REG - Goldstone Resources - Final Results
10/04/2024 16:30
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RNS Number : 0860K Goldstone Resources Ltd 10 April 2024
10 April 2024
GOLDSTONE RESOURCES LIMITED
("GoldStone" or the "Company")
Final Results for the year ended 31 December 2022
GoldStone Resources Limited (AIM: GRL) announces its final results for the
year ended 31 December 2022.
The Annual Report and Accounts for the year ended 31 December 2022 will
shortly be available to view and download in full on the Company's website at
www.goldstoneresources.com. Hard copies of the Annual Report and Accounts
are available on request.
For further information, please contact:
GoldStone Resources Limited
Emma Priestley Tel: +44 (0)1534 487 757
Strand Hanson Limited
James Dance / James Bellman Tel: +44 (0)20 7409 3494
S. P. Angel Corporate Finance LLP
Ewan Leggat / Charlie Bouverat Tel: +44 (0)20 3470 0501
Tel: +44 (0)20 7236 1177
St Brides Partners Ltd
Susie Geliher
Notes to Editors: About GoldStone Resources Limited
GoldStone Resources Limited (AIM: GRL) is an AIM quoted mining and development
company with projects in Ghana that range from grassroots exploration to
production.
The Company is focused on developing the Akrokeri-Homase project in
south-western Ghana, which hosts a JORC Code compliant 602,000oz gold resource
at an average grade of 1.77 g/t. The existing resource is confined to a 4km
zone of the Homase Trend, including Homase North, Homase Pit and Homase South.
The project hosts two former mines, the Akrokerri Ashanti Mine Ltd, which
produced 75,000 oz gold at 24 g/t recovered grade in the early 1900s, and the
Homase Pit which AngloGold Ashanti developed in 2002/03 producing 52,000 oz
gold at 2.5 g/t recovered. Production is currently focussed on the Homase
Mine however it is the Company's intention to build a portfolio of
high-quality gold projects in Ghana, with a particular focus on the highly
prospective Ashanti Gold Belt.
CHAIR'S REPORT
It gives me great pleasure to present my first statement as Chair of
GoldStone, having assumed the position in January 2024. I join as Chair at a
pivotal time for GoldStone, as we look to solidify and extend our position as
an emerging gold producer focussed on the famously productive Ashanti Gold
Belt in Ghana. 2022 was a year of significant progress for GoldStone, with
the commencement of commercial gold production, but also a year of challenge
as we looked to remedy a number of technical issues in order to optimise
production and move towards profitability. As shareholders will be aware,
the publication of this report is now over nine months past our intended
release date and so it is appropriate to also comment on the post period
developments for the Company. As such, 2023 could be defined as year of
reflection and innovation as we looked to address the stubborn agglomeration
issues that we have experienced since operations commenced at our initial
production asset, the Homase Mine in southwest Ghana.
During the year under review, GoldStone produced and sold 5,155 troy ounces of
gold from Homase, realising an average price of US$1,727 per troy ounce for
revenues of US$8.9m. From this gold production, gold loan repayments were
made via the delivery of 675 troy ounces to Asia Investments Management
Services Limited ("AIMSL").
As shareholders will be aware, this production figure would have been higher
were it not for the estimated 192 troy ounces of gold, amounting to some
US$350,000, that was stolen in a robbery, as announced on 29 June 2022. This
was a serious incident for GoldStone, and one which highlighted various areas
for improvement in terms of our security solution in-country. Investigations
relating to the robbery are on-going, with the target of pursuing charges on
those responsible, and all necessary changes have been made to our contract
security to ensure that the highest levels of safety and security are
enforced.
We were disappointed not to reach our 2022 production target of 7,000 troy
ounces of gold, with the known complications of the heap leach operation which
led to this shortfall, there are some 2,000 ounces remaining within the heap,
classed as GIP (Gold in Process), but there will be limited recovery from this
GIP gold until a new process method is introduced. As referred to previously,
GoldStone has been working to ameliorate some persistent agglomeration issues,
which, together with inclement weather during H2 2022, negatively impacted
gold recovery rates and affected the stacking of the material. The Company
continues to test and assess agglomeration methods to resolve and improve
recovery factor.
