Writedowns lead to loss for Golden Star

Writedowns of the carrying value of many of its properties have forced Golden Star Resources (GSC-T) to post a fourth-quarter loss.

In all, Golden Star took charges totalling US$22.4 million against its year-end earnings.

For the last quarter of 1997, the company reported a loss of US$12.1 million (or 41 cents per share), compared with a loss of US$5.9 million (23 cents per share) for the same period last year. Writedowns for the fourth quarter of 1997 totalled US$12.8 million.

“As an exploration company, writedowns are a regular part of the business,” says Wendy Yang, Golden Star’s manager of investor relations. The company recorded US$10.4 million in writedowns in 1996 and US$8.7 million in 1995.

Revenues were also down in 1997, to US$2.8 million from US$1.7 million the previous year, mainly because of the discontinuation of the alluvial gold operations of 69%-owned Guyanor Ressources (GRL.B-T) in French Guiana.

In Guyana, Golden Star dropped several of its large land holdings, including the Five Stars, Upper Potaro and Upper Mazaruni exploration areas. As a result, the company wrote down US$8.6 million against the carrying value of its Guyana assets.

During the third and fourth quarters, Golden Star dropped the Regina Est project in French Guiana, the San Simon project in Bolivia and several projects in Brazil.

Golden Star reported a loss for 1997 of US$26.6 million (or 92 cents per share), compared with a loss of US$7.8 million (31 cents per share) for 1996.

The loss was attributed primarily to writedowns.

Golden Star has reduced its exploration expenditures by half, to US$4.5 million in 1997. The company’s cash position remains strong, with US$17.3 million in cash and short-term investments and US$16.4 million in working capital.

Golden Star’s 63.9%-owned Pan African Resources (PARC-C) unit has dropped the Dioulafoundou and Melgue projects in Mali and the Galla Valley project in Eritrea and reduced its land package at the Comoe project in C(tm)te d’Ivoire.

In related news, the company will hold a vote April 7 on whether to roll Pan African back into Golden Star. Under the proposed arrangement, Pan African shareholders would be issued one share of Golden Star for every 50 shares of Pan African. Pan African would continue exploration in Kenya and C(tm)te d’Ivoire as a wholly owned unit of Golden Star.