TORONTO, Oct. 31, 2018 /PRNewswire/ - Golden Star
Resources Ltd. (NYSE American: GSS; TSX: GSC; GSE: GSR) ("Golden
Star" or the "Company") reports its financial and operational
results for the quarter ended September
30, 2018. The Company also provides an update on the
use of proceeds from the $125.7
million strategic investment by La Mancha Holding S.à r.l.,
a Luxembourg-incorporated private
gold investment company ("La Mancha"), on October 1, 2018.
HIGHLIGHTS:
- Gold production of 57,113 ounces in the third quarter of 2018,
including continued strong production from the Wassa Complex
("Wassa") of 38,097 ounces
-
- 20% increase in gold production from Wassa in the third quarter
of 2018 compared to the third quarter of 2017, including a 130%
increase in production from the Wassa Underground Gold Mine ("Wassa
Underground")
- Average production rate of over 3,400 tonnes per day ("tpd")
achieved at Wassa Underground during the third quarter of 2018
- Improvement plan implemented at the Prestea Complex ("Prestea")
during September 2018
-
- Plan is focused on reducing annual operating costs by 31%
through the closure of the open pit operation and on increasing the
production rate at the Prestea Underground Gold Mine ("Prestea
Underground")
- 10% increase in production rate during the third quarter of
2018 to 375 tpd compared to the second quarter of 2018
- Cash operating cost per ounce1 of $780 and All-In Sustaining Cost ("AISC") per
ounce1 of $994 in the
third quarter of 2018
- Gold revenues of $67.7 million
and net loss attributable to Golden
Star shareholders of $3.2
million or $0.01 loss per
share (basic) in the third quarter of 2018
- Cash provided by operations of $10.8
million or $0.03 per share in
the third quarter of 2018 and mine operating margin of
$10.2 million
- Capital expenditures of $9.8
million in the third quarter of 2018
- Consolidated cash balance of $18.4
million at September 30, 2018,
excluding the funds received from the strategic investment by La
Mancha of $125.7 million on
October 1, 20182
- Golden Star is on track to
achieve its consolidated full year ("FY") 2018 guidance in terms of
gold production, cash operating cost per ounce1 and AISC
per ounce1
Notes:
|
1.
|
See "Non-GAAP
Financial Measures".
|
2.
|
For more information,
please see the press release entitled, "Golden Star announces long
term, strategic investment by La Mancha", dated August 1, 2018 and
the press release entitled, "Golden Star Announces Completion of La
Mancha Strategic Investment", dated October 2, 2018.
|
Sam Coetzer, President and
Chief Executive Officer of Golden
Star, commented:
"With another strong quarter of production from Wassa and
continuing improvements at Prestea, Golden
Star is approaching the end of 2018 with a robust platform
for growth. We have implemented plans to reduce Prestea's
cash operating costs and we believe that following the closure of
the open pit operation, the underground operation will be
well-positioned to move forwards with a lower cost structure.
We saw similar increased cash operating costs last year at Wassa
during its transition into an underground-only operation and we
believe that Prestea's performance will improve in a similar way
once the operation is right sized.
"The strategic investment from La Mancha has strengthened our
balance sheet and we are excited to use these funds to gain a more
thorough understanding of the potential of our assets. We expect to
release further drilling results from Wassa Underground during the
fourth quarter of 2018, in addition to the first results from the
2018 drilling program at the Father Brown satellite deposit.
Golden Star is a very different
company from the one we were at the start of the year and we now
have the right people, the right assets and the right balance sheet
to deliver significant value for our shareholders."
Third Quarter 2018 Conference Call Details
Golden Star will conduct a
conference call and webcast to discuss the results of the third
quarter of 2018 on Thursday, November 1,
2018 at 10:00am ET.
The 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: 7227338
Webcast: www.gsr.com
A recording and webcast replay of the call will be available at
www.gsr.com following the call.
USE OF PROCEEDS
The table below provides a breakdown of the use of proceeds from
La Mancha's $125.7 million strategic
investment (net cash of approximately $125.0
million). Golden Star
has presented the use of proceeds as a series of ranges as the size
of the exploration budget is dependent on the success of the
exploration program at each asset and this will impact the size of
the development and expansion budget and the corporate
budget. Golden Star expects to
use the proceeds from La Mancha's strategic investment to advance
its organic projects between the fourth quarter of 2018 and the end
of 2020, whereas any external growth opportunities will be assessed
on a case-by-case basis as they arise.
La Mancha
Strategic Investment: Use of Proceeds
|
Range
(US$m)
|
Exploration
|
20.0
|
35.0
|
Development and
Expansion
|
30.0
|
75.0
|
General Corporate
Purposes
|
75.0
|
15.0
|
TOTAL (Net
Cash)
|
125.0
|
125.0
|
Exploration
La Mancha's strategic investment allows Golden Star to accelerate its exploration
program and to unlock its organic growth potential on an expedited
basis.
Golden Star expects the majority
of the $20.0 million to $35.0 million exploration budget to be allocated
to Wassa Underground, following the positive results received by
Golden Star in the second quarter of
2018, which led to a 147% increase in the Company's Inferred
Mineral Resources at this deposit.1 The two
objectives of this drilling are to convert Inferred Mineral
Resources into Indicated Mineral Resources and to assess if the
Wassa deposit extends beyond the current Inferred Mineral Resources
to the south.
The second exploration focus is anticipated to be the Father
Brown satellite deposit, which has the potential to be a second
high grade ore supply for the Wassa processing plant as an
underground operation. Golden
Star mined Father Brown between 2011 and 2015 as an open pit
operation. It has Indicated Mineral Resources of 1.2Mt at
5.84 grams per tonne ("g/t") of gold ("Au") for 233,000 ounces and
Inferred Mineral Resources of 1.5Mt at 5.08 g/t Au for 246,000
ounces, with potential for Mineral Resource growth. The two
objectives of the planned drilling are to assess if the deposit
extends beyond the current Inferred Mineral Resources beneath the
Father Brown and Adiokrom pits and to convert Inferred Mineral
Resources into Indicated Mineral Resources.
