TORONTO, May 7, 2015 /PRNewswire/ - Golden Star today reports its financial results
for the quarter ended March 31, 2015
("the first quarter" or "the period") and provides an update on its
development projects. All references to currency are to US
dollars.
- Gold produced and sold during the first quarter totalled 63,245
ounces compared to 72,085 ounces in the prior quarter with fewer
tonnes at lower grade processed
- Revenue for the first quarter was $76.5
million compared to $86.6
million for the prior quarter
- Cost of sales before depreciation and amortization was
$72.2 million and cash operating cost
per ounce1 totalled $1,061
for the first quarter
- Cash used by operations before working capital changes for the
first quarter totalled $2.2 million
with a consolidated cash balance of $24
million at period end
- Wassa Feasibility Study confirmed strong returns on development
of underground mine
- Wassa pre-construction preparation on schedule and below
budget
- Prestea underground rehabilitation work ongoing, significant
progress permitting Prestea south and expectations are that mining
will commence in late 2015
- Financing arrangement entered into with Royal Gold, Inc. and
its wholly-owned subsidiary for a $20
million term loan and $130
million stream transaction
1 See "Non GAAP Financial
Measures".
Sam Coetzer, President and CEO of
Golden Star, commented:
"Mining and processing operations in the first quarter were
largely in line with our mine plans. We have invested in
maintenance and pit preparations to ensure that production and
development operations can progress over the remainder of the
year. Average grade and tonnes processed will increase
through the year and we anticipate achieving our guidance at year
end. Both our development projects were advanced in the
quarter. Now that we have secured the necessary funding to
advance these projects, we look forward to the lower operating cost
profile that they are expected to deliver."
The Company has today announced the details of its financing
arrangement with Royal Gold, Inc. ("RGI") and its wholly-owned
subsidiary RGLD Gold AG ("RGLD" and, together with RGI, "Royal
Gold"). Please take note of this announcement titled
"Golden Star Announces $150
million Financing with Royal Gold, Inc to advance Wassa and
Prestea Underground Mines" released on SEDAR and Edgar this
morning.
Golden Star management will
conduct a conference call and webcast today, May 7, 2015, to discuss these results as well as
the financing agreement with Royal Gold at 10:00am EDT.
The call can be accessed by telephone or by webcast as
follows:
Participants - toll free: +1 888
390 0605
Participants - toll: +1 416 764
8609
Conference ID (all numbers):
25836040
Webcast: www.gsr.com
A recording of the conference call will be available until
May 14, 2015 by dialing:
Toll free: +1 888 390 0561
Toll: +1 416 764 8668
Replay passcode: 836040#
The webcast will also be available after the call at
www.gsr.com.
The Company's Annual General and Special Meeting of the
Shareholders will be held today, May
7th 2015, at 1:30pm EDT at the
St. Andrews Club, 27th Floor of 150 King Street West, Toronto.
Company Profile:
Golden Star Resources (NYSE MKT: GSS; TSX: GSC; GSE: GSR)
("Golden Star" or the "Company") is an established gold mining
company that holds a 90% interest in the Wassa, Prestea and Bogoso
gold mines in Ghana. In 2014, Golden
Star produced 261,000 ounces of gold and is expected to
produce 250,000 – 275,000 ounces in 2015. The Company is
financed to pursue brownfield development projects at its Wassa and
Prestea mines which are expected to transform these mines into
lower cost producers from 2016 onwards. As such, Golden Star offers investors leveraged exposure
to the gold price in a stable African mining jurisdiction with
significant development upside potential.
