TORONTO, July 31, 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 second quarter ended June
30, 2019.
HIGHLIGHTS:
- Gold Production for the second quarter: 48,422 ounces, 21%
lower than the same period in 2018
-
- 37,356 ounces of gold production at Wassa, 3% down from the
second quarter of 2018
- 11,066 ounces of gold production at Prestea, 51% down from the
second quarter of 2018
- Gold revenue for Q2 2019 totaled $61.9
million compared to $77.1
million in the same period in 2018
-
- Gold sales totaled 48,742 ounces in the second quarter of
2019
- Mine operating margin of $8.7
million compared to $10.2
million in the second quarter of 2018
- Cash operating cost per ounce1 of $886 and All-In Sustaining Cost ("AISC") per
ounce1 of $1,212 in the second
quarter of 2019, compared to $809 and
$1,104, respectively in the prior
year period
- Cash position of $66.2 million at
June 30, 2019
- Production guidance revised to 190,000 - 205,000 ounces from
220,000 - 240,000 ounces, cash operating costs revised to
$800 - $850 per ounce from $620 - $680 per
ounce and AISC revised to $1,100 -
$1,200 per ounce from $875 - $955 per
ounce
- Commitment letter signed on July 18,
2019 with Macquarie Bank for $60
million senior secured credit facility to refinance specific
debt facilities
- Initial independent review of Prestea completed and short-term
changes being implemented while next steps being planned
- High grade extension drilling results from Prestea released on
June 3, 2019
- Key management team changes announced with Andrew Wray appointed President & Chief
Executive Office and Graham Crew
appointed Chief Operating Officer
Notes:
|
1.
|
See "Non-GAAP
Financial Measures".
|
Andrew Wray, Chief
Executive Officer of Golden Star,
commented:
"The performance at both of our operations
during the quarter was below our expectations for the assets and as
a result we are reducing our guidance for consolidated production
for the full year while increasing our forecast costs on a per
ounce basis. I recognize how disappointing this is and I am
ensuring that we address the underlying issues at both operations.
At Prestea, the initial review has been completed and we are
beginning to implement a series of short-term changes while
redesigning the overall mine plan in order to return the asset to
sustainable levels of profitable production. At Wassa, operational
execution remained robust and the strong long-term fundamentals are
unchanged. However, we need to ensure greater near-term mining
flexibility to counter grade variability and are investing in
accelerating both our rate of development as well as our definition
drilling to achieve this by the end of this year. I am confident
that this focus, together with the greater management depth being
put in place, will address the issues we have seen in the second
quarter and the value inherent in our asset base will be
realized."
2019 FULL YEAR REVISED GUIDANCE
|
Gold production
(Koz)
|
Cash operating
costs ($/oz)
|
All-in sustaining
costs ($/oz)
|
Revised
|
Original
|
Revised
|
Original
|
Revised
|
Original
|
Wassa
|
150 – 160
|
170 – 180
|
600 – 650
|
560 – 600
|
880 – 940
|
Not
disclosed
|
Prestea
|
40 – 45
|
50 – 60
|
1,450 –
1,650
|
840 –
1,000
|
1,900 –
2,150
|
Not
disclosed
|
Consolidated
|
190 – 205
|
220 – 240
|
800 – 850
|
620 – 680
|
1,100
–1,200
|
875 – 955
|
The Company's consolidated production and cost guidance has been
revised, as set out above. Our expectations for the different
components of capital expenditure remain unchanged and we are still
forecasting consolidated total capital expenditure of $61.7 million.
At Prestea, our plan is to prioritize and implement a range of
short-term measures identified in the recent operational review
carried out by CSA Global and to also rework the overall life of
mine plan. While we are confident those measures will result in
significant improvement over time and expect to see meaningful
benefits next year, we are forecasting similar operating
performance in the second half of 2019 compared to the first half,
with the incremental open pit ounces likely to cease during the
third quarter.
At Wassa, the mining rate achieved over the first half of the
year of just over 3,500 tpd was in line with our expectations and
we believe that there is the potential to improve on this during
the second half of the year. However, we expect the grade of those
areas where we will be mining to be lower than originally planned
and below the overall reserve grade of the operation. As a result,
production in the second half is forecast to be marginally lower
than during the first half of the year. As we increase both our
development metres and definition drilling through the end of 2019,
we expect to be able to better manage our grade profile in line
with the overall reserve grade going forward.
With the reduction in forecast production, our cash operating
costs and AISC will be correspondingly higher in 2019 than
initially expected.
INDEPENDENT OPERATIONAL REVIEW OF PRESTEA MINE BY CSA
As a result of the operational challenges at Prestea
Underground, CSA Global was contracted to review the mine's
operations with the mandate to take a holistic approach to
understanding the challenges facing the operation. All aspects of
technical, operational and management areas were examined in order
for recommendations to be set forth to the Company for improvements
at Prestea.
CSA Global has identified a range of issues affecting
performance at the operation driving both lower mining rates as
well as excessive dilution. These include insufficient geological
and geotechnical data, poor definition of the reef position,
inadequate alignment of Alimak raises, inaccurate long hole
drilling and blasting, low equipment mechanical availability and
lack of access to the top level.