The third focus of the exploration program is Prestea
Underground and the objective of this drilling is to convert
Inferred Mineral Resources in Prestea Underground's West Reef
deposit into the Indicated category.
Golden Star intends to deploy ten
diamond drill rigs across its three targets, with six at Wassa
Underground, two at the Father Brown satellite deposit and two at
Prestea Underground.
Notes
|
1.
|
See press release
entitled "Golden Star Doubles Inferred Mineral Resources at Wassa
Underground Gold Mine", dated April 12, 2018.
|
Development and Expansion
The development and expansion budget has the objective of
increasing the throughput of Wassa Underground and potentially
developing the Father Brown satellite deposit in order to fill a
greater portion of the Wassa processing plant's under-utilized
capacity.
At Wassa Underground, the objective is to increase Wassa
Underground's average production rate from 3,000 tpd in 2018 to
4,000 tpd by mid-2020. Golden
Star is evaluating the construction of a paste backfill
plant, which is anticipated to allow the mining team to mine a
greater portion of Wassa Underground's Mineral Reserves.
Currently the mine design leaves pillars in place between the
longhole stopes and as an intermediate step, the Company is
considering the partial extraction of these pillars, using
unconsolidated waste backfill, in 2019.
The introduction of a paste backfill method in 2020 is expected
to allow the mining of primary and secondary stopes on each
sublevel without the need for pillars. This is expected to
significantly improve the efficiency of the operation by making the
whole ore body on a sublevel immediately available for mining,
instead of having to re-access old areas at a later date for pillar
recovery. Also, while waste backfill has to be trucked to the
stopes, paste is piped in, which reduces the need for mobile
equipment, thus decreasing both ventilation requirements and
equipment congestion. The remainder of the budget includes
provisions for decline and ore drive development and purchasing
additional mining equipment.
At Father Brown, the objective of the development and expansion
program is to develop a standalone underground operation with a
production rate of 1,500 tpd. However, the construction of
the Father Brown underground operation is highly dependent on the
success of the exploration program at the deposit.
General Corporate Purposes
The corporate budget includes provisions to enable the closure
of the Prestea Open Pits, including the severance expenses for the
Prestea workforce, which is expected to allow the Prestea Complex
to move forwards with a leaner cost structure.
The budget has a range of $15.0
million to $75.0 million
primarily because if Golden Star
chooses not to develop Father Brown into an underground operation,
further funds are expected to be available for corporate
purposes. Golden Star may
choose to use them within its external growth strategy or for
organic development elsewhere within the Company.
The use of proceeds is discretionary and may be updated in
accordance with Golden Star's plans
to pursue organic or external growth.
SUMMARY OF CONSOLIDATED OPERATIONAL AND FINANCIAL
RESULTS
|
|
Three Months
Ended
|
|
|
September
30,
|
OPERATING
SUMMARY
|
|
2018
|
2017
|
Wassa gold
sold
|
oz
|
38,295
|
31,999
|
Prestea gold
sold
|
oz
|
19,364
|
42,380
|
Total gold
sold
|
oz
|
57,659
|
74,379
|
Wassa gold
produced
|
oz
|
38,097
|
31,724
|
Prestea gold
produced
|
oz
|
19,016
|
42,103
|
Total gold
produced
|
oz
|
57,113
|
73,827
|
Average realized gold
price1
|
$/oz
|
1,175
|
1,233
|
|
|
|
|
Cost of sales per
ounce – Consolidated2
|
$/oz
|
998
|
855
|
Cost of sales per
ounce – Wassa2
|
$/oz
|
817
|
1,083
|
Cost of sales per
ounce – Prestea2
|
$/oz
|
1,355
|
669
|
Cash operating cost
per ounce – Consolidated2
|
$/oz
|
780
|
671
|
Cash operating cost
per ounce – Wassa2
|
$/oz
|
613
|
856
|
Cash operating cost
per ounce – Prestea2
|
$/oz
|
1,110
|
520
|
All-In Sustaining
cost per ounce – Consolidated2
|
$/oz
|
994
|
848
|
|
|
Three Months
Ended
|
|
|
September
30,
|
FINANCIAL
SUMMARY
|
|
2018
|
2017
|
Gold
revenues
|
$'000
|
67,738
|
87,772
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
48,873
|
53,502
|
Depreciation and
amortization
|
$'000
|
8,659
|
7,365
|
Mine operating
margin
|
$'000
|
10,206
|
26,905
|
General and
administrative expense
|
$'000
|
6,166
|
7,264
|
Loss on fair value of
financial instruments, net
|
$'000
|
629
|
3,446
|
Net (loss)/income
attributable to Golden Star
shareholders
|
$'000
|
(3,178)
|
12,117
|
Adjusted net income
attributable to Golden Star
shareholders2
|
$'000
|
3,011
|
19,827
|
(Loss)/income per
share attributable to Golden Star
shareholders -
basic
|
$/share
|
(0.01)
|
0.03
|
(Loss)/income per
share attributable to Golden Star
shareholders -
diluted
|
$/share
|
(0.01)
|
0.03
|
Adjusted income per
share attributable to Golden Star
shareholders –
basic2
|
$/share
|
0.01
|
0.05
|
Cash provided by
operations
|
$'000
|
10,771
|
23,717
|
Cash provided by
operations before working capital
changes2
|
$'000
|
7,947
|
23,941
|
Cash provided by
operations per share - basic
|
$/share
|
0.03
|
0.06
|
Cash provided by
operations before working capital
changes per share –
basic2
|
$/share
|
0.02
|
0.06
|
Capital
expenditures
|
$'000
|
9,784
|
17,877
|
|
|
|
|
|
Notes:
|
1.
|
Average realized gold
price per ounce excludes pre-commercial production ounces sold at
Prestea Underground in 2018 and 2017.
|
2.
|
See "Non-GAAP
Financial Measures".
|
OPERATIONAL PERFORMANCE
Overview
In the third quarter of 2018 Golden Star produced 57,113 ounces
of gold, with 83% of production attributable to underground
sources. During the fourth quarter of 2018 the Company plans to
cease production from the Prestea Open Pits, with the objective of
commencing FY 2019 from a robust position as an underground-only
producer. Going forward, Golden Star
intends to focus on high margin, underground ore with the aim of
generating strong cash flow and creating a robust platform to
deliver sustainable shareholder value.
