Golden Star Resources Ltd.

Golden Star Resources Ltd.

June 09, 2005 15:29 ET

Golden Star Receives Permits for Bogoso Expansion; Increases 2007 Production Estimates by 35%

DENVER--(CCNMatthews - Jun 9, 2005) -

Golden Star Resources Ltd. (Amex: GSS) (TSX: GSC) today announced that it has successfully completed the environmental permitting for its Bogoso Sulfide Expansion Project at its Bogoso/Prestea gold mine in Ghana.

Now that permits and financing are in hand, and subject to final Board approval, the Engineering, Procurement and Construction Management contract is expected to be signed and construction work to commence before the end of June. In the interim, detailed engineering design and ordering of long-lead-time items, which commenced earlier in 2005, continue in order to expedite the project. Construction of the 3.5 million-tonne per annum sulfide processing plant at Bogoso, including a BIOX® bio-oxidation circuit, is expected to take 15 to 18 months.

Financing in Place for Expansion

The capital cost for the construction is estimated between $115 million and $125 million, inclusive of the cost of expanding the existing mining fleet. Golden Star sold $50 million of convertible notes in April 2005. The proceeds from this sale, together with existing undrawn credit lines for purchasing mining equipment, cash on hand and cash flow from operations, are expected to be sufficient to fund the expansion project. In addition, Golden Star is finalizing a $30 million corporate revolving debt facility from a syndicate of international banks to provide funding for any further cash requirements or for other opportunities.

Dual Circuits Improve Bogoso Production over Previous Estimates

When commissioned, the sulfide plant is expected to produce 260,000 to 290,000 ounces of gold per annum at an average cash operating cost of $250 to $270 per ounce. The new sulfide processing plant will be built within the same complex as the existing 1.5 million-tonne per annum oxide processing plant at Bogoso, which has been in operation for 14 years. The oxide plant will be unaffected by the sulfide plant construction and will continue to process oxide and non-refractory ores from Bogoso and Prestea, and later it is expected to process ore from the southern Prestea area and the Dunkwa and Akropong properties, subject to technical studies and permitting. The dual sulfide and oxide plants increase our production estimates for Bogoso/Prestea, as the oxide plant is expected to produce gold at its historical rate of between 100,000 and 150,000 ounces per annum at an average cash operating cost of between $200 and $250 per ounce.

When the sulfide circuit is in full production in 2007, the annualized combined production from the sulfide and oxide processing plants at Bogoso is expected to be between 360,000 and 440,000 ounces at an average cash operating cost of between $230 and $260 per ounce. This compares to previous estimates of 260,000 to 290,000 ounces at average cash operating costs ranging between $250 and $270 per ounce, improvements of about 45% and 6%, respectively.

Peter Bradford, President and CEO, commented, "The next two years promise to be an exciting time for Golden Star as our expanded Bogoso plant provides an estimated 35% increase in 2007 Company production, which we now expect to be in excess of 500,000 ounces." He continued, "With the benefit this month of the new powerline connecting Wassa to the national power grid, we expect a full contribution from Wassa in the second half of 2005 and that should improve operating and financial results for the year."

2007 Production and Cash Operating Cost Estimated Ranges
(assumes full year of production from Bogoso Sulfide Plant)

Plant/Mine Previous Estimate Estimate as of Improvement
June 2005 (mid range)
Bogoso/Prestea Oxide 100,000-150,000 oz not
$200-$250/oz applicable
Bogoso/Prestea 260,000-290,000 oz 260,000-290,000 oz --
Sulfide $250-$270/oz $250-$270/oz --
Total 260,000-290,000 oz 360,000-440,000 oz 45%
Bogoso/Prestea $250-$270/oz $230-$260/oz 6%
Wassa approx. 140,000 oz approx. 140,000 oz --
$200-$220/oz $200-$220/oz --
Total Company 375,000-425,000 oz 500,000-580,000 oz 35%
costs not estimated $225-$255/oz not

Company Profile

Golden Star holds a 90% equity interest in the Bogoso/Prestea and Wassa open-pit gold mines in Ghana. In addition, the Company has an 81% interest in the currently inactive Prestea Underground mine in Ghana, as well as gold exploration interests elsewhere in West Africa and in the Guiana Shield of South America. Golden Star has approximately 142.4 million common shares outstanding.

Statements Regarding Forward-Looking Information: Some statements contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Such statements include comments regarding approval and signing of the Engineering, Procurement and Construction Management contract, anticipated improvements to the production estimates and cash operating costs at Bogoso/Prestea, the capital cost of and funding for the expansion project, future production from the southern Prestea area and the Dunkwa and Akropong properties and production estimates and cost estimates generally. Factors that could cause actual results to differ materially include timing of and unexpected events during construction and operations; variations in ore grade, tonnes crushed or milled; variations in relative amounts of refractory, non-refractory and transition ores; and fluctuations in costs. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in our Form 10-K for 2004. The forecasts contained in this press release constitute management's current estimates, as of the date of this press release, with respect to the matters covered thereby. We expect that these estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this press release represent management's estimate as of any date other than the date of this press release.

Non-GAAP Financial Measures: In this news release, the term "cash operating cost" is used on a per ounce of gold basis. Cash operating cost per ounce is equivalent to total cash cost per ounce, less production royalties and taxes. Total cash cost per ounce is equivalent to mining operations expenses for the period divided by the number of ounces of gold shipped during the period. We have included cash operating cost information to provide purchasers with information about the cost structure of our mining operations. This information differs from measures of performance determined in accordance with GAAP in Canada and in the United States and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. These measures are not necessarily indicative of operating profit or cash flow from operations as determined under GAAP and may not be comparable to similarly titled measures of other companies.

Contact Information

  • Golden Star Resources Ltd., Denver
    Peter Bradford, 303-894-4613 or 800-553-8436
    President and CEO
    Allan Marter, 303-894-4631 or 800-553-8436
    Chief Financial Officer