TORONTO, Dec. 1, 2015 /CNW/ - Golden Star is pleased to announce the results
of its Feasibility Study ("FS") regarding the development of its
Prestea Underground Mine in Ghana.
In November 2014 the Company
released a Preliminary Economic Assessment ("PEA") based on the
development of a non-mechanized mining operation in the West Reef
deposit at Prestea. The FS includes additional geotechnical,
hydrogeological and metallurgical test work on samples from
additional underground drilling. The drilling results contribute to
an updated resource block model which is the basis for the 2015
mine design and estimation of Mineral Reserves.
All references to currency are in United States dollars.
Highlights
- Post-tax Internal Rate of Return ("IRR") of 42% at $1,150 per ounce gold price
- Net Present Value, assuming 5% discount rate
("NPV5%") of $124 million
at $1,150 per ounce gold price
- West Reef Probable Mineral Reserves as of November 3, 2015 are 1.04 million tonnes (Mt)
grading 14.0 grams per tonne of gold ("g/t Au") for 469,000 ounces
of gold
- West Reef Indicated Mineral Resources as of October 24, 2015 of 1.14 Mt grading 18.4 g/t Au
for 675,000 ounces of gold inclusive of Mineral Reserves
- $63 million of capital required
to commercial production which includes $20
million of capitalized operating costs
- Life of mine ("LOM") of five and a half years, after 12 months
of rehabilitation and 7 months of development to commercial
production
- LOM cash operating costs of $462
per ounce
- LOM all-in sustaining costs of $603 per ounce
- LOM all-in costs of $756 per
ounce
- Payback period of 2.9 years from the start of project
Sam Coetzer, President and CEO of
Golden Star commented:
"This Feasibility Study confirms our expectations from the
PEA and I am very encouraged by the increase in reserves as a
result of the additional drilling that was completed. The increase
in mine life allows us to consider additional upside resource
development going forward.
The Feasibility Study considers a new standalone plant,
however, the Company is reviewing the option of modifying its
currently installed processing infrastructure to reduce capital
spending. Under these conditions the Feasibility Study indicates a
robust project with significant upside. Additionally, with the
current production from the Prestea South open pits, we believe
there are further synergies to be unlocked by the deferral of plant
modification capital without negatively impacting upon the
production profile. Prestea Underground will be viable in the
current gold price environment and, with the funding we have
arranged, we expect to bring it into production by early
2017."
Company Profile
Golden Star Resources (NYSE MKT: GSS; TSX: GSC; GSE: GSR)
("Golden Star" or the "Company") is an established gold mining
company with two 90% owned producing mines, Wassa and Prestea, on
the prolific Ashanti Gold Belt in
Ghana. In 2014, Golden Star
produced 261,000 ounces of gold. The Company is financed to
develop underground mines below existing open pit operations which
are expected to reduce unit costs further when in production from
2016 onwards. As such, the Company offers investors leveraged,
un-hedged exposure to the gold price with low operational risk in a
stable African mining jurisdiction in addition to significant
exploration and development upside potential.
For further information regarding Golden
Star's Mineral Reserves and Mineral Resources, see
Golden Star's Annual Information
Form for the year ended December 31,
2014, available on SEDAR at www.sedar.com.
INTRODUCTION
Prestea is an underground mine which has been in existence for
over 100 years and has historically produced an estimated 9 million
ounces of gold. It was acquired by Golden Star in 2002 and placed on care and
maintenance while evaluation and exploration activities
continued. The mine, located 16 km south of the Bogoso
processing plant along a dedicated haul road and adjacent to the
town of Prestea, is accessible by road from Accra as well as via the port city of Takoradi
150 kilometers to the south.
Subsequent to Golden Star's
acquisition of Prestea, the Company completed 284 underground
diamond drillholes for approximately 47,000 meters and identified
and defined a new mineral resource in the West Reef. This
steeply dipping, narrow vein deposit lies at a depth of 550 meters
to 1,025 meters below surface, approximately two kilometers to the
south of the Prestea Central Shaft and is host to high-grade, free
milling gold.
