Right now we feel such an opportunity exists with Goldstone Resources (LON:GRL) and in this rather timely podcast interview, CEO Jurie Wessels and Exploration Director Dr Hendrik Schloemann, talk to MiningMaven about their exciting gold exploration campaigns in Ghana Senegal and Gabon, progress on the ground and the newsflow expected over the course of the year.
We hope you enjoy listening.
NB: The line at times isn't that great, so we have produced a transcript of the interview below. You may also want to try listening with headphones - we found makes quite a difference.
Transcript of Interview with Goldstone Resources recorded on Monday 12th March 2012
Please note: Whilst every effort has been made to ensure the accuracy of this transcript please note that any errors and omissions are excepted.
This is a transcript of an exclusive MiningMaven podcast interview which is for information and educational purposes only and should not be considered as investment advice or a recommendation to buy shares in the company featured.
MM: We have Hendrik Schloemann (HS), Exploration Director, and Jurie Wessels (JW), CEO of Goldstone Resources (GR), on the line from Cape Town, South Africa. Gentlemen, thanks for joining Mining Maven today.
GR: Hi Paul, how are you doing?
MM: Very well thank you. We have sunshine in London. What’s it like in Cape Town?
GR: Much better than on your side I’m sure.
MM: Some things in life are not fair! After the variety of progress that you’ve made recently and the RNS updates that you provided to market, we thought that now was a good time to have a chat about Goldstone Resources and the progress that you’re making. Now, for the benefit of investors new to the Goldstone Resources story, could you provide a brief overview of your strategic company vision and the projects you have in Ghana, Senegal and Gabon?
JW: Yes Paul, its Jurie speaking here. The Company basically has two facets to it, both of which have different value propositions and strategies associated with them. The one facet relates to the tangible resource at Homase, as you no doubt know about, and the other to the speculative appeal and exploration upside associated with all our projects. When I refer to the speculative appeal in all our projects, I also include the targeted but yet to be discovered ounces at Homase and Akrokerri and you will see what we mean by the rest of it as we go on with the conversation, no doubt. On the one hand our strategy is to develop Homase and Akrokerri as far as possible, i.e., until the opportunity cost of exploration becomes too high, which will lead us to investigate possibilities of commercialisation and on the other hand it is to spend our exploration dollars wisely, to possibly make a company transforming discovery. That’s basically in short what our strategic vision is for the company and when you look at Goldstone, you would find two types of investors, both of which would either want to, on the one hand, see one side of Goldstone grow a bit more, that is the resource side of it and on the other would want to sit and wait for the exploration bang.
MM: Ok, thanks Jurie. We talk about through Mining Maven’s security and blue sky and I sense that is what you have in the company at the moment. But, one other element that we are also trying to find is the quality and depth of the management and technical team you have in place. Now, do you have the right resources from a management and technical perspective? Both to pursue the operations on the ground and also to manage the various corporate issues that the company will face?
HS: From a technical point of view, as you know, that I am the one heading the technical side of things, and we are presently in the process of employing or replacing Philip le Roux, our Exploration Manager, that’s almost completed but we’re still working on it and then a little bit further down, but still very senior, we have got two Senior Project Geologists who are positioned in the countries of operation and all of them with intimate knowledge of the country and the projects and I think just through this internal structure of people working with us, we are well set to supervise and explore in these countries.
JW: Yes from a corporate and operational point of view, we are an exploration company so our activities and the people that we employ are directed at supporting Hendrik’s job and what he is doing and what we have there, we’ve got our logistics man, Eddie Orton and logistics as you no doubt know, is something that is very important in countries where one operates under difficult circumstances and conditions and then in country corporate activity and compliance we have our General Manager recently appointed Jacques Coetzer, who is also instrumental in bringing these offices in line with activities that support our exploration efforts and smooth the road for Hendrik and his team. In Gabon, for instance, we do have a country manager there, an office manager her name is Axelle de Cargouet who we recently appointed and she is French speaking and we try to do the same thing in all the other countries, keep locals involved so that we are able to work with the conventions of the specific country.
MM: Ok, fantastic. So you’re building the team and a network that enables you to work in some of these substantial territories reasonably efficiently.
JW: Correct, that’s right.
