Net income per share attributable to
Golden Star shareholders - basic of
$0.10 in FY 2017
TORONTO, Feb. 20, 2018 /CNW/ - Golden Star Resources Ltd.
(NYSE American Exchange: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or
the "Company") reports its financial and operational results for
the fourth quarter and full year ("FY") ended December 31, 2017.
HIGHLIGHTS:
FY 2017
- FY 2017 consolidated guidance achieved or outperformed on all
metrics of gold production, cash operating cost per
ounce1, All-In Sustaining Cost ("AISC") per
ounce1 and capital expenditures
- 38% increase in consolidated gold production in FY 2017 to
267,565 ounces compared to FY 2016
- Consolidated cash operating cost per ounce1 and AISC
per ounce1 in FY 2017 below the bottom end of the
respective guidance ranges
-
- 13% decrease in cash operating cost per ounce1 to
$763 compared to FY 2016
- 14% decrease in AISC1 per ounce to $944 compared to FY 2016
- Capital expenditures of $69.6
million in FY 2017, with 57% representing development
capital primarily for the advancement of the Prestea Underground
Gold Mine ("Prestea Underground")
-
- Post-period end, commercial production was achieved at Prestea
Underground on February 1, 2018
- 108% increase in mine operating margin1 to
$57.2 million in FY 2017 compared to
FY 2016 due to a significant increase in revenues and a decrease in
the Company's cost structure
- 4% increase in cash generated by operations in FY 2017 to
$55.2 million ($0.15 per share - basic) compared to FY 2016
- Net income attributable to Golden
Star shareholders of $38.8
million ($0.10 income per
share) in FY 2017 compared to a net loss of $39.6 million ($0.13 loss per share) in FY 2016
- Consolidated cash balance of $27.8
million as at December 31,
2017
Fourth Quarter of 2017
- 34% increase in consolidated gold production in the fourth
quarter of 2017 to 71,769 ounces compared to the fourth quarter of
2016
- 8% decrease in cash operating cost per ounce1 in the
fourth quarter of 2017 to $812
compared to the fourth quarter of 2016
- 16% decrease in AISC per ounce1 in the fourth
quarter of 2017 to $1,002 compared to
the fourth quarter of 2016
- Golden Star named the winner of
the Prospectors and Developers Association of Canada ("PDAC") 2018 Award for Environmental
and Social Responsibility
Notes:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Sam Coetzer, President and
Chief Executive Officer of Golden
Star, commented:
"In 2017 Golden Star ramped up two underground mines and
achieved or outperformed our full year guidance on all stated
metrics. We also received national and international
recognition for our commitment to responsible mining, through the
PDAC 2018 Award for Environmental and Social Responsibility and the
Ghana Mining Industry Awards. In 2018 we will seek to build
on these achievements as we look to reduce our costs further, to
strengthen our financial position and to deliver more value for all
of our stakeholders. Wassa Underground and Prestea
Underground are our two cornerstone assets and through exploration
we will look to find additional sources of high margin ore to
increase production and to grow our company further."
Fourth Quarter and Full Year 2017 Conference Call
Details
The Company will conduct a conference call and webcast to
discuss its results for the fourth quarter and FY 2017 on
Wednesday, February 21, 2018 at
10:00 am ET.
The quarterly results call can be accessed by telephone or by
webcast as follows:
Toll Free (North America): +1
833 231 8263
Toronto Local and International: +1 647 689 4108
Conference ID: 2696867
Webcast: www.gsr.com
A recording and webcast replay of the call will be available
from www.gsr.com following the call.
SUMMARY OF CONSOLIDATED OPERATIONAL AND FINANCIAL
RESULTS
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
OPERATING
SUMMARY
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Wassa Main Pit gold
sold
|
oz
|
20,775
|
|
21,076
|
|
75,644
|
|
93,284
|
Wassa Underground
gold sold
|
oz
|
20,852
|
|
7,867
|
|
61,498
|
|
11,062
|
Prestea Open Pits
gold sold
|
oz
|
24,536
|
|
23,893
|
|
121,619
|
|
89,517
|
Prestea Underground
gold sold
|
oz
|
5,045
|
|
—
|
|
8,574
|
|
—
|
Total gold
sold
|
oz
|
71,208
|
|
52,836
|
|
267,335
|
|
193,863
|
Total gold
produced
|
oz
|
71,769
|
|
53,404
|
|
267,565
|
|
194,054
|
Average realized gold
price
|
$/oz
|
1,237
|
|
1,184
|
|
1,219
|
|
1,211
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce - Consolidated1
|
$/oz
|
1,111
|
|
1,114
|
|
998
|
|
1,060
|
Cost of sales per
ounce - Wassa1
|
$/oz
|
1,096
|
|
1,430
|
|
1,153
|
|
1,186
|
Cost of sales per
ounce - Prestea1
|
$/oz
|
1,137
|
|
836
|
|
823
|
|
928
|
Cash operating cost
per ounce - Consolidated1
|
$/oz
|
812
|
|
880
|
|
763
|
|
872
|
Cash operating cost
per ounce - Wassa1
|
$/oz
|
775
|
|
1,090
|
|
880
|
|
941
|
Cash operating cost
per ounce - Prestea1
|
$/oz
|
875
|
|
694
|
|
632
|
|
800
|
All-in sustaining
cost per ounce - Consolidated1
|
$/oz
|
1,002
|
|
1,197
|
|
944
|
|
1,093
|
|
|
|
|
|
|
|
|
|
FINANCIAL
SUMMARY
|
|
|
|
|
|
|
|
|
Gold
revenues
|
$'000
|
81,845
|
|
53,255
|
|
315,497
|
|
221,290
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
66,401
|
|
43,994
|
|
226,482
|
|
172,616
|
Depreciation and
amortization
|
$'000
|
7,095
|
|
6,117
|
|
31,792
|
|
21,160
|
Mine operating
margin
|
$'000
|
8,349
|
|
3,144
|
|
57, 223
|
|
27,514
|
General and
administrative expense
|
$'000
|
7,881
|
|
517
|
|
25,090
|
|
25,754
|
Loss/(gain) on fair
value of financial instruments, net
|
$'000
|
1,902
|
|
(840)
|
|
(2,057)
|
|
25,676
|
Loss on repurchase of
5% Convertible Debentures, net
|
$'000
|
—
|
|
—
|
|
—
|
|
11,594
|
Net income/(loss)
attributable to Golden Star shareholders
|
$'000
|
12,601
|
|
3,446
|
|
38,771
|
|
(39,647)
|
Adjusted net income
attributable to Golden Star shareholders1
|
$'000
|
15,151
|
|
64
|
|
46,092
|
|
11,183
|
Income/(loss) per
share attributable to Golden Star shareholders - basic
|
$/share
|
0.03
|
|
0.01
|
|
0.10
|
|
(0.13)
|
Income/(loss) per
share attributable to Golden Star shareholders - diluted
|
$/share
|
0.03
|
|
0.01
|
|
0.10
|
|
(0.13)
|
Adjusted income per
share attributable to Golden Star shareholders -
basic1
|
$/share
|
0.04
|
|
0.00
|
|
0.12
|
|
0.04
|
Cash provided by
operations
|
$'000
|
10,939
|
|
25,234
|
|
55,176
|
|
53,249
|
Cash provided by
operations before working capital changes1
|
$'000
|
6,760
|
|
23,896
|
|
62,624
|
|
75,457
|
Cash provided by
operations per share - basic
|
$/share
|
0.03
|
|
0.08
|
|
0.15
|
|
0.18
|
Cash provided by
operations before working capital changes per share -
basic
|
$/share
|
0.02
|
|
0.06
|
|
0.17
|
|
0.26
|
Capital
expenditures
|
$'000
|
16,751
|
|
23,779
|
|
69,638
|
|
84,356
|
Notes:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
OPERATIONAL PERFORMANCE
FY 2017
Golden Star achieved or
outperformed its FY 2017 consolidated guidance on all stated
metrics.
