Golden Star Resources Ltd. / GSS, GSC (NYSE, TOR))

Vollkommen richtig Valeuman, man kauft wenn Blut auf den Strassen fliesst.

Gruss

XAX

Bin wieder drin, nur zur Info ;).

Gruß

OhneRente

Golden Star und Mano River entdecken neue Goldzone in Sierra Leone:

http://www.gsr.com/News_Releases/Archived/Index.asp

am besten einfach verkaufen dann hat man keinen kummer mehr

ich lese gerade ein buch von kosto mit orginalunterschrieft ist das auch eine art von anlage?

Golden Star Resources was a real star performer up until the end of 2003 rising from around $0.2 on the pink slips, becoming listed again on the AMEX and being included in the prestigious HUI index of unhedged mining companies. Notwithstanding the fact that the HUI has corrected from its rapid rise of 2001-2003 Golden Star has under-performed the HUI from May of 2004. This is illustrated by the graph below of the ratio of GSS stock price divided by the HUI index. If the graph is rising GSS is outperforming the HUI while if the graph is falling GSS is underperforming the HUI.

GSS has certainly had some misfortune in its operations and has had a convoluted experience in takeovers but the punishment the market has meted out to this stock seems to me to be somewhat excessive considering the excellent fundamentals of this stock.

I will declare my bias right here that I have been a long time shareholder of GSS and I am still a stockholder of this company.

Something took my eye yesterday which was the short positions in major gold mining companies. This list is as follows

Goldcorp 33 million shares short

Kinross 32.3 million shares short

Cambior 27.2 million shares short

Bema 16 million shares sold short

Newmont 14.3 million shares short

Golden Star 14.6 million shares short

This amount of shares sold short considering gold is in a major secular bull market surprised me and on investigation I found that in many cases the short positions of these companies have been rising.

As there have been many reports of naked shorting of stocks in the stock market in general, I decided to contact Golden Star and ask if they knew whether this position is due to naked shorting or not. Allan Marter, the CFO, of Golden Star was kind enough to respond to me and I took the opportunity to ask him about some rumors that had been circulating about GSS and I asked Allan Marter’s permission to draw on the content of our e-mail exchanges to try to put the facts straight which should be of interest to café members.

First of all on the issue of whether there is naked short selling in GSS stock Allan had the following to say

QUOTE “While we can never know for sure who holds our short position (in the same way that holders of our shares and warrants usually prefer to hold in street name) we can trace the two big upticks in our short position to the listing of the warrant in 2003 and the sale of the convertible note in 2005. In between we had the short position at the time of the IAMGold bid and now some shorting of our stock while people go long St. Jude. However, this last one was restricted in size because it is apparently hard to get enough St. Jude stock to balance the position and we heard from reliable sources that the amount of our shares available to borrow was restricted, so people were not able to do as much shorting as they might otherwise have done. This is information we "know", but we cannot answer your question about whether we will certify as such. I don't believe you could ever get a company to do this. However, we will not ignore this question and will look into it further- END

To summarize this discussion it seems that holders of GSS warrants are suspected to have hedged their position by shorting some GSS stock. However, as I pointed out to Allan Marter this does not account for all the short position and it does not ensure that there is no illegal shorting. I also brought his attention to the list of short positions in major mining companies included above which does beg deeper investigation. He has promised to investigate further although he declined my request to put out a press release stating that GSS was investigating the suspiciously high short position in its stock.

I asked the following questions

1) Has GSS (including St Jude) sold any gold forward at a fixed price?

2) Is any of the future production encumbered in anyway such that any and all ounces produced would not be sold at the spot price?

3) Do you have any non-recourse loans, derivative contracts (on or off the balance sheet) or similar instruments? If so what is the nature of them?

Allan responded

QUOTE-

(1) we would have told the market if we had sold any gold forward, and St. Jude doesn’t have any production so it would have required a miracle for them to do this (and they haven’t);

(2) as we report in our 10-Q, there is no encumbrance on future production, but we do have some puts and calls; and

(3) as we repeatedly tell people, over and over again, we do not have any non-recourse loans of the Jim Sinclair type. -END

I asked Allan about rumors that GSS had sold a significant portion of its gold forward at $525/oz to which he responded as follows.

QUOTE- Let me tell you where the $525 number comes from. At page 28 of our latest 10-Q, you will see a description of our put and call options. Understand that we entered into these transactions when gold was $70 - $80 below where it is now, and we had started the Bogoso Sulfide Expansion Project based on forecasts of $400 gold. We are very happy that gold prices are higher than they were, but we likened buying puts to an insurance policy in case we had gold prices lower than $400 – not that we thought they would go there, but they might. And, we are very much believers in higher gold prices going forward, but we’re not going to do our budgets and forecasts even now at current prices – that just isn’t the way we have to run our business. Furthermore, the SEC makes us do our reserve calculations at the three year average which is $400 right now. So, after spending approximately $1 million in cash on puts when gold was around $424 - $430, we bought the next set of puts by selling calls at $525, when gold was $435 – this was done to conserve immediate cash. These calls are running off now at the rate of 5,000 ounces per month, but as they run at this rate until March of 2007 we might get called and have to sell some of our production (which may be between 10% – 17% on a monthly basis, at $525 if prices are higher than this at the time). But, the rest of our production, between 83% and 90% will be at the higher spot prices and we have no intention or desire to enter into any further derivative contracts for gold. We will still look at doing derivative contracts for our foreign currency exposure, and I am pleased to say that these have been on the right side and we have offset some of the paper losses (to date) on the gold calls by being ahead on the Rand and Euro positions we have.- END

What does this mean? When the price of gold was $430 GSS was worried that the price of gold might fall substantially. While I don’t agree that the hedge was a sensible move I do have some sympathy for the motivation. A very powerful Cartel has been trying its damnedest to prevent gold from rising for over 20 years and the gold mining companies have been suffering and have been trying to manage in a business that has lost money or made a small profit year after year. When you are in the trenches you don’t see the entire battle. At least GSS did not adopt the strategy of Barrick and many others who have borrowed gold from bullion banks to sell on the market to repay from future production. Such strategies damage the gold market by making the apparent supply much higher than it really is which depresses the price of gold.

