TORONTO, Feb. 21, 2017 /CNW/ - Golden Star Resources Ltd.
(NYSE MKT: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or the
"Company") reports its financial and operational results for the
fourth quarter and full year ended December
31, 2016.
HIGHLIGHTS:
- 2016 full year consolidated guidance achieved on all metrics of
gold production, cash operating cost per ounce1, All-In
Sustaining Cost ("AISC") per ounce1 and capital
expenditures
- Gold production of 194,054 ounces in 2016 and 53,403 ounces
during the fourth quarter of 2016, representing Golden Star's strongest quarterly performance of
the year
- Cash operating cost per ounce1 of $872 in 2016, an 11% decrease compared to 2015,
and $880 per ounce in the fourth
quarter of 2016, reflecting Golden
Star's on-going transition into a low cost, non-refractory
producer
- AlSC per ounce1 of $1,093 in 2016 and $1,197 in the fourth quarter of 2016
- Capital expenditures of $84.4
million in 2016, with 84% representing development capital
primarily for the advancement of the Wassa Underground Gold Mine
("Wassa Underground") and the Prestea Underground Gold Mine
("Prestea Underground")
- Post-period end, commercial production was achieved at Wassa
Underground on January 1, 2017
- West Reef ore body intersected on 24 Level for the first time
by Golden Star's mining operations
at Prestea Underground and first Alimak mining equipment moved
underground - commercial production on schedule for mid-2017
- Mine operating margin1 of $27.5 million in 2016, compared to a mine
operating loss1 of $27.6
million in 2015 due to the closure of the high cost,
refractory operations in the third quarter of 2015
- Cash generated by operations before changes in working
capital1 of $75.5 million
($0.26 per share) in 2016, a 41%
increase compared to 2015
- Consolidated cash balance of $21.8
million, prior to the receipt of the $10 million scheduled advance payment under the
streaming transaction on January 3,
2017 from RGLD Gold AG ("RGLD"), a subsidiary of
Royal Gold, Inc.
- In addition the Company received net proceeds of C$32.7 million ($24.8
million) from the bought deal public offering, which
completed on February 7, 2017
- Full year 2017 guidance represents an anticipated strengthening
of gold production and profitability due to a 31-44% expected
increase in ounces produced and an expected reduction in the cash
operating cost per ounce1
Notes:
1. See "Non-GAAP Financial Measures".
Sam Coetzer, President and
Chief Executive Officer of Golden
Star, commented:
"In 2016 Golden Star both progressed the development of our
two transformational underground projects and achieved our full
year guidance on all metrics. In 2017 we will seek to
consolidate on these achievements as we look to both expand our
production and reduce our costs further. 2017 will also be
another exciting year from a development perspective, as we look to
bring our high grade Prestea Underground and our high grade Mampon
deposit into production. Today, Golden Star is a very different company from the
one it was a year ago, with a substantially reduced risk profile
and various sources of ore feeding our plants from two open pit
mines and an underground mine. I look forward to continuing
our transformation into a high grade, low cost producer during the
year ahead."
Fourth Quarter and Full Year 2016 Conference Call
Details
The Company will conduct a conference call and webcast to
discuss its results for the fourth quarter and full year 2016 on
Wednesday, February 22, 2017 at
10:00 am ET.
The quarterly results call can be accessed by telephone or by
webcast as follows:
Toll Free (North America): +1 877 201 0168
Toronto Local and International: +1 647 788 4901
Webcast: www.gsr.com
A recording and webcast replay of the call will be available
from www.gsr.com following the call.
SUMMARY OF CONSOLIDATED OPERATIONAL AND FINANCIAL
RESULTS
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
OPERATING
SUMMARY
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Wassa Main Pit gold
sold
|
oz
|
21,076
|
|
30,880
|
|
93,284
|
|
107,751
|
Wassa Underground
gold sold
|
oz
|
7,867
|
|
—
|
|
11,062
|
|
—
|
Bogoso/Prestea gold
sold
|
oz
|
23,893
|
|
20,498
|
|
89,517
|
|
113,902
|
Total gold
sold
|
oz
|
52,836
|
|
51,378
|
|
193,863
|
|
221,653
|
Total gold
produced
|
oz
|
53,403
|
|
52,141
|
|
194,054
|
|
222,416
|
Average realized gold
price
|
$/oz
|
1,184
|
|
1,098
|
|
1,211
|
|
1,151
|
Cost of sales per
ounce - Consolidated1
|
$/oz
|
1,114
|
|
903
|
|
1,060
|
|
1,276
|
Cost of sales per
ounce - Wassa1
|
$/oz
|
1,430
|
|
813
|
|
1,186
|
|
1,061
|
Cost of sales per
ounce - Bogoso/Prestea1
|
$/oz
|
836
|
|
1,040
|
|
928
|
|
1,479
|
Cash operating cost
per ounce - Consolidated1
|
$/oz
|
880
|
|
715
|
|
872
|
|
976
|
Cash operating cost
per ounce - Wassa1
|
$/oz
|
1,090
|
|
625
|
|
941
|
|
838
|
Cash operating cost
per ounce - Bogoso/Prestea1
|
$/oz
|
694
|
|
849
|
|
800
|
|
1,108
|
All-in sustaining
cost per ounce - Consolidated1
|
$/oz
|
1,197
|
|
893
|
|
1,093
|
|
1,149
|
|
|
|
|
|
|
|
|
|
FINANCIAL
SUMMARY
|
|
|
|
|
|
|
|
|
Gold
revenues
|
$'000
|
53,255
|
|
56,420
|
|
221,290
|
|
255,187
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
43,994
|
|
39,354
|
|
172,616
|
|
245,494
|
Depreciation and
amortization
|
$'000
|
6,117
|
|
7,054
|
|
21,160
|
|
37,339
|
Mine operating
margin/(loss)
|
$'000
|
3,144
|
|
10,012
|
|
27,514
|
|
(27,646)
|
General and
administrative expense
|
$'000
|
517
|
|
2,521
|
|
25,754
|
|
14,281
|
(Gain)/Loss on fair
value of financial instruments, net
|
$'000
|
(888)
|
|
(1,658)
|
|
25,628
|
|
(1,712)
|
Loss on repurchase of
5% Convertible Debentures, net
|
$'000
|
—
|
|
—
|
|
11,594
|
|
—
|
Net income/(loss)
attributable to Golden Star shareholders
|
$'000
|
3,446
|
|
13,781
|
|
(39,647)
|
|
(67,681)
|
Adjusted net
income/(loss) attributable to Golden Star
shareholders1
|
$'000
|
64
|
|
7,003
|
|
11,183
|
|
(28,355)
|
Income/(loss) per
share attributable to Golden Star shareholders - basic and
diluted
|
$/share
|
0.01
|
|
0.05
|
|
(0.13)
|
|
(0.26)
|
Adjusted
income/(loss) per share attributable to Golden Star shareholders -
basic1
|
$/share
|
0.01
|
|
0.03
|
|
0.04
|
|
(0.11)
|
Cash provided by
operations
|
$'000
|
25,234
|
|
12,633
|
|
53,249
|
|
60,148
|
Cash provided by
operations before working capital changes1
|
$'000
|
23,896
|
|
29,725
|
|
75,457
|
|
53,437
|
Cash provided by
operations per share - basic
|
$/share
|
0.08
|
|
0.05
|
|
0.18
|
|
0.23
|
Cash provided by
operations before working capital changes per share - basic and
diluted
|
$/share
|
0.07
|
|
0.11
|
|
0.26
|
|
0.21
|
Capital
expenditures
|
$'000
|
23,779
|
|
13,726
|
|
84,356
|
|
57,051
|
|
Notes:
|
1. See "Non-GAAP
Financial Measures".
|
OPERATIONAL PERFORMANCE
Golden Star achieved its 2016
full year guidance on all announced metrics. The Company
delivered gold production of 194,054 ounces, which was in the top
half of its guidance range, a cash operating cost per
ounce1 of $872,
which was in the middle of its guidance range, and an AISC per
ounce1 of $1,093.
