GOLD: Golden Star sells Bogoso-Prestea to Future Global Resources

GHANA - Golden Star Resources has announced it will sell its 90% stake in the Bogoso-Prestea gold mine in southwestern Ghana to Future Global Resources for US$55 million and contingent payments of up to another US$40 million. The mine is about 40 km from Golden Star’s Wassa gold mine and the sale will allow the company to accelerate the growth and development of Wassa’s resource base and increase exploration on its wider Wassa-HBB project area. Under the deal, Future Global Resource will pay US$5 million in cash and assume about US$25 million of negative working capital. It must also pay Golden Star an additional US$10 million in cash on July 31, 2021 and another US$15 million in cash on July 31, 2023. The contingent payments of up to US$40 million are based on the development of the Bogoso refractory project, which Golden Star suspended in 2016, and spot gold prices. Bogoso currently has measured and indicated resources of 1.76 million ounces of gold contained within 19.8 million tonnes grading 2.76 grams gold per tonne. Raj Ray of BMO Capital Markets described the transaction as “a significant catalyst” because “it removes the continuing cash bleed in the Prestea underground operation and allows management to focus on the expansion of the potentially top-tier Wassa asset.” Prestea became an underground-focused operation in the second half of 2018, and its open-pit operations are now drawing to a close. The Boboso open-pit operation could be restarted after its refractory processing plant is refurbished. Golden Star expects to produce 195,000 to 210,000 ounces of gold this year at a cash operating cost of between US$790 and US$850 per ounce. The Bogoso-Prestea gold mine is Future Global Resources’ first production asset. The company was set up by shareholders this year to build a “globally diversified mining company” with an initial focus on Africa. Its largest shareholder is Blue International Holdings, a U.K.-based private investment holding company. Blue International’s largest investor is Joule Africa Ltd., a developer, owner and operator of sustainable power projects in sub-Saharan Africa. News of the sales agreement sent Golden Star’s shares up 15¢ in mid-day trading. Over the last year the company’s shares have traded in a range of $2.56 and $5.81. The company has about 110 million common shares outstanding for a market cap of about $540 million.