Analyst Actions: Golden Star at the Denver Gold Forum, Credit Suisse Listens In

Golden Star (GSC.TO) presented at the Denver Gold Forum: On Sept. 20th, Tom Mair, CEO, provided an update on the company's activities at the Denver Gold Forum.

Recovery rates show promise at Bogoso Prestea: "Management indicated that recoveries at Bogoso Prestea have recovered to historical run rates of 72-75% in September, which is a significant improvement over Q1/11 and Q2/11 at 61% and 66% respectively. Our $3.50/sh Target Price conservatively forecasts long-term recovery rates remaining flat at 65%, which suggests potential upside as management indicated it expects design recovery rates to be maintained going forward."

"Primary factors that will improve production at BP in 2H11 will be maintaining a consistent blend of fresh ore feed to the mill allowing for continued improvement in recoveries and grades. GSC has reiterated that it expects to return the Chujah and Bogoso North pits to design output and initiate mining at Buesichem North pit over the coming quarters. GSC highlighted its plans of bringing the tailings retreatment facility online by Q1/12 and with the recent reopening of the Pampe pit in August, GSC will have additional oxide ore feed to send to the oxide mill in early 2012."

Wassa update: "GSC indicated it is close to rectifying ore blending issue at Wassa related to the opening of a new open pit that consisted of "wet clay" material. The company is maintaining mining at the full run rate and has ore stock piles containing +8kozs of gold that will be processed in Q4/11."

Exploration update: "GSC highlighted its exploration successes at the Buesichem North Pit ramp where it has delineated a high grade shoot with grades of up to 4g/t at 25m widths. At Wassa there have been down dip extensions of the current Wassa pit at depth and to the south of the pit which offer potential resource additions. Additionally, there is a new discovery at Benso called Wiredukrom North, with intercepts ranging 2.3-5.1g/t. At Father Brown, where GSC recently opened a new pit near Wassa, there is potential at depth to increase the current 240kozs resource."

2011 production guidance maintained: "at 331kozs of gold at cash op. costs of $975/oz We are currently forecasting 2011FY gold production of 321kozs at cash op cost of $982/oz."

Investment thesis: "GSC is showing potential upside as the stock has been under pressure by investors frustrated with inconsistent operations and increasing cash costs. Although execution risks remain, GSC is compelling at the current stock price. We believe the current share price is providing a fresh opportunity for those investors looking to participate in the next rerating as the risk off trade subsides. We maintain our Outperform rating."

Valuation: "Our $3.50 target price for GSC is based on a 1.0x target P/NAV multiple to our DCF of $3.51 with net cash of $0.18/sh added at par."

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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