Gold production from the Wassa Complex was 38,097 ounces in the
third quarter of 2018, representing a 20% increase compared to the
third quarter of 2017 and in line with the second quarter of 2018.
Of this, 96% of Wassa's production was attributable to Wassa
Underground, which achieved its highest average mining rate to date
of over 3,400 tpd. Although Wassa Underground delivered lower
grades processed than in the first half of 2018 due to the mining
sequence and expected variation within the ore body, Golden Star expects the grade processed in the
fourth quarter of 2018 to be in line with the average Mineral
Reserve grade of 4.11 g/t Au. Wassa delivered a cash
operating cost per ounce1 of $613, which represents a 28% decrease compared to
the third quarter of 2017.
Gold production from the Prestea Complex was 19,016 ounces in
the third quarter of 2018. Of this, 57% of Prestea's
production is attributable to Prestea Underground, which is a
result of the Prestea Open Pits approaching the end of their mine
life. At the end of the third quarter of 2018 Golden Star
implemented the Prestea improvement plan, with the objectives of
decreasing annual cash operating costs at Prestea and increasing
the production rate at Prestea Underground. Prestea delivered
a cash operating cost per ounce1 of $1,110 in the third quarter of 2018 and this is
expected to decrease significantly in FY 2019 once Prestea
Underground is fully ramped up.
Golden Star's consolidated cash
operating cost per ounce1 was $780 in the third quarter of 2018, which
represents a 16% increase compared to the third quarter of
2017. The decrease in cash operating cost per
ounce1 at Wassa only partially offset the increase
at Prestea, which was due primarily to a decrease in gold sold
during the period.
The AISC per ounce1 in the third quarter of 2018
was $994, an increase of 17% compared
to the third quarter of 2017. The cost of sales per
ounce1 was $998.
Golden Star expects its operating costs to decrease in the
fourth quarter of 2018 as cost reduction measures at Prestea
continue to be implemented.
During the first nine months of 2018 Golden Star produced
175,938 ounces of gold, which represents 76% of the midpoint of the
revised FY 2018 guidance range. Golden Star's cash operating
cost per ounce1 for the first nine months of 2018 was
$831, which is $1 higher than the top end of the FY 2018
consolidated guidance range, and its AISC per ounce1 was
$1,077, which is within the FY 2018
consolidated guidance range. At the end of the third quarter
of 2018, the Company is on track to achieve its consolidated FY
2018 guidance in terms of gold production, cash operating cost per
ounce1 and AISC per ounce.1
Notes:
|
1.
|
See "Non-GAAP
Financial Measures".
|
Wassa Complex
|
|
Three Months
Ended
|
|
|
September
30,
|
|
|
2018
|
2017
|
WASSA FINANCIAL
RESULTS
|
|
|
|
Revenue
|
$'000
|
45,029
|
39,556
|
|
|
|
|
Mine operating
expenses
|
$'000
|
21,694
|
27,980
|
Severance
charges
|
$'000
|
-
|
145
|
Royalties
|
$'000
|
2,309
|
2,033
|
Operating costs
from/(to) metals inventory
|
$'000
|
1,770
|
(603)
|
Inventory net
realizable value adjustment and write-off
|
$'000
|
232
|
606
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
26,005
|
30,161
|
Depreciation and
amortization
|
$'000
|
5,284
|
4,481
|
Mine operating
margin
|
$'000
|
13,740
|
4,914
|
|
|
|
|
Capital
expenditures
|
$'000
|
7,033
|
6,469
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
Ore mined - Main
Pit
|
t
|
-
|
395,623
|
Ore mined -
Underground
|
t
|
313,369
|
211,670
|
Ore mined -
Total
|
t
|
313,369
|
607,293
|
Waste mined - Main
Pit
|
t
|
-
|
1,436,889
|
Waste mined -
Underground
|
t
|
73,327
|
56,553
|
Waste mined -
Total
|
t
|
73,327
|
1,493,442
|
Ore processed - Main
Pit
|
t
|
77,386
|
457,232
|
Ore processed -
Underground
|
t
|
316,907
|
211,670
|
Ore processed -
Total
|
t
|
394,293
|
668,902
|
Grade processed - Main
Pit
|
g/t
|
0.65
|
1.20
|
Grade processed -
Underground
|
g/t
|
3.69
|
2.61
|
Recovery
|
|
%
|
95.8
|
93.1
|
Gold produced - Main
Pit
|
oz
|
1,580
|
15,847
|
Gold produced -
Underground
|
oz
|
36,517
|
15,877
|
Gold produced -
Total
|
oz
|
38,097
|
31,724
|
Gold sold - Main
Pit
|
oz
|
1,778
|
16,122
|
Gold sold -
Underground
|
oz
|
36,517
|
15,877
|
Gold sold -
Total
|
oz
|
38,295
|
31,999
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
817
|
1,083
|
Cash operating cost
per ounce1
|
$/oz
|
613
|
856
|
Notes
|
1.
|
See "Non-GAAP
Financial Measures".
|
Wassa Operational Overview
Gold production from the Wassa Complex increased by 20% in the
third quarter of 2018 to 38,097 ounces compared to the third
quarter of 2017. Wassa became a primarily underground
operation in the first quarter of 2018 and consequently, by the
third quarter of 2018, 96% of Wassa's production was attributable
to Wassa Underground. Stockpiled ore from Wassa Main Pit is expected to continue to be fed
to the processing plant during the fourth quarter of 2018.