In June 2013, a feasibility study
of the development of the West Reef at Prestea was released by
Golden Star. This study showed
positive economics for the development of an underground mechanized
mine. Mineral Reserves were estimated at 1.4 Mt at a diluted
mined grade of 9.6 g/t Au for 443,000 ounces. The initial
capital outlay was estimated at $91
million with a development timeline of approximately three
years.
In November 2014 the Company
released the results of a PEA based on a non-mechanized mining
operation of the West Reef deposit at Prestea. Plant feed was
estimated at 0.65 million tonnes at a diluted mined grade of 17.2
g/t Au for 359,000 ounces. The initial capital outlay was
estimated at $40 million with a
development timeline of approximately 21 months.
This FS is based upon Mineral Reserves of 1.04 Mt at a diluted
mined grade of 14.0 g/t Au for 469,000 ounces of contained
gold. The initial capital outlay is estimated at $63 million with a development timeline of
approximately 19 months to commercial production.
MINERAL RESERVES
The FS is based on a Mineral Resource model completed in
August 2015 which has incorporated
all past drilling, reef drive sampling and assaying.
The West Reef Mineral Resource block model was used to estimate
Mineral Reserves using modifying factors. Mining shapes were
designed targeting the Indicated Mineral Resources only, using a
cut-off grade of 6.2 g/t Au as a guideline based on a gold price of
$1,150 per ounce, an estimated site
operating cost of $207 per tonne
processed, and a metallurgical gold recovery of 96%. The mining
shapes follow the geological wireframes of the mineralized
structure. Mining recovery and dilution parameters are based on the
selected mining method, minimum mining width, and geotechnical
considerations. External mining dilution averages 17% with zero
grade. Additional dilution arising from underground material
handling constraints averages 8% with zero grade. Mining recoveries
vary from 100% for sill development ore to 96% for stoping ore.
Economic modeling confirmed the viability of the Mineral
Reserves presented in the table below. The FS mine plan was based
on the stated West Reef Indicated Mineral Resources only.
The FS Mineral Reserve has been estimated by SRK Consulting
(Canada) Inc. in accordance with
guidelines set out in the Definition Standards on Mineral Resources
and Mineral Reserves published by the Canadian Institute of Mining,
Metallurgy, and Petroleum ("CIM Council") and as required by
Canada's National Instrument
43-101 ("NI 43-101").
The Mineral Reserve Statement for the West Reef is presented in
Table 1.
Table 1:
Mineral Reserve Statement, West Reef Deposit,
Prestea
Underground Project, Ghana, November 3, 2015
|
|
|
|
|
Category
|
Quantity
|
Grade
|
Contained
Metal
|
(Mt)
|
(g/t Au)
|
Au (koz)
|
Proven
|
-
|
-
|
-
|
Probable
|
1.04
|
14.0
|
469
|
Notes to the Mineral Reserve Statement:
- Mineral reserves are included in mineral resources. All figures
have been rounded to reflect the relative accuracy of the
estimates.
- The mineral reserve estimates are prepared in accordance with
the Definition Standards On Mineral Resources and Mineral Reserves,
adopted by the CIM Council on May 11,
2014, and the Estimation of Mineral Resources and Mineral
Reserves Best Practice Guidelines, adopted by CIM Council on
November 23, 2003, using
geostatistical and/or classical methods, and economic and mining
parameters appropriate to the West Reef deposit.
- Underground mineral reserves are reported at plant feed cut-off
grade of 6.2 g/t Au assuming: metal price of $1,150 per ounce of gold, mining cost of
$105 per ore tonne, G&A cost of
$23 per ore tonne, processing and
surface hauling cost of $79 per ore
tonne, and process recovery of 96%.
- Mineral reserves are the economic portion of the Measured and
Indicated mineral resources. Mineral reserve estimates include
mining dilution at grades assumed to be zero. Mining dilution and
recovery factors vary for specific stopes and sills and are
influenced by several factors including vein thickness, level
interval, and mining method.
