Gold stocks are stronger today after the recent slide that sent the Market Vectors Gold Mining ETF (GDX) down 26.5% over the past eight weeks. Golden Star Resources (GSS) is rising 7.2% today on the back of a stronger gold price and on positive company-specific exploration news. Golden Star Resources released an update this morning on its ongoing gold exploration at the company’s Benso concession in Ghana. The gold mining company reported that 88 diamond drill holes were completed in 2009, totaling 8,250 meters. The drilling was able to extend gold mineralized zones along strike and down dip of the current mining areas. Currently, resource models are being updated with the new drilling results and updated gold reserve and resource estimates at Benso are scheduled to be updated in the second half of 2010.

Golden Star Resources went on to discuss that previously reported hole, SWZDD016, located at the north end of the Subriso West pit and below the current pit design, intersected multiple zones of economic gold mineralization. Golden Star highlighted an intersection at a depth of 167 meters of 19 meters grading 3.6 grams per tonne of gold (g/t) with a central core of 7 meters grading 6.5 g/t of gold - indicating that the high-grade mineralization continues at depth and could potentially support underground mining.

During 2009, five drill holes comprising 1,650 meters were drilled to further test this high-grade gold zone at Benso. Hole SWZDD026 intersected three parallel zones commencing at a depth of 161 meters, including a 5 meter drilled width intercept of 26 g/t of gold. Meanwhile, Drill hole SWZDD030 targeted the new zone 100 meters along strike and intersected the high-grade gold zone at a depth of 336 meters yielding 11.4 meters at 6.6 g/t of gold, including 4.4 meters grading 12.2 g/t gold. Going forward, Golden Star stated that it will continue to test this high grade target zone down dip and along strike.

Commenting on these results, Mitchel Wasel , Vice President of Exploration at Golden Star, stated that “The drilling of this high grade shoot has produced some excellent results that should positively affect the next optimized pit shells and subsequent pit designs. The grades and thicknesses drilled thus far also exhibit widths and grades that could be amenable to underground mining.”

The discovery of these high-grade intercepts marks an important step for Golden Star, as the gold mining company has made a concerted effort to extend mine life through further exploration. Previously, industry analysts had raised questions regarding the gold mining company’s ability to extend mine life, but these drill results should serve to alleviate at least a portion of those concerns.

While Golden Star has not released its 2010 exploration budget, expectations are that the company will spend approximately $20 million drilling its concessions. The company continues to trade at a steep discount to its peer group on a price-to-cash flow basis and based upon the price investors are paying per ounce of gold production. The discovery of more gold ounces will extend the mine life at its current gold mining operations and would likely help to close the valuation gap and re-rate Golden Star’s share price in the coming year.

Golden Star Resources is an international gold mining and exploration company, with operations in Ghana, West Africa and South America. The gold mining company owns controlling interests in several gold properties in southwest Ghana, including the Bogoso/Prestea and Wassa mines. In mid-day trading shares of GSS were higher by $0.20, or 7.2%, to $2.96 and the Market Vectors Gold Mining ETF (GDX) was up $1.96, or 4.8% to $42.68 while the gold price rose $14.83 to $1,096.80 per ounce.