Golden Star closes $51m financing (February 14, 2003)

Golden Star Resources (GSC-T) has completed its over-subscribed, bought-deal offering, and raked in gross proceeds of $51 million.

Led by brokers Canaccord Capital and BMO Nesbitt Burns, the miner placed 17 million units at C$3 apiece in the U.S. and Canada, with each unit comprising a share and half a warrant. A whole warrant entitles the holder to buy another share for $4.60 for 48 months.

The warrants will be listed on the Toronto Stock Exchange under the ticker “GSC.WT.A”.

Proceeds are earmarked for exploration, acquisitions, development activities and general corporate purposes, with the company adding that is actively investigating potential acquisition and merger possibilities..

The company now has 105 million shares outstanding, for a market capitalization of C$278 million.

Based in Littleton, Co., Golden Star has three major assets in Ghana: a 90% interest in the Bogoso/Prestea open-pit gold mine, a 54% managing interest in the Prestea underground mine, and a 90% interest in the former-producing Wassa heap-leach mine.

While Golden Star won’t be reporting its annual results until March 28, the company is predicting that it will post — for the first time ever — positive earnings, though they will be lower than expected.

However, the company has released its production figures for the past year, which was impacted by lower fourth-quarter output attributed mostly to delays in obtaining final environmental permits to mine at the higher grade Plant-North deposit.

Production data for the last four months show that the effect of the delay was most-pronounced in November: 12,240 oz. gold produced in October; 8,493 oz. in November; 13,921 oz. in December; and 17,680 oz. in January.

For the fourth quarter, the company produced and sold 34,654 oz. gold at a cash operating cost of US$221 per oz., bringing the total production for 2002 to 124,399 oz. gold at a cost of US$193 per oz.

This year, Golden Star predicts it can ratchet up its output to 140,000 oz. at a cash operating cost of US$185 per oz., with all gold being sourced from the open pits at the Plant-North deposit at Bogoso/Prestea.

At Wassa, the company expects to complete a feasibility study by mid-2003, wih production possibly resuming there in the third quarter. Assuming a capital injection of some $14 million, the mine is said to have the potential to produce 120,000 oz. per year.

To push the process forward, Golden Star has already acquired two secondhand grinding mills suitable for use at Wassa and have shipped them to Ghana.

The company is also planning on stepping up exploration efforts throughout the country, and has budgetted $11 million for work in 2003.

In addition, Golden Star has some residual exploration properties in South America’s Guiana shield, through its 73%-owned subsidiary, Guyanor Ressources.