Golden Star Announces Wassa Mine Feasibility Study Results

Golden Star is pleased to announce the results of its Feasibility Study on the development of an underground mining operation ("Wassa Underground") at its currently operating Wassa open pit mine ("Wassa Open Pit" and, together with Wassa Underground, the "Wassa Mine") in Ghana. The Feasibility Study estimates the Wassa Mine will produce an average of 163,000 ounces of gold per annum over its production life with average cash operating costs of $780 per ounce. All references to "$" in this news release are to United States dollars. Highlights: Internal rate of return ("IRR") of 83% estimated for the Wassa Mine at $1,200 per ounce gold price Net present value, assuming a 5% discount rate ("NPV5%"), of $176 million estimated for Wassa Mine, at $1,200 per ounce gold price Total Proven and Probable Mineral Reserves for Wassa Mine as of December 31, 2014 are 24.1 million tonnes at 2.04 grams per tonne of gold ("g/t Au") for 1.6 million ounces of gold Total Measured and Indicated Mineral Resources as of December 31, 2014 are 49.5 million tonnes at 2.21 g/t Au for 3.5 million ounces of gold, inclusive of Mineral Reserves Wassa Underground Mineral Reserves as of December 31, 2014 are 5.4 million tonnes at 4.26 g/t Au for 745,000 ounces of gold Wassa Open Pit Mineral Reserves, including stockpiles, as of December 31, 2014 are 18.7 million tonnes at 1.39 g/t Au for 834,000 ounces of gold Inferred Mineral Resources as of December 31, 2014 are 11.6 million tonnes at 3.79 g/t Au for 1.4 million ounces of gold Pre-production incremental capital expenditure for Wassa Underground estimated at $39 million First production from Wassa Underground expected early 2016 and estimated to continue into 2024 LOM cash operating cost of $780 per ounce and all-in sustaining costs of $938 per ounce estimated for combined Wassa operation Payback at $1,200 per ounce gold price of 3.25 years Sam Coetzer, President and CEO of Golden Star commented: "We are excited to announce this positive Feasibility Study on the combined existing Wassa Open Pit operation and the Wassa Underground extension. The strong rate of return on investment suggested by the study validates the Preliminary Economic Assessment of Wassa Underground we published in 2014 and is a confirmation of the decisions made for the expenditures on drilling and these studies of the last few years. The Wassa Underground project has been underway since December 2014 when we purchased certain underground mining equipment and received the exploration decline permit. The Wassa Underground deposit remains open down plunge and has great potential to grow and the Company plans to extend development. The Wassa Mine will help transform Golden Star into a lower cost gold producer going forward." Introduction The Wassa Mine is in the Western Region of Ghana. It has a carbon-in-leach processing plant with a rated capacity of 2.7 million tonnes per annum ("Mtpa"). Golden Star has been mining the Wassa open pits since commissioning the plant in 2005. Mining is currently at the Wassa Open Pit, which is within 500 meters of the plant. Drilling below the Wassa Open Pit has been ongoing since late 2011. This drilling has been successful in increasing the Wassa Mineral Resource. In November 2014, SRK Consulting (UK) Ltd. ("SRK") was awarded the contract to prepare a Feasibility Study to determine the economic viability of an underground mine beneath the Wassa Open Pit. An underground mine is envisioned in the Feasibility Study that will operate in conjunction with the existing open pit mine into 2024. The Feasibility Study assumes owner mining in the Wassa Open Pit and Wassa Underground. A gold price of $1,200 per ounce was used in the economic modeling as well as the base case for the open pit and underground optimizations. Mineral Reserve Estimate The Feasibility Study is based on an updated mineral resource model completed in August 2014 which has incorporated all of the recent drilling, including infill drilling at depth, in addition to step out fences over 600 meters to the south of the Wassa Open Pit. Open pit optimization is conducted using Whittle Optimization software with historic operating cost data for the mining, processing, and general and administration ("G&A") costs; suitable dilution and recovery factors; stable pit slope estimates; and a gold price of $1,200 per ounce. Open pit design is based on the $1,200 per ounce Whittle shell with modifications for the current pit mining and access strategy. Mineral Reserves are reported in the open pit design using a cut-off grade of 0.77 g/t Au. Underground stope optimization has been carried out using a cut-off grade of 2.5 g/t Au estimated based on zero-based underground mining costs and historic processing and G&A costs. The