Given the lower than forecast production for the year, the Board were mindful
of the importance of preserving cash within the business for working capital
purposes. Accordingly, during the year, certain directors agreed to convert
US$239,250 of outstanding fees, accrued and unpaid to 30 June 2022, into
equity. The Board's continued, and indeed, increased alignment with
shareholders, is a clear signal of both their commitment to improving the
financial performance of the Company and their confidence in the quality of
our assets.
Post Period Developments
During 2023, the team on site have been working tirelessly to improve the
performance of the dry plant, particularly the screening and application of
cement into the agglomeration plant. Mining and staking recommenced in June
2023 and the cashflow projections are based upon increasing the production and
staking, which will improve in 2024, and which in turn will improve revenues.
Since the start of 2023, gold produced and sold amounted to approximately
1,250 ounces of gold bullion.
The Company announced in January 2023 that it had raised £2,400,000 via the
issue of convertible loan notes and has invested in the necessary equipment
and infrastructure to improve the long-term production profile of the Homase
Mine. The prime objective is to improve the mine's production profile and to
overcome the issues that hampered production during 2022. I look forward to
reporting further on this in due course.
In April 2024 the Company was able to bolster its financial position through a
£1.82m subscription for, in aggregate 182,000,000 new ordinary shares (the
"Subscription Shares") at a subscription price of 1 penny per ordinary share
(the "Subscription Price"). 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 to trading of the Subscription Shares ("Admission") (the
"Warrants") (together, the "Fundraising"). This fundraising will support the
Company and its new operational management team, supplied by Nguvu Mining
Limited ("Nguvu") as part of the Standstill Agreement announced on 3 January
2024. Given Nguvu is an 11.9 per cent. shareholder in the Company and a
company of which I am a director and the majority shareholder, this
arrangement will be subject to a separate agreement which will constitute a
Related Party Transaction pursuant to AIM Rule 13.
I would like to take this opportunity to thank the GoldStone management team,
some of whom have been working in difficult conditions for many months at a
time; their dedication and commitment to making a success of this project is
commendable. I would also like to thank my predecessor, Bill Trew, for his
contributions to the Company, who as of 1 April 2024 stood down from the Board
of Directors. Above all, I would like to thank our very loyal and patient
shareholders for their continued support. The road to gold production is
rarely a straight or easy one, however with the Homase Mine in production, and
with great exploration potential, and a defined plan to improve our production
profile over the long-term, I think we are in a solid position to deliver
growth in the future.
Angela List
Chair
Chief Executive Officer's REPORT
2022 was a landmark year for GoldStone and marked our transition from
developer to gold producer. As investors will be aware, our ambition for
GoldStone was to deliver maiden production and cash generation in as short a
timeframe, and to this end, we have been successful. Our experiences
throughout 2022 and 2023 have provided us with important information through
which to optimise and enhance our production profile, and we are implementing
this with the objective of increasing total ounces and lowering our cost of
production over the coming years. In tandem with this, we are also working
hard to increase our total resource inventory in order to deliver a long-life,
high-grade and high-margin gold operation based on our priority targets at
Homase and Akrokeri.
GoldStone's production journey started in November 2021 with our first pour,
following the construction of the initial stage of the mine, which included a
crushing, sizing, agglomeration and stacking unit, three heap leach pads, a
carbon-in-column plant, and an elution and gold room. The gold pour was a
technical success; however, it highlighted the need for remedial work to
improve recoveries due to agglomeration issues, which has been a theme
throughout 2022 and 2023.
Our work has focussed on performing detailed test work and cost analysis to
further understand the leach kinetics in order to optimise the recovery of the
remaining contained gold in the heap. This work informed the reconfiguration
of the agglomeration and crushing circuit to handle the excess clay
encountered and the greater than expected amount of silt originating from the
oxide orebody's fragile phyllitic content. A modified screening system was
designed and built to control the feed sizing, with the fines (<3mm), which
represent approximately 20% of the ore body, being removed, which is fed to a
gravity recovery circuit.
