Golden Star Secures $150 Million Financing with Royal Gold

Golden Star Resources (TSX:GSC,NYSEMKT:GSS) announced it has secured US$150 million in financing with Royal Gold Inc. (TSX:RGL,NASDAQ:RGLD) and its wholly-owned subsidiary RGLD Gold AG., which consists of a US$130 million stream transaction with RGLD and another $20 million term loan from RGI.

As quoted in the press release:

• Funds received will facilitate development of Wassa and Prestea underground mines which are expected to be in production by late 2016
• Financing enables Golden Star to implement the company strategy to transform to a low cost, non-refractory producer
• RGLD will provide Golden Star with a $130 million advance payment to be used for the development of underground mines and general corporate purposes
• Golden Star will initially deliver 8.5% of all production to RGLD at a cash purchase price of 20% of spot gold until 185,000 ounces have been delivered
• A further 5% of all production at a cash purchase price of 20% of spot gold will be delivered thereafter until an additional 22,500 ounces have been delivered
• Thereafter 3% of all production at a cash purchase price of 30% of spot gold will be delivered
• RGI will provide Golden Star a four year $20 million loan at a gold price linked interest rate of 0.625% per $100, being 7.5% at a gold price of $1,200Golden Star’s outstanding Ecobank I loan of $38 million will be retired on receipt of the funds from RGI and RGLD

Sam Coetzer, president and CEO of Golden Star, commented:

The Stream and Loan financing with Royal Gold allows Golden Star to execute on its strategy of becoming a low cost, non-refractory gold producer at a whilst reducing the Company’s overall cost of capital. The development of the Wassa and Prestea Underground mines will considerably improve Golden Star’s mine life with opportunities for further resource conversion and exploration success at both assets.  We are encouraged by the vote of confidence in our development projects by Royal Gold and we look forward to a long and supportive relationship.

Click here to read the full Golden Star Resources (TSX:GSC,NYSEMKT:GSS) press release.