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Golden Star Resources reports strong ROI for underground Ghanaian gold project

27th March 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Ghana-focused gold miner Golden Star Resources has reported a strong return on investment (ROI) for its brownfield Wassa underground gold project at its currently operating Wassa openpit mine in the country and expected the development to transform the company into a lower-cost gold producer.

The TSX-, NYSE MKT- and Ghana Stock Exchange-listed company on Thursday published the results of a feasibility study that had estimated that the underground development could produce on average 163 000 oz/y of gold over its expected eight-year production life, with average cash operating costs of $780/oz and all-in sustaining costs of $938/oz estimated for combined Wassa operation.

The study had calculated an internal rate of return of 83% at an assumed gold price of $1 200/oz. The net present value at a 5% discount rate was calculated at $176-million.

Golden Star reported total proven and probable reserves for Wassa, as at December 31, of 24.1-million tonnes, grading 2.04 g/t of gold, containing 1.6-million ounces.

The total measured and indicated resources stood at 49.5-million tonnes, grading 2.21 g/t gold for 3.5-million ounces, inclusive of the mineral reserves.

The $39-million Wassa underground project held reserves of 5.4-million tonnes at 4.26 g/t gold, for 745 000 oz of gold.

Inferred resources comprised 11.6-million tonnes, grading 3.79 g/t gold for 1.4-million ounces of gold.

The Wassa underground deposit remained open down plunge and had potential to grow.

Golden Star said it expected the underground operation to start producing gold early in 2016.

The project’s expected payback period at a $1 200/oz gold price was 3.25 years.

"The strong rate of return on investment suggested by the study validates the preliminary economic assessment of Wassa underground published in 2014 and is a confirmation of the decisions made for the expenditures on drilling and these studies of the last few years,” president and CEO Sam Coetzer said.

He noted that development of the underground project had been under way since December, when the company bought certain underground mining equipment and received the exploration decline permit.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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