TORONTO, Feb. 19, 2019 /CNW/ - Golden Star
Resources Ltd. (NYSE American: GSS; TSX: GSC; GSE:
GSR) ("Golden Star" or the "Company") is pleased to
announce its financial and operational results for the fourth
quarter and full year ("FY") ended December
31, 2018. All references to "$" or "dollars" in this press
release are to United States
currency unless stated otherwise.
HIGHLIGHTS:
FY 2018
- Strategic investment by La Mancha Holdings S.à r.l. ("La
Mancha") of $125.7 million
transformed the balance sheet
- Consolidated cash balance of $96.5
million as at December 31,
2018
- Commercial production achieved at the Prestea Underground Gold
Mine ("Prestea Underground") on February 1,
2018
- 224,784 ounces of consolidated gold production for FY 2018 (16%
decrease compared to FY 2017)
-
- Wassa Complex ("Wassa"): 149,697 ounces
- Prestea Complex ("Prestea"): 75,087 ounces
- Consolidated cash operating cost per ounce¹ of $847 (11% increase compared to FY 2017)
- All-in sustaining cost ("AISC") per ounce¹ of $1,107 (17% increase compared to FY 2017)
- Net loss attributable to Golden
Star shareholders of $18.1
million ($0.21 loss per share)
in FY 2018 compared to a net income attributable to Golden Star shareholders of $38.8 million ($0.52 income per share) in FY 2017
- Mine operating margin of $15.3
million in FY 2018 compared to $57.2
million in FY 2017 due to a decrease in production at
Prestea, only partially offset by an increase in production at
Wassa Underground
- Consolidated capital expenditure of $46.8 million in FY 2018, with 56% related to
Wassa Underground development and equipment purchases and 18%
related to Wassa exploration
Fourth Quarter of 2018
- Common share consolidation approved and completed at a ratio of
5:1
- Right-sizing of Prestea Underground operations completed
- Consolidated gold production of 48,846 ounces was achieved in
the fourth quarter of 2018
- Cash operating cost per ounce¹ in the fourth quarter of
$905
- AISC per ounce¹ in the fourth quarter of $1,218
Notes:
|
1. See "Non-GAAP
Financial Measures".
|
Sam Coetzer, President and
Chief Executive Officer of Golden
Star, commented:
"2018 was considered a year of transition for Golden Star while we began to cease open pit
mining and worked towards being an underground only producer. At
Prestea we faced some operational challenges that we believe we
have now overcome with the rightsizing of the mine having been
completed by year end.
Since the start of 2019, Prestea and Wassa have been
exceeding their historic tonnage profiles with Wassa running close
to 4,000 tonnes per day ("tpd") and Prestea reaching an average of
550 tpd this month. With the infrastructure upgrades being made
this year at Wassa, and the continuous positive conversion that we
have been seeing, we believe we are on our way to defining Wassa as
a world class asset.
I am also encouraged by the results from the Father Brown
Complex - released earlier today in a separate news release. This
year, we are establishing Golden
Star as a leading underground mining company in West Africa, with a defined path to becoming
an intermediate gold producer over the next five
years."
Fourth Quarter and Full Year 2018 Conference Call
Details
The Company will conduct a conference call and webcast to
discuss these results tomorrow, Wednesday
February 20, 2019 at 10:00 am
ET.
Toll Free (North America):
+1 833 231-8263
Toronto Local and International: +1
647 689-4108
Conference ID: 9195833
Webcast:
https://event.on24.com/wcc/r/1898520/1C843E8C2FDA22FA180D84AAF37B235F and
on the home page of the Company's website: www.gsr.com.
A recording and webcast replay of the call will be available on
the Company's website: www.gsr.com following the call.
SUMMARY OF CONSOLIDATED OPERATIONAL AND FINANCIAL
RESULTS
|
|
Three Months
Ended
December 31,
|
|
Years
Ended
December
31,
|
OPERATING
SUMMARY
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Wassa Main Pit gold
sold
|
oz
|
1,460
|
|
20,775
|
|
12,307
|
|
75,644
|
Wassa Underground
gold sold
|
oz
|
35,711
|
|
20,852
|
|
137,261
|
|
61,498
|
Prestea Open Pit gold
sold
|
oz
|
4,578
|
|
24,536
|
|
37,947
|
|
121,619
|
Prestea Underground
gold sold
|
oz
|
6,652
|
|
5,045
|
|
37,464
|
|
8,574
|
Total gold
sold
|
oz
|
48,401
|
|
71,208
|
|
224,979
|
|
267,335
|
Total gold
produced
|
oz
|
48,846
|
|
71,769
|
|
224,784
|
|
267,565
|
Average realized gold
price1
|
$/oz
|
1,185
|
|
1,237
|
|
1,225
|
|
1,219
|
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce – Consolidated2
|
$/oz
|
1,351
|
|
1,111
|
|
1,156
|
|
998
|
Cost of sales per
ounce – Wassa2
|
$/oz
|
836
|
|
1,096
|
|
898
|
|
1,153
|
Cost of sales per
ounce – Prestea2
|
$/oz
|
3,054
|
|
1,137
|
|
1,681
|
|
823
|
Cash operating cost
per ounce – Consolidated2
|
$/oz
|
905
|
|
812
|
|
847
|
|
763
|
Cash operating cost
per ounce – Wassa2
|
$/oz
|
614
|
|
775
|
|
629
|
|
880
|
Cash operating cost
per ounce – Prestea2
|
$/oz
|
1,867
|
|
875
|
|
1,292
|
|
632
|
All-in sustaining
cost per ounce – Consolidated2
|
$/oz
|
1,218
|
|
1,002
|
|
1,107
|
|
944
|
|
|
|
|
|
|
|
|
|
FINANCIAL
SUMMARY
|
|
|
|
|
|
|
|
|
Gold
revenues
|
$'000
|
57,339
|
|
81,845
|
|
273,017
|
|
315,497
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
57,565
|
|
66,401
|
|
223,729
|
|
226,482
|
Depreciation and
amortization
|
$'000
|
7,824
|
|
7,095
|
|
33,939
|
|
31,792
|
Mine operating
(loss)/margin
|
$'000
|
(8,050)
|
|
8,349
|
|
15,349
|
|
57,223
|
General and
administrative expense
|
$'000
|
2,244
|
|
7,881
|
|
16,428
|
|
25,090
|
(Gain)/loss on fair
value of financial instruments, net
|
$'000
|
(3,274)
|
|
1,902
|
|
(6,786)
|
|
(2,057)
|
Net (loss)/income
attributable to Golden Star
shareholders
|
$'000
|
(9,318)
|
|
12,601
|
|
(18,123)
|
|
38,771
|
Adjusted net
(loss)/income attributable to Golden Star
shareholders2
|
$'000
|
(5,211)
|
|
10,701
|
|
(1,916)
|
|
41,642
|
(Loss)/income per
share attributable to Golden Star
shareholders - basic
|
$/share
|
(0.09)
|
|
0.17
|
|
(0.21)
|
|
0.52
|
(Loss)/income per
share attributable to Golden Star
shareholders – diluted
|
$/share
|
(0.09)
|
|
0.16
|
|
(0.21)
|
|
0.48
|
Adjusted
(loss)/income per share attributable to
Golden Star shareholders – basic2
|
$/share
|
(0.05)
|
|
0.14
|
|
(0.02)
|
|
0.56
|
Cash (used)/provided
by operations
|
$'000
|
(24,676)
|
|
10,939
|
|
(7,555)
|
|
55,176
|
Cash (used)/provided
by operations before working
capital changes2
|
$'000
|
(9,416)
|
|
6,760
|
|
9,617
|
|
62,624
|
Cash (used)/provided
by operations per share - basic
|
$/share
|
(0.23)
|
|
0.14
|
|
(0.09)
|
|
0.74
|
Cash (used)/provided
by operations before working
capital changes per share – basic
|
$/share
|
(0.09)
|
|
0.09
|
|
0.11
|
|
0.84
|
Capital
expenditures
|
$'000
|
15,280
|
|
16,751
|
|
46,834
|
|
69,638
|
|
Notes:
|
1. Average
realized gold price per ounce excludes pre-commercial production
ounces sold at Prestea Underground in 2018 and 2017.
