$125.7 million
capital injection to accelerate Golden Star's growth
opportunities
TORONTO, Aug. 1, 2018 /PRNewswire/ - Golden Star Resources
Ltd. (NYSE American: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or the
"Company") is pleased to announce that it has entered into a long
term, strategic relationship with La Mancha Holding S.à r.l., a
Luxembourg-incorporated private
gold investment company ("La Mancha"). All references to "$" herein
are to United States dollars.
HIGHLIGHTS
- Creation of a long term, strategic relationship with La Mancha,
which will support Golden Star's growth into a leading African gold
producer
- As part of the transaction, La Mancha will invest approximately
$125.7 million cash into Golden Star
through a private placement and La Mancha will be issued
163,210,500 Golden Star common shares, representing approximately
30% of the outstanding share capital (on a non-diluted basis) after
giving effect to La Mancha's investment
-
- The long term nature of the investment is demonstrated by La
Mancha's agreement to a two year equity lock-up and standstill and
the provision of anti-dilution rights to La Mancha
- The investment will strengthen Golden Star's balance sheet and
provide the Company with increased financial capacity to unlock
organic growth opportunities and participate in the consolidation
of the African gold sector
- The transaction is value accretive for Golden Star's
shareholders
-
- The value of La Mancha's investment equates to a price of
$0.77 per share, which represents an
approximate 14% premium to the 30 day volume weighted average price
on the NYSE American ("VWAP") of $0.676 to July 31,
2018
- Proceeds of the transaction are expected to be used as
follows:
-
- To accelerate underground development and production at the
Wassa Underground Gold Mine ("Wassa Underground") and the Prestea
Underground Gold Mine ("Prestea Underground")
- To accelerate exploration and Mineral Reserve definition
drilling at Wassa Underground, Prestea Underground and the Father
Brown satellite deposit
- To fast track the necessary studies and development of the
southern portion of the Wassa Underground deposit
- Potential future acquisitions and general corporate
purposes
- Following completion of the transaction, La Mancha will
nominate up to three representatives to the Board of Golden
Star
- The Board of Golden Star has unanimously approved the strategic
investment by La Mancha
- In conjunction with the transaction, Golden Star intends to
consolidate its issued and outstanding common shares on a 5:1 ratio
(the "Consolidation") (all share amounts and per share dollar
amounts are before giving effect to the Consolidation)
- The issuance of common shares to La Mancha and the proposed
Consolidation are subject to approval from Golden Star's
shareholders and, in this respect, a special meeting is scheduled
to be held in mid-September 2018
Sam Coetzer, President and
Chief Executive Officer of Golden Star, commented:
"We are delighted to welcome La Mancha as a long term,
strategic investor. We share the vision of building a
leading, Africa-focused gold
producer and this transformative deal clearly endorses the
potential of Golden Star's assets. La Mancha has a strong
track record of creating sustainable shareholder value and their
previous investments demonstrate their ability to identify
compelling growth opportunities at an early stage. La
Mancha's $125.7 million investment
will allow Golden Star to fast track our exploration and expansion
programs at both Wassa Underground and Prestea Underground.
The transaction also de-risks our balance sheet and lends us a
platform to participate actively in the consolidation of the
African gold mining industry. I am very encouraged by the
professional approach of the La Mancha team and with our experience
of building and operating mines, together we have the expertise and
funding to grow across Africa."
Andrew Wray, Chief
Executive Officer of La Mancha, commented:
"Following the success of our strategic partnerships with
Evolution Mining and Endeavour Mining, which have rapidly both
become leading gold producers, we are excited to have the
opportunity to partner with Golden Star. Our strategic goal
is to create value with a long-term, supportive approach to the
benefit of all stakeholders. The Golden Star Board and
management team share this objective and we have been impressed
with their successful track record of project discovery and
development around their existing assets in Ghana. We look
forward to working with Sam and his team to unlock the value of
Golden Star's organic growth pipeline and to use our financial
resources to help take advantage of external growth opportunities
in Africa."
