2019 Financial Results Conference Call
Details Below
TORONTO, Jan. 22, 2020 /CNW/ - Golden Star Resources
Ltd. (NYSE American: GSS; TSX: GSC; GSE: GSR) ("Golden
Star" or the "Company") is pleased to announce its preliminary
production results for the fourth quarter ("Q4") and full year
("FY") for 2019 and its guidance for FY-2020. The 2019 cost
performance and FY-2019 financials will be released on February 18, 2020 after market close.
HIGHLIGHTS
- Q4-2019 production totalled 52koz, up 4% over Q3-2019. FY-2019
production therefore totalled 204koz, delivering on the upper end
of the 190 - 205koz revised guidance range.
- Wassa had a strong end to the year with grades improving in Q4
and throughput remaining ahead of plan. The underground delivered
grades of 3.8g/t in Q4, 33% higher than achieved in Q3.
- At Prestea, the mined and milled tonnes in Q4-2019 were lower
than the previous quarter given a lower open pit contribution,
underground stope availability and sequencing which was partially
offset by an increase in grades.
- The Company ended 2019 with $53.4
million of cash.
- FY-2020 production guidance of 195 - 210koz is in line with
2019 performance. Similarly, the All-in Sustaining
Cost1 ("AISC") guidance of $1,080-1,180/oz is in line with the revised
guidance for 2019. Underlying this guidance is a range of
operational initiatives aimed at improving the deliverability and
consistency of our longer-term plans. These include the investment
in a second mining method and level at Prestea, as well as the
completion of the paste plant project at Wassa.
- We are pleased to announce that Paul
Thomson will join the company on January 27, 2020 and will work through a
transition period with our current CFO, André van Niekerk. Paul
joins the Company from a private real estate business and was
previously the CFO of Aureus Mining and Berkeley Energia.
Table 1: Preliminary Production Data
(koz)
|
Quarterly
Production
|
Full Year
Production
|
|
Q4
2019
|
Q3
2019
|
%
change
QoQ
|
Q4
2018
|
%
change
YoY
|
FY
2019
|
FY
2018
|
%
change
YoY
|
Wassa
|
41
|
35
|
17%
|
38
|
8%
|
156
|
150
|
4%
|
Prestea
|
11
|
15
|
(27%)
|
11
|
-
|
48
|
75
|
(36%)
|
Consolidated
|
52
|
50
|
4%
|
49
|
6%
|
204
|
225
|
(9%)
|
|
|
|
|
|
|
|
|
|
Notes:
|
1.
|
See "Non-GAAP
Financial Measures".
|
Andrew Wray, President and
Chief Executive Officer of Golden
Star, commented:
"The 2019 production performance
was in line with the upper end of our revised guidance, thanks to
improved performance at Wassa, as expected. While 2019 marked the
start of a transformation of the business, 2020 will see
Golden Star look to further
demonstrate the long term potential of Wassa, and deliver on a new
mine plan at Prestea.
At Wassa, we continue to invest in the infrastructure
necessary to support the ongoing increase in throughput, which is
driving growth in production. This infrastructure includes the
paste plant project, electrical upgrades and mine access, together
with the step up in development and definition drilling, which is
improving our visibility and confidence in future operational
plans. The focus at Prestea will remain on the operational
turnaround and implementing the outcomes of the operational review
carried out in 2019. Much of this work centres around productivity
and dilution control in the Alimak stopes and the introduction of
the longhole mining methodology to a new level in the mine. This
will support the planned increase in production profile and
improved cash generation in future years.
Following André van Niekerk's decision not to move to
London, we are very pleased to
announce that we have completed the search process for a Chief
Financial Officer, and that Paul
Thomson will be joining the Company from January 27, 2020. Paul's experience in the gold
industry in Africa will be
invaluable as we work to deliver on the opportunities to continue
to grow Golden Star. I would like to
express my thanks to André for his continued support and his
commitment to remain with the business to affect an orderly hand
over of the CFO's responsibilities to Paul following the release of
our 2019 results in February."
