After initial production issues that saw the share price retreat nearly 50% Goldstone are firmly back on track with recoveries back up to forecast levels, 2022 production guidance at Homase of 20k/oz gold and high grade exploration programme at Akrokeri underway.
If you have followed my blogs and had a gander at my research notes you’ll see that Goldstone Resources is one of my main investments. In fact I first covered the company when the shares were trading at 2.9p
Goldstone are developing their AK-HM (Akrokeri & Homase) gold projects in the highly prospective Ashanti gold gold belt in Ghana.
Progress to date…
So through 2021 (as you can see from the https://twitter.com/GoldstoneRes twitter feed), the company have built a mine, commenced mining operations, built an elution facility and have poured first gold. An amazing achievement!
2021 was very much a year of build and development and despite headwinds the company achieved first gold pour from their Homase South pit in November. Not only did the company build the mine but they also constructed an elute facility and smelt house in just six weeks following an issue with using a third-party facility.
If you look at the companies largest shareholders who are mining veterans you’ll see why they managed to get the gold room built in record time.
Bringing a new mine on-line (in the middle of a pandemic) is no small feat and the company had a few teething issues that reduced initial gold recoveries. The shares took a hit which is to be expected however the company in their latest updated have said the agglomeration issues are now resolved by way of a re-configured mine plan.
Road ahead…
The company provided a detailed operational and exploration update end of March. I’ve filtered out the highlights as the company progress through 2022 in what should be a transformational year where they could become debt free and produce serious free cash flow.
2022 Guidance
2022 production guidance remains at 20,000 ounces but with improved dry plant and agglomeration modifications could be as high as 23,500 ounces.
AISC has increased to $US970 per ounce which is hardly surprising given the recent uplift in energy and raw materials costs, that said it’s still lower than a number of peers and the company believe will be further reduced throughout 2022. At todays gold price this sill yields just under a $1k per ounce margin.
Expansion Plans
With production hurdles out of the way, debt being paid off and healthy free cash flow generation, attention is now focused on expanding the Homase mine where they are assessing the results of geotechnical drilling that could allow the company to mine deeper into fresh ores to further increase mineable resource.
In parallel the company have commenced grade control drilling at the third Homase pit to determine the pit plan and also expand the overall resource.
Akrokeri Exploration Programme
Whilst Homase currently takes centre stage, the real elephant in the room is the former operational mine Akrokeri. Akrokeri in its initial 5 years of production produced 75,000 ounces of gold at an average recovered grade of a huge 24g/t
What’s exciting is that the drill programme at Akrokeri is finally underway and investors may be waking up to news of further high grade results given quartz vein sections yielding 51g/t
CEO Emma Priestley commented “Looking forward to the longer-term delivery of our growth objectives, Akrokeri remains a key pillar of our strategy with a drill and trench programme finally underway, we look forward to developing the exploration in the coming weeks. As shareholders will recall, Akrokeri is a previously producing mine with demarcated targets for future shallow open pit mining, which we are confident will lead to future growth of production.“
Busy 2022
If 2021 wasn’t busy enough, 2022 looks to be just as busy and fruitful where investors could see debt paid off in it’s entirety, mineable resource increased at Homase (current JORC 600,000 ounces) and perhaps confirmation of more bonanza grades at Akrokeri that could see a fast-track mine restart.
Despite the continuous doom and gloom I’ve seen on some Goldstone bulletin boards (unjustly imo) this company is walking the walk, unlike too many that talk the talk!
At £40m Market Cap with an operational mine on the balance sheet, a maiden 20k ounce pa that is likely to increase significantly over the next few years, low comparative costs and zero debt achievable this year – it’s cheap in my view!
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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.
