2017 Production Guidance 31-44% higher than
2016 Gold Production
TORONTO, Jan. 11, 2017 /CNW/ - Golden Star Resources Ltd.
(NYSE MKT: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or the
"Company") is pleased to announce its production results for the
fourth quarter and full year of 2016 and its guidance for 2017.
HIGHLIGHTS
- Gold production of 194,054 ounces in 2016, in the top half of
the guidance range of 180,000 to 205,000 ounces
- Gold production by asset in 2016, as follows:
- Wassa Main Pit: 93,319
ounces
- Wassa Underground Gold Mine ("Wassa Underground"): 11,062
ounces
- Prestea Open Pits: 89,673 ounces
- Gold production of 53,403 ounces during the fourth quarter of
2016, representing Golden Star's
strongest quarterly performance of the year
- Wassa Underground's mining rates accelerated strongly during
the quarter, culminating in the declaration of commercial
production on January 1, 2017
- Prestea Open Pits achieved record quarterly production for the
second consecutive quarter, with production of 24,128 ounces
- Cash and cash equivalents balance of $21.7 million as of December 31, 2016, which does not include the
receipt of the $10 million scheduled
advance payment on January 3, 2017
from RGLD Gold AG ("RGLD"), a subsidiary of Royal Gold, Inc., pursuant to the gold purchase
and sale agreement, as amended, with RGLD
- Full year 2017 guidance of:
- 255,000-280,000 ounces of gold production
- $780-$860 per ounce cash
operating cost1
- $970-$1,070 per ounce All-In
Sustaining Cost ("AISC")1
Notes:
1. See "Non-GAAP Financial Measures".
Sam Coetzer, President and
Chief Executive Officer of Golden
Star, commented:
"2016 was a transformational year for Golden Star as it represented our transition
into a combined open pit and underground gold mining company and
our first full year as a wholly non-refractory producer. It
is testament to the hard work and determination of our teams at
both operations that we achieved our 2016 production guidance in
the top half of the range, at the same time as progressing two
underground development projects. In 2017 we are focused on
expanding our production and continuing to reduce our costs as
Golden Star continues on its path to
become a high grade, low cost producer."
2016 Production Results and Operations Update
Golden Star produced 194,054
ounces of gold in 2016, in the top half of its 2016 production
guidance range of 180,000-205,000 ounces. The fourth quarter
of 2016 represented the Company's strongest quarterly production of
the year, with gold production of 53,403 ounces.
As at December 31, 2016,
Golden Star had a cash and cash
equivalents balance of $21.7 million,
which does not include the receipt of the $10 million scheduled advance payment from RGLD
on January 3, 2017.
Wassa Gold Mine (Main Pit and
Underground)
Total gold production from Wassa Main
Pit in 2016 was 93,319 ounces and in the fourth quarter of
2016, gold production was 21,411 ounces.
Total gold production from Wassa Underground in 2016 was 11,062
ounces and in the fourth quarter of 2016, gold production was 7,865
ounces. This represents an increase of 257% compared to the
third quarter of 2016 and may be attributed to a strong
acceleration of mining rates. As previously reported, the Company
achieved commercial production at Wassa Underground on January 1, 2017, on time and within budget.
At December 31, 2016, 3,818 metres of
development had been completed and seven stopes had been accessed
by the Company.
The total ore processed by the Wassa processing plant during
2016 was 2.6 million tonnes at a blended grade of 1.32 grams per
tonne ("g/t") and with a metallurgical recovery of 94%.
Prestea Open Pits
Gold production from the Prestea Open Pits was 89,673 ounces in
2016, which was 28% higher than the top end of the Company's
original 2016 guidance for these assets. Gold production in
the fourth quarter of 2016 was 24,127 ounces, delivering record
quarterly production from the Prestea Open Pits for the second
consecutive quarter.
The total ore processed by the Prestea processing plant during
2016 was 1.5 million tonnes at a grade of 2.21g/t, and with a
metallurgical recovery of 84%.
Prestea Underground
Construction of Prestea Underground continued on time and on
budget, with the first Alimaks having arrived at Prestea
Underground in December 2016. Other equipment also continued
to arrive, including underground haulage equipment such as ore
trucks and man carts.