Conference Call and Webcast
Golden Star will conduct a conference call and webcast to
discuss this announcement, in addition to the results of the second
quarter of 2018, on Thursday, August 2,
2018 at 10:00am ET. The
Chief Executive Officer of La Mancha, Andrew Wray, will join the Golden Star
management team on the call.
The call can be accessed by telephone or by webcast as
follows:
Toll Free (North America): +1 866 393 4306
Toronto Local and International: +1 734 385 2616
Conference ID: 3081459
Webcast: www.gsr.com
A recording and webcast replay of the call will be available at
www.gsr.com following the call.
Details of Proposed Transaction
Golden Star has entered into a long term, strategic relationship
with La Mancha, which secures a platform for the Company's growth
into a leading African gold producer. La Mancha has committed
to investing approximately $125.7
million cash into Golden Star through a private placement
and in exchange, La Mancha will be issued 163,210,500 Golden Star
common shares, representing approximately 30% of the outstanding
share capital (on a non-diluted basis) after giving effect to La
Mancha's investment. Following the completion of the
transaction, La Mancha will be Golden Star's largest
shareholder.
The transaction is value accretive for Golden Star's
shareholders as La Mancha has invested at a premium to the 30 day
VWAP of Golden Star's shares, which underscores La Mancha's belief
in the value of Golden Star's assets and the strength of its
management team. La Mancha's investment equates to a price of
$0.77 per share or an approximate 14%
premium to the 30 day VWAP of $0.676
to July 31, 2018.
The long term nature of the strategic relationship is
demonstrated by La Mancha's agreement to a two year equity lock-up
on the Golden Star shares issued to it pursuant to the transaction,
as well as to certain customary standstill provisions. La
Mancha will also have anti-dilution rights, which provide the
ability for La Mancha to maintain its approximately 30% equity
stake in Golden Star, and customary registration rights.
With a significantly stronger balance sheet, the Company will be
well-positioned to unlock its organic growth opportunities and to
pursue external growth opportunities. Golden Star intends to
deliver a disciplined acquisition strategy, in conjunction with
progressing its expansion opportunities at both Wassa Underground
and Prestea Underground, with the objective of bringing additional
assets into the Company's portfolio and expanding its production
profile.
To find out more about La Mancha and to view La Mancha's press
release regarding the strategic investment in Golden Star, please
visit www.lamancha.com
Use of Proceeds
Golden Star intends to use the proceeds of the transaction for
four primary purposes:
- To accelerate underground development and production at Wassa
Underground and Prestea Underground
- To accelerate exploration and Mineral Reserve definition
drilling at Wassa Underground, Prestea Underground and the Father
Brown satellite deposit
- To fast track the necessary studies and development of the
southern portion of the Wassa Underground deposit
- Potential future acquisitions and general corporate
purposes
The expansion program will have the objective of increasing the
throughput of both underground operations in order to allow them to
fill a greater portion of the two processing plants' under-utilized
capacity. The expansion program will include investing in
additional mining equipment to increase underground development
rates and progressing the Wassa Underground and Prestea Underground
workings on an accelerated basis.
The enhanced exploration program will focus primarily on the
southern portion of the Wassa Underground deposit, following the
positive results received by Golden Star in the second quarter of
2018, which led to a 147% increase in the Company's Inferred
Mineral Resources at this deposit1. It will also aim to
gain a stronger understanding of the potential of the Father Brown
deposit to be a second high grade ore supply for the Wassa
processing plant and target Mineral Resource expansion at Prestea
Underground.
Further details of the planned expenditure at each asset,
including the enhanced exploration strategy, will be released later
in the second half of 2018.