FY-2019 RESULTS AND CONFERENCE CALL
Following the release of our FY-2019 financial statements on
February 18, 2020, the Company will
conduct a conference call and webcast on Wednesday, February 19, 2020 at 10:00 am ET.
Toll Free (North America):
+1 833 231 8263
Toronto Local and International: +1
647 689 4108
Toll Free (UK): 0800 051
7107
Conference ID: 7897747
Webcast:
https://event.on24.com/wcc/r/2151422/6B38EC7D5988C8FD57C818D1DDCD2EF8
and on the home page of the Company's website: www.gsr.com.
A recording and webcast replay of the call will be available on
the Company's website: www.gsr.com following the call.
FY-2020 PRODUCTION AND CAPITAL EXPENDITURE GUIDANCE
Table 2: 2020 Production, Cost and Capex Guidance
Asset
|
Gold
Production
(koz)
|
Cash
Operating Cost1
($/oz)
|
AISC1
($/oz)
|
Sustaining
Capital2
($
millions)
|
Development
Capital2
($
millions)
|
Total
Capital
Expenditures
($
millions)
|
Wassa
Complex
|
155-165
|
620-660
|
930-990
|
23-25
|
19-21
|
42-46
|
|
|
|
|
|
|
|
Prestea
Complex
|
40-45
|
1,400-1,550
|
1,650-1,850
|
6.5-7.5
|
2.5-3
|
9-10.5
|
|
|
|
|
|
|
|
Capitalised
exploration
|
-
|
-
|
-
|
-
|
3.5
|
3.5
|
|
|
|
|
|
|
|
Consolidated
|
195-210
|
790-850
|
1,080-1,180
|
29.5-32.5
|
25-27.5
|
55-60
|
|
Notes:
|
1.
See "Non-GAAP Financial
Measures".
|
2.
Development capital are those costs
incurred at new operations and costs related to major projects at
existing operations where these projects will materially increase
production. All other costs relating to existing operations are
considered sustaining capital.
|
FY-2020 Production Guidance
Golden Star's 2020 consolidated
production guidance is in line with 2019 production performance.
The mid-point of the production guidance for Wassa is 3% ahead of
the 2019 performance. We expect a slightly lower contribution from
Prestea given minimal open pit production is planned, to some
extent offset by the increase in underground ounces.
Cost Guidance
The 2020 AISC guidance at Wassa
increases relative to 2019, despite slightly higher production
guidance, due to higher sustaining capex, the commissioning of the
paste fill plant at the end of Q3-2020, an increased allocation of
corporate costs and higher expected royalties.
At Prestea, we expect to see a reduction in AISC compared to
2019 although the cost profile remains elevated. As the
optimisation plans deliver results and we introduce a new mining
method on 17 Level, we expect the cost profile to improve and to be
substantially lower in 2021.
At a consolidated level, we expect AISC to be in line with
2019.
Capex Guidance
The $55-$60 million
capex guidance for 2020 is slightly lower than the $62 million guided in 2019. This spend is
expected to be weighted to H1-2020, with approximately 60%
anticipated to be spent in the first half of the year.
In 2020, capex continues to be focussed on Wassa, driven by the
paste fill plant project. The plant is expected to be completed in
Q3-2020 with the additional investment of $13.5 million, bringing the total investment to
$23 million.
A budget of $3.5 million has been
set for capitalised exploration at the mine sites in 2020.
EXPLORATION
In 2019, the Wassa exploration drilling (infill and step-out
extension drilling from surface) was completed with a total of
62,350 metres drilled with assay results released in Q4 (for more
information please see the Company's news release issued on
November 13, 2019). An update of the
resource model commenced, the results from which are due to be
announced in late Q1-2020. In Q4-2019, the exploration team also
completed a detailed review of the exploration portfolio in
Ghana, generating a pipeline of
early stage target delineation and drill testing targets.
In 2020, the greenfield and brownfield exploration programmes
will focus on near mine targets in and around Wassa and Prestea, as
well as on regional exploration targets. A total of $2.7 million (in addition to the $3.5 million budget for capitalised exploration)
has been allocated for exploration spend that will be expensed.
