TORONTO, Dec. 31, 2015 /PRNewswire/ - Golden Star today announces an amendment to the
Gold Purchase and Sale Agreement (the "Stream Agreement") with RGLD
Gold AG ("RGLD"), a wholly-owned subsidiary of Royal Gold, Inc. ("RGI"), which was announced
earlier in the year to provide an additional $15 million of funding with an option to access a
further $5 million. All references to
currency are to US dollars.
In May 2015 Golden Star, through
its wholly-owned subsidiary, Caystar Finance Co., entered into a
$130 million stream financing with
RGLD and a $20 million term loan with
RGI, respectively. These financing arrangements were to enable
Golden Star to continue its
transformation to becoming a low cost, non-refractory gold
producer. To date, the term loan has been fully drawn and the
stream advances have totaled $55
million, the proceeds of which have been invested in the two
development projects. The Wassa Underground Project is progressing
on schedule with approximately 820 meters of the twin decline
advance completed, and the intersection with the F shoot orebody in
November. The Prestea Underground Project has also advanced with
Central Shaft rehabilitation and refurbishment work on 17 and 24
levels progressing as scheduled. Both Wassa and Prestea Underground
Mines are expected to be in production in early 2017.
Due to the approximately $150 per
ounce drop in the gold price since this transaction was negotiated,
and as part of the funding of both of these Projects is coming from
cash flow from existing operations, an amendment to the existing
Stream Agreement was required:
- The amendment includes a $15
million addition to the stream advance payment
- At Golden Star's option, an additional $5 million of stream financing is available
subject to certain conditions including procurement of a minimum of
$5 million of third party
investment
- To accommodate the increased stream advance payments, the
stream percentages have been adjusted as follows:
- Golden Star will deliver from
January 1, 2016, 9.25% of gold
production to RGLD at a cash purchase price of 20% of spot
gold
- From January 1, 2018 or
commercial production of the Underground Mines, whichever is
sooner, Golden Star will deliver
10.50% of production at a cash purchase price of 20% of spot gold
until 240,000 ounces have been delivered
- If Golden Star exercises its
option on the additional $5 million
stream advance, the stream percentage from January 1, 2018 or commercial production of the
Underground Mines, whichever is sooner, shall be increased to
10.90% at a cash purchase price of 20% of spot gold until 250,000
ounces have been delivered
- Thereafter, 5.50% of production at a cash purchase price of 30%
of spot gold will be delivered
- Golden Star and RGLD are in the
process of reviewing the final design for the Prestea Underground
Project. If RGLD does not approve these changes, RGLD will not be
required to fund $39 million for that
project, in which case the cash price for future Prestea
Underground gold production will increase to 70% and the overall
gold delivery threshold referred to above will decrease to 196,000
ounces
"This amendment to the Stream Agreement with Royal Gold allows Golden
Star to continue to transform to a low cost, non-refractory
gold producer in spite of the lower gold price environment through
which the whole industry is navigating," said Sam Coetzer, President and CEO of Golden Star.
"The development of the Wassa and Prestea Underground Mines
will significantly lower the Company's cash operating costs per
ounce and considerably improve Golden
Star's mine life with opportunities for further resource
conversion and exploration success at both assets. This
amendment is another vote of confidence by Royal Gold in Golden Star and its development
projects and demonstrates the strength of the business relationship
between the two companies."
Company Profile:
Golden Star Resources (NYSE MKT: GSS; TSX: GSC; GSE: GSR)
("Golden Star" or the "Company") is an established gold mining
company that holds a 90% interest in the Wassa and Prestea gold
mines in Ghana. In 2014, Golden
Star produced 261,000 ounces of gold and expects to surpass
2015 production guidance. The Company is financed to pursue
brownfield development projects at its Wassa and Prestea mines
which are expected to transform these mines into lower cost
producers from 2016 onwards. As such, Golden Star offers investors leveraged exposure
to the gold price in a stable African mining jurisdiction with
significant development upside potential.
Cautionary note regarding forward-looking information
This report contains "forward looking information" within the
meaning of applicable Canadian securities laws and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995, concerning the business,
operations and financial performance and condition of Golden Star. Generally, forward-looking
information and statements can be identified by the use of
forward-looking terminology such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases (including negative or grammatical variations) or
statements that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotation thereof. Forward-looking information
and statements include, but are not limited to, information or
statements with respect to: satisfying the conditions
precedent under the Stream Agreement, the Company's strategy of
transforming its business to being a lower cost non-refractory
producer, the timing for development of and first production from
Wassa underground and Prestea underground, the life of mine at
Wassa underground and Prestea underground, the impact of
underground mine development on the Company's cash operating costs
per ounce, the conversion of resources and the success of
exploration.
Forward-looking information and statements are made based upon
certain assumptions and other important factors that, if untrue,
could cause the actual results, performances or achievements of
Golden Star to be materially
different from future results, performances or achievements
expressed or implied by such statements. Such statements and
information are based on numerous assumptions regarding present and
future business strategies and the environment in which
Golden Star will operate in the
future, including the price of gold, anticipated costs and ability
to achieve goals. Forward-looking information and statements
are subject to known and unknown risks, uncertainties and other
important factors that may cause the actual results, performance or
achievements of Golden Star to be
materially different from those expressed or implied by such
forward-looking information and statements, including but not
limited to: risks related to international operations, including
economic and political instability in foreign jurisdictions in
which Golden Star operates; risks
related to current global financial conditions; risks related to
joint venture operations; actual results of current exploration
activities; environmental risks; future prices of gold; possible
variations in Mineral Reserves, grade or recovery rates; mine
development and operating risks; accidents, labor disputes and
other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
development or construction activities and risks related to
indebtedness and the service of such indebtedness. Although
Golden Star has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information and statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking information and statements. Forward-looking
information and statements are made as of the date hereof and
accordingly are subject to change after such date.
Forward-looking information and statements are provided for the
purpose of providing information about management's current
expectations and plans and allowing investors and others to get a
better understanding of the Company's operating environment.
Golden Star does not undertake to
update any forward-looking information and statements that are
included in this news release except in accordance with applicable
securities laws.
SOURCE Golden Star Resources Ltd.