|
2. See "Non-GAAP
Financial Measures".
|
OPERATIONAL PERFORMANCE
FY 2018
Golden Star produced 224,784
ounces of gold in 2018 on a consolidated basis, a 16% decrease from
FY 2017. In terms of consolidated cash operating cost per ounce¹
and AISC per ounce¹, both results ($847 and $1,107,
respectively) were above the top end of the guidance ranges. These
results also represent an 11% increase in cash operating cost per
ounce¹ and a 17% increase in AISC per ounce¹ compared to FY 2017.
Additionally, Golden Star's
consolidated cost of sales per ounce¹ was $1,156.
In 2019, the Company is focused on developing its high-grade,
high-margin underground production profile. At Wassa
Underground, operational performance continues to exceed
expectations and at the same time the resource base has continued
to grow, showing it is well on this path. Prestea faced a number of
challenges during 2018, however with the actions taken in the last
quarter of 2018, it is now well positioned to ramp-up to the
targeted run rate of 650 tonnes per day ("tpd") over the coming
months.
Accordingly, 2019 guidance is as follows:
- Gold production of 220,000-240,000 ounces
- Cash operating cost per ounce1 of $620-$680
- AISC per ounce1 of $875-$955
- Capital expenditures of $61.7
million
From a development perspective, Golden
Star continued to advance both of its underground mines,
ramping up production during the course of 2018. Golden Star outperformed its planned mining rate
of 2,800 tpd at Wassa Underground by 4% in FY 2018, achieving 2,900
tpd on average and has continued to see the mining rate ramp up
steadily towards 4,000 tpd with an average mining rate of 3,400 tpd
in the fourth quarter of 2018. At Prestea Underground,
commercial production was achieved on February 1, 2018.
FOURTH QUARTER 2018
In the fourth quarter of 2018 consolidated production was 48,846
ounces of gold, representing a 32% decrease compared to the same
period in 2017. Golden Star's
consolidated cash operating cost per ounce1 increased by
11% to $905 in the fourth quarter of
2018 compared to the same period in 2018 and its AISC per
ounce1 increased by 22% to $1,218. The consolidated cost of sales per
ounce1 was $1,351.
Notes
|
1. See
"Non-GAAP Financial Measures".
|
Wassa Complex
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
WASSA FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
Revenue
|
$'000
|
44,109
|
|
51,628
|
|
183,078
|
|
167,376
|
|
|
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
22,044
|
|
31,012
|
|
86,916
|
|
115,625
|
Severance
charges
|
$'000
|
—
|
|
5,217
|
|
4,970
|
|
6,316
|
Royalties
|
$'000
|
2,316
|
|
2,682
|
|
9,508
|
|
8,652
|
Operating costs from
metals inventory
|
$'000
|
789
|
|
1,253
|
|
7,184
|
|
5,080
|
Inventory net
realizable value adjustment
|
$'000
|
349
|
|
—
|
|
3,684
|
|
2,410
|
Cost of sales
excluding depreciation and
amortization
|
$'000
|
25,498
|
|
40,164
|
|
112,262
|
|
138,083
|
Depreciation and
amortization
|
$'000
|
5,593
|
|
5,440
|
|
22,066
|
|
20,052
|
Mine operating
margin
|
$'000
|
13,018
|
|
6,024
|
|
48,750
|
|
9,241
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
13,898
|
|
8,470
|
|
35,420
|
|
21,583
|
|
|
|
|
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
|
|
|
|
|
Ore mined – Main
Pit
|
t
|
—
|
|
520,482
|
|
54,281
|
|
1,601,004
|
Ore mined –
Underground
|
t
|
309,504
|
|
171,907
|
|
1,075,218
|
|
681,141
|
Ore mined –
Total
|
t
|
309,504
|
|
692,389
|
|
1,129,499
|
|
2,282,145
|
Waste mined – Main
Pit
|
t
|
—
|
|
1,043,854
|
|
72,538
|
|
6,037,366
|
Waste mined
– Underground
|
t
|
89,288
|
|
60,054
|
|
309,265
|
|
199,550
|
Waste mined –
Total
|
t
|
89,288
|
|
1,103,908
|
|
381,803
|
|
6,236,916
|
Ore processed
– Main Pit
|
t
|
92,211
|
|
476,828
|
|
525,666
|
|
1,925,587
|
Ore processed
– Underground
|
t
|
309,504
|
|
179,186
|
|
1,075,218
|
|
691,255
|
Ore processed –
Total
|
t
|
401,715
|
|
656,014
|
|
1,600,884
|
|
2,616,842
|
Grade processed
– Main Pit
|
g/t
|
0.66
|
|
1.38
|
|
0.76
|
|
1.27
|
Grade processed
– Underground
|
g/t
|
3.80
|
|
4.04
|
|
4.18
|
|
3.03
|
Recovery
|
%
|
95.4
|
|
94.4
|
|
95.7
|
|
94.6
|
Gold produced
– Main Pit
|
oz
|
1,851
|
|
21,149
|
|
12,436
|
|
75,736
|
Gold produced
– Underground
|
oz
|
35,711
|
|
20,852
|
|
137,261
|
|
61,498
|
Gold produced –
Total
|
oz
|
37,562
|
|
42,001
|
|
149,697
|
|
137,234
|
Gold sold – Main
Pit
|
oz
|
1,460
|
|
20,775
|
|
12,307
|
|
75,644
|
Gold sold
– Underground
|
oz
|
35,711
|
|
20,852
|
|
137,261
|
|
61,498
|
Gold sold –
Total
|
oz
|
37,171
|
|
41,627
|
|
149,568
|
|
137,142
|
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce
|
$/oz
|
836
|
|
1,096
|
|
898
|
|
1,153
|
Cash operating cost
per ounce1
|
$/oz
|
614
|
|
775
|
|
629
|
|
880
|
|
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Wassa Operational Overview
Gold production from the Wassa Complex increased by 9% in FY
2018 to 149,697 ounces compared to FY 2017 due to increased
production at Wassa Underground, as its grade, recovery and tonnes
mined improved. Wassa Underground produced 137,261 ounces in
FY 2018, which represents 92% of Wassa's total production for the
year. This compares to Wassa Underground production of 61,498
ounces in FY 2017, when Wassa Underground's production represented
45% of the Wassa Complex's total gold production. As of
February 1, 2018, Wassa became an
underground-only mining operation, however, open pit stockpiled ore
continued to be processed throughout the year. Gold
production from the Wassa Complex in the fourth quarter of 2018 was
37,562 ounces, a decrease of 11% compared to the same period in
2017. This included 35,711 ounces from Wassa Underground (95%
of total production).