The Company expects to blast the first stope during the second
quarter of 2017. Development at Prestea Underground is anticipated
to remain on track for commercial production to be achieved in
mid-2017.
Mampon
As previously announced, Golden
Star received a mining lease for the Mampon deposit in
October 2016. Mampon is a higher grade, oxide deposit (304Kt
at 4.60g/t for 45,000 ounces) that is intended to be mined in
conjunction with the Prestea Open Pits.
Golden Star expects to begin
mining Mampon during the second quarter of 2017. Due to its
relatively high grade nature compared to the Prestea Open Pits,
Mampon is expected to enhance the Company's 2017 cash flow.
Exploration
Golden Star intends to release an
update on its exploration strategy for 2017 and beyond, in addition
to further drilling results from the B Shoot zone of the Wassa
Underground ore body, during the first quarter of 2017.
Full Year 2017 Guidance
The following tables set out Golden Star's full year 2017
guidance in terms of gold production, cash operating
costs1, AISC1, and capital expenditures.
Gold Production and Operating Cost Guidance
Asset
|
Gold
Production
(ounces)
|
Cash Operating
Costs1
($/oz)
|
AISC1
($/oz)
|
Wassa Main
Pit
|
85,000-95,000
|
|
|
Wassa
Underground
|
60,000-65,000
|
|
|
Wassa
Consolidated
|
145,000-160,000
|
830-915
|
|
Prestea Open
Pits2
|
65,000-70,000
|
|
|
Prestea
Underground3
|
45,000-50,000
|
|
|
Prestea
Consolidated
|
110,000-120,000
|
715-780
|
|
CONSOLIDATED
|
255,000-280,000
|
780-860
|
970-1,070
|
Capital Expenditures Guidance
Asset
|
Sustaining
Capital
($
millions)
|
Development
Capital
($
millions)
|
Total Capital
Expenditures
($
millions)
|
Wassa Main Pit and
Surface Infrastructure
|
5.9
|
1.1
|
7.0
|
Wassa
Underground
|
9.0
|
3.4
|
12.4
|
Prestea Open
Pits
|
5.0
|
-
|
5.0
|
Prestea
Underground4 and Processing Plant
|
0.4
|
31.2
|
31.6
|
Exploration
|
-
|
2.4
|
2.4
|
TOTAL
|
20.3
|
38.1
|
58.4
|
|
Notes to
tables:
|
- See "Non-GAAP Financial Measures".
- Prestea Open Pits production guidance includes the
forecast production from the Mampon deposit.
- Production guidance for Prestea Underground includes
7,000-7,500 ounces of pre-commercial production. Costs
incurred at Prestea Underground will be capitalized until
commercial production is achieved. As a result, these costs are
reflected in the Company's development capital expenditure guidance
set out in the second table and are not included in the Company's
cash operating cost or AISC guidance set out in the first
table.
- Capital expenditures for Prestea Underground exclude
capitalized revenues and capitalized interest.
|
Golden Star's production guidance
for 2017 represents an increase of 31% to 44% compared to full year
production in 2016. This increase is expected to be achieved
due to the following factors:
- Production from Wassa Underground, which has Mineral Reserves
grading 4.59g/t, is expected to continue to ramp-up during the
year. The Company anticipates that production will increase
significantly from the third quarter of 2017 onwards as
Golden Star begins to access the
transverse stopes of the higher grade B Shoot zone;
- Commercial production at Prestea Underground, which has Mineral
Reserves grading 14.02g/t, is expected to be achieved in mid-2017;
and
- Production from the Mampon deposit is expected to commence
during the second quarter of 2017
As a result of the above factors being anticipated to occur
primarily during the second half of 2017, Golden Star expects gold production to be
weighted towards the second half of the year. Gold production
in the first and second quarters of 2017 is expected to be in line
with the production results for the fourth quarter of 2016.
Consequently, Golden Star
anticipates that its cash operating cost per ounce1 and
AISC per ounce1 will be higher during the first
half of 2017, due to the lower grade ore being fed to both
processing plants during this period. If higher grade ore
begins to be processed in the second half of 2017, Golden Star expects its cash operating cost per
ounce1 and AISC per ounce1 to decrease
accordingly, which is expected to result in the Company achieving
its full year 2017 cost guidance.