Summary of Consolidated Operational and Financial
Results:
|
|
Three
months
ended
Mar. 31,
|
|
Three
months
ended
Dec. 31,
|
|
|
2015
|
|
2014
|
SUMMARY OF
CONSOLIDATED FINANCIAL RESULTS
|
|
|
|
|
Wassa gold
sold
|
oz
|
23,194
|
|
25,831
|
Bogoso gold
sold
|
oz
|
40,051
|
|
46,254
|
Total gold
sold
|
oz
|
63,245
|
|
72,085
|
|
|
|
|
|
Average realized
price
|
$/oz
|
1,210
|
|
1,201
|
Cash operating cost
per ounce - combined1
|
$/oz
|
1,061
|
|
919
|
All-in sustaining
cost per ounce1
|
$/oz
|
1,239
|
|
1,059
|
|
|
|
|
|
Gold
revenues
|
$'000
|
76,519
|
|
86,586
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
72,203
|
|
71,410
|
Depreciation and
amortization
|
$'000
|
11,585
|
|
8,150
|
Mine operating
(loss)/margin
|
$'000
|
(7,269)
|
|
7,026
|
General and
administrative expense
|
$'000
|
3,632
|
|
2,819
|
Loss/(gain) on fair
value of 5% of Convertible Debentures
|
$'000
|
3,736
|
|
(1,501)
|
Income tax
recovery
|
$'000
|
—
|
|
(254)
|
|
|
|
|
|
Adjusted net
(loss)/income attributable to shareholders
|
$'000
|
(8,955)
|
|
8,825
|
Net loss attributable
to shareholders
|
$'000
|
(13,127)
|
|
(48,155)
|
Net loss per share –
basic and diluted
|
$
|
(0.05)
|
|
(0.19)
|
|
|
|
|
|
Cash flow provided by
operations
|
$'000
|
4,838
|
|
4,316
|
Cash (used
in)/provided by operations before working capital
changes
|
$'000
|
(2,224)
|
|
11,682
|
Cash provided by
operations per share – basic and diluted
|
$
|
0.02
|
|
0.03
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
12,782
|
|
9,219
|
|
|
|
|
|
|
1 See
"Non-GAAP Financial Measures".
|
Review of Financial Performance
Gold produced and sold in the period was 63,245 ounces, compared
to 72,085 ounces in the fourth quarter 2014 as total ore tonnes and
grade processed declined at both operations.
Revenue for the first quarter 2015 was $76.5 million, with an average realized gold
price for the quarter of $1,210.
Cost of sales before depreciation and amortization increased
marginally from $71.4 million in the
fourth quarter 2014 to $72.2 million
in the first quarter 2015. Despite a significantly lower
strip ratio at both mines as well as lower tonnes processed, costs
increased with higher power costs from diesel powered generators
and higher mining costs in the deeper Chujah and Bogoso North pits
as well as with scheduled maintenance. As a result, mine
operating losses were $7.3 million
compared to a margin of $7.0 million
in the prior quarter.
Cash used in operations before changes in working capital for
the first quarter was $2.2 million
compared to $11.7 million provided by
operations in the prior quarter.
Consolidated cash operating costs per ounce were $1,061 per ounce, an increase from $919 per ounce in the fourth quarter. These
higher costs per ounce are primarily as a result of higher mining
costs, lower head grade and higher power costs in the
quarter.
Corporate general and administrative expenditures were
$3.6 million compared to $2.8 million in the prior quarter with an
increase in salaries and benefit costs as well as higher legal
fees.
The adjusted net loss attributable to Golden Star shareholders for the first quarter
was $9.0 million. Depreciation
and amortization also increased as a result of the reduced Mineral
Reserve base over which assets are amortized.
Capital expenditures for the first quarter totalled $12.8 million of the total capital expenditure of
$72 million that is now expected for
the year. This increase in capital expenditure is as a result
of the Company's intention and ability to bring Prestea into
production by 2016.
The consolidated cash balance was $24
million at March 31,
2015. As a result of the financing agreement entered into
with Royal Gold Inc, the cash balance is expected to be
supplemented with the first draw down of the advance payment of
$55 million in the second quarter of
2015 as well as the draw down of the $20
million term loan. After the retirement of the
outstanding Ecobank I loan facility in the principal amount of
$38 million, a further $25 million remains available for drawdown on the
existing Ecobank II loan facility.