In order to address these issues, two main initiatives are being
undertaken. Firstly, the prioritization and implementation of a
number of low-cost, quick win initiatives are being undertaken with
immediate effect, including increased definition drilling,
development of a geotechnical block model, improved supervision,
additional critical small equipment, capacity building and
better-defined key performance indicators. Secondly, the long-term
mine plan will be redesigned and will assess whether the current
mining method or a revised Alimak design with shorter raises is
appropriate and whether a complementary mining method to bring
additional flexibility is needed.
$60 Million Credit
Facility
On July 18, 2019, the Company
signed a commitment letter for a senior secured credit facility in
the principal amount of $60 million
(the "Credit Facility") with Macquarie Bank. The Credit Facility is
expected to close during the third quarter of 2019 subject to
normal course conditions precedent, including finalization of an
intercreditor agreement with RGLD Gold AG. The Credit Facility will
be used to refinance Ecobank Loan III, Ecobank Loan IV, and the
Vendor Agreement with Volta River Authority, with any remaining
balance to be available for general corporate purposes. The Credit
Facility is available by way of a single drawdown with repayments
of $5 million quarterly, commencing
on June 30, 2020. The final
maturity date is March 31, 2023. The
interest rate is 4.5% plus the applicable USD LIBOR rate. The
Credit Facility is subject to normal course financial
covenants.
Second Quarter 2019 Conference Call Details
The Company will conduct a conference call and webcast to
discuss these results this morning, July 31,
2019, at 10:00 am ET.
Toll Free (North America):
+1 833 231-8263
Toronto Local and International: +1
647 689-4108
Conference ID: 7455677
Webcast:
https://event.on24.com/wcc/r/2021114/D66FCC3978DE56D35751B81386315D15
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
|
|
|
June
30,
|
OPERATING
SUMMARY
|
|
2019
|
2018
|
Wassa gold
sold
|
oz
|
|
37,725
|
|
|
38,249
|
Prestea gold
sold
|
oz
|
|
11,017
|
|
|
22,310
|
Total gold
sold
|
oz
|
|
48,742
|
|
|
60,559
|
Wassa gold
produced
|
oz
|
|
37,356
|
|
|
38,532
|
Prestea gold
produced
|
oz
|
|
11,066
|
|
|
22,677
|
Total gold
produced
|
oz
|
|
48,422
|
|
|
61,209
|
Average realized gold
price
|
$/oz
|
|
1,270
|
|
|
1,273
|
|
|
|
|
Cost of sales per
ounce – Consolidated1
|
$/oz
|
|
1,093
|
|
|
1,106
|
Cost of sales per
ounce – Wassa1
|
$/oz
|
|
831
|
|
|
944
|
Cost of sales per
ounce – Prestea1
|
$/oz
|
|
1,987
|
|
|
1,383
|
Cash operating cost
per ounce – Consolidated1
|
$/oz
|
|
886
|
|
|
809
|
Cash operating cost
per ounce – Wassa1
|
$/oz
|
|
655
|
|
|
610
|
Cash operating cost
per ounce – Prestea1
|
$/oz
|
|
1,677
|
|
|
1,149
|
All-In Sustaining
cost per ounce – Consolidated1
|
$/oz
|
|
1,212
|
|
|
1,104
|
All-In Sustaining
cost per ounce – Wassa1
|
$/oz
|
|
941
|
|
|
994
|
All-In Sustaining
cost per ounce – Prestea1
|
$/oz
|
|
2,143
|
|
|
1,293
|
|
|
|
|
Notes:
|
1. See "Non-GAAP
Financial Measures".
|
|
|
Three Months
Ended
|
|
|
June
30,
|
FINANCIAL
SUMMARY
|
|
2019
|
20182
|
Gold
revenues
|
$'000
|
|
61,915
|
|
|
77,121
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
|
46,506
|
|
|
57,717
|
Depreciation and
amortization
|
$'000
|
|
6,749
|
|
|
9,235
|
Mine operating
margin
|
$'000
|
|
8,660
|
|
|
10,169
|
General and
administrative expense
|
$'000
|
|
9,505
|
|
|
6,909
|
(Gain)/loss on fair
value of financial instruments, net
|
$'000
|
|
(424)
|
|
|
1,301
|
Income tax
expense
|
$'000
|
|
5,278
|
|
|
3,783
|
Net loss attributable
to Golden Star shareholders
|
$'000
|
|
(9,036)
|
|
(6,642)
|
Adjusted net income
attributable to Golden Star
|
|
|
|
shareholders1
|
$'000
|
|
872
|
|
|
2,408
|
Loss per share
attributable to Golden Star shareholders –
|
|
|
|
basic
|
$/share
|
|
(0.08)
|
|
(0.09)
|
Loss per share
attributable to Golden Star shareholders –
|
|
|
|
diluted
|
$/share
|
|
(0.08)
|
|
(0.09)
|
Adjusted income per
share attributable to Golden Star
|
|
|
|
shareholders –
basic1
|
$/share
|
|
0.01
|
|
|
0.03
|
Cash provided by
operations
|
$'000
|
|
2,183
|
|
10,321
|
Cash provided by
operations before working capital
|
|
|
|
changes1
|
$'000
|
|
591
|
|
10,276
|
|
|
|
|
|
|
Cash used by
operations per share - basic
|
$/share
|
|
0.02
|
|
0.14
|
Cash provided by
operations before working capital
|
|
|
|
changes per share –
basic1
|
$/share
|
|
0.01
|
|
0.13
|
Capital
expenditures
|
$'000
|
|
16,993
|
|
10,186
|
|
|
|
|
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 second quarter of 2019, Golden
Star produced 48,422 ounces of gold. Gold production
from the Wassa Complex ("Wassa") was 37,356 ounces, with Wassa
Underground producing 36,164 ounces of gold (or approximately 97%
of Wassa's total production), compared to 35,519 ounces in the same
period in 2018 (or approximately 92% of Wassa's total
production). This 2% increase in production was related to
the 31% increase in ore tonnes mined and 33% increase in ore tonnes
processed, resulting from productivity improvements offset
partially by a 30% decrease in grade due to limited flexibility
within the mine plan.
