Record Quarter at Wassa
TORONTO, May 1, 2019 /CNW/ - Golden Star Resources Ltd.
(NYSE American: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or
the "Company") reports its financial and operational results for
the first quarter ended March 31,
2019.
HIGHLIGHTS:
- Focus on safety reflected in continued improvement with a lost
time injury frequency rate ("LTIFR") of 0.07 and a total recordable
injury frequency rate ("TRIFR") of 0.85
- Total gold production of 53,284 ounces in the first quarter of
2019, in line with budget and an 8% decrease compared to the first
quarter of 2018 (57,616 ounces)
- Cash operating cost per ounce1 of $731 and All-In Sustaining Cost ("AISC") per
ounce1 of $976 in the
first quarter of 2019, 20% and 17% lower than the same period last
year, respectively
- Mining rates at Wassa Underground of approximately 3,600 tonnes
per day ("tpd") on average in the first quarter of 2019 represents
a 53% increase compared to the first quarter of 2018 and surpasses
the 2019 targeted average mining rate of 3,500 tpd
- Gold production from Wassa was 42,910 ounces for the first
quarter of 2019, a 21% increase from the 35,506 ounces produced
during the same period in 2018
- Prestea produced 10,374 ounces of gold during the quarter, 53%
lower than the first quarter of 2018 as a result of the focus on
underground production and the lower than planned tonnes and
grade
- Mineral Reserve and Mineral Resource update released
March 28, 2019; Wassa Underground
Reserves increased by 47% and inferred mineral resources increased
by 12%2
- Father Brown Resource Statement released February 19, 2019; 93% increase in Inferred
Mineral Resources3
- Cash provided by operations before changes in working capital
of $14.9 million ($0.14 per share) in the first quarter of 2019 and
mine operating margin of $16.6
million
- Consolidated cash balance of $81.9
million at March 31, 2019
- Golden Star remains on track to achieve its consolidated full
year ("FY") 2019 guidance
Notes:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
2.
|
See press release
dated March 28, 2019 entitled, "Golden Star Announces Mineral
Reserve and Mineral Resource Update; Wassa Underground Reserve
increase 47%".
|
3.
|
See press release
dated February 21, 2019 entitled, "Golden Star Updates Mineral
Resource Statement at Father Brown: 93% Increase in Inferred
Mineral Resources".
|
Andrew Wray, President and
Chief Executive Officer of Golden Star, commented:
"I am delighted to take over as President and CEO at what is
a pivotal time for the company as demonstrated by this set of
results. Our operation at Wassa continues to deliver on its
promise, not only with the low cost, record underground production
seen during the first quarter but also the recently released
reserve and resource update which demonstrated continued growth in
the ore body and a significant step up in its reserve base. At the
same time, Prestea is not delivering to the targets set for it or
to its potential both in terms of tonnes moved as well as the grade
delivered and as a result is not generating the returns we expect
from it. Our priority is to assess and address the root causes of
this so that we can achieve consistent operational performance and
returns commensurate with the resources being applied, and improve
the overall optionality of the business.
I would also like to thank the entire team at Golden Star for
a sincere welcome to the Company and am looking forward to the
opportunities that exist to increase shareholder value by growing
the Company in a disciplined fashion, increasing cash flow, and
continuing on operational improvements.
Underpinning these priorities for the Company will be a
continued absolute requirement to carry out our business in a safe
and responsible manner that benefits all stakeholders."
First Quarter 2019 Conference Call Details
The Company will conduct a conference call and webcast to
discuss these results tomorrow, Thursday May
02, 2019 at 10:00 am ET.
Toll Free (North America):
+1 833 231-8263
Toronto Local and International: +1
647 689-4108
Conference ID: 3289245
Webcast:
https://event.on24.com/wcc/r/1956473/B39D93F6E551735F39788DCB10539C1B 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
|
|
|
March
31,
|
OPERATING
SUMMARY
|
|
2019
|
2018
|
Wassa gold
sold
|
oz
|
42,999
|
35,853
|
Prestea gold
sold
|
oz
|
10,497
|
22,507
|
Total gold
sold
|
oz
|
53,496
|
58,360
|
Wassa gold
produced
|
oz
|
42,910
|
35,506
|
Prestea gold
produced
|
oz
|
10,374
|
22,110
|
Total gold
produced
|
oz
|
53,284
|
57,616
|
Average realized gold
price1
|
$/oz
|
1,257
|
1,258
|
|
|
|
|
Cost of sales per
ounce – Consolidated2
|
$/oz
|
947
|
1,204
|
Cost of sales per
ounce – Wassa2
|
$/oz
|
724
|
1,000
|
Cost of sales per
ounce – Prestea2
|
$/oz
|
1,859
|
1,562
|
Cash operating cost
per ounce – Consolidated2
|
$/oz
|
731
|
909
|
Cash operating cost
per ounce – Wassa2
|
$/oz
|
552
|
683
|
Cash operating cost
per ounce – Prestea2
|
$/oz
|
1,463
|
1,306
|
All-In Sustaining
cost per ounce – Consolidated2
|
$/oz
|
976
|
1,171
|
All-In Sustaining
cost per ounce – Wassa2
|
$/oz
|
760
|
956
|
All-In Sustaining
cost per ounce – Prestea2
|
$/oz
|
1,865
|
1,547
|
Notes:
|
|
1.