Currently, Golden Star expects
production to conclude at the Prestea Open Pits and Mampon during
the third quarter of 2017, however if the Company's exploration
campaign is successful, it may be possible to extend production
from these deposits.
Capital expenditures are expected to be higher in the first half
of 2017 than in the second half of 2017 due to the costs associated
with the continued construction of Prestea Underground and
accessing the Mampon deposit. If Prestea Underground achieves
commercial production as expected during mid-2017, capital
expenditures are expected to reduce accordingly.
Golden Star expects to release its fourth quarter and full
year 2016 Financial Results on February 21, 2017. The
Company's 2016 cash operating cost per ounce1 and AISC
per ounce1 will also be reported at that time.
All monetary amounts refer to United States dollars unless otherwise
indicated.
Notes:
1. See "Non-GAAP Financial Measures"
Company Profile
Golden Star is an established
gold mining company that owns and operates the Wassa and Prestea
mines situated on the prolific Ashanti Gold
Belt in Ghana, West Africa. Listed on the NYSE MKT, the TSX,
and the GSE, Golden Star is
strategically focused on increasing operating margins and cash flow
through the development of its two high grade, low cost underground
mines both in conjunction with existing open pit operations. The
Wassa Underground Gold Mine commenced commercial production in
January 2017 and the Prestea
Underground Gold Mine is expected to achieve commercial production
in mid-2017. Gold production in 2017 is expected to be
255,000-280,000 ounces with cash operating costs of $780-860 per ounce.
Non-GAAP Financial Measures
In this press release, we use the terms "cash operating cost per
ounce" and "All-In Sustaining Cost per ounce". These should
be considered as non-GAAP financial measures as defined in
applicable Canadian and United
States securities laws and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP.
"Cost of sales excluding depreciation and amortization" as found
in the statements of operations includes all mine-site operating
costs, including the costs of mining, ore processing, maintenance,
work-in-process inventory changes, mine-site overhead as well as
production taxes, royalties, and by-product credits, but excludes
exploration costs, property holding costs, corporate office general
and administrative expenses, foreign currency gains and losses,
gains and losses on asset sales, interest expense, gains and losses
on derivatives, gains and losses on investments and income tax
expense/benefit. "Cash operating cost per ounce" for a period
is equal to "Cost of sales excluding depreciation and amortization"
for the period less royalties, the cash component of metals
inventory net realizable value adjustments and severance charges
divided by the number of ounces of gold sold during the
period. We use cash operating cost per ounce as a key
operating indicator. We monitor this measure monthly, comparing
each month's values to third quarters' values to detect trends that
may indicate increases or decreases in operating efficiencies. We
provide this measure to investors to allow them to also monitor
operational efficiencies of the Company's mines. We calculate this
measure for both individual operating units and on a consolidated
basis. Since cash operating costs do not incorporate revenues,
changes in working capital and non-operating cash costs, they are
not necessarily indicative of operating profit or cash flow from
operations as determined under International Financial Reporting
Standards ("IFRS").
"All-In Sustaining Cost" commences with cash operating costs and
then adds sustaining capital expenditures, corporate general and
administrative costs excluding non-cash share based compensation,
mine site exploratory drilling and greenfield evaluation costs and
environmental rehabilitation costs. All-In Sustaining Cost
seeks to represent the total costs of producing gold from current
operations, and therefore it does not include capital expenditures
attributable to projects or mine expansions, exploration and
evaluation costs attributable to growth projects, income tax
payments, interest costs or dividend payments. Consequently, this
measure is not representative of all of the Company's cash
expenditures. In addition, the calculation of All-In Sustaining
Costs does not include depreciation expense as it does not reflect
the impact of expenditures incurred in prior periods. Therefore, it
is not indicative of the Company's overall profitability.
Non-cash share-based compensation expenses are excluded from the
Company's current method of calculating All-In Sustaining Costs, as
the Company believes that such expenses may not be representative
of the actual payout on the equity and liability based awards.