Gold production from Prestea Complex ("Prestea") was 11,066
ounces in the second quarter of 2019, a 51% decrease from the
22,677 ounces produced during the same period in 2018. This
decrease in production was due primarily to the planned reduction
from the Prestea Open Pits and lower than planned head grade at
Prestea Underground resulting from a combination of excessive
dilution and ore loss.
Consolidated cost of sales per ounce was $1,0931 in the second quarter of 2019,
1% lower than $1,106 in the same
period in 2018. Consolidated cash operating cost per ounce was
$886 in the second quarter of 2019,
10% higher than $809 in the same
period in 2018. Cash operating cost per ounce at Wassa increased 7%
to $655 in the second quarter of 2019
as gold sold was slightly lower compared to the same period in 2018
and mine operating expense higher due to an increase in total
tonnes mined, as Wassa Underground has steadily increased its
mining rates. Cash operating cost per ounce at Prestea increased
46% to $1,677 due mainly to a
decrease in gold sold during the period, offset partially by a
decrease in mine operating expenses and operating costs from metals
inventory, resulting from reduced production from the Prestea Open
Pits and a lower draw down of ore stockpiles in the period,
respectively. Production rates at Prestea Underground continue to
be lower than expected and have not been able to offset the lower
production at the Prestea Open Pits as planned. For the six months
ended June 30, 2019, consolidated cash operating cost per
ounce decreased 6% to $805 from
$857 in the same period in 2018 due
mainly to a decrease in operating costs from metal inventory,
offset partially by a decrease in gold sold at Prestea.
Notes:
|
1. See "Non-GAAP
Financial Measures".
|
Wassa Complex ("Wassa")
|
|
Three Months
Ended
|
|
|
June
30,
|
|
|
2019
|
2018
|
WASSA FINANCIAL
RESULTS
|
|
|
|
Revenue
|
$'000
|
|
47,893
|
|
|
48,588
|
|
|
|
|
Mine operating
expenses
|
$'000
|
|
24,067
|
|
|
21,952
|
Severance
charges
|
$'000
|
|
—
|
|
|
1,576
|
Royalties
|
$'000
|
|
2,439
|
|
|
2,517
|
Operating costs from
metals inventory
|
$'000
|
|
636
|
|
1,374
|
Inventory net
realizable value adjustment and write-off
|
$'000
|
|
—
|
|
|
3,103
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
|
27,142
|
|
|
30,522
|
Depreciation and
amortization
|
$'000
|
|
4,226
|
|
|
5,581
|
Mine operating
margin
|
$'000
|
|
16,525
|
|
|
12,485
|
|
|
|
|
Capital
expenditures
|
$'000
|
|
13,622
|
|
7,881
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
Ore mined -
Underground
|
t
|
|
312,115
|
|
|
238,953
|
Ore mined -
Total
|
t
|
|
312,115
|
|
|
238,953
|
Waste mined -
Underground
|
t
|
|
78,214
|
|
|
73,122
|
Waste mined
-Total
|
t
|
|
78,214
|
|
|
73,122
|
Ore processed — Main
Pit/Stockpiles
|
t
|
|
52,786
|
|
|
140,517
|
Ore processed -
Underground
|
t
|
|
312,115
|
|
|
235,415
|
Ore processed -
Total
|
t
|
|
364,901
|
|
|
375,932
|
Grade processed — Main
Pit/Stockpiles
|
g/t
|
|
0.64
|
|
|
0.72
|
Grade processed -
Underground
|
g/t
|
|
3.51
|
|
4.99
|
Recovery
|
%
|
|
95.9
|
|
96.1
|
Gold produced — Main
Pit/Stockpiles
|
oz
|
|
1,192
|
|
|
3,013
|
Gold produced -
Underground
|
oz
|
|
36,164
|
|
|
35,519
|
Gold produced -
Total
|
oz
|
|
37,356
|
|
|
38,532
|
Gold sold — Main
Pit/Stockpiles
|
oz
|
|
1,561
|
|
2,730
|
Gold sold -
Underground
|
oz
|
|
36,164
|
|
|
35,519
|
Gold sold -
Total
|
oz
|
|
37,725
|
|
|
38,249
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
|
831
|
|
944
|
Cash operating cost
per ounce1
|
$/oz
|
|
655
|
|
610
|
All-In Sustaining cost
per ounce1
|
$/oz
|
|
941
|
|
|
994
|
|
|
|
|
Notes:
|
1.
|
See "Non-GAAP
Financial Measures"
|
Wassa Operational Overview
Gold production from Wassa was 37,356 ounces for the second
quarter of 2019, a 3% decrease from the 38,532 ounces produced
during the same period in 2018. This decrease in production was
primarily due to a decrease in stockpile production as there was a
62% decrease in stockpile ore tonnes processed compared to the same
period in 2018.