Deswick Stope Optimizer software was used incorporating cut-off grade and various mineable stope parameters such as stope height, width, footwall and hangingwall angles, and minimum distance between parallel stopes. The underground mine design process utilized Surpac software and included stope design based on the optimization results, stope access development, mine access development, and supporting infrastructure development. A mining schedule was developed using MineSched software and includes realistic development and stoping productivity rates based on manpower and mining equipment proposed, stope sequencing taking into account geotechnical considerations, backfill requirements, ventilation requirements, and emergency egress. Economic modeling confirmed the viability of the Mineral Reserve estimate presented in the table below. The Feasibility Study Mineral Reserve has been estimated by SRK Consulting (UK) Ltd. in accordance with guidelines set out in the Definition Standards for Mineral Resources and Mineral Reserves published by the Canadian Institute of Mining, Metallurgy, and Petroleum and as required by Canada's National Instrument 43-101 ("NI 43-101"). The following table provides a breakdown of the Proven Mineral Reserves and Probable Mineral Reserves at the Wassa Mine as at December 31, 2014. Mineral Reserves Dec 31, 2014 Proven Mineral Reserve Dec 31, 2014 Probable Mineral Reserve Dec 31, 2014 Proven and Probable Mineral Reserve tonnes grade ounces tonnes grade ounces tonnes grade ounces (000) g/t Au (000) (000) g/t Au (000) (000) g/t Au (000) Wassa Open Pit - - - 17,831 1.42 812 17,831 1.42 812 Wassa Underground - - - 5,437 4.27 746 5,437 4.27 746 Stockpiles 820 0.73 19 - - - 820 0.73 19 Subtotal Wassa 820 0.73 19 23,268 2.08 1,558 24,089 2.04 1,578 Notes to the Mineral Reserve statement: (1) The stated Mineral Reserves have been prepared in accordance with the requirements of NI 43-101 and are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum's "CIM Definition Standards – For Mineral Resources and Mineral Reserves". Mineral Reserve estimates reflect the Company's reasonable expectation that all necessary permits and approvals will be obtained and maintained. Mining dilution and mining recovery vary by deposit and have been applied in estimating the Mineral Reserves. (2) The 2014 Mineral Reserves were prepared under the supervision of Mr. Mike Beare, CEng BEng ACSM MIMMM, SRK Corporate Consultant (Mining Engineering). Mr. Beare is a "Qualified Person" as defined by Canada's NI 43-101 and is independent of the Company. (3) The Mineral Reserves were estimated using a gold price assumption of $1,200 per ounce. (4) The slope angles of all pit designs are based on geotechnical criteria as established by external consultants. The size and shape of the pit designs are guided by consideration of the results from a pit optimization program. (5) Cut off grades have been estimated based on operating cost projections, mining dilution and recovery, royalty payment requirements and applicable metallurgical recovery estimates as follows: Wassa Open Pit 0.77 g/t Au and Wassa Underground 2.50 g/t Au. (6) Numbers may not add due to rounding. Open Pit Mining Golden Star has been mining the Wassa open pits since 2005. Prior to 2013, mining was in a number of smaller satellite pits which were combined into a single large Wassa Open Pit in late 2013 allowing for operational efficiencies and cost savings. Open pit mining is expected to continue in the Wassa Open Pit area at a total material mined rate of approximately 1.2 million tonnes per month until 2021 when the strip ratio is expected to start to decrease. On average, we anticipate that the Wassa Open Pit will produce approximately 2.0 Mtpa of ore feed, with the balance of the total plant capacity of 2.7 Mtpa being supplied by Wassa Underground. Underground Mining Access development to the underground stoping areas will be via a twin decline system from the north east wall of the current Wassa Open Pit. The twin decline system will enable efficient ventilation during the early stages of the underground life and will remove the requirement for a raisebore ventilation raise and escape way close to the start of the decline. The main decline will be 5.8 meters high and 5.2 meters wide and developed using standard trackless mechanized mining methods. The upper stopes will be mined using longitudinal longhole open stoping with waste rock fill. This will enable efficient early production before a cemented rock fill preparation and delivery system is installed. The Wassa Open Pit will eventually mine down to the top of these upper stopes, but only towards the end of the life of mine. In the deeper, wider areas of the deposit a transverse longhole open stoping method will be used. A primary-secondary mining