At Wassa, drilling is focused on several targets in the footwall
to the main mining area (B-Shoot) targeting plunge extensions of
gold mineralisation between the mined out Wassa South East pit and the recently identified
footwall zones in the Wassa "deeps" drilling. This programme will
commence in Q1-2020 and consists of an initial 4-6 holes for ~3,000
metres of diamond core on 400 metre-spaced sections drilled from
underground platforms.
No further capital is planned at this stage for 2020 on Father
Brown while resource estimation and evaluation work progresses in
conjunction with desktop mine design work. This will be used to
assess whether potential future drill programmes are justified.
BALANCE SHEET
The Company ended 2019 with $53.4
million of cash and total gross debt of $105.1 million, for net debt of $51.7 million.
Table 3: Preliminary Net Debt Position
(US$m)
|
Q4-20191
|
Q3-2019
|
Q4-2018
|
Cash
|
53.4
|
56.8
|
96.5
|
Corporate
debt
|
58.1
|
49.0
|
56.1
|
Convertible
debenture
|
47.0
|
46.4
|
44.6
|
Net
debt
|
51.7
|
38.6
|
(4.2)
|
|
Notes:
|
1.
The debt balances for Q4 are preliminary
and are subject to change resulting from adjustments to the
amortisation of arrangement fees or the present value of the
debenture.
|
MANAGEMENT CHANGES
The Company is pleased to announce that Paul Thomson will join the Company on
January 27, 2020 and, following the
transition of the CFO responsibilities after the Company's 2019
results are announced on February 18,
2020, will be appointed Executive Vice President, Chief
Financial Officer. André van Niekerk has committed to remaining
with the Company up to April 2020 to
support Paul in his new role. As announced in October 2019, André made the decision not to
move to London as part of the
relocation of the Company's executive team to be nearer to
operations in Ghana.
Mr. Thomson has over 25 years of finance and capital markets
experience, predominantly in the mining industry. He has held a
number of finance, corporate finance and business development roles
at mining companies including Aureus Mining, Berkeley Energia and
Kazakhmys. Most recently, he has been the Finance Director for a
private residential and commercial property developer. He is a
chartered accountant and started his career at Ernst &
Young.
WASSA MINE
Table 4: Wassa - Preliminary Operational Data
|
Q4
2019
|
Q3
2019
|
QoQ %
change
|
Q4
2018
|
YoY %
change
|
FY
2019
|
FY
2018
|
YoY %
change
|
Tonnes mined
(kt)
|
376
|
407
|
(8%)
|
310
|
21%
|
1,422
|
1,075
|
32%
|
Underground
mining rate (Tpd)
|
4,087
|
4,423
|
(8%)
|
3,364
|
21%
|
3,895
|
2,946
|
32%
|
Underground
grade (g/t)
|
3.78
|
2.84
|
33%
|
3.80
|
(1%)
|
3.57
|
4.18
|
(15%)
|
Tonnes milled
(kt)
|
389
|
427
|
(9%)
|
402
|
(3%)
|
1,548
|
1,601
|
(3%)
|
Head grade
(g/t)
|
3.46
|
2.70
|
28%
|
3.08
|
12%
|
3.27
|
3.06
|
7%
|
Recovery rate
(%)
|
95%
|
95%
|
0%
|
95%
|
0%
|
96%
|
96%
|
0%
|
Production
(koz)
|
41
|
35
|
17%
|
38
|
8%
|
156
|
150
|
4%
|
2019 Performance vs. Guidance
With production from Wassa totalling 156koz in 2019, the mine
has delivered on its revised guidance for the year of 150-160koz.
The underground mining delivered grades of 3.78g/t in Q4-2019, 33%
higher than achieved in Q3-2019. In conjunction with achieving
these higher grades, the operation continued to deliver mining
rates in excess of 4,000 tonnes per day (tpd). Mining progressed in
the 595 and 620 Levels, moving out of the areas where lower than
expected grades were experienced in the prior quarter.