Mining rates at Wassa Underground increased to approximately
3,470 tpd on average in the second quarter of 2019 compared to
approximately 2,620 tpd in the same period in 2018. Underground ore
processed increased 33% to 312,115 tonnes in the second quarter of
2019 compared to 235,415 tonnes in the same period in 2018. Wassa
Underground definition (grade control) drilling has resulted in
significant short-range model changes in Panels 1 & 2 of B
Shoot. Overall this has resulted in increased tonnage, however at
significantly lower grade than the previously used resource model.
This change has resulted in increased ore development and together
with limited flexibility with the mine plan contributed to a 30%
decrease in grade.
Cost of sales, excluding depreciation and amortization in the
quarter decreased $3.4 million and
11% compared to the second quarter of 2018. The decrease was due
primarily to a $1.6 million decrease
in severance charges, as suspension of the Wassa surface mining
operation was completed in early 2018, a $0.7 million decrease in operating costs from
metals inventory related to a reduction in drawdown of ore
stockpiles compared to the same period in 2018, a $3.1 million decrease in inventory net realizable
value adjustment and write-off as materials and supplies
inventories related to open pit mining were written off in the same
period in 2018, and a $0.1 million
decrease in royalty expense due to lower gold sales. Partially
offsetting these reductions was a $2.1
million increase in mine operating expenses resulting from a
31% increase in ore tonnes mined as Wassa Underground has steadily
increased its mining rates.
Cash operating cost per ounce increased 7% to $655 from $610 for
the same period in 2018. The higher cash operating costs per ounce
were primarily a result of a decrease in gold sold and an increase
in mine operating expenses. AISC per ounce decreased 5% to
$941 from $994 for the same period in 2018 mainly due to
lower sustaining capital expenditures and a $3.1 million decrease in inventory net realizable
value adjustment and write-off, partially offset by the decrease in
gold sold.
Prestea Complex ("Prestea")
|
|
Three Months
Ended
|
|
|
June
30,
|
|
|
2019
|
2018
|
PRESTEA FINANCIAL
RESULTS
|
|
|
|
Revenue
|
$'000
|
|
14,022
|
|
|
28,533
|
|
|
|
|
Mine operating
expenses
|
$'000
|
|
18,706
|
|
|
23,504
|
Severance
charges
|
$'000
|
|
30
|
|
|
—
|
Royalties
|
$'000
|
|
726
|
|
|
1,483
|
Operating costs
(to)/from metals inventory
|
$'000
|
|
(229)
|
|
|
2,134
|
Inventory net
realizable value adjustment and write off
|
$'000
|
|
131
|
|
|
74
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
|
19,364
|
|
|
27,195
|
Depreciation and
amortization
|
$'000
|
|
2,523
|
|
|
3,654
|
Mine operating
loss
|
$'000
|
|
(7,865)
|
|
|
(2,316)
|
|
|
|
|
Capital
expenditures
|
$'000
|
|
3,371
|
|
|
2,305
|
|
|
|
|
PRESTEA OPERATING
RESULTS
|
|
|
|
Ore mined Open
Pits
|
t
|
|
158,300
|
|
|
45,547
|
Ore mined –
Underground
|
t
|
|
37,155
|
|
|
31,373
|
Ore mined –
Total
|
t
|
|
195,455
|
|
|
76,920
|
Waste mined – Open
Pits
|
t
|
|
219,400
|
|
|
146,316
|
Waste mined –
Underground
|
t
|
|
2,014
|
|
|
—
|
Waste mined –
Total
|
t
|
|
221,414
|
|
|
146,316
|
Ore processed – Open
Pits
|
t
|
|
174,718
|
|
|
342,226
|
Ore processed –
Underground
|
t
|
|
37,155
|
|
|
31,373
|
Ore processed –
Total
|
t
|
|
211,873
|
|
|
373,599
|
Grade processed – Open
Pits
|
g/t
|
|
1.55
|
|
|
2.33
|
Grade processed –
Underground
|
g/t
|
|
4.09
|
|
|
13.56
|
Recovery
|
%
|
|
83.2
|
|
|
88.0
|
Gold produced – Open
Pits
|
oz
|
|
7,196
|
|
|
10,214
|
Gold produced –
Underground
|
oz
|
|
3,870
|
|
|
12,463
|
Gold produced –
Total
|
oz
|
|
11,066
|
|
|
22,677
|
Gold sold – Open
Pits
|
oz
|
|
7,147
|
|
|
9,847
|
Gold sold –
Underground
|
oz
|
|
3,870
|
|
|
12,463
|
Gold sold –
Total
|
oz
|
|
11,017
|
|
|
22,310
|
|
|
|
|
Cost of sales per
ounce1
|
$/oz
|
|
1,987
|
|
|
1,383
|
Cash operating cost
per ounce1
|
$/oz
|
|
1,677
|
|
|
1,149
|
All-In Sustaining cost
per ounce1
|
$/oz
|
|
2,143
|
|
|
1,293
|
|
|
|
|
|
|
|
Notes:
|
1.
|
See "Non-GAAP
Financial Measures".
|
Prestea Operational Overview
Gold production from Prestea was 11,066 ounces in the second
quarter of 2019, a 51% decrease from the 22,677 ounces produced
during the same period in 2018. This decrease in production was due
primarily to the planned reduction from the Prestea Open Pits and
lower than planned head grade at Prestea Underground resulting from
a combination of excessive dilution and ore loss.