sequence will be implemented with the primary stopes filled with cemented rock fill and the secondary stopes with waste rock fill. The overall stoping sequence will be bottom-up to reduce the incidence of sill pillar development. New surface infrastructure to support the underground mining will be constructed including electrical power supply from the grid with backup genset support, surface mechanical and electrical workshops. At steady state production, the Wassa Underground is expected to produce an average of approximately 2000 tonnes per day across the life of mine. Mineral Processing The Wassa processing plant was constructed in 2005 and is currently operating at its rated capacity of 2.7 Mtpa. The plant is 500 meters from the current Wassa Open Pit mining operations. Processing currently includes a four stage crushing circuit, grinding, gravity recovery, carbon in leach circuits and a thickener. A final recovery circuit using electrowinning is also in place along with associated secure gold room facilities. Average metallurgical recovery in fresh ore is currently 93% and future recovery from combined Wassa Open Pit and Wassa Underground operations is estimated to be the same. Capital Expenditure A summary of the estimated capital costs and timing thereof from the Feasibility Study is presented below in $ millions: Capital Total 2015 2016 2017 2018 2019 2020-2024 Underground Project Capital 38.5 20.5 13.0 5.0 - - - Underground Sustaining Capital 36.5 - - 5.3 8.1 10.8 12.3 Plant & Open Pit Project Capital 5.7 5.5 0.2 - - - - Plant & Open Pit Sustaining Capital 89.8 8.7 18.9 18.4 14.0 9.5 20.3 Closure 18.9 - - - - - 18.9 Total Capital 189.4 34.7 32.2 28.7 22.1 20.3 51.4 Pre-production incremental capital costs for the underground mine are estimated to total $39 million, primarily comprised of equipment purchase, infrastructure construction and underground development. The construction of the new tailings impoundment and open pit mobile equipment replacement make up the bulk of the plant and open pit sustaining capital. Economic Summary and Sensitivity to Gold Price and Discount Rate The following table is a summary of Wassa Underground's sensitivity of Net Present Value (NPV) to changes in gold prices and discount rates, as well as the sensitivity of IRR to gold prices: Post – Tax ($M) NPV5% NPV10% IRR Gold Price $1,000 38 -5 8 $1,100 99 70 37 $1,200 176 136 83 $1,300 252 201 505 $1,400 327 265 - Operating Metrics A summary of the projected production and operating metrics for the combined Wassa Open Pit and Wassa Underground mines and resulting operating costs from the Feasibility Study are summarized below: FS baseline metrics Total 2015 2016 2017 2018 2019 2020-2024 Average pit Run of Mine ("ROM") (tpd1) 5,603 7,444 6,854 5,896 4,274 5,518 4,945 Average underground ROM (tpd1) 1,870 N/A 1,498 1,913 2,241 2,364 1,961 Daily tonnes processed (tonnes) 7,448 7,465 7,485 7,465 7,465 7,465 7,465 Average mill feed grade (g/t Au) 2.04 1.47 1.51 2.14 2.53 2.76 1.98 Average gold recoveries 93% 93% 93% 93% 94% 94% 93% Average annual gold production (k oz.2) 1,470 116 120 170 201 220 159 Cost Summary ($/ounce) Total 2015 2016 2017 2018 2019 2020-2024 Cash operating cost 780 929 1,024 844 747 673 736 All-in sustaining cost3 938 1,064 1,242 1,043 916 826 876 All-in Cost3 968 1,288 1,353 1,073 916 826 876 (1) "tpd" means tonnes per day. (2) "k oz" means thousand ounces. (3) See non-GAAP Measures Near Term Development Plans and Ongoing Exploration The majority of underground equipment for the development of the exploration decline was ordered late 2014 and delivery is expected over the next three months. An owner operated team has been assembled and the team is currently being formed at Wassa. The starter-pit mining which will host the two portals has been completed and the preparations that will form the platform and the sumps for the declines have been established. The Wassa Mine has received the necessary permits to commence with the exploration decline. The Wassa Open Pit mine is now fully established as a single large pit which will operate separately from the two declines resulting in little impact of one on the other. Management believes that with additional drilling from underground there is an opportunity to firstly optimize the mine plan and secondly to potentially add more ounces to the resource base. However there is no certainty that additional drilling would result in all or any such ounces being included in a mine plan. Technical Information and Quality Control The technical contents of this press release have been reviewed and approved by Mike Beare CEng BEng ACSM MIMMM, a Qualified Person pursuant to National Instrument 43-101. Mr. Beare is a Corporate Consultant (Mining Engineering) with SRK Consulting (UK) Ltd. and is independent of the Company