Golden Star Resources Limited (GSRL) has announced that it has entered into a long-term strategic relationship with La Mancha Holding, a Luxembourg-incorporated private gold investment company, which part of the proceeds would be used by the company to accelerate gold production in its Wassa and Prestea mines in the Western Region.
According to the company, the creation of a long-term strategic relationship with La Mancha would support its growth into a leading African gold producer.
As part of the transaction, the company stated that the La Mancha will invest approximately US $125.7 million cash into GSRL through a private placement and La Mancha will be issued 163,210,500 GSRL”s common shares, representing approximately 30% of the outstanding share capital on a non-diluted basis after giving effect to La Mancha’s investment.
It noted that the long-term nature of the investment was 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.
According to the company, the investment will strengthen GSRL’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.
It added that the transaction was value accretive for Golden Star’s shareholders, saying that the value of La Mancha’s investment equates to a price of US $0.77 per shares.
And following completion of the transaction, the company stated that La Mancha would nominate up to three representatives to the board of Golden Star.
President and Chief Executive Officer (CEO) of GSRL, Mr Sam Coetzer, noted, “We are delighted to welcome La Mancha as a long-term strategic investor.
He said the company shares the vision of building a leading, Africa-focused gold producer and this transformative deal clearly endorses the potential of GSRL’s assets.
He indicated that La Mancha has a strong track record of creating sustainable shareholder value
He reiterated that La Mancha’s US$125.7 million investment will allow GSRL to fast track its exploration and expansion programmes at both Wassa and Prestea Underground Mines.
“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,” he said.
For his part, Chief Executive Officer of La Mancha, Mr Andrew Wray, said that “Following the success of our strategic partnerships with Evolution Mining and Endeavour Mining, which have rapidly both become leading gold producers.
He stated that we are excited to have the opportunity to partner with Golden Star.
He said: “Our strategic goal is to create value with a long-term, supportive approach to the benefit of all stakeholders.” He noted that “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 Mr. Sam Coetzer 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,” he said.