Gold production from Wassa Main
Pit was 12,436 ounces in FY 2018 and 1,851 ounces in the
fourth quarter of 2018. This decrease in production is a result of
the planned transition into an underground-only mining operation
initiated at the end of FY 2017. Wassa now operates as an
underground-only mining operation and completed right-sizing
activities in early 2018.
Mining rates at Wassa Underground continued to be strong in the
fourth quarter of 2018 at approximately 3,400 tpd, which represents
a 21% outperformance compared to the planned mining rate for 2018
of 2,800 tpd. The average mining rate for FY 2018 was 2,900
tpd. The head grade of Wassa Underground ore being delivered
to the processing plant increased by 38% compared to FY 2017, to
4.18 grams per tonne ("g/t") of gold ("Au") in FY 2018 as a result
of mining operations focusing solely on the B-Shoot zone where
larger stopes and higher grade areas were accessed.
The average targeted mining rate for Wassa Underground in 2019
is 3,500 tpd, moving towards a target of 4,000 tpd in 2020.
Wassa's cash operating cost per ounce¹ decreased 29% in FY 2018
to $629 compared to FY 2017 as a
result of a decrease in mine operating expenses and an increase in
gold sold related to increased production from Wassa Underground.
Wassa's cash operating cost per ounce¹ in the fourth quarter of
2018 was $614, representing a
decrease of 21% compared to the fourth quarter of 2017. The
cost of sales per ounce¹ for Wassa was $898 in FY 2018 and $836 in the fourth quarter of 2018.
Capital expenditures for FY 2018 increased by 64% compared to FY
2017 due mainly to an increase in capital expenditure related to
increasing the mining rate at Wassa Underground and exploration
activities focused on step-out and inferred to indicated mineral
resource conversion drilling. In total, $26.0 million related to Wassa Underground,
$8.3 million related to exploration
and the remainder related to improvement of the tailings storage
facility and the processing plant. During the fourth quarter
of 2018, capital expenditures totaled $13.9
million, which included $8.8
million related to Wassa Underground and $4.5 million related to exploration
drilling.
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Prestea Complex
|
|
Three Months
Ended
December 31,
|
|
Years Ended
December 31,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
PRESTEA FINANCIAL
RESULTS
|
|
|
|
|
|
|
|
|
Revenue
|
$'000
|
13,230
|
|
30,217
|
|
89,939
|
|
148,121
|
|
|
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
20,982
|
|
21,952
|
|
89,112
|
|
81,753
|
Severance
charges
|
$'000
|
9,882
|
|
2,833
|
|
9,888
|
|
2,916
|
Royalties
|
$'000
|
693
|
|
1,938
|
|
4,794
|
|
8,643
|
Operating costs
(to)/from metals inventory
|
$'000
|
(11)
|
|
(486)
|
|
5,702
|
|
(4,913)
|
Inventory net
realizable value adjustment and write-off
|
$'000
|
521
|
|
—
|
|
1,971
|
|
—
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
32,067
|
|
26,237
|
|
111,467
|
|
88,399
|
Depreciation and
amortization
|
$'000
|
2,231
|
|
1,655
|
|
11,873
|
|
11,740
|
Mine operating
(loss)/margin
|
$'000
|
(21,068)
|
|
2,325
|
|
(33,401)
|
|
47,982
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
1,382
|
|
8,281
|
|
11,414
|
|
48,055
|
|
|
|
|
|
|
|
|
|
PRESTEA OPERATING
RESULTS
|
|
|
|
|
|
|
|
|
Ore mined – Open
Pits
|
t
|
32,275
|
|
300,247
|
|
374,218
|
|
1,462,607
|
Ore mined
– Underground
|
t
|
29,654
|
|
19,458
|
|
128,048
|
|
31,740
|
Ore mined
– Total
|
t
|
61,929
|
|
319,705
|
|
502,266
|
|
1,494,347
|
Waste mined – Open
Pits
|
t
|
89,638
|
|
912,509
|
|
921,054
|
|
3,496,148
|
Waste mined
– Underground
|
t
|
3,008
|
|
6,254
|
|
7,403
|
|
26,303
|
Waste mined
– Total
|
t
|
92,646
|
|
918,763
|
|
928,457
|
|
3,522,451
|
Ore processed – Open
Pits
|
t
|
185,014
|
|
442,333
|
|
1,179,414
|
|
1,587,482
|
Ore processed
– Underground
|
t
|
24,168
|
|
22,846
|
|
122,562
|
|
45,497
|
Ore processed
– Total
|
t
|
209,182
|
|
465,179
|
|
1,301,976
|
|
1,632,979
|
Grade processed –
Open Pits
|
g/t
|
1.01
|
|
2.39
|
|
1.20
|
|
2.85
|
Grade processed
– Underground
|
g/t
|
8.56
|
|
8.41
|
|
10.12
|
|
6.96
|
Recovery
|
%
|
84.9
|
|
82.6
|
|
86.8
|
|
86.4
|
Gold produced
– Open Pits
|
oz
|
4,632
|
|
24,723
|
|
37,623
|
|
121,757
|
Gold produced
– Underground
|
oz
|
6,652
|
|
5,045
|
|
37,464
|
|
8,574
|
Gold produced
– Total
|
oz
|
11,284
|
|
29,768
|
|
75,087
|
|
130,331
|
Gold sold – Open
Pits
|
oz
|
4,578
|
|
24,536
|
|
37,947
|
|
121,619
|
Gold sold
– Underground
|
oz
|
6,652
|
|
5,045
|
|
37,464
|
|
8,574
|
Gold sold
– Total
|
oz
|
11,230
|
|
29,581
|
|
75,411
|
|
130,193
|
|
|
|
|
|
|
|
|
|
Cost of sales per
ounce
|
$/oz
|
3,054
|
|
1,137
|
|
1,681
|
|
823
|
Cash operating cost
per ounce1
|
$/oz
|
1,867
|
|
875
|
|
1,292
|
|
632
|
|
Notes
|
1. See "Non-GAAP
Financial Measures".
|
Prestea Operational Overview
Gold production from the Prestea Complex was 75,087 ounces for
the year ended December 31, 2018, a
42% decrease from the 130,331 ounces produced in 2017. This
decrease in production was due primarily to the planned reduction
from the Prestea Open Pits and the slower than expected ramp up at
Prestea Underground.
