The continent of Africa is one of the last frontiers in the search for minerals, needed to satisfy the requirements of modern man, in an ongoing desire for improvement in his standard of living.

One company has had the foresight to explore in Ghana, a country ruled by a democratic government, which is 'mining friendly'.

Golden Star Resources is a mid-tier gold producer, actively mining in Ghana, West Africa, in the prolific Ashanti Gold Belt. Management has lots of mining experience.

Under the leadership of CEO Peter Bradford since 1999, Golden Star has successfully transitioned from being 'just another exploration company', to a successful mid-tier gold producer, while continuing its exploration program.

The stated goals of the company are to:

• Build a well-known gold company that,
• Delivers excellent returns to investors,
• Attracts and retains talented people
• Is committed to high mining standards
• Is an ideal partner for host communities and government.

In 2006 the company produced 201,407 ounces of gold at its two Ghana open pit operations. Cost of production was US $382/oz. Production in 2007 is expected to increase to 280,000 ounces, thanks to the just completed production expansion at Bogoso/Prestea. Listed reserves as of end 2006 were 4.15 million ounces of gold.

The Flagship property is the Bogoso/Prestea open pit mine. This property covers a strike length of approximately 85 km on the Ashanti Trend. Management is so confident that there is a lot more gold to be discovered in the Ashanti Trend, that the company has steadily increased its land holding in the Bogoso area. The name of the second producing mine is Wassa.

The company's operating method is to expand its business in Ghana, by continuing to explore while producing; and simultaneously working to bring its other properties into production. Golden Star is active in various stages of exploration in Ghana, Sierra Leone, Burkina Faso, Niger, Ivory Coast and Suriname. The company also intends to expand into South America, beyond Suriname.

The exploration budget for 2007 is US $15 million dollars, and drilling is currently taking place in Sierra Leone, Burkina Faso and Niger, while a JV in Suriname has been arranged with Newmont Mining.

Management is also on the lookout for acquisitions, and in 2005 the company purchased St. Jude Resources. The gold at this property is destined to be processed at the Wassa mine.

Mining has been carried on in this part of Ghana since 1873. Since then some 11 million ounces of gold have been extracted. Golden Star Resources, with its modern methods of exploration and extraction expects to continue the process for many more years. The Government of Ghana owns 10% of both mines, and is thus interested in the continued success of the mines. The Wassa mine has received awards from the Ghana Environmental Protection Agency for the past two years. A testament to the dedication of the company to mine responsibly.

The recently completed $125 million expansion at the Bogoso/Prestea mine has resulted in two modern operations, side by side. This expansion will increase production this year, from 201,000 ounces to an estimated 280,000 ounces. 110,000 at Wassa, 170,000 at Bogoso/Prestea.

The previously producing CIL mine at Bogoso has been joined by a Biox production facility. The Biox procedure lowers capital and operating costs, is environmentally sound, simplifies operation, is suited for remote locations and uses new, yet proven technology. The patented Biox system is currently in use at 11 plants worldwide. It is a modern method for retrieving gold from ore, involving a Bio-oxidation process. The nearby, successful Obuasi Mine, owned by Anglogold-Ashanti, is processing similar ores from the Ashanti Trend, a mere 90 km away, using a similar sized Biox plant.

The current life expectancy of both mines is at least seven years, and exploration currently underway in two areas called: Hwini-Butre and Benso is expected to feed additional ore into the Wassa plant as early as Q3/08. Meanwhile, exploration at Bogoso is expected to extend the life of that mine.

This chart compares the NAV (Net Asset Value), of GSS to a few other well-known gold mining companies. NAV is a term used to describe the value of a company's assets less the value of its liabilities. As this chart shows, GSS is currently undervalued by 19%, using a gold price of US $638.

Currently 233 million shares are outstanding, market cap is just over US $1 billion dollars, (making it a take-over candidate), and the stock has good liquidity, averaging 4.3 million shares daily. The shares are widely held by institutions and by the public.

GSS at a mere $4 and change is a virtual CALL OPTION on gold, that NEVER EXPIRES! Does it get any better than that?

 

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