The Company delivered a 38% increase in consolidated gold
production to 267,565 ounces compared to FY 2016, which was in the
middle of its guidance range. In terms of consolidated cash
operating cost per ounce1 and AISC per
ounce1, both results ($763 and $944
respectively) were below the bottom end of the guidance
ranges. These results also represent a 13% decrease in cash
operating cost per ounce1 and a 14% decrease in AISC per
ounce1 compared to FY 2016. Additionally,
Golden Star's consolidated cost of
sales per ounce1 was $998. As Prestea Underground was in
pre-commercial production during 2017, its gold production and
operating exenditures1 were capitalized.
Golden Star's total capital
expenditures for the year were $69.6
million, in line with its guidance of $69.3 million.
The Company intends to focus on high margin ore in 2018 and to
become a primarily underground-focused gold producer. As a
result, gold production is expected to decrease by 5-14% in FY 2018
compared to FY 2017. However by focusing on higher grade,
underground ore, Golden Star expects
to deliver a lower cash operating cost per ounce1
(expected decrease of 4-15%) and AISC per ounce1
(decrease of up to 10%) than in FY 2017. This is anticipated
to strengthen the Company's financial position and give it a robust
platform to deliver shareholder value.
Accordingly, 2018 guidance is as follows:
- Gold production of 230,000-255,000 ounces
- Cash operating cost per ounce1 of $650-$730
- AISC per ounce1 of $850-$950
- Capital expenditures of $36.5
million
From a development perspective, Golden
Star continued to advance both of its underground mines,
ramping up production during the course of 2017. Commercial
production was declared at the Wassa Underground Gold Mine ("Wassa
Underground") on January 1, 2017 and
the Company began to access the higher grade B Shoot zone in late
March 2017. Golden Star
outperformed its planned mining rate of 1,400 tonnes per day
("tpd") at Wassa Underground by 33% in FY 2017, achieving 1,866 tpd
on average. At Prestea Underground, the first stope was
blasted by Golden Star's mining
operations in late September 2017 and
commercial production was achieved on February 1, 2018, post-period end.
Fourth quarter of 2017
In the fourth quarter of 2017 consolidated production was 71,769
ounces of gold, representing a 34% increase compared to the same
period in 2016. Golden Star's
consolidated cash operating cost per ounce1 decreased by
8% to $812 in the fourth quarter of
2017 compared to the same period in 2016 and its AISC per
ounce1 decreased by 16% to $1,002. The consolidated cost of sales per
ounce1 was $1,111.
Notes
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Wassa Complex ("Wassa")
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
WASSA FINANCIAL
RESULTS
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenue
|
$'000
|
$
|
51,628
|
|
$
|
24,785
|
|
$
|
167,376
|
|
$
|
112,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
|
31,012
|
|
|
23,139
|
|
|
115,625
|
|
|
92,938
|
|
Severance
charges
|
$'000
|
|
5,217
|
|
|
—
|
|
|
6,316
|
|
|
113
|
|
Royalties
|
$'000
|
|
2,682
|
|
|
1,770
|
|
|
8,652
|
|
|
6,483
|
|
Operating costs
from/(to) metals inventory
|
$'000
|
|
1,253
|
|
|
(161)
|
|
|
5,080
|
|
|
(5,149)
|
|
Inventory net
realizable value adjustment
|
$'000
|
|
—
|
|
|
1,190
|
|
|
2,410
|
|
|
1,190
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
|
40,164
|
|
|
25,938
|
|
|
138,083
|
|
|
95,575
|
|
Depreciation and
amortization
|
$'000
|
|
5,440
|
|
|
4,202
|
|
|
20,052
|
|
|
15,094
|
|
Mine operating
margin/(loss)
|
$'000
|
$
|
6,024
|
|
$
|
(5,355)
|
|
$
|
9,241
|
|
$
|
1,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
|
8,470
|
|
|
10,155
|
|
|
21,583
|
|
|
41,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ore mined – Main
Pit
|
t
|
|
520,482
|
|
|
513,144
|
|
|
1,601,004
|
|
|
2,311,503
|
|
Ore mined –
Underground
|
t
|
|
171,907
|
|
|
118,896
|
|
|
681,141
|
|
|
185,314
|
|
Ore mined –
Total
|
t
|
|
692,389
|
|
|
632,040
|
|
|
2,282,145
|
|
|
3,496,817
|
|
Waste mined – Main
Pit
|
t
|
|
1,043,854
|
|
|
2,151,267
|
|
|
6,037,366
|
|
|
9,741,312
|
|
Waste mined -
Underground
|
t
|
|
60,054
|
|
|
45,305
|
|
|
199,550
|
|
|
233,225
|
|
Waste mined -
Total
|
t
|
|
1,103,908
|
|
|
2,196,572
|
|
|
6,236,916
|
|
|
9,974,537
|
|
Ore processed - Main
Pit
|
t
|
|
476,828
|
|
|
593,286
|
|
|
1,925,587
|
|
|
2,444,339
|
|
Ore processed -
Underground
|
t
|
|
179,186
|
|
|
115,602
|
|
|
691,255
|
|
|
178,255
|
|
Ore processed -
Total
|
t
|
|
656,014
|
|
|
708,888
|
|
|
2,616,842
|
|
|
2,622,594
|
|
Grade processed -
Main Pit
|
g/t
|
|
1.38
|
|
|
1.22
|
|
|
1.27
|
|
|
1.27
|
|
Grade processed -
Underground
|
g/t
|
|
4.04
|
|
|
2.27
|
|
|
3.03
|
|
|
2.06
|
|
Recovery
|
%
|
|
94.4
|
|
|
92.9
|
|
|
94.6
|
|
|
93.6
|
|
Gold produced - Main
Pit
|
oz
|
|
21,149
|
|
|
21,411
|
|
|
75,736
|
|
|
93,319
|
|
Gold produced -
Underground
|
oz
|
|
20,852
|
|
|
7,865
|
|
|
61,498
|
|
|
11,062
|
|
Gold produced -
Total
|
oz
|
|
42,001
|
|
|
29,276
|
|
|
137,234
|
|
|
104,381
|
|
Gold sold - Main
Pit
|
oz
|
|
20,775
|
|
|
21,076
|
|
|
75,644
|
|
|
93,284
|
|
Gold sold -
Underground
|
oz
|
|
20,852
|
|
|
7,867
|
|
|
61,498
|
|
|
11,062
|
|
Gold sold -
Total
|
oz
|
|
41,627
|
|
|
28,943
|
|
|
137,142
|
|
|
104,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
|
1,096
|
|
|
1,430
|
|
|
1,153
|
|
|
1,186
|
|
Cash operating cost
per ounce1
|
$/oz
|
|
775
|
|
|
1,090
|
|
|
880
|
|
|
941
|
Notes
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Wassa Operational Overview
Gold production from the Wassa complex increased by 31% in FY
2017 to 137,234 ounces compared to FY 2016 due to the larger
contribution of ounces from the higher grade Wassa Underground as
it continued to ramp up. Wassa Underground produced 61,498
ounces in FY 2017, which represents 45% of Wassa's total production
for the year. This compares to production of 11,062 ounces in
FY 2016, when Wassa Underground's production represented just 11%
of the Wassa complex's total gold production. Gold production
from the Wassa complex in the fourth quarter of 2017 was 42,001
ounces, an increase of 43% compared to the same period in
2016. This included 20,852 ounces from Wassa Underground (50%
of total production).
