TIDMGRL
RNS Number : 7295Q
Goldstone Resources Ltd
30 June 2022
30 June 2022
GOLDSTONE RESOURCES LIMITED
("GoldStone" or the "Company")
Final Results
GoldStone Resources Limited (AIM: GRL), the emerging gold
producer and developer focussed on Ghana, is pleased to announce
its final results for the year ended 31 December 2021.
The Annual Report and Accounts will shortly be available to view
and download in full at the Company's website
www.goldstoneresources.com. Hard copies of the Annual Report and
Accounts are available on request.
Highlights
-- Successful transition from explorer and developer to commercial gold producer
-- Completion of first gold pour at Homase Mine in the Ashanti
Gold Belt in Ghana in November 2021
-- Export of first commercial gold pour of 42.96kg gold doré,
producing 40.96kg of gold bullion (1,307 Troy Ounces) and 1.72 kg
of silver bullion (55 Troy Ounces) and revenues of US$2.4
million
-- Gold loan repayment of US$1.1 million resulting in the
interest rate being taken out of default and improving GoldStone's
financial performance moving forward
-- Post period end, GoldStone has exported and received income
from 46.44kg of gold bullion resulting in US$2.84 million of
revenue and continues exporting gold monthly
-- Optimisation and re-engineering programme undertaken post
period end to improve efficiencies and gold recovery following
agglomeration issues reported in January 2022
-- Resource expansion programme progressing with grade control
drilling for the third Homase pit underway to determine the pit
planning and expanding the mineable resource inventory
-- Additional geochemical soil sampling programmes underway
across Homase and Akrokeri licence areas to seek parallel zones of
mineralisation and drilling and trenching programme commenced at
Akrokeri to move this forward towards recommissioning.
Chairman's StatemeNt
GoldStone Resources Limited (the "Company" or, together with its
subsidiaries, the "Group") has been steadily pursuing its main
unwavering ambition to become an emerging gold producer in Ghana.
During 2021, the year under review, this goal was achieved. In
November 2021 we announced the successful completion of our first
gold pour at our Homase Mine in the Ashanti Gold Belt in Ghana, an
event which saw us commence our transition from an explorer and
developer to a commercial gold producer.
This is a landmark moment for any gold mining company, however
given the unique challenges presented in the 18 months to the first
gold pour, I believe this is a particularly notable achievement.
For this I would like to thank our operational team, our
shareholders and other stakeholders for their staunch support, and
patient and resolute determination over recent years.
As our shareholders will be acutely aware, the work doesn't stop
at first gold pour, but rather starts the ongoing process of
optimising and re-engineering aspects of the operation in order to
strive for maximum efficiency as production ramps up. In many ways
2021 was an exceptionally challenging but successful year for
GoldStone. However, as we moved into 2022, we were presented with
new challenges and, post period end, we updated the market with
news regarding start-up agglomeration issues which impacted initial
gold recoveries. With swift and decisive action by the GoldStone
Board and management team, we were able to resolve these issues and
increase gold recovery from the heap leach pads to over 60%. During
this time our in-situ test work continued and all of the results
from testing of stacked ore indicates that we will ultimately
achieve an overall leach recovery of in excess of 82%. During this
time, further testwork has indicated that modifying the circuit to
include additional gravity for coarse gold recovery and re-crushing
the oversize and the quartz particles will ensure the higher
recovery is achieved. Additional construction work to modify the
existing circuit has commenced and this is expected to be completed
by Q3 2022.
The Group expects to have stacked some 450,000 tonnes of
agglomerated ore by the end of the current financial year, which
will be fed from the first two pits within the Homase Mine. With
the improved dry plant and agglomeration modifications outlined in
the announcement dated 25th March 2022, there has been an
improvement in our production profile during H1 2022. However, our
ability to deliver on our production target of 20,000oz of gold in
2022 has been impacted, inter alia, by diesel availability (which
is impacting us and indeed Ghana as a whole), and an incident of
theft (as reported in our announcement of 29 June 2022). The fuel
issue is a changing and fast-moving situation, and we are working
hard to secure a reliable source of fuel, however our current
expectation for production in 2022 has been revised to 14,000 oz,
rising to 20,000oz in 2023.
On 17 January 2022, the Group announced the export of the first
commercial gold pour of 42.96 kg gold doré, which included the
14.46kg poured in November 2021. This produced 40.96 kg of gold
bullion (1,307 Troy Ounces) and 1.72 kg of silver bullion (55 Troy
Ounces), and revenues of US$2.4 million, of which US$1.1 million
was credited as payment of the Gold Loan. Since January, the Group
has exported and received income from 46.44 kg of gold bullion
(approximately 1,493 ounces), 1.7 kg of silver bullion
(approximately 100 ounces), resulting in US$2.84 million of
revenue. The Group continues to produce and export gold
monthly.
From a financial perspective, our position has improved
significantly over recent months, and as noted above we reported,
post period end, that Gold Loan repayments from first gold pour of
US$1.1m, via the delivery of 610 troy ounces to Asia Investment
Management Services Limited was completed, resulting in the
interest rate on the Gold Loan being taken out of default. Once
again, this development ensures that GoldStone is on an even
footing and is now well placed to move forward from a position of
strength and achieve its operational and commercial objectives
through 2022 and in the coming years.
Looking ahead, our development plans extend further than our
initial first two pits at Homase, and grade control drilling for
the third pit is underway to determine the pit planning and
expanding the mineable resource inventory at Homase. Additionally,
the operational team has undertaken further geochemical soil
sampling programmes within the Homase and Akrokeri Licence areas to
seek parallel zones of mineralisation, following the programme
carried out in 2018. This programme, and subsequent work, has
continued to highlight the importance of our Akrokeri Licence,
which includes the former Akrokeri Underground Mine, in the context
of our asset portfolio, and the Group has commenced a drilling and
trenching programme in this area to move this forward towards a
mine plan.