The Prestea Open Pits produced 37,623 ounces for the year ended
December 31, 2018, compared to
121,757 ounces in 2017. This decrease in production was
planned, as the Prestea Open Pits were expected to complete gold
production at the end of 2017. Mining of the Prestea Open
Pits continued throughout 2018 with additional ore being sourced
from the pits close to Prestea and is expected to continue into the
first quarter of 2019.
Prestea Underground declared commercial production on
February 1, 2018 and produced 37,464
ounces for the year ended December 31,
2018, compared to 8,574 ounces in 2017. Grade,
recovery and production improved in 2018 compared to 2017. In
the fourth quarter of 2018, the Company concluded the business
right-sizing of Prestea Underground's operations by reducing the
workforce and establishing a lower operating cost base. In
addition, the processing plant was converted to a low tonnage, high
grade configuration allowing it to efficiently treat underground
ore production. At the end of 2018, improvements were being
recorded in Prestea Underground's lead production indicators.
Improvements in raise development, longhole drilling and blasting
productivities are expected to continue to bring the production
rate up to the 650 tpd target in 2019.
The Prestea Complex's cash operating cost per ounce¹ increased
104% in FY 2018 to $1,292 compared to
the same period in 2017. The increase in cash operating cost
per ounce¹ was primarily due to the increase in inventory costs and
mine operating expenses in the period, as well as the decrease in
ounces sold for the year ended December 31,
2018 compared to 2017. During the fourth quarter of
2018, the Prestea Complex delivered a cash operating cost per
ounce¹ of $1,867. The cost of
sales per ounce¹ at Prestea in FY 2018 was $1,681 and in the fourth quarter of 2018 was
$3,054.
Total capital expenditures for FY 2018 at Prestea decreased by
76% and totaled $11.4 million
compared to FY 2017 due mainly to a $27.7
million decrease in development expenditures and a
$4.7 million decrease in capitalized
borrowing costs relating to Prestea Underground which achieved
commercial production on February 1,
2018. In addition, there was a decrease in capital
expenditures related to the Prestea Open Pits and the Mampon
deposit, as some of these deposits ceased production by the end of
2017. Total capital expenditures for the fourth quarter of
2018 were $1.4 million, with
$0.9 million relating to Prestea
Underground.
Notes
|
1. See
"Non-GAAP Financial Measures".
|
EXPLORATION
Fourth Quarter of 2018 Exploration Update
At the end of the fourth quarter of 2018, seven drill rigs were
employed at Wassa with the objective of further testing the
extensions of the Wassa Underground gold mineralization to the
south as well as converting the Inferred Mineral Resources to
Indicated Mineral Resources. Five holes were completed during the
fourth quarter totaling approximately 4,800 metres, the results of
which were released on December 17,
2018. Golden Star expects to
release further drilling results and an updated Mineral Resource
Estimate in the first quarter of 2019.
Drilling of the West Reef from 24 Level at Prestea Underground
continued during the fourth quarter of 2018, with one drill rig
completing eight holes for a total of 1,744 metres. The
drilling focused on continuing to in-fill the existing Indicated
Mineral Resources and testing Inferred Mineral Resources between
the 21 and 27 Levels. The 262 drill chamber on 24 level was
completed in the fourth quarter of 2018, which will enable a second
underground drill rig to be mobilized to the mine to test the down
plunge extension of West Reef. This drilling commenced in
February 2019.
On February 19, 2019, the Company
announced an updated Mineral Resource estimate at Father Brown,
consisting of the Father Brown Zone and Adoikrom Zone. Inferred
Mineral Resources have increased 93% from 246,000 ounces at
year-end 2017, to 474,743 ounces at an average grade of 6.7 grams
per tonne ("g/t") of gold ("Au"). The updated Indicated and
Inferred Mineral Resource estimate includes results of 18 holes
totaling 8.873 metres of drilling. In 2019, a drilling budget of
$1.5 million will be allocated to
inferred expansion drilling of 9,000 metres. Further drilling will
be assessed to expand the Inferred Mineral Resources and drill off
the Inferred Mineral Resources to seek to upgrade them to the
Indicated Mineral Resource category.
FINANCIAL PERFORMANCE
Capital Expenditures
Golden Star incurred capital
expenditures totaling $46.8 million
in FY 2018, a decrease of 33% or $22.8
million compared to FY 2017 as a result of Prestea
Underground achieving commercial production on February 1, 2018. During the fourth quarter
of 2018, capital expenditures were $15.3
million, a decrease of 9% compared to the fourth quarter of
2017.
FY 2018 Capital Expenditures Breakdown (in millions)
Item
|
Sustaining
|
Development
|
Total
|
Wassa Exploration
Drilling
|
-
|
8.3
|
8.3
|
Wassa Main Pit and
Processing Plant
|
0.6
|
-
|
0.6
|
Wassa Tailings
Expansion
|
-
|
0.5
|
0.5
|
Wassa
Underground
|
15.4
|
3.0
|
18.4
|
Wassa Equipment
Purchases
|
3.4
|
4.2
|
7.6
|
Wassa
Subtotal
|
19.4
|
16.0
|
35.4
|
Prestea Exploration
Drilling
|
-
|
1.9
|
1.9
|
Prestea Open
Pits/Mampon Development
|
1.5
|
0.8
|
2.3
|
Prestea
Underground
|
1.3
|
5.9
|
7.2
|
Prestea
Subtotal
|
2.8
|
8.6
|
11.4
|
Consolidated
|
22.2
|
24.6
|
46.8
|
Fourth Quarter 2018 Capital Expenditures Breakdown (in
millions)1
Item
|
Sustaining
|
Development
|
Total
|
Wassa Exploration
Drilling
|
-
|
4.5
|
4.5
|
Wassa Main Pit and
Processing Plant
|
0.4
|
-
|
0.4
|
Wassa Tailings
Expansion
|
-
|
0.2
|
0.2
|
Wassa
Underground
|
4.0
|
2.2
|
6.2
|
Wassa Equipment
Purchases
|
2.3
|
0.3
|
2.6
|
Wassa
Subtotal
|
6.7
|
7.2
|
13.9
|
Prestea Exploration
Drilling
|
-
|
0.4
|
0.4
|
Prestea Open
Pits
|
0.1
|
-
|
0.1
|
Prestea
Underground
|
0.6
|
0.3
|
0.9
|
Prestea
Subtotal
|
0.7
|
0.7
|
1.4
|
Consolidated
|
7.4
|
7.9
|
15.3
|
Other Financial Highlights
Gold revenues for FY 2018 totaled $273.0
million, a 13% decrease compared to $315.5 million in the same period in 2017 due
mainly to a 14% decrease in gold sold, offset partially by a 1%
increase in average realized gold price. Gold revenue totaled
$57.3 million in the fourth quarter
of 2018, compared to $81.8 million in
the same period in 2017. Gold revenue for the fourth quarter of
2018 was $24.5 million or 30% lower
than the same period in 2017, as a result of a decrease in gold
revenue generated from Wassa and Prestea. Compared with the same
period in 2017, gold revenue generated from Prestea decreased by
56% during the fourth quarter of 2018 resulting from the planned
decrease in production from the Prestea Open Pits and the slower
than expected ramp up of production at Prestea Underground. Gold
revenue generated from Wassa decreased by 15% as a result of Wassa
fully transitioning into an underground-only mining operation.
