DENVER, CO, Mar 21, 2012 (MARKETWIRE via COMTEX) --Golden Star Resources Ltd. (NYSE Amex: GSS) (TSX: GSC) (GSE: GSR) ("Golden Star" or the "Company") is pleased to announce the completion of a Company authored Preliminary Economic Assessment ("PEA") of the West Reef orebody of the Prestea Underground Mine. The Company plans to file a PEA document that is compliant with National Instrument 43-101 within 45 days. The Board of Directors has approved the PEA and has directed management to proceed to a full feasibility study. All references herein to "$" are United States dollars.
Highlights:
-- West Reef has an Indicated Resource of 874,000 tonnes grading 18.07
grams per tonne (g/t) for 508,000 ounces of gold (Au) and the orebody
is open along strike and down dip
-- The PEA contemplates a 1,200 tonnes per day operation from mechanized
mining to produce 90,000 ounces of gold per year at full operation
-- Ore will be processed at the Bogoso oxide processing plant
-- Life-of-mine cash operating costs (before royalty and taxes) are
estimated at $650 to $700 per ounce
-- Capital cost, including a decline and hoisting shaft, are estimated at
approximately $115 million
-- Net present value at $1,500/oz Au and 5% discount rate is $134 million
(pre-tax)
-- Internal rate of return of 17%
Tom Mair, President and Chief Executive Officer, commented, "We are excited to announce the completion of the PEA and our commitment to completing the West Reef feasibility study later this year. We are also investigating the possibility of obtaining all necessary permits for a re-start of underground mining operations at Prestea by the end of 2012. This production would be sourced from existing infrastructure in the upper levels of the mine. It is gratifying that our hard work and perseverance is being rewarded with a project that will not only provide a new source of gold production for Golden Star but is anticipated to lower our overall cash operating costs. In addition, a viable underground operation will enable us to continue to explore the Prestea Underground complex thoroughly -- not only in previously unexplored areas between surface and 1,400 meters but also depth extensions of the orebodies below all historic workings."
History:
In March 2002 Golden Star, through its local subsidiary, Bogoso Gold Limited (now Golden Star Bogoso/Prestea Limited ("GSBPL")), formed a joint venture with the government of Ghana and Prestea Gold Resources Limited, the former owner of the Prestea Underground Mine. The purpose of the joint venture was to evaluate and, if warranted, restart and operate the Prestea Underground Mine. The mine has produced over nine million ounces of gold since the late 19th century from workings which extend more than 10 kilometers along strike and up to 1,400 meters below surface.
Upon acquisition, Golden Star recognized that the exploration potential of the Prestea Underground complex was substantial and that the Company had a considerable amount of work ahead to make the workings safe for a series of drilling programs. Golden Star has financed the care and maintenance of the mine which included extensive dewatering of the workings, rehabilitation of the Central and Bondaye Shafts and the winders, refurbishment of main access ways from the Central Shaft to the West Reef orebody and other areas, and replacement of pumps, compressors and ventilation equipment. The Company also obtained extensive geologic and operational data from the Prestea Mine Offices, digitized all the relevant data and outlined a number of drill targets. From 2003 to 2006, Golden Star carried out a number of drilling programs from underground, testing the down-dip extensions of the West Reef and Main Reef orebodies. The drilling was successful and outlined a significant extension to the known West Reef orebody below 17 Level (600 meters below surface). Prior drilling by Golden Star of the Prestea Underground has resulted in an Indicated Resources total of 666,000 ounces of gold, of which the West Reef orebody accounts for 508,000 ounces. Inferred Resources total an additional 1.23 million ounces, of which 270,000 ounces are situated within the West Reef area. To date, Golden Star has invested approximately $64 million in the Prestea Underground Mine.
PEA Operating Parameters:
The PEA targets a modern, mechanized mine development plan which would deliver ore to the Bogoso Oxide Processing Plant at a rate of 1,200 tonnes per day at an average diluted mined grade of approximately 8 g/t Au, producing approximately 90,000 ounces of gold per year at full production. Commencing in 2013, the Company expects to begin the development of a decline from surface to, eventually, 30 Level (1,200 meters below surface), with simultaneous decline development from 24 Level (900 meters below surface). The decline would enable the efficient and safe passage of people, materials and equipment into the West Reef area. In addition, an ore hoisting shaft would be raise bored from West Reef to surface.
The orebody is steeply dipping (60 to 70 degrees) and is 1.5 meters to 1.7 meters wide. The PEA contemplates 1 meter of dilution on either side of the ore and 20 meter spaced sub-levels. Stoping would use a modified AVOCA mining method, where a central raise (slot) is developed in a panel of ore, production holes are blasted into the void and the ore is mucked on the lower level. The stopes progress in both directions from the central raise and waste backfill is introduced at the center to follow the blast faces. The two halves of the ore panel are progressively blasted, mucked and backfilled until the whole panel is extracted for that level. The process is then repeated, using the backfilled stope as the floor for the next cut.