Gold production from Wassa Main
Pit was 75,736 ounces in FY 2017 and 21,149 ounces in the
fourth quarter of 2017. As previously announced, Golden Star took the decision during the third
quarter of 2017 to defer the next pushback of Wassa Main Pit, Cut 3, to focus on the higher
grade, higher margin underground ounces. This followed an
internal study to assess capital expenditure requirements and
margins in light of the current gold price. As a result, a
severance charge of $5.2 million was
recorded at the Wassa complex in the fourth quarter of 2017 as the
mine's workforce was reduced. Wassa became an
underground-only operation in late January
2018, although 341,000 tonnes of lower grade, stockpiled ore
will continue to be fed to the processing plant during the first
nine months of 2018.
Mining rates at Wassa Underground continued to be strong in the
fourth quarter of 2017 at approximately 1,900 tpd, which represents
a 36% outperformance compared to the planned mining rate for 2017
of 1,400 tpd. The average mining rate for FY 2017 was 1,866
tpd. The head grade of Wassa Underground's ore being
delivered to the processing plant increased by 47%, compared to FY
2016, to 3.03 grams per tonne ("g/t") of gold ("Au") in FY 2017 as
a result of mining operations accessing the higher grade B Shoot
zone from late March 2017
onwards. In the fourth quarter of 2017, the head grade from
Wassa Underground increased by 55% to 4.04 g/t Au compared to the
third quarter of 2017 and by 78% compared to the fourth quarter of
2016.
The average targeted mining rate for Wassa Underground in 2018
is 2,700-3,000 tpd, with the potential to expand further in
time. The mining team is well-positioned to increase the
tonnage profile in 2018, with the mining sequence working well and
an increasing number of stopes prepared and developed, in addition
to new equipment having arrived on site.
Wassa's cash operating cost per ounce1 decreased by
6% in FY 2017 to $880 compared to FY
2016 as a result of the increase in gold sold. Wassa's cash
operating cost per ounce1 in the fourth quarter of 2017
was $775, representing a decrease of
29% compared to the fourth quarter of 2016. The cost of sales
per ounce1 for Wassa was $1,153 in FY 2017 and $1,096 in the fourth quarter of 2017.
Commercial production was declared at Wassa Underground on
January 1, 2017 and as a result,
capital expenditures for FY 2016 decreased by 48% to $21.6 million compared to FY 2016. The
majority of this amount was development capital ($14.1 million), which comprised $8.5 million relating to the development of Wassa
Underground, $3.7 million of
exploration drilling and $1.9 million
for the improvement of the tailings storage facility. The
remaining $7.5 million relates to
sustaining capital. During the fourth quarter of 2017,
capital expenditures totaled $10.2
million, which included $4.2
million of development capital, primarily for the
development of Wassa Underground and exploration drilling.
Notes
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Prestea Complex ("Prestea")
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
2017
|
|
2016
|
PRESTEA FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$'000
|
$
|
30,217
|
|
$
|
28,470
|
|
|
$
|
148,121
|
|
$
|
108,949
|
|
|
|
|
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
21,952
|
|
17,021
|
|
|
81,753
|
|
73,046
|
|
Severance
charges
|
$'000
|
2,833
|
|
—
|
|
|
2,916
|
|
(184)
|
|
Royalties
|
$'000
|
1,938
|
|
1,468
|
|
|
8,643
|
|
5,599
|
|
Operating costs to
metals inventory
|
$'000
|
(486)
|
|
(433)
|
|
|
(4,913)
|
|
(1,420)
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
26,237
|
|
18,056
|
|
|
88,399
|
|
77,041
|
|
Depreciation and
amortization
|
$'000
|
1,655
|
|
1,915
|
|
|
11,740
|
|
6,066
|
|
Mine operating
margin
|
$'000
|
$
|
2,325
|
|
$
|
8,499
|
|
|
$
|
47,982
|
|
$
|
25,842
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
8,281
|
|
13,530
|
|
|
48,055
|
|
42,413
|
|
|
|
|
|
|
|
|
|
|
PRESTEA OPERATING
RESULTS
|
|
|
|
|
|
|
|
Ore mined – Open
Pits
|
t
|
300,247
|
|
341,246
|
|
|
1,462,607
|
|
1,499,656
|
|
Ore mined -
Underground
|
t
|
19,458
|
|
—
|
|
|
31,740
|
|
—
|
|
Waste mined – Open
Pits
|
t
|
912,509
|
|
614,805
|
|
|
3,496,148
|
|
4,039,768
|
|
Waste mined -
Underground
|
t
|
6,254
|
|
—
|
|
|
26,303
|
|
—
|
|
Ore
processed
|
t
|
465,179
|
|
377,580
|
|
|
1,632,979
|
|
1,504,139
|
|
Grade processed –
Open Pits
|
g/t
|
2.39
|
|
2.51
|
|
|
2.85
|
|
2.21
|
|
Grade processed -
Underground
|
g/t
|
8.41
|
|
—
|
|
|
6.96
|
|
—
|
|
Recovery
|
%
|
82.6
|
|
83.0
|
|
|
86.4
|
|
83.9
|
|
Gold produced - Open
Pits
|
oz
|
24,723
|
|
24,128
|
|
|
121,757
|
|
89,673
|
|
Gold produced -
Underground
|
oz
|
5,045
|
|
—
|
|
|
8,574
|
|
—
|
|
Gold produced -
Total
|
oz
|
29,768
|
|
24,128
|
|
|
130,331
|
|
89,673
|
|
Gold sold - Open
Pits
|
oz
|
24,536
|
|
23,893
|
|
|
121,619
|
|
89,517
|
|
Gold sold -
Underground
|
oz
|
5,045
|
|
—
|
|
|
8,574
|
|
—
|
|
Gold sold -
Total
|
oz
|
29,581
|
|
23,893
|
|
|
130,193
|
|
89,517
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
1,137
|
|
836
|
|
|
823
|
|
928
|
|
Cash operating cost
per ounce1
|
$/oz
|
875
|
|
694
|
|
|
632
|
|
800
|
Notes
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Prestea Operational Overview
Gold production from the Prestea complex increased by 45% in FY
2017 to 130,331 ounces compared to FY 2016. This was
primarily as a result of the contribution from the high grade
Mampon deposit and Prestea Underground. The Prestea complex
also exceeded the top end of its upwardly revised FY 2017
production guidance of 120,000-130,000 ounces. Gold
production in the fourth quarter of 2017 increased by 23% to 29,768
ounces compared to the same period in 2016.
