Golden Star Resources has announced the payment of US$51.5 million as full cash repayment of 7 per cent convertible debentures which matured on August 15, 2021.

By making this cash repayment, Golden Star Resources has moved to reduce its outstanding liabilities by this amount from the balance sheet and risk of equity dilution.

The structure of the convertible debentures required that they were subject to some limitations. That is, convertible into common shares at a conversion rate of 222.222 per US$1,000 principal amount of the 7 per cent convertible debenture. The conversion price per common share was also pegged at approximately US$4.50.

It is worthy to note that the company’s 7 per cent convertible debentures were issued in August 2016 for US$65 million and prior to maturity US$51.5 million were outstanding. Interest on the convertible debentures was payable semi-annually on February 1 and August 1 of each year until maturity on August 15, 2021.

Andrew Wray, Chief Executive Officer of Golden Star, commented:

“The repayment of the Convertible Debentures is an important step in the strengthening and progression of our balance sheet over the last 18 months.

“This deleveraging event removes the significantly more expensive facility from our balance sheet and therefore lowers our cost of capital. It is also positive to see the Convertible Debentures repaid in cash, with no equity dilution.”
Andrew Wray, CEO Golden Star

Conditions for Macquarie Bank credit facility

Moreover, concurrent with the cash repayment of the Convertible Debentures, the Company met the conditions precedent for draw-down of the recently increased senior secured credit facility with Macquarie Bank Limited (the “Macquarie Credit Facility”).

That said, these conditions included a minimum cash balance of US$35 million post repayment of the convertible debentures. However, the conditions carried a clause which suggested that the amount could only be repaid if the funds drawn from the Macquarie Credit Facility were applied to the cash repayment of the Convertible Debentures.

With these conditions met, the Company drew down on the remaining US$29.2 million of available liquidity. As of the maturity date, the US$90 million Macquarie Credit Facility was fully drawn.

“From Q1 2020 to the end of Q2 2021 we successfully halved the Company’s net debt position, while also investing approximately US$80 million in the business. This has repositioned the balance sheet providing an appropriate funding structure with attractive debt ratios.

“We therefore look forward to delivering on the future growth of the Wassa mine with a stronger balance sheet and significant investment already completed, at the same time as we are continuing to make good progress on delivering the operational improvements to support a consistent increase in production volumes.”
Andrew Wray, CEO Golden Star

Golden Star Resources 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 New York Stock Exchange (NYSE) American, the Toronto Stock Exchange and the Ghanaian Stock Exchange.