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Golden Star Resources Ltd. (AMEX: $GSS)

Golden Star Resources Ltd. (GSS) is an international gold mining and exploration company that produces gold in Ghana, West Africa. Through its subsidiaries, it owns a controlling interest in four significant gold properties in southern Ghana: The Bogoso/Prestea property, Wassa property, Prestea Underground property and Hwini-Butre and Benso concessions (HBB Properties). At December 31, 2008, Bogoso/Prestea and Wassa produced and sold 126,026 and 125,427 ounces of gold, respectively. Bogoso/Prestea had proved and probable mineral reserves of 23.8 million tons containing approximately 2.4 million ounces of gold. Wassa, including the HBB properties, had proved and probable mineral reserves of 11.7 million tons containing approximately 0.9 million ounces of gold. It holds interests in various gold exploration projects in Ghana and elsewhere in West Africa, including Sierra Leone, Burkina Faso, Niger, and Côte d’Ivoire, as well as holds and manages exploration properties in Suriname, Brazil and French Guiana in South America.

The Company was founded in 1984 and is based in Littleton, Colorado.

Source: Reuters.com, SEC Filings.

Financial Summary

FIRST QUARTER 2010 HIGHLIGHTS

– Net income of $3.9 million or $0.015 per share compared to a net loss of $1.1 million for the first quarter of 2009.

– Gold revenues for the quarter of $103.3 million representing an increase of 18% over first quarter of 2009;

– Quarterly gold sales of 92,938 ounces for the first quarter of 2010, a 4% decrease from the first quarter of 2009;

–  Operating cash flow of $25.5 million for the first quarter of 2010, or $0.099 per share;

–  Operating cash flow before working capital charges of $33.2 million for the first quarter of 2010, or $0.129 per share;

–  Quarter-end cash balance of $164.9 million; and

–  Realized gold price for the first quarter averaged $1,111 per ounce compared to $904 in the first quarter of 2009, an increase of 23%.

Bogoso sold 45,909 ounces of gold in the first quarter of 2010, a 13% increase over first quarter of 2009 gold sales. All gold sales were the product of the sulfide plant for both the first quarter of 2010 and the first quarter of 2009. Gold recovery rates at the sulfide plant increased to 72.1% over the quarter, up from 71.5% during the first quarter of 2009. The increased gold sales were reflective of higher through-put rates at the sulfide plant that averaged 7,566 tpd (tonnes per day) in the first quarter of this year compared to 6,966 tpd in the first quarter of 2009. In addition, the gold grade processed in the first quarter of 2010 was 2.98 g/t (grams per tonne) compared to 2.68 g/t for the same period of 2009. Additionally, cash operating costs were reduced 14% to $700 per ounce compared with $813 per ounce in the first quarter of 2009.

Wassa sold 47,029 ounces of gold during the first quarter of 2010 compared to 56,425 ounces in the first quarter of last year, a result of scheduled maintenance projects during the quarter. The Company performed scheduled maintenance at a ball mill at Wassa and this contributed to a 16% decrease in ore processed. This effect was partially offset by a higher processed grade of 2.41 g/t compared to 2.28 g/t in the first quarter of 2009.

CASH, CASH FLOW AND LIQUIDITY

Cash and cash equivalents totaled $164.9 million at the end of March 2010. Cash flow from operations totaled $25.5 million for the first quarter of 2010 compared to $11.1 million during the first quarter of 2009. Mining operations generated $33.2 million in cash before adjustments to working capital in the quarter. All capital requirements for 2010 are expected to be funded from operating cash flows.

Capital projects for the year are anticipated to total $70 million. Bogoso area mine development projects are estimated at $21 million, mine site drilling is budgeted to $9 million with an additional $4 million for drilling at other areas proximal to the operating mines. The remainder, $36 million, is scheduled for plant and equipment upgrades.

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast amongst nine polled investment analysts. Against the Golden Star Resources Ltd company.

The nine analysts offering 12-month price targets for GSS have a median target of 4.25, with a high estimate of 5.50 and a low estimate of 3.40. The median estimate represents a 6.25% increase from the last price of 4.00.

Source: www.ft.com

Consensus Estimates Analysis

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=GSS

Investment Highlights

The Company’s exploration budget for 2010 has been increased to $18 million compared to $9 million that was spent in 2009. GSS said that approximately $14 million of this is planned to be spent in proximity to operations with the intent to expand its mineral reserve and resource base. During the first quarter of the year, exploration activities were concentrated notably at the Buesichem and Benso pit areas. Furthermore, an airborne geophysical survey was conducted over the HBB concession areas. When the results of this data are received, it will be analyzed to prioritize future exploration targets.

During the quarter, an infill soil geochemical program was completed at Amelekia in Cote d’Ivoire. This program provided evidence that the gold mineralization zones that originally were believed to be distinct, are now thought to be continuous and merit further exploration. Drilling is planned for the second half of this year at Amelekia. Also, several gold anomalies were identified at the Agboville concessions as a result of geochemical sampling.

At the Sonfon project in Sierra Leone, an IP (Induced Polarity) geophysical survey was conducted during the quarter over and around previously drilled targets. Results from this survey will be used to determine future drill targets for later in the year.

In Burkina Faso, initial reconnaissance exploration activities at two new concession areas during the first quarter of 2010 determined that further exploration is warranted. Soil geochemistry and laterite sampling programs are planned for later this year.

Property evaluation and acquisition in Brazil continued during the quarter. Pending receipt of results from the initial exploration, more exploration will be scheduled.

LOOKING AHEAD

Objectives for the remainder of 2010 include the following:

– Finalization of the permit for the Prestea South ore bodies to provide oxide ore to the oxide plant at Bogoso;

– Continue exploration activities to increase and enhance reserves and resources at Bogoso/Prestea and Wassa/HBB; and

– Evaluate options and determine strategies for development of the Prestea Underground project.

Source: http://www.gsr.com

Technical Analysis

Source: http://stockcharts.com

GSS is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

GSS is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

GSS’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9-day moving average or signal line. This suggests that positive momentum has begun to slow.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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