Golden Star boosts Bogoso-Prestea resource

After further analysis of existing data, Golden Star Resources (GSC-T) has upped the combined resource estimate at the 90%-owned Bogoso-Prestea property in Ghana.

Measured and indicated resources are now pegged at 25.2 million tonnes averaging 3.34 grams gold per tonne, equivalent to about 2.7 million oz. gold. About 11.8 million tonnes running 3.76 grams lie in the measured category. In the indicated category are 13.4 million tonnes grading 2.97 grams. The new resource figure is a 22% increase over the one reported in early October.

Of the total resource, about 11.25 million tonnes is primary ore averaging 3.72 grams, another 7.3 million tonnes grading 2.99 grams is associated with refractory sulphides.

Probable reserves at the operations are estimated at 17.4 million tonnes grading 3.08 grams gold, equivalent to 1.7 million oz. The company notes that none of the reserves have been classified as proven, as more drilling and assaying are pending. Just less than half the total reserves are associated with refractory transition and refractory sulphide ore. Probable reserves at Bogoso-Prestea are contained in a US$275-per-oz. optimized pit shell. The average metallurgical recovery rate for the reserve is 83.8%.

The mining plan at Bogoso-Prestea calls for production of more than 130,000 oz. annually over the next ten years at an average cash cost of US$190 per oz. At a gold price of US$275 per oz., gold royalties payable to the Government of Ghana and to South African-based Barnato Exploration (Barnex) total US$16 per oz. and raise total cash costs to US$206 per oz. Production for 2002 is pegged at 130,000 oz. at a total cash cost of US$214 per oz. Ore from the Prestea concession is being hauled to and processed in the Bogoso processing plant, some 12 km away. Mining at Prestea began in September 2001.

The Ghanaian government granted GSC a mining lease at Prestea earlier this summer after the company entered into two agreements aimed at clearing pre-existing title and claims to the property. Under the first deal, GSC issued to Barnex, which had an option to acquire the property, 3.333 million shares and 1.333 million three-year warrants priced at US70 apiece. GSC must also pay Barnex a sliding-scale royalty on the first million ounces produced.

Under a second deal with Prestea Gold Resources, a worker-owned company actively mining the century-old Prestea underground mine, will be paid US$2.1 million, of which $1.3 million has already been advanced. The deal is expected to wrap up by year-end.

During the first fifteen months of mining at Prestea, GSC will incur capital expenditures of about US$13.4 million, including: US$2 million on exploration on the Prestea property; US$1.5 million for road construction; US$6 million for removal and replacement of surface infrastructure; plus another US$3.9 million for tailings dams construction, improvements to the processing plant and other miscellaneous items. Sustaining capital over the life of the operation is pegged at US$1.3 million annually, with a US$25.4-million lump sum earmarked for the upgrade of the Bogoso processing plant to incorporate a stirred tank bio-oxidation circuit to handle the refractory ores in about 2006.

Capital expenditures during 2002 will be covered in part by cash flow, after that funding will come from a US$5-million non-recourse debt facility. The company is also currently considering a private placement.

Golden Star originally acquired a 70% stake in the Bogoso gold mine in1999 by acquiring a 70% shareholding in Bogoso Gold Ltd. (BGL). In September 2001, Golden Star boosted its BGL holding to 90% by acquiring an additional 20% from Australia’s Anvil Mining for 3 million shares.