Prestea Underground produced 3,870 ounces in the second quarter
of 2019 compared to 12,463 ounces in the same period in 2018.
Production decreased 69% in the second quarter of 2019 compared to
the same period in 2018, as a result of a 70% decrease in ore grade
processed, offset partially by a 18% increase in ore tonnes
processed. Production during the quarter was impacted by stopes
performing poorly due to waste zones within the current stoping
area not previously identified in the resource block model. These
waste zones necessitated redesign and re-slotting of some stopes
and resulted in production delays and excessive internal dilution.
Further unplanned dilution was encountered due to poor ground
conditions resulting in hanging wall failures as well as inaccurate
production drilling in some instances. A number of
initiatives have been implemented including closer spaced
definition (grade control) drilling to address these issues and
will form part of the broader review of the operation.
The Prestea Open Pits produced 7,196 ounces in the second
quarter of 2019, compared to 10,214 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 second quarter of 2019 with
additional ore being sourced from the pits close to Bogoso. These
additional open pit sources are expected to be mined out within the
third quarter of 2019.
Cost of sales excluding depreciation and amortization was
$19.4 million for the second quarter
of 2019, compared to $27.2 million
for the same period in 2018. The decrease was due primarily to a
$4.8 million decrease in mine
operating expenses related to less production from the Prestea Open
Pits, a $2.4 million decrease in
operating costs from metals inventory, and a $0.8 million decrease in royalty expense
resulting from lower gold sales partially offset by a $0.1 million increase inventory net realizable
value adjustment and write-off.
Cash operating cost per ounce of $1,677 increased 46% compared to $1,149 for the same period in 2018. AISC per
ounce increased 66% to $2,143 from
$1,293 for 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. AISC per ounce
was also impacted by higher sustaining capital expenditures related
to Prestea underground capitalized development.
Exploration
On June 24, 2019, the Company
filed an updated technical report pursuant to National Instrument
("NI") 43-101 for its Wassa Gold
Mine in Ghana entitled "NI
43-101 Technical Report on Resources and Reserves, Golden Star
Resources, Wassa Gold Mine,
Ghana" effective date December 31, 2018. See press release entitled
"Golden Star Files Updated Technical Report for Wassa Gold Mine".
Wassa
On July 15, 2019, the Company
reported significant gold mineralization 200 metres ("m") down
plunge to the south of the Inferred Mineral Resource at the Wassa
Underground demonstrating the extension of the deposit. The Company
will continue with the inferred delineation and conversion drilling
at Wassa into the third quarter of the year, then will be
incorporating all of the results, including underground drilling,
to the update of mineral resource and reserves for 2020 budgeting
and year-end mineral resource and reserve estimates.
Father Brown
On July 15, 2019, the Company
reported significant gold mineralization, including 8.1 m grading 8.7 grams per tonne of
gold, showing that the Adoikrom gold bearing structure extends
over 200 m down plunge of the last
drill hole. The drilling has been paused with the next step being
to update the mineral resource models during the third quarter of
2019 which in turn will enable the Company's planning engineers to
determine whether there is a viable underground mining project at
Father Brown. The results of this study will also determine whether
further drilling is warranted.
Prestea Underground
On June 3, 2019, the Company
reported initial high grade extension drilling results from Prestea
Underground which include 124.4 grams per tonne of gold over one
metre. Assay results for eight diamond drill holes along the
northern extension of the West Reef were received confirming ore
body extensions to the north of the current reserves, approximately
150 m along strike between 21 and 24
levels. The exploration program for the third quarter of 2019 will
continue to focus on further delineation of the mineralization in
this area in order to potentially bring this material into the mine
reserves. Also, definition drilling between 17 level and 21 level
is expected to occur during the third quarter of 2019, after which
exploration drilling will then be paused in the second half of 2019
so that the operations can focus on operational improvements.
FINANCIAL PERFORMANCE
Financial Highlights
Gold revenue totaled $61.9 million
in the second quarter of 2019, compared to $77.1 million in the same period in 2018. Gold
revenue for the second quarter of 2019 was $15.2 million or 20% lower than the same period
in 2018, primarily as a result of a decrease in gold revenue
generated from Prestea. Compared with the same period in 2018, gold
revenue generated from Prestea decreased by $14.5 million (51%), resulting from the planned
decrease in production from the Prestea Open Pits and lower than
planned head grade at Prestea Underground due to a combination of
excessive dilution and ore loss. Gold revenue generated from Wassa
decreased by $0.7 million (1%) as a
result of processing fewer tonnes from the stockpile in 2019 as
compared to the prior year. The consolidated average realized gold
price remained consistent at $1,270
per ounce in the second quarter of 2019, compared to $1,273 per ounce for the same period in 2018. For
the six months ended June 30, 2019, gold revenue was
$129.2 million, a 13% decrease
compared to $147.9 million in the
same period in 2018 due to a decrease in gold revenue at Prestea,
offset by an increase at Wassa primarily a result of increased gold
production from Wassa Underground.
Consolidated cost of sales per ounce was $1,093 in the second quarter of 2019, 1% lower
than $1,106 in the same period in
2018. Cash operating costs in Q2 2019 were $5.8 million (12%) lower than the same period in
the prior year, mainly due to $7.2
million (28%) reduction in cash operating costs at Prestea
as a result of less open pit material processed in Q2 of
2019. This was offset by a $1.4
million (6%) increase in cash operating cost at Wassa as a
result of improved underground mining rate at Wassa Underground.