Notes
1. See press release
entitled 'Golden Star Doubles Inferred Mineral Resources at Wassa
Underground Gold Mine', dated April 12, 2018
|
Board Nominees
La Mancha has the right to nominate up to three representatives
to Golden Star's Board of Directors following completion of the
transaction. If La Mancha's shareholding in Golden Star falls below
25% (but remains at or above 17.5%) after the transaction, La
Mancha will be entitled to nominate two representatives to the
Golden Star Board, and if La Mancha's shareholding in Golden Star
falls below 17.5% (but remains above 10%) after the transaction, La
Mancha will be entitled to nominate one representative to the
Golden Star Board.
La Mancha initially expects to nominate two Directors upon the
closing of the transaction, with the third to be nominated at the
next Annual General Meeting or earlier in the event of a
vacancy.
Share Consolidation
Golden Star intends to consolidate its issued and outstanding
common shares on a 5:1 ratio, which will be submitted for approval
to the Company's shareholders at the upcoming special meeting.
There are presently 380,824,555 common shares of the Company
issued and outstanding. After the proposed transaction is completed
with La Mancha, there will be 544,035,055 shares and after giving
effect to the proposed Consolidation if approved by the
shareholders and implemented by the Company, this number will
become approximately 109 million shares.
Timetable and Special Meeting
The issuance of 163,210,500 Golden Star common shares to La
Mancha and the proposed Consolidation are subject to certain
conditions, including the approval of Golden Star's
shareholders.
BMO Capital Markets has provided an opinion to the Board of
Directors of Golden Star stating that, and based upon and subject
to the assumptions, limitations, and qualifications set forth
therein, the consideration to be received by the Company pursuant
to the transaction is fair from a financial point of view to the
Company.
In addition, the Board of Golden Star has unanimously approved
the strategic investment by La Mancha. The directors and
officers of the Company have signed voting support agreements to
vote their shares in favour of approving the proposed
transaction.
An information circular is being prepared and is expected to be
distributed to Golden Star's shareholders in the coming days in
advance of a special meeting, which is expected to be held in
mid-September 2018.
Advisors
Golden Star is being advised by Fasken Martineau DuMoulin
LLP. La Mancha is being advised by McCarthy Tétrault LLP.
All monetary amounts refer to United States dollars unless otherwise
indicated.
Company Profile
Golden Star is an established gold mining company that owns and
operates the Wassa and Prestea mines in 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 its
two high grade, low cost underground mines. Gold production
guidance for 2018 is 230,000-255,000 ounces at a cash operating
cost per ounce of $650-730. As the winner of the PDAC
2018 Environmental and Social Responsibility Award, Golden Star is
committed to leaving a positive and sustainable legacy in its areas
of operation.
Cautionary note regarding forward-looking information
Some statements contained in this news release are "forward
looking information" within the meaning of Canadian securities laws
and "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Generally,
forward-looking statements and information can be identified by the
use of forward-looking terminology such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases (including negative or grammatical variations) or
statements that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotation thereof. Forward looking statements
and information include, but are not limited to, statements and
information regarding: the use of proceeds of the transaction; the
ability of the Company to acquire other properties; the Company's
ability to unlock organic growth opportunities and participate in
the consolidation of the African gold sector (and as to the
consolidation thereof); the consolidation of the Company's common
shares; and the Company's growth into a leading African gold
producer. Investors are cautioned that forward-looking statements
are inherently uncertain and involve risks, assumptions and
uncertainties that could cause actual facts to differ materially.
Factors that could cause actual results to differ materially
include: risks related to international operations, including
economic and political instability in foreign jurisdictions in
which Golden Star operates; risks related to current global
financial conditions; actual results of current exploration
activities; environmental risks; future prices of gold; possible
variations in mineral reserves, grade or recovery rates; mine
development and operating risks; accidents, labor disputes and
other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
development or construction activities and risks related to
indebtedness and the service of such indebtedness. 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 Management's Discussion and Analysis of
financial conditions and results of operations for the year ended
December 31, 2017. Additional factors
are included in our annual information form for the year ended
December 31, 2017 which is filed on
SEDAR at www.sedar.com. 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. 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.
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SOURCE Golden Star Resources Ltd.