Aim-listed GoldStone Resources has entered into a subscription agreement with Hong Kong-listed mining and investment company Persistence Gold Group pursuant to which Persistence has agreed to subscribe for 351.59-million new ordinary shares in the company at a price of £0.01 per subscription share.

The subscription will raise gross proceeds of £3.51-million for GoldStone. 

GoldStone says the subscription represents a significant strategic investment in the company and establishes a new relationship with an experienced international mining investor.

On admission, the subscription shares will represent an interest of about 20.96% in the company’s ordinary shares.

The net proceeds will be used to undertake an expanded drilling programme at the Homase mine, in Ghana, to increase and enhance the existing Joint Ore Reserves Committee- (Jorc-) compliant mineral resource; progress exploration activities across the company's licence portfolio; support mine planning and technical studies; strengthen the company's working capital position; and associated general corporate and operational expenditure.

GoldStone says its board believes the expanded drilling programme has the potential to materially enhance the long-term value of the Homase project and support future mine development opportunities.                              

Meanwhile, in connection with the subscription, GoldStone notes that Persistence Gold Group will have the right to nominate one representative to the board of GoldStone for so long as Persistence retains an interest of 15% or more in the company’s ordinary shares.

Accordingly, Persistence executive director Jeff Malaihollo is expected to be appointed as a nonexecutive director of the company following the admission of the subscription shares.

Further, the company, Persistence and Strand Hanson, the company’s nominated adviser, have entered into a relationship agreement, to provide certain safeguards to ensure that, for so long as Persistence and its associates together are entitled to exercise, or control the exercise of, 15% or more of the issued share capital of the company, GoldStone is capable of carrying on its business independently of Persistence as a substantial shareholder.

"We are delighted to welcome Persistence Gold Group as a strategic shareholder in GoldStone. This investment provides the company with significant financial flexibility to accelerate the next phase of development at Homase through an expanded drilling programme aimed at increasing and enhancing our Jorc mineral resource.

“We also look forward to working closely with Jeff Malaihollo and the Persistence team as we continue to develop GoldStone into a leading African gold company,” says CEO Emma Priestley.