During the fourth quarter of 2018, gold revenue from Wassa
Underground accounted for 96% of total gold revenue of Wassa
compared to 50% in the same period in 2017. The consolidated
average realized gold price was $1,185 per ounce in the fourth quarter of 2018,
compared to $1,237 per ounce for the
same period in 2017.
Cost of sales excluding depreciation and amortization in the
fourth quarter of 2018 totaled $57.6
million compared to $66.4 million in the same period in
2017. Cost of sales excluding depreciation and amortization in the
fourth quarter of 2018 decreased 13% compared to the same period in
2017 due mainly to a decrease in mine operating expense resulting
from Wassa fully transitioning into an underground-only mining
operation and a decrease in royalties due to lower gold sold at
Wassa and Prestea. This was offset partially by an increase in
severance, related to the Prestea improvement plan implemented
during the fourth quarter, which included right-sizing the
workforce at Prestea and optimizing the management and supervisory
structure. For the year ended December 31,
2018, cost of sales excluding depreciation and amortization
was $223.7 million, a 1% decrease
compared to $226.5 million in the
same period in 2017. The decrease was largely due to a 19% decrease
in cost of sales excluding depreciation and amortization at Wassa,
primarily related to a decrease in mine operating expenses
resulting from fully transitioning to an underground-only mining
operation at the end of January 2018.
This decrease was offset by a 26% increase in cost of sales
excluding depreciation and amortization at Prestea, related to the
continued drawdown of ore stockpiles, an increase in mine operating
expenses related to Prestea Underground costs no longer being
capitalized as commercial production was achieved on February 1, 2018 and a $7.0 million increase in severance related to the
Prestea improvement plan implemented in the fourth quarter of
2018.
Depreciation and amortization expense totaled $7.8 million in the fourth quarter of 2018
compared to $7.1 million in the
same period in 2017. The increase in depreciation and amortization
expense in the fourth quarter of 2018 was due to an increase in
depreciation at both Wassa and Prestea. Wassa depreciation
increased mainly due to an increase in gold production and mining
interests, while Prestea depreciation increased due to the
commencement of depreciation of Prestea Underground assets as
commercial production was achieved on February 1, 2018. For the year ended December 31, 2018 depreciation and amortization
expense totaled $33.9 million, 7%
higher than $31.8 million in the same
period in 2017 mainly due to an increase in gold production and
mining interests at Wassa.
General and administrative expense totaled $2.2 million in the fourth quarter of 2018,
compared to $7.9 million in
the same period in 2017. The decrease in general and
administrative expense for the fourth quarter of 2018 was due
primarily to a $6.5 million decrease
in share-based compensation expense compared to the same period in
2017. For the year ended December 31,
2018, general and administrative expense totaled
$16.4 million compared to
$25.1 million in the same period of
2017. The decrease relates primarily to an $11.3 million decrease in share-based
compensation expense compared to the same period in 2017. General
and administrative expense, excluding share-based compensation,
totaled $4.1 million and $15.6 million in the three months and year ended
December 31, 2018, compared to
$2.8 million and $12.5 million in the same period in 2017. The
increase in both periods relates primarily to an increase in
salaries and benefits.
Golden Star recorded a gain of
$3.3 million on fair value of
financial instruments in the fourth quarter of 2018 compared to a
$1.9 million loss in the same period
in 2017. The $3.3 million fair value
gain in the fourth quarter of 2018 relates to a non-cash
revaluation gain on the embedded derivative liability of the 7%
Convertible Debentures. The $1.9
million fair value loss recognized in the fourth quarter of
2017 was related to a non-cash revaluation loss on the embedded
derivative liability of the 7% Convertible Debentures. For
the year ended December 31, 2018 and
2017, the Company recorded a $6.8
million and $2.1 million gain
on fair value of financial instruments, respectively.
Net loss attributable to Golden
Star shareholders for the fourth quarter of 2018 totaled
$9.3 million or $0.09 loss per share, compared to net income
of $12.6 million or $0.17 income per share (basic) in the same period
in 2017. The net loss and loss per share attributable to
Golden Star shareholders in the
fourth quarter of 2018 compared to the net income and income per
share (basic) in the same period of 2017 was mainly due to a
decrease of $16.4 million in mine
operating margin, a $14.5 million
decrease in income tax recovery, a $2.7
million increase in finance expense and a $2.4 million decrease in other income, partially
offset by a $5.6 million decrease in
general and administrative expenses and a $5.2 million increase in the gain on fair value
of financial instruments. For the year ended December 31, 2018, net loss attributable to
Golden Star shareholders totaled
$18.1 million or $0.21 loss per share, compared to a net income of
$38.8 million or $0.52 income per share (basic) in the same period
in 2017. The net loss and loss per share attributable to
Golden Star shareholders for the
year ended December 31, 2018 compared
to the net income and income per share (basic) in the same period
in 2017 was mainly due to a decrease of $41.9 million in mine operating margin,
$25.3 million increase in deferred
income tax expense, and a $9.6
million increase in finance expense, partially offset by a
$8.7 million decrease in general and
administrative expenses and a $4.7
million increase in the gain on fair value of financial
instruments.
Cash used by operations before working capital changes¹ was
$9.4 million for the fourth
quarter of 2018, compared to $6.8
million of cash provided by operations before working
capital changes in the same period in 2017. The decrease in cash
provided by operations before working capital changes was due
primarily to a decrease in consolidated mine operating margin
related to Prestea and an increase in consolidated general and
administrative (excluding share based compensation), exploration,
reclamation and interest payments. For the year ended December 31, 2018, cash provided by operations
before working capital changes was $9.6
million compared to $62.6
million in the same period in 2017. The decrease was
primarily due to a decrease in consolidated mine operating margin
related to Prestea and a $10.0
million decrease in advance payments from RGLD AG, as the
full $145.0 million in advance
payments under the gold purchase and sale agreement with RGLD AG
were received by the end of January
2017.
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 FY and fourth quarter of 2018 will be
available 24 hours after release at the latest.