Capex
The investment in the paste fill plant and
electrical upgrades resulted in an increase in capital spend in
Q4-2019. As detailed in the guidance commentary below, the paste
fill plant is expected to be completed in Q3-2020 and is being
implemented to support the recovery of pillars in new mining areas.
Ultimately, this will result in a higher yield of the available ore
from the Wassa mine.
2020 Guidance
Wassa is expected to produce between 155 - 165koz in 2020 at a
cash operating cost of $620-660/oz
and an AISC of $930-990/oz.
Mining rates
We expect mining rates for the FY-2020 to
be in excess of 4,000tpd, compared to just under 3,900tpd in 2019,
as a result of the ongoing investment in development and definition
drilling as well as additional mining fleet. Volumes of any lower
grade stockpile material will be minimal during 2020.
Grades
Underground mined grades are expected to
remain in line with the average grade achieved in 2019. We are
currently finalising our reserve and resource calculations for
year-end 2019, and, as part of this process, will be reviewing the
future grade profile at Wassa and will be incorporating the results
of our drilling programmes during 2019.
Costs
The $620-660/oz
cash cost guidance for 2020 shows a slight increase over 2019
guidance ($600-650/oz) due to the
introduction of paste filling in H2-2020 and higher expected
royalties. The AISC also rises slightly with an acceleration of
maintenance spend through the year and an increased allocation of
corporate costs. This results in 2020 AISC guidance of $930-990/oz.
Capex
The capital programmes at Wassa are expected to total $42-46 million in 2020 of which $17.5 million is allocated to capitalised
development, $6 million is allocated
to new mobile equipment and the replacement of components in the
existing fleet and $13.5 million is
allocated to the completion of the paste fill plant.
PRESTEA MINE
Table 5: Prestea - Preliminary Operational Data
|
Q4
2019
|
Q3
2019
|
QoQ %
change
|
Q4
2018
|
YoY %
change
|
FY
2019
|
FY
2018
|
YoY %
change
|
Open pit ore
mined
|
112
|
178
|
(37%)
|
32
|
248%
|
494
|
374
|
32%
|
Open pit
grades
(g/t)
|
1.45
|
1.62
|
(10%)
|
1.01
|
(44%)
|
1.56
|
1.20
|
(30%)
|
Underground
ore
mined (kt)
|
34
|
42
|
(19%)
|
30
|
13%
|
152
|
123
|
24%
|
Underground
mining
rate (tpd)
|
374
|
457
|
(18%)
|
322
|
16%
|
417
|
336
|
24%
|
Underground
grade (g/t)
|
6.87
|
5.00
|
37%
|
8.56
|
(20%)
|
5.58
|
10.12
|
(45%)
|
Tonnes milled
(kt)
|
152
|
221
|
(31%)
|
209
|
(27%)
|
719
|
1,302
|
(45%)
|
Head grade
(g/t)
|
2.68
|
2.26
|
19%
|
1.88
|
43%
|
2.41
|
2.04
|
18%
|
Recovery rate
(%)
|
86%
|
87%
|
(1%)
|
85%
|
1%
|
86%
|
86%
|
0%
|
Production
(koz)
|
11
|
15
|
(27%)
|
11
|
0%
|
48
|
75
|
(36%)
|
2019 Performance vs. Guidance
Production from Prestea totalled 47.6koz in 2019 which was ahead
of the revised guidance range of 40-45koz, due to the initial
benefits from the implementation of the operational review
recommendations during the second half of the year.
Grades
In Q4 the work to address dilution in the
underground mine delivered improvements, particularly in stope S12,
which was the first stope with a reduced raise height. This helped
to better control mining execution and manage dilution. The
initiative to separate ore from waste to further reduce dilution of
the mill feed is also starting to yield benefits with 9,000 tonnes
of waste material successfully removed from processing in the
quarter.
Stope availability
Underground ore volumes were lower
than anticipated due to ore being locked up in stope S13 as a
result of oversize material blocking the stope draw point. This ore
is expected to be released through Q1-2020 as the mining activity
progresses through the adjacent stope S14.
