GSS trading volume on Friday, Sept 28 was 7,227,700 shares. That is more than 3 times their 3-month average of 1,779,700. As you can see in the chart below, a huge block moved through at about 1:30pm (nearly 3 million shares) and another shortly after 3pm (over 2 million shares). At around $2.70 per share, that is a significant chunk of change that is suddenly interested in GSS. The price of GSS was lingering around $2.64 for most of the day, down about 2%.

GSS_Chart.pngShortly after the first large block traded hands, GSS turned up and the share price increased by ten cents or nearly 4%. We can’t be certain what is behind the increased volume, but it looks bullish from our point of view. With a market cap of $567 million, production of over 200,000 ounces of gold (increasing by 50% or more per year) and reserves and resources north of 10 million ounces, GSS is a prime takeover target. Acquisition speculation could be behind the volume movement today, but takeover or not, GSS is a promising miner that should be on your radar. They were one of the strongest performers in the early days of this bull market, increasing from $1 to $8 from Jan 2002 to Jan 2004. 700% return in two years!

Golden Star is a gold mining company with its operating mines on the prolific Ashanti Gold Belt in Ghana, West Africa. 2005 production was 200,968 ounces and is expected to increase significantly to 300,000 ounces in 2006 and 500,000 ounces in 2007.

gss_logo.jpgGSS growth in 2006 and 2007 is largely the result of the expansion of activities at Bogoso/Prestea. Construction and development activities for this expansion are well progressed and are expected to be completed late in 2006 at a cost of $125 million. In December 2004, Golden Star completed construction of the Wassa gold mine, located about 35 kilometers east of Bogoso/Prestea. In 2006, Wassa is projected to produce about 120,000 ounces.

At year-end 2005, Golden Star had 4.05 million ounces in reserves and, in addition, 200% more than that in its resource categories, all within trucking distance of current processing plants. The reserves and resources were estimated at gold prices of $400 and $480 per ounce respectively.

We like GSS anywhere under $3. It will easily double from current pricing once the uptrend resumes.

Full Diclosure: The authour owns shares of GSS and plans to add to the position next week.