9th Sep 2005 07:00
Goldstone Resources Ltd09 September 2005 GOLDSTONE RESOURCES LTD AGREEMENT CONCLUDED WITH MAJOR OVER BAUXITE INTERESTS The Directors of GoldStone Resources Ltd ("the Company" or "GoldStone") arepleased to report that an option agreement pertaining to the Company's bauxiteinterests in Guyana has been concluded with BHP Billiton ("BHP Billiton"). The salient terms of the agreement are as follows: GoldStone has granted to BHP Billiton the sole option (the "Option") to requireGoldStone to apply for prospecting licences to explore for bauxite (the "BauxiteProspecting Licences") over all the areas (comprising Kamarang, Kopinang andParish's Hill) described in the bauxite reconnaissance permission ("the BauxitePermission") granted to GoldStone on 7 September 2005 by the Guyana Geology andMines Commission, particulars of which are described below. In consideration for the Option, BHP Billiton will pay a fee of US$100,000 toGoldStone (the "Option Fee") on 8 September 2006 provided that BHP Billiton hasnot withdrawn from the agreement before this date. BHP Billiton may exercise the Option before 7 June 2007 (the "Option Period") inwhich event GoldStone is required to transfer all the Bauxite ProspectingLicences to BHP Billiton (the "Transfer"). BHP Billiton has the right to withdraw from the agreement before the Transfer ifless than half of the Bauxite Prospecting Licences are granted. After theTransfer has been effected, BHP Billiton has the right to withdraw from theagreement entirely but has to re-transfer the Bauxite Prospecting Licences backto GoldStone for consideration of US$10 per Bauxite Prospecting Licence and cedethe ownership in all the exploration information gained by BHP Billiton toGoldStone without consideration. In addition to the Option Fee and the monthly management fee described below,BHP Billiton will make the following payments in consideration of the transferof the Bauxite Prospecting Licences: A. US$100,000 upon Transfer; B. US$200,000 on the 1st anniversary of the Transfer; C. US$1 million on the 2nd anniversary of the Transfer; D. US$3 million on the 4th anniversary of the Transfer; and E. US$8 million on the 7th anniversary of the Transfer. If BHP Billiton withdraws from the agreement after the payment of payment C ortransfers all the Bauxite Prospecting Licences pertaining to the Kamarang andKopinang areas back to GoldStone, then BHP Billiton will be released from makingpayments D and E. BHP Billiton and GoldStone will co-operate to undertake an initial programme ofreconnaissance exploration (the "Initial Exploration") for bauxite during theOption Period with the objective of identifying areas with the best potentialfor economic bauxite and to assist BHP Billiton in evaluating whether toexercise the Option. BHP Billiton shall fund all the costs of the InitialExploration programme and any exploration undertaken thereafter. The costs ofthe Initial Exploration programme will not be less than US$400,000. The InitialExploration will not involve the acquisition by BHP Billiton of tangibledepreciable property. Should exploration be carried through to feasibility stage, it is anticipatedthat total expenditure on exploration prior to feasibility studies by BHPBilliton may require an amount of up to US$10 million. During nine months of the first year of the Option Period GoldStone will providein-country logistical support. BHP Billiton will reimburse GoldStone for theactual costs of such support and the incidental costs (including the yearlyfees) of maintaining the Bauxite Permission. BHP Billiton will also payGoldStone a management fee for the logistical support during the first yeartotalling US$100,000. Bauxite Permission The Bauxite Permission to conduct geological and geophysical surveys for bauxiteand associated minerals has been granted to the Company by the Guyana Geologyand Mines Commission. This permission is necessary to further the objectives of the agreement with BHPBilliton to conduct further exploration for bauxite in Guyana. As a result ofthe grant of the Bauxite Permission, the Company has extracted its bauxiteinterests and rights from its current reconnaissance permission for gold, whichexpires in mid December 2005. The Bauxite Permission covers 4,100 square miles of land in the Kamarang,Kopinang and Parish's Hill areas, all of which are known for their bauxitepotential. The area where the Company has previously conducted bauxiteexploration is included in the Bauxite Permission area. The salient terms of the Bauxite Permission are as follows: The Bauxite Permission has been granted for two years, but the Company has theright to surrender all its rights at any time without recourse provided that ithas paid the first year's fees. The Company is obliged to make two annual feepayments ($22,000 in the first year and $25,000 in the second year) in order toretain the Bauxite Permission. The Bauxite Permission area is reserved for GoldStone for the duration of theBauxite Permission to apply for 20 Prospecting Licences, with the exception ofplaces that are the subject matter of grants and pending applications on orbefore 16 May 2005. Nico van der Hoven, Chief Executive of GoldStone, reports: "Given the new twoyear permission, obtained specifically for bauxite exploration, and thesubstantial amount of exploration work still to be undertaken on this potentialresource, we believe that the agreement with BHP Billiton has secured both therequired expertise and financial resources to maximise this asset's potentialfor the benefit of the Company's shareholders." This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Goldstone Resources