Notes
|
1. See
"Non-GAAP Financial Measures".
|
OTHER CORPORATE DEVELOPMENTS DURING FY 2018
Strategic Investment by way of Private Placement
On October 1, 2018, the Company
closed a $125.7 million strategic
investment by La Mancha Holding S.à r.l. ("La Mancha"), a
Luxembourg-incorporated private
gold investment company, through a private placement of common
shares. Following receipt of the funds, La Mancha was issued
163,210,500 Golden Star common
shares (32,642,100 post-share consolidation), representing
approximately 30% of the outstanding share capital (on a
non-diluted basis) after giving effect to La Mancha's
investment. Pursuant to the transaction, La Mancha has
customary anti-dilution and demand registration rights and is
subject to a two-year equity lock-up, as well as to certain
customary standstill provisions. In addition, two new
directors were appointed to the Company's Board of Directors
pursuant to La Mancha's right to appoint up to three
nominees. Andrew Wray, Chief
Executive Officer of La Mancha, and Graham
Crew, La Mancha's second nominee, joined the Board of
Directors effective October 1,
2018.
The table below provides a breakdown of the expected use of
proceeds from La Mancha's $125.7
million strategic investment (net cash of $124.8 million). Golden Star has presented the use of proceeds as
a series of ranges as the size of the exploration budget is
dependent on the success of the exploration program at each asset
and this will impact the size of the development and expansion
budget and the budget for general corporate purposes.
Golden Star has begun to use the
proceeds from La Mancha's strategic investment on its organic
projects in the fourth quarter of 2018 and expects to continue to
do so until the end of 2020, however, use of any proceeds for any
external growth opportunities will be assessed on a case-by-case
basis as they arise.
(Stated in millions
of U.S dollars)
|
Range
|
Exploration
|
$
|
20.0
|
|
$
|
35.0
|
Development and
expansion
|
30.0
|
|
75.0
|
General corporate
purposes
|
75.0
|
|
15.0
|
Total (Net
Cash)
|
$
|
125.0
|
|
$
|
125.0
|
Share Consolidation
On October 30, 2018, Golden Star consolidated its issued and
outstanding common shares on the basis of one post-consolidation
common share for every five pre-consolidation common shares (the
"Consolidation"). Prior to the La Mancha transaction, there
were 380.8 million Golden Star
common shares issued and outstanding. After the completion of
the transaction, there were 544.0 million common shares issued and
outstanding, and post-Consolidation this number was approximately
108.8 million common shares issued and outstanding.
Ecobank IV Loan and Royal Gold Loan Repayment
On June 28, 2018, Golden Star (Wassa) Limited, a subsidiary of
Golden Star, closed a $20.0 million secured loan facility (the
"Facility") with Ecobank Ghana Limited. The Company used the
Facility to repay in full its existing $20.0
million medium term loan facility with Royal Gold, Inc. that would have been due in
full on May 5, 2019 and which
required a cash flow sweep. There are no prepayment penalties
associated with the Facility. The Facility is repayable
within 60 months of initial drawdown. Interest on amounts
drawn under the Facility is payable monthly in arrears at an
interest rate equal to three month LIBOR plus a spread of 7.5% per
annum. During the year ended December 31,
2018, the Company made principal payments totaling
$2.0 million resulting in a remaining
principal balance of $18.0 million
($17.7 million net of transaction
fees) at December 31, 2018.
Ecobank III Loan Drawdown
On January 24, 2018, the remaining
$15.0 million available under the
Ecobank III loan facility was drawn. The balance of the
Ecobank III loan subsequent to the drawdown was $25.0 million with the full amount available
under the facility now drawn. During the year ended
December 31, 2018, the Company made
principal payments totaling $4.7
million resulting in a remaining principal balance of
$20.3 million ($19.9 million net of transaction fees) at
December 31, 2018.
Commercial production achieved at Prestea Underground
On February 1, 2018, commercial
production was achieved at the Company's Prestea Underground Mine
in Ghana. Exploration drilling is underway at the mine with
the objective of increasing the annual production rate and
extending the mine life. Gold production is anticipated to
ramp up during 2019 to name plate production rate of 650 tpd.
Corporate Responsibility
Golden Star has reached beyond
expectations of corporate environmental and social initiatives at
its operations and in 2018 was recognized with the prestigious
Prospectors and Developers Association of Canada ("PDAC") award for Environmental and
Social Responsibility. The PDAC Board recognized Golden Star as a global leader in corporate
responsibility. The Company's far-reaching sustainability efforts
continued through the year with programs to enhance workplace
safety culture, deliver new multi-stakeholder partnerships and
demonstrate high-value post-mining land uses, through reclamation
of former tailings storage facilities into commercial-scale oil
palm plantations.
At the Ghana Mining Industry Awards, Golden Star was recognized once again and won
the Corporate Social Investment Project of the Year for the second
year in succession for the land-mark social enterprise initiative –
the "Golden Star Oil Palm Plantation" of "GSOPP". Efforts in
retaining the value of the Company's operations for its host
communities were also recognized, with Golden Star awarded as first-runner up in the
Local Content category. Additionally, the local community company
supported an establishment by Golden
Star known as "LOCOMs" or "Local Companies in Mining
Services Company" and was also recognized in the Mine Supply and
Services category – further evidence of sustainability.
OUTLOOK
The following tables set out Golden Star's full year 2019
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
($/ounce)
|
Wassa
|
170,000-180,000
|
560-600
|
-
|
Prestea
|
50,000-60,000
|
840-1,000
|
-
|
Consolidated
|
220,000-240,000
|
620-680
|
875-955
|
Capital Expenditures Guidance
Asset
|
Sustaining
Capital
($
millions)
|
Development
Capital
($
millions)
|
Total
Capital
Expenditures
($
millions)
|
Wassa
|
20.7
|
18.1
|
38.8
|
Prestea
|
9.5
|
-
|
9.5
|
Exploration
|
-
|
13.4
|
13.4
|
Consolidated
|
30.2
|
31.5
|
61.7
|
Notes to
tables:
|
1. See
"Non-GAAP Financial Measures".
|
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".
