DENVER, Colo., April 16, 2003 (PRIMEZONE) -- Golden Star Resources Ltd. ("Golden Star") (AMEX:GSS) (TSE:GSC) is pleased to announce that it has entered into two separate agreements which will result in Golden Star controlling an additional 45 kilometers of the Ashanti trend in Ghana, north of and contiguous with its Bogoso/Prestea property (see attached map available in the press release on our website, www.gsr.com).
We have also entered into a third agreement to acquire additional processing capacity that could facilitate a significant increase in production from our 90% owned flagship Bogoso/Prestea gold mine.
Mampon Gold Property Transaction
Golden Star has agreed terms with Ashanti Goldfields Company Limited ("Ashanti") to acquire Ashanti's rights to a portion of the Asikuma prospecting license in Ghana, known as the Mampon gold property, in exchange for a cash payment of $9.5 million and the assumption by Golden Star of certain royalty obligations owed by Ashanti to Birim Goldfields Inc. ("Birim"). Ashanti originally acquired the rights to the Mampon gold property from Birim in 1999 and subsequently conducted an exploration drilling program and mining feasibility study. A significant portion of the Mampon gold property is located within a Forest Reserve area and is one of five projects identified by Ghana Government as eligible for a mining permit subject to normal permitting procedures and a site inspection. The transaction is subject to the approval of the Ghana Minister of Mines and to other customary terms and conditions.
Birim Transaction
In a separate development, Golden Star has agreed terms with Birim to acquire Birim's rights to the Asikuma prospecting license (from which the Mampon gold property mentioned above was excised in 1999) and the Mansiso prospecting license in Ghana, as well as Birim's rights to the benefit of the above-mentioned royalty obligation owed by Ashanti to Birim on the Mampon gold property, in exchange for the cash payment of $3.4 million. In addition, Golden Star will pay to Birim a Net Smelter Return ("NSR") royalty on future gold production from the two prospecting licenses (including the Mampon gold property) although no NSR royalty will be paid on the first 200,000 ounces recovered from the known Mampon deposit on the Asikuma prospecting license. The transaction is subject to the approval of the Ghana Minister of Mines and to other customary terms and conditions. The NSR royalty rates are as follows:
Average Quarterly Gold Price NSR Rate Equal to and less than $300/oz 2.0% Greater than $300/oz and equal and less than $350/oz 2.5% Greater than $350/oz and equal and less than $400/oz 3.0% Greater than $400/oz 3.5%
The proposed acquisition of a further 45 kilometers of Ashanti trend, via these two transactions, immediately adds 0.24 million ounces to Golden Star's 2.2 million ounces of Proven and Probable Mineral Reserves at Bogoso/Prestea (using a $300 per ounce gold price) at December 31, 2002. In addition, the development of access to the northern boundary of the Bogoso mining lease will improve the viability of smaller mineralized gold deposits already identified in the area. The proposed acquisition also significantly adds to the excellent exploration potential that already exists at Bogoso/Prestea.
Previous diamond drilling of the Mampon deposit on the Asikuma prospecting license, which has been more fully reported by the previous owners included intersections at depth, with grades of 9.23 g/t over 16.3 meters at 245 meters depth and 10.67 g/t over 7.7 meters at 325 meters depth. Elsewhere on the properties to be acquired, a number of smaller deposits have been identified which will require follow up work. In particular, drilling commenced in April on the Mansiso target on the Mansiso concession, where very high grade grab samples have been collected and reported by the previous owners. The drilling is being managed and funded by Golden Star.
Obotan Transaction
In a third transaction, Golden Star has agreed terms with Resolute Mining Limited ("Resolute") to acquire a nominal 4,500 tonne-per-day conventional milling and carbon in leach processing plant, stores, inventory, and a six megawatt powerhouse, located at the Obotan mine in Ghana, in exchange for a cash payment of $4.3 million. The Obotan transaction is subject to customary terms and conditions, however, no regulatory approvals are expected to be required in Ghana. In addition, and subject to the consents required under certain agreements, we may acquire certain marketable securities from Resolute for a further cash payment of $1.24 million.
It is intended to use the Obotan processing equipment for non-refractory ore processing capacity at Bogoso/Prestea. This will allow the existing processing plant at Bogoso to be converted with the addition of a BIOX circuit, and so enable the mining and processing of refractory sulfide ore. Golden Star expects the total costs for this expansion, including the cost of the Obotan plant, its relocation and upgrade, the BIOX upgrade to the existing Bogoso processing plant, and the expansion of the owner operated mining fleet at Bogoso/Prestea, to be about $60 million. The expansion work could commence in 2004. A feasibility study to verify capital cost estimates and project viability, which will build on the feasibility study work previously completed for the Bogoso sulfide project, should be completed in 2003. The previous Bogoso sulfide feasibility study work estimated the capital cost for the BIOX upgrade at $20 million. We plan to consider and implement external funding options for the expansion project in parallel with the feasibility study work. Strong interest in potential debt finance for a significant portion of the capital cost has already been received from several institutions.
