TORONTO, Jan. 16, 2019 /PRNewswire/ - Golden Star
Resources Ltd. (NYSE American: GSS; TSX: GSC; GSE:
GSR) ("Golden Star" or the "Company") is pleased to
announce its preliminary production results for the fourth quarter
("Q4") and full year ("FY") of 2018 and its guidance for FY 2019,
as well as a change to its management team.
HIGHLIGHTS
Q4 and FY 2018 Production Results
- Consolidated gold production for FY 2018 of 224,861
ounces, 139 ounces below the low end of guidance
- Gold production by asset in FY 2018:
-
- Wassa Complex ("Wassa"): 149,697 ounces
- Prestea Complex ("Prestea"): 75,164 ounces
- Gold production in the fourth quarter of 2018 of 48,854
ounces
FY 2019 Guidance
- FY 2019 consolidated guidance for gold production of
220,000-240,000 ounces
- Significant decrease in projected operating cost per ounce
expected in 2019:
-
- FY 2019 consolidated cash operating cost1 per ounce
expected to be $620-$680, which is ~20% lower than the mid-point
of the 2018 guidance range ($810)
- FY 2019 consolidated All-In Sustaining Cost
("AISC")1 per ounce expected to be $875-$955,
which is ~15% lower than the mid-point range of the 2018 guidance
range ($1,075)
Notes:
|
1. See "Non-GAAP
Financial Measures".
|
Sam Coetzer, President and
Chief Executive Officer of Golden
Star, commented:
"2018 marked the completion of the transition of our two
operations into fully underground mines, focused on higher grade
and higher margin production. This is a significant achievement and
positions the company strongly for the future. We're confident that
there is still much potential to be realized.
At Wassa Underground, operational performance has
consistently exceeded our expectations and at the same time the
resource base has continued to grow, underpinning our confidence in
its substantial production growth potential.
For Prestea, 2018 was a difficult year with performance below
our expectations in terms of production and costs. In the fourth
quarter, we took a series of actions to ensure that the operation
is rightsized with the appropriate skills base and cost structure
to move towards consistently delivering a run rate of 650 tonnes
per day ("tpd") during 2019.
With a strong balance sheet, I am confident that all of the
elements are in place for the Company to successfully deliver on
its target of increased production at a lower cost, driving value
for its shareholders."
PROGRESSION OF UNDERGROUND PRODUCTION
Golden Star produced 224,861
ounces of gold in 2018 on a consolidated basis. Going forward the
Company is focused on developing its high-grade underground
production profile, rather than the higher cost, lower grade, open
pit supply that was mined in the past. Wassa Underground has
already proven to be well on this path and continues to show
improvements year over year. Prestea faced a number of challenges
during 2018, however with the actions taken in the last quarter of
the year, it is now well positioned to ramp-up to the targeted run
rate of 650 tpd over the coming months.
As illustrated by the graph, the transition from two open pit
operations into two underground mines has now been achieved. As the
Company heads through 2019, the cost improvements from this
approach are expected to continue to be delivered at the same time
as development capital spend is ramped up to enable Golden Star to achieve the longer-term potential
of its assets.
FY 2019 PRODUCTION AND CAPITAL EXPENDITURE GUIDANCE
Asset
|
Gold
Production
(ounces)
|
Cash
Operating Cost1
($/ounce)
|
AISC1
($/ounce)
|
Sustaining
Capital2
($
millions)
|
Development
Capital2
($
millions)
|
Total
Capital
Expenditures
($
millions)
|
Wassa
Complex
|
170,000-
180,000
|
560-600
|
-
|
20.7
|
18.1
|
38.8
|
Prestea
Complex
|
50,000-
60,000
|
840-1,000
|
-
|
9.5
|
-
|
9.5
|
Exploration
|
-
|
-
|
-
|
-
|
13.4
|
13.4
|
Consolidated
|
220,000-
240,000
|
620-680
|
875-955
|
30.2
|
31.5
|
61.7
|
Notes: 1.
See "Non-GAAP Financial Measures".
|
2. Development
capital are those costs incurred at new operations and costs
related to major projects at existing operations where these
projects will materially increase production. All other costs
relating to existing operations are considered sustaining
capital.
|
Production Guidance
Golden Star's 2019 consolidated
production guidance is in line with actual production delivered in
2018, albeit the composition will be different.
As a result of Wassa Underground continuing to surpass
expectations, and capital being allocated to upgrade infrastructure
and the additional delineation and stope definition drilling,
Wassa's production guidance has been increased by 17% from the 2018
achieved production of 149,697 ounces of gold. In 2019, Wassa is
expected to produce at an average rate of approximately 3,500 tpd
moving towards a target of 4,000 tpd in 2020. Deep drilling has
continued to show positive results and studies are ongoing to
decide on the optimal long-term development of the asset, including
the appropriate mining method. A Preliminary Economic Assessment is
expected in the second half of 2019.
At Prestea, with the cessation of open pit mining and the
ongoing ramp-up of underground volumes, guidance for 2019 has been
set at 50,000-60,000 ounces of gold for the year. In the final
quarter of 2018, the Company concluded the business rightsizing by
reducing the workforce and establishing a lower direct operating
cost base. During the fourth quarter of 2018 the plant was
converted to a low tonnage, high grade configuration allowing it to
efficiently treat the underground production. At the end of 2018,
significant improvements were being recorded in Prestea's lead
production indicators.