Additionally, its cost of sales per ounce2 was
$1,060. Golden Star's total capital expenditures for the
year were $84.4 million, in line with
guidance of $90 million.
The Company expects to strengthen its gold production and
profitability in 2017, with an increase in ounces produced of
31-44% compared to 2016 production and a decrease in cash operating
cost per ounce1 of 1-11% compared to the 2016
result. Accordingly, 2017 guidance is as follows:
- Gold production of 255,000-280,000 ounces
- Cash operating cost per ounce1 of $780-$860
- AISC per ounce1 of $970-$1,070
- Capital expenditures of $58
million
In the fourth quarter of 2016 Golden Star produced 53,403 ounces
of gold, representing the strongest quarterly performance of the
year and a 2% increase compared to the same period in 2015.
However the cash operating cost per ounce1 was
$880, an increase of 23% compared to
the fourth quarter of 2015, due to the decrease in gold produced by
Wassa Main Pit as a result of a 31% decrease in ore grade
processed. These higher costs at the Wassa Gold Mine
("Wassa") were offset partially by the lower costs at the Prestea
Gold Mine ("Prestea") as a result of the stronger production from
the Prestea Open Pits, compared to the fourth quarter of
2015. As Wassa Underground was still in pre-commercial
production during 2016, its gold production and cash operating cost
per ounce1 was capitalized. The AISC per
ounce1 was $1,197.
From a development perspective, 2016 was a transformational year
for Golden Star. The Company
incurred $70.5 million of development
capital, primarily as a result of the work at the two underground
developments gaining momentum. Golden
Star blasted the first stope at Wassa Underground on
July 10, 2016, and during the
remainder of the year the mine produced 11,062 ounces. The
project construction of Wassa Underground is now complete and
commercial production was achieved on January 1, 2017.
At Prestea Underground, project development work continued on
schedule, with 350 development metres completed by year-end and 420
metres as of mid-February 2017 as the
construction team advanced towards the West Reef ore body.
Post-period end, in early January
2017, the West Reef was intersected on 24 Level by
Golden Star's mining operations for
the first time and the first Alimak raise mining equipment was
moved underground. The Company remains on track to blast the
first stope in the second quarter of 2017, with commercial
production expected to be achieved in mid-2017. The
declaration of commercial production at Prestea Underground will be
the final planned milestone in Golden
Star's transformation into a high grade, low cost,
non-refractory producer.
Notes
|
1. See "Non-GAAP
Financial Measures".
|
2. Cost of sales is a
GAAP Financial Measure but cost of sales per ounce is a Non-GAAP
Financial Measure. To be consistent with industry practice,
cost of sales per ounce will be disclosed going forwards, in line
with the other previously disclosed Non-GAAP Financial Measures
used by the Company.
|
Wassa Gold Mine
|
|
|
Three Months
Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
WASSA FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
|
Revenue
|
$'000
|
$
|
24,785
|
|
$
|
33,760
|
|
$
|
112,341
|
|
$
|
123,189
|
|
|
|
|
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
23,139
|
|
22,532
|
|
92,938
|
|
95,152
|
|
Severance
charges
|
$'000
|
—
|
|
—
|
|
113
|
|
1,816
|
|
Royalties
|
$'000
|
1,770
|
|
1,728
|
|
6,483
|
|
6,234
|
|
Operating costs to
metals inventory
|
$'000
|
(161)
|
|
(3,231)
|
|
(5,149)
|
|
(4,886)
|
|
Inventory net
realizable value adjustment
|
$'000
|
1,190
|
|
—
|
|
1,190
|
|
1,524
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
25,938
|
|
21,029
|
|
95,575
|
|
99,840
|
|
Depreciation and
amortization
|
$'000
|
4,202
|
|
4,068
|
|
15,094
|
|
14,522
|
|
Mine operating
(loss)/margin
|
$'000
|
$
|
(5,355)
|
|
$
|
8,663
|
|
$
|
1,672
|
|
$
|
8,827
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
10,155
|
|
8,001
|
|
41,805
|
|
33,912
|
|
|
|
|
|
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
|
|
|
|
|
|
Ore mined
|
t
|
632,040
|
|
806,153
|
|
2,496,817
|
|
2,849,061
|
|
Waste
mined
|
t
|
2,196,572
|
|
2,924,040
|
|
9,974,537
|
|
10,631,663
|
|
Ore processed - Main
Pit
|
t
|
593,286
|
|
620,047
|
|
2,444,339
|
|
2,495,176
|
|
Ore processed -
Underground
|
t
|
115,602
|
|
—
|
|
178,255
|
|
—
|
|
Ore processed -
Total
|
|
708,888
|
|
620,047
|
|
2,622,594
|
|
2,495,176
|
|
Grade processed -
Main Pit
|
g/t
|
1.22
|
|
1.77
|
|
1.27
|
|
1.46
|
|
Grade processed -
Underground
|
g/t
|
2.27
|
|
—
|
|
2.06
|
|
—
|
|
Recovery
|
%
|
92.9
|
|
93.9
|
|
93.6
|
|
93.4
|
|
Gold produced - Main
Pit
|
oz
|
21,411
|
|
31,395
|
|
93,319
|
|
108,266
|
|
Gold produced -
Underground
|
oz
|
7,865
|
|
—
|
|
11,062
|
|
—
|
|
Gold produced -
Total
|
oz
|
29,276
|
|
31,395
|
|
104,381
|
|
108,266
|
|
Gold sold - Main
Pit
|
oz
|
21,076
|
|
30,880
|
|
93,284
|
|
107,751
|
|
Gold sold -
Underground
|
oz
|
7,867
|
|
—
|
|
11,062
|
|
—
|
|
Gold sold -
Total
|
oz
|
28,943
|
|
30,880
|
|
104,346
|
|
107,751
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
1,430
|
|
813
|
|
1,186
|
|
1,061
|
|
Cash operating cost
per ounce1
|
$/oz
|
1,090
|
|
625
|
|
941
|
|
838
|
|
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Wassa Operational Overview
Gold production from Wassa was 104,381 ounces in 2016, a 4%
decrease compared to 2015 due to the lower grade ore processed from
Wassa Main Pit. Wassa Underground produced 11,062 ounces in
2016 compared to nil in 2015, and although it delivered higher
grade ore (2.06 grams per tonne ("g/t")) than Wassa Main Pit
(1.27g/t), it was not enough to offset the lower grade ore received
from Wassa Main Pit when compared to 2015. Gold production
from Wassa in the fourth quarter was 29,276 ounces, including 7,867
ounces from Wassa Underground.
