Investors in GSR share offer to smile with surging gold price

Accra, Jan. 3, GNA - Prospective shareholders of Golden Star Resources' (GSR) ongoing initial share offer in the country are expected to benefit immensely from the surging gold prices on the world market. GSR, an international gold mining and exploration company, which focuses primarily on mining, mine development and gold exploration in Ghana, entered the Ghanaian market with a discounted initial offer price.

The Initial Ghana Offer is pegged at GH=A23.00 per share, which was at a discount to the closing price of GH=A23.36 on the American Stock Exchange (AMEX) as at December 21, last year. The offer, which was to span December 5 to 21 last year, has been extended to January 18 this year to enable more GRS employees and Ghanaians to take advantage of the opportunity.

Speaking to the Ghana News Agency on Thursday, Mr Mawuli Hedo, an analyst with Strategic African Securities (SAS) Finance Group, managers of the offer, predicted that 'the current fledgling gold rally is expected to last for at least a couple of years and will ultimately push GSR stock price further up'.

He said investors would most likely invest in a gold stock if the company was properly managed, un-hedged, had high level of technology and low cost of extraction of gold.

Mr Hedo said: "The only logical reason to invest in gold stocks, after you have done your due diligence and research is the expectation that gold price will go higher."

He said GSR, which was expected to issues a total of 3,170,000 shares did not hedge against its gold production and therefore the expected high gold prices would benefit the company's shareholders. "A hedging gold mining company makes private deals with bankers to sell the gold it will mine in the future at a fixed price regardless of whether the actual gold price in the future turns out to be higher or lower than the agreed upon contractual price," he explained.

Mr Hedo advised would be investors in a gold mining to consider the company's reserves, saying it was good to see reserves equal to at least 5-10 years worth of current annual production for long-term investment. "GSR's proven and probable gold reserves have increased over the years, indicating that the expected high gold prices will benefit investors," he said.