Review of Operational Performance
Wassa Operations
|
|
Three months
ended
Mar. 31,
|
|
Three months
ended
Dec. 31,
|
|
|
2015
|
|
2014
|
WASSA FINANCIAL
RESULTS
|
|
|
|
|
|
Revenue
|
$'000
|
28,112
|
|
30,979
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
25,300
|
|
26,559
|
|
Royalties
|
$'000
|
1,406
|
|
1,550
|
|
Operating costs from/
(to) metals inventory
|
$'000
|
1,947
|
|
(3,107)
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
28,653
|
|
25,002
|
|
Depreciation and
amortization
|
$'000
|
3,900
|
|
4,439
|
|
Mine operating
(loss)/ margin
|
$'000
|
(4,441)
|
|
1,538
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
10,426
|
|
5,941
|
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
|
|
Ore mined
|
t
|
560,151
|
|
653,061
|
|
Waste
mined
|
t
|
2,361,781
|
|
2,830,078
|
|
Ore
processed
|
t
|
630,720
|
|
651,462
|
|
Grade
processed
|
g/t
|
1.20
|
|
1.32
|
|
Recovery
|
%
|
92.6
|
|
93.4
|
|
Gold sales
|
oz
|
23,194
|
|
25,831
|
|
Cash operating cost
per ounce1
|
$/oz
|
1,119
|
|
908
|
1 See
"Non-GAAP Financial Measures".
|
Ore tonnes mined in the first quarter decreased 14% from the
prior quarter as mining early in the quarter took place mainly in
the Starter Pit. This lower grade area of the pit is the
location of the exploration decline. Mining in the first
quarter was focused here to prepare the pit for the construction of
the exploration decline. Completing the Starter Pit in the
first quarter allows mining for the remainder of the year to focus
on the higher grade B-Shoot area. Lower grade in the first
quarter was as a direct consequence of this mine plan.
The strip ratio in the first quarter was 4.2:1, marginally lower
than in the fourth quarter. Overall the strip ratio is
expected to be lower in 2015 than in 2014.
Due to nationwide power shortages, load shedding continued into
the first quarter of 2015. Wassa is receiving approximately
66% of its normal power load. However scheduled maintenance
planning has resulted in only 3% reduction in ore processed.
The generators at Wassa are being run on an ongoing basis to feed
power into the plant.
Grade processed declined to 1.2 g/t Au, as mining was in the
lower grade Starter Pit area and ore feed was supplemented from
lower grade stockpiles. Grade is expected to increase in the
second quarter of 2015 and again in the second half of 2015 as
mining shifts to the B Shoot area of the Main Pit.
As a result, gold produced and sold at Wassa in the quarter
declined to 23,194 ounces from 25,831 ounces in the prior
quarter.
Mine operating expenses reduced as a result of fewer tonnes
mined and processed, however cash operating costs per ounce
increased from $908 to $1,119 primarily as a result of lower grade and
ore tonnes processed, mining inefficiencies in the tightly
constrained Starter Pit and higher fuel costs associated with the
running of generators at Wassa.
Capital expenditures totalled $10.4
million, of which $5.8 million
was spent on mobile fleet and electrical infrastructure for
underground development. A further $1.5 million was spent in the construction of
project offices, a new thickener for the processing plant and an
extension of the existing tailings facility.
Wassa Underground
Drilling below the Wassa main pit since late 2011 was successful
in increasing the Wassa Mineral Resource. In March 2015 the results of a Feasibility Study on
the economic viability of an underground mine operating in
conjunction with the existing open pit mine were announced.
The study was based on an updated mineral resource model that
estimates total Measured and Indicated Mineral Resources as of
December 31, 2014 of 3.5 million
ounces at average grade of 2.21 g/t Au inclusive of Mineral
Reserves. Wassa underground Mineral Reserves were estimated
at 745,000 ounces of gold at 4.26 g/t Au and open pit Mineral
Reserves of 834,000 ounces of gold at 1.39 g/t Au. Inferred
Mineral Resources as of December 31,
2014 were 1.4 million ounces at 3.79 g/t Au, which were not
considered for the purposes of the Feasibility Study.
For additional information, including a breakdown of Wassa's
Mineral Reserves and Mineral Resources, see Golden Star's press release titled "Golden Star
Announces Wassa Mine Feasibility Study Results" dated March 26, 2015.
The study demonstrated an internal rate of return of 83% and a
net present value, assuming a 5% discount rate, of $176 million for the Wassa Mine.
