38% increase in gold production in 2017
compared to 2016
TORONTO, Jan. 11, 2018 /PRNewswire/ - Golden Star
Resources (NYSE American: GSS; TSX: GSC; GSE: GSR) ("Golden Star"
or the "Company") is pleased to announce its production results for
the fourth quarter and full year ("FY") of 2017 and its guidance
for FY 2018.
HIGHLIGHTS
Q4 and FY 2017 Production Results
- 38% increase in consolidated gold production in FY 2017 to
267,565 ounces compared to FY 2016
- Gold production by asset in FY 2017, as follows:
-
- Wassa Main Pit: 75,736
ounces
- Wassa Underground Gold Mine ("Wassa Underground"): 61,498
ounces
- Prestea Open Pits: 121,757 ounces
- Prestea Underground Gold Mine ("Prestea Underground"): 8,574
ounces
- 34% increase in consolidated gold production in the fourth
quarter of 2017 to 71,769 ounces compared to the fourth quarter of
2016. Other highlights of the fourth quarter of 2017 included:
-
- 55% increase in Wassa Underground's head grade to 4.04 grams
per tonne ("g/t") of gold ("Au") compared to the third quarter of
2017 and a 78% increase compared to the fourth quarter of 2016
- 57% increase in gold production from Prestea Underground
compared to the third quarter of 2017
- Processing of ore from the Prestea Open Pits expected to
continue until the end of the first half of 2018
- Consolidated cash balance of $27.8 million as
at December 31, 2017
FY 2018 Guidance
- FY 2018 consolidated guidance for gold production of
230,000-255,000 ounces, focusing on higher margin ore
- Significant decrease in operating cost per ounce expected in
2018:
-
- FY 2018 consolidated cash operating cost per ounce1
expected to be 11-21% lower than the midpoint of the 2017 guidance
range ($820) at $650-730
- FY 2018 consolidated All-In Sustaining Cost
("AISC")1 per ounce expected to be 7-17% lower than the
midpoint of the 2017 guidance range ($1,020) at $850-$950
Notes:
1. See "Non-GAAP Financial Measures".
Sam Coetzer, President and
Chief Executive Officer of Golden
Star, commented:
"Achieving our 2017 production guidance while simultaneously
operating two underground mines in the early stages of production
is a great achievement and I would like to thank our teams at both
operations for their hard work and commitment. I'm
particularly pleased to see the strong results from Wassa
Underground in the fourth quarter of 2017, including a 55% increase
in grade compared to the third quarter, and I look forward to
stronger production in 2018 as we increase the mining rate
further. In 2018 our primary focus will be high grade, high
margin underground ounces. Although production in 2018 is
anticipated to be lower than in 2017, our operating cost guidance
is also significantly reduced and thus we believe this strategy
delivers the best value for all of our stakeholders. We will
also continue with our exploration strategy, which seeks to
increase the mine lives of both Wassa and Prestea and to find
additional high margin ore sources to fully utilize the excess
capacity at both of our processing plants."
2017 PRODUCTION RESULTS AND OPERATIONS UPDATE
Golden Star produced 267,565
ounces of gold in FY 2017, achieving the middle of the FY 2017
consolidated production guidance range of 255,000-280,000
ounces. Consolidated gold production in the fourth quarter of
2017 increased by 34% to 71,769 ounces, compared to the same period
in 2016.
As at December 31, 2017, Golden
Star had a consolidated cash balance of $27.8
million.
Wassa Gold Mine
Gold production from the Wassa complex increased by
31% in FY 2017 to 137,234 ounces, compared to FY 2016. In the
fourth quarter of 2017, gold production was 42,001 ounces, an
increase of 43% compared to the fourth quarter of 2016.
The total ore processed by the Wassa processing plant during FY
2017 was 2.6 million tonnes at a blended grade of 1.73 g/t Au and
with a metallurgical recovery of 95%.
Wassa Main Pit
Gold production from Wassa Main
Pit was 75,736 ounces in FY 2017 and 21,149 ounces in the
fourth quarter of 2017. As previously announced, Golden Star took the decision during the third
quarter of 2017 to defer the next pushback of Wassa Main Pit, Cut 3. This followed an
internal study to assess capital expenditure requirements and
margins in light of the current gold price. The purpose of
this change is to focus on the higher grade, higher margin
underground ounces. Wassa is expected to become an
underground-only operation by the end of January 2018, although 341,000 tonnes of lower
grade, stockpiled ore will continue to be fed to the processing
plant during the first nine months of 2018.