|
Average realized gold
price per ounce for the three months ended March 31, 2018 excludes
2,049 pre- commercial production ounces sold at Prestea Underground
in January 2018.
|
2.
|
See "Non-GAAP
Financial Measures".
|
|
|
Three Months
Ended
|
|
|
March
31,
|
FINANCIAL
SUMMARY
|
|
2019
|
20182
|
Gold
revenues
|
$'000
|
67,257
|
70,819
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
43,804
|
59,574
|
Depreciation and
amortization
|
$'000
|
6,862
|
8,221
|
Mine operating
margin
|
$'000
|
16,591
|
3,024
|
General and
administrative expense
|
$'000
|
4,105
|
1,109
|
Loss/(gain) on fair
value of financial instruments, net
|
$'000
|
3,873
|
(5,442)
|
Income tax
expense
|
$'000
|
7,202
|
2,891
|
Net (loss)/income
attributable to Golden Star
shareholders
|
$'000
|
(1,924)
|
1,015
|
Adjusted net
income/(loss) attributable to Golden Star
shareholders1
|
$'000
|
9,394
|
(2,123)
|
(Loss)/income per
share attributable to Golden Star
shareholders – basic
|
$/share
|
(0.02)
|
0.01
|
Loss per share
attributable to Golden Star shareholders –
diluted
|
$/share
|
(0.02)
|
(0.03)
|
Adjusted
income/(loss) per share attributable to Golden Star
shareholders
– basic1
|
$/share
|
0.09
|
(0.03)
|
Cash used by
operations
|
$'000
|
(590)
|
(3,971)
|
Cash provided by
operations before working capital
changes1
|
$'000
|
14,908
|
810
|
Cash used by
operations per share - basic
|
$/share
|
(0.01)
|
(0.05)
|
Cash provided by
operations before working capital
changes per share – basic1
|
$/share
|
0.14
|
0.01
|
Capital
expenditures
|
$'000
|
13,142
|
11,582
|
Notes:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
2.
|
Per share data has
been re-stated to reflect the share consolidation that was
implemented on October 30, 2018.
|
OPERATIONAL PERFORMANCE
In the first quarter of 2019 Golden Star produced 53,284 ounces
of gold. Gold production from the Wassa Complex ("Wassa")
increased by 21% in the first quarter of 2019 to 42,910 ounces
compared to the first quarter of 2018. This increase in production
was primarily due to a 43% increase in production from Wassa
Underground resulting from an increase in mining rates, as total
tonnes mined increased compared to the same period in 2018.
Approximately 98% of Wassa's production was attributable to Wassa
Underground. Consequently, the Wassa complex delivered its lowest
cash operating cost per ounce1 of $552.
Gold production from the Prestea Complex ("Prestea") was 10,374
ounces in the first quarter of 2019, which represents a 53%
decrease compared to the same period in 2018. This decrease
in production was due primarily to the planned reduction in
production from the Prestea Open Pits and a slower than expected
ramp up at Prestea Underground, both in terms of ore tonnes mined
as well as the grade delivered.
Consolidated cash operating cost per ounce was $731 in the first quarter of 2019, 20% lower than
$909 in the same period in
2018. This was due primarily to Wassa achieving a 19%
improvement in cash operating cost per ounce1 in the
first quarter of 2019 largely as a result of the increase in gold
sold during the period. Cash operating cost per ounce1
at Prestea increased 12% due mainly to a decrease in gold sold
during the period. This was partially offset by a decrease in mine
operating expenses.
The AISC per ounce1 in the first quarter of 2018 was
$976, a decrease of 17% compared to
the first quarter of 2018. The decrease was mainly attributable to
lower consolidated mine operating expenses and operating costs from
metals inventory, offset partially by lower gold sales compared to
the same period in 2018.
At the end of the first quarter of 2019, Golden Star is on track
to achieve its consolidated FY 2019 guidance on all stated
metrics.
