UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 18, 1999
GOLDEN STAR RESOURCES LTD.
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(Exact name of registrant as specified in its charter)
Canada 0-21708 98-0101955
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
1660 Lincoln Street, Suite 3000
Denver, Colorado 80264-3001
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(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 830-9000
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On May 18, 1999, Golden Star Resources Ltd. (Amex: GSR; Toronto: GSC)
and Anvil Mining NL issued a press release (the "Press Release") stating that
they are in the process of acquiring a 70% and 20% equity interest,
respectively, in Bogoso Gold Limited (BGL) from a consortium of banks. Total
consideration for the acquisition of BGL is US$17 million, including US$12
million on closing and US$5 million on the first anniversary of the commencement
of commercial mining of sulphide ore as part of a new sulphide project. BGL
operates the Bogoso gold mine in Ghana, a plus 100,000 ounce per year gold mine
located on the Ashanti trend. The Bogoso mine is currently processing oxide and
transition ore and has a 2-year mine life on the basis of current reserves and
stockpiles. Bogoso also hosts substantial sulphide mineralization, the potential
of which will require additional exploration, metallurgical testwork and
engineering to confirm its feasibility.
Golden Star Resources Ltd. (Golden Star) and Anvil Mining NL (Anvil)
have been informed by the International Finance Corporation (IFC) that their
offer to purchase 90% of the shares of Bogoso Gold Limited (BGL) from a
consortium of banks led by IFC and Deutsche Investitions und
Entwicklungsgesellschaft mbH (DEG) of Germany has been accepted, subject to the
approval of the boards of the IFC and DEG. Following the completion of the
purchase, Golden Star and Anvil will hold equity interests of 70% and 20%,
respectively, in BGL with the Government of Ghana retaining its 10% equity
interest. In addition to acquiring 90% of the shares in BGL, the purchase
includes the acquisition of existing bank debt of approximately US$34 million
owed by BGL to the consortium of banks selling BGL. Golden Star and Anvil will
acquire 78% and 22% of this debt, respectively, and as a result, BGL will have
no external bank debt other than the debt acquired by Golden Star and Anvil.
Golden Star expects that the acquisition agreement will be signed by the parties
once ratified by the boards of directors of IFC and DEG (expected by May 25).
The acquisition of the shares and debt of BGL is also subject to approval by the
Government and Bank of Ghana.
BGL operates the Bogoso gold mine, which is located on the Ashanti gold
belt of Ghana. The mine went into production in 1991 and experienced problems
processing sulphide ores in the first few years of the operation. In 1994
management decided to switch to processing oxide ore. Since then, the mine has
produced an average of just over 100,000 ounces of gold per year from oxide ore
at an average cash operating cost of approximately US$208 per ounce, with
consistently strong operating cash flow. BGL is currently well positioned with
adequate working capital and no external bank debt, other than the debt to be
acquired by Golden Star and Anvil.
As at March 31, 1999, the assets of BGL included approximately US$11.0
million in cash, US$7 million of which will be set aside as an environmental
rehabilitation and social development fund for the eventual closure of the mine.
All cash generated by the operation from April 1, 1999 will accrue to Golden
Star and Anvil.
The following table provides BGL's reported current proven and
probable, open pittable oxide and transition reserves as well as total
mineralized material (equivalent to measured and indicated resources under
Canadian (CIM) and Australian (JORC) definitions) as at March 31, 1999. Assaying
is performed on site using the fire assay technique. Independent check assays
are performed regularly by SGS, Ghana. BGL's reserves and mineralized material
were independently audited by Dr. John Arthur of SRK Consulting in April 1999.
In addition to reserves and
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mineralized material, it also is the intention of Golden Star and Anvil to
process existing low grade stockpiles at Bogoso and such additional material
that will be added through the mining of current reserves and mineralized
material. Expected gold recoveries for oxide and transition material are 86% and
60%, respectively.
Mineralized material does not represent reserves and has not been
included in the proven and probable reserve estimates below because even though
enough drilling and trenching indicate a sufficient amount and grade to warrant
further exploration or development expenditures, these mineral deposits do not
qualify under the U.S. Securities and Exchange Commission standards as being
commercially minable until further drilling, metallurgical work and other
economic and technical feasibility factors based upon such work are resolved.
Mineralized material is reported only if the potential exists for
reclassification to reserves following additional drilling and/or final
technical, economic, and legal factors have been determined for the project.
