Golden Star Resources has announced that it has concluded negotiations with Future Global Resources (FGR) Limited to restructure the consideration for the purchase of the Bogo-Prestea mine.

This comes a year after the company completed the sale of the mine in September 30, 2020. Already, the agreement has been twice amended, and this is yet another set of changes being made to the sale agreement.

As at July 2021, FGR’s major shareholder Blue International Holdings Limited had not paid all monies due Golden Star Resources, with an amount of $15 million still in arrears. An event which nearly escalated into a court action against FGR.

However, with further discussions having ensued between both parties, this has necessitated the restructuring of the sale of the Bogoso-Prestea mine, a statement released by Golden Star Resources noted.

Meanwhile, Golden Star Resources continues to hold on to its consideration to sell the Bogoso-Prestea mine to Future Global Resources, which is so that it can concentrate on the development of its Wassa mine.

Terms for the restructuring of the sale

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

“By working with the FGR team, we have been able to conclude discussions on an amicable and cooperative basis. The future of the Bogoso-Prestea mine, its workers and other stakeholders was our priority. We have agreed to restructure the acquisition consideration into an net smelter return (NSR) agreement, in order to better align any payments owed to Golden Star with the performance of the Prestea underground mine operation.”
Andrew Wray

Emphasizing on the terms for the restructuring agreed by both parties, the CEO of Golden Star further indicated that the quantum of the Sulphides Contingent Payment will remain unchanged.

“We have agreed to provide FGR with further financial flexibility for the development of the refractory resource by adjusting the timing of the payments associated with the sulphide project. [This is] to allow time for production to reach 500,000 ounces before we realize the full contingent payment.”
Andrew Wray, CEO Golden Star

Considering the foregoing, the restructuring consideration aims at better aligning the payments due to Golden Star following the expected performance of the Bogo-Prestea asset.

Breakdown of NSR Agreement

According to the statement, the new NSR agreement is as follows: First, NSR royalty payments will be paid at 1.0% of the net smelter returns once production ranges between 100,000oz of total of 300,000oz of gold; Second, upon exceeding 300,000oz of gold, the royalty rate will increase to 2.0%, until cumulative royalty payments total $35 million at which point the obligation to make royalty payments will automatically terminate.

Also, the value of the Sulphides Contingent Payment of up to $40 million remains unchanged from those outlined in the Share Purchase Agreement. The quantum of the Contingent Payment is determined by reference to the average spot gold price for the 90 day period preceding the date of the trigger point for such payment.

Furthermore, the trigger point for the Sulphides Contingent Payment is the extraction of an aggregate of 5% of the sulphide resources as stated at the end of 2019. This reflects a 1.76 million ounces of measured and indicated mineral resources and 0.07 million ounces of inferred mineral resource.

“We are pleased to reach a full and final settlement of all existing and future claims, as this will allow both the Golden Star and FGR management teams to focus fully on their respective assets to deliver the best outcome for all stakeholders.”
Andrew Wray, CEO Golden Star Resources

Golden Star 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 NYSE American, the Toronto Stock Exchange and the Ghanaian Stock Exchange, Golden Star is focused on delivering strong margins and free cash flow from the Wassa mine.