With our production profile consistently improving at Homase and
plans in place for expansion and optimisation extending across
Homase and Akrokeri, we believe GoldStone is in a very strong
position to look to deliver real returns to shareholders. I look
forward to providing further updates as our growth strategy
advances and our position as an emerging West African gold producer
is firmly established.
Bill Trew
Chairman
Chief Executive Officer's Statement
GoldStone has performed well over the past two years, with a
proven gold mining operation now producing gold and significant
further upside from its expansion and development initiatives. As
many investors and industry veterans will attest, it is no easy
feat for a company to get an asset from exploration, through
development and into production - let alone doing this with the
specific financial pressures of a pre-revenue growth company like
GoldStone. Intensifying our particular list of challenges is its
geographical location - GoldStone is the first junior to take an
exploration company all the way to production in Ghana - a country
which boasts several mining majors but that does not have a proven
entry point for emerging producers such as us. With the consistent
and tangible support of our investors and the tenacity and
innovation of our operational team, we achieved this milestone in
November 2021 with our first gold pour.
As shareholders will be aware, our route to gold production has
taken various directions. However during the year under review,
GoldStone completed construction for the initial stage of the mine,
which includes crushing, sizing, agglomeration and stacking unit,
three heap leach pads, a carbon-in-column plant, and an elution and
gold room, for a total investment of US$15 million including
overheads. This was a low capex route to cash flow for GoldStone in
terms of benchmark industry standards, and importantly, it remains
a capital efficient operation in the context of other emerging
producers with an estimated cash cost of around US$1,200 per oz
expected for the remainder of 2022, with an all-in sustaining cost
of US$1,300 per ounce. This is the Group's current estimate,
however as shareholders will understand, and as is evident across
all industries on a global level, costs are liable to increase due
to persistent supply chain bottlenecks and increased prices for
major input materials such as fuel for the mining fleet and power
generation costs which are seeing increases of over 25%. It is
noted that Ghana's inflation rate has increased to its highest
level in 18 years, with an inflation rate of 23.6% recorded in May
2022. The Group will continue to monitor the levels of cost
inflation over the remainder of 2022, as we continue to target
long-term cash flow and value our operation at industry costs per
ounce of gold produced.
Looking back at our operations specifically, our transition into
production has not been plain sailing and agglomeration issues at
the end of the period resulted in much lower gold recovery than
anticipated. The team subsequently carried out a programme of
detailed test work and cost analysis to further understand the
leach kinetics within the heap and therefore optimise the recovery
of the remaining contained gold.
As part of this work programme, the agglomeration and crushing
circuit was reconfigured to handle the excess clay encountered and
the greater than expected amount of silt originating from the oxide
orebody's phyllitic content. A modified screening system has been
installed to control the feed sizing, with the fines (<3mm)
being removed, which represents approximately 20% of the ore body,
and fed initially to a gravity recovery circuit. The test work
indicates that the gravity recovery circuit should recover between
14% and 24% of the contained gold, whilst reducing leaching costs
and improving cashflow.
Concurrent with the preparation of Cell 3 of the heap leach to
receive agglomerated ore, the Group is building an additional 1,000
tonne per day (tpd) crushing, agglomeration and stacking circuit,
which will have double stacking capacity to 2,000 tpd and is now
due to be commissioned during Q3 2022.
The current available mineable resource from the first pit
within the Homase Mine was estimated by management to be 304,000
tonnes @ 1.7g/t of oxide ore (correction to the Press Release dated
25 March 2022, where it referred to two pits, when it should have
been one). From the second pit it is estimated by management that
there is 640,000 tonnes @ 1.25g/t of oxide ore, which was derived
from the update regarding the mineable resource announced 12
November 2020. The mineable resource is within the confines of the
602,000oz JORC (2012) resource previously announced.
The free dig mining of the first pit was halted at 40metres, due
to a silica alteration in the orebody being encountered, which
means that a drill and blast method of mining will have to be
instigated to continue the mining at depth. This has meant that the
high grade southern ore shoot that was being mined, was curtailed,
which has resulted in the average grade mined to date, dropping to
1.5g/t. The grade is expected to improve with depth, as the higher
grade southern plunging oreshoot within the first pit, becomes more
prominent. The first pit deepening, which is subject to the
geotechnical assessment, requires a pushback, which will make the
remaining oxide resources available, which is situated outside the
current 40 metre optimised pit shell, and should see the average
pit grade increasing to 1.7g/t.
The tonnes mined to date from the first pit are 202,138 tonnes
of ore and 619,218 tonnes of waste, which is less that the 210,000
tonnes of ore reported tonnes at 25 March 2022, due to the final
pit reconciliation, from which the average pit density measurements
revealed that the oxidised material characterized by sub- average
density is wider than originally anticipated.
The Group has undertaken geotechnical drilling within the first
two pits, which is currently being assessed, and subject to the
results and subsequent permitting, this could possibly allow these
pits to extend into the fresh ores down to -80 metres, for a
further 585,700 tonnes @ 1.7g/t and 1,261,600 tonnes @ 1.1g/t of
fresh ore as outlined in the announcement 12 November 2021.
The Group has undertaken grade control drilling for the third
pit within the Homase Mine, to determine the pit planning and
expanding the mineable resource inventory, the results are awaited
from the ALS Certified Laboratory in Kumasi.
Turning now to our Akrokeri Licence, centred on the former
Akrokeri Underground Mine, our operational team continued with the
reassessment of the former mine workings and former artisanal mine
workings, building the database with historical exploration work
and consolidating historical geological reports that reference not
just the Akrokeri Mine but also the several other historical
exploration targets in the vicinity of the Akrokeri Mine. This work
has merited a diamond drilling campaign for which the Company is
waiting for the arrival of a rig. The results will provide a better
guide to the structural setting of the Akrokeri mineralisation and
provide a route through which to advance further exploration and
through to production.