Gold production from the Prestea Open Pits increased by 36% to
121,757 ounces in FY 2017, compared to FY 2016. This
represents a 74% outperformance compared to the top end of the
Company's original 2017 guidance for these assets. In the
fourth quarter of 2017 the pits delivered 24,723 ounces, which is a
2% increase compared to the same period in 2016. The Prestea
Open Pits were expected to complete gold production at the end of
2017 but it is now anticipated that mining will continue until late
in the first quarter of 2018 and processing of stockpiled ore will
continue until the end of the first half of 2018. A severance
charge of $2.8 million was recorded
at the Prestea complex during the fourth quarter of 2017 as the
Prestea Open Pits' workforce begins to be reduced in advance of the
end of their minelife.
Gold production from Prestea Underground was 8,574 ounces in FY
2017 and 5,045 ounces in the fourth quarter of 2017, which
represents a 57% increase compared to the third quarter of
2017. However production in the fourth quarter of 2017 was
lower than anticipated due to weaker than expected blasting
performance in the first stope. After conducting an internal
review, various adjustments have been made to drill design
patterns, blasting practices and raise layouts in order to improve
blasting efficiencies. As a result, in-stope productivity has
increased and progress with subsequent stopes has
accelerated. With the production sequence progressing well,
commercial production was declared at Prestea Underground on
February 1, 2018, post-period
end.
The Prestea complex's cash operating cost per ounce1
decreased by 21% in FY 2017 to $632 compared to FY
2016. This result is 7% below the lower end of the downwardly
revised $680-725 guidance
range. This robust outperformance was primarily as a result
of the 36% increase in gold sold from the Prestea Open Pits
resulting from the 29% increase in head grade being fed to the
Prestea processing plant. During the fourth quarter of 2017,
the Prestea complex delivered a cash operating cost per
ounce1 of $875. The
cost of sales per ounce1 at Prestea in FY 2017 was
$823 and in the fourth quarter of
2017 it was $1,137.
Total capital expenditures for FY 2017 at Prestea were
$48.1 million, a 13% increase
compared to the same period in 2016. This is as a result of
an increase in development capital expenditures, totaling
$42.4 million, which were incurred
primarily on advancing Prestea Underground towards production
($36.8 million). Other
development capital related to the Prestea Open Pits ($1.2 million) and exploration drilling
($1.5 million). Total capital
expenditures for the fourth quarter of 2017 were $8.3 million, with $6.8
million relating to the development of Prestea
Underground.
Notes
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Exploration
Fourth Quarter of 2017 Exploration Update
During the fourth quarter of 2017 Golden Star's exploration team
was focused on in-fill and expansion drilling of Wassa
Underground's Inferred Mineral Resources and exploratory drilling
of the South Gap at Prestea Underground, which is situated between
two historical shafts (Bondaye and Tuapim).
Three rigs were employed at Wassa Underground, drilling seven
deep holes for 5,055 metres. These holes were drilled from
the surface to test the potential extensions of the B Shoot and F
Shoot gold mineralization at depth to the south and to assess the
geometry and continuity of these mineralized corridors. This
work received positive results and the drilling to the south
confirmed that the ore body remains open down plunge. Further
drilling is expected to be conducted in 2018, investigating the
significant intercepts received in 2017.
At Prestea Underground, one rig was used to drill the South Gap
and it completed nine holes for a total of 3,000
metres1. This initial 100 metre spaced drilling
program will be followed up in 2018 by drill testing of the areas
where economic underground gold grades and structure widths were
intersected.
The Company expects to release further drilling results from the
South Gap later in the first quarter of 2018, in addition to its
exploration strategy for 2018. An overview of Golden Star's exploration program in FY 2017 can
be found in the Company's Management Discussion & Analysis.
Notes
|
|
1.
|
This includes two
holes that were drilled at the end of the third quarter of
2017.
|
FINANCIAL PERFORMANCE
Capital Expenditures
Golden Star incurred capital
expenditures in FY 2017 totaling $69.6
million, a decrease of 17% compared to FY 2016 as a result
of Wassa Underground achieving commercial production on
January 1, 2017. During
the fourth quarter of 2017, capital expenditures were $16.8 million, a decrease of 30% compared to the
fourth quarter of 2016.