This work had a marginally positive impact on production, however recoveries
still sat at a sub-optimal level of approximately 65%. The Company continues
to test and assess agglomeration methods to seek to improve recovery. Testwork
is showing very high recovery potential (in excess of 80%), and the Company
will continue to make further improvements to the dry plant, particularly the
screening and application of cement into the agglomeration plant, to improve
recovery rates.
Notwithstanding the processing challenges experienced during 2022 and 2023,
external factors, including supply shortages, volatile currency markets and
spiralling costs for consumables, all played a part in the Company's financial
performance. In light of this, Homase has not yet achieved consistent
positive site-level cash flow, with an average All-in Cost ("AIC") of US$1,369
per ounce average for 2022, which is primarily due to a lower-than-expected
production rate and ongoing inflationary pressures, in particular in relation
to fuel, spares, consumables and reagents.
The Company is taking proportionate steps to improve production at the Homase
Mine, which have been implemented during 2023 and will continue through 2024
following the recent announcement of a £1.82 million, (before expenses)
conditional fundraising in April 2024, and building on the injection of
capital in January 2023 through the issue of convertible loan notes to the sum
of US$3 million (£2.4 million).
Alongside its strategy to improve its production profile, a core pillar of
GoldStone's growth strategy remains the expansion of its mineralised footprint
and resource inventory. As such, in August 2022, GoldStone commenced a
diamond drilling programme at Akrokeri, the main focus for the GoldStone
exploration team. Initial drill results were received in September 2022,
followed by the full assay results in April 2023. These results, announced 5
April 2023, reconfirmed the Company's belief that the Akrokeri mineralisation
occupies a significant structural corridor that extends to both the south and
north of the historical underground mine. A particular highlight was the
identification of a wide mineralised lode hosting gold at 4.1m @ 11.01 g/t,
including 1m @ 41.04 g/t in hole 22AKDD002.
Significant intercepts from the 2022/23 diamond drilling include:
· 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
The Company also launched a soil- and auger-sampling programme during 2022
which targeted 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 the known Homase Trend, with a total of 579 samples collected.
The results were combined with historical data to update the geochemical
anomalies identified in 2018 and Q1 2023, and further confirmed the presence
of multiple exploration targets which are yet to be fully evaluated. These
new targets are being prioritised for follow-up work and the Company is
focused on evaluating these systematically, with the objective being to expand
the mineral resource that is currently being exploited at Homase.
The results received from this most recent exploration programme, together
with additional exploration work undertaken over the past three years,
provides significant evidence of our ability to materially grow our total
mineral resource in the future, thus extending mining operations in the coming
years.
Corporate and Financial Review
Losses from operations for the 12 months to 31 December 2022 were US$674k
(2021: loss US$1,523k).
The financial statements at year end show the Group's balance sheet, with net
assets standing at US$12.8 million against net assets of US$16.0 million at
the end of the previous year.
Cash and cash equivalents as at 31 December 2022 were US$113k (2021:
US$337k).
Post period end, on 27 January 2023, GoldStone announced that it had issued
convertible loan notes to Blue Gold International Limited ("BGL" or "Blue
Gold") in the nominal amount of £2,400,000 and which are due for redemption
on 30 November 2024. 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 has 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 Group prepares regular management accounts and financial forecasts to
monitor and manage working capital and funding requirements going forward.
The accounts and forecasts are regularly reviewed and challenged by the Board.
Warrants
The Company announced, on 23 June 2022, the exercise of 14,000,000 warrants to
subscribe for new Ordinary Shares at a price of 3.0 pence per share, which
provided £420,000 of additional funding to the Company.
