Goldstone says concludes Guyana bauxite option agreement with BHP Billiton

2005-09-26

LONDON (AFX) - Goldstone Resources Ltd said an option agreement over its bauxite interests in Guyana has been concluded with BHP Billiton. Under the agreement GoldStone has granted to BHP the sole option to require GoldStone to apply for prospecting licences to explore for bauxite in Guyana. BHP will pay a 100,000 usd fee to GoldStone on Sept 8 2006 provided that BHP has not withdrawn from the agreement before this date. BHP said it may exercise its option before June 7 2007 in which event GoldStone is required to transfer all the Bauxite Prospecting Licences to BHP. In addition to the Option Fee and a monthly management fee, BHP said it will make the following payments in consideration of the transfer of the Bauxite Prospecting Licences: 100,000 usd upon transfer; 200,000 on 1st anniversary of transfer, 1 mln usd on 2nd anniversary, 3 mln usd on 4th anniversary; and, 8 mln usd on 7th anniversary. BHP and GoldStone will co-operate on an initial programme of reconnaissance exploration for bauxite during the option period. BHP said it shall fund all the costs of the initial exploration programme, estimated at at least 400,000 usd, and any exploration undertaken thereafter. BHP also said that, should exploration be carried through to feasibility stage, it is anticipated that total expenditure on exploration prior to feasibility studies may require up to 10 mln usd.