However, consolidated cash operating cost per ounce was
$886 in the second quarter of 2019,
10% higher than $809 in the same
period in 2018 due to the 20% lower gold sales by the operations.
Gold sales in Q2 2019 for Wassa and Prestea were 1% and 51% lower
than the same in the prior period last year, respectively. For the
six months ended June 30, 2019, consolidated cash operating
cost decreased 18% to $82.3 million
from $100.2 million in the same
period in 2018 due mainly to a decrease in the processing of lower
grade high cost stockpiles. However, cash operating cost per ounce
for the six months ended June 30,
2019 decreased only 6% to $805
from $857 in the same period in 2019
due to 14% lower gold sales from the operations.
Depreciation and amortization expense totaled $6.7 million in the second quarter of 2019
compared to $9.2 million in the same
period in 2018. For the six months ended June 30, 2019,
depreciation and amortization expense was $13.6 million, a 22% decrease compared to
$17.5 million in the same period in
2018. The decrease in depreciation and amortization expense for the
three and six months ended June 30, 2019 was due to decreases
at both Wassa and Prestea. Wassa depreciation decreased mainly due
to an increase in the total recoverable gold ounces over the life
of mine of Wassa Underground, while Prestea depreciation decreased
due to a decrease in gold production.
Golden Star reported a mine operating margin of $8.7
million in the second quarter of 2019, compared to
$10.2 million in the second quarter
of 2018. The $4.0 million increase in
Wassa's mine operating margin was offset by the $5.5 million mining operating loss at
Prestea.
General and administrative expense totaled $9.5 million in the second quarter of 2019,
compared to $6.9 million in the same
period in 2018. The increase in general and administrative expense
for the second quarter of 2019 was due primarily to $3.7 million in termination costs related to the
change in senior management in 2019, offset by a $2.0 million decrease in share-based compensation
expense compared to the same period in 2018. Share-based
compensation expense decreased in the period as the final
Performance Share Units ("PSU") vested in December 2018, therefore the Company did not
recognize a PSU expense in the period. General and administrative
expense, excluding share-based compensation and termination costs
related to the change in senior management in 2019, totaled
$4.7 million compared to $3.7 million in the same period in 2018.
The Company recorded a gain of $0.4
million on fair value of financial instruments in the second
quarter of 2019 compared to a $1.3
million loss in the same period in 2018. The $0.4 million fair value gain in the second
quarter of 2019 relates to a non-cash revaluation gain on the
embedded derivative liability of the 7% Convertible Debentures. The
$1.3 million fair value loss
recognized in the second quarter of 2018 was related to a non-cash
revaluation loss on the embedded derivative liability of the 7%
Convertible Debentures. For the six months ended June 30,
2019, the Company recorded a $3.4
million loss and $4.1 million
gain on fair value of financial instruments, compared to a
$4.1 million gain in the same period
of 2018.
Income tax expense was $5.3
million in the second quarter of 2019 compared to
$3.8 million for the same period in
2018. The increase in income tax expense compared to the same
period in 2018 relates to the increase in mine operating margin at
Wassa.
Net loss attributable to Golden
Star shareholders for the second quarter of 2019 totaled
$9.0 million or $0.08 loss per share (basic), compared to a net
loss of $6.6 million or $0.09 loss per share (basic) in the same period
in 2018. The increase in net loss and loss per share attributable
to Golden Star shareholders in the
second quarter of 2019 was mainly due to $1.5 million decrease in mine operating margin
and a $2.6 million increase in
general and administrative expenses, a $1.5
million increase in tax expense, offset by a
$1.7 million increase in fair value
gain on financial instruments. For the six months ended
June 30, 2019, net loss attributable to Golden Star shareholders totaled $11.0 million or $0.10 loss per share (basic), compared to a net
loss of $5.6 million or $0.07 loss per share (basic) in the same period
in 2018. This increase is mainly due to a $5.6 million increase in general and
administration expenses, $5.8 million
increase in income tax expense, $7.6
million increase in fair value loss on financial
instruments, offset by a $12.1
million increase in mine operating margin.
Net cash provided by operating activities was $2.2 million for the second quarter of 2019
compared to $10.3 million in the same
period in 2018. Changes to working capital provided $1.6 million for the quarter ended June 30, 2019. Cash provided by operations before
working capital changes (see "Non-GAAP Financial Measures" section)
was $0.6 million for the second
quarter of 2019, compared to $10.3
million in the same period in 2018. The decrease in cash
provided by operations before working capital changes was due
primarily to a decrease in mine operating margin at Prestea and an
increase in consolidated general and administrative expense
(excluding share-based compensation). For the six months ended
June 30, 2019, cash provided by operations before working
capital changes was $15.5 million
compared to $11.1 million in the same
period in 2018. The increase was primarily due to an
increase in mine operating margin at Wassa, partially offset
by an increase in consolidated general and administrative expense
(excluding share-based compensation).
The Company held $66.2
million in cash and cash equivalents as at June 30, 2019
compared to $96.5 million in cash and
cash equivalents at December 31, 2018. During the six months
ended June 30, 2019, operations provided $1.6 million, investing activities used
$26.9 million and financing
activities used $5.0 million of
cash.