In addition, Nguvu Holdings Limited (formerly known as BCM Investments
Limited) ("Nguvu"), a company in which Angela List, a director of the Company,
is a director of and a majority shareholder, gave notice to the Company in
late May 2022 of its intention to exercise 6,000,000 of the 12,000,000
warrants it held to subscribe for Ordinary Shares at a price of 3.0 pence per
share (the "Nguvu Warrants"). Nguvu was unable to provide a signed notice of
exercise before the Company entered into a close period pending publication of
the annual report and accounts of the Company for the year ended 31 December
2021 and therefore, as the Nguvu Warrants had an expiry date of 22 June 2022,
the Board of the Company resolved to extend the exercise period of the Nguvu
Warrants by two weeks to expire at midnight on 6 July 2022. Nguvu
subsequently exercised 6,000,000 warrants providing £180,000 of additional
funding to the Company.
Post Period Developments
As outlined above, 2022 and indeed 2023 were defined by significant
operational developments, whilst being simultaneously curtailed by persistent
technical challenges and macro-level issues including high inflation and
supply chain problems. Whilst some of these technical challenges are yet to
be completely remedied, I am confident that we are now in a much stronger
position to realise our production ambitions.
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, provides the Company with the potential to
defer repayment of the gold loan until 29 June 2024. The standstill agreement
has subsequently been extended to 31 December 2025. 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. The Standstill
Agreement allowed for the Company to renegotiate the terms, announced 10 April
2024, which was in conjunction with the Company announcing it has
conditionally raised £1.82 million before expenses by way of the Subscription
of, in aggregate, 182,000,000 new ordinary shares of 1 penny par value each in
the capital of the Company ("Ordinary Shares") at a price of 1 penny per share
Subscription Shares 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 "Warrants").
The Company has agreed 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 ordinary
Shares of £0.01 each in the capital of the Company (the "Conversion Shares"),
which will be in addition to the fundraise.
The net proceeds of the Fundraising will be used for general working capital
purposes and to progress the Company's strategy of developing and improving
production at its Homase Mine in Ghana, and during the first quarter of 2024,
a new operational management team have been identified and upon the successful
fundraise, are expected to have both a meaningful impact on the Company's
operations and ability to ramp up production.
Risk management
The Board has identified the following as being principal strategic and
operational risks (in no particular order):
a. development and mining
Development and mining for natural resources is speculative and involves
significant risk.
Planned production schedules may not be achieved as a result of unforeseen
operational problems, machinery malfunctions or other disruptions. Operating
costs and profits for commercial production therefore remain subject to
variation, such as gold prices or not achieving the expected recovery rates.
Inflation and supply chain issues, which are affectively the global economy,
may also impact on recovery rates.
The Board are evaluating each stage of the development and mining of the
Group's projects, site by site, in order to mitigate as far as possible these
risks inherent in production. Use of modern technology and electronic tools
assist in reducing risk in this area. Good employee relations are also key
in reducing the exposure to labour disputes. The Group is committed to
following sound environmental guidelines and practice and is keenly aware of
the issues surrounding each individual project.
b. country and political
GoldStone's projects are in Ghana. Emerging market economies could be
subject to greater risks including legal, regulatory, economic and political
risks and are potentially subject to rapid change.
The Board routinely monitors political and regulatory developments in Ghana.
The Ghanaian Government continues to be supportive towards the mining sector,
including the improved policing of small-scale mining operations, thus
ensuring controlled management of neighbouring areas.
In addition, the Group actively engages in dialogue with relevant Government
representatives in order to keep abreast of all key legal and regulatory
developments applicable to areas of interest. GoldStone maintains internal
processes to ensure that it is wholly compliant with all relevant regulations
in order to maintain its licences.
It is noted that security risk is inherent with a business operating in an
emerging economy such as Ghana, particularly for a producing gold mine. The
Company is increasing its engagement with the government and its governing
bodies to monitor the emerging country risk in order to ascertain any
particular risks or trends that can be identified and mitigated to seek to
ensure the security of our people and our business.
The Company has increased its focus on security and management plans and is
continuously monitoring any security issues, threats and emerging potential
issues through global and national advisory services, government security
intelligence and local engagement, to establish an appropriate and effective
security approach that is also aligned with the Voluntary Principles of
Security and Human Rights.
c. social, safety and environmental
The Group's success depends upon its social, safety and environmental
performance as failures may lead to delays or suspensions of its activities.