Economic analysis from the PEA of the West Reef mining area suggests a capital cost of approximately $115 million for completion of the refurbishment of the Central Shaft and existing haulage drives to the West Reef area, upgrading of pumps, compressors and ventilation, development of the decline and raise-bored shaft to 30 Level and initial stope development. The PEA has delineated a mining area within the West Reef orebody containing 375,000 ounces of Indicated Resources and 85,000 ounces of Inferred Resources. The Company expects that with further drilling around the periphery of the West Reef orebody the Inferred Resource ounces will be upgraded to the Indicated Resource category and the mine development plans can be expanded. The ore is known to be non-refractory with a significant portion of the gold ( > 60%) expected to be recovered from the gravity circuit at the Bogoso Oxide Processing Plant for total gold production of approximately 437,000 ounces over the life of the project. This could be higher depending on the success of future drilling programs along strike and down dip of the known West Reef orebody. The PEA estimates life-of-mine cash operating costs in the range of $650 to $700 per ounce of gold, not including the 5% royalty paid to the government of Ghana. At a gold price of $1,500 per ounce, the PEA suggests a pre-tax net present value for the project (discounted at 5%) of $134 million and an internal rate of return of 17%.
Prestea Underground Resources:
Cautionary Note to US Investors Concerning Estimates of "Indicated Mineral Resources" and "Inferred Mineral Resources"
This section uses the terms "Indicated Mineral Resources" and "Inferred Mineral Resources." The Company advises US investors that while these terms are recognized and required by National Instrument 43-101, the US Securities and Exchange Commission ("SEC") does not recognize them. US Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into a higher category or into mineral reserves. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. In accordance with Canadian rules, estimates of Inferred Mineral Resources cannot form the basis of feasibility or other economic studies, and US investors are cautioned not to assume that any part or all of the Inferred Mineral Resource exists, or is economically or legally mineable. Also, disclosure of contained ounces is permitted under Canadian regulations; however the SEC generally requires mineral resource information to be reported as in-place tonnage and grade.
The Indicated and Inferred Mineral Resources reported below have been estimated in compliance with definitions set out in Canada's National Instrument 43-101.
The Indicated and Inferred Mineral Resources have been estimated at an economic cut-off grade based on a gold price of $1,500 per ounce for December 31, 2011, and on economic parameters deemed realistic.
The following table summarizes Prestea Underground Mine's estimated Indicated and Inferred Mineral Resources as of December 31, 2011:
-------------------------------------------------------------------- Prestea Underground Tonnes Gold Grade Ounces Resources (M) (g/t) (000's) -------------------------------------------------------------------- Indicated 1.641 12.63 666 Inferred 5.243 7.28 1,227 --------------------------------------------------------------------
Of these resources, the West Reef orebody has estimated Indicated and Inferred Mineral Resources as of December 31, 2011:
-------------------------------------------------------------------- West Reef Tonnes Gold Grade Ounces Resources (M) (g/t) (000's) -------------------------------------------------------------------- Indicated 0.874 18.07 508 Inferred 0.829 10.14 270 --------------------------------------------------------------------
Notes to the Indicated and Inferred Mineral Resources:
(1) The Prestea Underground resource was estimated using a $1,500 per ounce gold price and an economic gold cut-off of 2.3 g/t. (2) The Qualified Person reviewing and validating the estimation of the Mineral Resources is S. Mitchel Wasel, Golden Star Resources Vice President of Exploration.
The technical contents of this press release have been reviewed and approved by Dr. Martin Raffield, P. Eng., a Qualified Person pursuant to National Instrument 43-101. Dr. Raffield is Senior Vice President Technical Services for Golden Star.
COMPANY PROFILE
Golden Star Resources holds the largest land package in one of the world's largest and most prolific gold producing provinces. The Company holds a 90% equity interest in Golden Star (Bogoso/Prestea) Limited and Golden Star (Wassa) Limited, which respectively own the Bogoso/Prestea and Wassa/HBB open-pit gold mines in Ghana, West Africa. In addition, Golden Star has an 81% interest in the currently inactive Prestea Underground mine in Ghana, as well as gold exploration interests elsewhere in Ghana, in other parts of West Africa and in Brazil in South America. Golden Star has approximately 259 million shares outstanding. Additional information is available at www.gsr.com.
Statements Regarding Forward-Looking Information: Some statements contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include plans and timing for a definitive feasibility study, and plans and timing for development of and commencement of operations at the Prestea Underground Mine; significance of drilling results and the impact on mine development plans; estimates and expectations for ore types and indicated and inferred resources; estimates concerning cash operating costs, gold prices, recovery rates, ounces of gold produced, net present values (including assumed discount rates), the internal rate of return, levels of investment and capital cost necessary to bring the Prestea Underground Mine into development phase; the impact of operations at the Prestea Underground Mine on overall cash operating costs and on exploration at the Prestea Underground complex; mining methods at the Prestea Underground Mine; and plans to file a detailed and National Instrument 43-101 compliant Preliminary Economic Assessment within 45 days. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual facts to differ materially, including timing of and unexpected events at the Prestea Underground Mine; variations in ore grade; delay or failure to receive government approvals and permits; the availability and cost of electrical power and key inputs; timing and availability of external financing on acceptable terms; technical, permitting, mining or processing issues; fluctuations in gold price and costs; and general economic conditions.. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in our Form 10-K for 2011. The forecasts contained in this press release constitute management's current estimates, as of the date of this press release, with respect to the matters covered thereby. We expect that these estimates will change as new information is received. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event.
For further information, please contact: GOLDEN STAR RESOURCES LTD. Bruce Higson-Smith Senior Vice President Finance and Corporate Development 1-800-553-8436 INVESTOR RELATIONS Jay Pfeiffer Pfeiffer High Investor Relations, Inc. 303-393-7044
SOURCE: Golden Star Resources