Golden Star grabbing St. Jude (September 27, 2005)

Vancouver – Golden Star Resources (GSC-T, GSS-X) has come to an agreement to acquire St. Jude Resources (SJD-V, STJUF-Q) through an all share deal worth US$118 million.

Acquisition terms will have Golden Star issuing 0.72 of a common share for each share of St. Jude, representing a share price of $3.10 for the junior (as of the announcement date) or a 38% premium over its 20-day average closing price. Upon completion, St. Jude shareholders would own about 19% of Golden Star.

The deal would give Golden Star title to St. Jude’s Hwini-Butre gold project in the Ashanti gold belt of western Ghana, which has a combined in situ measured and indicated gold inventory of more than 1.3 million oz. It would significantly expand Golden Star’s footprint in the region where it already has two producing gold mines, Bogoso-Prestea and Wassa. The latter operation being in close proximity to Hwini-Butre.

In a prepared statement, Golden Star president Peter Bradford described the benefit of the deal as “delivering properties in Ghana with high grade non-refractory gold resources that are within haulage distance to our Wassa gold mine.”

The major would also gain exposure in north-central Burkina Faso, where St. Jude’s Goulagou-Rounga project hosts an historic inferred resource of over 770,000 contained oz. of gold. Additionally, Golden Star would acquire the junior’s Deba-Tialkam gold projects in western Niger.

The agreement has the blessing of the both boards, and following execution of a definitive agreement, will go to a vote to St. Jude’s shareholders.

Of interesting note, Newmont Mining (NMC-T, NEM-N) has emerged as a large land holder in the area surrounding St. Jude’s Hwini-Butre concessions.

The deal met with mixed reaction from the market. Golden Star shares fell 9%, or 38, to close at $3.92 following announcement of the agreement. St. Jude shares rallied up almost 13% to close at $2.70 per share.

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