MM: Great. Now turning to Ghana, can you tell us about the current status of your Homase/Akrokerri project, describing the current JORC resource and the steps you are taking to further your understanding of, first of all, the local geology and then to expand the quantified resource?
HS: Paul, you know, I’m zooming out a little bit, and I am sure you already know, in Ghana in the Ashanti Gold Belt which is a good address to explore at and within that we are quite close to the Obuasi plant and we have a 4km long gold resource there of 400,000 ounces and all of that is along a shear zone in the Birimian rocks. It is well understood and all the mineralisation is still open down dip and along strike and we will find it, I think, relatively easy to test the potential in these directions, ie., down dip and along strike. Recently we also added a second drill rig to our Homase and Akrokerri projects and of course that will help us to add a lot more momentum there to the exploration in advance of the next couple of months. On top of that, we have quite a lot of exploration potential on the permit area, we’ve got a parallel trend that came up excitingly recently as the Adubrim structure which is just a few hundred metres from Homase and which supplied us with, or gave us very good soil results recently. Then we have a granite intrusion at the Akrokerri granite and there is a quartz vein that was mined by the colonials from 1900-1906 at very high grades. We are presently drilling under the colonial workings and we have some wonderful soil anomalies in the area. So all together, we believe that we have the exploration potential to build on our 400,000 ounces and with that in view, we have just commissioned an airborne geophysical study which is called a VTEM study, which will shed new light on all of these aspects of the exploration, clarifying some of the structures that we want to follow up.
MM: Now, notwithstanding the value of the resource in the ground, what options are there for crystallising value for investors as the exploration phase matures and the thoughts turn to gold production or alternatives.
JW: Paul, you know we’ve got 128,000 oz of the resource in the oxide material which is the upper part of it, which is easy to extract because it’s on the surface. We hope to obviously extend that with our efforts as we go on and there are various ways of commercialising the project because there is two different metallurgies you have. The Oxides which is on surface you would obviously start mining that first and let’s assume that we do justify an independent operation then clearly, we will start with an open cast operation over the resource and then start thinking are we going to mine it? It can either be done by us ourselves or it can be done by a contract miner or we can commercialise it by selling it off and retaining some kind of interest. If that doesn’t work, i.e., there is not an independent operation feasible on the Homase/Akrokerri licensed areas and we found less than what’s necessary to justify it then the option which is always very attractive to Goldstone as compared to other company’s that are not in a brownfield environment is that around us are other headgear and also processing plants and that means that we commercialise the asset by selling the ore. The gold prices are at very high levels, its never been this high comparatively speaking in real terms and I think what you would find is that its very attractive to people who are operating in that area.
MM: You also have the Manso Amenfi project in Ghana. What are the key features of this licence and what are you hoping to learn from the high resolution airborne magnetic and radiometric survey work that you’re undertaking?
HS: Well in Manso Amenfi in Ghana, we have a problem that is a good one to have: we found a large number of gold and soil anomalies during our initial soil survey, covering the entire permit area, but the problem now is that we cannot follow up all of these on the ground so we have to prioritise them and the high resolution magnetic survey, and to some extent, also the radiometric survey, will help us with this process. We hope to find with the survey that some of these gold anomalies which many of them have a strike length of more than 4km, will also be shown or will correlate in space with the structures that may show up in the magnetic survey and, in particular, those anomalies that show correlation with structures interpreted from the mag survey that we want to follow up on the ground. So that’s what we’re hoping to get out of this. Once that is achieved, we would then go back to the prioritised anomalies and do underground follow up with infill soil sampling and trenching.
MM: Now if we move over to Senegal, you have identified multiple targets in Senegal. Can you explain how the targets were selected and what you are looking to achieve through the drilling programme that is commencing, I believe, in March this year, alongside again the high resolution airborne magnetic and radiometric survey work you have commissioned for the licence area?