MINERAL RESOURCES
The Mineral Resource Statement as of October 24, 2015 was prepared by Mr. Mitch Wasel, Vice President Exploration, who is
a Qualified Person pursuant to National Instrument 43-101.
Table 2: Mineral
Resource Statement, Prestea Underground Project,
Ghana, October 24,
2015.
|
|
|
|
|
Deposit
|
Measured
|
Indicated
|
Inferred
|
(Mt)
|
(g/t
Au)
|
(koz
Au)
|
(Mt)
|
(g/t
Au)
|
(koz
Au)
|
(Mt)
|
(g/t
Au)
|
(koz
Au)
|
Main Reef
|
-
|
-
|
-
|
0.17
|
7.8
|
43
|
2.02
|
7.1
|
460
|
West Reef
|
-
|
-
|
-
|
1.14
|
18.4
|
675
|
0.66
|
13.5
|
288
|
Footwall
|
-
|
-
|
-
|
0.29
|
8.5
|
80
|
0.22
|
8.7
|
60
|
Shaft
Pillar
|
-
|
-
|
-
|
-
|
-
|
-
|
0.36
|
9.2
|
107
|
Total
|
-
|
-
|
-
|
1.60
|
15.5
|
798
|
3.26
|
8.7
|
915
|
Notes to the Mineral Resource Statement:
- The identified mineral resources in the block model are
classified according to the CIM definitions for Measured, Indicated
and Inferred categories and are constrained by a block cut-off
grade calculated using a gold price of $1,300 per ounce and below the mid-year
topographic surface. The mineral resources are reported in-situ
without modifying factors applied;
- The mineral resources were estimated using block models. The
composite grades were capped where this was deemed necessary, after
statistical analysis. Ordinary Kriging was used to estimate the
block grades. The search ellipsoids were orientated to reflect the
general strike and dip of the modelled mineralization;
- Block model tonnage and grade estimates were classified
according to the Definition Standards on Mineral Resources and
Mineral Reserves adopted by the CIM Council (May 2014). The basis of the mineral resource
classification included confidence in the geological continuity of
the mineralized structures, the quality and quantity of the
exploration data supporting the estimates, and the geostatistical
confidence in the tonnage and grade estimates. Three-dimensional
solids were modelled reflecting areas with the highest confidence,
which were classified as Indicated mineral resources;
- All figures are rounded to reflect the relative accuracy of the
estimate. All composites have been capped where appropriate.
PRESTEA UNDERGROUND WEST REEF FEASIBILITY STUDY
RESULTS
The FS demonstrates positive economics for the extraction of the
West Reef Probable Mineral Reserves using shrinkage stoping.
In conducting this assessment, a gold price of $1,150 per ounce was assumed. The results
indicate an IRR of 42%, NPV at a 5% discount rate of
$124 million and a payback period of
2.9 years from the start of development.
Project Infrastructure
The plan to extract the West Reef at Prestea is an expansion of
a previously operating underground mining operation. Therefore most
of the required services, infrastructure and community support are
already in place:
- Surface access to the mine is via the public road network that
extends onto the mine site and mineralized material will be hauled
to the processing plant along an existing private haul road;
- Labour with underground mining experience is plentiful and the
care and maintenance activities at Prestea already employ 205
experienced staff and employees;
- Utilities are available including electricity from the
Ghana national grid which is
currently used to power the existing Prestea mine
infrastructure;
- Ore will be processed through a 500 tonnes per day processing
facility at the Bogoso plant site; and
- Tailings will be deposited in Golden
Star's existing and permitted Bogoso tailings storage
facility.
At Prestea there is an extensive infrastructure of surface and
underground vertical shafts, inclined shafts, horizontal
development, raises and stopes developed along the 9 kilometers of
strike length of the gold mineralization. The primary access
shaft for the West Reef is the Central Shaft located in the town of
Prestea and the secondary shaft is the Bondaye Shaft, 5 kilometers
to the south. The Central Shaft will be used for personnel access,
materials transport, dewatering and hoisting. The Bondaye
Shaft will act as the secondary means of egress as well as for
dewatering.