FY 2017 Capital Expenditures Breakdown (in
millions)1
|
|
|
|
Item
|
Sustaining
|
Development
|
Total
|
|
Wassa Exploration
Drilling
|
-
|
$3.7
|
$3.7
|
|
Wassa Main Pit and
Processing Plant
|
$0.1
|
-
|
$0.1
|
|
Wassa Tailings
Expansion
|
-
|
$1.9
|
$1.9
|
|
Wassa
Underground
|
$1.2
|
$8.5
|
$9.7
|
|
Wassa Equipment
Purchases
|
$6.2
|
-
|
$6.2
|
|
Wassa
Subtotal
|
$7.5
|
$14.1
|
$21.6
|
|
Prestea Exploration
Drilling
|
-
|
$1.8
|
$1.8
|
|
Prestea Open
Pits
|
$2.1
|
$1.2
|
$3.3
|
|
Mampon
Development
|
$3.5
|
-
|
$3.5
|
|
Prestea
Underground
|
-
|
$39.4
|
$39.4
|
Prestea
Subtotal
|
$5.6
|
$42.4
|
$48.0
|
Consolidated
|
$13.1
|
$56.5
|
$69.6
|
Fourth Quarter 2017 Capital Expenditures Breakdown (in
millions)1
|
|
|
|
Item
|
Sustaining
|
Development
|
Total
|
|
Wassa Exploration
Drilling
|
-
|
$1.0
|
$1.0
|
|
Wassa Tailings
Expansion
|
-
|
$0.3
|
$0.3
|
|
Wassa
Underground
|
$0.4
|
$3.0
|
$3.4
|
|
Wassa Equipment
Purchases
|
$3.8
|
-
|
$3.8
|
Wassa
Subtotal
|
$4.2
|
$4.3
|
$8.5
|
|
Prestea Exploration
Drilling
|
-
|
$0.5
|
$0.5
|
|
Prestea Open
Pits
|
$0.3
|
$0.5
|
$0.8
|
|
Mampon
Development
|
$0.2
|
-
|
$0.2
|
|
Prestea
Underground
|
-
|
$6.8
|
$6.8
|
Prestea
Subtotal
|
$0.5
|
$7.8
|
$8.3
|
Consolidated
|
$4.7
|
$12.1
|
$16.8
|
Notes
|
|
1.
|
Please note variance
to consolidated total relates to corporate capital
expenditures.
|
Other Financial Highlights
Gold revenues for FY 2017 totaled $315.5
million from gold sales of 267,335 ounces at an average
realized gold price of $1,219 per
ounce. This represents a 43% increase in revenue compared to
FY 2016, due primarily to the revenue attributable to Wassa
Underground after achieving commercial production on January 1, 2017. Gold revenues for the
fourth quarter of 2017 were $81.8
million from gold sales of 71,208 ounces at an average
realized gold price of $1,237 per
ounce, compared to gold revenues of $53.3
million in the fourth quarter of 2016 from gold sales of
52,836 ounces at an average realized gold price of $1,184. The 54% increase in gold revenues
was due primarily to higher gold production at Wassa Underground.
Gold revenues from the Wassa complex increased by 108% during the
fourth quarter of 2017 as a result of an increase in gold ounces
sold at the underground operation, which achieved commercial
production on January 1, 2017. Gold
revenues from the Prestea complex increased by 6% during the fourth
quarter of 2017 as gold sales attributable to the Prestea Open Pits
increased by 3% compared to the same period in 2016.
Cost of sales excluding depreciation and amortization for the
full year totaled $226.5 million, an
increase of 31% from $172.6 million
in the same period in FY 2016, due mainly to a $9.2 million severance charge in FY 2017, an
increase in inventory charge as a result of drawdown of stockpiles
at Wassa, an increase in mining costs at Prestea due to higher
haulage costs for the material mined at the Mampon deposit and an
increase in mining costs at Wassa Underground, which were
capitalized in FY 2016. Cost of sales excluding depreciation and
amortization in the fourth quarter of 2017 totaled $66.4 million, compared to $44.0 million in the same period in 2016.
Depreciation and amortization for FY 2017 was $31.8 million, a 50% increase compared to 2016.
Depreciation and amortization totaled $7.1 million in the fourth quarter of 2017
compared to $6.1 million in the same
period in 2016. The increase in depreciation and amortization
expense for the three and twelve months ended December 31, 2017 was due primarily to the
commencement of depreciation on Wassa Underground assets in FY 2017
as a result of achieving commercial production, higher production
at both operations and lower Mineral Reserve and Mineral Resource
estimates for the Prestea Open Pits compared to FY 2016.
As a result, Golden Star reported
a mine operating margin of $57.2
million in FY 2017, an increase of 108% compared to FY
2016. This reflects the significant increase in gold revenues
and the reduction in the Company's cost structure due to the
ramping up of the two high grade, underground mines.
General and administrative ("G&A") expenses for FY 2017
totaled $25.1 million. G&A
expenses excluding share-based compensation costs were $12.9 million in FY 2017, slightly higher than
the same period in FY 2016. G&A expenses for the fourth
quarter of 2017 were $7.9 million.
The increase in G&A costs in this period was due primarily to
an increase in share-based compensation compared to the same period
in FY 2016, primarily as a result of an increase in Golden Star's share price.
Golden Star recorded a
$2.1 million fair value gain on
financial instruments in FY 2017 compared to a $25.7 million fair value loss for the same period
in 2016 as the prior year loss included a fair value loss on the
Company's 5% Convertible Debentures. In the fourth quarter of
2017 the Company recorded a $1.9
million loss on fair value of financial instruments compared
to a $0.8 million gain in the fourth
quarter of 2016. The loss relates to a non-cash revaluation
loss on the embedded derivative of the Company's 7% Convertible
Debentures. Further details of this loss and gain on
financial instruments is included in Golden
Star's Management's Discussion and Analysis.
The net income attributable to Golden
Star shareholders in FY 2017 totaled $38.8 million or $0.10 income per share, compared to a net loss of
$39.6 million or $0.13 loss per share for the same period in 2016.
The 177% increase was due primarily to a higher mine operating
margin at both operations, an income tax recovery and a gain on
financial instruments in FY 2017 compared to a loss on financial
instruments recognized in FY 2016. The net income
attributable to Golden Star
shareholders for the fourth quarter of 2017 totaled $12.6 million or $0.03 income per share, compared to a net income
of $3.4 million or $0.01 income per share in the same period in
2016. The net income attributable to Golden Star shareholders in the fourth quarter
of 2017 was due primarily to the deferred tax recovery recognized
in the fourth quarter of 2017 as compared to nil in the fourth
quarter of 2016.
After certain adjustments, the adjusted net income attributable
to Golden Star
shareholders1 in FY 2017 was $46.1 million, which represents an increase of
312% compared to the same period in 2016. In the fourth quarter of
2017, after certain adjustments, the adjusted net income
attributable to Golden Star
shareholders1 was $15.2
million, compared to adjusted net income of $0.1 million for the same period in 2016.
The higher adjusted net income attributable to Golden Star shareholders1 for the
three and twelve months ended December 31,
2017 was principally due to a higher mine operating margin
compared to the same periods in 2016.
