TORONTO (miningweekly.com) – Denver, Colorado-based Golden Star Resources is looking for ways to boost production levels at its Ghanaian gold mines, to take advantage of record prices for the yellow metal, CEO Tom Mair said on Tuesday.
Golden Star operates the Bogosa/Prestea and Wassa mines, and has also commissioned updated NI 43-101 technical reports for both operations, at a higher gold price assumption, he told analysts on a conference call.
„The higher gold price, in conjunction with substantial drilling results of this year, will result in more ore and longer mine lives,“ Mair commented.
Shares in the company dropped 18% on Tuesday, after the firm reported a third-quarjaw crusher capacity chartter loss and lowered its production guidance for this year, citing lower grades and heavy rainfall as affecting operations.
Mair said that the company expects to complete the updated technical reports by the end of the year.
In the meantime though, and based on preliminary results from the studies under way, Gold Star has commissioned an engineering study on a sulphide mill expansion in the expectation tblack coal crushing equipment suppliers in uaehat the revised resource base will justify higher throughput levels, he said.
The company is also moving forward with plans to boost production by reprocessing tailings at Bogosa, reopening the nearby Pampe open pit, and is hoping to be ready to make a decision on restarting the Prestea underground operation „in the next couple of quarters“.
Golden Star is also still shanghai grinding powderwaiting for permitting approval to develop the new Prestea South mine, which will likely add another 75 000 to 100 000 oz/y to group production.
The tailings reprocessing project could add around 40 000 to 50 000 oz/y of gold production, and the company is moving ahead with permitting and procurement for the project, which is expected to come online in mid-2011.
ROYALTIES
Mair said that the company has requested talks with the government of Ghana, after a Mining Amendment Act passed on March 19 changed the royalty calculation from a sliding scale depending on operating margins, under which the company had been paying 3% royalty, to a flat rate of 5%.
Both the mines operate under contracts that provide for royalty stability, but there is a clause in the contract that allows for a renegotiation of terms „in a cooperative fashion“, Mair said.
The government has requested that these discussions take place, he said.
However, the State has at least confirmed that the company will pay its agreed 3% royalty until March 31, 2011.
RAINFALL HITS EARNINGS
Golden Star reported a net loss of $1,8-million for the third quarter of 2010, compared with a $2,3-million loss a year earlier.
Output was impacted on by lower recoveries at Bogoso/Prestea, lower grades milled and record high rainfall in the operating areas which affected ore deliveries.
„The weather is the most extreme we have measured since the beginning of our operations at this time of year,“ Mair commented.
The Akosombo dam reservoir, the main source of hydropower in Ghana, reached a record height of over 277 ft, compared with 234 ft less than three years ago.
While the severe weather affected operations negatively, Mair commented that the argument could be made that the abundance of water should translate into lower hydropower costs.
Golden Star expects to produce 370 000 oz of gold this year, at cash operating costs of $715/oz.