In June 2022, the Group was dealt a financial blow post-period
end in June 2022, due to an armed robbery at site which resulted in
the loss of gold, with a value of approximately US$350k. Whilst
this loss is not expecting to have a fundamental impact on the
performance of the business, the Group was not in a position to
make an announcement which was compliant with the AIM Rules, which
led to a suspension in the trading of its ordinary shares on the
AIM market on 10 June 2022 whilst an investigation was launched by
the authorities in Ghana. The suspension was lifted following the
Company's 29 June 2022 announcement. The investigation into the
robbery is ongoing and, concurrently, Goldstone is reviewing its
security protocols. A new security company has been appointed and
additional security measures are being implemented on an urgent
basis to enhance protection for the Company's operations, assets
and personnel moving forward. These issues are causing some
short-term disruption to operations, which are expected to continue
into Q3 2022, but the Company expects to maintain regular
production of gold doré throughout Q3 and Q4 2022.
Corporate and Financial Review
Losses from operations for the 12 months to 31 December 2021
were US$1,523k (2020: loss of US$610k). This included a finance
cost of US$729k (2020: US$nil) in respect of the restatement of the
Gold Loan taken out in 2020 of US$3.0 million to the gold price at
the year end.
After an exchange loss on the restatement of the Group's
Ghanaian assets as 31 December 2020, to the exchange rate as at 31
December 2021 of US$1,250k (2020: US$30k), the comprehensive loss
for the year was US$2,773k (2020: US$640k).
The financial statements at year end show the Group's balance
sheet, with net assets standing at US$16.0 million against net
assets of US$10.85 million at the end of the previous year.
Cash and cash equivalents as at 31 December 2021 were US$337k
(2020: US$701k).
With the revenue now being generated from our gold production
and the further funds issued from the revenue of warrants in June
2022, the Board is confident that it remains well positioned to
continue the ramp up of production at Homase.
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 of 1 penny
each in the capital of the Company ("Ordinary Shares") at a price
of 3 pence per Ordinary Share (the "Warrant Exercise"). The Warrant
Exercise provides GBP420,000 of additional funding to the
Company.
Nguvu Holdings Limited (formerly known as BCM Investments
Limited) ("Nguvu") 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 pence per
Ordinary Share (the "Nguvu Warrants"), but 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. As
Angela List, a director of the Company, is a director of and
shareholder in Nguvu, the Nguvu Warrants, which had an expiry date
of 22 June 2022, could not be exercised during this close period.
Accordingly, 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 (the "Warrant Extension"). If the Nguvu
Warrants are exercised, in whole or in part, during such extended
period, a further announcement will be made. The remaining 6
million Warrants held by Nguvu expired at midnight on 22 June
2022.
Former director's claim
As previously announced, following the claim against Goldstone
Resources Limited ("the Company") brought by a former director
(initially announced on 13 October 2016), it was further announced
in December 2018 that the South African Labour Court had ruled in
favour of the former director and awarded him damages of US$140k
plus interest and legal costs. In January 2021, The Group agreed to
issue 1,800,000 new Ordinary Shares of 1 pence each in the Company
to the former director, which had a value of GBP163,800
(approximately US$222,768) at the closing middle market price of
the Company's Ordinary Shares on 15 January 2021, which, in
addition to US$22,500 already paid in cash, represented a full and
final settlement of the damages awarded to him by the South African
courts. The Company has been indemnified against any future claims
by the former director of the Company.
Risk management
The Board has identified the following as being principal
strategic and operational risks (in no particular order):
a. going concern
The financial statements have been prepared assuming the Group
and Company will continue as a going concern. 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 commences commercial
gold production, existing cash resources and available
facilities.
The Group had available cash of US$336,524 as at 31 December
2021 (2020: US$701,384).
The Group commenced commercial production in January 2022. This
was later than previously anticipated due to permitting issues. As
can be seen in note 15, warrants over 459,035,996 Ordinary Shares
were exercised by shareholders during the year to generate funds
for the Group and pay down borrowings. In addition, Asian
Investment Management Services Limited ("AIMS"), who hold the
secured Gold Loan of US$3.0 million, supported the Group by
agreeing to a number of deferments of interest payments and, in
September 2021, agreed to an extension of the facility to 31 August
2022 and a gold repayment plan (see note 18). As a result of the
Group not commencing commercial production until early 2022 the
first three repayments were not made until January 2022 (see note
18 for further details). This allowed the Group to exit the default
interest rate of 17% on the Gold Loan, reverting back to 14%.
The Group is now generating revenues from commercial production.
The financial models and projections prepared by the Board in order
to monitor cash flow demonstrate that the Group is a viable going
concern. However, if there are further delays or problems
encountered with production, the ability to meet the repayment
schedule of the Gold Loan would be at risk. The Board believes the
flexibility and support afforded to the Group by AIMS to date
demonstrates that, if required, this would be forthcoming. AIMS
have confirmed their intention to continue to support the Group by
agreeing to further extensions of the payment plan, however the
interest rate would revert back to the default rate of 17% from
September 2022.
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 March 2022.
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 adopt the going
concern assumption.
b. 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 project, 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.
c. 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.
d. 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 2021 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 ramps up 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.
e. coronavirus impact
The Coronavirus pandemic continued to have a significant impact
on the operations of many businesses both in Ghana and globally
during 2021. The Group strictly adhered to government requirements
and health guidelines at the height of the pandemic and continues
to follow enhanced health and wellbeing protocols to safeguard our
employees, local communities and partners within our supply
chain.
