Golden star resources - similar to svm?

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jmsvett
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Golden star resources - similar to svm?

One of their directors-senior management recently bought $232,000.00 shares in gss at a $2.32 a share.

The stock has been taken to the woodshed like svm.

I do not know much about Ghana - but $232,000 bet has got to be a vote of confidence.

Edited by admin on 11/08/2014 - 06:20

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dirk
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There is a lot of pudding on

There is a lot of pudding on the plate. The depressed stockprice is because GSS is not meeting guidance (again and again) for both costs and production totals.

Most recently: http://www.reuters.com/article/2011/09/14/goldstar-idUSL3E7KE3J920110914

However, at current gold prices GSS's profit margin is higher than when the stock traded at $4.00. The risk/reward on this stock is therefor interesting.

There is a GSS thread here: http://www.tfmetalsreport.com/forum/1517/gss-10-today-massive-volume-30-last-week

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Sparkenheimer
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Golden Star Resources

I'm always looking for undervalued situations and this one looks pretty beat up. After a preliminary look here are my thoughts.

Share Count - 258M not overly diluted, last financing was in Dec 2009, 20M shares at $3.75. Doesn't seem to be in need of cash now.

Balance Sheet - 123M in cash down from 192M a year earlier. Long term debt 126M about the same as last year. Short term debt 8M down from 13M a year ago. Total assets 692M down from 829M, cash spent and depreciation. Seem to be fairly consistant money losers and have high cash cost $1079 an ounce last quarter, although they claim to be processing lower grade right now.

Operations - 2 operating mines in Ghana (one of the more friendly mining jurisdictions in Africa) with exploration there and in Brazil. Lower production this year (grades) and most of the production is refractory ore that is more complicated and more expensive to refine. They roast and process their own ore at two facilities.

Resources - They have reserves of about 4.5 million ounces at a 2.2 GPT grade, the last upgrade was an increase of 1.5 million ounces due to higher gold prices (more than half) and exploration progress in Feb/11.

Country Risk - As noted, Ghana is mining friendly but have recently increased taxes. Plus in that part of the world things can change pretty quick.

I guess I'll have to dig a little deeper and keep my eye on it. The last quarter was at $1400 gold, surely they could make money at $1800 gold. Anyone own this or have comments?

CIBC has a $3.00 price target on it.

I have shares in a junior, Pelangio Exploration, PX on the TSX-V, that does business in Ghana. They have a smart CEO and have made me good cash over the last few years. Worth a look.

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