Wassa Underground
Gold production from Wassa Underground increased by 456% in FY
2017 to 61,498 ounces, compared to FY 20161. In
the fourth quarter of 2017, gold production was 20,852 ounces,
representing a 165% increase compared to the fourth quarter of
20161 and a 31% increase compared to the third quarter
of 2017. Mining rates at Wassa Underground continued to be
strong in the fourth quarter of 2017 at approximately 1,900 tonnes
per day ("tpd"), which represents a 36% outperformance compared to
the planned mining rate for 2017 of 1,400 tpd. The head grade
of Wassa Underground's ore being delivered to the processing plant
increased by 55% in the fourth quarter of 2017 to 4.04 g/t Au,
compared to the third quarter of 2017, and by 78% compared to the
fourth quarter of 20161.
The targeted mining rate for Wassa Underground in 2018 is
2,700-3,000 tpd, with the potential to expand further in
time. The mining team is well-positioned to increase the
tonnage profile in 2018, with the mining sequence working well and
an increasing number of stopes prepared and developed.
Additionally, four new underground haulage trucks were purchased
and arrived on site early in the fourth quarter of 2017 and a new
stope drill has been commissioned. Golden Star will provide further details of the
new mine plan for the Wassa complex later in the first quarter of
2018.
From the commencement of development of Wassa Underground to
December 31, 2017, 8,900 metres of
development had been completed and the mining operations had
accessed 25 stopes.
Notes
1. Wassa Underground was in pre-commercial
production until December 31,
2016.
Prestea Gold Mine
Gold production from the Prestea complex was 130,331 ounces in
FY 2017, which represents a 45% increase compared to FY 2016,
primarily as a result of the contribution from the high grade
Mampon deposit and Prestea Underground. The Prestea complex
also exceeded the top end of its upwardly revised FY 2017
production guidance of 120,000-130,000 ounces. Gold
production in the fourth quarter of 2017 increased by 23% to 29,768
ounces compared to the same period in 2016.
The total ore processed by the Prestea processing plant during
FY 2017 was 1.6 million tonnes at a grade of 2.85 g/t Au, and with
a metallurgical recovery of 86%.
Prestea Open Pits
Gold production from the Prestea Open Pits increased by 36% to
121,757 ounces in FY 2017, compared to FY 2016. This
represents a 74% outperformance compared to the top end of the
Company's original 2017 guidance for these assets. In the
fourth quarter of 2017 the mine delivered 24,723 ounces, which is a
2% increase compared to the same period in 2016.
The Prestea Open Pits were expected to complete gold production
at the end of 2017 but it is now anticipated that mining will
continue until late in the first quarter of 2018 and processing of
stockpiled ore will continue until the end of the first half of
2018. This is due to additional ore being sourced from the
Tuapim pit and the Beta South pit, which are close to Prestea, and
the Aboronye pit, which is close to Mampon. Golden Star will
continue to review additional targets for ore supply and will
provide updates as the year progresses.
Prestea Underground
Gold production from Prestea Underground was 8,574 ounces in FY
2017 and 5,045 ounces in the fourth quarter of 2017, which
represents a 57% increase compared to the third quarter of
2017. However production in the fourth quarter of 2017 was
lower than anticipated due to weaker than expected blasting
performance in the first stope. After conducting an internal
review, various adjustments have been made to drill design
patterns, blasting practices and raise layouts in order to improve
blasting efficiencies. As a result, in-stope productivity has
increased and progress with subsequent stopes has accelerated.
The blasting of the first stope is expected to be complete by
mid-January 2018, at which point the
stope will be filled with ore and the contained ounces held in
stope inventory. The operations team have been mucking the
swell from the stope as the blasting progressed and when blasting
is complete they will begin the final draw down of the ore at a
planned rate of 300-400 tpd. The longhole drilling of the
second stope is progressing well, with blasting of this stope
expected to begin in early February 2018. Golden Star expects to draw down 150 tpd from
this stope during February 2018, with
the final draw down anticipated to begin in early March
2018.
The screening of the third stope is nearing completion and the
operations team will then begin the cable bolting process.
The development of the fourth raise has advanced by approximately
68 metres and the fifth nest is complete, with the Alimak installed
and ready to begin raise development. The sixth nest is
developed and installation of the Alimak is expected to begin in
early February 2018 when the
equipment will be transferred from the first stope.
Waste development within Prestea Underground is well advanced,
so the operations team is now focused on advancing the reef drive,
which runs from the twelfth stope onwards and travels along the
reef for 14 stopes. As at December 31, 2017, 2,400 metres of
development had been completed since the start of the project.