Notes:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Wassa Complex ("Wassa")
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2019
|
2018
|
WASSA FINANCIAL
RESULTS
|
|
|
|
Revenue
|
$'000
|
53,992
|
45,352
|
|
|
|
|
Mine operating
expenses
|
$'000
|
23,433
|
21,226
|
Severance
charges
|
$'000
|
225
|
3,394
|
Royalties
|
$'000
|
2,799
|
2,366
|
Operating costs from
metals inventory
|
$'000
|
323
|
3,251
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
26,780
|
30,237
|
Depreciation and
amortization
|
$'000
|
4,372
|
5,608
|
Mine operating
margin
|
$'000
|
22,840
|
9,507
|
|
|
|
|
Capital
expenditures
|
$'000
|
11,066
|
6,606
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
Ore mined - Main
Pit
|
t
|
-
|
54,281
|
Ore mined -
Underground
|
t
|
326,747
|
213,392
|
Ore mined -
Total
|
t
|
326,747
|
267,673
|
Waste mined Main
Pit
|
t
|
-
|
72,538
|
Waste mined -
Underground
|
t
|
56,229
|
73,528
|
Waste mined
-Total
|
t
|
56,229
|
146,066
|
Ore processed -
Stockpiles/Main Pit
|
t
|
40,043
|
215,552
|
Ore processed -
Underground
|
t
|
326,747
|
213,392
|
Ore processed -
Total
|
t
|
366,790
|
428,944
|
Grade processed -
Stockpiles/Main Pit
|
g/t
|
0.64
|
0.90
|
Grade processed -
Underground
|
g/t
|
4.31
|
4.54
|
Recovery
|
%
|
95.6
|
95.2
|
Gold produced -
Stockpiles/Main Pit
|
oz
|
806
|
5,992
|
Gold produced -
Underground
|
oz
|
42,104
|
29,514
|
Gold produced -
Total
|
oz
|
42,910
|
35,506
|
Gold sold
Stockpiles/Main Pit
|
oz
|
895
|
6,339
|
Gold sold -
Underground
|
oz
|
42,104
|
29,514
|
Gold sold -
Total
|
oz
|
42,999
|
35,853
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
724
|
1,000
|
Cash operating cost
per ounce1
|
$/oz
|
552
|
683
|
All-In Sustaining cost
per ounce1
|
$/oz
|
760
|
956
|
Notes:
|
|
1.
|
See "Non-GAAP Financial Measures".
|
Wassa Operational Overview
Gold production from Wassa was 42,910 ounces for the first
quarter of 2019, a 21% increase from the 35,506 ounces produced
during the same period in 2018. This increase in production
was due to a 43% increase in production from Wassa Underground
resulting from an increase in mining rates, as total tonnes mined
and processed increased compared to the same period in 2018.
Wassa Main Pit gold production was suspended on February 1, 2018, as Wassa became an
underground-only mining operation.
As expected, the grade of the underground ore in the first
quarter of 2019 decreased by 5% to 4.31 grams per tonne ("g/t") of
gold ("Au") compared to the first quarter of 2018. Mining
rates at Wassa Underground exceeded expectations, at approximately
3,600 tpd on average in the first quarter of 2019. This
represents a 52% increase compared to the first quarter of 2018 and
surpasses the 2019 targeted average mining rate of 3,500 tpd.
Underground ore processed increased 53% to 326,747 tonnes in the
first quarter of 2019 compared to 213,392 tonnes in the same period
of 2018.
Wassa reported a 19% decrease in cash operating cost per
ounce1 for the first quarter of 2019 to $552 compared to the first quarter of 2018. This
was primarily a result of an increase in gold sold and a decrease
in operating costs from metals inventory, offset partially by an
increase in mine operating expenses.
