Bogoso In New Pact For Prestea Mine

DENVER -(Dow Jones)- Golden Star Resources Ltd.'s (GSRSF) 90%-owned Bogoso Gold Ltd. subsidiary has entered into a new agreement with Prestea Gold Resources Ltd. and the government of Ghana relating to the Prestea underground mine.

In a news release, Golden Star said that, under the agreement, the underground mine will be shut down and put on care and maintenance, and the mining lease will be transferred to Bogoso, to be held on behalf of a joint venture between Bogoso, Prestea Gold and the government.

Golden Star said Bogoso will have an initial 45% interest in the joint venture, and will take over the management of the underground mine. The subsidiary will immediately begin an assessment of its safety and economic viability, and certain infrastructure associated with the underground mine will be decommissioned and demolished to make way for the development of Bogoso's surface mining operations.

Golden Star said Bogoso has, on behalf of Prestea Gold, paid $1.9 million of employee back pay and severance costs to Prestea Gold's former employees. Upon the demolition of the underground mine infrastructure, it will make a final payment of $500,000 to Prestea Gold.

The consolidation and coordination of the activities of the underground mine into the activities of Bogoso will significantly improve the likelihood of its future profitable operation as an incremental part of Bogoso's operations, Golden Star said.

The Prestea underground mine is contained within a mining lease, which covers the same area as the surface mining lease granted to Bogoso in June 2001 . The surface mining lease is restricted down to a depth of 150 meters below sea level and the underground mining lease is restricted to material deeper than 150 meters below sea level. The underground mine, which has operated for 100 years, producing more than 9 million ounces of gold, lies underneath some of the surface reserves to be mined by Bogoso. The consolidation of the underground mine with the activities of Bogoso "is therefore a natural progression to the orderly and economic development of the area," the company said.

Bogoso started mining at the northern end of the Prestea property last September and has since been developing haul roads to the central part of the Prestea property where the majority of the surface reserves lie. It has also begun to test for additional mineralization along the Ashanti trend, between the northern end of the Prestea property and the central portion of the Prestea property.