TORONTO, July 29, 2015 /CNW/ - Golden Star today
reports its financial results for the quarter ended June 30, 2015 ("the second quarter" or "the
period"). All references to currency are to US dollars.
- Gold produced and sold during the second quarter was 55,132
ounces compared to 63,245 ounces in the prior quarter
- Revenue for the second quarter was $65.8
million compared to $76.5
million for the prior quarter
- Cost of sales before depreciation and amortization was
$78.7 million and cash operating cost
per ounce1 totaled $1,113
for the second quarter
- Cash used by operations for the second quarter was $2.7 million with a consolidated cash balance of
$21.4 million at period end
- Solid performance from Wassa open pit operations as improved
grade reduced cash operating costs per ounce
- Environmental permit received to develop Prestea's open pit
operations and mining subsequently commenced
- Bogoso operations continued to be impacted by fluctuating power
supply and refractory mining will now be curtailed earlier to focus
on higher margin Prestea development
- Operating plan updated in response to lower gold price and
guidance revised accordingly
- Financing arrangement for $150
million with Royal Gold, Inc.
and its wholly-owned subsidiary, successfully closed
1 See "Non-GAAP Financial Measures".
Sam Coetzer, President and CEO of
Golden Star, commented:
"Recent market dynamics combined with ongoing in-country
operating challenges have reaffirmed our commitment to our stated
strategy. That strategy remains to favour margin over ounces
and to pursue growth from low cost non-refractory ore
sources. In this context we have made two critical changes to
our near term operating plan. We have commenced open pit
mining at Prestea's surface deposits to deliver higher margin
ounces to the non-refractory plant at Bogoso. These will
replace lower margin production from tailings retreatment.
The suspension of the Bogoso refractory business in a
responsible manner will commence with immediate effect. The
result of these changes is a reduction in total ounces produced but
an increase in potential returns to shareholders as direct
operating costs are expected to reduce dramatically.
Our development projects have progressed well over the
quarter. With the closure of the financing transaction with
Royal Gold we can accelerate these
projects to deliver ounces in 2016. At Wassa construction of
the twin declines has started and the project is on schedule.
Ongoing operations at Wassa have not been impacted by the
project and production at this mine was improved in the
quarter. At Prestea underground we will shortly release the
findings of the Feasibility Study which I expect to show
improvements in capital efficiency. We remain on target to
transform this business to a lower cost gold producer by the end of
2016."
Golden Star management will
conduct a conference call and webcast tomorrow, July 30, 2015, to discuss these results at
10:00am EDT.
The quarterly results 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: 50609963
Webcast: www.gsr.com
A recording of the call will be available until August 5, 2015 by dialing:
Toll free: +1 888 390 0541
Toll: +1 416 764 8677
Replay passcode: 609963#
The webcast will also be available after the call at
www.gsr.com.
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. 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
Jun.
30,
|
|
Three
months
ended
Mar.
31,
|
|
|
|
2015
|
|
2015
|
|
SUMMARY OF
CONSOLIDATED FINANCIAL RESULTS
|
|
|
|
|
|
Wassa gold
sold
|
oz
|
24,829
|
|
23,194
|
|
Bogoso gold
sold
|
oz
|
30,303
|
|
40,051
|
|
Total gold
sold
|
oz
|
55,132
|
|
63,245
|
|
|
|
|
|
|
Average realized
price
|
$/oz
|
1,193
|
|
1,210
|
|
Cash operating cost
per ounce - combined1
|
$/oz
|
1,113
|
|
1,061
|
|
All-in sustaining
cost per ounce1
|
$/oz
|
1,302
|
|
1,239
|
|
|
|
|
|
|
Gold
revenues
|
$'000
|
65,796
|
|
76,519
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
78,738
|
|
72,203
|
|
Depreciation and
amortization
|
$'000
|
13,175
|
|
11,585
|
|
Mine operating
loss
|
$'000
|
(26,117)
|
|
(7,269)
|
|
General and
administrative expense
|
$'000
|
4,829
|
|
3,632
|
|
Loss on fair value of
5% Convertible Debentures
|
$'000
|
1,266
|
|
3,736
|
|
Impairment
charges
|
$'000
|
34,396
|
|
—
|
|
|
|
|
|
|
Adjusted net loss
attributable to shareholders
|
$'000
|
(15,979)
|
|
(8,955)
|
|
Net loss attributable
to shareholders
|
$'000
|
(61,503)
|
|
(13,127)
|
|
Net loss per share –
basic and diluted
|
$
|
(0.24)
|
|
(0.05)
|
|
|
|
|
|
|
Cash (used
in)/provided by operations
|
$'000
|
(2,664)
|
|
4,838
|
|
Cash used in
operations before working capital changes
|
$'000
|
(8,670)
|
|
(2,224)
|
|
Cash (used
in)/provided by operations per share – basic and diluted
|
$
|
(0.01)
|
|
0.02
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
12,754
|
|
12,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 See "Non-GAAP Financial
Measures".