Emma Priestley
Chief Executive Officer
For further information, please contact:
GoldStone Resources Limited
Bill Trew / 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
St Brides Partners Limited Tel: +44 (0) 20 7236 1177
Susie Geliher / Catherine Leftley
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).
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2021
Consolidated statement of financial position
as at 31 December 2021
in united states dollars note 31 December 31 December
2021 2020
--------------------------------- ----- ------------- -------------
Assets
non-current assets
property, plant and equipment 8 21,280,257 491,208
intangible assets - exploration
and evaluation 9 - 14,339,772
================================= ===== ============= =============
total non-current assets 21,280,257 14,830,980
================================= ===== ============= =============
current assets
inventory 12 1,959,083 -
trade and other receivables 11 257,013 2,145,576
cash and cash equivalents 13 336,524 701,384
================================= ===== ============= =============
total current assets 2,552,620 2,846,960
================================= ===== ============= =============
total assets 23,832,877 17,677,940
================================= ===== ============= =============
Equity
share capital - ordinary
shares 15 6,383,213 3,913,963
share capital - deferred
shares 15 6,077,013 6,077,013
share premium 15 33,535,384 28,080,853
foreign exchange reserve 15 (1,332,396) (82,149)
capital contribution
reserve 15 555,110 555,110
15,
share options reserve 17 3,535,197 3,535,197
accumulated deficit 15 (32,758,006) (31,234,911)
total equity 15,995,514 10,845,076
================================= ===== ============= =============
Liabilities
non-current liabilities
borrowings 18 - 1,300,000
provision for rehabilitation 14 901,284 -
================================= ===== ============= =============
total non-current liabilities 901,284 1,300,000
================================= ===== ============= =============
current liabilities
trade and other payables 19 1,395,222 1,001,998
borrowings 18 5,540,857 4,530,866
--------------------------------- ----- ------------- -------------
total current liabilities 6,936,079 5,532,864
================================= ===== ============= =============
total liabilities 7,837,363 6,832,864
================================= ===== ============= =============
total equity and liabilities 23,832,877 17,677,940
================================= ===== ============= =============
Consolidated statement of comprehensive income
for the year ended 31 December 2021
year ended year ended
31 December 31 December
in united states dollars note 2021 2020
----------------------------------- ------- ------------- -------------
administrative expenses (794,208) (577,153)
=================================== ======= ============= =============
operating loss 6 (794,208) (577,153)
=================================== ======= ============= =============
finance costs 7 (728,887) (32,942)
loss before and after tax from
continuing operations (1,523,095) (610,095)
items that may be reclassified
subsequently to profit and loss:
foreign exchange translation
movement (1,250,247) (30,088)
=================================== ======= ============= =============
total comprehensive loss for
the year (2,773,342) (640,183)
=================================== ======= ============= =============
loss per share from operations
basic and diluted losses per
share attributable to the equity
holders of the company during
the year (expressed in cents
per share) 16 (0.004) (0.002)
Consolidated statement of changes in equity
for the year ended 31 December 2021
share share
capital capital foreign capital share
in united note ordinary deferred share exchange contribution options accumulated total
states dollars shares shares premium reserve reserve reserve deficit equity
--------------- ------ ---------- ---------- ----------- ------------ ------------- ---------- ------------- ------------
balance as at
31 December
2019 3,484,580 6,077,013 27,222,084 (52,061) 555,110 229,688 (30,624,816) 6,891,598
=============== ====== ========== ========== =========== ============ ============= ========== ============= ============
Total loss for
the year - - - - - - (610,095) (610,095)
translation
movement - - - (30,088) - - - (30,088)
=============== ====== ========== ========== =========== ============ ============= ========== ============= ============
total
comprehensive
loss
for the year - - - (30,088) - - (610,095) (640,183)
=============== ====== ========== ========== =========== ============ ============= ========== ============= ============
warrants
granted in
period 17 - - - - - 3,305,509 - 3,305,509
warrants
exercised in
period 17 405,084 - 810,168 - - - - 1,215,252
share issue 15 24,299 - 48,601 - - - - 72,900
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 17 - - - - - - - -
granted in
period
warrants
exercised in
period 17 2,191,715 - 3,367,140 - - - - 5,558,855
=============== ====== ========== ========== =========== ============ ============= ========== ============= ============
share issue 15 277,535 - 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) 15,995,514
--------------- ------ ---------- ---------- ----------- ------------ ------------- ---------- ------------- ------------
Consolidated statement of cash flows
for the year ended 31 December 2021
year ended year ended
31 December 31 December
in united states dollars note 2021 2020
---------------------------------------- ------- ------------- -------------
cash flow from operating activities
operating loss for the year (794,208) (577,153)
adjusted for:
* depreciation 8 71,300 14,617
* foreign exchange differences 164,170 (30,088)
* provisions - 25,737
* changes in working capital (462,382) 329,937
net cash used in operating activities (1,021,237) (236,950)
========================================= ======= ============= =============
cash flow from investing activities
capitalisation of exploration costs 9 (746,640) (4,185,534)
acquisition of property, plant
and equipment 8 (4,872,653) (481,511)
net cash used in investing activities (5,619,293) (4,667,045)
========================================= ======= ============= =============
cash flow from financing activities
proceeds from loan 18 - 3,000,000
(repayment)/proceeds from bond
issue 18 (300,000) 1,300,000
proceeds from share issue 15 6,575,670 1,215,251
net cash generated from financing
activities 6,275,670 5,515,251
========================================= ======= ============= =============
net decrease in cash and cash
equivalents (364,860) 611,256
========================================= ======= ============= =============
cash and cash equivalents at beginning
of the year 13 701,384 90,128
========================================= ======= ============= =============
cash and cash equivalents at end
of the year 13 336,524 701,384
========================================= ======= ============= =============
Notes to the consolidated financial statements
1. Reporting entity
The consolidated financial statements for the year ended 31
December 2021 (the "financial statements") comprise GoldStone
Resources Limited (the "Company") and its subsidiaries, set out in
note 22, (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 2021
and includes the consolidated financial statements of the Group
prepared in accordance with international accounting standards in
accordance with UK- adopted-IFRSs.