Pre-production incremental capital expenditure for Wassa
underground is estimated at $39
million with first production expected early 2016 and
commercial production in July 2016. Cash operating costs of
$780 per ounce and all-in sustaining
costs of $938 per ounce were
estimated for combined Wassa operation over the life of mine, which
is expected to extend to 2024.
Wassa underground development is progressing well with the
senior management team now hired. All equipment, including
backup power generators and the underground mining fleet, has been
ordered and is either in transit or on site. The platform for
the exploration decline portal is complete and decline development
is expected to commence in July 2015. The necessary permits
to start construction were received in early 2015. Mining in
the Wassa open pit will not be impacted by this construction.
Of the total budget for 2015 of $28
million, $7.3 million has been
spent to date.
Bogoso Operations
|
|
Three months
ended
Mar. 31,
|
|
Three months
ended
Dec. 31,
|
|
|
2015
|
|
2014
|
BOGOSO FINANCIAL
RESULTS
|
|
|
|
|
|
Revenue
|
$'000
|
48,407
|
|
55,607
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
43,946
|
|
44,362
|
|
Royalties
|
$'000
|
2,422
|
|
2,782
|
|
Operating costs to
metals inventory
|
$'000
|
(2,818)
|
|
(736)
|
|
Cost of sales
excluding depreciation and
amortization
|
$'000
|
43,550
|
|
46,408
|
|
Depreciation and
amortization
|
$'000
|
7,685
|
|
3,711
|
|
Mine operating
(loss)/ margin
|
$'000
|
(2,828)
|
|
5,488
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
2,356
|
|
3,278
|
|
|
|
|
|
BOGOSO OPERATING
RESULTS
|
|
|
|
|
|
Ore mined
refractory
|
t
|
741,992
|
|
729,921
|
|
Waste
mined
|
t
|
1,439,321
|
|
1,694,068
|
|
Refractory ore
processed
|
t
|
571,806
|
|
665,123
|
|
Refractory ore
grade
|
g/t
|
2.59
|
|
2.73
|
|
Gold recovery –
refractory ore
|
%
|
70.6
|
|
72.2
|
|
Non-refractory ore
processed
|
t
|
421,566
|
|
331,769
|
|
Non-refractory ore
grade
|
g/t
|
0.92
|
|
1.02
|
|
Gold recovery -
non-refractory ore
|
%
|
41.9
|
|
39.4
|
|
Gold sold
refractory
|
oz
|
34,589
|
|
41,968
|
|
Gold sold
non-refractory
|
oz
|
5,462
|
|
4,286
|
|
Gold sales
(total)
|
oz
|
40,051
|
|
46,254
|
|
Cash operating cost
per ounce1
|
$/oz
|
1,027
|
|
926
|
1 See "Non-GAAP Financial
Measures".
|
Refractory ore mined was in line with the previous quarter and
the waste mined continues to decline as these pits reach the end of
their life. Towards the end of the quarter the Bogoso North
pit was mined out and mining is now exclusively from the Chujah
Pit. The strip ratio is expected to be below 2:1 in the
second and third quarters of 2015. In the fourth quarter
2015, refractory mining will be complete but processing activities
will continue with stockpiled ore.
Tonnes processed declined from the fourth quarter 2015 as major
planned maintenance of the process facility was
completed. This maintenance in the first quarter allows
for improved throughput for the remainder of the year.
Fluctuations in voltage on the main power line into Bogoso caused a
failure of an electrical switch gear resulting in unplanned down
time. Gridco, the Ghanaian power distribution authorities,
have repaired the line.
Bogoso gold production and sales totalled 40,051 ounces compared
to 46,254 ounces in the fourth quarter and revenue accordingly
declined to $48.4 million.
Tailings retreatment ramped up in the quarter after a new high
pressure surface pump was installed in the fourth quarter
2014. Tonnes retreated increased 27% as did ounces
recovered.
In the first quarter 2015 Bogoso's mine operating expenses were
$43.9 million which was in line with
the prior quarter. While processing costs were lower,
maintenance costs in the quarter were higher. Ongoing costs
are being reduced with the retrenchment of staff at Bogoso in
anticipation of the closure of the refractory business. Head count
at Bogoso has now been reduced by 15% over the last twelve months
and a further 25% reduction is expected in 2015.