Mining
The West Reef mineralization lies approximately 2 kilometers
south of Central Shaft and 3 kilometers north of the Bondaye Shaft
at a depth of between 550 and 1,025 meters below surface. The
mineralization dips at approximately 60 to 85 degrees to the west
and varies in width from 0.5 to 3.5 meters with an average width of
approximately 1.8 meters.
The FS proposes shrinkage stoping, which was the mining method
historically used at Prestea, but with the application of rock
bolts and timber props to support the stope walls to maintain stope
stability and control waste dilution. The main haulage level
will be established on the existing 24 level to move mineralized
and waste rock to the Central Shaft for hoisting to surface.
An incline/decline system will be developed in the footwall of the
mineralization to access sublevels at a vertical spacing of
approximately 35-40 meters between existing levels 17 and 24 and
140 m below level 24. Shrinkage stopes will be developed
between open raises spaced 60 meters on strike. Drawcones
will be developed out of the sublevels into the stopes and will be
equipped with chutes for controlled shrinkage mucking into rail
cars in the sublevels. The stopes will be advanced up dip
with only the swell material (30% of total blasted) removed from
the stopes during the mining phase. When the stope is mined
up to the sill pillar below the upper sublevel, the remaining
mineralized material in the stope will be drawn as required.
Total mining operating costs are estimated to be an average of
$105 per tonne during commercial
production.
Metallurgy and Processing
The metallurgical test work results indicate that the Prestea
West Reef material is free milling with approximately 96%
metallurgical recovery using gravity followed by Carbon-in-Leach ("CIL") processing. The
proportion of gravity recoverable gold identified in the test work
is high at between 50% and 90%. The processing facility will
comprise of a 500 tonnes per day standalone plant utilizing a
standard comminution circuit, followed by gravity and CIL sections.
The recovered gravity concentrate will be treated in the existing
Acacia circuit. Gold recovered from the CIL circuit will be further
processed in the existing elution circuit. Dore will be smelted in
the existing gold room.
Capital cost of the new processing plant is estimated at
$20.6 million and is included in the
initial capital expenditure of $63
million. Total processing and haulage operating costs
are expected to average $79 per ore
tonne over the life of mine.
Capital Expenditure
Initial capital expenditure is estimated at $63 million with life of mine capital totaling
$77 million net of revenue,
processing costs and working capital during the development
phase. The table below presents the major capital items
during the life of the project.
|
|
|
|
|
|
|
|
Capital
|
Total
($M)
|
2015
($M)
|
2016
($M)
|
2017
($M)
|
2018
($M)
|
2019
($M)
|
2020-
2024
($M)
|
Infrastructure
Rehabilitation
|
26.3
|
4.0
|
12.8
|
5.7
|
3.9
|
-
|
-
|
Capitalized opex net
of revenue
|
20.1
|
4.2
|
15.4
|
0.5
|
-
|
-
|
-
|
Processing
Plant
|
20.6
|
2.1
|
18.5
|
-
|
-
|
-
|
-
|
Mining
Equipment
|
3.9
|
0.5
|
2.7
|
0.8
|
-
|
-
|
-
|
Mining
Sustaining
|
2.2
|
-
|
-
|
0.4
|
0.4
|
0.4
|
1.0
|
Other
|
3.4
|
0.9
|
0.9
|
0.1
|
-
|
-
|
1.5
|
Total
Capital
|
76.5
|
11.6
|
50.3
|
7.4
|
4.3
|
0.4
|
2.5
|
The infrastructure rehabilitation includes shaft and hoist
upgrades, electrical infrastructure, process plant, ventilation,
compressed air and pumping. This forms the bulk of the
initial capital expenditure. The capitalized operating cost
relates to manpower, power, consumables and refurbishment costs
during the pre-development and production ramp-up phase.
