After further analysis of data,
Measured and indicated resources are now pegged at 25.2 million tonnes averaging 3.34 grams gold per tonne, equivalent to 2.7 million oz. gold. The new resource figure is a 22% increase over the one reported in early October.
Of the resource, 6.7 million tonnes grading 3.1 grams gold per tonne are in oxide or transitional oxide-sulphide material. A further 11.25 million tonnes are primary ore averaging 3.72 grams, and the gold in another 7.3 million tonnes grading 2.99 grams is associated with refractory sulphides.
Pits have been designed around probable reserves of 17.4 million tonnes grading 3.08 grams gold, equivalent to 1.7 million oz. The company notes that none of the reserves has been classified as proven, as more drilling and assaying are pending. The probable reserves are based on a gold price of US$275 per oz.
Just less than half the total reserves are associated with refractory-transition and refractory-sulphide material. The average metallurgical recovery rate for the reserve is 83.8%. Ore from the Prestea concession is being hauled to, and processed in, the Bogoso processing plant, some 12 km away. To handle the refractory material from the Prestea pit, operators plan to add a stirred tank bio-oxidation circuit to the Bogoso processing plant. The circuit would be constructed in 2006 at a cost of US$25.4 million.
The mining plan at Bogoso-Prestea calls for production of more than 130,000 oz. annually over the next 10 years and estimates 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.; these royalties have the effect of raising 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. Mining at the Prestea open pit began in September 2001.
During the first 15 months of mining at Prestea, Golden Star will incur capital expenditures of 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; and
– 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, not including the mill upgrade.
Capital expenditures in 2002 will be covered in part by cash flow, though funding will also come from a US$5-million non-recourse debt facility. In addition, the company is considering a private placement.
Golden Star originally acquired a 70% stake in the Bogoso gold mine in 1999 by acquiring a 70% shareholding in Bogoso Gold. In September 2001, Golden Star boosted its Bogoso Gold holding to 90% by acquiring an additional 20% from Australia’s Anvil Mining in return for 3 million shares.
The Ghanaian government granted Golden Star 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, Golden Star issued to Barnex, which had an option to acquire the property, 3.3 million shares and 1.3 million 3-year warrants priced at US70 apiece. Golden Star must also pay Barnex a sliding-scale royalty on the first million ounces produced.
Under a second deal, 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 close by year-end.
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