On September 20, 2018 as a result
of Wassa's strong performance during the year-to-date, Golden Star increased its FY 2018 production
guidance for the Wassa Complex to 150,000 to 155,000 ounces of
gold1, an increase of 9% compared to the mid-point
of the previous guidance range. Consequently, the average
production rate targeted at Wassa Underground in FY 2018 was
increased to 3,000 tpd and during the third quarter of 2018, Wassa
Underground achieved an average production rate of over 3,400 tpd.
This represents a 55% increase compared to the same period in 2017.
The mining team is well-positioned to continue production at the
current tonnage profile in the fourth quarter of 2018 and during
2019, with the mining sequence working well and an increasing
number of stopes prepared and developed. Post-period end, a
ventilation upgrade was implemented to enable the production rate
to be further increased to 4,000 tpd on a consistent basis by
mid-2020.
The grade of the ore from Wassa Underground in the third quarter
of 2018 increased by 41% to 3.69 g/t Au compared to the third
quarter of 2017, due to mining operations focusing solely on the B
Shoot zone. However the grade decreased by 26% compared to
the second quarter of 2018, due primarily to expected variances
within the ore body. Golden Star had
expected to achieve a grade of approximately 3.8 g/t Au during the
first half of 2018 but the deposit exceeded expectations and the
average grade processed was 4.78 g/t Au. The Company expects
the grade processed in the fourth quarter of 2018 to be in line
with Wassa Underground's average Mineral Reserve grade of 4.11 g/t
Au.
The Wassa Complex reported a 28% decrease in cash operating cost
per ounce2 for the third quarter of 2018 to
$613 compared to the third quarter of
2017. This strong performance was due primarily to the
increase in gold sold and a reduction in mine operating expenses as
Wassa has transitioned into an underground-only operation.
The cost of sales per ounce2 for Wassa in the
third quarter of 2018 was $817.
Notes
|
1.
|
See press release
entitled, "Golden Star Provides an Update on Operations at the
Prestea Complex and Full Year 2018 Guidance", dated September 20,
2018.
|
2.
|
See "Non-GAAP
Financial Measures".
|
Prestea Complex
|
|
Three Months
Ended
|
|
|
September
30,
|
|
|
2018
|
2017
|
PRESTEA FINANCIAL
RESULTS
|
|
|
|
Revenue
|
$'000
|
22,709
|
48,216
|
|
|
|
|
Mine operating
expenses
|
$'000
|
21,706
|
22,113
|
Severance
charges
|
$'000
|
6
|
83
|
Royalties
|
$'000
|
1,154
|
2,901
|
Operating costs to
metals inventory
|
$'000
|
(211)
|
(1,756)
|
Inventory net
realizable value adjustment and write-off
|
$'000
|
213
|
-
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
22,868
|
23,341
|
Depreciation and
amortization
|
$'000
|
3,375
|
2,884
|
Mine operating
(loss)/margin
|
$'000
|
(3,534)
|
21,991
|
|
|
|
|
Capital
expenditures
|
$'000
|
2,751
|
11,408
|
|
|
|
|
PRESTEA OPERATING
RESULTS
|
|
|
|
Ore mined – Open
Pits
|
t
|
67,238
|
469,961
|
Ore mined -
Underground
|
t
|
34,575
|
5,093
|
Ore mined -
Total
|
t
|
101,813
|
475,054
|
Waste mined – Open
Pits
|
t
|
182,103
|
1,024,836
|
Waste mined -
Underground
|
t
|
2,184
|
6,374
|
Waste mined -
Total
|
t
|
184,287
|
1,031,210
|
Ore processed – Open
Pits
|
t
|
307,482
|
389,065
|
Ore processed -
Underground
|
t
|
34,575
|
19,276
|
Ore processed -
Total
|
t
|
342,057
|
408,341
|
Grade processed – Open
Pits
|
g/t
|
1.12
|
3.49
|
Grade processed –
Underground
|
g/t
|
10.39
|
5.83
|
Recovery
|
|
%
|
84.0
|
86.7
|
Gold produced – Open
Pits
|
oz
|
8,148
|
38,899
|
Gold produced –
Underground
|
oz
|
10,868
|
3,204
|
Gold produced –
Total
|
oz
|
19,016
|
42,103
|
Gold sold - Open
Pits
|
oz
|
8,496
|
39,176
|
Gold sold -
Underground
|
oz
|
10,868
|
3,204
|
Gold sold -
Total
|
oz
|
19,364
|
42,380
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
1,355
|
669
|
Cash operating cost
per ounce1
|
$/oz
|
1,110
|
520
|
Notes
|
1.
|
See "Non-GAAP
Financial Measures".
|
Prestea Operational Overview
Gold production from the Prestea Complex in the third quarter of
2018 was 19,016 ounces. This represents a 55% decrease
compared to the third quarter of 2017 due to the Prestea Open Pits
approaching the end of their mine life and the slower than expected
ramp up of Prestea Underground. Gold production is expected
to strengthen in FY 2019 when Prestea Underground is fully ramped
up.
The Prestea Open Pits produced 8,148 ounces of gold in the third
quarter of 2018, which represents a 79% decrease compared to the
same period in 2017. This decrease in production was planned,
as the Prestea Open Pits were expected to cease gold production at
the end of 2017. Mining continued throughout the first half
of 2018 and completed during the third quarter of 2018, although
processing of stockpiled ore is expected to continue during the
fourth quarter of 2018.
