Golden Star looks ahead at five best properties

Golden Star Resources (GSC-T) is changing its strategy in the face of persistently low gold prices.

The Denver-based company will minimize its grassroots work in favor of focusing on five advanced projects: Gross Rosebel in Suriname, and Yaou, Dorlin, Paul Isnard and St. Elie in French Guiana.

At Gross Rosebel, tests are under way to determine the project’s heap-leach potential. Results to date demonstrate that soft rock material is amenable to agglomeration, and column leach tests are establishing gold recoveries for the primary ore types. Initial results indicate favorable recoveries in the soft rock and slower, less robust leaching in the transitional and hard rock material. Golden Star is conducting additional testing to evaluate the effectiveness of fine-grinding in transitional and hard rock material.

The company will assess the results from this work before it commits to a scoping study on the heap-leaching process. Golden Star is hoping that a switch to heap leaching, as well as additional development alternatives, will reduce capital and operating costs. The company expects to complete this evaluation by mid-1999.

In the meantime, Golden Star is preparing its mining concession applications for both Yaou and Dorlin in French Guiana. Comprehensive studies, required under French law, are expected to be completed by the first quarter of the new year.

At the St. Elie project, the company is engaged in near-surface exploration of a prospect known as Dieu-Merci. The program, which is aimed at determining whether or not the mineralization is of sufficient grade to justify a prefeasibility study, is expected to be completed by the second half of 1999.

Golden Star has drilled eight core holes (1,600 metres) at the Paul Isnard project, intercepting zones of semi-massive sulphide mineralization in all but one. The weighted average of the mineralized zone was 23 grams gold per tonne (uncut) over 1.1 metres in an overall interval of 4.2 grams gold (uncut) over 6.4 metres. A program of airborne geophysics is tentatively planned for next year.

While work continues on these five projects, Golden Star has shelved plans to explore properties in Brazil and Ivory Coast, and will scale back grassroots work in Guyana and Suriname. The new strategy is aimed at reducing general and administrative expenses. At last report, the company had US$7.7 million in cash and short-term investments plus US$7.4 million in working capital.

For the third quarter, Golden Star reported a loss of US$2.1 million (or 7 cents per share), compared with a loss of US$5.1 million (17 cents per share) a year ago. Much of the 1997 loss was due to property writedowns totalling US$3.5 million.

For the first nine months of 1998, the company posted a net loss of US$4 million (or 13 cents per share), compared with a loss of US$14.4 million (50 cents per share) for the corresponding period last year.

In October, David Fennell resigned as president of Golden Star and as chairman of the 71%-held subsidiary, Guyanor Ressources (GLR.B-T). He has yet to be replaced.