Cash provided by operations in FY 2017 was $55.2 million or $0.15 per share, which compares to $53.2 million or $0.18 per share in FY 2016. Cash provided
by operations before changes in working capital1 for FY
2017 was $62.6 million or
$0.17 per share, compared to
$75.5 million or $0.26 per share in FY 2016. This decrease was due
mainly to $60.0 million received in
advance payments from RGLD Gold AG ("RGLD") in FY 2016 compared to
$10.0 million received in FY 2017,
offset by a higher mine operating margin in FY 2017 compared to the
same period in 2016. In the fourth quarter of 2017, cash provided
by operations was $10.9 million or
$0.03 per share, compared to
$25.2 million or $0.08 in the fourth quarter of 2016. Cash
provided by operations before changes in working
capital1 was $6.8 million
or $0.02 per share in the fourth
quarter of 2017, compared to $23.9
million or $0.06 per share in
same period in 2016.
The Company's consolidated cash balance was $27.8 million at the end of 2017. Working capital
provided $4.2 million during the
fourth quarter of 2017 compared to $1.3
million in the same period in 2016. The working capital
changes in the fourth quarter of 2017 related to an increase of
$5.4 million of accounts payable and
accrued liabilities and a decrease of $0.8
million in accounts receivable, offset by an increase of
$1.5 million in inventories and
$0.5 million in prepaid and
other.
For further information about Golden
Star's operational and financial performance, please visit
the Financial and Operational database at
http://apps.indigotools.com/IR/IAC/?Ticker=GSC&Exchange=TSX
The data relating to the FY and fourth quarter of 2017 will be
available 24 hours after release at the latest.
Notes
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Other Corporate Developments During FY 2017
Bought deal transaction
In February 2017 Golden Star
completed a bought deal public offering. This resulted in the
issuance of 31,363,950 common shares, including 4,090,950 common
shares issued upon full exercise of the over-allotment
option. The shares were issued at a price C$1.10 per share for net proceeds of $24.5 million.
$25 million Medium Term
Facility from Ecobank
In March 2017 the Company, through
its subsidiary, Golden Star (Wassa)
Limited, signed a commitment letter with Ecobank Ghana Limited
regarding a $25.0 million secured
Medium Term Loan facility. The facility has a term of 60 months
from the date of initial drawdown and the interest rate on the loan
is three month LIBOR plus 8% per annum. At December 31, 2017, the Company had drawn down
$10.0 million and post-period end in
late January 2018, the Company drew
down the remaining $15.0 million to
assist with the funding of the severance payments in the first half
of 2018 at both Wassa and Prestea.
Advance payment under Streaming Agreement
In January 2017 Golden Star
received the final advance payment of $10.0
million pursuant to the gold purchase and sales agreement
with RGLD. Since the inception of the Streaming Agreement in
July 2015, the Company has received
total advance payments of $145.0
million. All advance payments under the Streaming
Agreement have now been received.
Awards Recognition
In November 2017 Golden Star was
named as the winner of the PDAC 2018 Environmental and Social
Responsibility Award. Selected by PDAC's Board of Directors,
this award recognizes an organization that demonstrates outstanding
initiative, leadership, and accomplishment in establishing and
maintaining good relations with local communities and in protecting
and preserving the natural environment during an exploration
program or operation of a mine. Golden Star will be honored at an awards
ceremony to be held during PDAC's annual convention
in Toronto on March 6, 2018.
Also in November 2017,
Golden Star's local subsidiary,
Golden Star Bogoso/Prestea Limited ("GSBPL"), was named Mining
Company of the Year at the Ghana Mining Industry Awards.
Judged by a panel of industry professionals, the Mining
Company of the Year Award recognizes an organization that has
achieved the highest aggregate performance results in the
categories of environmental management, occupational health and
safety, corporate social investment, innovation and local
content.
The Company also won:
- Mining Personality of the Year for Golden Star's Chief Operating
Officer, Daniel Owiredu, which was the inaugural award in this
category
- Best Performer in Corporate Social Investment for Golden Star's breast cancer awareness program
that involved screening over 10,400 women in Ghana during
the past three years
- Best Graduate Research for Ahmed-Salim Adam, Process
Manager at Golden Star's Prestea operations
- Runner Up in Occupational Health and Safety for
GSBPL
Outlook
For the second consecutive year, the consolidated guidance range
for cash operating cost per ounce1 and AISC per
ounce1 is materially lower than the previous year's
guidance, reflecting Golden Star's
significantly reducing cost structure.
The following tables set out Golden Star's full year 2018
guidance in terms of gold production, cash operating cost per
ounce1, AISC per ounce1, and capital
expenditures.
Gold Production and Operating Cost Guidance
Asset
|
Gold
Production
(ounces)
|
Cash
Operating Cost1
($/ounce)
|
AISC1
($/ounce)
|
Wassa
|
137,000-142,000
|
600-650
|
-
|
Prestea
|
93,000-113,000
|
740-880
|
-
|
Consolidated
|
230,000-255,000
|
650-730
|
850-950
|
Capital Expenditures Guidance
Asset
|
Sustaining
Capital
($
millions)
|
Development
Capital
($
millions)
|
Total
Capital
Expenditures
($
millions)
|
Wassa
|
14.7
|
5.9
|
20.6
|
Prestea
|
3.0
|
6.3
|
9.3
|
Exploration
|
-
|
6.6
|
6.6
|
Consolidated
|
17.7
|
18.8
|
36.5
|
Notes to
tables:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
All monetary amounts refer to United States dollars unless otherwise
indicated.
Company Profile
Golden Star is an established
gold mining company that owns and operates the Wassa and Prestea
mines in Ghana, West Africa. Listed on the NYSE American, the
Toronto Stock Exchange and the Ghanaian Stock Exchange,
Golden Star is focused on delivering
strong margins and free cash flow from its two high grade, low cost
underground mines. Gold production guidance for 2018 is
230,000-255,000 ounces at a cash operating cost per ounce of
$650-730. As the winner of the
PDAC 2018 Environmental and Social Responsibility Award,
Golden Star is committed to leaving
a positive and sustainable legacy in its areas of operation.