Cash operating cost per ounce totalled $1,027 for the first quarter of 2015, compared to
$926 per ounce in the fourth quarter
of 2014.
Capital expenditures at the Bogoso Mine were negligible in the
first quarter.
Prestea Mine
Prestea Mine consists of an underground mine that has been in
existence for over 100 years along with adjacent surface
deposits. The underground mine is currently being
rehabilitated and the high grade surface deposits to the south have
to date been exploited by artisanal miners. Subsequent to the
release of a positive Preliminary Economic Assessment ("PEA") on
the development of Prestea underground mine, Golden Star plans to commence mining at both
operations by 2016.
The PEA contemplated a 500 tonnes per day underground mining
operation extracting high grade ore from the West Reef section of
Prestea underground. High grade ore will be transported along
the existing dedicated haul road to the Bogoso plant and a new 500
tonnes per day gravity-CIL plant will process the material.
Initial capital costs of the development were estimated at
$41 million.
In the first quarter detailed engineering and estimation work
for the Feasibility Study progressed well. The results of
this study are expected to be released in July 2015. Capital
expenditure in the quarter was $2.4
million, mostly on rehabilitation of the main levels on
which mining will take place. Power issues, as a result of
load shedding, have delayed shaft rehabilitation work.
In addition to the normal care and maintenance work carried out
on Prestea underground mine, the Central and Bondaye Shafts have
had extensive refurbishment over the last few years. Further
work required includes installation of new air compressors, a new
main ventilation fan, upgrading of the shaft winders and a pumping
system.
With the conclusion of the financing arrangement with Royal Gold
the development plans for Prestea underground are being
progressed. As such the capital expenditure estimates have
been revised from the prior amount of $13
million to $29 million for the full year.
The permitting process for Prestea surface pits is progressing
well and non-refractory ore production from these pits is expected
by the end of the year. The non-refractory plant at Bogoso
will continue to process tailings from the Bogoso tailings storage
facilities and will supplement that feed with oxide ores from the
surface pits.
Outlook
The Company remains focused on the execution of its strategy of
transforming Golden Star to being a
low cost producer. With the successful conclusion of the
Royal Gold fundraising, the Company is now adequately financed to
deliver on this strategy. The remainder of this year will be
dedicated to project management and construction at Wassa and
Prestea, the placing of refractory operations on to care and
maintenance as well as risk management and optimization at our
existing operations.
GOLDEN STAR
RESOURCES LTD.
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in
thousands of U.S. dollars except shares and per share data)
(Unaudited)
|
|
|
For the three
months
ended March 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
76,519
|
|
$
|
85,004
|
|
Cost of sales
excluding depreciation and amortization
|
|
72,203
|
|
84,296
|
|
Depreciation and
amortization
|
|
11,585
|
|
6,616
|
Mine operating
loss
|
|
(7,269)
|
|
(5,908)
|
|
|
|
|
|
Other
expenses/(income)
|
|
|
|
|
|
Exploration
expense
|
|
312
|
|
84
|
|
General and
administrative
|
|
3,632
|
|
5,706
|
|
Finance expense,
net
|
|
2,670
|
|
2,419
|
|
Other
income
|
|
(2,506)
|
|
(23)
|
|
Loss on fair value of
5% Convertible Debentures
|
|
3,736
|
|
10,174
|
Loss before
tax
|
|
(15,113)
|
|
(24,268)
|
|
Income tax
expense
|
|
—
|
|
85
|
Net
loss
|
|
$
|
(15,113)
|
|
$
|
(24,353)
|
Loss attributable to
non-controlling interest
|
|
(1,986)
|
|
(1,989)
|
Net loss
attributable to Golden Star shareholders
|
|
$
|
(13,127)
|
|
$
|
(22,364)
|
|
|
|
|
|
Net loss per share
attributable to Golden Star shareholders
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.05)
|
|
$
|
(0.09)
|
Weighted average
shares outstanding-basic and diluted (millions)
|
|
259.5
|
|
259.2
|
GOLDEN STAR
RESOURCES LTD.