Peter Bradford, President and CEO of Golden Star commented, "The Bogoso/Prestea complex has historical production in excess of 11 million ounces and we have already established a significant open pit reserves. In addition, there remains significant potential to establish further open pit and underground reserves at Bogoso/Prestea and throughout the district on both our exploration properties on the Akropong trend and on those being acquired in these transactions. We therefore have an opportunity to completely review our mining and processing options to optimize gold production from this significant mineralized system and reap the benefits of scale that it can offer. The acquisition of the Obotan plant will enable us to expedite the implementation of this, as it potentially frees up the existing processing plant at Bogoso for its early conversion for refractory sulfide ore processing. In parallel, we continue to expand our district land positions to further increase our reserves and resources and broaden our exploration upside.
"Strategically this fits well with the anticipated construction timetable for Wassa, which should be completed in the first quarter of 2004. A second processing plant at Bogoso/Prestea should increase group gold production by an additional 100,000 ounces per annum and should result in cost savings from reduced haulage and G&A costs. Subject to our proposed development of Wassa and the upgrade of our mining and processing capacity at Bogoso/Prestea, Golden Star should have an annualized group gold production rate of 350,000 ounces per year by late 2004."
Mineral Reserves to be Acquired in the Mampon and Birim Transactions
The Probable Mineral Reserves, as estimated by Golden Star, for the Mampon deposit located on the Asikuma prospecting license and the Opon deposit located on the Mansiso prospecting license at March 31, 2003 are as follows:
Tonnes Gold Grade Contained Gold
(000) (g/t) (Ounces)
Mampon 1,455 5.04 234,162
Opon 108 1.97 6,860
Total 1,563 4.80 241,022
Notes:
1. The Mineral Reserves were determined at a gold price of $300 per ounce.
2. The Mineral Reserves were estimated in conformance with the definitions contained in Canada's National Policy Instrument 43-101 which is broadly consistent with the definitions in the U.S. Securities and Exchange Commission Industry Guide 7.
3. The Company's Qualified Person for the estimation of the Mineral Reserves is David Alexander, our employee.
4. The estimation of the Mineral Reserves has been based on our historical and forecast mining and processing costs in Ghana, appropriate mining loss and dilution factors and metallurgical recoveries derived from testwork by others.
Mineral Resources to be Acquired in Mampon and Birim Transactions
Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Mineral Resources
This news release uses the terms "measured mineral resources" and "indicated mineral resources". We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.
Cautionary Note to U.S. Investors concerning estimates of Inferred Mineral Resources
This news release uses the term "inferred mineral resources." We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. "Inferred mineral 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 the inferred mineral resources will ever be upgraded to a higher category. Under Canadian rules estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically or legally mineable.
Measured, Indicated and Inferred Mineral Resources, as estimated by Golden Star, for the Mampon and Aboronye deposits on the Asikuma prospecting license and the Opon deposit on the Mansiso prospecting license at March 31, 2003 are as follows:
Measured
Measured Indicated & Indicated Inferred
Deposits Tonnes Grade Tonnes Grade Tonnes Grade Tonnes Grade
(000) (g/t) (000) (g/t) (000) (g/t) (000) (g/t)
Mampon/Aboronye 391 2.49 602 3.27 993 2.97 4,009 2.85
Opon 0 0 39 1.61 39 1.61 240 2.20
Total 391 2.49 641 3.17 1,032 2.92 4,249 2.81
Notes:
1. The Mineral Resources were estimated at a gold price of $325 per ounce.
2. The Mineral Resources were estimated in conformance with the definitions contained in Canada's National Policy Instrument 43-101.
3. The Mineral Resources are additional to the Mineral Reserves stated above, and not inclusive of the Mineral Reserves.
4. The Company's Qualified Person for the estimation of the Mineral Resources is Mitchel Wasel, our employee.
Golden Star holds a 90% equity interest in the Bogoso/Prestea open-pit gold mine in Ghana, a 54% managing equity interest in the currently inactive Prestea underground gold mine in Ghana, and a 90% equity interest in the Wassa gold project, also in Ghana. In addition, the Company has other gold exploration interests in the Guiana Shield in South America as well as elsewhere in West Africa. Golden Star currently has approximately 107 million common shares outstanding and is listed on the Toronto Stock Exchange under the symbol "GSC" and on the American Stock Exchange under the symbol "GSS."
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. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially. Such statements include comments regarding the establishment and estimates of mineral reserves and non-reserve mineral resources, the recovery of any mineral reserves, production, production commencement dates, grade, processing capacity, potential mine life, feasibility studies, development, costs, expenditures, mine re-opening and exploration. Factors that could cause actual results to differ materially include timing of and unexpected events during construction, expansion and start-up; variations in ore grade, tons mined, crushed or milled; delay or failure to receive board or government approvals; timing and availability of external financing on acceptable terms; technical, permitting, mining or processing issues, and fluctuations in gold price and 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 discussed in our Form 10-K for 2002. 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.