Wassa reported a cash operating cost per ounce1 for
2016 of $941, a 12% increase compared
to 2015. This is due largely to an increase in mining costs
per tonne, reflecting higher labour costs as well as higher
drilling and blasting costs. The cash operating cost per
ounce1 for the fourth quarter was $1,090, in line with expectations. The cost
of sales per ounce1 for Wassa in 2016 was $1,186 and in the fourth quarter of 2016 it was
$1,430. These costs relate
solely to Wassa Main Pit as Wassa Underground was still in
pre-commercial production during 2016 and therefore gold production
and cash operating costs were capitalized. Following the
declaration of commercial production on January 1, 2017, Wassa's cash operating cost per
ounce1 will include higher grade underground production
and as a result it is expected to decrease.
Capital expenditures at Wassa in 2016 were $41.9 million, a 24% increase compared to
2015. The majority of this amount was development capital,
which included $23.8 million relating
to Wassa Underground, $9.5 million
for the expansion of the Tailings Storage Facility ("TSF") and
$0.3 million for other
development. The remaining $8.2
million was sustaining capital. During the fourth
quarter, capital expenditures were $10.2
million, which included $2.8
million in development capital for Wassa Underground,
$3.3 million for the improvement of
the TSF, $0.2 million for other
development and $3.9 million in
sustaining capital.
Wassa Underground Development
Wassa Underground achieved commercial production on January 1, 2017. The construction of Wassa
Underground, including the installation of all ancillary
infrastructure, was completed at the end of the fourth quarter of
2016 and the underground development has progressed sufficiently in
order to accommodate the near-term mine plan.
Gold production ramped up during the fourth quarter of 2016 and
it is anticipated to continue to ramp up during 2017 as
Golden Star's mining operations
begin to access the B Shoot, which is a higher grade area of the
Wassa Underground ore body. The Company plans to begin
longitudinal stoping of the B Shoot during the first quarter of
2017, with the larger, transverse stopes expected to be accessed in
the third quarter of 2017. The full production rate of 2,200
tonnes per day ("tpd") is expected to be achieved at Wassa
Underground in 2018.
From 2017 onwards, the average life of mine combined production
from Wassa Main Pit and Wassa Underground is expected to be
approximately 175,000 ounces of gold per annum.
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Prestea Gold Mine
|
|
|
Three Months
Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
BOGOSO/PRESTEA
FINANCIAL RESULTS
|
|
|
|
|
|
|
|
|
Revenue
|
$'000
|
$
|
28,470
|
|
$
|
22,660
|
|
$
|
108,949
|
|
$
|
131,998
|
|
|
|
|
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
17,021
|
|
17,591
|
|
73,046
|
|
128,332
|
|
Severance
charges
|
$'000
|
—
|
|
(231)
|
|
(184)
|
|
12,810
|
|
Royalties
|
$'000
|
1,468
|
|
1,143
|
|
5,599
|
|
6,669
|
|
Operating costs to
metals inventory
|
$'000
|
(433)
|
|
(178)
|
|
(1,420)
|
|
(2,157)
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
18,056
|
|
18,325
|
|
77,041
|
|
145,654
|
|
Depreciation and
amortization
|
$'000
|
1,915
|
|
2,986
|
|
6,066
|
|
22,817
|
|
Mine operating
margin/(loss)
|
$'000
|
$
|
8,499
|
|
$
|
1,349
|
|
$
|
25,842
|
|
$
|
(36,473)
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
13,530
|
|
5,725
|
|
42,413
|
|
23,139
|
|
|
|
|
|
|
|
|
|
|
BOGOSO/PRESTEA
OPERATING RESULTS
|
|
|
|
|
|
|
|
|
Ore mined
refractory
|
t
|
—
|
|
—
|
|
—
|
|
1,230,333
|
|
Ore mined
non-refractory
|
t
|
341,246
|
|
301,397
|
|
1,499,656
|
|
480,583
|
|
Total ore
mined
|
t
|
341,246
|
|
301,397
|
|
1,499,656
|
|
1,710,916
|
|
Waste
mined
|
t
|
614,805
|
|
894,081
|
|
4,039,768
|
|
3,603,153
|
|
Refractory ore
processed
|
t
|
—
|
|
—
|
|
—
|
|
1,520,541
|
|
Refractory ore
grade
|
g/t
|
—
|
|
—
|
|
—
|
|
2.15
|
|
Gold recovery -
refractory ore
|
%
|
—
|
|
—
|
|
—
|
|
67.5
|
|
Non-refractory ore
processed
|
t
|
377,580
|
|
317,764
|
|
1,504,139
|
|
1,409,128
|
|
Non-refractory ore
grade
|
g/t
|
2.51
|
|
2.36
|
|
2.21
|
|
1.32
|
|
Gold recovery -
non-refractory ore
|
%
|
83.0
|
|
83.1
|
|
83.9
|
|
64.3
|
|
Gold produced -
refractory
|
oz
|
—
|
|
1,042
|
|
—
|
|
76,981
|
|
Gold produced -
non-refractory
|
oz
|
24,128
|
|
19,704
|
|
89,673
|
|
37,169
|
|
Gold produced -
total
|
oz
|
24,128
|
|
20,746
|
|
89,673
|
|
114,150
|
|
Gold sold -
refractory
|
oz
|
—
|
|
1,042
|
|
—
|
|
76,981
|
|
Gold sold -
non-refractory
|
oz
|
23,893
|
|
19,456
|
|
89,517
|
|
36,921
|
|
Gold sold -
total
|
oz
|
23,893
|
|
20,498
|
|
89,517
|
|
113,902
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
836
|
|
1,040
|
|
928
|
|
1,479
|
|
Cash operating cost
per ounce1
|
$/oz
|
694
|
|
849
|
|
800
|
|
1,108
|
|
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Prestea Operational Overview
Gold production from the Prestea Open Pits was 89,673 ounces in
2016, which was 28% higher than the top end of the Company's
original 2016 guidance for these assets. Non-refractory gold
production increased by 142% compared to 2015 as Golden Star commenced non-refractory gold
production during the third quarter of 2015, resulting in only a
few months of non-refractory production in 2015. Refractory
gold production, which was suspended in the third quarter of 2015,
was nil in 2016 and 76,981 ounces in 2015.
Gold production in the fourth quarter of 2016 was 24,128 ounces,
delivering record quarterly production from the Prestea Open Pits
for the second consecutive quarter. This represents a
16% increase compared to the same period in 2015 due to higher
throughput and higher ore grade processed.