Notes:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Prestea Complex ("Prestea")
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2019
|
2018
|
PRESTEA FINANCIAL
RESULTS
|
|
|
|
Revenue
|
$'000
|
13,265
|
25,467
|
|
|
|
|
Mine operating
expenses
|
$'000
|
16,463
|
22,920
|
Severance
charges
|
$'000
|
69
|
-
|
Royalties
|
$'000
|
675
|
1,464
|
Operating costs
(to)/from metals inventory
|
$'000
|
(1,103)
|
3,790
|
Inventory net
realizable value adjustment and write off
|
$'000
|
920
|
1,163
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
17,024
|
29,337
|
Depreciation and
amortization
|
$'000
|
2,490
|
2,613
|
Mine operating
loss
|
$'000
|
(6,249)
|
(6,483)
|
|
|
|
|
Capital
expenditures
|
$'000
|
2,076
|
4,976
|
|
|
|
|
PRESTEA OPERATING
RESULTS
|
|
|
|
Ore mined Open
pits
|
t
|
44,707
|
228,707
|
Ore mined –
Underground
|
t
|
38,678
|
32,446
|
Ore mined –
Total
|
t
|
83,385
|
261,153
|
Waste mined – Open
pits
|
t
|
34,237
|
505,997
|
Waste mined –
Underground
|
t
|
1,208
|
2,211
|
Waste mined –
Total
|
t
|
35,445
|
508,208
|
Ore processed – Main
pits
|
t
|
95,654
|
344,692
|
Ore processed –
Underground
|
t
|
38,678
|
32,446
|
Ore processed –
Total
|
t
|
134,332
|
377,138
|
Grade processed – Open
pits
|
g/t
|
1.32
|
1.50
|
Grade processed –
Underground
|
g/t
|
6.25
|
8.22
|
Recovery
|
%
|
87.4
|
88.6
|
Gold produced – Open
pits
|
oz
|
3,030
|
14,629
|
Gold produced –
Underground
|
oz
|
7,344
|
7,481
|
Gold produced –
Total
|
oz
|
10,374
|
22,110
|
Gold sold – Open
pits
|
oz
|
3,153
|
15,026
|
Gold sold –
Underground
|
oz
|
7,344
|
7,481
|
Gold sold –
Total
|
oz
|
10,497
|
22,507
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
1,859
|
1,562
|
Cash operating cost
per ounce1
|
$/oz
|
1,463
|
1,306
|
All-In Sustaining cost
per ounce1
|
$/oz
|
1,865
|
1,547
|
Notes:
|
|
1.
|
See "Non-GAAP Financial Measures".
|
Prestea Operational Overview
Gold production from Prestea was 10,374 ounces in the first
quarter of 2019, a 53% decrease from the 22,110 ounces produced
during the same period of 2018. 71% of production was attributable
to Prestea Underground and 29% to the Prestea Open Pits.
Prestea Underground produced 7,344 ounces in the first quarter
of 2019 compared to 7,481 ounces in the same period in 2018, a
reduction of 2%. A number of factors affected performance during
the quarter, including lower than planned ore tonnes, unplanned
waste zones within the stopes, increased dilution resulting from
over break related to hanging wall failure and long hole drilling
efficiency issues. A number of initiatives have been
implemented to address these issues and will form part of a broader
review of the operation.
The Prestea Open Pits produced 3,030 ounces in the first quarter
of 2019, compared to 14,629 ounces in the same period in
2018. This decrease in production was planned, as the Prestea
Open Pits were expected to complete gold production in 2018.
Mining has continued into the first quarter of 2019 with additional
ore being sourced from the pits close to Prestea to help mitigate
the lower than planned production from Prestea Underground.
Prestea reported a cash operating cost per ounce1 of
$1,463 in the first quarter of 2019,
which represents a 12% increase compared to the same period in
2018. The increase in costs per ounce were primarily due to
lower gold sales in the period, offset partially by lower mine
operating expenses and operating costs from metals inventory.
Notes:
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
EXPLORATION
During the first quarter of 2019, exploration activities at
Wassa continued to focus on step out drilling and drilling seeking
to convert inferred mineral resources to indicated mineral
resources. At Prestea two underground drill rigs were
steadily drilling, one focused on stope definition drilling ahead
of mining and the second testing extensions of the West Reef to the
north. Surface drilling of the Father Brown and Adoikrom
deposits utilized two drill rigs in the first quarter of 2019,
testing both the structures at depth and along projected
plunges.
Wassa Underground
At the end of the first quarter of 2019, 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. Twenty holes were completed during the
quarter totaling approximately 15,600 metres ("m"). The Company
expects to release further drilling results in the second quarter
of 2019.
Prestea Underground
Drilling of the West Reef from 24 Level at Prestea Underground
utilized two drill rigs in the first quarter of 2019, completing
twenty holes for a total of 4,110m. The drilling focused on in-filling
the existing indicated mineral resources ahead of mining and
testing inferred mineral resources between the 21 and 24 Levels,
north of the existing mining areas. The 262 drill chamber on
24 Level was completed in the fourth quarter of 2018 and the second
contractor drill rig commenced drilling in the middle of January
2019. Drilling with two underground rigs is scheduled to
continue through 2019 and the Company expects to release results in
the second quarter of 2019.
Father Brown Satellite Deposit
During the first quarter of 2019, the Company continued its
drilling of the Father Brown targets. Two surface contractor
rigs were utilized completing 17 holes totaling approximately
9,000m. Drilling to date has
identified two plunging shoots which the Company plans to further
drill test in the second quarter of 2019. The drilling of these
targets will be paused during the second quarter of 2019 in order
to review the results from a conceptual mine design perspective to
determine if the further drilling is warranted.