Prestea Underground has been delivering a consistent quantity of
material to the processing plant throughout December 2017 and early January 2018. From
mid-January 2018 the grade is
expected to increase significantly as the final draw down of the
first stope begins. The Company intends to blend 300-400 tpd
of ore from the first stope with 100 tpd of material from the
subsequent raises and the reef drive to deliver 400-500 tpd to the
processing plant. In early February
2018, the production rate is scheduled to ramp up further to
600-700 tpd as a result of the blasting of the second stope
commencing and the mucking of the swell from this stope
contributing to production. With the production sequence now
progressing well, commercial production at Prestea Underground is
expected in early February 2018.
Exploration
Golden Star intends to release
its exploration strategy for 2018 later in the first quarter of
2018. It will include an update on the Company's key
exploration targets, which have the potential to be additional high
margin ore sources to fill the under-utilized processing capacity
of Golden Star's two existing
plants.
The Company also expects to release further drilling results
from the B Shoot zone of Wassa Underground and the West Reef ore
body of Prestea Underground later in the first quarter of 2018.
FY 2018 GUIDANCE
For the second consecutive year, the top end of the consolidated
guidance range for the current year (FY 2018) for cash operating
cost per ounce1 and AISC per ounce1 is below
the bottom end of the guidance range for the previous year (FY
2017) on the same metrics, reflecting Golden Star's significantly reducing cost
structure.
The following tables set out Golden Star's full year 2018
guidance in terms of gold production, cash operating cost per
ounce1, AISC per ounce1, and capital
expenditures.
Gold Production and Operating Cost Guidance
Asset
|
Gold
Production (ounces)
|
Cash
Operating Cost1 ($/ounce)
|
AISC1 ($/ounce)
|
Wassa
|
137,000-142,000
|
600-650
|
-
|
Prestea
|
93,000-113,000
|
740-880
|
-
|
Consolidated
|
230,000-255,000
|
650-730
|
850-950
|
Expected gold production in FY 2018 is lower than in FY 2017 due
to the Company's transition to being a primarily
underground-focused producer. Gold production from the Wassa
complex in FY 2018 is anticipated to be solely from Wassa
Underground, with the exception of a small contribution from
Wassa Main Pit stockpiles, as
disclosed above. Gold production from Prestea is expected to
comprise ounces from the Prestea Open Pits and Prestea Underground
during the first half of 2018, with production during the second
half of 2018 relating solely to Prestea Underground.
Golden Star expects gold
production to be weighted towards the second half of the year,
despite the anticipated cessation in production from the Prestea
Open Pits. This is due primarily to an anticipated increase
in both mining rate and grade from Wassa Underground during the
second half of the year, as the mining operations progress to a
deeper, higher grade area of the B Shoot zone and begin to access
larger stopes.
Consequently, Golden Star
anticipates that its cash operating cost per
ounce1 and AISC per ounce1 will be
higher during the first half of 2018, due to the continuing
ramp up of both underground operations.
Notes:
1. See "Non-GAAP Financial Measures".
Capital Expenditures Guidance
Asset
|
Sustaining
Capital ($
millions)
|
Development
Capital ($
millions)
|
Total
Capital
Expenditures ($
millions)
|
Wassa
|
14.7
|
5.9
|
20.6
|
Prestea
|
3.0
|
6.3
|
9.3
|
Exploration
|
-
|
6.6
|
6.6
|
Consolidated
|
17.7
|
18.8
|
36.5
|
Capital expenditures for the two operations are budgeted to be
significantly lower in FY 2018 than in FY 2017 and are expected to
be incurred at a steady rate throughout the year. The
$5.9 million of development capital
expenditures at Wassa are expected to be incurred primarily on the
construction a ventilation intake/exhaust raise and a rock pass and
on the purchase of additional mining equipment. The
$6.3 million of development capital
expenditures at Prestea are anticipated to be incurred primarily on
developing ore passes and ventilation raises and on the remaining
modifications to the processing plant.
Total capital expenditures at Prestea are budgeted to be lower
than at Wassa due to the existing historical workings within
Prestea Underground and the smaller scale of the operations.
The cost to modernize historical workings is lower than the cost to
build new workings and therefore the sustaining capital required
for Prestea Underground is anticipated to be significantly lower
than for Wassa Underground going forwards.
A breakdown of the 2018 exploration budget will be included in
the exploration strategy update, which is expected to be released
later in the first quarter of 2018.