Prestea reported a cash operating cost per ounce1 of
$800 in 2016, which is at the lower
end of the downwardly revised $800-890 per ounce guidance range. This robust
outperformance is a result of the strong production delivered by
Prestea. It represents a 28% decrease compared to 2015 due to the
change in cost profile as a result of mining lower cost, oxide
(non-refractory) ore, compared to higher cost, higher power
consuming refractory ore. During the fourth quarter of 2016,
Prestea delivered a cash operating cost per ounce1 of
$694, which represents an 18%
decrease compared to the same period in 2015. The cost of
sales per ounce1 at Prestea in 2016 was $928 and in the fourth quarter of 2016 it was
$836.
Total capital expenditures for 2016 were $42.4 million, an 83% increase compared to the
same period in 2015. This is as a result of an increase in
development capital expenditures, which comprised 87% of the total
capital during the year, and were used to continue to advance
Prestea Underground towards production. Total capital expenditures
for the fourth quarter of 2016 were $13.5
million, an increase of 137% compared to the fourth quarter
of 2015.
During the fourth quarter of 2016 Golden Star announced the
receipt of the mining lease for the Mampon deposit. Mampon is
a high grade, oxide deposit, approximately 65 kilometres to the
north of the Company's carbon-in-leach processing plant at the
Bogoso site. There is an existing, good quality road
connecting the deposit and the processing plant for the majority of
the distance, so limited capital expenditures will be required in
order to bring Mampon into production. Following the receipt
of the mining lease, the Company received the environmental permit
and the forestry permit and, accordingly, there are no outstanding
permits required for mining to begin.
Higher grade ore from Mampon will be blended with ore from the
Prestea Open Pits, which is expected to enhance Golden Star's cash flow in 2017.
Golden Star expects to start mining
Mampon in the second quarter of 2017.
Prestea Underground Development
Refurbishment work continued to progress as expected at the high
grade Prestea Underground during the fourth quarter of 2016.
A total development advance of 350 metres was completed by
year-end, focusing on crosscut advancement towards the West Reef
ore body. The work also involved the construction of a
workshop and electrical bays and the slashing of existing drives to
a size suitable for mechanized load-haul-dump equipment.
The rock winder upgrade was 95% complete by the end of 2016,
with commissioning completed in January
2017, enabling an increase in hoisting capacity to satisfy
the production profile in 2017. Essentially, this marks
the completion of the infrastructure refurbishment at Prestea
Underground. The shaft's capacity is 1,200 tpd, so if further
Mineral Reserves are delineated, there is potential for the mine's
production rate to be increased substantially.
The first Alimak raise mining equipment arrived at Prestea
Underground in December 2016 and
other equipment also arrived during the fourth quarter of 2016,
including underground haulage equipment such as ore trucks and
locomotives. During the first quarter of 2017 the first
Alimak was moved underground and the Alimak nest, which is the area
at the base of the stope where the Alimak is stored during
blasting, is being prepared. Manroc Developments Inc., the
Alimak training contractor for Prestea Underground, has also
mobilized the first members of its team to site to pass on the
necessary expertise to Golden Star's
workforce.
In early January 2017 the West
Reef ore body was intersected on 24 Level for the first time by
Golden Star's mining operations in
two separate cross cuts. The focus is now on establishing the
infrastructure and entrance into the first of the stopes.
During the first quarter of 2017, 650 tonnes of material were
hauled and hoisted from 24 Level to surface in order to test the
haulage and hoisting system. Ore is currently being stockpiled at
the processing facility at Bogoso, with the intention to run a
batch through as an early test. As construction activities continue
to advance according to schedule, stoping is expected to start in
the second quarter of 2017, with commercial production anticipated
to be declared in mid-2017.
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Exploration
During the fourth quarter, Golden
Star's exploration program targeted the B shoot zone of
Wassa Underground, focusing on the areas of the B Shoot that are
expected to be mined with transverse stoping. The program
comprised 24 holes, totaling 7,684 metres, with the first nine
holes reported on December 5,
2016. As previously reported, these holes returned a number
of significant intercepts including 31.7 metres grading 23.8g/t
from 296.8 metres in hole BS16DD009 and 8.0 metres grading 13.9g/t
from 57.0 metres in hole BS16DDD002. Further drilling results
are expected to be reported during the first quarter of
2017.
Golden Star also expects to
provide an update on its exploration strategy in the first quarter
of 2017. There is an opportunity to expand the Mineral
Reserves and extend the mine lives of both Wassa and Prestea
through further drilling.
In addition, there is substantial potential to increase
Golden Star's Mineral Resources
outside of the existing Mineral Resource footprint. The
Company's concession areas total 1,156 square
kilometres of the Ashanti Gold trend in Ghana, which is one of the largest land
packages of any company operating in Ghana, including the major gold
producers. Once the current capital expenditures programs are
complete, Golden Star plans to ramp
up its exploration program, which is expected to expand its Mineral
Resource and Mineral Reserve base and increase the lives of its
operations.
FINANCIAL PERFORMANCE
Capital Expenditures
Golden Star incurred substantial
capital expenditures in 2016 totaling $84.4
million, an increase of 48% compared to 2015. 83% of
the capital expenditures were development capital as a result of
the development work gaining momentum at Wassa Underground and
Prestea Underground. Of the development capital, $23.8 million was spent at Wassa Underground,
$36.8 million at Prestea Underground,
$9.5 million on the Wassa TSF
expansion and the remaining $0.3
million on other development at Wassa.
During the fourth quarter of 2016, capital expenditures were
$23.8 million, an increase of 73%
compared to the fourth quarter of 2015.
Full Year 2016 Capital Expenditures Breakdown (in
millions)1
|
|
|
|
Item
|
Sustaining
|
Development
|
Total
|
|
Wassa Open Pit and
Processing Plant
|
$8.2
|
|
|
|
Wassa Tailings
Expansion
|
|
$9.5
|
|
|
Wassa
Underground
|
|
$23.8
|
|
|
Other
Development
|
|
$0.4
|
|
Wassa
Subtotal
|
|
|
$41.9
|
|
Prestea Open Pit
Mines
|
$5.6
|
|
|
|
Prestea
Underground
|
|
$36.8
|
|
Prestea
Subtotal
|
|
|
$42.4
|
Consolidated
|
$14.0
|
$70.4
|
$84.4
|
Fourth Quarter 2016 Capital Expenditures Breakdown (in
millions)1
Item
|
Sustaining
|
Development
|
Total
|
|
Wassa Open Pit and
Processing Plant
|
$3.9
|
|
|
|
Wassa Tailings
Expansion
|
|
$3.3
|
|
|
Wassa
Underground
|
|
$2.8
|
|
|
Other
Development
|
|
$0.2
|
|
Wassa
Subtotal
|
|
|
$10.2
|
|
Prestea Open Pit
Mines
|
$2.7
|
|
|
|
Prestea
Underground
|
|
$10.8
|
|
Prestea
Subtotal
|
|
|
$13.5
|
Consolidated
|
$6.7
|
$17.1
|
$23.8
|
|
Notes
|
1. Please note
variance to consolidated total relates to corporate capital
expenditures.
|
Other Financial Highlights
Gold revenues for 2016 totaled $221.3
million from gold sales of 193,860 ounces, which excludes
the 11,062 ounces sold from Wassa Underground, at an average
realized gold price of $1,211 per
ounce. This represents a 13% decrease in revenue compared to
2015, which is a result of fewer ounces sold at both Prestea and
Wassa but partially offset by the higher realized gold price.