The Group financial statements have been prepared using
accounting policies set out in note 3 which are consistent with all
applicable IFRSs. For these purposes, IFRSs comprise the standards
issued by the International Accounting Standards Board and
interpretations issued by the International Financial Reporting
Interpretations Committee that have been endorsed by the UK
Endorsement Board.
The Group financial statements have been prepared under the
historical cost convention except for the treatment of share based
payments, certain debtors at fair value and derivatives. The Group
financial statements are presented in United States Dollars ("$")
and all values are rounded to the nearest thousand except where
otherwise stated.
The preparation of consolidated financial statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and reported amounts in the financial statements. The
areas involving a higher degree of judgement or complexity, or
areas where assumptions or estimates are significant to the
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. 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 commences commercial
gold production, existing cash resources and available
facilities.
The Group had available cash of US$336,524 as at 31 December
2021 (2020: US$701,384).
The Group commenced commercial production in January 2022. This
was later than previously anticipated due to permitting issues. As
can be seen in note 15, warrants over 459,035,996 Ordinary Shares
were exercised by shareholders during the year to generate funds
for the Group and pay down borrowings. In addition, Asian
Investment Management Services Limited ("AIMS"), who hold the
secured Gold Loan of US$3.0 million, supported the Group by
agreeing to a number of deferments of interest payments and, in
September 2021, agreed to an extension of the facility to 31 August
2022 and a gold repayment plan (see note 18). As a result of the
Group not commencing commercial production until early 2022 the
first three repayments were not made until January 2022 (see note
18 for further details). This allowed the Group to exit the default
interest rate of 17% on the Gold Loan, reverting back to 14%.
(b) going concern
The Group is now generating revenues from commercial production.
The financial models and projections prepared by the Board in order
to monitor cash flow demonstrate that the Group is a viable going
concern. However, if there are further delays or problems
encountered with production, the ability to meet the repayment
schedule of the Gold Loan would be at risk. The Board believes the
flexibility and support afforded to the Group by the shareholders
and AIMS to date demonstrates that, if required, this would be
forthcoming. AIMS have confirmed their intention to continue to
support the Group by agreeing to further extensions of the payment
plan, however the interest rate would revert back to the default
rate of 17% from September 2022.
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 March 2022.
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 adopt the going
concern assumption.
(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) valuation of exploration and evaluation expenditure
The application of the Group's accounting policy for exploration
and evaluation expenditure requires judgement in determining
whether it is likely that future economic benefits are likely from
future exploration. If information becomes available suggesting
that recovery of expenditure is unlikely, the amount capitalised is
written off in the consolidated statement of comprehensive income
in the period when the new information becomes available.
(ii) impairment of intangible and tangible assets
The assessment of tangible and intangible assets 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 re 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.
(iii) 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.
(iv) 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.
(v) 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 deprecation/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 base
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.
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 and its subsidiaries as at 31 December
2021. 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.
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 only.
(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) 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 tax effects.
(iv) deferred shares
Deferred shares are classified as equity and held in the capital
contributions reserve account.
(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.
(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 production period expenditure directly attributable
to the construction of each individual asset are 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.
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 tangible fixed assets 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 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 amortised.
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. Oncer 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.
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.
(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 require 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
the group 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 income statement 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 income
statement.
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 Group 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 affected 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 presume to be carried out on an
arms 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 dore 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 profit and
loss period in which they are incurred.
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
2021:
-- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16:
Interest Rate Benchmark Reform - Phase 2
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 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 IFRS 3: Reference to Conceptual Framework
-- Amendments to IAS 16: Property, Plant and Equipment: proceeds before intended use
-- Amendments to IAS 37: Onerous contracts - costs of Fulfilling a Contract
-- IFRS 1: First time adoption of International Financial
Reporting Standards: subsidiary as a first time adopter
-- IFRS 9: Financial Instruments: Fees in the "10 per cent" test
for derecognition of financial liabilities
-- IAS 41: Agriculture - Taxation in fair value measurement
-- Amendments to IAS 8: Definition of accounting estimates
-- Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
-- 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. 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 and Evaluation: 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 2021
total per consolidated
income statement/financial
in united states dollars exploration corporate 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 assets 23,558,117 274,760 23,832,877
================================ ============ ========== ============================
reportable segment liabilities 2,066,460 5,770,903 7,837,363
================================ ============ ========== ============================
information about reportable segments for the year ended 31
December 2020
total per consolidated
income statement/financial
in united states dollars Exploration corporate position
-------------------------------- ------------ ------------ -----------------------------
reportable segment expenditure - (610,095) (610,095)
================================ ============ ============ =============================
reportable segment (loss) - (610,095) (610,095)
================================ ============ ============ =============================
reportable segment assets 14,359,654 3,318,286 17,677,940
reportable segment liabilities (504,905) (6,327,959) (6,832,864)
================================ ============ ============ =============================
6. Expenses by nature
The operating loss is stated after charging:
year ended year ended
31 December 31 December
in united states dollars 2021 2020
----------------------------------- ------------- -------------
auditor's remuneration in respect
of audit of the
financial statements
* current auditor 30,000 26,200
depreciation 71,300 14,617
foreign exchange difference 164,170 172,832
===================================== ============= =============
7. Finance cost
year ended year ended
31 December 31 December
in united states dollars 2021 2020
-------------------------------- ------------- -------------
interest charged on borrowings - 13,209
finance charges on borrowings - 19,733
loan derivative 728,887 -
------------- -------------
total 728,887 32,942
================================== ============= =============
The Gold Loan (see note 18) is repayable in gold, at the choice
of the lender. As the Group is now in production the Loan has been
restated in the year to reflect the gold price as at 31 December
2021. The resulting loss of US$728,887 is reported as a finance
cost.
