Majestic Announces Strategic Investment In Goldstone Resources Limited
Majestic’s first African project signals diversification despite dilution and governance risks.
Majestic Gold Corp., through its 58.75%-held subsidiary Persistence Gold Group Ltd., has acquired a 20.96% equity interest in GoldStone Resources Limited. The transaction, valued at approximately £3.52 million (CAD$6.67 million), was executed via the purchase of 351,594,899 ordinary shares at £0.01 per share. This marks Majestic's first strategic investment outside of China, aimed at diversifying its asset base and gaining exposure to African mining opportunities.
GoldStone's primary assets include the Homase Gold Mine, an operating open-pit heap leach operation, and the historical Akrokeri Underground Mine located in Ghana's Ashanti Gold Belt. Additionally, GoldStone holds a binding memorandum of understanding for a 50% interest in a gold project in Sierra Leone, situated adjacent to the Boamuhun Gold Mine.
The Homase deposit holds a JORC-compliant resource of approximately 10.6 million tonnes at 1.77 g/t gold, equating to roughly 600,000 ounces, as of October 30, 2012. Proceeds from the transaction will be used by GoldStone to advance the Homase Mine, including drilling to upgrade the resource base and commencing a feasibility study for sulphide ore exploitation. Under the terms of the deal, Majestic gains the right to nominate one board representative to GoldStone, contingent on retaining a 15%+ interest.
Majestic Gold Corp. (MJS) has allocated CAD$6.67M toward its investment, an amount representing approximately 13.5% of the $49.2M raised in its recent placement. This figure constitutes a negligible fraction of the company’s $171.6M cash balance and does not meaningfully alter the balance sheet or near-term cash flow.
The investment provides a low-cost entry point into Ghana, a stable, tier-1 jurisdiction, directly addressing the company's stated goal to diversify away from China. However, the 20.96% stake is non-controlling, and Majestic secures only one board seat.
The transaction is viewed as an expected execution of the May 21 placement mandate. The stock has traded in a tight range near $0.10–$0.11 following the dilutive $0.13 placement. The chart already reflects the dilution and governance uncertainty; this news does not override that pricing.
Majestic Gold Corp. (TSXV: MJS; FRA: A0BK1D) is a British Columbia-based junior gold producer listed on the TSX Venture Exchange and the Frankfurt Stock Exchange. The company describes itself as a low-cost producer engaged in commercial gold operations, with its primary assets located in eastern Shandong Province, China.
The company’s flagship Songjiagou Gold Mines project comprises both open-pit and underground operations. Additional assets include the Mujin Gold Project, which features the DGZ underground mine and other exploration targets, specifically the CH and HH deposits. Majestic Gold operates through its subsidiary, Persistence Gold Group Ltd., a Hong Kong Stock Exchange-listed entity that recently completed a HK$472M placement.