La Mancha has agreed to invest around $125.7m for a stake of nearly 30% in Canadian gold mining company Golden Star Resources.
Image: Pouring Liquid Gold. Photo: courtesy of Dan Brown.
The investment from the Luxembourg-based gold investment company will support Golden Star Resources in growing into a major African gold producer.
It will consolidate the balance sheet of the Canadian miner and provide increased financial capacity to latch on to organic growth opportunities and take part in the consolidation of the African gold sector, said La Mancha.
Golden Star Resources will use the proceeds to speed up underground development and production at the Wassa Underground Gold Mine and the Prestea Underground Gold Mine, both located in Ghana.
It will also be used for accelerating exploration and mineral reserve definition drilling at Wassa Underground, Prestea Underground and also at the Father Brown satellite deposit.
Golden Star Resources president and CEO Sam Coetzer said: “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.”
Golden Star Resources will also allocate a part of the investment to fast track the required studies and development of the southern part of the Wassa Underground deposit apart from spending on potential acquisition in the future and general corporate purposes.
La Mancha CEO Andrew Wray said: “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.”
In February, Golden Star Resources announced the start of commercial production of the Prestea Underground gold mine.