Table 1. Bogoso Gold Mine Reserves and Mineralized Material as of
March 31, 1999
Grade In situ
'000 tonnes g Au/t Ounces
Oxide Material
Mineralized Material (1) 2,868 2.3 na
Proven & Probable Reserves 1,963 2.6 162,319
Transition Material
Mineralized Material (1) 3,202 2.8 na
Proven & Probable Reserves 232 3.3 24,836
Total Oxide & Transition
Mineralized Material (1) 5,867 2.6 na
Proven & Probable Reserves 2,195 2.7 187,156
(1) Mineralized Material equivalent to measured and indicated resources under
Canadian (CIM) and Australian (JORC) definitions.
BGL also reported as at March 31, 1999 sulfide mineralized material
(equivalent to measured and indicated resources under Canadian and Australian
definitions) of approximately 10.3 million tonnes at 3.3g Au/t, though
additional exploration, metallurgical test work and engineering will be required
before the feasibility of their mining and processing is confirmed.
On the basis of the established oxide and transition reserves plus
stockpiles, BGL currently has a limited mine life of 2 years. However, this
situation has existed since 1994 and BGL has been successful in continuing to
find additional oxide ore reserves. It is anticipated that a systematic approach
towards oxide exploration envisioned by Golden Star and Anvil may further extend
the oxide life of the mine.
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The total purchase consideration for the acquisition of BGL is US$17
million, comprising the following: (1) US$12 million payable on closing; and (2)
US$5 million as a deferred payment, payable on the first anniversary of the
commencement of commercial mining of the sulfide ore as part of a new sulfide
project. Funding for the first US$12 million of the acquisition cost will be
borne by Golden Star. The acquisition costs and all other associated costs with
interest will be repaid from BGL to Golden Star, prior to Anvil receiving any
cash flow from BGL.
A standby credit facility for up to US$12 million has been arranged by
Golden Star to effect the purchase. As part of the agreement with the bank
vendors, Golden Star has arranged a US$2.0 million letter of credit in favor of
the vendors, which is non-refundable if Golden Star fails to meet its
obligations under the purchase agreement. As part of the standby credit
facility, Golden Star will issue 1.5 million common share purchase warrants
following the signing of the acquisition agreement and up to an additional 1.5
million purchase warrants upon draw down depending on the amount utilized under
the facility. The warrants will have a three year term and will be priced at the
signing of the acquisition agreement by the parties, using the 10 day weighted
average closing price for Golden Star shares on the American Stock Exchange. The
warrants will be callable by Golden Star under certain conditions. For each year
during the first six years following the Acquisition that total production from
the Bogoso mine concession is greater than 75,000 ounces, the lender of the
credit facility will receive a cash payment of US$250,000 per 12 month period,
totaling not more than US$1,250,000.
Golden Star will receive from Anvil a total of 7.0 million Anvil
options with 3.5 million to be issued following the signing of the purchase
agreement and 3.5 million on completion of the acquisition. The options will
have a 3 year term and an exercise price (subject to Australian Stock Exchange
approval) of A$0.08 per share. Anvil's common shares closed at A$0.052 on May
17, 1999.
Golden Star will have a controlling interest in BGL, control its board
of directors and act as operator of the mine. Anvil's Managing Director, Peter
Bradford, will take on the additional responsibilities of Managing Director of
BGL responsible for overseeing BGL's day to day mining and processing
operations. Upon completion of the acquisition, Golden Star and Anvil intend to
focus on: (1) achieving operating cost savings that became apparent during due
diligence; (2) conducting a systematic oxide exploration program to maximize the
potential of the oxide and transition gold mineralization of the concessions,
funded by existing cash reserves and cash flow; (3) assessing other potential
sources of oxide ore in the area around the BGL concession, and; (4) timely
evaluation, including additional exploration and metallurgical test work, and if
warranted development and expansion of BGL's existing sulfide deposits.
Little systematic exploration has been conducted on the BGL concession,
which spans 18.5 kilometers of the Ashanti trend. Golden Star and Anvil believe
that potential exists for discovery of additional oxide mineralization.