GOLDEN STAR
RESOURCES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME/(LOSS) (Stated in
thousands of U.S. dollars except shares and per share
data)
|
|
|
|
|
|
For the Years
Ended
December 31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
315,497
|
|
$
|
221,290
|
|
Cost of sales
excluding depreciation and amortization
|
|
|
226,482
|
|
|
172,616
|
|
Depreciation and
amortization
|
|
|
31,792
|
|
|
21,160
|
Mine operating
margin
|
|
|
57,223
|
|
|
27,514
|
|
|
|
|
|
|
|
Other
expenses/(income)
|
|
|
|
|
|
|
|
Exploration
expense
|
|
|
1,871
|
|
|
1,818
|
|
General and
administrative
|
|
|
25,090
|
|
|
27,754
|
|
Finance expense,
net
|
|
|
8,485
|
|
|
7,832
|
|
Other
income
|
|
|
(4,346)
|
|
|
(3,349)
|
|
(Gain)/Loss on fair
value of financial instruments, net
|
|
|
(2,057)
|
|
|
25,676
|
|
Loss on repurchase of
5% Convertible Debentures, net
|
|
|
—
|
|
|
11,594
|
|
Loss/(gain) on
conversion of 7% Convertible Debentures, net
|
|
|
165
|
|
|
(48)
|
|
Income/(loss)
before tax
|
|
|
28,015
|
|
|
(41,763)
|
|
Deferred income tax
recovery
|
|
|
(12,944)
|
|
|
—
|
Net income/(loss)
and comprehensive loss
|
|
$
|
40,959
|
|
$
|
(41,763)0)
|
Net income/(loss)
attributable to non-controlling interest
|
|
|
2,188
|
|
|
(2,116)
|
Net income/(loss)
attributable to Golden Star shareholders
|
|
$
|
38,771
|
|
$
|
(39,647)
|
|
|
|
|
|
|
|
Net income/(loss)
per share attributable to Golden Star shareholders
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.10
|
|
$
|
(0.13)
|
Weighted average
shares outstanding - basic (millions)
|
|
|
373.5
|
|
|
294.1
|
Weighted average
shares outstanding - diluted (millions)
|
|
|
441.0
|
|
|
294.1
|
GOLDEN STAR
RESOURCES LTD. CONSOLIDATED BALANCE
SHEETS (Stated in thousands of U.S.
dollars)
|
|
|
|
As of
December 31,
|
|
2017
|
|
2016
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
27,787
|
|
$
|
21,764
|
|
Accounts
receivable
|
3,428
|
|
|
7,299
|
|
Inventories
|
50,653
|
|
|
44,381
|
|
Prepaids and
other
|
5,014
|
|
|
3,926
|
|
|
Total Current
Assets
|
86,882
|
|
|
77,370
|
RESTRICTED
CASH
|
6,505
|
|
|
6,463
|
MINING
INTERESTS
|
254,058
|
|
|
215,017
|
DEFFERED TAX
ASSETS
|
12,944
|
|
|
—
|
|
|
Total
Assets
|
$
|
360,389
|
|
$
|
298,850
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
94,623
|
|
$
|
92,900
|
|
Derivative
liabilities
|
—
|
|
|
2,729
|
|
Current portion of
rehabilitation provisions
|
6,566
|
|
|
5,515
|
|
Current portion of
deferred revenue
|
17,894
|
|
|
19,234
|
|
Current portion of
long term debt
|
15,864
|
|
|
15,378
|
|
Current portion of
other liability
|
13,498
|
|
|
2,073
|
|
|
Total Current
Liabilities
|
148,445
|
|
|
137,829
|
REHABILITATION
PROVISIONS
|
64,146
|
|
|
71,867
|
DEFERRED
REVENUE
|
92,062
|
|
|
94,878
|
LONG TERM
DEBT
|
79,741
|
|
|
89,445
|
LONG TERM DERIVATIVE
LIABILITY
|
10,963
|
|
|
15,127
|
OTHER LONG TERM
LIABILITY
|
6,786
|
|
|
10,465
|
|
|
Total
Liabilities
|
402,143
|
|
|
419,611
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
SHARE
CAPITAL
|
|
|
|
|
|
First preferred
shares, without par value, unlimited shares
authorized. No shares issued and outstanding
|
—
|
|
|
—
|
|
Common shares,
without par value, unlimited shares authorized
|
783,167
|
|
|
746,542
|
CONTRIBUTED
SURPLUS
|
35,284
|
|
|
33,861
|
DEFICIT
|
(794,180)
|
|
|
(832,951)
|
|
Shareholder's
equity/(deficit) attributable to Golden Star
Shareholders
|
24,271
|
|
|
(52,548)
|
NON-CONTROLLING
INTEREST
|
(66,025)
|
|
|
(68,213)
|
|
Total
Deficit
|
|
(41,754)
|
|
|
(120,761)
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
360,389
|
|
$
|
298,850
|
GOLDEN STAR
RESOURCES LTD. CONSOLIDATED STATEMENTS OF CASH
FLOWS (Stated in thousands of U.S.
dollars)
|
|
|
|
|
|
|
|
For the Years
Ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net
income/(loss)
|
$
|
40,959
|
|
|
$
|
(41,763)
|
|
Reconciliation of
net income/(loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
31,823
|
|
|
21,173
|
|
|
|
Share-based
compensation
|
12,554
|
|
|
13,850
|
|
|
|
Deferred income tax
recovery
|
(12,944)
|
|
|
—
|
|
|
|
(Gain)/loss on fair
value of 7% Convertible Debentures embedded derivatives
|
(2,095)
|
|
|
3,812
|
|
|
|
Loss on fair value of
5% Convertible Debentures
|
317
|
|
|
17,235
|
|
|
|
Loss on repurchase of
5% Convertible Debentures, net
|
—
|
|
|
11,594
|
|
|
|
Recognition of
deferred revenue
|
(14,156)
|
|
|
(11,267)
|
|
|
|
Proceeds from Royal
Gold stream
|
10,000
|
|
|
60,000
|
|
|
|
Reclamation
expenditures
|
(5,992)
|
|
|
(5,527)
|
|
|
|
Other
|
2,158
|
|
|
6,350
|
|
|
|
Changes in working
capital
|
(7,448)
|
|
|
(22,208)
|
|
|
|
|
Net cash provided by
operating activities
|
55,176
|
|
|
53,249
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
Additions to mining
properties
|
(632)
|
|
|
(2,108)
|
|
|
|
Additions to plant
and equipment
|
(649)
|
|
|
(613)
|
|
|
|
Additions to
construction in progress
|
(67,591)
|
|
|
(81,635)
|
|
|
|
Change in accounts
payable and deposits on mine equipment and material
|
1,103
|
|
|
(2,794)
|
|
|
|
Increase in
restricted cash
|
(41)
|
|
|
—
|
|
|
|
Proceeds from sale of
assets
|
—
|
|
|
657
|
|
|
|
|
Net cash used in
investing activities
|
(67,810)
|
|
|
(86,493)
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
Principal payments on
debt
|
(2,198)
|
|
|
(29,345)
|
|
|
|
Proceeds from debt
agreements
|
10,000
|
|
|
3,000
|
|
|
|
Proceeds from 7%
Convertible Debentures, net
|
—
|
|
|
20,714
|
|
|
|
5% Convertible
Debentures repayment
|
(13,611)
|
|
|
(19,941)
|
|
|
|
Shares issued,
net
|
24,456
|
|
|
45,450
|
|
|
|
Exercise of
options
|
10
|
|
|
22
|
|
|
|
|
Net cash provided by
financing activities
|
18,657
|
|
|
19,900
|
|
|
Increase/(decrease)
in cash and cash equivalents
|
6,023
|
|
|
(13,344)
|
|
Cash and cash
equivalents, beginning of period
|
21,764
|
|
|
35,108
|
|
Cash and cash
equivalents, end of period
|
$
|
27,787
|
|
|
$
|
21,764
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
In this press release, we use the terms "cash operating cost",
"cash operating cost per ounce", "all-in sustaining costs", "all-in
sustaining costs per ounce", "adjusted net income attributable to
Golden Star shareholders", "adjusted
income per share attributable to Golden
Star shareholders", "cash provided by operations before
working capital changes", and "cash provided by operations before
working capital changes per share - basic". 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, severance charges 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" 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, and "cash operating cost
per ounce" is that amount divided by the number of ounces of gold
sold (excluding pre-commercial production ounces sold) during the
period. We use cash operating cost per ounce as a key operating
metric. We monitor this measure monthly, comparing each month's
values to prior periods' 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 IFRS. Changes in numerous factors
including, but not limited to, 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. We believe 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.