|
GOLDEN STAR RESOURCES
LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND
COMPREHENSIVE (LOSS)/INCOME
(Stated in
thousands of U.S. dollars except shares and per share
data)
|
|
For the Years
Ended
December 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
273,017
|
|
$
|
315,497
|
Cost of sales
excluding depreciation and amortization
|
|
223,729
|
|
226,482
|
Depreciation and
amortization
|
|
33,939
|
|
31,792
|
Mine operating
margin
|
|
15,349
|
|
57,223
|
|
|
|
|
|
Other
expense/(income)
|
|
|
|
|
Exploration
expense
|
|
2,959
|
|
1,871
|
General and
administrative
|
|
16,428
|
|
25,090
|
Finance expense,
net
|
|
18,072
|
|
8,485
|
Other
income
|
|
(3,603)
|
|
(4,346)
|
Gain on fair value of
financial instruments, net
|
|
(6,786)
|
|
(2,057)
|
Loss on conversion of
7% Convertible Debentures, net
|
|
—
|
|
165
|
(Loss)/income
before tax
|
|
(11,721)
|
|
28,015
|
Deferred income tax
expense/(recovery)
|
|
12,350
|
|
(12,944)
|
|
|
|
|
|
|
|
Net (loss)/income
and comprehensive (loss)/income
|
|
$
|
(24,071)
|
|
$
|
40,959
|
Net (loss)/income
attributable to non-controlling interest
|
|
(5,948)
|
|
2,188
|
Net (loss)/income
attributable to Golden Star shareholders
|
|
$
|
(18,123)
|
|
$
|
38,771
|
|
|
|
|
|
Net (loss)/income
per share attributable to Golden Star shareholders
|
|
|
|
|
Basic
|
|
$
|
(0.21)
|
|
$
|
0.52
|
Diluted
|
|
$
|
(0.21)
|
|
$
|
0.48
|
Weighted average
shares outstanding - basic (millions)
|
|
84.3
|
|
74.7
|
Weighted average
shares outstanding - diluted (millions)
|
|
84.3
|
|
88.2
|
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of U.S. dollars)
|
As
of December 31,
|
|
2018
|
|
2017
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
96,507
|
|
$
|
27,787
|
Accounts
receivable
|
3,213
|
|
3,428
|
Inventories
|
35,196
|
|
50,653
|
Prepaids and
other
|
5,291
|
|
5,014
|
Total Current
Assets
|
140,207
|
|
86,882
|
RESTRICTED
CASH
|
6,545
|
|
6,505
|
MINING
INTERESTS
|
270,640
|
|
254,058
|
DEFFERED TAX
ASSETS
|
595
|
|
12,944
|
Total
Assets
|
$
|
417,987
|
|
$
|
360,389
|
|
|
|
|
LIABILITIES
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
78,484
|
|
$
|
94,623
|
Current portion of
rehabilitation provisions
|
7,665
|
|
6,566
|
Current portion of
deferred revenue
|
14,316
|
|
17,894
|
Current portion of
long term debt
|
27,482
|
|
15,864
|
Current portion of
other liability
|
6,410
|
|
13,498
|
Total Current
Liabilities
|
134,357
|
|
148,445
|
REHABILITATION
PROVISIONS
|
58,560
|
|
64,146
|
DEFERRED
REVENUE
|
105,632
|
|
92,062
|
LONG TERM
DEBT
|
73,224
|
|
79,741
|
DERIVATIVE
LIABILITY
|
4,177
|
|
10,963
|
OTHER
LIABILITY
|
—
|
|
6,786
|
Total
Liabilities
|
375,950
|
|
402,143
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
SHARE
CAPITAL
|
|
|
|
First preferred
shares, without par value, unlimited shares authorized.
No shares issued and outstanding
|
—
|
|
—
|
Common shares,
without par value, unlimited shares authorized
|
908,035
|
|
783,167
|
CONTRIBUTED
SURPLUS
|
37,258
|
|
35,284
|
DEFICIT
|
(831,283)
|
|
(794,180)
|
|
|
|
|
Shareholder's
equity attributable to Golden Star Shareholders
|
114,010
|
|
24,271
|
NON-CONTROLLING
INTEREST
|
(71,973)
|
|
(66,025)
|
Total
Equity/(Deficit)
|
|
42,037
|
|
|
(41,754)
|
Total Liabilities
and Shareholders' Equity
|
$
|
417,987
|
|
$
|
360,389
|
GOLDEN STAR RESOURCES
LTD.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Stated in thousands of U.S. dollars)
|
For the Years
Ended
December 31,
|
|
2018
|
|
2017
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net
(loss)/income
|
$
|
(24,071)
|
|
$
|
40,959
|
Reconciliation of
net (loss)/income to net cash (used in)/provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
33,975
|
|
31,823
|
Share-based
compensation
|
1,278
|
|
12,554
|
Deferred income tax
expense/(recovery)
|
12,350
|
|
(12,944)
|
Gain on fair value of
7% Convertible Debentures embedded derivatives
|
(6,786)
|
|
(2,095)
|
Recognition of
deferred revenue
|
(13,738)
|
|
(14,156)
|
Proceeds from Royal
Gold stream
|
—
|
|
10,000
|
Reclamation
expenditures
|
(5,316)
|
|
(5,992)
|
Other
|
11,925
|
|
2,475
|
Changes in working
capital
|
(17,172)
|
|
(7,448)
|
Net cash (used
in)/provided by operating activities
|
(7,555)
|
|
55,176
|
INVESTING
ACTIVITIES:
|
|
|
|
Additions to mining
properties
|
(677)
|
|
(632)
|
Additions to plant
and equipment
|
(95)
|
|
(649)
|
Additions to
construction in progress
|
(44,163)
|
|
(67,591)
|
Change in accounts
payable and deposits on mine equipment and material
|
(3,014)
|
|
1,103
|
Increase in
restricted cash
|
(40)
|
|
(41)
|
Proceeds from asset
disposal
|
38
|
|
—
|
Net cash used in
investing activities
|
(47,951)
|
|
(67,810)
|
FINANCING
ACTIVITIES:
|
|
|
|
Principal payments on
debt
|
(15,607)
|
|
(2,198)
|
Proceeds from debt
agreements
|
35,000
|
|
10,000
|
5% Convertible
Debentures repayment
|
—
|
|
(13,611)
|
Royal Gold loan
repayment
|
(20,000)
|
|
—
|
Shares issued,
net
|
124,772
|
|
24,456
|
Exercise of
options
|
61
|
|
10
|
Net cash provided by
financing activities
|
124,226
|
|
18,657
|
Increase in cash and
cash equivalents
|
68,720
|
|
6,023
|
Cash and cash
equivalents, beginning of period
|
27,787
|
|
21,764
|
Cash and cash
equivalents, end of period
|
$
|
96,507
|
|
$
|
27,787
|
Non-GAAP Financial Measures
In this press release, we use the terms "cash operating cost",
"cash operating cost per ounce", "all-in sustaining costs", "all-in
sustaining costs per ounce", "adjusted net income attributable to
Golden Star shareholders", "adjusted
income per share attributable to Golden
Star shareholders", "cash provided by operations before
working capital changes", and "cash provided by operations before
working capital changes per share – basic". 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 per ounce" is equal to cost of sales excluding
depreciation and amortization for the period plus depreciation and
amortization for the period divided by the number of ounces of gold
sold (excluding pre-commercial production ounces sold) during the
period.
"Cost of sales excluding depreciation and amortization" as found
in the statements of operations includes all mine-site operating
costs, including the costs of mining, ore processing, maintenance,
work-in-process inventory changes, mine-site overhead as well as
production taxes, royalties, severance charges and by-product
credits, but excludes exploration costs, property holding costs,
corporate office general and administrative expenses, foreign
currency gains and losses, gains and losses on asset sales,
interest expense, gains and losses on derivatives, gains and losses
on investments and income tax expense/benefit.