On February 19, 2019, the Company
announced an updated mineral resource estimate at Father Brown,
consisting of the Father Brown and Adoikrom Zones. 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 g/t of
gold. The updated indicated and inferred mineral resource
estimate includes results of 18 holes totaling 8,873m of drilling1. The Company
expects to release further drilling results in the second quarter
of 2019.
Notes:
|
|
1.
|
See
press release entitled, "Golden Star Updates Mineral Resource
Statement at Father Brown: 93% Increase in Inferred Mineral
Resources".
|
FINANCIAL PERFORMANCE
Capital Expenditures
Capital expenditures for the first quarter of 2019 totaled
$13.1 million compared to
$11.6 million in the first quarter of
2018, representing a 13% increase. Capital expenditures at
Wassa during the first quarter of 2019 comprised 84% of total
capital expenditures and totaled $11.1
million, which included $5.4
million spent on exploration drilling, $2.1 million on Wassa Underground capitalized
development, $1.3 million on mobile
equipment, $1.1 million on the
construction of a ventilation raise, $0.6
million related to the tailings storage facility and the
remainder on other equipment and capital expenditures. Capital
expenditures at Prestea during the first quarter of 2019 comprised
16% of the total capital expenditures and totaled $2.1 million, which included $1.6 million on Prestea Underground, $0.2 million on exploration drilling and
$0.3 million on other equipment and
capital expenditures.
First Quarter 2019 Capital Expenditures Breakdown (in
millions)
Item
|
Sustaining
|
Development
|
Total
|
Wassa Exploration
Drilling
|
-
|
5.4
|
5.4
|
Wassa Main Pit and
Processing Plant
|
0.4
|
-
|
0.4
|
Wassa Tailings
Expansion
|
-
|
0.6
|
0.6
|
Wassa
Underground
|
2.2
|
1.2
|
3.4
|
Wassa Equipment
Purchase
|
0.9
|
0.3
|
1.2
|
Wassa
Subtotal
|
3.5
|
7.5
|
11.0
|
Prestea Exploration
Drilling
|
-
|
0.2
|
0.2
|
Prestea Open Pits and
Processing Plant
|
0.3
|
-
|
0.3
|
Prestea
Underground
|
1.6
|
-
|
1.6
|
Prestea
Subtotal
|
1.9
|
0.2
|
2.1
|
Consolidated
|
5.4
|
7.7
|
13.1
|
Other Financial Highlights
Gold revenues for the first quarter of 2019 totaled $67.3 million from gold sales of 53,496 ounces,
at an average realized gold price of $1,257 per ounce. This represents a 5% decrease
in revenues compared to the first quarter of 2018, primarily as a
result of a decrease in gold revenue generated from Prestea,
partially offset by an increase in gold revenue generated by Wassa.
Compared with the same period in 2018, gold revenue generated from
Prestea decreased by 48%, resulting from the planned decrease in
production from the Prestea Open Pits and the slower than expected
ramp up at Prestea Underground. Gold revenue generated from Wassa
increased by 19% as a result of increased mining rates at Wassa
Underground.
Cost of sales excluding depreciation and amortization in the
first quarter of 2019 totaled $43.8
million compared to $59.6
million in the same period in 2018. Cost of sales excluding
depreciation and amortization in the first quarter of 2019
decreased 26% compared to the same period in 2018 due mainly to a
$7.8 million decrease in operating
costs to metals inventory expense, as both Prestea and Wassa drew
down less on ore stockpiles during the period. Mine operating
expenses decreased $4.3 million
mainly due to reduced production from the Prestea Open Pits, offset
partially by increased mining rates at Wassa Underground. In
addition, severance expense decreased $3.1
million, as suspension of the Wassa surface mining operation
was completed in early 2018. Royalty expense decreased
$0.4 million due to lower gold sales
in the period at Prestea, offset partially by higher gold sales at
Wassa, and inventory net realizable value adjustments and
write-offs at Prestea decreased $0.2
million.
Depreciation and amortization expenses for the first quarter of
2019 totaled $6.9 million, a 16%
decrease compared to the first quarter of 2018 due mainly to a
decrease in depreciation at Wassa, related to an increase in total
recoverable gold ounces over the life of mine of Wassa
Underground.
Golden Star reported a mine operating margin of $16.6
million in the first quarter of 2019, compared to $3.0 million in the first quarter of 2018. This
increase was related to an increase in gold sold from Wassa
Underground.