"All-in sustaining costs" commences with cash operating costs
and then adds the cash component of metals net realizable value
adjustment, royalties, sustaining capital expenditures, corporate
general and administrative costs (excluding share-based
compensation expenses), and accretion of rehabilitation provision.
"All-in sustaining costs per ounce" is that amount divided by the
number of ounces of gold sold (excluding pre-commercial production
ounces sold) during the period. This measure 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. Share-based
compensation expenses are now also excluded from the calculation of
all-in sustaining costs as the Company believes that such expenses
may not be representative of the actual payout on equity and
liability based awards. Share-based compensation expenses were
previously included in the calculation of all-in sustaining costs.
The Company has presented comparative figures to conform with the
computation of all-in sustaining costs as currently calculated by
the Company.
The Company believes that "all-in sustaining costs" will better
meet the needs of analysts, investors and other stakeholders of the
Company in understanding the costs associated with producing gold,
understanding the economics of gold mining, assessing the operating
performance and also the Company's ability to generate free cash
flow from current operations and to generate free cash flow on an
overall Company basis. Due to the capital intensive nature of the
industry and the long useful lives over which these items are
depreciated, there can be a disconnect between net earnings
calculated in accordance with IFRS and the amount of free cash flow
that is being generated by a mine.
"Cash provided by operations before working capital changes" is
calculated by subtracting the "changes in working capital" from
"net cash provided by operating activities" as found in the
statements of cash flows. "Cash provided by operations before
working capital changes per share - basic" is "Cash provided by
operations before working capital changes" divided by the basic
weighted average number of shares outstanding for the
period.
"Adjusted net income attributable to Golden Star shareholders" is calculated by
adjusting Net income/(loss) attributable to Golden Star shareholders for (gain)/loss on fair
value of financial instruments, share-based compensation expenses,
loss on conversion of 7% Convertible Debentures, severance charges
and income tax recovery on previously unrecognized deferred tax
assets. "Adjusted income per share attributable to Golden Star shareholders" for the period is
"Adjusted net income attributable to Golden
Star shareholders" divided by the weighted average number of
shares outstanding using the basic method of earnings per
share.
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. Non-GAAP measures are intended to
provide additional information only and do not have standardized
definitions under IFRS and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. These measures 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, 2017,
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: the Company's
ability to further reduce its costs, strengthen its financial
position and deliver more value to shareholders in 2018; the
Company's ability to find and focus on high margin ore; the
Company's ability to become an underground-focused gold producer;
production, profitability, cash operating costs, cash operating
costs per ounce, and AISC per ounce for 2018; the risk profile of
the Company; the ability to achieve 2018 production guidance in
terms of production, profitability, cash operating costs, cash
operating costs per ounce, AISC per ounce, and capital
expenditures; the Company's ability to continue feeding stockpiled
ore to the Wassa and Prestea processing plants; the amount of
stockpiled ore to be fed to the Wassa and Prestea processing
plants; the Company's ability to increase the tonnage profile at
Wassa Underground in 2018; the timing for releasing further details
regarding the new mine plan for the Wassa complex; the ability to
continue mining at the Prestea Open Pits; the timing for completing
production at the Prestea Open Pits; drilling plans at Wassa
Underground and Prestea Underground; the Company's obligation to
make severance payments and the timing thereof; and capital
expenditures for 2018.
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.
Technical Information and Quality Control
The technical contents of this press release have been reviewed
and approved by S. Mitchel Wasel, BSc Geology, a "Qualified Person"
pursuant to National Instrument 43-101 ("NI 43-101"). Mr. Wasel is
Vice President Exploration for Golden
Star and an active member of the Australasian Institute of
Mining and Metallurgy.
The technical contents of this press release have been reviewed
and approved by Dr. Martin Raffield,
P. Eng., a Qualified Person pursuant to NI 43-101. Dr.
Raffield is Senior Vice President of Project Development and
Technical Services for Golden
Star.
Additional scientific and technical information relating to the
mineral properties referenced in this news release are contained in
the following current technical reports for those properties
available at www.sedar.com: (i) Wassa - "NI 43-101 Technical Report
on feasibility study of the Wassa open pit mine and underground
project in Ghana" effective date
December 31, 2014; (ii) Prestea
Underground - "NI 43-101 Technical Report on a Feasibility Study of
the Prestea Underground Gold Project in Ghana" effective date November 3, 2015; and (iii) Bogoso - "NI 43-101
Technical Report on Resources and Reserves Golden Star Resources
Ltd., Bogoso Prestea Gold Mine, Ghana" effective date December 31, 2013.
Cautionary Note to U.S. Investors
This news release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ materially from the
requirements of United States
securities laws applicable to U.S. companies. The terms "mineral
reserve", "proven mineral reserve" and "probable mineral reserve"
are Canadian mining terms as defined in accordance with NI 43-101.
These definitions differ from the definitions of the Securities and
Exchange Commission (the "SEC") set forth in Industry Guide 7 under
the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Under SEC Industry Guide 7 standards,
mineralization may not be classified as a "reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve determination is made.
In addition, the terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral
resource" are defined in and required to be disclosed by NI 43-101,
however, these terms are not defined terms under SEC Industry Guide
7 and are normally not permitted to be used in reports and
registration statements filed with the SEC. Investors are cautioned
not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves. "Inferred mineral
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Investors are cautioned not to assume that all or any
part of an inferred mineral resource exists or is economically or
legally mineable. Disclosure of "contained ounces" in a resource is
permitted disclosure under Canadian regulations, however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC Industry Guide 7 standards as in
place tonnage and grade without reference to unit measures.
For the above reasons, information contained in this news
release or in the documents referenced herein containing
descriptions of our mineral deposits may not be comparable to
similar information made public by U.S. companies subject to the
reporting and disclosure requirements under the United States federal securities laws and
the rules and regulations thereunder.
SOURCE Golden Star Resources Ltd.