This week GoldStone Resources published their interim results. Goldstone are advancing their Akrokeri-Homase Gold projects in the highly prospective region of Ghana.
2020 has so far been a pivotal year for the company where investors are now seeing real progress towards the transition from developer to producer. All of this ties in with what looks to be a solid back-drop for gold.
In this blog I’ll bring you up to date on where we are at as the next sequence of events should see the company make a giant leap forwards in their aspirations to be a multi-million ounce gold producer, developer and explorer, that in turn should reward shareholders handsomely.
You can read my detailed research note on GoldStone here where I also touch upon gold and where I and many others think it could be heading.
So where are they at…?
The company completed a debt fund-raise US$4.3m H1 which leaves them fully-funded to get into production. Rather sensibly the company reduced the Capex by deferring building the gold room such that they can initially sell un-refined gold in carbonate form or utilise a third-party plant. This should be short-lived however as as the cash starts flowing, Goldstone will build their own processing facility.
Goldstone also received approvals from the Ministry for an initial 10 year mining lease and transfer of the Homase prospecting licence from Cherry Hill to GoldStone Akrokeri Limited, GoldStone’s wholly owned Ghanaian subsidiary. This should, I assume, increase Goldstones Homase interest to 100%.
The Government are clearly supportive as per this short excerpt from the update which also bodes well for receiving the final environmental permit.
‘This lease may be renewed and/or extended to include additional pits along the Homase Trend and the Company is pleased to report that the Ghanaian Minerals Commission has encouraged the Company to expand the lease to encompass the proposed Homase Central and North Pits along the Homase Trend and the Company is in the process of submitting such an application.‘
The ‘DEP’ (Definitive Economic Plan) has also been remodelled to factor in increased gold prices and the Capex reduction which has seen a healthy increase in initial Phase 1 project economics, increasing project IRR from 143% to 382% !
Another little snippet from the update reveals the initial Homase drilling programme has been completed (to increase mineable resource) and assays are pending. I suspect this means that we’ll be seeing an updated JORC resource sometime soon.
And where are they going…?
So this is the fun bit! After all the hard work H1, raising funds and securing initial approvals, things really are now moving. The company are ploughing on in the back-ground getting machinery to site and preparing for production such that as soon as the environmental permit comes they can immediately start production c.14,400oz initial production.
Aside of the above, we can expect drilling assays/results from the recent campaign at Homase which added to previous drill results not factored into the current 600koz JORC resource could potentially see a nice uplift in an updated JORC resource.
Note also the company are looking at a further drilling programme:
‘The Company is also considering an additional drilling programme within the Homase Trend, extending approximately 2,000 metres northwards from the historic Homase Main Pit, encompassing the proposed Homase Central and North Pits, being the other two open pits defined in the Definitive Economic Plan (“DEP”) for AKHM announced in June 2019.
The intention is to seek to further define and extend the mineable resource down to a vertical depth of 60 metres, currently defined to a depth of 30 metres, for all three proposed pits, to further enhance the already attractive fundamentals which we believe are achievable at AKHM.‘
The investment proposition…
There has been a lot of chatter around gold and rightly so, lots of excitement around Canadian and Australian gold projects but its worth noting where Goldstone are operating, this info-graphic recently published by the company gives a good visual on that!
The locality of Goldstones projects to the Anglo Ashanti 70moz+ Obuasi mine is of high interest to me as an investor especially with the licenses offering significant exploration upside with drilling that can be funded from cashflow as soon as Q4
You can read more on why I think Goldstone is a very attractive investment in my research note here where I also present for balance, risks.
It’s all finally coming together and if the company execute the plan, Goldstone could achieve their target of becoming a multi-million ounce gold developer and producer which in turn could offer investors significant upside from the current sub £20m Market Cap
Watch this space…
Research materials prepared based upon my own analysis and research. Accuracy cannot be guaranteed and research notes should not be taken as investment advice. Please always do your own research.