Golden Star outlined the Prestea
improvement plan in its press release dated September 20, 2018.1 The plan's
objective is to ensure that production and operating cost targets
are met by the end of FY 2018 so that Prestea can begin FY 2019
from a strong position. As part of the plan, Golden Star will undertake the closure of the
open pit operation, which includes downsizing the processing plant
from a capacity of 4,000 tpd to 700 tpd, right-sizing the workforce
at Prestea and optimizing the management and supervisory
structure. This is expected to decrease Prestea's annual cash
operating costs by 31%, which represents a reduction in excess of
$25 million. The decrease is
expected to consist of a 13% reduction to mine site general and
administrative ("G&A") expenses, a 41% reduction in processing
costs due to lower tonnages being processed in FY 2019 and the
cessation of surface mining.
In order to effect these cost reductions the Company anticipates
to incur approximately $9 million in
severance charges to right size the Prestea workforce during the
fourth quarter of 2018. This increase in severance charges
compared to previous estimates is due to Golden Star's decision to reduce the Prestea
workforce more than previously planned, following the receipt of
the proceeds from La Mancha's strategic investment. This is
anticipated to allow the Prestea Complex to move forward with a
leaner cost structure.
The second element of the plan is to increase the targeted
production rate at Prestea Underground to the nameplate production
rate of 650 tpd. During the third quarter of 2018 Golden Star
made the decision to bring its Alimak mining training program at
Prestea Underground in-house, with the objective of better
integrating the Alimak mining team with the rest of the Prestea
Underground operations and to improve the efficiency of the
management of personnel, equipment and materials. This plan
received the full support and assistance of Manroc Developments
Inc, who held the training contract from the start of
mining.
The handover took place in July and August 2018 and resulted in reduced production as
personnel were reorganized. Despite this, during the third
quarter of 2018 Golden Star delivered a 10% increase in the
production rate to 375 tpd compared to the second quarter of 2018
and there have been significant improvements in other lead
indicators, such as raise development and longhole drilling.
Golden Star also expects to see an
increase in the recovery rate of the ore from Prestea Underground
following the downsizing of the processing plant, which is
currently estimated to be approximately 94%, and a reduction in
Prestea's power consumption. In addition, Golden Star intends to purchase and install two
new Alimaks, with the objective of increasing the flexibility of
the mining sequence. The installation of the sixth Alimak is
expected in the fourth quarter of 2018 and the seventh Alimak is
ordered and expected on site in the first quarter of 2019.
Gold production from Prestea Underground was 10,868 ounces in
the third quarter of 2018, a 239% increase compared to the third
quarter of 2017. The grade of the ore processed from Prestea
Underground increased by 78% in the third quarter of 2018 to 10.39
g/t Au compared to the third quarter of 2017. However it
decreased by 23% compared to the second quarter of 2018, which is
due to anticipated variation within the ore body, and this resulted
in a 13% decrease in gold production compared to the second quarter
of 2018. Prestea Underground's mining team continues to
strengthen the mining sequence and adjust drill design patterns,
raise layouts and stope ventilation and the mine's performance is
expected to improve in the fourth quarter of 2018 and beyond.
Prestea reported a cash operating cost per
ounce2 of $1,110 in
the third quarter of 2018, which represents a 113% increase
compared to the same period in 2017. This increase was due
primarily to the decrease in gold sold in the quarter.
Prestea's cash operating cost per ounce2 decreased
by 3% compared to the second quarter of 2018. The cost of
sales per ounce2 at Prestea in the third quarter of
2018 was $1,355.
Notes
|
1.
|
See press release
entitled, "Golden Star Provides an Update on Operations at the
Prestea Complex and Full Year 2018 Guidance", dated September 20,
2018.
|
2.
|
See "Non-GAAP
Financial Measures".
|
Exploration
During the third quarter of 2018, exploration activities
continued to focus on step out drilling at Wassa Underground from
surface and in-fill drilling Indicated Mineral Resources at Prestea
Underground's West Reef deposit from underground.
Wassa Underground
Golden Star released the results
of drilling undertaken during the first half of 2018 on
September 20, 2018.1
These results confirmed that gold mineralization extends 200
metres down plunge to the south of the Inferred Mineral Resources
at Wassa Underground, demonstrating the extension of the deposit,
and they are anticipated to increase Wassa's Inferred Mineral
Resources. Some of the previously released significant
intercepts were as follows2:
- 64.3 metres grading 7.4 g/t Au from 577 metres and
- 49.7 metres grading 5.5 g/t Au from 792.0 metres in hole
BS18DD391D1 (drilled depths from wedge, which is 730.0 metres down
the mother hole)
- 17.5 metres grading 10.0 g/t Au from 1,369.70 metres in hole
BS18DD391M
During the third quarter of 2018, two rigs were employed at
Wassa with the objective of further testing the extensions of the
Wassa Underground gold mineralization to the south. Three
holes were completed during the quarter totaling approximately
4,000 metres, the results of two of which were also released on
September 20, 2018, and the results
of the third hole are pending. Golden Star expects to release
further drilling results from Wassa Underground, including the
results of the third hole, during the fourth quarter of 2018.
Notes
|
1.
|
See press release
entitled, "Golden Star Extends Wassa Underground Deposit a Further
200 Metres to the South", dated September 20, 2018.
|
2.
|
All widths quoted in
this press release are estimated true widths.
|
Prestea Underground
Drilling of the West Reef from 24 Level at Prestea Underground
continued during the third quarter of 2018, with one rig completing
seven holes for a total of 2,200 metres. The drilling focused
on continuing to in-fill the existing Indicated Mineral Resources
and testing Inferred Mineral Resources between the 21 and 27
Levels.
During the first nine months of 2018 drilling has been
restricted to less prospective areas of the West Reef. This
was due to limited drilling access to the northern portion of the
active mining area, which is expected to have the most potential
for Mineral Resource addition.
A drilling chamber, which is planned to provide access to the
northern area to test for high grade extensions to the West Reef
gold mineralization, is expected to be completed late in the fourth
quarter of 2018 and drilling is expected to commence immediately
afterwards.