CONDENSED INTERIM
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE LOSS
(Stated in
thousands of U.S. dollars)
(Unaudited)
|
|
|
|
For the three
months
ended March 31,
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE LOSS
|
|
|
|
|
|
Net
loss
|
|
|
$
|
(15,113)
|
|
$
|
(24,353)
|
Comprehensive
loss
|
|
|
(15,113)
|
|
(24,353)
|
Comprehensive loss
attributable to non-controlling interest
|
|
|
(1,986)
|
|
(1,989)
|
Comprehensive loss
attributable to Golden Star shareholders
|
|
|
$
|
(13,127)
|
|
$
|
(22,364)
|
GOLDEN STAR
RESOURCES LTD.
CONDENSED INTERIM
CONSOLIDATED BALANCE SHEETS
(Stated in
thousands of U.S. dollars)
(Unaudited)
|
|
|
As of
March 31,
|
|
As of
December 31,
|
|
|
|
2015
|
|
2014
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
24,182
|
|
$
|
39,352
|
|
Accounts
receivable
|
13,617
|
|
14,832
|
|
Inventories
|
55,304
|
|
54,279
|
|
Prepaids and
other
|
|
|
6,138
|
|
4,767
|
|
Total Current
Assets
|
99,241
|
|
113,230
|
Restricted
cash
|
2,041
|
|
2,041
|
Mining
interests
|
|
|
143,152
|
|
142,782
|
|
Total
Assets
|
|
$
|
244,434
|
|
$
|
258,053
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
109,137
|
|
$
|
123,451
|
|
Current portion of
rehabilitation provisions
|
5,096
|
|
4,562
|
|
Current portion of
long term debt
|
|
|
16,597
|
|
17,181
|
|
Total Current
Liabilities
|
130,830
|
|
145,194
|
Long term
debt
|
102,373
|
|
85,798
|
Rehabilitation
provisions
|
|
|
80,094
|
|
81,254
|
|
Total
Liabilities
|
|
|
313,297
|
|
312,246
|
|
|
|
|
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
|
695,266
|
|
695,266
|
Contributed
surplus
|
31,975
|
|
31,532
|
Deficit
|
|
|
(738,750)
|
|
(725,623)
|
|
Total Golden Star
(Deficit)/ Equity
|
(11,509)
|
|
1,175
|
Non-controlling
interest
|
|
|
(57,354)
|
|
(55,368)
|
|
Total
Equity
|
|
|
(68,863)
|
|
(54,193)
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
244,434
|
|
$
|
258,053
|
GOLDEN STAR
RESOURCES LTD.
CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in
thousands of U.S. dollars)
(Unaudited)
|
|
|
For the three
months
ended March 31,
|
|
|
2015
|
2014
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
|
|
$
|
(15,113)
|
|
$
|
(24,353)
|
Reconciliation of
net income to net cash (used in)/ provided
by operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
11,594
|
|
6,616
|
|
Loss on retirement of
asset
|
|
—
|
|
43
|
|
Share-based
compensation
|
|
529
|
|
1,438
|
|
Deferred income tax
recovery
|
|
—
|
|
85
|
|
(Gain)/ loss on fair
value of 5% Convertible Debentures
|
|
3,736
|
|
10,174
|
|
Gain on deferral of
other long term liabilities
|
|
(2,432)
|
|
—
|
|
Accretion of
rehabilitation provisions
|
|
440
|
|
436
|
|
Amortization of
deferred financing fees
|
|
62
|
|
62
|
|
Reclamation
expenditures
|
|
(1,066)
|
|
(667)
|
|
Other
|
|
26
|
|
—
|
|
Changes in working
capital
|
|
7,062
|
|
4,219
|
|
|
Net cash provided
by/(used in) operating activities
|
|
4,838
|
|
(1,947)
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Additions to mining
properties
|
|
(19)
|
|
(8,374)
|
|
Additions to plant
and equipment
|
|
—
|
|
(499)
|
|
Additions to
construction in progress
|
|
(12,444)
|
|
(3,339)
|
|
Capitalized
interest
|
|
(319)
|
|
—
|
|
Change in accounts
payable and deposits on mine equipment and
material
|
|
(2,878)
|
|
(1,915)
|
|
Other investing
activities
|
|
—
|
|
(5)
|
|
|
Net cash used in
investing activities
|
|
(15,660)
|
|
(14,132)
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Principal payments on
debt
|
|
(4,348)
|
|
(1,650)
|
|
Proceeds from debt
agreements
|
|
—
|
|
10,000
|
|
|
Net cash (used in)/
provided by financing activities
|
|
(4,348)
|
|
8,350
|
|
|
(Decrease)/ increase
in cash and cash equivalents
|
|
(15,170)
|
|
(7,729)
|
|
Cash and cash
equivalents, beginning of period
|
|
39,352
|
|
65,551
|
|
Cash and cash
equivalents, end of period
|
|
$
|
24,182
|
|
$
|
57,822
|
Non-GAAP Financial Measures
In this press release, we use the terms "cash operating cost per
ounce", "adjusted net loss attributable to Golden Star shareholders" and "all-in sustaining
cost per ounce". These should be considered as non-GAAP
financial measures as defined in applicable Canadian and
United States securities laws and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
"Cost of sales 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, 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.
