LONDON (ShareCast) - (Sharecast News) - GoldStone Resources announced on Friday that, in line with progress towards starting production at the Homase South Pit and construction of the associated heap leach facility on its Akrokeri-Homase Gold Project, it has planned an additional infill reverse circulation drilling programme.
The AIM-traded firm said the objective was to increase the mineable resource at depth at the pit, with the programme expected to begin shortly.

It said the Homase South Pit - the first of the three open pits planned to be brought into production - extends 1,500 metres southwards from the historic Homase Main Pit, which produced 52,500 ounces of gold at an average grade of 2.5 grams of gold per tonne in 2002 and 2003, by AngloGold Ashanti.

The proposed programme would seek to further define and extend the mineable resource down-dip at the Homase South Pit to a vertical depth of around 60 metres, with the pit currently targeting the oxide resource to a vertical depth of 30 metres.

GoldStone said the programme would build on previous drilling it completed in 2011 and 2012, which defined its existing JORC resource, and which indicated increased grades in the area of 1.4 grams to 2.5 grams of gold per tonne below the weathered zone of 30 metres.

The company said it was also considering an additional drilling programme within the Homase Trend, extending northwards, by around 2,000 metres from the Homase Main Pit, encompassing the proposed Homase Central and North Pits, and the historical exploration pit, to the same depth of 60 metres, to further increase the mineable resource.

GoldStone's board also updated the financial model used for its definitive economic plan to bring it in line with the current gold price of around $1,800 per ounce, up from $1,300, and to reflect a reduced initial capital expenditure of $3m, down from $6.9m.

The firm said the reduced initial capital expenditure approach would enable it to achieve first production within the timetable envisaged, while deferring certain elements of the project, including the elution plant, electrowinning and gold room, so they could be funded from production cash flows.

The combined effect of an increase in the gold price and the reduction in initial capital outlay was estimated by the board to increase the originally estimated project net present value to $34.5m from $19.5m, and the internal rate of return to 382% from 143%, at a 10% discount rate and excluding financing costs.

"The updated definitive economic plan, to reflect the current gold prices and our current development plan, demonstrates the attractiveness of the Akrokeri-Homase (AKHM) project," said chief executive officer Emma Priestley.

"The potential to further expand the mineable resource through the planned additional drilling programmes also offers further potential upside though our ability to increase the minable resource.

"We continue to believe that AKHM has the ability to deliver significant value for all shareholders, and we look forward to keeping shareholders updated as we move forward to achieving first gold production in the fourth quarter of 2020."

At 0826 BST, shares in GoldStone Resources were up 1.75% at 7.1p.

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