Gold revenues for the fourth quarter of 2016 were $53.3 million from gold sales of 52,836 ounces at
an average realized gold price of $1,184 per ounce. This represents a 6%
decrease in revenue as a result of lower ore grade processed from
the Wassa Main Pit, offset by the 3% increase in gold sales.
Cost of sales excluding depreciation and amortization for the
full year totaled $172.6 million, a
decrease of 30% from $245.5 million
in the same period in 2015, due primarily to a decrease in mine
operating expenses at Prestea. Lower mine operating expenses were a
result of exclusively mining and processing lower cost Prestea
oxide ore through the non-refractory plant in 2016, compared to
processing primarily refractory ore through the higher cost
refractory plant in 2015. Cost of sales excluding
depreciation and amortization in the fourth quarter totaled
$44.0 million.
Depreciation and amortization for 2016 was $21.2 million, a 43% reduction compared to
2015. This decrease is primarily a result of the lower
production at both operations and the higher Mineral Reserve and
Mineral Resource estimates at Prestea compared to the prior
year. Depreciation and amortization totaled $6.1 million in the fourth quarter of 2016
compared to $7.1 million in the same
period in 2015.
As a result, Golden Star reported
a mine operating margin of $27.5
million in 2016 compared to a mine operating loss of
$27.6 million in 2015. This
reflects the significant change in the Company's cost structure
following the closure of the high cost refractory operation.
General and administrative ("G&A") expenses for 2016 totaled
$25.8 million, which included
$13.9 million of non-cash share-based
compensation expenses reflecting the substantial improvement in the
Company's share price during the year. G&A expenses
excluding non-cash share-based compensation cost were $11.9 million in 2016, slightly lower than the
same period in 2015. G&A expenses for the fourth quarter
of 2016 were $0.5 million.
Golden Star recorded $37.2 million of fair value losses on financial
instruments in 2016, compared to a gain of $1.7 million in 2015. The losses in 2016
were comprised of revaluation, repurchase and conversion losses on
the 5% Convertible Debentures, 7% Convertible Debentures, warrants
and forward and collar contracts. In the fourth quarter of
2016 Golden Star recorded a gain of $0.9
million on financial instruments. Further details of
this loss and gain on financial instruments is included in the
Company's Management's Discussion and Analysis.
The net loss attributable to Golden
Star shareholders in 2016 was $39.6
million or $0.13 loss per
share, compared to a net loss of $67.7
million or $0.26 loss per
share in 2015. The 42% decrease in net loss attributable to
Golden Star shareholders for 2016
was due mainly to higher mine operating margin at the Prestea Open
Pits and no impairment charges for 2016, compared to a $34.9 million impairment charge recognized in
2015. These were partially offset by higher losses on financial
instruments and higher non-cash share-based compensation
expenses. The net income attributable to Golden Star shareholders for the fourth quarter
of 2016 totaled $3.4 million or
$0.01 income per share, compared to a
net income of $13.8 million or
$0.05 income per share for the same
period in 2015. The decrease in net income attributable to
Golden Star shareholders for the
fourth quarter of 2016 was due to lower mine operating margin at
Wassa and lower other income.
After certain adjustments, the adjusted net earnings
attributable to Golden Star
shareholders1 was $11.2
million, a significant improvement from the adjusted net
loss attributable to Golden Star
shareholders1 in 2015 of $28.4
million. In the fourth quarter of 2016, after certain
adjustments, the adjusted net earnings attributable to Golden Star shareholders1 was
$0.1 million, compared to adjusted
net earnings of $7.0 million for the
same period in 2015. This lower adjusted net earnings was due
to the mine operating loss at Wassa in the fourth quarter of 2016
resulting from lower revenue from gold sales attributable to the
Wassa Main Pit.
Cash provided by operations in 2016 was $53.2 million or $0.18 per share, which compares to $60.1 million or $0.23 per share in 2015. Cash provided by
operations before changes in working capital for 2016 was
$75.5 million or $0.26 per share. During 2016, advance
payments of $60.0 million were
received from RGLD pursuant to the streaming transaction, compared
to $75.0 million in 2015. This
is primarily the reason for the stronger result in 2015. In
the fourth quarter of 2016, cash provided by operations was
$25.2 million or $0.08 per share and cash provided by operations
before changes in working capital was $23.9
million or $0.07 per
share.
The Company's consolidated cash balance was $21.8 million at the end of 2016. This does not
reflect the $10.0 million received on
January 3, 2017 from RGLD pursuant to
the streaming transaction. In addition the Company received net
proceeds of $24.8 million from the
bought deal public offering, which closed on February 7th, 2016.
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 full year and fourth quarter of 2016 will
be available 24 hours after release at the latest.
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Other Corporate Developments
Bought Deal Transaction
On February 7, 2017, the Company
completed a bought deal public offering of common shares which
resulted in 31,363,950 common shares being sold at a price of
C$1.10 per share for gross proceeds
of C$34.5 million (net proceeds of
C$32.7 million or $24.8 million).
The Company intends to use the net proceeds from the offering to
fund:
- Exploration projects on the Company's properties
- Capital expenditures at the Wassa Gold Mine and the Prestea
Gold Mine
- The partial repayment of the Company's 5% Convertible
Debentures
- Working capital and general corporate purposes
Streaming Agreement with RGLD
During the fourth quarter of 2016, the Company received an
advance payment of $20.0 million
pursuant to the gold purchase and sale agreement, as amended (the
"Streaming Agreement") with RGLD. On January
3, 2017, the Company received the final $10.0 million of scheduled advance payment.
Since the inception of the Streaming Agreement in July 2015, the Company has received total advance
payments of $145.0 million. All
advance payments required under the streaming agreement have now
been received from RGLD.
Forward and Collar Contracts
As of January 1, 2017,
Golden Star has no outstanding
contracts.
In early 2016, Golden Star
initiated a gold hedging program to limit its exposure to the
fluctuations in the gold price during the development phase of the
Wassa Underground and Prestea Underground projects. During the year
ended December 31, 2016, the Company
realized a loss of $2.3 million on
settled costless collars and forward sales contracts.
Outlook
The following tables set out Golden Star's full year 2017
guidance in terms of gold production, cash operating cost per
ounce1, AISC per ounce1, and capital
expenditures.
