Sustained low gold prices have forced
A scoping study suggests that the open-pit heap-leach gold operation could be profitable at gold prices as low as US$200 per oz.
At 5,000 tonnes per day, Gross Rosebel could produce between 95,000 and 140,000 oz. annually, based on reserves calculated with a gold price of US$200 per oz. Reserves under this option would be greatly reduced, amounting to 647,000 oz. gold within 9.8 million tonnes of soft saprolitic material grading 2.4 grams per tonne. The stripping ratio would be 1.4-to-1, and gold recovery would average 86% over a mine life of only six years.
The partners estimate capital expenditures will total US$26.6 million for the operation, which is expected to produce gold at cash operating costs of less than US$140 per oz.
At a more optimistic gold price of US$250 per oz., reserves at Gross Rosebel would nearly double to 1.26 million oz. within 26.8 million tonnes averaging 1.7 grams per tonne. The mine life would increase accordingly, to 16 years, with annual production ranging from 60,000 to 100,000 oz., though higher production is likely to occur in the early years.
Gold recovery, as well as capital costs should remain the same, though cash operating costs would be slightly higher at US$165 per oz. Total costs in both cases should average below US$190 per oz.
Before the proposed plan can be incorporated into a final feasibility study, Golden Star and Cambior will have to carry out further tests, including agglomeration work and load permeability studies.
Meanwhile in Ghana, Africa, Golden Star and its Australian partner, Anvil Mining, have renegotiated the purchase agreement for the Bogoso gold mine.
The plan allows the partners to lower the initial cash payment to US$6.5 million, down from US$12 million under the previous agreement.
Golden Star and Anvil would then have to pay another U$5 million on the first anniversary of the start of commercial mining of sulphide ores, as per the original agreement.
In return for the lower initial payment, the pair will make future payments, not to exceed US$10 million, related to changes in the price of gold. The additional payments are calculated by multiplying US$183,333 by the change in the gold price over US$255 per oz.
For the second quarter of 1999, Golden Star reported a loss of US$3.9 million (or 13 cents per share), compared with a loss of US$1.2 million (4 cents per share) in the corresponding period last year.
In the first half of this year. the company incurred a loss of US$4.3 million (14 cents per share), compared with a US$1.9-million loss (6 cents per share) in the initial six months of 1998.
Golden Star holds US$900,000 in cash and short-term investment, excluding another US$2.2 million in restricted cash, and has no working capital. This bleak financial picture compares poorly to just six months ago, when the company held US$7.4 million in cash and US$6.5 million in working capital. A year ago, it had US$11.1 million in cash and US$11.2 in working capital.
This downward development has cast a shadow over the company’s existence.
Without financing or other capital-raising transactions, such as a sale of assets, Golden Star’s operations could be compromised, the company stated in its quarterly report.
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