Analyst Actions: Credit Suisse Looks at Golden Star

Valuation: "We are revising our DCF upward to $3.40/sh (from $3.36/sh), after incorporating Q2/11 results and rolling our NAV to Q3/11. We apply a 1.0X P/NAV Target multiple to our DCF and add net cash of $(0.13)/sh (from $0.03/sh) at par to arrive at our $3.50 Target price. The DCF revision resulted from incorporating 2012 production guidance. While costs increased in the near term, this was more than offset by lower long-term costs and higher near term production at Bogoso Prestea ( BP ). We are maintaining our 2012 production forecasts at Wassa of 145koz (down from 178kozs in 2011) as we correctly forecasted lower grades and production for next year. We believe the recent hit to share price on the perception of the hedgebook represents a unique buying opportunity. We maintain our Outperform rating."

Hedge book hits GSC, overdone, no hedging in 2012: "The company indicated it still has 67kozs remaining on its gold hedge book, which has an implied buy out value of ~$17M or $0.06/sh, while the stock was off 20% in two days at its low point yesterday. GSC CEO Tom Mair indicated on the call, that hedging was the appropriate decision for GSC to make at the end of last year, as GSC was entering a rebuilding phase with lower production, higher costs. GSC indicated it does not plan on renewing its hedge book and expects Q2/11 will mark the low point for cashflows going forward."

GSC provides 2012 guidance with ~19% YOY production growth: "We have revised our model to incorporate newly released production and cash cost guidance for 2012 of 395kozs of gold at $913/oz. We are now forecasting 2012FY production of 394kozs (from 353kozs) after incorporating the addition of 87kozs at Pampe and 5kozs from the new tailing facility in 2012. We have also increased our 2012 cash costs expectations to $955/oz (from $855/oz) after incorporating higher costs at BP largely due to the $60/oz increase resulting from a new tailings water treatment plant in 2012 and 2013, and a greater mix on Pampe ore. Costs are expected to drop significantly after the backlog of water is processed."

EPS revisions: "We have revised our 2011/2012/2013FY EPS forecasts downward to $(0.02)/$0.28/$0.25 from $(0.01)/$0.31/$0.27, respectively, primarily due to increases to operating costs."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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