The GSS hedge is a very simple one. They bought some gold put options with a strike price of $400/oz when the gold price was $430. That cost them $1 million dollars. To minimize the hit of $1 million on their balance sheet they sold call options for gold at $525. The money they raised from selling the calls largely covered the cost of the puts they had bought. These call options are for 5000 ozs per month until March 2007. That means that each month that goes by without the gold price exceeding $525 the options on 5000 ozs will expire unexercised. If the gold price exceeds $525/oz then the holders of any of the unexpired options may ask for delivery of gold at $525 /oz. GSS will not lose money on these options because their cost of production is much less than $525 /oz but they will lose out on being able to achieve full spot price for that gold. The MAXIMUM exposure this represents currently is only 80,000 ozs and this reduces by 5000 ozs each month that the gold price is below $525. 83%-90% of their monthly production is available to be sold unencumbered at full spot price. If ever the gold price should drop below $400 GSS will exercise their puts and make a gain but on the present state of the gold bull market it is likely the puts will expire out of the money.

While this was not a smart strategy, GSS should be given credited for having realized their mistake and Allan Marter says they do not intend or desire to enter into any similar such contracts again. Even with a rapidly rising gold price the impact on the company’s profitability will be small because above $525/oz GSS will be immensely profitable for what it sells at spot AND what it sells at $525/oz.

GSS was severely punished by the market for its failed takeover attempt of IAMGOLD. Having received a strong message from the market that they didn’t think that GSS should be in the acquisition business, but focusing instead on its own organic growth, GSS went ahead with its takeover of St. Jude. The market duly sent a second message that they were unimpressed with the diversion of attention from its organic growth plan and the shares dropped again.

Allan Marter says

QUOTE “You seem to ignore the facts that the market (led by a few very skeptical analysts) doesn’t believe we can produce, many shareholders who bought at higher prices don’t give us credit for what we’ve done and don’t believe our 43-101 reserves and resources, therefore they don’t buy the growth profile that we have. The fall off in our stock started with the shorting that came from the IAMGold bid and which was worsened when our largest shareholder at the time (a hedge fund) dropped all our shares when we pulled out of the bidding. Then when we had some bad quarters any confidence in us disappeared according to some people and there have been other holders who have quit the stock (some like Bill Murphy). Then there are many people who think, incorrectly, that we have sold forward in spite of repeated answers to the contrary and that we no longer believe in gold because we bought some put, and later sold some calls” – END

It is hardly fair to criticize investors for having lost patience in the performance of Golden Star. Bill Murphy sold a portion of his holding at $3 and has recently purchased a new position so it is fair to say he has remained supportive of GSS even though the management has made many mistakes and the share price has plummeted.

The bottom line is that GSS has very impressive fundamentals which despite recent operational problems and management mistakes deserve serious investor attention. The company’s principal properties are in Ghana, West Africa. GSS produced approximately 148,000 ounces of gold in 2004 from its Bogoso/Prestea open pit mine at an average cash operating cost of $250 per ounce. Production will increase in 2005 to about 200,000 ounces with the new Wassa Mine in production, production forecast at 300,000 ounces in 2006 followed by another major increase in 2007 to more than 500,000 ounces at an average cash cost of $250 - $270/oz when the Bogoso/Prestea expansion is completed. They have an extensive exploration program committing $15 million per year to both extend current resources and find currently undiscovered gold resources. GSS has over 10 Million ozs of gold in reserves and resources with very good prospects to radically increase that. At the current market cap GSS equates to buying proven and probable gold in the ground for less than $50/oz. For comparison the same calculation for Newmont is $216/oz.

GSS has had its share of operational problems, its foray into failed and dilutive acquisitions, and an ill-advised hedge. By and large though I think this company’s problems are behind it. They have fabulous growth potential of tripling their gold output from the levels of last year. They have impressive appraisal and exploration potential in highly productive and successful areas. They are presently producing almost 200,000 ozs per year.

A rapidly accelerating gold price as is anticipated above $500/oz will return Golden Star to the constellation of rising stars.

I believe that GSS is a bargain at current levels.

Adrian Douglas

Sehr ausführlich und gibt eigentlich nur das was ich auch meine. Mit der Substanz die GSS aus seinen vielen Projekten hat, werden Sie bei steigendem Goldpreis wieder sehr gut performen. Im Augenblick kann man GSS noch günstig akkumulieren

Harmony, Anglo oder GFI werden die GSS noch aufkaufen habe ich das Gefuehl. Es passt ja alles, Produktion ueber 200.000 Unzen und Reserven haben sie nun auch genug. Das naechste Takeover Target in Afrika denke ich mal fuer eine Senior in Afrika.

Haltet den Stern, der hebt schon ab.

Mfg

Eldo

GSS, technisch ein Buy.

Edel Man und ELDO

GSS heute +11,91% es geht doch.....genauso wie das andere Sorgenkind SRLM machen beide ziemliche Bocksprünge nach oben die letzten Tage...mir solls Recht sein.
MAE erste Sahne zur Zeit....schön blöd wer auf Siegel gehört und Sie verscheppert hat. Auch stark in der Performance in letzter Zeit sind die BEMA und die CDY