General and administrative expense totaled $4.1 million in the first quarter of 2019,
compared to $1.1 million in the same
period in 2018. The increase in general and administrative expense
for the first quarter of 2019 was due primarily to a $3.6 million increase in share-based compensation
expense compared to the same period in 2018. General and
administrative expense, excluding share-based compensation, totaled
$3.2 million compared to $3.7 million in the same period in 2018. The
decrease relates primarily to a decrease in salaries and
benefits.
The Company recorded a loss of $3.9
million on fair value of financial instruments in the first
quarter of 2019 compared to a $5.4
million gain in the same period in 2018. The $3.9 million fair value loss in the first quarter
of 2019 relates to a non-cash revaluation loss on the embedded
derivative liability of the 7% Convertible Debentures.
Net loss attributable to Golden Star shareholders for the first
quarter of 2019 totaled $1.9 million
or $0.02 loss per share (basic),
compared to a net income of $1.0
million or $0.01 income per
share (basic) in the same period in 2018. The decrease in net
income and income per share attributable to Golden Star
shareholders in the first quarter of 2019 was mainly due to an
increase of $9.3 million in the loss
on fair value of financial instruments, a $4.3 million increase in income tax expense, a
$3.0 million increase in general and
administrative expenses, a $0.3
million decrease in other income and a $0.1 million increase in exploration expense,
partially offset by a $13.6 million
increase in mine operating margin and a $1.2 million decrease in finance expense.
Income tax expense was $7.2
million in the first quarter of 2019 compared to
$2.9 million for the same period in
2018. The increase in income tax expense compared to prior
year relates primarily to the increase in mine operating margin at
Wassa.
Cash provided by operations before working capital
changes1 was $14.9 million
for the first quarter of 2019, compared to $0.8 million of cash provided by operations
before working capital changes in the same period in 2018. The
increase in cash provided by operations before working capital
changes was due primarily to an increase in mine operating margin
at Wassa, a decrease in consolidated general and administrative
expense (excluding share based compensation) and reclamation
payments.
The Company held $81.9 million at
March 31, 2019. Working capital used
$15.5 million during the first
quarter of 2019, compared to $4.8
million in the same period in 2018. The working
capital changes included a $10.0
million decrease in accounts payable and accrued
liabilities, a $3.5 million increase
in inventory, and a $2.0 million
increase in accounts receivable, offset by a $0.1 million decrease in prepaids and
other. Accounts payable and accrued liabilities reduced from
$78.5 million at December 31, 2018 to $71.7
million at March 31,
2019. The decrease in accounts payable included $5.3 million in severance payments at
Prestea.
Notes
|
|
1.
|
See "Non-GAAP
Financial Measures".
|
Outlook
Golden Star remains on track to achieve its guidance on all
stated metrics for FY 2019. This includes consolidated full
year production of 220,000 - 240,000 ounces of gold at a cash
operating cost per ounce1 of between $620 and $680, an
AISC per ounce1 of between $875 and $955 and
capital expenditures of $61.7
million, which includes $13.4
million for exploration.
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 underground mines in Ghana, West
Africa. Listed on the NYSE American, the Toronto Stock
Exchange and the Ghana 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.
GOLDEN STAR
RESOURCES LTD. CONDENSED INTERIM CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE
(LOSS)/INCOME (Stated in thousands of U.S. dollars except
shares and per share data)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2019
|
2018
|
|
|
|
Revenue
|
$
|
67,257
|
$
|
70,819
|
Cost of sales
excluding depreciation and amortization
|
43,804
|
59,574
|
Depreciation and
amortization
|
6,862
|
8,221
|
Mine operating
margin
|
16,591
|
3,024
|
|
|
|
Other