HS: Our initial survey consisted of “termite mound sampling” and we covered the entire area and we discovered three regional large surface gold anomalies in the prospect or in the permit area and after this we started doing our follow up work on the ground and at this stage, we have only received results for the central Tiabedji anomaly as far as the infill and follow up work is concerned. We then took a decision to commit to a 15,000m RAB drilling programme on the Tiabedji anomaly, the central anomaly, and we will later, once the infill results for the other two anomalies are well known, we will probably do more drilling on these two other anomalies. The RAB drilling on the Tiabedji anomaly is to commence this month and we hope that this will be an exciting programme for us. It is also important to remember that Tiabedji anomaly is a splay of the MPZ. The MPZ is a major structure that crosses large parts of the eastern part of Senegal and a little bit further to the north east, resulted in the formation of the very large Mosaba gold deposit that was discovered by Rand Gold.
JW: You asked what are we looking to achieve through the drilling programme and what we really want to achieve is to make a discovery.
MM: Preferably more than one!
JW: That in itself, by the nature of the RAB drilling programme, would not be sufficient and unfortunately we would have to do other work but it would give everybody a very good idea depending on the results of course, of what’s going on there.
MM: Just to help clarify for anyone who doesn’t understand, what does RAB drilling mean?
HS: RAB drilling really means that you drill only to shallower depths and you go into weathered rock but you typically wouldn’t go into fresh rock. Because of the shallow nature of the drilling, the price per metre is low and you can drill a lot of metres with a relatively small budget so you can cover a lot of ground, you can cover a very large anomaly. For example, like the Tiabedji anomaly is, and see where the underlying mineralisation in the weathered rock lies. You would then typically, after you’ve found it in the weathered rock, go back with a more expensive drilling method like, for example, with RC drilling and drill under the RAB anomalies to confirm how the found mineralisation in the rock would extend to larger depths under the RAB results. So it’s a step process and it’s a logical next step and it will tell us if the rock is mineralised and where it is mineralised.
JW: Yes but if you do get a consistent result in the drill lines, then you can easily draw some inference from that, that there is something big around.
MM: Ok, thanks for that. Now investors following the GoldStone Resources story for some time will be aware of the excitement surrounding your interests in Gabon. Can you explain to listeners the size and prospectivity of the Gabon anomalies?
HS: In Gabon we have two anomalies; one is the Oyem anomaly and the other one is the Ngoutou anomaly, now both of them are a staggering length of 15km and we recently did some follow up work over the Oyem anomaly where we, in the centre, crossed the anomaly with four lines and we determined that the width of the Oyem anomaly is 400m, so we are looking at something that really has the size potential to result in a large discovery, that’s why we are quite excited about it and it is also very encouraging to see that the soil anomaly itself coincides with a geological structure that lies right under it, as determined from magnetic results. It’s good to see that these two coincide so beautifully with each other. There are also artisanals in the area that mine gold from the streams that drain the anomalous area which is again another strong indication that this soil anomaly has the potential to result in a large discovery. So we are quite excited overall about these two anomalies.
JW: If you look at both of them, they tick all the boxes that you would search for when you look to find the ideal gold-in-soil anomaly. If you look at the genesis of a discovery made by scientific method, this is how things start. This is where the geologists’ techniques become applicable and what we have there, as Hendrik said, is three things. We’ve got the size, the consistency in the size. Secondly, we do have the underlying structure so there is a reason why the anomaly is there and then thirdly, there is actually gold. So it’s very difficult to fight against that. The question is, is there enough and that we will hope to try and answer.
MM: With such a substantial territory in Gabon, how do you mobilise and manage in-country operations effectively?
JW: You are talking about Gabon but the answer we’ll be giving pretty much applies to all the projects, especially Senegal as well. It’s very important to have the right people involved and the right people will make sure that the right base camp is built, adequate for the purpose that we want to use it for and then that base camp is established in the nearest centre, it doesn’t have to be the capital city, but somewhere that has sufficient infrastructure and facilities to support the exploration efforts. Now, for instance, in Gabon, we have got a base camp in Libreville with space enough where your drill rigs can be parked, where we can keep our equipment and then in Oyem at this stage, and in Ngoutou its in building, we’ve got a base camp and we building “fly camps” to support the drilling operation.
MM: One investor, Unity Mining, a company listed on the ASX, holds around 1/3 of GoldStone’s shares. Why is this an important strategic relationship for GoldStone Resources and for Unity Mining?