Severance
Golden Star expects to incur
$18.6 million in severance charges
during 2018. This is comprised of $10.0 million at Wassa, as a result of the
decision to cease production from Wassa
Main Pit, and $8.6 million at
Prestea, as a result of mining from the Prestea Open Pits being
expected to complete during the first quarter of 2018. These
charges are anticipated to be incurred in the first half of the
year.
Although the severance charges in 2018 are significant,
Golden Star believes that
transitioning to being a primarily underground-focused producer is
the optimal strategy for free cash flow generation in subsequent
years. The Company is focusing on high grade, low cost, high
margin ounces in order to strengthen its financial position and to
deliver robust value for its stakeholders.
Q4 AND FY 2017 FINANCIAL RESULTS
Golden Star expects to release its fourth quarter and full
year 2017 Financial Results after market close on February 20,
2018. The Company's 2017 cash operating cost per
ounce1 and AISC per ounce1 will
also be reported at that time.
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 in Ghana, West Africa. Listed on the NYSE American, the
Toronto Stock Exchange and the Ghanaian Stock Exchange,
Golden Star is focused on delivering
strong margins and free cash flow from its two high grade, low cost
underground mines. Gold production guidance for 2018 is
230,000-255,000 ounces at a cash operating cost per ounce of
$650-730. As the winner of the
PDAC 2018 Environmental and Social Responsibility Award,
Golden Star is committed to leaving
a positive and sustainable legacy in its areas of operation.
Non-GAAP Financial Measures
In this press release, we use the terms "cash operating cost per
ounce" and "All-In Sustaining Cost". 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.
"Cash operating cost" for a period is equal to "cost of sales
excluding depreciation and amortization" for the period less
royalties, the cash component of metals inventory net realizable
value adjustments and severance charges, and "cash operating cost
per ounce" is that amount divided by the number of ounces of gold
sold (excluding pre-commercial production ounces sold) during the
period. We use cash operating cost per ounce as a key operating
metric. We monitor this measure monthly, comparing each month's
values to prior periods' values to detect trends that may indicate
increases or decreases in operating efficiencies. We provide this
measure to investors to allow them to also monitor operational
efficiencies of the Company's mines. We calculate this measure for
both individual operating units and on a consolidated basis. Since
cash operating costs do not incorporate revenues, changes in
working capital and non-operating cash costs, they are not
necessarily indicative of operating profit or cash flow from
operations as determined under IFRS. Changes in numerous factors
including, but not limited to, mining rates, milling rates, ore
grade, gold recovery, costs of labor, consumables and mine site
general and administrative activities can cause these measures to
increase or decrease. We believe that these measures are similar to
the measures of other gold mining companies, but may not be
comparable to similarly titled measures in every instance.
"All-In Sustaining Costs" commences with cash operating costs
and then adds 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.
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.
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 amongst other things. 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 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: the ability of
Golden Star to fund its capital
expenditures program; 2018 guidance in terms of gold production,
cash operating cost per ounce, All-In Sustaining Cost per ounce and
capital expenditures; the ability of Golden
Star to increase the mine lives of its operations through
exploration and to find additional sources of high margin ore; the
targeted mining rate for Wassa Underground in 2018; the timing for
releasing the new mine plan for Wassa; the timing for ceasing
production at Wassa Main; the amount and grade of ore to be fed to
processing plants in 2018; the grade to be delivered by the Prestea
Open Pits in the first half of 2018; the timing for ceasing
production at the Prestea Open Pits; the targeted mining rate from
Prestea Underground in 2018; the commencement of commercial
production from Prestea Underground in early February 2018; the timing of the release of the
2018 exploration strategy; the release of further drilling results
from Wassa Underground and Prestea Underground during the first
quarter of 2018; the timing for blasting the first stope and second
stope at Prestea Underground; the timing and rate of the final draw
at the first stope and second stope of Prestea Underground; the
timing for commencing cable bolting at the third stope of Prestea
Underground; the timing for installing the Alimak at the sixth nest
of Prestea Underground; the ability to increase the grade at the
first stope of Prestea Underground; the sustaining capital
requirements of Wassa Underground relative to the sustaining
capital requirements of Prestea Underground; the timing of the
release of the 2018 exploration strategy and budget; the timing and
amount of severance charges during 2018; the ability of
Golden Star to strengthen its
financial position and deliver value for its stakeholders; and
timing of the release of the Company's FY and fourth quarter of
2017 financial results.
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 or
forward looking statements that are included in this news release
except in accordance with applicable securities laws.
Technical Information
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.
SOURCE Golden Star Resources Ltd.