Bonus grades in one of its Prestea open pits in central Ghana will give Golden Star Resources (GSC-T) a substantial increase in gold production for 2003. The company now expects its Bogoso and Prestea mines to produce 160,000 oz. gold in 2003, compared to the 140,000 oz. projected earlier for the year.
The increase comes as a result of third-quarter production at the Plant-North pit at Prestea, where both gold grade and ore production were higher than reserve models had predicted.
Golden Star also announced it had arranged a buy-back of an existing royalty on the Bogoso and Prestea gold properties. South African-based Barnato Exploration will trade a complex sliding-scale royalty for 2.75 million shares of Golden Star, a transaction valued at US$11.5 million.
The existing royalty was a dollar-per-ounce arrangement that varied with the gold price, starting at US$6 per oz. at prices below US$260 per oz. and rising with each US$10 increase in the price to a maximum of US$16.80 at prices over US$340 per oz. At the time it was negotiated, in 2001, gold prices were in the US$270-per-oz. range, but with the subsequent increase in the gold price the royalty represented about US$4 million in annual cash flow.
Golden Star now has an unencumbered 90% ownership of the Prestea-Bogoso operation, with the government of Ghana owning the remaining 10%.
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