Macro Tsimmis

intelligently hedged investment

Golden Star Resources (GSS) update #6

Posted by intelledgement on Thu, 28 Feb 08

Golden Star Resourses (GSS), our Ghanian gold mining company, today released 4Q07 and full year financial data: overall, the company lost $36.4MM in 2007, a turnaround from a 2006 profit of $64.7MM reflecting primarily the costs of bringing the newly commissioned Bogoso sulfide processing plant online and up to speed. Production costs at Bogoso rose from $430/oz in 2006 to $788/oz in 2007…which, when you are selling gold for $713/oz—as GSS did in 2007—is not a recipe for black ink.

However, the BIOX® plant has already solved the medium-term problem of declining production at Bogoso/Prestea due to ore containing gold that cannot be accessed by the standard cyanidation process and according to Tom Mair, Interim President and CEO, “We expect ongoing optimization of the Bogoso sulfide processing plant to contribute to improved bottom line results going forward.”

With gold prices soaring, and the power interruptions that plagued Ghana in 2006 unlikely to disrupt production in 2007 thanks to the end of the drought that limited hydropower production and the commissioning of a dedicated backup plant financed by several mining companies, conditions appear to favor improved results for GSS this year. One good sign is that the company appears to have more gold than previously thought: mineral reserves increased by 780M ounces (+19%) during 2007 to 62.3 million tonnes of ore grading 2.46 grams per tonne (g/t) for contained gold of 4.93 million ounces at year end.

Time will tell.

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