Father Brown satellite deposit
Drilling commenced at the Father Brown satellite deposit during
the third quarter of 2018, utilizing two drill rigs.
Golden Star expects to release the
initial 2018 drilling results from Father Brown during the fourth
quarter of 2018.
FINANCIAL PERFORMANCE
Capital Expenditures
Having largely completed the development of both Wassa
Underground and Prestea Underground, capital expenditures for the
third quarter of 2018 totaled $9.8
million compared to $17.9
million in the third quarter of 2017, representing a 45%
decrease. Of this, 71% of capital expenditures were
attributable to Wassa ($7.0 million),
with the remainder attributable to Prestea ($2.8 million).
Third Quarter 2018 Capital Expenditures Breakdown (in $
millions)
Item
|
Total
|
Wassa
Underground
|
5.0
|
Wassa Surface Plant
& Equipment
|
0.3
|
Wassa
Exploration
|
1.3
|
Other
|
0.4
|
Wassa
Subtotal
|
7.0
|
Prestea
Underground
|
1.7
|
Prestea Surface Plant
& Equipment
|
0.5
|
Prestea
Exploration
|
0.3
|
Other
|
0.3
|
Prestea
Subtotal
|
2.8
|
Consolidated
|
9.8
|
Other Financial Highlights
Gold revenues for the third quarter of 2018 totaled $67.7 million from gold sales of 57,659 ounces at
an average realized gold price of $1,175 per ounce. Gold revenues decreased
by 23% in the third quarter of 2018 compared to the same period in
2017 as a result of a decrease in the average realized gold price
and the 53% decrease in revenue from Prestea, which was only
partially offset by the 14% increase in revenue from Wassa.
Cost of sales excluding depreciation and amortization for the
third quarter of 2018 totaled $48.9
million, a decrease of 9% compared with the same period in
2017. This was due mainly to a reduction in mine operating
expense as a result of Wassa transitioning into an underground-only
operation and a decrease in royalties due to lower gold sales
primarily at Prestea. This was offset partially by an
increase in metals inventory costs at Wassa resulting from
processing of previously mined open pit ore stockpiles.
Depreciation and amortization expenses for the third quarter of
2018 totaled $8.7 million, an 18%
increase compared to the third quarter of 2017. This was due
to an increase in depreciation at both Wassa and Prestea.
Wassa depreciation increased mainly from an increase in gold
production and mining interests, while Prestea depreciation
increased due to the commencement of depreciation of Prestea
Underground assets as commercial production was achieved on
February 1, 2018.
As a result, Golden Star reported a mine operating
margin of $10.2 million in the third quarter of 2018,
compared to $26.9 million in the
third quarter of 2017. This 62% decrease was due to the decrease in
revenues and the increase in depreciation and amortization expenses
in the third quarter of 2018, only partially offset by the decrease
in cost of sales.
G&A expenses for the third quarter of 2018 totaled
$6.2 million, compared to
$7.3 million in the same period in
2017, representing a decrease of 15%. The decrease in G&A
costs for the third quarter of 2018 was due primarily to a
$1.9 million decrease in share-based
compensation expense compared to the same period in 2017.
G&A expenses, excluding share based compensation, were
$4.0 million for the third quarter of
2018, compared to $3.2 million for
the same period in 2017. This increase was due to an increase
in salaries and benefits.
Golden Star recorded a loss of
$0.6 million on fair value of
financial instruments in the third quarter of 2018, compared to a
$3.4 million loss in the third
quarter of 2017. The $0.6
million fair value loss in the third quarter of 2018 relates
to a non-cash revaluation loss on the embedded derivative liability
of the 7% Convertible Debentures. The $3.4 million fair value loss recognized in the
third quarter of 2017 was comprised of a $3.2 million non-cash revaluation loss on the
embedded derivative liability of the 7% Convertible Debentures, a
$0.5 million non-cash revaluation
loss on warrants and a $0.2 million
gain on warrants exercised.
The net loss attributable to Golden
Star shareholders in the third quarter of 2018 totaled
$3.2 million or $0.01 loss per share (basic), compared to a net
income of $12.1 million or
$0.03 income per share (basic) in the
third quarter of 2017. The net loss and loss per share
(basic) attributable to Golden Star
shareholders in the third quarter of 2018 compared to the net
income and income per share (basic) in the same period of 2017 was
mainly due to a decrease of $16.7
million in mine operating margin, a $4.2 million increase in deferred income tax
expense, and a $1.8 million increase
in finance expense, partially offset by a $2.8 million decrease in the loss on fair value
of financial instruments, a $1.1
million decrease in G&A expenses and a $0.9 million increase in other income.
The adjusted net income attributable to Golden Star shareholders1 in the
third quarter of 2018 was $3.0
million, compared to $19.8
million in the same period in 2017. The 85% decrease
was due primarily to a lower consolidated mine operating margin
relating to Prestea and higher net finance and exploration
expenses.
Cash provided by operations before working capital
changes1 in the third quarter of 2018 was $7.9 million compared to $23.9 million in the third quarter of 2017.
This 67% decrease was due primarily to a decrease in
consolidated mine operating margin at Prestea and an increase in
exploration, reclamation and interest payments.
The Company's consolidated cash balance was $18.4 million at September
30, 2018, which does not include the $125.7 million investment (net cash of
$125.0 million) from La Mancha, which
was received on October 1, 2018.
Working capital provided $2.8
million during the three months ended September 30, 2018, compared to using
$0.2 million in the same period in
2017. The working capital changes in the third quarter of
2018 included an increase in accounts payable and accrued
liabilities of $2.0 million, a
decrease in accounts receivable of $1.1
million, offset by an increase in prepaids and other of
$0.2 million.
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 third quarter of 2018 will be available 24
hours after release at the latest.
