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Business News Tue, 2 Oct 2001

Golden Star On the Mend After Close Call

Golden Star Resources came within a skipped heartbeat of dying before a last minute deal involving the Prestea mine extended the life of its Bogoso gold mine in Ghana.

With the delicate corporate manoeuvring essentially completed, management can again focus on improving operations and there is even talk of other projects based on the Bogoso-Prestea centralised infrastructure concept.

CE Peter Bradford says the immediate priority is to secure Bogoso's cash flow that will be used to fund the conversion of resources to reserves, equipment upgrades and the completion of a sulfide feasibility study. However, the sulfide project would only be viable with a gold price above $300 per ounce.

Like Crystallex, GSR has focused on consolidating existing and known resources around a central plant. Bradford says the fragmented tenements were ripe for consolidation and a comprehensive exploration programme. Large tracts have shown geochemical anomalies but have yet to be drilled. Regional modelling suggests the results could be impressive, at least when measured against the scale of present operations.

He says investors can also be assured that the labour and political problems that previously plagued the region's mines have been resolved. A timely advance on wages secured the good will of workers while Bradford praises the Ghanaian government's enthusiastic sponsorship of the project.

A new project debt facility is due to be announced in the coming weeks while a contract mining arrangement is also about to be secured that will further free up GSR's resources.

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Bradford is candid about Bogoso never being more than a middle-of-the road producer in terms of costs and lifespan. However, it will kick in enough experience and cash flow to stabilise the parent company as it embarks on other projects.

Bradford says it is actively identifying West African processing facilities where the operators are displaying "project fatigue". Two are promising although he will not say more on who they might be or where the operations are. The company controls concessions in neighbouring C?te d'Ivoire.

While the African assets are finding a new rhythm, Bradford is also upbeat about the prospects for the Gross Rosebel gold mine in Suriname. The half share joint venture with Cambior has suffered from the owners' respective problems, but with both recovering it could now get the attention it requires.

A feasibility study is to commence later this year although early indications are that without a gold price higher than $300 an ounce this project will also remain dormant unless the economics can be tweaked.

Bradford describes the firm's near death experience as character development. There is no doubt plenty more to come before the sceptics can be sworn off. Meanwhile, investors will be reasonably satisfied with the recent leap in the share price.

Source: Miningweb (Johannesburg)
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