China’s Chifeng acquiring Golden Star for US$470 M

TORONTO – Golden Star Resources Inc. [GSC-TSX, GSS-NYSE American, GSR-GSE] said Monday it has agreed to be acquired by Shanghai Stock Exchange-listed Chifeng Jilong Gold Mining Co. Ltd. in a deal worth approximately US$470 million.

Under the transaction, Golden Star shareholders will receive US$3.91 per shares (equivalent to $4.85), an amount that represents a 24.1% premium over the closing price of Golden Star shares on the NYSE American over the 20 days ending October 29, 2021.

The board of directors of Golden Star has unanimously approved the transaction and recommended that shareholder of the company vote in favour of the deal.

Golden Star is an established gold mining company. Its flagship asset is the Wassa underground mine is located in the western region of Ghana, West Africa. In the second quarter of 2021, the Wassa mine produced 37,900 ounces of gold at an all-in-sustaining cost of US$1,182 per ounce, bringing total production for the first half of 2021 to 78,000 ounces.

The company said it remains on track to produce between 145,000 and 155,000 ounces of gold in 2021.

Chifeng is an international gold mining company, listed on the Shanghai Stock Exchnge, with a market cap of US$4.3 billion. It operates five mining assets, including the Sepon gold mine in Laos. In 2018, Chifeng acquired Sepon before undertaking significant capital expenditures to redevelop the gold processing facility in order to double the future gold production.

Chifeng is acquiring Golden Star sahead of a planned future production expansion at the Wassa mine.

In July, 2020, Golden Star announced the sale of its 90% stake in the Bogoso-Prestea Gold Mine in Ghana to Future Global Resources for US$95 million.

Golden Star was a winner of the 2018 Environmental & Social Responsibility Award at the Prospectors and Developers Association of Canada (PDAC) conference for exceptional community relations, commitment to sustainable development, and support for employees and local businesses at its two mines.

Since operations commenced at Wassa in 1999, the company has installed more than 200 clean water supply systems to serve local communities, doubling the proportion of households with access to clean, pipe-born water to at least 30%.

Three years ago, the company entered into a long-term strategic relationship with La Mancha Holding S.a.r.l, a Luxenbourg-incorporated private gold investment company.

That was after La Mancha said it has agreed to take a 30% equity stake in Golden Star by way of a US$125.7 million equity investment.

On Monday, Golden Star said all of its directors and senior officers, as well as those of Lac Mancha Star Invesments S.a.r.l., which collectively hold 33.4% of the company’s shares, have agreed to support the deal with Chifeng.

On October 29, Golden Star shares were trading at $3.87 in a 52-week range of $5.69 and $2.58, leaving the company with a market cap of $448 million, based on 115.7 million shares outstanding.

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