Notes
|
1.
|
See "Non-GAAP
Financial Measures". The calculations for all Non-GAAP
Financial Measures referenced in this press release are included in
the Management Discussion & Analysis.
|
Other Corporate Developments
Long term, strategic investment by La Mancha and appointment
of two nominees to Board of Directors
Post-period end, on October 1,
2018, the Company completed a $125.7
million private placement by La Mancha, a Luxembourg-incorporated private gold
investment company. Pursuant to the private placement, La Mancha
was issued 163,210,500 Golden Star
common shares, representing approximately 30% of the outstanding
share capital (on a non-diluted basis) after giving effect to La
Mancha's investment.
La Mancha has the right to nominate up to three representatives
to Golden Star's Board of Directors
and two nominees joined the Board on October
1, 2018. La Mancha expects to nominate a third
Director at the next Annual General Meeting or earlier in the event
of a vacancy. La Mancha's two nominees are Andrew Wray, Chief Executive Officer of La
Mancha, and Graham Crew.
This strategic investment by La Mancha strengthens the Company's
balance sheet and provides the Company with increased financial
capacity to unlock organic growth opportunities and participate in
the consolidation of the African gold sector.
For more information about the La Mancha transaction, please see
the press releases entitled "Golden Star Announces Long Term,
Strategic Investment by La Mancha", dated August 1, 2018 and "Golden Star announces completion of La Mancha
strategic investment", dated October 2,
2018.
Share Consolidation
Golden Star's Board of directors
has approved a 5:1 consolidation of the common shares of the
Company (the "Consolidation"). The Consolidation was approved
at a special meeting of the Company's shareholders on September 17, 2018, with 96.62% of votes cast in
favour. The common shares of the Company began trading on a
Consolidation-adjusted basis when the market opened on October 30, 2018.
Golden Star's common share count
was reduced from approximately 544.0 million outstanding common
shares to approximately 108.8 million outstanding common shares
post-Consolidation. The Company believes that a reduction in
the number of outstanding common shares will increase Golden Star's flexibility and competitiveness in
the marketplace and may make its shares more attractive to
potential investors.
Outlook
Golden Star is on track to
achieve its FY 2018 consolidated guidance in terms of gold
production, cash operating cost per ounce1 and AISC per
ounce1. On a consolidated basis, the Company
expects to produce 225,000-235,000 ounces of gold at a cash
operating cost per ounce1 of between $790 and $830 and
an AISC per ounce1 of between $1,050 and $1,100.
Following the strategic investment by La Mancha, expected
capital expenditures for 2018 increased from $36.5 million to $45.1
million, which includes $10.9
million for exploration. The expected increase of
$8.6 million in comparison to
previous guidance is due to a $4.3
million increase in Wassa Underground development and a
$4.3 million increase in exploration
spending.
All monetary amounts refer to United States dollars unless otherwise
indicated.
Company Profile
Golden Star is an established,
African focused gold producer that owns and operates the Wassa and
Prestea mines in Ghana. Listed on the NYSE American,
the Toronto Stock Exchange and the Ghanaian Stock
Exchange, the Company's objective is to grow into a best-in-class,
mid-tier gold producer. Golden Star aims to expand its
production profile through the exploration and development of its
existing mines, particularly Wassa, and through the acquisition of
additional mines. Gold production guidance for 2018 is
225,000-235,000 ounces at a cash operating cost per ounce
of $790-830. 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.
CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE (LOSS)/ INCOME
(Stated in thousands of
U.S. dollars except shares and per share data)
(Unaudited)
|
Three Months
Ended
|
|
September
30,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Revenue
|
$
|
67,738
|
$
|
87,772
|
Cost of sales
excluding depreciation and amortization
|
|
48,873
|
|
53,502
|
Depreciation and
amortization
|
|
8,659
|
|
7,365
|
Mine operating
margin
|
|
10,206
|
|
26,905
|
|
|
|
|
|
Other
expenses/(income)
|
|
|
|
|
Exploration
expense
|
|
501
|
|
400
|
General and
administrative
|
|
6,166
|
|
7,264
|
Finance expense,
net
|
|
4,086
|
|
2,264
|
Other
income
|
|
(1,105)
|
|
(172)
|
Loss on fair value of
financial instruments, net
|
|
629
|
|
3,446
|
(Loss)/income
before tax
|
|
(71)
|
|
13,703
|
Deferred income tax
expense
|
|
4,151
|
|
-
|
Net (loss)/income and
comprehensive (loss)/income
|
$
|
(4,222)
|
$
|
13,703
|
Net (loss)/income
attributable to non-controlling interest
|
|
(1,044)
|
|
1,586
|
Net (loss)/income
attributable to Golden Star shareholders
|
$
|
(3,178)
|
$
|
12,117
|
|
|
|
|
|
Net (loss)/income
per share attributable to Golden
Star
shareholders
|
|
|
|
|
Basic
|
$
|
(0.01)
|
$
|
0.03
|
Diluted
|
$
|
(0.01)
|
$
|
0.03
|
Weighted average
shares outstanding-basic (millions)
|
|
380.8
|
|
378.0
|
Weighted average
shares outstanding-diluted (millions)
|
|
380.8
|
|
385.3
|
GOLDEN STAR RESOURCES LTD.