The Group takes its responsibilities in these areas seriously and monitors its
performance across these areas on a regular basis.
The Group experienced no fatalities for the 2022 financial year and no
lost-time injuries, which contributes to the Group's commendable safety
performance. The Group has set out to create an environment of zero harm by
creating a safe and healthy workplace and managing our activities in a way
that eliminates accidents, minimises health and safety risks and promotes
excellence in the performance of our operations.
As the Homase Mine increases production, the Group is strengthening its
relationships with the communities living within the concession areas and
close to the projects. The immediate focus for each of the villages within
the licences, has been sanitation and drinking water, and improving the school
facilities, maintaining the buildings and providing school uniforms. The
Group continues to build on the community relationships to assist the
smallholder farmers and ensuring a "community first" approach when
recruiting. These schemes benefit both the communities and the investors in
which the Group will be operating.
d. financial
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, as announced on 3
January 2024, the Company had received notification that a standstill
agreement for a further 6 months, to the 29 June 2024 had been agreed, this
has subsequently been extended to 31 December 2025. The conditions which have
been agreed to, included a repayment plan to repay the loan, 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 ordinary Shares.
This was in conjunction with the Company announcing it has conditionally
raised £1.82 million before expenses by way of a Subscription of, in
aggregate, 182,000,000 new ordinary shares of 1 penny par value each in the
capital of the Company at a price of 1 penny per share, together with one
warrant per ordinary 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 Fundraising will be used for general working capital
purposes and to progress the Company's strategy of developing and improving
production at its Homase Mine in Ghana.
Emma Priestley
Chief Executive Officer
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
in united states dollars note 31 December 2022 31 December 2021
Assets
non-current assets
property, plant and equipment 9 19,967,587 21,280,257
intangible assets - exploration and evaluation 10 - -
total non-current assets 19,967,587 21,280,257
current assets
inventory 13 114,376 1,959,083
trade and other receivables 12 870,468 257,013
cash and cash equivalents 14 113,312 336,524
total current assets 1,098,156 2,552,620
total assets 21,065,743 23,832,877
Equity
share capital - ordinary shares 16 6,836,778 6,383,213
share capital - deferred shares 16 6,077,013 6,077,013
share premium 16 35,143,117 33,535,384
foreign exchange reserve 16 (5,930,054) (1,332,396)
capital contribution reserve 16 555,110 555,110
share options reserve 16, 18 - 3,535,197
accumulated deficit 16 (29,897,222) (32,758,006)
total equity 12,784,742 15,995,515
Liabilities
non-current liabilities
provision for rehabilitation 15 821,622 901,284
total non-current liabilities 821,622 901,284
current liabilities
trade and other payables 20 3,647,352 1,395,221
Borrowings 19 3,812,027 5,540,857
total current liabilities 7,459,379 6,936,078
total liabilities 8,281,001 7,837,362
total equity and liabilities 21,065,743 23,832,877
The accounting policies and notes form part of these consolidated financial
statements. The consolidated financial statements were approved by the Board
of directors on
Signed on behalf of the Board of directors.
