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Why Golden Star Resources Is Soaring Today

By Scott Levine – Nov 1, 2021 at 11:34AM

Key Points

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This gold producer's investors seem to have just hit gold.

What happened

Shares of gold producer Golden Star Resources (GSS) are shining brightly in investors' eyes today. The reason? The company has agreed to a buyout offer, announcing its entrance into a definitive agreement.

As of 10:47 a.m. EDT, shares of Golden Star Resources are up 14%.

Gold coins on a scale.

Image source: Getty Images.

So what

According to the terms of the transaction, Chifeng Jilong Gold Mining, an international gold mining company, is acquiring Golden Star Resources in a deal expected to close in January 2022 at which time it will pay Golden Star shareholders $3.91 in cash per share, representing $470 million of the outstanding shares. Investors are likely pleased with the deal considering the amount they will receive represents a 51.5% premium based on the volume-weighted average price of Golden Star over the 60 trading days ending last Friday.

Addressing the company's sole gold asset located in Ghana, Wassa, and the merits of the acquisition, Andrew Wray, Golden Star's CEO, said, "We believe that the transaction will benefit all of our stakeholders, with shareholders receiving an attractive premium in return for the future growth potential, and with Wassa forming part of Chifeng's larger portfolio of gold mines there will be a larger capital base to help deliver that growth."

Now what

While Golden Star Resources will no longer be available on American markets, gold-oriented investors still have plenty of gold producers to choose from. And it's not only the companies digging the yellow stuff out of the ground that will appeal to precious metals investors; royalty and streaming companies, which provide the specialized financing for gold mining projects, are another viable option.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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