Denver-based Golden Star Resources (GSC-T) has reached an agreement with Prestea Gold Resources (PGR) to acquire the Prestea surface concession in Ghana.
The deal is subject to the approval of the government of Ghana, which squashed Golden Star’s attempt to acquire the mine in 2000. Golden Star also needs to come to a separate agreement with Barnato Exploration regarding Barnato’s claims to the concession.
PGR was formed in 1998 by the mineworkers’ union to reopen the mine after Barnex decided to close it. The company was initially granted a six-month sub-lease, which was subordinate to Barnex’s mining lease. In November 2000, the government nullified Barnex’s rights to Prestea and granted PGR a new 15-year mining lease. Barnex disputed the decision.
Under the new deal, PGR’s mining lease will be surrendered. Golden Star will apply for a surface mining lease to a depth of 200 vertical metres and PGR will apply for an underground mining lease for below 200 metres. Golden Star will be responsible for any mitigation of the underground infrastructure by the company’s surface operations.
To acquire the surface concession, Golden Star must reach a deal with Barnex to settle its claim to Prestea. Golden Star must also pay a US$2.1-million option payment to PGR at closing. The option gives Golden Star the right to manage the underground mine and the right, but not the obligation, to make a further payment of US$1.9 million to acquire a 35% interest in PGR.
In August 2000, Golden Star signed a letter of intent with Barnex to acquire its rights and obligations regarding Prestea for US$12 million. This expired after Barnex’s rights were nullified. Golden Star is negotiating a new agreement with Barnex. Golden Star is also in discussions with the government of Ghana to obtain the necessary approvals and consents for the arrangements with PGR and Barnex. Golden Star is also negotiating with a number of financial institutions to obtain the funding required to proceed with the acquisition.
Since the 1880s, Prestea is said to have produced more than 7 million oz. gold. Since 1995, Barnato has invested US$22 million in the project in the form of property payments, exploration expenditures and feasibility costs.
Golden Star is most interested in the oxide potential at the Prestea property. Mineralization could be trucked 12 miles to the processing plant at the Bogoso gold mine. However, the interest in oxides will defer development of sulphide resources at Bogoso for some time.
“The acquisition represents a quantum leap for the company,” says Allan Marter, Golden Star’s chief financial officer. “Instead of having 12 months of reserves at Bogoso, it gives us the potential for more than 12 years.”
Peter Bradford, the company’s CEO, says: “The considerable quantity of mineralized material being acquired at Prestea will result in an immediate extension of the mine life at Bogoso of at least five years, using the existing processing plant.”
Golden Star holds a 70% equity interest in the Bogoso mine. The company is in talks to acquire Australian-based Anvil Mining’ 20% interest in return for a 7.9% stake in Golden Star.
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