"Cash operating cost" for a period is equal to "cost of sales
excluding depreciation and amortization" for the period less
royalties, the cash component of metals inventory net realizable
value adjustments and severance charges, and "cash operating cost
per ounce" is that amount divided by the number of ounces of gold
sold (excluding pre-commercial production ounces sold) during the
period. We use cash operating cost per ounce as a key operating
metric. We monitor this measure monthly, comparing each month's
values to prior periods' values to detect trends that may indicate
increases or decreases in operating efficiencies. We provide this
measure to investors to allow them to also monitor operational
efficiencies of the Company's mines. We calculate this measure for
both individual operating units and on a consolidated basis. Since
cash operating costs do not incorporate revenues, changes in
working capital and non-operating cash costs, they are not
necessarily indicative of operating profit or cash flow from
operations as determined under IFRS. Changes in numerous factors
including, but not limited to, mining rates, milling rates, ore
grade, gold recovery, costs of labor, consumables and mine site
general and administrative activities can cause these measures to
increase or decrease. We believe that these measures are similar to
the measures of other gold mining companies, but may not be
comparable to similarly titled measures in every instance.
"All-in sustaining costs" commences with cash operating costs
and then adds the cash component of metals net realizable value
adjustment, royalties, sustaining capital expenditures, corporate
general and administrative costs (excluding share-based
compensation expenses), and accretion of rehabilitation provision.
"All-in sustaining costs per ounce" is that amount divided by the
number of ounces of gold sold (excluding pre-commercial production
ounces sold) during the period. This measure seeks to represent the
total costs of producing gold from current operations, and
therefore it does not include capital expenditures attributable to
projects or mine expansions, exploration and evaluation costs
attributable to growth projects, income tax payments, interest
costs or dividend payments. Consequently, this measure is not
representative of all of the Company's cash expenditures. In
addition, the calculation of all-in sustaining costs does not
include depreciation expense as it does not reflect the impact of
expenditures incurred in prior periods. Therefore, it is not
indicative of the Company's overall profitability. Share-based
compensation expenses are also excluded from the calculation of
all-in sustaining costs as the Company believes that such expenses
may not be representative of the actual payout on equity and
liability based awards. The Company has presented comparative
figures to conform with the computation of all-in sustaining costs
as currently calculated by the Company.
The Company believes that "all-in sustaining costs" will better
meet the needs of analysts, investors and other stakeholders of the
Company in understanding the costs associated with producing gold,
understanding the economics of gold mining, assessing the operating
performance and also the Company's ability to generate free cash
flow from current operations and to generate free cash flow on an
overall Company basis. Due to the capital intensive nature of the
industry and the long useful lives over which these items are
depreciated, there can be a disconnect between net earnings
calculated in accordance with IFRS and the amount of free cash flow
that is being generated by a mine.
"Cash provided by operations before working capital changes" is
calculated by subtracting the "changes in working capital" from
"net cash provided by operating activities" as found in the
statements of cash flows. "Cash provided by operations before
working capital changes per share - basic" is "Cash provided by
operations before working capital changes" divided by the basic
weighted average number of shares outstanding for the
period.
"Adjusted net income attributable to Golden Star shareholders" is calculated by
adjusting net income/(loss) attributable to Golden Star shareholders for (gain)/loss on fair
value of financial instruments, share-based compensation expenses,
loss on conversion of 7% Convertible Debentures, severance charges
gain on reduction of asset retirement obligations, and income tax
recovery on previously unrecognized deferred tax assets. "Adjusted
income per share attributable to Golden
Star shareholders" for the period is "Adjusted net income
attributable to Golden Star
shareholders" divided by the weighted average number of shares
outstanding using the basic method of earnings per share.
Changes in numerous factors including, but not limited to, our
share price, risk free interest rates, gold prices, mining rates,
milling rates, ore grade, gold recovery, costs of labor,
consumables and mine site general and administrative activities can
cause these measures to increase or decrease. The Company
believes that these measures are similar to the measures of other
gold mining companies, but may not be comparable to similarly
titled measures in every instance.
In the current market environment for gold mining equities, many
investors and analysts are more focused on the ability of gold
mining companies to generate free cash flow from current
operations, and consequently the Company believes these measures
are useful non-IFRS operating metrics ("non-GAAP measures") and
supplement the IFRS disclosures made by the Company. These measures
are not representative of all of Golden
Star's cash expenditures as they do not include income tax
payments or interest costs. Non-GAAP measures are intended to
provide additional information only and do not have standardized
definitions under IFRS and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. These measures are not necessarily indicative of
operating profit or cash flow from operations as determined under
IFRS.
For additional information regarding the Non-GAAP financial
measures used by the Company, please refer to the 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 are 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 risk profile of
the Company; the ability to achieve 2019 guidance in terms of gold
production, cash operating costs per ounce, AISC per ounce, and
capital expenditures; continued production of gold sourced from the
pits close to Prestea into the first quarter of 2019; the Company's
ability to achieve 3,500 tpd at Wassa in 2019 and 4,000 tpd at
Wassa in 2020; the right-sizing of Prestea Underground; the
Company's ability to achieve a targeted run rate at Prestea of 650
tpd in 2019; the release of further drilling results and an updated
Mineral Resource Estimate for Wassa in the first quarter of 2019;
the expected use of proceeds from La Mancha's $125.7 million strategic investment, including
the continued use of the investment on Golden Star's organic projects until the end of
2020; and the belief that operational challenges at Prestea have
been overcome.
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; and (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.
Cautionary Note to U.S. Investors
This news release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ materially from the
requirements of United States
securities laws applicable to U.S. companies. The terms "mineral
reserve", "proven mineral reserve" and "probable mineral reserve"
are Canadian mining terms as defined in accordance with NI 43-101.
These definitions differ from the definitions of the Securities and
Exchange Commission (the "SEC") set forth in Industry Guide 7 under
the United States Securities Exchange Act of 1934, as amended.
Under SEC Industry Guide 7 standards, mineralization may not be
classified as a "reserve" unless the determination has been made
that the mineralization could be economically and legally produced
or extracted at the time the reserve determination is made.
In addition, the terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral
resource" are defined in and required to be disclosed by NI 43-101,
however, these terms are not defined terms under SEC Industry Guide
7 and are normally not permitted to be used in reports and
registration statements filed with the SEC. Investors are cautioned
not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves. "Inferred mineral
resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Investors are cautioned not to assume that all or any
part of an inferred mineral resource exists or is economically or
legally mineable. Disclosure of "contained ounces" in a resource is
permitted disclosure under Canadian regulations, however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC Industry Guide 7 standards as in
place tonnage and grade without reference to unit measures.
For the above reasons, information contained in this news
release or in the documents referenced herein containing
descriptions of our mineral deposits may not be comparable to
similar information made public by U.S. companies subject to the
reporting and disclosure requirements under the United States federal securities laws and
the rules and regulations thereunder.
View original
content:http://www.prnewswire.com/news-releases/golden-star-reports-fourth-quarter-and-full-year-2018-results-300798531.html
SOURCE Golden Star Resources Ltd.