"All-in sustaining costs" commences with cash operating costs
and then adds sustaining capital expenditures, corporate general
and administrative costs, mine site exploratory drilling and
greenfield evaluation costs and environmental rehabilitation
costs. 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.
"Cash operating cost per ounce" for a period is equal to "Cost
of sales excluding depreciation and amortization" for the period
less royalties and production taxes, minus the cash component of
metals inventory net realizable value adjustments and severance
charges divided by the number of ounces of gold sold during the
period. We use cash operating cost per ounce as a key
operating indicator. We monitor this measure monthly,
comparing each month's values to prior quarters' values to detect
trends that may indicate increases or decreases in operating
efficiencies. We provide this measure to investors to allow
them to also monitor operational efficiencies of the Company's
mines. We calculate this measure for both individual
operating units and on a consolidated basis. Since cash
operating costs do not incorporate revenues, changes in working
capital and non-operating cash costs, they are not necessarily
indicative of operating profit or cash flow from operations as
determined under International Financial Reporting Standards
("IFRS").
In order to indicate to stakeholders the Company's earnings
excluding the non-cash (gain)/loss on the fair value of the
Company's outstanding convertible debentures and non-cash
impairment charges, the Company calculates "adjusted net loss
attributable to Golden Star
shareholders" to supplement the condensed interim consolidated
financial statements.
Changes in numerous factors including, but not limited to, our
share price, risk free interest rates, gold prices, mining rates,
milling rates, ore grade, gold recovery, costs of labor,
consumables and mine site general and administrative activities can
cause these measures to increase or decrease. The Company
believes that these measures are similar to the measures of other
gold mining companies, but may not be comparable to similarly
titled measures in every instance.
In the current market environment for gold mining equities, many
investors and analysts are more focused on the ability of gold
mining companies to generate free cash flow from current
operations, and consequently the Company believes these measures
are useful non-IFRS operating metrics ("non-GAAP measures") and
supplement the IFRS disclosures made by the Company. These
measures are not representative of all of Golden Star's cash expenditures as they do not
include income tax payments or interest costs. There is
material limitations associated with the use of such non-GAAP
measures. Since these measures do not incorporate all
non-cash expense and income items, changes in working capital and
non-operating cash costs, they are not necessarily indicative of
operating profit or cash flow from operations as determined under
IFRS.
For additional information regarding the Non-GAAP 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 and nine months ended September 30,
2014 and the Company's Management Discussion and Analysis of
Financial Condition and Results of Operations for the Year Ended
December 31, 2013, available at
www.sedar.com.