Operating
Metrics
|
|
|
|
Ore mined
|
Mt
|
1.04
|
|
Dilution
|
%
|
25
|
|
LOM Average Mill Head
Grade (diluted)
|
g/t
|
14.0
|
|
Gold content in
ore
|
koz
|
469
|
|
Metallurgical
recovery
|
%
|
96
|
|
Average Annual Gold
Production
|
koz
|
80
|
|
LOM Ounces
sold
|
koz
|
450
|
|
|
|
|
Mining
|
per tonne
(milled)
|
$105
|
|
Processing
|
per tonne
(milled)
|
$79
|
|
G&A
|
per tonne
(milled)
|
$23
|
|
Total operating
cost
|
per tonne
(milled)
|
$207
|
|
Gold price
assumption
|
per ounce
|
$1,150
|
|
|
|
|
Internal Rate of
Return (IRR)
|
%
|
42
|
|
Net Present Value at
5% discount (NPV5%)
|
million
|
$124
|
|
|
|
|
Gross
revenue
|
million
|
$518
|
|
Operating
costs
|
million
|
$203
|
|
Operating profit
(EBITDA)
|
million
|
$242
|
|
Capital
Costs
|
|
|
|
Cash Operating
Costs
|
per ounce
|
$462
|
|
All-In Sustaining
Costs (including royalty and stream)
|
per ounce
|
$603
|
|
All-In
Costs
|
per ounce
|
$756
|
Economic Sensitivity
The project is robust as the following sensitivities to gold
price for post–tax NPV5% and IRR presented in the table
below demonstrate:
Gold Price
|
|
NPV5%
|
|
IRR
|
|
|
|
|
|
$ 1,050
|
|
$92 M
|
|
35%
|
$ 1,100
|
|
$108 M
|
|
39%
|
$ 1,150
|
|
$124
M
|
|
42%
|
$ 1,200
|
|
$141 M
|
|
46%
|
$ 1,250
|
|
$157 M
|
|
49%
|
Opportunities
The FS identified a number of opportunities:
- Project Mineral Resources could increase by further drilling of
the areas up dip of West Reef, above 17 level, and down plunge to
the north of West Reef below 24 level
- Further drilling could convert existing Inferred Mineral
Resources to the Measured or Indicated Resource category,
potentially adding to the Mineral Reserves and extending life of
mine
- The FS is based on all stope rib and sill pillars being left
in-situ post mining. It is estimated that Indicated Mineral
Resources within these pillars totals 287,000 tonnes grading 18 g/t
Au for 168,000 ounces
- Further stope design optimization and placement of development
waste into mining voids could lead to reduced internal and external
dilution, and increased mill head grades
- Strong potential to modify the existing processing plant which
could reduce both the capital requirement and the construction
schedule.
NI 43-101 TECHNICAL REPORT
The complete NI 43-101 Technical Report which will include the
results of the FS will be filed on SEDAR (www.sedar.com) within 45
days and will also be available on the Company's website
(www.gsr.com).
The FS information presented in this press release has been
reviewed and approved by the following Qualified Persons pursuant
to the National Instrument 43-101: Benny
Zhang, P. Eng., M. Eng.; Ken
Reipas, P. Eng., both are Principal Mining Engineers of SRK
Consulting (Canada) Inc., and are
independent of the Company; and Dr. Martin
Raffield, P. Eng., Senior Vice President Project Development
and Technical Services for Golden
Star.
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Some statements contained in this news release are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and applicable Canadian
securities laws. Investors are cautioned that forward-looking
statements are inherently uncertain and involve risks and
uncertainties that could cause actual results to differ materially.
