TORONTO, Oct. 1, 2021 /PRNewswire/ - Golden Star
Resources Ltd. (NYSE American: GSS) (TSX: GSC) (GSE:
GSR) ("Golden Star" or the "Company") is pleased to announce
that it has concluded negotiations with Future Global Resources
Limited ("FGR") to restructure the consideration for the purchase
of the Bogoso-Prestea mine that was completed on September 30, 2020. All references to "$"
herein are to United States
dollars.
HIGHLIGHTS:
- The conclusion of negotiations to restructure the consideration
for the purchase of the Bogoso-Prestea mine represents a full and
final settlement of all existing and future claims, together with a
mutual release between Golden Star and FGR
- The deferred consideration (the "Deferred Consideration")
detailed in the share purchase agreement dated July 26, 2020, as supplemented by a letter
agreement dated September 30, 2020,
and amended by a first amending agreement dated March 28, 2021 and a second amending agreement
dated May 31, 2021 (collectively, the
"Share Purchase Agreement") will now be replaced by a net smelter
return ("NSR") agreement which will trigger certain payments once
100,000 ounces of gold have been produced from the Prestea
underground mine
- The NSR payments are capped at $35
million, equaling the value of the initial Deferred
Consideration and the working capital balancing payment that were
defined in the Share Purchase Agreement
- The quantum of the Sulphides Contingent Payment defined in the
Share Purchase Agreement remains unchanged. Golden Star has agreed
to adjust the timing of the staged payments in order to support the
development of the refractory resource at Bogoso-Prestea
Andrew Wray, Chief Executive
Officer of Golden Star, commented:
"By working with the FGR team we have been able to conclude
discussions on an amicable and cooperative basis. The future of the
Bogoso-Prestea mine, its workers and other stakeholders was our
priority. We have agreed to restructure the acquisition
consideration into an NSR agreement, in order to better align any
payments owed to Golden Star with the performance of the Prestea
underground mine operation.
While the quantum of the Sulphides Contingent Payment remains
unchanged, we have agreed to provide FGR with further financial
flexibility for the development of the refractory resource by
adjusting the timing of the payments associated with the sulphide
project to allow time for production to reach 500,000 ounces before
we realize the full contingent payment.
We are pleased to reach a full and final settlement of all
existing and future claims, as this will allow both the Golden Star
and FGR management teams to focus fully on their respective assets
to deliver the best outcome for all stakeholders."
Revised payment terms
The restructuring of the
consideration is aimed at better aligning the payments due to
Golden Star with the anticipated performance of the Bogoso-Prestea
asset. The Deferred Consideration has therefore been replaced by an
NSR agreement with the following commercial terms:
- From October 1, 2020, NSR royalty
payments in respect of products produced from the Prestea
underground mine will be paid at a rate of 1.0% of the net smelter
returns once production exceeds 100,000 ounces of gold, and up to a
total of 300,000 ounces of gold
- Once production from the Prestea underground mine exceeds
300,000 ounces of gold, the royalty rate will increase to 2.0%,
until cumulative royalty payments total $35
million at which point the obligation to make royalty
payments will automatically terminate
- These payments apply to production from the areas containing
the underground resources and reserves declared at the Prestea
underground mine at the time it was acquired by FGR
Sulphides Contingent Payment
The value of the
Sulphides Contingent Payment of up to $40
million relating to the Bogoso-Prestea refractory gold
resources remains unchanged from those outlined in the Share
Purchase Agreement. The quantum of the Contingent Payment is
determined by reference to the average spot gold price for the 90
day period preceding the date of the trigger point for such payment
(as described below):
- $20 million, if the average spot
gold price is less than or equal to $1,400/oz;
- $30 million, if the average spot
gold price is greater than $1,400/oz
but less than or equal to $1,700/oz;
or
- $40 million, if the average spot
gold price is greater than $1,700/oz
The trigger point for the Sulphides Contingent Payment is the
extraction of an aggregate of 5% of the sulphide resources as
stated at the end of 2019, being 1.76 million ounces of measured
and indicated mineral resources and 0.07 million ounces of inferred
mineral resource.
The Sulphides Contingent Payment is now payable in three
tranches, rather than the two tranches defined in the Share
Purchase Agreement, as follows:
- 33.3% at the time when 5% of the sulphide mineral resources
have been extracted;
- 33.3% at the time of the first anniversary of the declaration
that 5% of the sulphide mineral resources have been extracted;
and
- The remaining unpaid amount of the Sulphides Contingent Payment
will fall due once a cumulative 500,000 ounces of gold have been
produced from the Bogoso Sulphide project.
Company Profile:
Golden Star is an established gold mining company that owns and
operates the Wassa underground mine in the Western Region of
Ghana, West Africa. Listed
on the NYSE American, the Toronto Stock Exchange and the Ghanaian
Stock Exchange, Golden Star is focused on delivering strong margins
and free cash flow from the Wassa mine. As the winner of the
Prospectors & Developers Association of Canada 2018 Environmental and Social
Responsibility Award, Golden Star remains committed to leaving a
positive and sustainable legacy in its areas of
operation.
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 and "forward looking
information" within the meaning of Canadian securities laws and
include but are not limited to, statements and information
regarding: the timing for and quantum of any NSR payments,
the timing for and quantum of the Sulphides Contingent Payments,
the impact of the consideration restructuring on all stakeholders,
including operations at the Prestea Underground Mine and the
development of the refractory resource, and the receipt by
Golden Star of NSR payments and/or contingent payments . 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. Investors are cautioned that
forward-looking statements and information are inherently uncertain
and involve risks, assumptions and uncertainties that could cause
facts to differ materially. 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: gold
price volatility; discrepancies between actual and estimated
production; mineral reserves and resources and metallurgical
recoveries; mining operational and development risks; liquidity
risks; suppliers suspending or denying delivery of products or
services; regulatory restrictions (including environmental
regulatory restrictions and liability); actions by governmental
authorities; the speculative nature of gold exploration; ore type;
the global economic climate; share price volatility; foreign
exchange rate fluctuations; risks related to streaming agreements
and joint venture operations; the availability of capital on
reasonable terms or at all; 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 including financial and other
risks resulting from the impact of the COVID-19 global pandemic;
actual results of current exploration activities; environmental
risks; future prices of gold; possible variations in mineral
reserves and mineral resources, grade or recovery rates; mine
development and operating risks; an inability to obtain power for
operations on favorable terms or at all; mining plant or equipment
breakdowns or failures; an inability to obtain products or services
for operations or mine development from vendors and suppliers on
reasonable terms, including pricing, or at all; public health
pandemics such as COVID-19, including risks associated with
reliance on suppliers, the cost, scheduling and timing of gold
shipments, uncertainties relating to its ultimate spread, severity
and duration, and related adverse effects on the global economy and
financial markets; 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; litigation risks; the quantum and timing of receipt of
NSR payments and/or the Sulphides Contingent Payments from the sale
by the Company of its interest in Bogoso-Prestea; 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 future developments
affecting the Company will be those anticipated by management.
Please refer to the discussion of these and other factors in
Management's Discussion and Analysis of financial conditions and
results of operations for the year ended December 31, 2020 and in our annual information
form for the year ended December 31,
2020 as filed on SEDAR at www.sedar.com. 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 any estimate at
any particular time or in response to any particular event.
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SOURCE Golden Star Resources Ltd.