Emma Priestley
chief executive officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER
2022
in united states dollars year ended year ended
31 December 2022 31 December 2021
note
revenue 5 8,902,549 -
cost of sales 7 (5,746,204) -
gross profit 3,156,345 -
expenses 7 (3,319,225) (794,208)
operating loss 7 (162,880) (794,208)
finance costs 8 (511,533) (728,887)
loss before and after tax from continuing operations
(674,413) (1,523,095)
items that may be reclassified subsequently to profit and loss:
foreign exchange translation movement (4,597,658) (1,250,247)
total comprehensive loss for the year (5,272,071) (2,773,342)
loss per share from operations
basic and diluted losses per share, from continuing and total operations, 17 (0.001) (0.004)
attributable to the equity holders of the company during the year (expressed
in cents per share)
The accounting policies and notes form part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2022
in united states dollars share capital share capital share premium capital contribution reserve share options reserve accumulated deficit total equity
ordinary shares deferred shares foreign
note exchange
reserve
balance as at 31 December 2020 3,913,963 6,077,013 28,080,853 (82,149) 555,110 3,535,197 (31,234,911) 10,845,076
total loss for the year - - - - - - (794,208) (794,208)
translation movement - - - (1,250,247) - - - (1,250,247)
loan derivative movement - - - - - - (728,887) (728,887)
total comprehensive loss for the year - - - (1,250,247) - - (1,523,095) (2,773,342)
warrants granted in period - - - - - - - -
warrants exercised in period 2,191,715 - 3,367,140 - - - - 5,558,855
share issue 277,535 - 2,087,391 - - - - 2,364,926
balance as at 31 December 2021 6,383,213 6,077,013 33,535,384 (1,332,396) 555,110 3,535,197 (32,758,006) 15,995,515
total loss for the year - - - - - - (674,413) (674,413)
translation movement - - - (4,597,658) - - - (4,597,658)
total comprehensive loss for the year - - - (4,597,658) - - (674,413) (5,272,071)
warrants granted in period 18 - - - - - - - -
warrants exercised in period 18 251,885 - 497,875 - - - - 749,760
share issue 16 201,680 - 1,109,858 - - - - 1,311,538
transfer 16 - - - - - (3,535,197) 3,535,197 -
Balance as at 31 December 2022 6,836,778 6,077,013 35,143,117 (5,930,054) 555,110 - (29,897,222) 12,784,742
The accounting policies and notes form part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
In united states dollars year ended year ended year ended
31 December 2022 31 December 2021 31 December 2018
note
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 other non-cash changes year ended
31 December 2022
cash flows
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 year ended
31 December 2022 31 December 2021
auditor's remuneration in respect of audit of the
financial statements
- group auditor 50,645 30,000
- subsidiary auditor 9,450 2,900
depreciation 272,404 71,300
foreign exchange difference 812,410 164,170
8. finance costs
in united states dollars year ended year ended
31 December 2022 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 carrying value
accumulated depreciation
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 additions transfer carrying value ending balance
value
opening
balance exchange movement
depreciation
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 carrying value ending balance
transfer
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 $2,634,053 were recognised in the
financial statements.
10. intangible assets - exploration and evaluation
The Group's intangible assets comprise wholly of exploration and evaluation
assets in respect of AKHM in Ghana.
in united states dollars 31 December
balance as at 31 December 2020 14,339,772
additions 746,640
transfer to assets under construction (see note 9) (15,086,412)
balance as at 31 December 2021 and 2022 -
Once commercially viable reserves are established and development is
sanctioned, exploration and evaluation assets are transferred to assets under
construction. This took place in 31 December 2021 see Note 9 for further
details.
11. taxation
current and deferred tax
The Company is subject to Jersey income tax at the rate of 0%. The subsidiary
is registered for income tax purposes with the Ghana Revenue Service. Due to
the loss-making position of the Group in all jurisdictions there is no tax
charge and no deferred tax asset has been recognised in the current or prior
periods due to the uncertainty and timing of future profits. As a result, no
reconciliation has been prepared. The Company should be registered for UK
Corporation Tax and management are currently in the process of registering it
for such.
12. trade and other receivables
in united states dollars 31 December 2022 31 December 2021
trade receivables 405,414 -
other receivables 465,054 257,013
Total 870,468 257,013
Other receivables include US$ 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 Grade Contained Gold
Tonnes (million) (Au g/t) 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 £4,961,901 £4,590,340
(31 December 2021: 459,033,996)
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: £3,730,772 £3,730,772
414,530,304) deferred 0.9 pence shares
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 £10,000,000 £10,000,000
shares
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 weighted average exercise price number of warrants weighted average exercise price
31 December 2022 31 December 2022 31 December 2021 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 22 June 27 December 2018
2020 2020
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 2,906,262 3,769,500
loan derivative 905,765 728,770
bonds - 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 1,513,058 882,045
other payables 971,948 302,738
accruals 1,162,346 210,438
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 equity weakening equity strengthening equity weakening
2022 2022 2021 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 ownership interest
2022 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.
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