8. Property, plant and equipment
31 December 2021 31 December 2020
-------------------------------------------- -----------------------------------
in united states accumulated carrying accumulated carrying
dollars cost depreciation value cost depreciation value
-------------------------- ------------- -------------- ------------- -------- -------------- ---------
assets under the
course of construction* 20,408,816 - 20,408,816 - - -
------------- -------------- ------------- -------- -------------- ---------
gold samples 4,570 - 4,570 4,570 - 4,570
------------- -------------- ------------- -------- -------------- ---------
computer equipment 74,468 (68,263) 6,205 73,368 (67,303) 6,065
------------- -------------- ------------- -------- -------------- ---------
office equipment 117,182 (110,115) 7,067 111,672 (108,567) 3,105
------------- -------------- ------------- -------- -------------- ---------
field/geological
equipment 953,231 (125,529) 827,702 101,168 (62,953) 38,215
------------- -------------- ------------- -------- -------------- ---------
motor vehicles 70,304 (44,407) 25,897 477,444 (38,191) 439,253
------------- -------------- ------------- -------- -------------- ---------
total 21,628,571 (348,314) 21,280,257 768,222 (277,014) 491,208
========================== ============= ============== ============= ======== ============== =========
* During the period, the Group's exploration and evaluation
assets, which represent the mining assets in Ghana, were
transferred from intangible assets to property, plant and equipment
as the Group moved towards commencement of commercial production in
2022.
reconciliation of property, plant and equipment - 31 December
2021
carrying carrying
in united states value opening depreciation value ending
dollars balance additions transfer balance
--------------- ------------ --------------- ------------- --------------
assets under the
course of 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
GBP901,284.
reconciliation of property, plant and equipment -31 December
2020
in united states carrying value carrying value
dollars opening balance additions depreciation ending balance
------------------- -------------------- ---------- --------------- ------------------
gold samples 4,570 - - 4,570
computer equipment 3,187 5,672 (2,794) 6,065
office equipment 1,155 2,470 (520) 3,105
field/geological
equipment 5,872 34,501 (2,158) 38,215
motor vehicles 9,530 438,868 (9,145) 439,253
total 24,314 481,511 (14,617) 491,208
======================== =============== ============== =============== ==============
9. 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 2019 8,256,380
additions 6,083,392
---------------------------------------- --------------
balance as at 31 December 2020 14,339,772
additions 746,640
transfer to assets under construction
(see note 8) (15,086,412)
---------------------------------------- --------------
balance as at 31 December 2021 -
---------------------------------------- --------------
Once commercially viable reserves are established and
development is sanctioned, exploration and evaluation assets are
transferred to assets under construction.
10. Taxation
current and deferred tax
The Company is subject to Jersey income tax at the rate of 0%.
The Group is also registered for income tax purposes with the South
African 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.
11. Trade and other receivables
in united states dollars 31 December 31 December
2021 2020
-------------------------- ------------ ------------
other receivables 257,013 2,145,576
Total 257,013 2,145,576
========================== ============ ============
Other receivables include US$27,955 (2020: US$1,852,791) in
respect of the fair value of share warrants issued in the current
and prior period.
12. Inventory
in united states dollars 31 December 31 December
2021 2020
------------------------- ------------ ------------
gold in circuit 602,097 -
gold on hand 1,142,276 -
ore stockpile 214,710 -
Total 1,959,083 -
========================= ============ ============
Inventory is recognised at the lower of cost or net realisable
value.
13. Cash and cash equivalents
The cash and cash equivalents balance at the year-end was made
up of balances in the following currencies:
in united states dollars 31 December 31 December
2021 2020
-------------------------- ------------ ------------
sterling 78,372 620,961
US dollars 218,818 72,939
ghana cedis 39,334 7,484
Total 336,524 701,384
========================== ============ ============
14. Provision for rehabilitation
in united states dollars 31 December 31 December
2021 2020
------------------------- ------------ ------------
1 January - -
additions 901,284 -
Total 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.
15. Capital and reserves
(a) share capital
31 December 31 December
2021 2020
---------------------------------------------- -------------- --------------
ordinary shares
called up, allotted and fully paid
459,033,996 ordinary shares of 1 pence
each
(2020: 281,785,967) GBP4,590,340 GBP2,817,859
converted to united states dollars
at date of issue $6,383,213 $3,913,963
deferred shares
called up, allotted and fully paid
in issue at 1 January GBP3,730,772 GBP3,730,772
in issue at 31 December - fully paid
414,530,304 (December 2020: 414,530,304)
deferred 0.9 pence shares GBP3,730,772 GBP3,730,772
============================================== ============== ==============
converted to united states dollars
at date of issue $6,077,013 $6,077,013
Authorised
1,000,000,000 (December 2020: 1,000,000,000)
authorised ordinary 1 pence shares GBP10,000,000 GBP10,000,000
================================================ ============== ==============
During the year the Company issued the following 1 pence fully
paid shares:
Number of Nominal Share
Shares Value premium
-------------- ---------------------------- ------------ ----------- -------------
1 January
2021 Opening balance 281,785,967 $3,913,963 $28,080,853
21 January Shares at 9.1p share 1,800,000 GBP18,000 GBP145,800
2021
Converted to United States
Dollars at date of issue - $24,480 $198,288
5 March 2021 Shares at 3p share 42,000,000 GBP420,000 GBP840,000
Converted to United States
Dollars at date of issue - $583,532 $1,196,198
8 June 2021 Shares at 1.2p share* 20,352,377 GBP203,524 GBP40,705
Converted to United States
Dollars at date of issue - $286,969 $57,395
Shares at 3p share 66,000,000 GBP660,000 GBP1,320,000
Converted to United States
Dollars at date of issue - $934,030 $1,868,060
12 July 2021 Shares at 7p share 8,400,000 GBP84,000 GBP420,000
Converted to United States
Dollars at date of issue - $116,717 $583,585
29 July 2021 Shares at 1.2p share* 20,000,000 GBP200,000 GBP40,000
Converted to United States
Dollars at date of issue - $277,638 $55,528
17 September Shares at 3p share 4,000,000 GBP40,000 GBP80,000
2021
Converted to United States
Dollars at date of issue - $55,239 $110,478
27 September Shares at 3p share 6,000,000 GBP60,000 GBP120,000
2021
Converted to United States
Dollars at date of issue - $82,000 $164,000
11 November Shares at 11.5p share 8,695,652 GBP86,956 GBP913,044
2021
Converted to United States
Dollars at date of issue - $108,645 $1,220,999
31 December
2021 Closing balance 459,033,996 $6,383,213 $33,535,384
*Proceeds of exercise used to pay down shareholder loan (note
18).