Additionally, Golden Star and Anvil both consider the upside potential of the
sulfide mineralization to be a major attraction of the Bogoso property. Of the
37 existing open pits, from which oxide mineralization has been mined since 1991
over a total strike length of approximately 17 kilometers, meaningful
exploration drilling for sulfides has been undertaken under only 5 of these
oxide pits (Bogoso North, Marlu, Dumasi, Chujah, and Nankafa), with most of this
work dating from the late 1980s. Golden Star believes that the potential for new
sulfide discoveries under previously untested oxide pits is considerable as is
the
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potential for depth extensions to existing sulfide mineralization. The sulfide
mineralization at Bogoso is similar to that currently being profitably exploited
and processed by bio-oxidation at Ashanti's Obuasi mine.
In the Press Release, Jim Askew, Golden Star President and CEO,
commented, "We are very pleased that Anvil brought the BGL opportunity to our
attention in early April. We are also very pleased to have been in a position to
join forces, as this acquisition serves our corporate objectives of accelerating
the process of becoming operating companies."
In the Press Release, Mr. Askew further commented that "BGL is
generally a well-run mining operation with potential for further improvement.
The acquisition of 70% of BGL will provide Golden Star with attributable
production of approximately 90,000 ounces annually and an attractive return on
investment. Perhaps more importantly, the BGL acquisition creates the foundation
and momentum for other corporate initiatives currently under consideration."
In the Press Release, Peter Bradford, Anvil Managing Director, said,
"The acquisition of a 20% interest in BGL provides an attractive opportunity for
Anvil to have a share in an operating entity which has considerable upside in
sulfide mineralization. Furthermore, the long standing relationship that the
senior management of the two companies have had in previous gold mining
operations in Ghana provides a sound basis for developing other opportunities in
this world-class gold province."
Ghana has been an attractive investment destination for Australian and
North American exploration and mining companies for more than a decade. Notable
North American and Australian company mine development successes have been the
Pioneer Group (at Teberebie +250,000 ounces/year), Ranger (at Abosso- Damang
+250,000 ounces/year), Resolute (at Obotan, +130,000 ounces/year) and Golden
Shamrock (now part of Ashanti at Idaupriem +150,000 ounces/year). The country's
largest gold producer is the Ashanti Goldfields Obuasi operation (+820,000
ounces/year) which has been in operation for over 100 years and has remaining
resources in excess of 23 million ounces.
Golden Star is a gold and diamond exploration and development company
which, subject to the execution of a definitive agreement and various approvals,
will have a 70% equity interest in the Bogoso gold mine in Ghana and which holds
a 30% equity interest in the Omai gold mine in Guyana. Golden Star also holds
significant gold and diamond exploration interests in South America and Africa.
Golden Star currently has approximately 29.6 million shares outstanding. The
Company is listed on the Toronto Stock Exchange (under the symbol "GSC") and the
American Stock Exchange (under the symbol "GSR").
The above statements concerning Golden Star's and Anvil's investment in
BGL and the Bogoso mine, the method of financing such investment and the
business strategies and processes of going forward following such investment
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The above forward-looking statements involve risks and
uncertainties including those relating to exploration, unanticipated grade,
geological, metallurgical, processing, access, transportation of supplies, water
availability or other problems,
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the establishment and recovery of reserves, changes in project parameters as
plans continue to be refined, political, economic and operational risks of
foreign operations, potential mine production and development, operating costs
reductions, availability of materials and equipment, the timing of receipt of
governmental permits and capitalization and commercial viability. Please refer
to a discussion of these and other factors in Golden Star's 10K, 10Q and other
Securities and Exchange Commission filings.
Anvil is a precious and base metal exploration and development company
which, subject to the execution of a definitive agreement and various approvals,
will have a 20% equity interest in the Bogoso gold mine in Ghana and which holds
a 90% interest in the Dikulushi copper/silver deposit in the Democratic Republic
of Congo (DRC) where its tenement holdings total 43,000 square kilometers.
Dikulushi is one of the highest-grade, undeveloped copper/silver deposits in the
world. Anvil also holds gold exploration interests in Western Australia. The
Company is listed on the Australian Stock Exchange (under the symbol "AVL") and
also the Berlin Stock Exchange (under the symbol "903718").
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Not Applicable
(b) Pro forma financial information.
Not Applicable
(c) Exhibits.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOLDEN STAR RESOURCES LTD.
By: /s/ Louis O. Peloquin
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Name: Louis O. Peloquin
Title: General Counsel
Dated: May 20, 1999