Capital Expenditures
Capital expenditures for the second quarter of 2019 totaled
$17.0 million compared to
$10.2 million in the same period in
2018. Capital expenditures at Wassa during the second quarter of
2019 comprised 80% of total capital expenditures and totaled
$13.6 million, which included
$6.6 million on exploration drilling,
$2.5 million on Wassa Underground
capitalized development, $1.1 million
on mobile equipment, $0.4 million on
the construction of a ventilation raise, $1.2 million related to the tailings storage
facility and the remainder on other equipment and capital
expenditures. Capital expenditures at Prestea during the second
quarter of 2019 comprised 20% of total capital expenditures and
totaled $3.4 million, which included
$2.7 million on sustaining capital
related to Prestea Underground, $0.3
million on exploration drilling and $0.4 million on other equipment and capital
expenditures.
Second Quarter 2019 Capital Expenditures Breakdown (in
millions)
Item
|
|
Sustaining
|
|
Development
|
|
Total
|
|
Wassa Exploration
Drilling
|
|
-
|
|
6.6
|
|
6.6
|
|
Wassa Main Pit and
Processing Plant
|
|
0.7
|
|
-
|
|
0.7
|
|
Wassa Tailings
Expansion
|
|
-
|
|
1.2
|
|
1.2
|
|
Wassa
Underground
|
|
2.5
|
|
1.5
|
|
4.0
|
|
Wassa Equipment
Purchase
|
|
0.5
|
|
0.6
|
|
1.1
|
|
Wassa
Subtotal
|
|
3.7
|
|
9.9
|
|
13.6
|
|
Prestea Exploration
Drilling
|
|
-
|
|
0.3
|
|
0.3
|
|
Prestea Open Pits and
Processing Plant
|
|
0.4
|
|
-
|
|
0.4
|
|
Prestea
Underground
|
|
2.7
|
|
-
|
|
2.7
|
|
Prestea
Subtotal
|
|
3.1
|
|
0.3
|
|
3.4
|
|
Consolidated
|
|
6.8
|
|
10.2
|
|
17.0
|
|
|
|
|
|
|
|
|
|
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. Revised gold production guidance for 2019 is
190,000 - 205,000 ounces at a cash operating cost per
ounce1 of $800-$850. 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
|
(Stated in
thousands of U.S. dollars except shares and per share
data)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
2018
|
|
|
|
Revenue
|
$
|
61,915
|
|
$
|
77,121
|
Cost of sales
excluding depreciation and amortization
|
|
46,506
|
|
|
57,717
|
Depreciation and
amortization
|
|
6,749
|
|
|
9,235
|
Mine operating
margin
|
|
8,660
|
|
|
10,169
|
|
|
|
Other
expenses/(income)
|
|
|
Exploration
expense
|
|
801
|
|
|
760
|
General and
administrative
|
|
9,505
|
|
|
6,909
|
Finance expense,
net
|
|
3,602
|
|
|
5,391
|
Other
expense/(income)
|
|
780
|
|
|
(415)
|
(Gain)/loss on fair
value of financial instruments, net
|
|
(424)
|
|
|
1,301
|
Loss before
tax
|
|
(5,604)
|
|
|
(3,777)
|
Income tax
expense
|
|
5,278
|
|
|
3,783
|
Net loss and
comprehensive loss
|
$
|
(10,882)
|
|
$
|
(7,560)
|
Net loss attributable
to non-controlling interest
|
|
(1,846)
|
|
|
(918)
|
Net loss income
attributable to Golden Star shareholders
|
$
|
(9,036)
|
|
$
|
(6,642)
|
|
|
|
Net loss per
share attributable to Golden Star shareholders
|
|
|
Basic
|
$
|
(0.08)
|
|
$
|
(0.09)
|
Diluted
|
$
|
(0.08)
|
|
$
|
(0.09)
|
Weighted average
shares outstanding-basic (millions)
|
|
108.9
|
|
|
76.2
|
Weighted average
shares outstanding-diluted (millions)
|
|
108.9
|
|
|
76.2
|
GOLDEN STAR
RESOURCES LTD.