Improvements in raise development, long hole drilling and
blasting productivities are expected to continue to bring the
production rate up to the 650 tpd target in 2019. At the beginning
of January, one stope is in final drawdown and one stope is
blasting/swell mucking. The raising, drilling and mining sequence
is moving into a steady cycle which will facilitate the mucking of
650 tpd from final drawdown, swell mucking and raise ore
sources.
Cost Guidance
As a result of positive reconciliation from mineral resources to
mined ore and excess processing plant capacity, in 2019 capital has
been allocated to install infrastructure that is expected to
achieve increased mining rates of 4,000 tpd in early 2020 at Wassa.
This capital includes $18.1 million
of development capital, which will be allocated to mobile
equipment, paste backfill plant construction, electrical upgrades
and improvements to the tailing facilities.
Capital has also been allocated for delineation and stope
definition drilling in order to potentially increase Proven Mineral
Reserves.
A budget of $13.4 million has been
set for exploration activities in 2019, broken down to include
$9.8 million at Wassa for both
inferred resource expansion drilling and inferred to indicated
conversion, with an initial $1.5
million dedicated to Father Brown for infill expansion
drilling. At Prestea, $1.6 million
has been allocated for expansion drilling. The remaining
$0.5 million is earmarked for
follow-up drilling to be defined when results are delivered.
EXPLORATION
In 2019, drilling is focused on Father Brown and the Wassa
Southern Extension in order to accelerate organic growth. The
excess plant capacity available at the operations improves capital
efficiency, therefore the Company expects a higher rate of return
when developing these projects. At Prestea, the same optionality
exists as throughput increases.
The Company's Exploration strategy is to build on the existing
resource base at Wassa and Prestea and to prove up significant
tonnage and grade to advance Father Brown to the development
stage.
MANAGEMENT CHANGE
Golden Star is also pleased to
announce that effective January 2,
2019 Tania Shaw has been appointed Vice President, Investor
Relations and Corporate Affairs. Ms. Shaw is a seasoned investor
relations professional and has held positions in communications and
investor relations in the gold sector for the last 14 years. She
was previously Vice President of Investor Relations for Oceanus
Resources, and prior to that held roles of increasing
responsibility with Detour Gold, Primero Mining and Roxgold. Ms.
Shaw obtained her CPIR designation (Certified Professional Investor
Relations) in 2013 and is a member in good standing of the Canadian
Investor Relations Institute.
Golden Star thanks Katharine Sutton for her contribution to the
Company over the last two and a half years and wishes her well in
her future endeavours.
UPCOMING NEWS RELEASES
- February 20, 2019: 2018 Fourth
quarter and Full Year Financial Results
- February, 2019: Exploration Plan and Budget
- February, 2019: Father Brown Drill Results
- March, 2019: Updated Mineral Reserves and Resources
All monetary amounts refer to United States dollars
unless otherwise indicated.
Company Profile:
Golden Star is an established
gold mining company that owns and operates the Wassa and Prestea
underground mines in Ghana,
West Africa. Listed on the NYSE
American, the Toronto Stock Exchange and the Ghanaian Stock
Exchange, Golden Star is focused on
delivering strong margins and free cash flow from its two
high-grade, low cost underground mines. Gold production guidance
for 2019 is 220,000-240,000 ounces at a cash operating cost per
ounce1 of $620-$680. 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.
Notes:
|
1. See "Non-GAAP
Financial Measures".
|
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 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.
Changes in numerous factors including, but not limited to, the
Company's 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, 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: the ability of
Golden Star to fund its capital
expenditures program; 2019 guidance in terms of gold production,
cash operating cost per ounce, All-In Sustaining Cost per ounce and
capital expenditures; the potential of the Company to increase
production at a lower cost and drive shareholder value, including
production growth at Wassa and the ability to deliver a consistent
run rate at Prestea; the Company's ability to achieve the long-term
potential of its assets; 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
2019; the amount and grade of ore to be fed to processing plants in
2019; the targeted mining rate from Prestea Underground in 2019;
the Company's ability to achieve strong organic growth and to add
supply in order to utilize its excess capacity, including filling
the Wassa processing facility with high-grade underground ore and
achieving production of 650 tpd at the Prestea processing plant;
the potential to increase gold production; the Company's ability to
develop long-term margin focused mines; the achievement of a higher
rate of return at the Company's projects, including by way of
increased throughput; planned drilling at Father Brown and the
Wassa Southern Extension during 2019; the achievement of
approximately 3,500 tpd at Wassa in 2019; the ability to optimize
Wassa in the future; 2019 capital spending at Wassa to install
infrastructure resulting in the achievement of increased mining
rates to 4,000 tpd; the ability of the Company to increase Proven
Mineral Reserves at Wassa; the continuation of drilling at Father
Brown; the advancement of Father Brown to the development stage;
continued improvement in lead indicators at Prestea; and the timing
for a Preliminary Economic Assessment at Wassa.
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 National Instrument 43-101 Standards of
Disclosure for Mineral Projects. Dr. Raffield is Senior
Vice President of Project Development and Technical
Services for Golden Star.
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SOURCE Golden Star Resources Ltd.