CONDENSED
INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in thousands
of U.S. dollars)
(Unaudited)
|
As
of
|
|
|
September
30,
|
|
December
31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
18,359
|
$
|
27,787
|
Accounts
receivable
|
|
3,371
|
|
3,428
|
Inventories
|
|
37,573
|
|
50,653
|
Prepaids and
other
|
|
5,000
|
|
5,014
|
Total Current
Assets
|
|
64,303
|
|
86,882
|
RESTRICTED
CASH
|
|
6,511
|
|
6,505
|
MINING
INTERESTS
|
|
258,448
|
|
254,058
|
DEFERRED TAX
ASSETS
|
|
2,120
|
|
12,944
|
Total
Assets
|
$
|
331,382
|
$
|
360,389
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
85,499
|
$
|
94,623
|
Current portion of
rehabilitation provisions
|
|
8,732
|
|
6,566
|
Current portion of
deferred revenue
|
|
14,411
|
|
17,894
|
Current portion of
long term debt
|
|
26,936
|
|
15,864
|
Current portion of
other liability
|
|
19,709
|
|
13,498
|
Total Current
Liabilities
|
|
155,287
|
|
148,445
|
REHABILITATION
PROVISIONS
|
|
55,351
|
|
64,146
|
DEFERRED
REVENUE
|
|
106,735
|
|
92,062
|
LONG TERM
DEBT
|
|
77,867
|
|
79,741
|
LONG TERM DERIVATIVE
LIABILITY
|
|
7,451
|
|
10,963
|
LONG TERM OTHER
LIABILITY
|
|
-
|
|
6,786
|
Total
Liabilities
|
|
402,691
|
|
402,143
|
|
|
|
|
|
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
|
|
783,230
|
|
783,167
|
CONTRIBUTED
SURPLUS
|
|
36,823
|
|
35,284
|
DEFICIT
|
|
(821,965)
|
|
(794,180)
|
Shareholders'
Equity attributable to Golden Star shareholders
|
|
(1,912)
|
|
24,271
|
NON-CONTROLLING
INTEREST
|
|
(69,397)
|
|
(66,025)
|
Total
Deficit
|
|
(71,309)
|
|
(41,754)
|
Total Liabilities
and Shareholders' Equity
|
$
|
331,382
|
$
|
360,389
|
GOLDEN STAR RESOURCES LTD.
CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in
thousands of U.S. dollars)
(Unaudited)
|
Three Months
Ended
|
|
September
30,
|
|
|
2018
|
|
2017
|
OPERATING
ACTIVITIES:
|
|
|
|
|
Net
(loss)/income
|
$
|
(4,222)
|
$
|
13,703
|
Reconciliation of
net (loss)/income to net cash
provided by
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
8,669
|
|
7,373
|
Share-based
compensation
|
|
2,164
|
|
4,059
|
Deferred income tax
expense
|
|
4,151
|
|
-
|
Loss on fair value of
7% Convertible Debentures
embedded derivative
|
|
629
|
|
3,170
|
Recognition of
deferred revenue
|
|
(4,154)
|
|
(4,266)
|
Reclamation
expenditures
|
|
(943)
|
|
(2,157)
|
Other
|
|
1,653
|
|
2,059
|
Changes in working
capital
|
|
2,824
|
|
(224)
|
Net cash provided by
operating activities
|
|
10,771
|
|
23,717
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Additions to mining
properties
|
|
(85)
|
|
(82)
|
Additions to plant and
equipment
|
|
-
|
|
(374)
|
Additions to
construction in progress
|
|
(9,699)
|
|
(16,655)
|
Proceeds from asset
disposal
|
|
38
|
|
-
|
Change in accounts
payable and deposits on mine
equipment and material
|
|
(426)
|
|
(2,194)
|
Net cash used in
investing activities
|
|
(10,172)
|
|
(19,305)
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Principal payments on
debt
|
|
(4,112)
|
|
(357)
|
Net cash used in
financing activities
|
|
(4,112)
|
|
(357)
|
(Decrease)/increase
in cash and cash equivalents
|
|
(3,513)
|
|
4,055
|
Cash and cash
equivalents, beginning of period
|
|
21,872
|
|
25,899
|
Cash and cash
equivalents, end of period
|
$
|
18,359
|
$
|
29,954
|
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", "cash provided by operations before
working capital changes per share - basic", "adjusted net income
attributable to Golden Star
shareholders" and "adjusted income per share attributable to
Golden Star shareholders". 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, 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 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 information under
the heading "Non-GAAP Financial Measures" in the Company's
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the full year ended December 31, 2017, which is available
at www.sedar.com.
Cautionary note regarding forward-looking information
This press release contains "forward looking information" within
the meaning of applicable Canadian securities laws and
"forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995, concerning
the business, operations and financial performance and condition of
Golden Star. Generally,
forward-looking information and statements can be identified by the
use of forward-looking terminology such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases (including negative or grammatical variations) or
statements that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotation thereof. Forward-looking information and
statements in this press release include, but are not limited to,
information or statements with respect to: production, cash
operating costs and AISC per ounce estimates for 2018, on a
consolidated basis and for each of Wassa and Prestea; timing for
the use of proceeds of La Mancha's strategic investment; allocation
of the exploration budget; construction of a paste backfill plant
to mine a greater portion of Wassa Underground's Mineral Reserves;
the sources of gold production at Wassa during 2018 and the timing
thereof; the sources of gold production at Prestea during
2018 and the timing thereof; the cessation of production from the
Prestea Open Pits; planned exploration and drilling at Wassa and
Prestea and release of corresponding drilling results; the mining
rate and grade from Wassa; capital expenditures, including
sustaining capital and development capital, for 2018, on a
consolidated basis and for each of Wassa and Prestea; the nature of
development capital expenditures at both Wassa and Prestea during
2018; the feed of stockpiled lower grade ore from Wassa Main Pit to the processing plant during
2018; the timing for completion of mining from the Prestea Open
Pits during 2018 and the processing of stockpiled ore therefrom;
purchase of Alimaks and their installation at Prestea Underground;
the growth of Wassa Underground's Inferred Mineral Resources from
drilling completed in the first half of 2018; the use of proceeds
from the La Mancha strategic investment and nomination of a third
Director by La Mancha; the start of trading of common shares on a
Consolidation-adjusted basis and the benefits flowing from the
Consolidation; and the achievement of full year guidance.
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 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; and (ii)
Bogoso/Prestea – "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 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.
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.
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SOURCE Golden Star Resources Ltd.