Tuesday, November 9, 2010

Golden Star Resources (AMEX:GSS) Faces Production Challenges

The recent earnings report for Golden Star Resources (AMEX:GSS) revealed they have production issues that need to be taken care of at their flagship Bogoso/Prestea mine, located in Ghana, which they have a 90 percent stake in.

Golden Star President and CEO, Tom Mair, said about the challenges, "Our operating cash flow remained strong in the third quarter as gold prices reached new record highs. Our production performance was impacted by lower recoveries at Bogoso/Prestea, lower grades milled and record high rainfall in our operating areas which affected ore deliveries. Our strong financial position allowed us to make substantial investments in our future. We drilled a further 30,000 meters around our properties in the quarter. We made progress on restarting the Bogoso oxide mill by advancing the tailings reprocessing project, preparing to restart mining at Pampe pit and progressing the Prestea Underground scoping study."

BMO Capital downgraded Golden Star on the news, lowering them from "Out Perform" to "Market Perform."

Golden Star was trading at $5.32 today, down $0.64, or 10.74 percent as of 11:48 AM EST. BMO increased their price target on them from $5.50 to $6.25.

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