Golden Star Resources Ltd.

Golden Star Resources Ltd.

September 27, 2005 12:27 ET

Golden Star Resources to Acquire St. Jude Resources for US$118 Million

DENVER and VANCOUVER, British Columbia--(CCNMatthews - Sep 27, 2005) -

Golden Star Resources Ltd. (TSX: GSC) (AMEX: GSS) ("Golden Star") and St. Jude Resources Ltd. (TSX.V: SJD) ("St. Jude") are pleased to announce that they have signed a pre-merger agreement whereby Golden Star will acquire all of the outstanding shares of St. Jude (the "Transaction") on the basis of 0.72 of a Golden Star common share for every St. Jude common share. The Boards of Directors of both companies have unanimously approved the Transaction, completion of which is conditional on the execution of a definitive agreement, approval of St. Jude shareholders, requisite regulatory and court approvals as well as satisfaction of other customary conditions. The pre-merger agreement provides Golden Star with customary deal protection mechanisms.

The terms of the Transaction imply a purchase price of CDN$3.10 per St. Jude share (based on the closing price of Golden Star on the TSX on September 26, 2005) representing a premium of 38% to the 20-day average closing price of St. Jude common shares on the TSX Venture Exchange. Upon completion of the Transaction, St. Jude shareholders would own approximately 19% of Golden Star on a fully diluted basis. The transaction would be highly accretive to Golden Star's net asset value per share and is expected to be accretive to cash flow per share from 2007.

St. Jude's principal assets are the Hwini-Butre and Benso projects at the southeastern end of the prolific Ashanti gold belt region in Ghana. Together, Hwini-Butre and Benso have total near surface attributable measured and indicated resources of approximately 15.1 million tonnes at an average grade of 2.71 grams per tonne for contained gold of about 1.3 million ounces.(1)

In addition, St. Jude has several other highly prospective advanced exploration projects in Ghana, Burkina Faso and Niger.

Peter Bradford, President and CEO of Golden Star, said: "The acquisition of St. Jude delivers properties in Ghana with high-grade non-refractory gold resources that are within haulage distance to our Wassa gold mine. In assessing development scenarios for these properties, we will consider both stand-alone development options and the opportunity to mine and haul this high-grade material to Wassa, extending the mine life and increasing production at lower cash costs with minimal additional capital investment."

Mr. Bradford continued, "St Jude's properties outside of Ghana also offer Golden Star the opportunity to broaden and diversify its activities in the region, particularly into Burkina Faso where we see a number of exciting opportunities."

Michael A. Terrell, President and CEO of St. Jude, stated: "This transaction delivers an immediate and attractive premium for our shareholders and allows them to participate in the ongoing development and upside of not only St. Jude's quality assets but also Golden Star's existing projects."

The Transaction is expected to be implemented through a court-sanctioned plan of arrangement pursuant to the Canada Business Corporations Act and to close by mid-December. Upon closing of the Transaction, Mr. Terrell will join the Board of Directors of Golden Star.

BMO Nesbitt Burns is acting as financial advisor to Golden Star. Salman Partners and Haywood Securities are acting as joint financial advisors to St. Jude and have provided advice that the consideration offered under the Transaction is fair from a financial point of view to the shareholders of St. Jude.

About Golden Star

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. Before the benefit of this transaction, production is expected to increase to over 500,000 ounces in 2007, compared to expected production of approximately 220,000 ounces in 2005. Golden Star has approximately 143 million common shares outstanding.

Forward-looking Statement

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 the anticipated acquisition of St. Jude by Golden Star, the timing and terms of that transaction, potential development options for the St. Jude properties and Golden Star's expected production in 2005 and 2007. Factors that could cause actual results to differ materially include delays in or inability to obtain regulatory, court and shareholder approvals, a superior proposal and Golden Star's decision not to match it, a decision by Golden Star to change its strategic plan, or the failure to achieve anticipated development options for the St. Jude properties; unexpected events during construction and start-up of the Bogoso expansion; variations in ore grade, tonnes mined and crushed or milled from those anticipated; variations in relative amounts of refractory, non-refractory and transition ores; delay or failure to receive government or regulatory approvals relating to increased production; timing and availability of external financing on acceptable terms; technical, permitting, mining or processing issues; and fluctuations in gold prices and costs. There can be no assurance that future developments affecting Golden Star will be those anticipated by management. Please refer to the discussion of these and other factors in Golden Star's 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. Golden Star expects that these estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While Golden Star may elect to update these estimates at any time, Golden Star does 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.

Cautionary Note to United States Investors Regarding Estimates of Measured, Indicated and Inferred Resources

This press release uses the terms measured, indicated and inferred resources. United States investors are advised that while such terms are recognized and required by Canadian regulators, the SEC does not recognize them. Inferred resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under certain non U.S. rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated resources will ever be converted in to reserves. United States investors are also cautioned not assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.

This press release does not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell, any of the securities of Golden Star or St. Jude, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Golden Star common shares to be issued in the transaction have not been and will not be registered under the United States Securities Act of 1933 as amended (the "U.S. Securities Act"), or any securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

(1) Based on publicly available reserve and resource estimates provided by St. Jude.

Contact Information

  • Golden Star Resources Ltd., Denver
    Peter Bradford, 303-894-4613
    President and CEO
    Toll-Free: 800-553-8436
    Allan Marter, 303-894-4631
    Chief Financial Officer
    Toll-Free: 800-553-8436
    St. Jude Resources Ltd.
    Mike Terrell, 604-940-6565
    President and CEO
    Todd McMurray, 604-940-6565
    Vice President, Corporate Development
    Toll-Free: 1-866-281-2193