Gold Production and Operating Cost Guidance
Asset
|
Gold
Production (ounces)
|
Cash Operating
Costs1 ($/oz)
|
AISC1 ($/oz)
|
Wassa Main
Pit
|
85,000-95,000
|
|
|
Wassa
Underground
|
60,000-65,000
|
|
|
Wassa
Consolidated
|
145,000-160,000
|
830-915
|
|
Prestea Open
Pits2
|
65,000-70,000
|
|
|
Prestea
Underground3
|
45,000-50,000
|
|
|
Prestea
Consolidated
|
110,000-120,000
|
715-780
|
|
CONSOLIDATED
|
255,000-280,000
|
780-860
|
970-1,070
|
Capital Expenditures Guidance
Asset
|
Sustaining
Capital ($
millions)
|
Development
Capital
($
millions)
|
Total Capital
Expenditures
($
millions)
|
Wassa Main Pit and
Surface Infrastructure
|
5.9
|
1.1
|
7.0
|
Wassa
Underground
|
9.0
|
3.4
|
12.4
|
Prestea Open
Pits
|
5.0
|
-
|
5.0
|
Prestea
Underground4 and Processing Plant
|
0.4
|
31.2
|
31.6
|
Exploration
|
-
|
2.4
|
2.4
|
TOTAL
|
20.3
|
38.1
|
58.4
|
|
Notes to
tables:
|
1. See "Non-GAAP
Financial Measures".
|
2. Prestea Open Pits
production guidance includes the forecast production from the
Mampon deposit.
|
3. Production guidance for Prestea
Underground includes 7,000-7,500 ounces of pre-commercial
production. Costs incurred at Prestea Underground will
be capitalized until commercial production is achieved. As a
result, these costs are reflected in the Company's development
capital expenditure guidance set out in the second table and are
not included in the Company's cash operating cost or AISC guidance
set out in the first table.
|
4. Capital
expenditures for Prestea Underground show total gross
capital. They exclude capitalized revenues and capitalized
interest. Capital expenditures net of development revenue for
Prestea Underground are $22.3 million.
|
Golden Star's production guidance
for 2017 represents an increase of 31% to 44% compared to full year
production in 2016. This increase is expected to be achieved
due to the following factors:
- Production from Wassa Underground is expected to continue to
ramp up during the year. The Company anticipates that gold
production will increase significantly from the third quarter of
2017 onwards as Golden Star begins
to access the transverse stopes of the higher grade B Shoot
zone;
- Commercial production at Prestea Underground is expected to be
achieved in mid-2017; and
- Production from the Mampon deposit is expected to commence
during the second quarter of 2017
As a result of the above factors being anticipated to occur
primarily during the second half of 2017, Golden Star expects gold production to be
weighted towards the second half of the year. Gold production
in the first and second quarters of 2017 is expected to be in line
with the production results for the fourth quarter of 2016.
Consequently, Golden Star
anticipates that its cash operating cost per ounce1 and
AISC per ounce1 will be higher during the first
half of 2017, due to the lower grade ore being fed to both
processing plants during this period. As higher grade ore
begins to be processed in the second half of 2017, Golden Star expects its cash operating cost per
ounce1 and AISC per ounce1 to decrease
accordingly, which is expected to result in the Company achieving
its full year 2017 cost guidance.
Currently, Golden Star expects
production to conclude at the Prestea Open Pits and Mampon during
the third quarter of 2017, however if the Company's exploration
campaign is successful, it may be possible to extend production
from these deposits.
Capital expenditures are expected to be higher in the first half
of 2017 than in the second half of 2017 due to the costs associated
with the continued construction of Prestea Underground and
accessing the Mampon deposit. If Prestea Underground achieves
commercial production as expected during mid-2017, capital
expenditures are expected to reduce accordingly.
Golden Star expects its cash
operating cost per ounce1 to decrease further as both
underground development projects commence commercial production and
the Company completes its planned transformation into a high grade,
low cost gold producer.
Notes
1. See "Non-GAAP Financial Measures".
All monetary amounts refer to United States dollars unless otherwise
indicated.
Company Profile
Golden Star is an established
gold mining company that owns and operates the Wassa and Prestea
mines situated on the prolific Ashanti Gold
Belt in Ghana, West Africa. Listed on the NYSE MKT, the TSX,
and the GSE, Golden Star is
strategically focused on increasing operating margins and cash flow
through the development of its two high grade, low cost underground
mines both in conjunction with existing open pit operations. The
Wassa Underground Gold Mine commenced commercial production in
January 2017 and the Prestea
Underground Gold Mine is expected to achieve commercial production
in mid-2017. Gold production in 2017 is expected to be
255,000-280,000 ounces with cash operating costs of $780-860 per ounce.
GOLDEN STAR RESOURCES LTD.
CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
AND
COMPREHENSIVE LOSS
(Stated in thousands of
U.S. dollars except shares and per share data)
(Unaudited)
|
|
For the Years
Ended
December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
221,290
|
|
$
|
255,187
|
|
Cost of sales
excluding depreciation and amortization
|
|
172,616
|
|
245,494
|
|
Depreciation and
amortization
|
|
21,160
|
|
37,339
|
Mine operating
margin/(loss)
|
|
27,514
|
|
(27,646)
|
|
|
|
|
|
Other
expenses/(income)
|
|
|
|
|
|
Exploration
expense
|
|
1,818
|
|
1,307
|
|
General and
administrative
|
|
25,754
|
|
14,281
|
|
Finance expense,
net
|
|
7,832
|
|
10,670
|
|
Other income
|
|
(3,349)
|
|
(8,178)
|
|
Loss/(gain) on fair
value of financial instruments, net
|
|
25,628
|
|
(1,712)
|
|
Loss on repurchase of
5% Convertible Debentures, net
|
|
11,594
|
|
—
|
|
Impairment
charges
|
|
—
|
|
34,396
|
Net loss and
comprehensive loss
|
|
$
|
(41,736)
|
|
$
|
(78,410)
|
Net loss attributable
to non-controlling interest
|
|
(2,116)
|
|
(10,729)
|
Net loss
attributable to Golden Star shareholders
|
|
$
|
(39,647)
|
|
$
|
(67,681)
|
|
|
|
|
|
Net loss per share
attributable to Golden Star shareholders
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.13)
|
|
$
|
(0.26)
|
Weighted average
shares outstanding-basic and diluted (millions)
|
|
294.1
|
|
259.7
|
GOLDEN STAR RESOURCES LTD.