Cautionary note regarding forward-looking information
This report contains "forward looking information" within the
meaning of applicable Canadian securities laws and "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995, concerning the business,
operations and financial performance and condition of Golden Star. Generally, forward-looking
information and statements can be identified by the use of
forward-looking terminology such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases (including negative or grammatical variations) or
statements that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotation thereof. Forward-looking information
and statements include, but are not limited to, information or
statements with respect to: the timing and budget for construction
at Wassa and the impact of construction on the open pit mine; the
timing for commencing mining at Prestea underground; payments to be
received pursuant to the Royal Gold financing; the timing for
completion of the Feasibility Study at Prestea;cash operating costs
and all-in sustaining costs at Wassa over the life of mine; gold
production forecast for 2015; the Company's strategy of
transforming its business to being a lower cost non-refractory
producer and the timing thereof; matters relating to the
Feasibility Study for Wassa, including estimated internal rate of
return and net present value of Wassa underground (including
assumed discount rates), the timing for first production from Wassa
underground and Prestea underground; the life of mine at Wassa
underground; capital expenditures at Wassa underground and Prestea
underground; further work required at Prestea underground;
permitting; and the processing non-refractory ore at the Bogoso
non-refractory plant.
Forward-looking information and statements are made based upon
certain assumptions and other important factors that, if untrue,
could cause the actual results, performances or achievements of
Golden Star to be materially
different from future results, performances or achievements
expressed or implied by such statements. Such statements and
information are based on numerous assumptions regarding present and
future business strategies and the environment in which
Golden Star will operate in the
future, including the price of gold, anticipated costs and ability
to achieve goals. Forward-looking information and statements
are subject to known and unknown risks, uncertainties and other
important factors that may cause the actual results, performance or
achievements of Golden Star to be
materially different from those expressed or implied by such
forward-looking information and statements, including but not
limited to: risks related to international operations, including
economic and political instability in foreign jurisdictions in
which Golden Star operates; risks
related to current global financial conditions; risks related to
joint venture operations; actual results of current exploration
activities; environmental risks; future prices of gold; possible
variations in Mineral Reserves, grade or recovery rates; mine
development and operating risks; accidents, labor disputes and
other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
development or construction activities and risks related to
indebtedness and the service of such indebtedness. Although
Golden Star has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information and statements, there may be other
factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking information and statements. Forward-looking
information and statements are made as of the date hereof and
accordingly are subject to change after such date.
Forward-looking information and statements are provided for the
purpose of providing information about management's current
expectations and plans and allowing investors and others to get a
better understanding of the Company's operating environment.
Golden Star does not undertake to
update any forward-looking information and statements that are
included in this news release except in accordance with applicable
securities laws.
Cautionary note to U.S. investors
This news release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ materially from the
requirements of United States
securities laws applicable to U.S. companies. The terms
"mineral reserve", "proven mineral reserve" and "probable mineral
reserve" are Canadian mining terms as defined in accordance with
National Instrument 43-101 - Standards of Disclosure for Mineral
Projects ("NI 43-101"). These definitions differ from the
definitions of the Securities and Exchange Commission (the "SEC")
set forth in Industry Guide 7 under the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Under
SEC Industry Guide 7 standards, mineralization may not be
classified as a "reserve" unless the determination has been made
that the mineralization could be economically and legally produced
or extracted at the time the reserve determination is made.
Among other things, all necessary permits would be required to be
in hand or issuance imminent in order to classify mineralized
material as reserves under the SEC standards. Under SEC
Industry Guide 7 standards, a "final" or "bankable" feasibility
study is required to report reserves, the three-year historical
average price is used in any reserve or cash flow analysis to
designate reserves and the primary environmental analysis or report
must be filed with the appropriate governmental authority.
In addition, the terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral
resource" are defined in and required to be disclosed by NI 43-101;
however, these terms are not defined terms under SEC Industry Guide
7 and are normally not permitted to be used in reports and
registration statements filed with the SEC. Investors are cautioned
not to assume that any part or all of mineral deposits in these
categories will ever be converted into reserves. "Inferred
mineral resources" have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. Investors are cautioned not to
assume that all or any part of an inferred mineral resource exists
or is economically or legally mineable. Disclosure of
"contained ounces" in a resource is permitted disclosure under
Canadian regulations; however, the SEC normally only permits
issuers to report mineralization that does not constitute
"reserves" by SEC Industry Guide 7 standards as in place tonnage
and grade without reference to unit measures.
For the above reasons, information contained in this news
release and the documents referenced herein containing descriptions
of our mineral deposits may not be comparable to similar
information made public by U.S. companies subject to the reporting
and disclosure requirements under the
United States federal securities laws and the rules and
regulations thereunder.
SOURCE Golden Star Resources Ltd.