JW: GoldStone concluded a strategic alliance with Unity Mining back in May 2010 and it was important for us then, as it is now, that Unity is an investor like everybody else. Although Unity is a mining company, they operate in Australia, they have got mining operations there, and because they are peers, they see the benefits and the potential of a company like GoldStone, so I think that’s a good test for anybody that wished to invest in GoldStone. The second thing is that there has been some banter at the bulletin boards, I believe, that basically boil down to Unity being put into a position of purchasing GoldStone for a song and we’d like to allay fears very quickly. The first thing is that Unity Mining is an investor, secondly, they’ve got operations in Australia and thirdly, they are constrained now after we have made some amendments at our AGM, if they ever have the intention to do so, of purchasing the shares in the company without anybody else hearing about it. Firstly, there is the disclosure and transparency rulings that applies to them now, so every percentage point that they do purchase there will be an announcement, so people will realise that and the share price would hopefully increase, if Unity starts buying. Secondly, we do have City Code like provisions in our statutes now, which covers an investor in the event of Unity reaching 49% or more of an interest in GoldStone. Now, we know that a take-over doesn’t occur overnight, especially a takeover where someone wishes to acquire a large position in the company to enable it to manipulate the price of a company and I think, as long as people keep their eyes on what’s going with the share price and what’s going on with announcements, then I can’t see any reason why there should be any fear of Unity purchasing GoldStone very cheaply, that’s if they even have the intention to do that.
MM: If you look at the Unity Mining communications, they obviously hold their investment in GoldStone in high importance for their future?
HS&JW: Yes they do.
MM: Recognising the flourishing of your exploration programmes, how well funded is the company?
HS: The funds that we received in last year, November, will be enough to carry us comfortably through the exploration programmes that we have applied for this year and we are very happy with that and we foresee no shortage of funding for this year.
MM: Fantastic. Now, one question that increasingly is of significance to investors, individual and institutional: Is your work supported by the local communities and, going forward, what will you add to the localities where the company operates?
HS: It’s part of our strategy and internal view to work closely with the communities. We understand that the communities will be part of our success in the future and therefore, we make quite an effort to work closely on the ground. Let me just give you a few examples of what we are doing. For example, in Gabon, we have established a relationship with the WWF and WWF in Gabon is very concerned about the poaching of forest elephants in the area. In the immediate area of our Oyem licence, started to cooperate with them in helping them with some finance in order to make it impossible for the poachers to penetrate the area. In Senegal and Sangola, we did a bit of research on the ground and it turned out that the government was not able to register births in the area where we operate and that was quite detrimental to the communities because the people that weren’t registered at birth, are not able to receive government funds later on in their life and of course they can’t have an ID book, and therefore we helped the government with funding, or let’s rather say, the Province in the area, with funding that was used in order to establish a birth certification registration process. In Homase/Akrokerri there was a need in the small town of Akrokerri for more potable water and we, in the next two weeks, will start with a programme during which we will drill, I think it’s three or four holes in order to supply potable water to the community.
JW: Just continuing on Hendrik’s answer we would like to say that we have got a very good relationship with the community, especially the Homase/Akrokerri, where there are quite a lot of people living there and I, for instance, last week met the Chief of the Akrokerri surrounding area and the Royal household and they levelled some requests to us, one for instance is that we contribute towards the erection of poles (for electricity) in the area which we of course can’t always do in the exploration stage and we’d like to always bring them to the point where they’d rather see the benefits that will follow from a possibly mining operation later on, but yes, all over the place we have got good relationships with the people that are on the ground and that’s obviously very important to us.
MM: One final question: What can investors look forward to by way of expected news flow in 2012?
JW: We have got three drill rigs out in the field now, two at Homase and Akrokerri and then another one mobilising as we speak at Sangola. There will be a fourth one added in Gabon at Oyem and you heard that we are busy with other work as well, the radiometric and airborne magnetic surveys and other work that relates to infill soil sampling, etc. So there is a wealth of newsflow possibly to come in the next nine months, arriving from those activities and we will keep the market up to date as we have done to date.
MM: That’s good to hear. Well thank you once again, Hendrik and Jurie for your time today.
JW: Yes, thank you very much for affording us the opportunity. Thanks Paul.
HS: Thanks Paul. Always a pleasure to talk to you guys.