Golden Star, Barnex sign Prestea purchase deal

Denver — Golden Star Resources (GSC-T) has cleared another hurdle in the acquisition of the Prestea mine in southwestern Ghana.

The Denver-based company agreed to acquire former operator Barnato Exploration’s stake to Prestea in exchange for a package worth at least US$10 million.

The package consists of US$2 million in stock (3.3 million shares valued at US60 per share), 1.3 million warrants exercisable at US70 per share, and a sliding royalty on the first million ounces produced from Prestea and the nearby Bogoso gold mine.

The royalty will be paid quarterly and varies from US$6 per oz. at a gold price of less than US$260 per oz. to US$16.80 per oz. at a price exceeding US$340 per oz.

In a side deal with Barnato, Golden Star agreed to buy the right to a 60% stake in the Obuom gold property, northeast of the giant Obuasi mine on the Ashanti gold trend. The company hopes to amass a significant land position in the region.

The latest Barnato deal at Prestea follows an earlier agreement with worker-owned Prestea Gold Resources for the surface rights to the property.

The Ghana government has given its approval in principle for the Prestea Gold Resources transaction.

Under Golden Star’s deal with Prestea Gold, the company, which was formed in 1998 by unionized workers who wanted to reopen the mine after Barnex closed it, will surrender its mining licence, paving the way for the government to issue two new mining leases. The surface mining lease will go to Golden Star, allowing the company to mine material to a depth of 200 metres.

The underground mining lease, valid below 200 metres, would go to Prestea Gold. As part of the deal, Golden Star agreed to pay US$2.1 million for the right to manage the underground mine and to acquire a 35% interest in Prestea Gold by paying a further US$1.9 million.

The board of directors of Prestea Gold also ratified the deal, and Golden Star expects to complete the acquisition by August, says President Peter Bradford. The transactions are still subject to formal agreements from the government of Ghana and the South African Reserve Bank, and to the approval of Barnato’s shareholders and the Toronto Stock Exchange.

Golden Star expects to extend the life of its 70%-held Bogoso mine by trucking oxide feed to the mill from Prestea, 12 km away. Also, the company is acquiring an additional 20% interest from its Australian partner, Anvil Mining. The government of Ghana holds the remainder.

The company recently raised US$1.3 million from 1.24 million warrants and broker warrants exercised at US52 per share, and 1.5 million warrants exercised at US42.5 per share. It has 41 million shares outstanding.