CONDENSED
INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in thousands
of U.S. dollars)
(Unaudited)
|
|
As of
December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
21,764
|
|
$
|
35,108
|
|
Accounts
receivable
|
|
7,299
|
|
5,114
|
|
Inventories
|
|
44,381
|
|
36,694
|
|
Prepaids and
other
|
|
3,926
|
|
5,754
|
|
|
Total Current
Assets
|
|
77,370
|
|
82,670
|
RESTRICTED
CASH
|
|
6,463
|
|
6,463
|
MINING
INTERESTS
|
|
215,017
|
|
149,849
|
|
|
Total
Assets
|
|
$
|
298,850
|
|
$
|
238,982
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
94,973
|
|
$
|
110,811
|
|
Derivative
liabilities
|
|
2,729
|
|
407
|
|
Current portion of
rehabilitation provisions
|
|
5,515
|
|
3,660
|
|
Current portion of
deferred revenue
|
|
19,234
|
|
11,507
|
|
Current portion of
long term debt
|
|
15,378
|
|
22,035
|
|
|
Total Current
Liabilities
|
|
137,829
|
|
148,420
|
REHABILITATION
PROVISIONS
|
|
71,867
|
|
76,025
|
DEFERRED
REVENUE
|
|
94,878
|
|
53,872
|
LONG TERM
DEBT
|
|
89,445
|
|
91,899
|
LONG TERM DERIVATIVE
LIABILITY
|
|
15,127
|
|
—
|
OTHER LONG TERM
LIABILITY
|
|
10,465
|
|
—
|
|
|
Total
Liabilities
|
|
419,611
|
|
370,216
|
|
|
|
|
|
|
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
|
|
746,542
|
|
695,555
|
CONTRIBUTED
SURPLUS
|
|
33,861
|
|
32,612
|
DEFICIT
|
|
(832,951)
|
|
(793,304)
|
|
Deficit
attributable to Golden Star
|
|
(52,548)
|
|
(65,137)
|
NON-CONTROLLING
INTEREST
|
|
(68,213)
|
|
(66,097)
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
298,850
|
|
$
|
238,982
|
GOLDEN STAR RESOURCES LTD.
CONDENSED
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in
thousands of U.S. dollars)
(Unaudited)
|
|
For the Years
Ended
December 31,
|
|
2016
|
|
2015
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
$
|
(41,763)
|
|
$
|
(78,410)
|
Reconciliation of
net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
21,173
|
|
37,372
|
|
Impairment
charges
|
|
—
|
|
34,396
|
|
Share-based
compensation
|
|
13,850
|
|
2,005
|
|
Loss on fair value of
embedded derivatives
|
|
3,812
|
|
—
|
|
Loss/(gain) on fair
value of 5% Convertible Debentures
|
|
17,235
|
|
(1,440)
|
|
Loss on repurchase of
5% Convertible Debentures, net
|
|
11,594
|
|
—
|
|
Loss/(gain) on fair
value of warrants
|
|
2,322
|
|
(272)
|
|
Recognition of
deferred revenue
|
|
(11,267)
|
|
(9,621)
|
|
Proceeds from Royal
Gold stream
|
|
60,000
|
|
75,000
|
|
Reclamation
expenditures
|
|
(5,527)
|
|
(2,947)
|
|
Gain on reduction of
rehabilitation provisions
|
|
(198)
|
|
(5,652)
|
|
Other
|
|
4,226
|
|
3,006
|
|
Changes in working
capital
|
|
(22,208)
|
|
6,711
|
|
|
Net cash provided by
operating activities
|
|
53,249
|
|
60,148
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Additions to mining
properties
|
|
(2,108)
|
|
(758)
|
|
Additions to plant
and equipment
|
|
(613)
|
|
(1,416)
|
|
Additions to
construction in progress
|
|
(81,635)
|
|
(54,877)
|
|
Change in accounts
payable and deposits on mine equipment and material
|
|
(2,794)
|
|
4,974
|
|
Increase in
restricted cash
|
|
—
|
|
(4,422)
|
|
Proceeds from sale of
assets
|
|
657
|
|
—
|
|
|
Net cash used in
investing activities
|
|
(86,493)
|
|
(56,499)
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Principal payments on
debt
|
|
(29,345)
|
|
(48,611)
|
|
Proceeds from debt
agreements
|
|
3,000
|
|
22,000
|
|
Proceeds from 7%
Convertible Debentures, net
|
|
20,714
|
|
—
|
|
5% Convertible
Debentures repurchase
|
|
(19,941)
|
|
—
|
|
Proceeds from Royal
Gold loan, net
|
|
—
|
|
18,718
|
|
Shares issued,
net
|
|
45,450
|
|
—
|
|
Exercise of
options
|
|
22
|
|
—
|
|
|
Net cash provided
by/(used in) financing activities
|
|
19,900
|
|
(7,893)
|
Decrease in cash and
cash equivalents
|
(13,344)
|
|
(4,244)
|
Cash and cash
equivalents, beginning of period
|
35,108
|
|
39,352
|
Cash and cash
equivalents, end of period
|
$
|
21,764
|
|
$
|
35,108
|
Non-GAAP Financial Measures
In this press release, we use the terms "cash operating cost per
ounce", "all-in sustaining costs per ounce", "cost of sales per
ounce", "cash provided by operations before changes in working
capital", "cash flow generated before changes in working capital"
and "adjusted net earnings/ (loss) attributable to
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, and by-product credits, but excludes
exploration costs, property holding costs, corporate office general
and administrative expenses, foreign currency gains and losses,
gains and losses on asset sales, interest expense, gains and losses
on derivatives, gains and losses on investments and income tax
expense/benefit. "Cash operating cost per ounce" for a period
is equal to "Cost of sales excluding depreciation and amortization"
for the period less royalties, the cash component of metals
inventory net realizable value adjustments and severance charges
divided by the number of ounces of gold sold during the
period. We use cash operating cost per ounce as a key
operating indicator. We monitor this measure monthly, comparing
each month's values to prior quarters' values to detect trends that
may indicate increases or decreases in operating efficiencies. We
provide this measure to investors to allow them to also monitor
operational efficiencies of the Company's mines. We calculate this
measure for both individual operating units and on a consolidated
basis. Since cash operating costs do not incorporate revenues,
changes in working capital and non-operating cash costs, they are
not necessarily indicative of operating profit or cash flow from
operations as determined under International Financial Reporting
Standards ("IFRS").
"All-In Sustaining Costs" commences with cash operating costs
and then adds sustaining capital expenditures, corporate general
and administrative costs excluding non-cash share based
compensation, mine site exploratory drilling and greenfield
evaluation costs and environmental rehabilitation costs. 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. Non-cash share-based compensation expenses are
now also excluded from the Company's current method of calculating
All-In Sustaining Costs, as the Company believes that such expenses
may not be representative of the actual payout on the equity and
liability based awards. Non-cash 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.
"Cost of sales" means cost of sales excluding depreciation and
amortization as shown on the Company's statement of operations plus
depreciation and amortization. "Cost of sales per ounce" for
the period is "Cost of sales" divided by the number of ounces of
gold sold during the period.
"Cash provided by operations before working capital changes" and
"cash flow generated before changes in working capital" are
calculated by subtracting the "Changes in working capital" from
"Net cash provided by operating activities" as found in the
statements of cash flows.
In order to indicate to stakeholders the Company's earnings
excluding the non-cash loss on the fair value of the Company's
outstanding convertible debentures, non-cash impairment charges,
and non-cash share based compensation, the Company calculates
"adjusted net income/ (loss) attributable to shareholders" and
"adjusted income/ (loss) per share attributable to shareholders" to
supplement the condensed consolidated financial statements.
The adjusted income/ (loss) per share attributable to shareholders
is calculated using 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. There are material limitations
associated with the use of such non-GAAP measures. Since
these measures do not incorporate all non-cash expense and income
items, changes in working capital and non-operating cash costs,
they are not necessarily indicative of operating profit or cash
flow from operations as determined under IFRS.
