Thank you, Mr Speaker. Mr Speaker:
In 2002, the underground mine under Prestea Gold Resources which was operated by the workers of the mine, failed leading to labour unrests and serious community impact. Working with Government to manage these impacts, among others, Golden Star Resources (GSR) bought the mine, paid salaries and redundancies and debtors.
GSR then embarked on rebuilding the mine by undertaking care and maintenance while carrying out shaft refurbishment, mine dewatering, exploration, drilling and feasibility studies. In excess, US$90 million has been spent by GSR on these activities over the 12-year period while employing 350 permanent employees and direct contractors.
More recently, in 2011, as part of their preparation to commence commercial production, GSR's New Century Mine (NCM), as the underground mine has come to be known, undertook clean-up of access drives, crosscuts and chute areas. The material obtained from this clean-up was hoisted to surface and hauled to Bogoso for processing. NCM continues to employ 350 permanent employees and direct contractors.
However, the stope blasting, trial mining, clean-up, hoisting and processing of ore from NCM was suspended in May, 2013 due to dramatic drop in gold price, inability to obtain finances for the mechanized mining operation option detailed in 2003 feasibility study and failure of the main ventilation fan. NCM has undertaken to complete ventilation design process and new fan specification has been identified.
These challenges notwithstanding, in view of the commitment of New Century Mine to start commercial production as soon as possible, it is at an advanced stage of review of low capital option, that is, a shrinkage mining with handheld drilling machine options in the West Reef. This new option is labour intensive and would lead to higher employment within the Prestea area.
The original mechanized mining option would require an initial capital of approximately US$110 million to get to commercial production. The bulk of this expenditure would have been for a new access, hoisting and ventilation shaft system. The reduced capital expenditure option to commence a handheld shrinkage mining method from 24 level would cost approximately US$30 million. Within 18 months of receipt of the funding, we expect production to start.
New Century Mine currently has five shaft term sheets in hand, from a variety of financial institutions, the terms of which are still being negotiated and optimized. Those financing opportunities are subject to the full technical and legal due diligence of the financing institutions, approval by their credit/investment committee and approval by the Golden Star Board of Directors.
New Century Mine is confident that they will be able to settle on an appropriate financing package for Prestea in the foreseeable future.