expenses/(income)
|
|
|
Exploration
expense
|
844
|
706
|
General and
administrative
|
4,105
|
1,109
|
Finance expense,
net
|
3,547
|
4,783
|
Other
income
|
(321)
|
(628)
|
Loss/(gain) on fair
value of financial instruments, net
|
3,873
|
(5,442)
|
Income before
tax
|
4,543
|
2,496
|
Income tax
expense
|
7,202
|
2,891
|
Net loss and
comprehensive loss
|
$
|
(2,659)
|
$
|
(395)
|
Net loss attributable
to non-controlling interest
|
(735)
|
(1,410)
|
Net (loss)/income
attributable to Golden Star shareholders
|
$
|
(1,924)
|
$
|
1,015
|
|
|
|
Net (loss)/income
per share attributable to Golden Star shareholders
|
|
|
Basic
|
$
|
(0.02)
|
$
|
0.01
|
Diluted
|
$
|
(0.02)
|
$
|
(0.03)
|
Weighted average
shares outstanding-basic (millions)
|
108.8
|
76.2
|
Weighted average
shares outstanding-diluted (millions)
|
108.8
|
87.6
|
|
|
|
|
|
|
GOLDEN STAR
RESOURCES LTD. CONDENSED INTERIM CONSOLIDATED BALANCE
SHEETS (Stated in thousands of U.S. dollars)
(unaudited)
|
|
|
|
As
of
|
|
March
31,
|
December
31
|
|
2019
|
2018
|
|
|
|
ASSETS
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
81,868
|
96,507
|
Accounts
receivable
|
5,257
|
3,213
|
Inventories
|
37,808
|
35,196
|
Prepaids and
other
|
5,404
|
5,291
|
Total Current
Assets
|
130,337
|
140,207
|
RESTRICTED
CASH
|
6,545
|
6,545
|
MINING
INTERESTS
|
277,198
|
270,640
|
DEFFERED TAX
ASSETS
|
-
|
595
|
Total
Assets
|
$
|
414,080
|
$
|
417,987
|
|
|
|
LIABILITIES
|
|
|
CURRENT
LIABILITIES
|
|
|
Accounts payable and
accrued liabilities
|
$
|
71,719
|
$
|
78,484
|
Current portion of
rehabilitation provisions
|
8,885
|
7,665
|
Current portion of
deferred revenue
|
14,506
|
14,316
|
Current portion of
long term debt
|
27,858
|
27,482
|
Other
liability
|
6,410
|
6,410
|
Total Current
Liabilities
|
129,378
|
134,357
|
REHABILITATION
PROVISIONS
|
56,262
|
58,560
|
DEFERRED
REVENUE
|
103,048
|
105,632
|
LONG TERM
DEBT
|
71,347
|
73,224
|
DERIVATIVE
LIABILITY
|
8,050
|
4,177
|
DEFFERED TAX
LIABILITY
|
5,681
|
-
|
Total
Liabilities
|
373,766
|
375,950
|
|
|
|
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
|
908,065
|
908,035
|
CONTRIBUTED
SURPLUS
|
38,226
|
37,258
|
DEFICIT
|
(833,269)
|
(831,283)
|
Shareholders'
equity attributable to Golden Star
shareholders
|
113,022
|
114,010
|
NON-CONTROLLING
INTEREST
|
(72,708)
|
(71,973)
|
Total
Equity
|
40,314
|
42,037
|
Total Liabilities
and Shareholders' Equity
|
$
|
414,080
|
$
|
417,987
|
GOLDEN STAR
RESOURCES LTD. CONDENSED INTERIM CONSOLIDATED STATEMENTS
OF CASH FLOWS (Stated in thousands of U.S.
dollars) (unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2019
|
2018
|
OPERATING
ACTIVITIES:
|
|
|
Net loss
|
$
|
(2,659)
|
$
|
(395)
|
Reconciliation of
net loss to net cash used in operating activities:
|
|
|
Depreciation and
amortization
|
6,995
|
8,228
|
Share-based
compensation
|
946
|
(2,638)
|
Income tax
expense
|
7,202
|
2,891
|
Loss/(gain) on fair
value of 7% Convertible Debentures
embedded derivative
|
3,873
|
(5,442)
|
Recognition of
deferred revenue
|
(3,547)
|
(3,239)
|
Reclamation
expenditures
|
(689)
|
(1,343)
|
Other
|
2,787
|
2,748
|
Changes in working
capital
|
(15,498)
|
(4,781)
|
Net cash used in
operating activities
|
(590)
|
(3,971)
|
INVESTING
ACTIVITIES:
|
|
|
Additions to mining
properties
|
(288)
|
(309)
|
Additions to plant and
equipment
|
-
|
(245)
|
Additions to
construction in progress
|
(12,854)
|
(11,028)
|
Change in accounts
payable and deposits on mine
equipment and material
|
1,854
|
(71)
|
Net cash used in
investing activities
|
(11,288)
|
(11,653)
|
FINANCING
ACTIVITIES:
|
|
|
Principal payments on
debt
|
(2,779)
|
(939)
|
Proceeds from debt
agreements
|
-
|
15,000
|
Exercise of
options
|
18
|
-
|
Net cash (used
in)/provided by financing activities
|
(2,761)
|
14,061
|
Decrease in cash and
cash equivalents
|
(14,639)
|
(1,563)
|
Cash and cash
equivalents, beginning of period
|
96,507
|
27,787
|
Cash and cash
equivalents, end of period
|
$
|
81,868
|
$
|
26,224
|
Statements Regarding Forward-Looking Information
Some statements contained in this news release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and "forward looking
information" within the meaning of Canadian securities laws.
