Golden Star Resources Ltd. (NYSE MKT: GSS; TSX: GSC; GSE: GSR) has announced that it has repaid in full its loan deal with Ecobank Ghana Limited.
The loan was a $25-million medium term facility (“Ecobank II”) and since the facility became available to the company in September 2014, the miner had previously repaid $3 million.
The proceeds were used for the advancement of the Wassa Gold Mine, including progressing a feasibility study for the Wassa Underground Gold Mine.
The first stope was blasted at Wassa Underground on July 10, 2016, representing the start of pre-commercial production at the mine.
The remaining $22 million of the loan, as well as all accrued interest thereon, has now been repaid in full using the proceeds from the financing transaction that closed on August 3, 2016.
The repayment of Ecobank II is expected to result in a saving of approximately $600,000 in interest charges during the remainder of 2016.
It is also expected to have a significant positive impact on Golden Star’s cash flows, as the company was due to use its operating cash flows to pay $8.4 million to Ecobank by the end of 2017: $2.8 million in the second half of 2016 and $5.6 million in 2017.
Sam Coetzer, President and Chief Executive Officer of Golden Star, commented that: “The repayment of the Ecobank loan is an important step in strengthening our balance sheet. By repaying the remainder of the loan now, we have reduced our interest charges in 2016 and strengthened materially our cash flow over the next 18 months. The funds allowed us to progress our Wassa Underground mine, and this asset forms an important part of our strategy to become a high-grade, low cost, non-refractory gold producer. I look forward to updating the market on Golden Star’s transformation further over the coming months.”
The repayment of Ecobank II follows the previously announced offerings of equity and senior convertible notes by Golden Star, which closed on 3 August 2016. The net cash proceeds of the equity offering were approximately $32.4 million and the net cash proceeds of the private placement of convertible senior notes were approximately $21.2 million.
The remainder of the funds from the offerings were used to repurchase additional 5.0% convertible senior unsecured debentures due 1 June 2017 in privately negotiated transactions and for other corporate purposes. After the above mentioned transactions, the remaining balance of the 5.0% convertible senior unsecured debentures is $13.6 million.
Golden Star is an established gold mining company that owns and operates the Wassa and Prestea mines situated on the prolific Ashanti Gold Belt in western Ghana, Africa. Listed on the NYSE MKT, the TSX, and the GSE, Golden Star is strategically focused on increasing operating margins and cash flow through the development of two high-grade, low-cost underground mines both in conjunction with existing open pit operations.
The Wassa Underground commenced pre-commercial production in mid-2016 and the Prestea Underground is expected to commence production in mid-2017. Both projects are fully funded and on track to begin production as expected. Production in 2016 is expected to be between 180,000–205,000 ounces of gold with costs of US$815-US$925 per ounce.