Guyanor to restructure (June 07, 2004)

Golden Star Resources (GSC-T) will play the angel in a restructuring of French-based Guyanor Resources (GRL.B-T), providing continuing financing and forgiving an existing loan.

Under the deal, Golden Star gets a joint-venture interest in the Paul-Isnard gold property in French Guiana. Guyanor also signs over the Bon Espoir property, north of Paul-Isnard, which it acquired from Gold Fields (GFI-N) in December 2003 for 1.5 million shares and an equal number of warrants, a deemed value of US$300,000. (Gold Fields retains a variable-rate royalty and a back-in right.)

The two companies also plan to sell their interests in the Yaou and Dorlin gold properties.

Guyanor’s existing debt to Golden Star — US$15.2 million at the end of 2003 — is forgiven until Guyanor receives cash flow from the Paul-Isnard property. The amount to be repaid is capped at US$16 million.

At Guyanor’s annual meeting at the end of June, management will present a proposal to shareholders for a share issue — probably a rights offering — for at most 50 million euros ($83 million). Under the deal, Golden Star, which owns 73% of Guyanor, agrees to participate in the financing.

The proceeds would go to acquire minority interests in producing mineral properties, particularly royalty interests.

Another proposal to be put before shareholders would see Guyanor’s Class A shares (traded in France) and Class B shares (traded in Canada) combined into a single class of common shares traded on the Paris March and the Toronto Stock Exchange.

Guyanor’s properties are all advanced exploration projects in western French Guiana. Paul-Isnard has an inferred resource of 8.2 million tonnes grading 1.8 grams gold per tonne. Yaou has a 12-million-tonne inferred resource grading 2.6 grams gold per tonne. Dorlin, the most advanced project, has 3.6 million tonnes grading 1.6 grams in the indicated category, plus an inferred resource of 3.4 million tonnes grading 1.4 grams per tonne.