2020 Guidance
Production
We expect production at Prestea to be
40-45koz in 2020. This is slightly below the output seen in 2019,
but underlying this is a significant increase in underground
production as we expect the open pit contribution to be minimal, at
around 2koz, compared to 23koz in 2019.
Throughput
During 2020, we expect to see a step up in volumes delivered from
the underground activities to in excess of 500tpd, driven by
improved stope cycle times on 24 Level as a result of the
implementation of the operational improvement plans. This will be
complemented by development and stoping ore from the longhole
stopes on 17 Level as we progress through the year.
Grades
The mill feed grade will improve through the
year with the continued delivery of the waste separation and
dilution initiatives, such as the shorter Alimak stope heights
together with the introduction of a smaller Alimak platform.
Costs
We expect to see the overall cost metrics
continue to improve as we go through 2020, with expected cash
operating costs of $1,400-1,550/oz
and AISC of $1,650-1,850/oz. These
costs remain above our longer-term targets and our focus will
remain on continuous operational optimisations. These initiatives
are expected to transition the operation to a much improved cost
profile by the end of 2020 and we expect these metrics to fall
further during 2021.
Capex
The capital programmes at Prestea are expected
to total $9-10.5 million in 2020. The
largest component of this is for the additional equipment,
including the new development jumbo, the loader and the longhole
drill rig all of which will be operational during the first half of
the year.
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
underground 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
underground mines. Gold production guidance for 2020 is
195,000-210,000 ounces at a cash operating cost per
ounce1 of $790-$850. Since
winning the PDAC 2018 Environmental and Social Responsibility
Award, Golden Star has remained
committed to leaving a positive and sustainable legacy in its areas
of operation.
Notes:
|
1.
|
See "Non-GAAP
Financial Measures"
|
Statements Regarding Forward-Looking Information
Some statements contained in this news release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and "forward looking
information" within the meaning of Canadian securities laws include
but are not limited to, statements and information regarding: gold
production of 195-210koz, AISC of $1,080-1,180/oz and cash operating cost per ounce
of $790-$850 in 2020; capex of $55-$60 million in
2020, with approximately 60% in the first half of the year;
$3.5 million for capitalised
exploration and $5 million for
exploration spend in 2020; operational initiatives aimed at
improving the deliverability and consistency of the Company's
longer-term plans; Paul Thomson
joining the Company on January 27,
2020 and being appointed CFO following the release of the
Company's 2019 results in February; further demonstrating the
long-term potential of Wassa and delivering on a new mine plan at
Prestea in 2020; the continued investment in the infrastructure
necessary to support the ongoing increase in throughput at Wassa;
the operational turnaround and implementing the outcomes of the
operational review carried out in 2019 at Prestea to support the
planned increase in production profile and improved cash generation
in future years; the cost profile at Prestea improving and being
substantially lower in 2021; the completion of the Wassa paste fill
plant project in Q3 2020 with the additional investment of
$13.5 million; an updated resource
model for Wassa in late Q1 2020; greenfield and brownfield
exploration programmes focussing on near mine targets in and around
Wassa and Prestea, as well as on regional exploration targets, in
2020; the commencement of a drilling programme at Wassa in Q1 2020;
no further capital spend in 2020 on Father Brown; Wassa producing
between 155-165koz in 2020 at a cash operating cost of $620-660/oz and an AISC of $930-990/oz; mining rates at Wassa being in
excess of 4,000tpd in 2020; underground mined grades at Wassa
remaining in line with the average grade achieved in 2019; capital
programmes at Wassa of $42-46 million
in 2020; Prestea producing between 40-45koz in 2020; a step up in
volumes delivered from the underground activities at Prestea in
2020; Improved mill feed grade at Prestea through 2020; continued
improvement in the overall cost metrics at Prestea through 2020;
expected cash operating costs of $1,400-1,550/oz and AISC of $1,650-1,850/oz at Prestea for 2020; capital
programmes at Prestea of $9-10.5
million in 2020; the release of the Company's Q4 2019 cost
performance and FY 2019 financials on February 18, 2020. 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. Investors are cautioned that
forward-looking statements and information are inherently uncertain
and involve risks, assumptions and uncertainties that could cause
actual facts to differ materially. 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 future developments
affecting the Company will be those anticipated by management.