Changes in numerous factors including, but not limited to, our
share price, risk-free interest rates, gold prices, mining rates,
milling rates, ore grade, gold recovery, costs of labor,
consumables and mine site general and administrative activities can
cause these measures to increase or decrease. The Company
believes that these measures are similar to the measures of other
gold mining companies, but may not be comparable to similarly
titled measures in every instance.
In the current market environment for gold mining equities, many
investors and analysts are more focused on the ability of gold
mining companies to generate free cash flow from current
operations, and consequently the Company believes these measures
are useful non-IFRS operating metrics ("non-GAAP measures") and
supplement the IFRS disclosures made by the Company. These measures
are not representative of all of Golden
Star's cash expenditures as they do not include income tax
payments or interest costs. There is material limitations
associated with the use of such non-GAAP measures. Since
these measures do not incorporate all non-cash expense and income
items, changes in working capital and non-operating cash costs,
they are not necessarily indicative of operating profit or cash
flow from operations as determined under IFRS.
For additional information regarding the Non-GAAP financial
measures used by the Company, please refer to the heading "Non-GAAP
Financial Measures" in the Company's Management Discussion and
Analysis of Financial Condition and Results of Operations for the
full year ended December 31, 2015 and
in the Company's Management Discussion and Analysis for the three
months ended September 30, 2016, both
of which are available at www.sedar.com.
Cautionary note regarding forward-looking information
This press release contains "forward looking information" within
the meaning of applicable Canadian securities laws and
"forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995, concerning
the business, operations and financial performance and condition of
Golden Star. Generally,
forward-looking information and statements can be identified by the
use of forward-looking terminology such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases (including negative or grammatical variations) or
statements that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotation thereof. Forward-looking information
and statements in this press release include, but are not limited
to, information or statements with respect to: production, cash
operating costs, AISC and capital expenditure guidance for 2017;
the intended expansion of production and reduction of costs for
2017; the achievement of 2017 production guidance in terms of
production, cash operating costs and capital expenditures; mining
rates and the acceleration of mining rates; sustaining, development
and total capital expenditures for 2017; the achievement of
blasting the first stope at Prestea Underground in mid-2017; the
ability of Prestea Underground to commence commercial production in
mid-2017; and the ability of the Company to commence mining of the
Mampon deposit in Q2 2017; the expected higher grade nature of the
Mampon deposit; the success of the Company's exploration results at
Mampon and the Prestea Open Pits; the impact of mining Mampon on
the Company's cash flow; the achievement of accessing the
transverse stopes of the higher grade B Shoot zone at Wassa
Underground in Q3 2017; the timing of the release of fourth quarter
and full year 2016 Financial Results; and the timing of the release
of the Company's exploration strategy for 2017 and beyond.
Forward-looking information and statements are made based upon
certain assumptions and other important factors that, if untrue,
could cause the actual results, performances or achievements of
Golden Star to be materially
different from future results, performances or achievements
expressed or implied by such statements. Such statements and
information are based on numerous assumptions regarding present and
future business strategies and the environment in which
Golden Star will operate in the
future, including the price of gold, anticipated costs and ability
to achieve goals. Forward-looking information and statements are
subject to known and unknown risks, uncertainties and other
important factors that may cause the actual results, performance or
achievements of Golden Star to be
materially different from those expressed or implied by such
forward-looking information and statements, including but not
limited to: risks related to international operations, including
economic and political instability in foreign jurisdictions in
which Golden Star operates; risks
related to current global financial conditions; risks related to
joint venture operations; actual results of current exploration
activities; environmental risks; future prices of gold; possible
variations in Mineral Reserves, grade or recovery rates; mine
development and operating risks; accidents, labor disputes and
other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
development or construction activities and risks related to
indebtedness and the service of such indebtedness. Although
Golden Star has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information and statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
information and statements. Forward-looking information and
statements are made as of the date hereof and accordingly are
subject to change after such date. Forward-looking information and
statements are provided for the purpose of providing information
about management's current expectations and plans and allowing
investors and others to get a better understanding of the Company's
operating environment. Golden Star
does not undertake to update any forward-looking information and
statements that are included in this news release except in
accordance with applicable securities laws.
SOURCE Golden Star Resources Ltd.