(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 (2020: 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.
(vi) accumulated deficit
Accumulated deficit reserve represents the cumulative net gains
and losses recognised in the consolidated statement of
comprehensive income.
16. Earnings per share
The calculation of basic and diluted earnings per share at 31
December 2021 was based on the losses attributable to ordinary
shareholders of US$1,523,095 (2020: US$610,095), and an average
number of ordinary shares in issue of 353,369,120 (2020:
252,004,667).
in united states dollars 31 December 31 December
2021 2020
------------------------------------- ------------ ------------
loss attributable to shareholders (1,523,095) (610,095)
weighted average number of ordinary
shares 353,369,120 252,004,667
basic and diluted earnings per
share 0.004 (0.002)
====================================== ============ ============
The Group has the following instruments which could potentially
dilute basic earnings per share in the future:
in number of shares 31 December 31 December
2021 2020
--------------------- ------------ ------------
Warrants 26,000,000 182,352,377
====================== ============ ============
17. Share based payment arrangements
At 31 December 2021, 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 year ended 31
December 2021 (2020: same).
(b) reconciliation of outstanding share options
There are no options outstanding at 31 December 2021 (2020:
same).
(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 based on the
Black-Scholes formula. 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
weighted weighted
number of average exercise number of average exercise
warrants price warrants price
31 December 31 December 31 December 31 December
2021 2021 2020 2020
-------------------- -------------- ------------------ ------------- ------------------
outstanding as at
1 January 182,352,377 2.6p 40,352,377 1.2p
granted during the
year - - 172,000,000 3.0p
exercised during
the year (156,352,377) 2.5p (30,000,000) 3.0p
outstanding at
31 December 26,000,000 3.0p 182,352,377 2.6p
==================== ============== ================== ============= ==================
exercisable at
31 December 26,000,000 3.0p 182,352,377 2.6p
==================== ============== ================== ============= ==================
The warrants outstanding at 31 December 2021 have a weighted
exercise price of 3.0p (2020: 2.6p) and a weighted average life of
0.5 years (2020: 1.5 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
2020 2020 2018
-------------------------------- ---------- ---------- ------------
share price at grant 2.10p 4.20p 1.20p
warrant exercise price 3.00p 3.00p 1.20p
expected life of warrants from 2.3 years 2.0 years 3.4 years
exercise date
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
(2020: $3,305,509).
(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 11 and 18 for
further details. The amount capitalised during the year was
US$67,100 (2020: US$67,400).
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 11 and 18 for further
details. The amount capitalised during the year was US$75,130
(2020: US$295,000).
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 11 and 18 for further
details. The amount capitalised during the year was US$1,682,615
(2020: US$1,252,328).
18. Borrowings
31 December
in united states dollars 31 December 2021 2020
-------------------------- ----------------- ------------
shareholder loan 742,587 1,346,642
gold loan 3,769,500 3,184,224
loan derivative 728,770 -
bonds 300,000 -
========================== ================= ============
current borrowing 5,540,857 4,530,866
========================== ================= ============
bonds - 1,300,000
========================== ================= ============
non-current borrowing - 1,300,000
-------------------------- ----------------- ------------
Total 5,540,857 5,830,866
========================== ================= ============
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$1,224k.
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.
In June 2021 Paracale exercised warrants totalling 32,352,377
new ordinary shares of which 20,352,377 at a price of 1.2 pence
were set against the loan (US$344,364). The balance of the warrants
were exercised for cash. A further exercise in July 2021 for
20,000,000 ordinary shares of 1.2p (US$333,166) was also used to
reduce the loan.
At 31 December 2021, Paracale had exercised all its
warrants.
Gold Loan
The Company entered into a loan agreement with Asian Investment
Management Services Limited ("AIMS") 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.
On 20 September 2021, AIMS agreed to extend the maturity date on
the US$3 million secured gold loan to 31 August 2022. The extension
restructures the repayment obligations as shown below. The Company
retains the right to repay the Gold Loan early without penalty.
Interest will continue to accrue at the default rate of 17%
until January 2022, then will revert to the original interest rate
of 14% until maturity. In conjunction with the extension, the
Company has agreed a repayment schedule for the Gold Loan and
accrued and ongoing interest, as set out below:
Month Gold Loan payments
(in kilos of
gold)
October 2021 5
-------------------
November
2021 6
-------------------
December
2021 8
-------------------
January 2022 8
-------------------
February
2022 8
-------------------
March 2022 8
-------------------
April 2022 8
-------------------
May 2022 8
-------------------
June 2022 8
-------------------
July 2022 8
-------------------
August 2022 7.4
-------------------
In the event that any payment is not made when due in accordance
with the agreed repayment schedule, this will be deemed an event of
default. Any interest that is not paid when due will accrue
interest at the default rate of 17% until payment.