Please refer to the discussion of these and other factors in
Management's Discussion and Analysis of financial conditions and
results of operations for the year ended December 31, 2018 and in our annual information
form for the year ended December 31,
2018 as filed on SEDAR at www.sedar.com. The forecasts
contained in this press release constitute management's current
estimates, as of the date of this press release, with respect to
the matters covered thereby. We expect that these estimates will
change as new information is received. While we may elect to update
these estimates at any time, we do not undertake any estimate at
any particular time or in response to any particular event.
Non-GAAP Financial Measures
In this news 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 (loss)/income
attributable to Golden Star
shareholders", "adjusted (loss)/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".
"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.
"Cost of sales per ounce" is equal to cost of sales excluding
depreciation and amortization for the period plus depreciation and
amortization for the period divided by the number of ounces of gold
sold (excluding pre-commercial production ounces sold) during the
period.
"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, materials and supplies write-off 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 or 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 inventory net realizable
value adjustments, royalties, sustaining capital expenditures,
corporate general and administrative costs (excluding share-based
compensation expenses and severance charges), and accretion of
rehabilitation provision. For mine site all-in sustaining costs,
corporate general and administrative costs (excluding share-based
compensation expenses and severance charges) are allocated based on
gold sold by each operation. "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 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.
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 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. 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.
"Adjusted net (loss)/income attributable to Golden Star shareholders" is calculated by
adjusting net (loss)/income attributable to Golden Star shareholders for (gain)/loss on fair
value of financial instruments, share-based compensation expenses,
severance charges, loss/(gain) on change in asset retirement
obligations, and income tax expense. "Adjusted (loss)/income per
share attributable to Golden Star
shareholders" for the period is "Adjusted net (loss)/income
attributable to Golden Star
shareholders" divided by the weighted average number of shares
outstanding using the basic method of earnings per share.
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
three months ended September 30,
2019, which are available at www.sedar.com.
Technical Information
The Mineral Reserve and Mineral Resource estimates have been
compiled by the Company's technical personnel in accordance with
definitions and guidelines set out in the Definition Standards for
Mineral Resources and Mineral Reserves adopted by the Canadian
Institute of Mining, Metallurgy, and Petroleum and as required
by Canada's National Instrument 43-101 - Standards of
Disclosure for Mineral Projects ("NI 43-101"). Mineral Reserve
estimates reflect the Company's reasonable expectation that all
necessary permits and approvals will be obtained and maintained.
Mining dilution and mining recovery vary by deposit and have been
applied in estimating the Mineral Reserves.
The Mineral Resource technical contents of this press release
have been reviewed and approved by S. Mitchel Wasel, BSc Geology, a
"Qualified Person" pursuant to 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 Mineral Reserve technical contents of
this press release have been reviewed and approved by and were
prepared under the supervision of Dr. Martin Raffield, Senior Vice President, Project
Development and Technical Services for the Company. Dr. Raffield is
a "Qualified Person" as defined by NI 43-101.
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 Resources and Reserves, Golden Star Resources,
Wassa Gold Mine, Ghana" effective date December 31, 2018; and (ii) Prestea Underground -
"NI 43-101 Technical Report on Resources and Reserves, Golden Star
Resources, Bogoso/Prestea Gold Mine, Ghana" effective date December 31, 2017.
Cautionary Note to US Investors Concerning Estimates of
Measured and Indicated Mineral Resources
This press release uses the terms "Measured Mineral Resources"
and "Indicated Mineral Resources". The Company advises US investors
that while these terms are recognized and required by NI 43-101,
the US Securities and Exchange Commission ("SEC") does
not recognize them. Also, disclosure of contained ounces is
permitted under Canadian regulations; however
the SEC generally requires Mineral Resource information
to be reported as in-place tonnage and grade. US Investors are
cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into Mineral
Reserves.
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SOURCE Golden Star Resources Ltd.