This week Goldstone Resources provided shareholders with an operational update, notably the results of the recent 22 hole drill programme at the Homase South Pit (one of three pits at the Homase project)
As a shareholder, I’ve been following the companies progress and you can read back through my blogs by searching for Goldstone on the Home Page. Alternatively you can read my original research note here which I have been keeping up to date as the story progresses.
Homase the focus of this blog is just one of two 100% owned projects, Akrokeri the old underground mine that mined grades of c.1oz/t is a whole other story!
So the company aim to start production Q4/20 at the Homase South Pit. This is subject to attaining the final environmental permit which has been held up slightly by COVID-19. so could slip to Q1/21
Upon receipt of the permit (and given surrounding operating mines on strike this cant be far off I hope), the company can move to production in just 8 weeks given there is minimal construction/commissioning required as the project is a simpler ‘Free dig’ heap leach operation from surface.
In fact equipment is already in transit and on site. If you are interested it’s worth following the companies twitter account at https://twitter.com/GoldstoneRes where more updates are appearing on production preparation.
So what does the 257% resource increase at Homase South mean?
Well a heck of a lot actually! As previously mentioned, Homase South is one of three pits within the current 602,000oz JORC resource. This JORC resource does not include additional resource from the previous 2011/12 and just completed 2020 drilling programmes. The resource is therefore likely to increase significantly and the company will be updating the JORC as signalled in this weeks RNS.
The thing is, this is probably the tip of the iceberg given that similar resource increase could be seen at Homase Main and North, basically they have gone deeper given the resource was open at depth.
The resource is not only open at depth but along strike too – the Homase Trend just keeps on going (in the words of the company). So not only can the company expand the resource at the additional pits there is likely a series of further prospects that could be identified through exploration along the Homase trend. In fact the company have signalled they are considering an exploration drill programme, however thats not immediately important right now given the Phase 1 mining operation is the key to advancing the projects.
Perhaps the most exciting and I think un-noticed information in the RNS is that the 257% resource increase will translate into ‘substantially increasing production and processing rates‘ not to mention the increased grades.
What could this look like? Well we will need to wait for the updated DEP (Definitive Economic Plan) the company will publish. However, I’d suggest that a resource increase from 33,000oz to 120,000oz (just at the Homase South Pit) could mean the company could double or even treble the original Phase 1 planned production of 14,400oz pa
Its too early to translate this into EBITDA projections as the deeper ore may increase the AISC so I’ll look forward to seeing the updated DEP and JORC resource.
A Giant Leap…
For investors that have invested and followed the story this is a pivotal moment. Why? because the company is on the cusp of first production (pending the final permit) and with that comes first revenues and self sufficiency.
It’s a Big moment for a company and investors when a junior mining company can stand on its own two feet. The most exciting thing for me is that when that happens the upside is unlimited.
The company can gradually scale up production alongside extending the resource via further drilling and exploration with what seems likely to become a million+ ounce project (remember we didn’t talk about 100% owned Akrokeri yet, the high grade underground mine that mined a head grade of 24g/t in the early 20th century) sitting between Homase and Obuasi the latter a 70Moz giant that also started from just a series of small pits like many other surrounding mines!
Its going to be busy with plenty of news flow, updated JORC, update DEP, permit and first production at Homase, as I said this is just the start all amidst the back drop of an interesting gold environment!
Disclaimer
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.
