25g/t;

·    22AKDD008: 3.00 metres @ 3.08g/t from 34.8 metres, including 1.0 metre @ 5.23g/t;

·    22AKDD008: 3.70 metres @ 2.54g/t from 72.6 metres, including 2.2 metres @ 4.03g/t;

·    22AKDD009: 4.80 metres @ 7.31 g/t from surface, including 1.0 metre @ 25.8 g/t;

·    22AKDD015: 1.0 metre @ 4.53 g/t from 61.9 metres;

·    22AKDD015: 1.10 metres @ 11.23 g/t from 95.7 metres, including 0.5 metre @ 20.01 g/t;

·    22AKDD016: 12.0 metres @ 0.93 g/t from 79.3 metres, including 1.6 metres @ 2.97 g/t; and

·    22AKDD019: 2.80 metres @ 1.84 g/t from 72.0 metres, including 2.2 metres @ 2.21g/t.

 

Key findings showed:

·    A total of 20 diamond drillholes have now been drilled, 14 probing the southern extension of the South Shaft and the remaining 6 holes around the North Shaft;

·    Results show the wide mineralised lode hosting gold at 4.1m @ 11.01 g/t, including 1m @ 41.04 g/t in hole 22AKDD002;

·    Results give strong grounds for continued exploration and further core drilling at Akrokeri; and

·    At Homase, the results from soil and auger sampling has confirmed anomalies that demonstrate a new mineralised zone to the west of the main Homase orebody and also shows further extension along strike to the north and south of the known Homase Trend.

 

The Soil and Auger Sampling Programmes within the Homase Mineralised Trend that continued during Q3 and Q4 2022 and into Q1 2023, were targeting two areas, Esuaya in the north-east and Adubriem West, and a targeted augering programme was also undertaken over an area to the south-west of known Homase Trend, with a total of 579 samples collected.

 

These results were combined with the historical data to update the geochemical anomalies identified in the announcements of 17 June 2018 and 25 March 2022.  This exploration has further confirmed the presence of multiple exploration targets, which are yet to be fully evaluated.

The Company is confident that the results of the drilling and geochemical survey programmes completed over the past three years demonstrate the potential to add to the total mineral resource and thus considerably extend mining operations in the coming years. Prioritisation will be given to the most promising prospects and a more detailed drilling programme will begin in the coming months, initially focusing on Akrokeri South and the new Homase geochemical targets.

 

In addition, the Company is continuing with the ongoing exploration programme at Akrokeri Underground Mine.

 

An operational update was provided on the 31 May 2023 in relation to mining and production activities at the Homase Gold Mine in south-western Ghana, with the following overview:

 

·    Front-end loaders, tractor and excavators, and the required plant including a second stacker and vibrating screens delivered to site with the objective of optimising production at Homase;

·    ~$1.5 million invested into new and second-hand plant, equipment and components for the second dry plant and to complete the construction of next pad for the heap leach operation;

·    Mining production levels forecast for 60,000 tonnes per month of ore, within three months following mine plan revision during Q1 2023;

·    Revision of mine plan and improvements to the process plant to improve long-term performance has impacted Q1 2023 production, resulting in a small gold pour of 250 ounces doré for the quarter; and

·    Second dry plant will allow stacking to increase to some 40,000 tonnes pcm over the coming months, thus improving gold production for the remainder of 2023.

 

Further to 31 May 2023, the Company has subsequently made significant improvements to the existing dry plant to enable it to perform more in line with expectations.  The agglomeration drum for the second dry plant has been completed, the second screen is on order and the additional 30 metres of conveyors are to be fabricated.   The Company has also purchased two second hand 30 tonne excavators, two new front end loaders, a truck crane, TLB, tractor and supporting associated accessories.

 

In-line with the enhancements to the dry plant, mining commenced in Pit 2 of the Homase Mine in May 2023, with an initial stripping ratio of 3:1, and to date some 65,300 tonnes of ore have been mined at an inferred grade of 1.1g/t. Stacking recommenced in June 2023, and plant feed has been maintained at an average of 1,000 tonnes per shift, running on a single shift basis. The Company can report that for 2023, some 1,250 ounces (39 kilos) of fine gold has been shipped.

After reconciling mine development and production from 2022, including investigating the issues with the heap leach process, which have been an on-going problem, and the impact of no stacking on to the heap for the first six months of 2023, the Company is currently undertaking a review of its Homase production plan and forecast.

It was announced that Mr William (Bill) Trew stood down as Non-Executive Director to the Company on the 1 April 2024. 

On 3 January 2024, the Company announced a Standstill Agreement with AIMSL in respect of its Gold Loan agreement.   This Standstill Agreement, which was necessary due to the inability to complete a negotiation on an extension within the appropriate timeframe, provided the Company with the potential to defer repayment of the gold loan until 29 June 2024 and has subsequently been extended to 31 December 2025, as set out below.  The Standstill Agreement also set out to appoint Angela List as the Chair, and for an operational management team to be mobilised to GoldStone's operations. 

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

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

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

 

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended by virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019.