For additional information regarding the Non-GAAP financial
measures used by the Company, please refer to the heading "Non-GAAP
Financial Measures" in the Company's Management Discussion and
Analysis of Financial Condition and Results of Operations for the
full year ended December 31, 2016,
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,
profitability, cash operating costs, cash operating costs per
ounce, and AISC per ounce for 2017; the risk profile of the
Company; the ability to achieve 2017 production guidance in terms
of production, profitability, cash operating costs, cash operating
costs per ounce, AISC per ounce, and capital expenditures; the
intended expansion of production and reduction of costs for 2017;
the timing for transforming, and the Company's ability to
transform, into a lower cost producer and the resulting reduction
in cash operating costs; sustaining, development and total capital
expenditures for 2017; future work to be completed at Prestea
Underground; the achievement of blasting the first stope at Prestea
Underground in the Q2 2017; the ability of Prestea Underground to
commence commercial production in mid-2017; the timing for
rehabilitation work, as well as pre-development and development
work and stoping, at Prestea Underground mine; the timing of and
amount of production from Prestea Underground; the anticipated
mining rate and acceleration of mining rates for Prestea
Underground; the grade of ore from Prestea Underground and Mampon;
production from Wassa Underground; the sufficiency of
infrastructure at Wassa Underground to accommodate the near-term
mine plan at Wassa Underground; the achievement of beginning
longitudinal stoping of the B Shoot at Wassa Underground during Q1
2017 and accessing the transverse stopes of the higher grade B
Shoot zone at Wassa Underground in Q3 2017; reaching full
production at Wassa Underground in 2018; average annual life of
mine combined production as Wassa and Prestea from 2017 onwards;
capital expenditures for the development of Prestea Underground;
the capital expenditure required to bring Mampon to commercial
production; the ability of the Company to commence mining of the
Mampon deposit in Q2 2017; the expected higher grade nature of the
Mampon deposit; the success of the Company's exploration results at
Mampon and the Prestea Open Pits; the impact of mining Mampon on
the Company's cash flow; the timing of the conclusion of commercial
production at Prestea Open Pits and Mampon; and ability of the
Company to extend commercial production at Prestea Underground and
Mampon; the timing of the release of the Company's drilling
results; the timing of the release of the Company's exploration
strategy for 2017 and beyond; the potential to expand the Mineral
Reserves of the Company through further drilling; the potential to
increase the Company's Mineral Resources outside of the existing
Mineral Resource footprint; the impact that increased exploration
is expected to have on Mineral Resource, Mineral Reserves, and
expected life of the Company's mines; the Company's ability to
reduce the level of its debt, including through internal cash flow
as the Company's new underground operations ramp-up to full
production; the Company's intended use of the net proceeds from the
bought deal public offering; and the ability of the Company to
repay the 5% Convertible Debentures and 7% Convertible Debentures
when due or to restructure them or make alternate arrangements.
Forward-looking information and statements are made based upon
certain assumptions and other important factors that, if untrue,
could cause the actual results, performances or achievements of
Golden Star to be materially
different from future results, performances or achievements
expressed or implied by such statements. Such statements and
information are based on numerous assumptions regarding present and
future business strategies and the environment in which
Golden Star will operate in the
future, including the price of gold, anticipated costs and ability
to achieve goals. Forward-looking information and statements are
subject to known and unknown risks, uncertainties and other
important factors that may cause the actual results, performance or
achievements of Golden Star to be
materially different from those expressed or implied by such
forward-looking information and statements, including but not
limited to: risks related to international operations, including
economic and political instability in foreign jurisdictions in
which Golden Star operates; risks
related to current global financial conditions; risks related to
joint venture operations; actual results of current exploration
activities; environmental risks; future prices of gold; possible
variations in Mineral Reserves, grade or recovery rates; mine
development and operating risks; accidents, labor disputes and
other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
development or construction activities and risks related to
indebtedness and the service of such indebtedness. Although
Golden Star has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information and statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended.
There can be no assurance that such statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
information and statements. Forward-looking information and
statements are made as of the date hereof and accordingly are
subject to change after such date. Forward-looking information and
statements are provided for the purpose of providing information
about management's current expectations and plans and allowing
investors and others to get a better understanding of the Company's
operating environment. Golden Star
does not undertake to update any forward-looking information and
statements that are included in this news release except in
accordance with applicable securities laws.
Technical Information and Quality Control
The technical contents of this press release have been reviewed
and approved by S. Mitchel Wasel, BSc Geology, a "Qualified Person"
pursuant to National Instrument 43-101 ("NI 43-101"). Mr. Wasel is
Vice President Exploration for Golden
Star and an active member of the Australasian Institute of
Mining and Metallurgy.
The technical contents of this press release have been reviewed
and approved by Dr. Martin Raffield,
P. Eng., a Qualified Person pursuant to NI 43-101. Dr.
Raffield is Senior Vice President of Project Development and
Technical Services for Golden
Star.
Additional scientific and technical information relating to the
mineral properties referenced in this news release are contained in
the following current technical reports for those properties
available at www.sedar.com: (i) Wassa - "NI 43-101 Technical Report
on feasibility study of the Wassa open pit mine and underground
project in Ghana" effective date
December 31, 2014; (ii) Prestea
Underground - "NI 43-101 Technical Report on a Feasibility Study of
the Prestea Underground Gold Project in Ghana" effective date November 3, 2015; and (iii) Bogoso - "NI 43-101
Technical Report on Resources and Reserves Golden Star Resources
Ltd., Bogoso Prestea Gold Mine, Ghana" effective date December 31, 2013.
Cautionary Note to U.S. Investors
This news release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ materially from the
requirements of United States
securities laws applicable to U.S. companies. The terms "mineral
reserve", "proven mineral reserve" and "probable mineral reserve"
are Canadian mining terms as defined in accordance with NI 43-101.
These definitions differ from the definitions of the Securities and
Exchange Commission (the "SEC") set forth in Industry Guide 7 under
the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Under SEC Industry Guide 7 standards,
mineralization may not be classified as a "reserve" unless the
determination has been made that the mineralization could be
economically and legally produced or extracted at the time the
reserve determination is made.
In addition, the terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral
resource" are defined in and required to be disclosed by NI 43-101;
however, these terms are not defined terms under SEC Industry Guide
7 and are normally not permitted to be used in reports and
registration statements filed with the SEC. Investors are cautioned
not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves. "Inferred mineral
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Investors are cautioned not to assume that all or any
part of an inferred mineral resource exists or is economically or
legally mineable. Disclosure of "contained ounces" in a resource is
permitted disclosure under Canadian regulations; however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC Industry Guide 7 standards as in
place tonnage and grade without reference to unit measures.
For the above reasons, information contained in this news
release or in the documents referenced herein containing
descriptions of our mineral deposits may not be comparable to
similar information made public by U.S. companies subject to the
reporting and disclosure requirements under the United States federal securities laws and
the rules and regulations thereunder.
SOURCE Golden Star Resources Ltd.