Goldstone expects big things from its hand in Africa

Africa-focused gold explorer Goldstone Resources (LON:GRL) currently appeals to two kinds of investor, says chief executive Jurie Wessels.

Some are interested in the production and cashflow potential of the gold explorer’s flagship project at Homase/Akrokerri in Ghana, while the others are focused solely on the blue sky upside at the group’s four other very early stage licences.

Wessels, a South African minerals lawyer by training, believes this broad appeal is indicative of the company’s good position at present.

By having five projects on the go the discovery risk is spread both for the company and its investors, he says, especially as fledgling projects in Senegal and Gabon have the potential to be company transforming.

The company recently raised £4.7 million through a placing at 5p, slightly more than it had originally hoped, and will use the money to fund what Wessels admits is a busy drilling campaign next year for a company of its size.

A big chunk of the cash is earmarked for the Homase /Akrokerri project.

Although separate, the two sites are adjacent and Goldstone classifies them as one because the metallurgical characteristics are very similar.

Drilling results at in October were sufficiently encouraging for the company to start immediately on the second phase of a 9,000 metre exploration programme. 

The gold grades returned by the latest four holes included 4.4 grammes per tonne (g/t) over 10.4 metres and 4.9 g/t over 4.3 metres.

There is a JORC-compliant 405,600 ounces already, but the company has an exploration target of one million ounces and its confidence is helped by the fact that Homase/ Akrokerri sits in an already prolific gold producing region.

It is close to the already producing Obuasi mine, where AngloGold Ashanti has pulled out about 30 million ounces, and lies on the same mineralisation belt. AngloGold Ashanti itself also mined a pit at Homase in 2002 and 2003.

“We are looking for surface extensions on the same structure as Obuasi as the mineralisation is similar”, Wessels says.

The first 4,500 metres of drilling at Homase/ Akrokerri suggested there is scope for a pit project to a depth of 300 metres, which would also provide the cash for a possible move underground. AngloGold is already down at the 2km level at Obuasi.

A new resource statement for  Homase /Akrokerri is due in about nine months time and will clearly have a major impact on the company going forward, but Goldstone is also busy on its other targets.

At Manso Amenfi, also in Ghana, Goldstone’s licence sits on an intersection of two major structures and, again, is in close proximity to a host of working mines including Golden Star’s Pampe mine. 

There will no drilling at Manso Amenfi next year, largely as early soil sampling threw up too many targets, Wessels says, and these need to be narrowed down through more trenching and sampling. 

There will be drilling in Senegal, on the Sangola permit, and also in the virtually untouched Oyem and Ngoutou prospects in Gabon, central Africa.

In fact, Gabon has only just issued its first gold exploration licences and through the happy, but unplanned, coincidence of Wessels and Hendrik Schloemann, Goldstone’s exploration director, being in the country at the right time, they believe they have cherry-picked the best two. 

While it is very early in both projects, Wessels says the licences have the things you need for any prospective anomaly - size, underlying structure and artisanal workings that show gold downstream from the anomaly. 

In Senegal, Goldstone intends to start drilling in February and finish by June and July when the rainy season starts.

Australian mining firm Unity has a 33.6% stake in Goldstone, which it maintained in the latest placing and that gives some additional corporate interest.

At the time of the placing the Australian group agreed to a stipulation that if its stake ever reached 49% it would make a full offer to the other shareholders. 

Unity bought an initial 20% stake in Goldstone in May last year, which it has steadily increased. It also has warrants that, if exercised, could raise another £2.3 million for Goldstone.

After the placing Goldstone has total cash of about £6 million, which house broker Westhouse said puts it in a very strong position to fund exploration both at Homase/ Akrokerri and also the prospective projects.

Westhouse also has a 14p price target on Goldstone shares based on a likely enhanced resource at Homase/Akrokerri and increased newsflow from the expanded exploration programme in Senegal and Gabon. 

If it can deliver meaningful drilling success this year, that gap between the current price and Westhouse’s target could close sharply and something that would make both types of Goldstone investor very happy.