|
CONDENSED INTERIM
CONSOLIDATED BALANCE SHEETS
|
(Stated in
thousands of U.S. dollars)
|
(unaudited)
|
|
|
|
As
of
|
|
June
30,
|
December
31,
|
|
2019
|
2018
|
|
|
|
ASSETS
|
|
|
CURRENT
ASSETS
|
|
|
Cash and cash
equivalents
|
|
66,154
|
|
|
96,507
|
Accounts
receivable
|
|
5,327
|
|
|
3,213
|
Inventories
|
|
36,940
|
|
|
35,196
|
Prepaids and
other
|
|
4,943
|
|
|
5,291
|
Total Current
Assets
|
|
113,364
|
|
|
140,207
|
RESTRICTED
CASH
|
|
6,545
|
|
|
6,545
|
MINING
INTERESTS
|
|
287,900
|
|
|
270,640
|
DEFFERED TAX
ASSETS
|
|
—
|
|
|
595
|
Total
Assets
|
$
|
407,809
|
|
$
|
417,987
|
|
|
|
LIABILITIES
|
|
|
CURRENT
LIABILITIES
|
|
|
Accounts payable and
accrued liabilities
|
$
|
80,462
|
|
$
|
78,484
|
Current portion of
rehabilitation provisions
|
|
10,416
|
|
|
7,665
|
Current portion of
deferred revenue
|
|
14,145
|
|
|
14,316
|
Current portion of
long term debt
|
|
27,387
|
|
|
27,482
|
Other
liability
|
|
—
|
|
|
6,410
|
Total Current
Liabilities
|
|
132,410
|
|
|
134,357
|
REHABILITATION
PROVISIONS
|
|
55,638
|
|
|
58,560
|
DEFERRED
REVENUE
|
|
101,093
|
|
|
105,632
|
LONG TERM
DEBT
|
|
69,810
|
|
|
73,224
|
DERIVATIVE
LIABILITY
|
|
7,626
|
|
|
4,177
|
DEFFERED TAX
LIABILITY
|
|
10,531
|
|
|
—
|
Total
Liabilities
|
|
377,108
|
|
|
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
|
|
908,987
|
|
|
908,035
|
CONTRIBUTED
SURPLUS
|
|
38,573
|
|
|
37,258
|
DEFICIT
|
|
(842,305)
|
|
|
(831,283)
|
Shareholders'
equity attributable to Golden Star
shareholders
|
|
105,255
|
|
|
114,010
|
NON-CONTROLLING
INTEREST
|
|
(74,554)
|
|
|
(71,973)
|
Total
Equity
|
|
30,701
|
|
|
42,037
|
Total Liabilities
and Shareholders' Equity
|
$
|
407,809
|
|
$
|
417,987
|
GOLDEN STAR
RESOURCES LTD.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Stated in
thousands of U.S. dollars)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2019
|
2018
|
OPERATING
ACTIVITIES:
|
|
|
Net loss
|
$
|
(10,882)
|
|
$
|
(7,560)
|
|
|
|
Reconciliation of
net loss to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
|
6,880
|
|
|
9,245
|
Share-based
compensation
|
|
1,058
|
|
|
3,220
|
Income tax
expense
|
|
5,278
|
|
|
3,783
|
(Gain)/loss on fair
value of 7% Convertible Debentures
|
|
|
|
|
|
embedded
derivative
|
|
(424)
|
|
|
1,301
|
Recognition of
deferred revenue
|
|
(3,306)
|
|
|
(3,959)
|
Reclamation
expenditures
|
|
(681)
|
|
|
(1,934)
|
Other
|
|
2,668
|
|
|
6,180
|
Changes in working
capital
|
|
1,592
|
|
|
45
|
Net cash provided by
operating activities
|
|
2,183
|
|
|
10,321
|
INVESTING
ACTIVITIES:
|
|
|
Additions to mining
properties
|
|
—
|
|
|
(73)
|
Additions to plant and
equipment
|
|
—
|
|
|
—
|
Additions to
construction in progress
|
|
(16,993)
|
|
|
(8,214)
|
Change in accounts
payable and deposits on
mine
|
|
|
|
|
equipment and
material
|
|
1,353
|
|
|
(739)
|
Increase in restricted
cash
|
|
—
|
|
|
(6)
|
Net cash used in
investing activities
|
|
(15,640)
|
|
|
(9,032)
|
FINANCING
ACTIVITIES:
|
|
|
Principal payments on
debt
|
|
(2,824)
|
|
|
(5,679)
|
Proceeds from debt
agreements
|
|
—
|
|
|
20,000
|
Royal Gold loan
repayment
|
|
—
|
|
|
(20,000)
|
Exercise of
options
|
|
567
|
|
|
38
|
Net cash used in
financing activities
|
|
(2,257)
|
|
|
(5,641)
|
Decrease in cash and
cash equivalents
|
|
(15,714)
|
|
(4,352)
|
Cash and cash
equivalents, beginning of period
|
|
81,868
|
|
|
26,224
|
Cash and cash
equivalents, end of period
|
$
|
66,154
|
|
$
|
21,872
|
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: estimated gold
production, cash operating costs, All-in Sustaining Costs and
capital expenditures for 2019; the implementation of short-term
changes and redesigning the overall mine plan at Prestea; similar
operating performance at Prestea in the second half of 2019;
investing to accelerate our rate of development and definition
drilling at Wassa to achieve greater near-term mining flexibility
to counter grade variability by the end of 2019; capital
expenditures of $61.7 million in
2019; marginally lower production at Wassa in H2 2019; closing of
the Credit Facility in the third quarter of 2019; mining out of the
Prestea Open Pits in the third quarter of 2019; the continuation of
drilling at Wassa in the third quarter of 2019 and providing an
update of mineral resource and reserves for 2020 budgeting and
year-end mineral resource and reserve estimates; updating the
mineral resource models for Father Brown and determining whether
there is a viable underground mining project in the third quarter
of 2019; the exploration program for Prestea during the third
quarter of 2019. 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 severance charges), and accretion of
rehabilitation provision. For mine site all-in sustaining costs,
corporate general and administrative costs (excluding share-based
compensation expenses and severance charges) 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,
severance charges, loss/(gain) on change in asset retirement
obligations, and income tax expense. "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 June 30, 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 Resources and Reserves, Golden Star Resources, Wassa Gold Mine, Ghana" effective date December 31, 2018; and (ii) Prestea Underground -
"NI 43-101 Technical Report on Resources and Reserves, Golden Star
Resources, Bogoso/Prestea Gold Mine, Ghana" effective date December 31, 2017.
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.