Such statements include comments regarding: FS operating
metrics, including estimated gold production, tonnes mined and
processed, grade and gold recoveries; payback period; estimated
pre-tax and post-tax internal rate of return and net present value
of Prestea Underground Mine (including assumed discount rates) and
sensitivities to gold price; the timing for first production and
commercial production from Prestea Underground Mine; the life of
mine at Prestea and the ability to increase mineral resources and
extend the life of mine; cash operating costs per ounce; all-in
sustaining costs per ounce; the transformation of Golden Star into a low cost producer; the
availability and quantum of funding to advance the development of
Prestea Underground Mine; mining methods and estimated recovery at
Prestea Underground Mine; capital costs, including processing
plant, initial and life of mine capital costs, for Prestea
Underground Mine; the construction of a new processing plant or the
ability to modify the existing processing plant; availability of
tailings storage facilities; required investments in mine
infrastructure; production and operating metrics; the timing for
ramping up production at Prestea Underground Mine; estimates of
probable mineral reserves and indicated and inferred mineral
resources, including tonnage, grade and contained ounces of gold;
and future work to be completed at Prestea Underground Mine.
Factors that could cause actual results to differ materially
include timing of and unexpected events during the development of
the Prestea Underground Mine; variations in ore grade, tonnes
mined, crushed or milled; variations in relative amounts of
refractory, non-refractory and transition ores; delay or failure to
receive board or government approvals and permits; the availability
and cost of electrical power; timing and availability of external
financing on acceptable terms; technical, permitting, mining or
processing issues, including difficulties in establishing the
infrastructure for Prestea Underground Mine; changes in U.S. and
Canadian securities markets; and fluctuations in gold price and
input costs and general economic conditions. There can be no
assurance that future developments affecting the Company will be
those anticipated by management. Please refer to the
discussion of these and other factors in our Annual Information
Form for the year ended December 31,
2014. The forecasts contained in this press release
constitute management's current estimates, as of the date of this
press release, with respect to the matters covered thereby.
We expect that these estimates will change as new information is
received and that actual results will vary from these estimates,
possibly by material amounts. While we may elect to update
these estimates at any time, we do not undertake to update any
estimate at any particular time or in response to any particular
event. Investors and others should not assume that any
forecasts in this press release represent management's estimate as
of any date other than the date of this press release.
CAUTIONARY NOTE TO US INVESTORS CONCERNING ESTIMATES OF
MEASURED AND INDICATED MINERAL RESOURCES
This press release uses the terms "Measured Mineral Resources"
and "Indicated Mineral Resources". The Company advises US
investors that while these terms are recognized and required by
National Instrument 43-101, the US Securities and Exchange
Commission ("SEC") does not recognize them. Also, disclosure
of contained ounces is permitted under Canadian regulations;
however the SEC generally requires Mineral Resource information to
be reported as in-place tonnage and grade. US Investors are
cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into Mineral
Reserves.
NON-GAAP FINANCIAL MEASURES
In this press release, we use the terms "cash operating cost per
ounce", "all-in sustaining costs per ounce", and "all-in cash costs
per ounce". These terms should be considered as Non-GAAP
Financial Measures as defined in applicable Canadian and
United States securities laws and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with International
Financial Reporting Standards. "Cash operating cost per
ounce" for a period is equal to the cost of sales excluding
depreciation and amortization for the period less royalties and
production taxes, minus the cash component of metals inventory net
realizable value adjustments divided by the number of ounces of
gold sold during the period. "All-in sustaining costs per
ounce" commences with cash operating costs and then adds royalties
and the stream, sustaining capital expenditures, mine site
exploratory drilling and greenfield evaluation costs and
environmental rehabilitation costs. This measure seeks to
represent the total costs of producing gold from operations.
"All-in costs per ounce" commences with all-in sustaining costs and
adds the initial and development capital expenditures. This
measure seeks to represent the total costs of gold sold from
operations including all capital expenditures. These measures are
not representative of all cash expenditures as they do not include
income tax payments or interest costs. These measures are not
necessarily indicative of operating profit or cash flow from
operations as would be determined under International Financial
Reporting Standards. Changes in numerous factors including,
but not limited to, mining rates, milling rates, gold grade, gold
recovery, and the costs of labor, consumables and mine site general
and administrative activities can cause these measures to increase
or decrease. We believe that these measures are the same or
similar to the measures of other gold mining companies, but may not
be comparable to similarly titled measures in every instance.
SOURCE Golden Star Resources Ltd.