Forward looking statements and information include but are not
limited to, statements and information regarding: the completion of
production from the Prestea Open Pits in 2018; the release of
further drilling results in the second quarter of 2019; drill
testing of Father Brown in the second quarter of 2019; the pausing
of drilling during the second quarter of 2019 and the review of the
results from a conceptual mine design perspective to determine if
the further drilling is warranted; drilling at Prestea Underground
with two underground rigs will through 2019; 2019 production
guidance, cash operating cost per ounce guidance, AISC guidance and
capital expenditure guidance, as well as the ability of the Company
to achieve such guidance. 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. Investors are cautioned that forward-looking
statements and information are inherently uncertain and involve
risks, assumptions and uncertainties that could cause actual facts
to differ materially. 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 future developments
affecting the Company will be those anticipated by management.
Please refer to the discussion of these and other factors in
Management's Discussion and Analysis of financial conditions and
results of operations for the year ended December 31, 2018 and in our annual information
form for the year ended December 31,
2018 as filed on SEDAR at www.sedar.com. The forecasts
contained in this press release constitute management's current
estimates, as of the date of this press release, with respect to
the matters covered thereby. We expect that these estimates will
change as new information is received. While we may elect to update
these estimates at any time, we do not undertake any estimate at
any particular time or in response to any particular event.
Non-GAAP Financial Measures
In this MD&A, we use the terms "cash operating cost", "cash
operating cost per ounce", "all-in sustaining costs", "all-in
sustaining costs per ounce", "adjusted net (loss)/income
attributable to Golden Star shareholders", "adjusted (loss)/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".
"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.
"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.
"Cash operating cost" for a period is equal to "cost of sales
excluding depreciation and amortization" for the period less
royalties, the cash component of metals inventory net realizable
value adjustments, materials and supplies write-off and severance
charges, and "cash operating cost per ounce" is that amount divided
by the number of ounces of gold sold (excluding pre-commercial
production ounces sold) during the period. We use cash operating
cost per ounce as a key operating metric. We monitor this measure
monthly, comparing each month's values to prior periods' values to
detect trends that may indicate increases or decreases in operating
efficiencies. We provide this measure to investors to allow them to
also monitor operational efficiencies of the Company's mines. We
calculate this measure for both individual operating units and on a
consolidated basis. Since cash operating costs do not incorporate
revenues, changes in working capital or 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 inventory net
realizable value adjustments, royalties, sustaining capital
expenditures, corporate general and administrative costs (excluding
share-based compensation expenses), and accretion of rehabilitation
provision. For mine site all-in sustaining costs, corporate general
and administrative costs (excluding share-based compensation
expenses) are allocated based on gold sold by each operation.
"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 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 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. 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.
"Adjusted net (loss)/income attributable to Golden Star
shareholders" is calculated by adjusting net (loss)/income
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
(loss)/income per share attributable to Golden Star shareholders"
for the period is "Adjusted net (loss)/income attributable to
Golden Star shareholders" divided by the weighted average number of
shares outstanding using the basic method of earnings per
share.
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
three months ended March 31, 2019,
which are available at www.sedar.com.
Technical Information
The Mineral Reserve and Mineral Resource estimates have been
compiled by the Company's technical personnel in accordance with
definitions and guidelines set out in the Definition Standards for
Mineral Resources and Mineral Reserves adopted by the Canadian
Institute of Mining, Metallurgy, and Petroleum and as required
by Canada's National Instrument 43-101 – Standards of
Disclosure for Mineral Projects ("NI 43-101"). Mineral Reserve
estimates reflect the Company's reasonable expectation that all
necessary permits and approvals will be obtained and maintained.
Mining dilution and mining recovery vary by deposit and have been
applied in estimating the Mineral Reserves.
The Mineral Resource technical contents of this press release
have been reviewed and approved by S. Mitchel Wasel, BSc Geology, a
"Qualified Person" pursuant to 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
Mineral Reserve technical contents of this press release have been
reviewed and approved by and were prepared under the supervision of
Dr. Martin Raffield, Senior Vice
President, Project Development and Technical Services for the
Company. Dr. Raffield is a "Qualified Person" as defined by NI
43-101.
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 a 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 US Investors Concerning Estimates of
Measured and Indicated Mineral Resources
This press release uses the terms "Measured Mineral Resources"
and "Indicated Mineral Resources". The Company advises US investors
that while these terms are recognized and required by NI 43-101,
the US Securities and Exchange Commission ("SEC") does
not recognize them. Also, disclosure of contained ounces is
permitted under Canadian regulations; however
the SEC generally requires Mineral Resource information
to be reported as in-place tonnage and grade. US Investors are
cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into Mineral
Reserves.
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SOURCE Golden Star Resources Ltd.