In January 2022, a payment of 19Kg of gold was made in order to
repay the interest due for October, November and December 2021. It
was further agreed with AIMS that in order to enable the Company to
efficiently manage shipments, it shall not be deemed an event of
default if the monthly payments set out in the Company's
announcement on 20 September 2021 are not made at the end of each
month.
In consideration of entering into the loan agreement AIMS were
issued with 120,000,000 warrants to subscribe for such number of
Ordinary Shares at an exercise of 3.0 pence per share (the
"Exercise Price"), at any time during the period through to 22 June
2022. This resulted in an increase in the share option reserve and
other receivables of US$2.9 million in the prior period. At 31
December 2021, AIMS had exercised all of their warrants.
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, twenty of
the bond notes were redeemed in cash or shares. In conclusion of
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. At 31
December 2021, 26,000,000 warrants remain outstanding.
19. Trade and other payables
31 December
in united states dollars 31 December 2021 2020
-------------------------- ----------------- ------------
trade payables 882,045 570,391
other payables 302,739 242,289
accruals 210,439 189,318
Total 1,395,223 1,001,998
========================== ================= ============
20. 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 a
customer or counterparty 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.
(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 Ghana 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 Ghana 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:
reporting reporting
average date spot average date spot
rate 2021 rate 2021 rate 2020 rate 2020
--------------------------- ----------- ----------- ----------- -----------
Sterling to US dollars 1.376 1.353 1.284 1.380
Ghana Cedis to US dollars 0.157 0.162 0.176 0.170
=========================== =========== =========== =========== ===========
A strengthening (weakening) of GBP or GHS against all other
currencies at 31 December 2021 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.
equity strengthening equity weakening equity strengthening equity weakening
in united states dollars 2021 2021 2020 2020
--------------------- ----------------- --------------------- -------------------
ghana cedis 10% (2020:
10%) 2,298,000 (2,298,000) 1,432,000 (1,432,000)
--------------------- ----------------- --------------------- -----------------
Total 2,298,000 (2,298,000) 1,432,000 (1,432,000)
========================== ===================== ================= ===================== =================
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 has a loan arrangement with Paracale as detailed in note
18. The interest rate is fixed at 6% for the duration of the term
of the loan. The Group also has a loan agreement with AIMS. 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.
21. 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 31 December
2021 2020
--------------------------------------------------- ------------ ------------
Director's remuneration: executive - E
Priestley 65,500 68,750
Director's remuneration (accrued): executive
- E Priestley (*) 54,500 51,250
Director's remuneration: non-executive
- R Wilkins - 12,000
Director's remuneration (accrued): non-executive 12,000 -
- R Wilkins (*)
Director's remuneration: non-executive
- W Trew - 5,000
Director's remuneration: (accrued): non-executive
- W Trew (*) 24,000 7,000
Director's remuneration: non-executive
- A List - 12,000
Director's remuneration (accrued): non-executive 12,000 -
- A List (*)
Director's remuneration: non-executive
- O Fenn - 1,500
Director's remuneration (accrued): non-executive
- O Fenn (*) 12,000 10,500
total 180,000 168,000
=================================================== ============ ============
(*) Represents the value of accrued fees for the period 31
December 2020 to 31 December 2021 for each director.
The total amount payable to the highest paid director in respect
of emoluments was US$120,000 (2020: US$120,000). No directors
exercised any share options during the year (2020: nil).
Bill Trew's remuneration is paid to Oxus Mining Limited, a
company in which he is a director. 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. R Wilkins's
remuneration was paid to KSJ Investments Limited, a company in
which he is a director.
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, the Company's
chairman, is interested. At year end the balance was US$743k (2020:
US$1,346k), as at 31 December 2021 and included interest accrued to
date of US$19 (2020: US$177k)- see note 18 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 18 for further
details.
During the year, MAED (UK) Limited ("MAED") began undertaking
the update of the Definitive Economic Plan ("DEP") report which was
originally prepared in 2019 by them. This was an agreed review
under the original engagement between MAED and the Company. MAED is
a related party, as it is wholly owned by the Company's
non-executive chairman Bill Trew. At the year end there is an
amount owing to MAED of US$266,109 (2020: US$nil), for services
provided during the financial year.
22. Group entities
Details of the Group's subsidiaries at the end of the reporting
period are as follows:
country ownership ownership
of incorporation principal interest interest
and operation activity 2021 2020
----------------------------- ------------------- ------------------ ------------ ----------
Development
and exploration
of gold and
associated
GoldStone Akrokeri Limited Ghana elements 100% 100%
============================= =================== ================== ============ ==========
GoldStone Homase Limited Ghana Dormant 100%(*) 100%(*)
============================= =================== ================== ============ ==========
GoldStone Resources Limited
Gabon S.A.R.L. Gabon 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.
23. Ultimate controlling party
The directors believe that there is no ultimate controlling
party of the Group.
24. Subsequent events
On 4 January 2022, the Company announced that it had commenced
commercial gold production and that repayments of Gold Loan
instalments were to be made out of stock held and a further gold
pour (see note 18). Shipment of this gold was announced on 17
January 2022.
The Board issued an operational and exploration update in March
2022.
On 10 June 2022 shares in the Company were temporarily suspended
from trading on AIM pending an announcement in respect of the armed
robbery at the mine which was made on 29 June 2022. The shares were
readmitted for trading on 29 June 2022.
On 23 June 2022, the Company announced the exercise of
14,000,000 warrants to subscribe for new Ordinary Shares of 1 penny
at a price of 3.0 pence per share. The exercise provided GBP420,000
of additional funding to the Company.
**ENDS**
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END
FR BKCBNDBKBKAB
(END) Dow Jones Newswires
June 30, 2022 02:00 ET (06:00 GMT)
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