Review of Financial Performance
Gold produced and sold in the period was 55,132 ounces compared
to 63,245 ounces in the prior quarter with weaker production from
the Bogoso refractory business. This reduced production was
the key driver of lower revenue for the second quarter of
$65.8 million.
Cost of sales before depreciation and amortization increased
from $72.2 million in the prior
quarter to $78.7 million in the
second quarter. This was primarily as a result of severance
charges of $13.0 million accrued at
Bogoso in preparation for the suspension of the refractory
operations. Mine operating expenses were $60.2 million for the second quarter reduced from
$69.2 million in the prior quarter
primarily as a result of fewer tonnes mined and milled at
Bogoso. Mine operating losses were $26.1 million compared to $7.3 million in the prior quarter.
Corporate general and administrative expenditures were
$4.8 million compared to $3.6 million in the prior quarter as non-cash
expenses of $1.0 million relating to
share-based compensation were accrued in the quarter.
In line with the decision to suspend the refractory business at
Bogoso and in recognition of the recent decline in the gold price,
impairment charges of $34.4 million
was taken at the end of the quarter. The charge was comprised
of $8.7 million on mining interests,
$12.9 million on materials and
supplies inventory and $12.8 million
on refractory ore inventory. After this impairment and
severance costs at Bogoso of $13.0
million, the adjusted net loss attributable to Golden Star shareholders for the second quarter
was $16.0 million.
Cash used in operations before changes in working capital for
the second quarter was $8.7 million
and capital expenditures for the second quarter totaled
$12.8 million. Further capital
expenditure of $50 million is
expected for the year on the Wassa and Prestea mines.
The consolidated cash balance was $21.4
million at June 30, 2015 after
the drawdown of $15.0 million on the
Ecobank loan II in late June 2015. Subsequent to period end,
a $20.0 million loan from
Royal Gold was received and the
$40 million in an initial upfront
payment on the stream from Royal
Gold's subsidiary is expected tomorrow July 30, 2015. These funds will be applied
to the retirement of $38.0 million in
debt outstanding on the Ecobank I loan.
Review of Operational Performance
Wassa Operations
|
|
Three
months
ended
Jun.
30,
|
|
Three
months
ended
Mar.
31,
|
|
|
2015
|
|
2015
|
WASSA FINANCIAL
RESULTS
|
|
|
|
|
|
Revenue
|
$'000
|
29,615
|
|
28,112
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
24,412
|
|
24,819
|
|
Severance
charges
|
$'000
|
322
|
|
481
|
|
Royalties
|
$'000
|
1,483
|
|
1,406
|
|
Operating costs
(to)/from metals inventory
|
$'000
|
(1,621)
|
|
1,144
|
|
Inventory net
realizable value adjustment
|
$'000
|
721
|
|
803
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
25,317
|
|
28,653
|
|
Depreciation and
amortization
|
$'000
|
2,841
|
|
3,900
|
|
Mine operating
margin/(loss)
|
$'000
|
1,457
|
|
(4,441)
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
6,979
|
|
10,426
|
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
|
|
Ore mined
|
t
|
753,883
|
|
560,151
|
|
Waste
mined
|
t
|
2,688,452
|
|
2,361,781
|
|
Ore
processed
|
t
|
609,076
|
|
630,720
|
|
Grade
processed
|
g/t
|
1.36
|
|
1.20
|
|
Recovery
|
%
|
94.1
|
|
92.6
|
|
Gold sales
|
oz
|
24,829
|
|
23,194
|
|
Cash operating cost
per ounce1
|
$/oz
|
918
|
|
1,119
|
1 See "Non-GAAP Financial Measures".
Ore tonnes mined in the second quarter increased 35% from the
prior quarter as mining transitioned back into the Main pit from
the Starter pit where operations were focused in the first
quarter. Grade mined and processed increased as expected with
this shift to a higher grade zone. Stripping increased in
line with the forecast stripping ratio of approximately 4:1 for
2015.
Ore processed in the quarter declined marginally from the prior
quarter with a crusher failure in June that resulted in a number of
days of plant downtime. However as a result of the higher
grade, gold produced and sold at Wassa in the quarter increased to
24,829 ounces from 23,194 ounces in the prior quarter.
Mine operating expenses declined marginally with increased
mining efficiencies in the larger Main pit and fewer tonnes
processed. However cash operating costs per ounce reduced
considerably to $918 as a result of
the combination of lower expenses and improved grade.
During the quarter, $2.8 million
of capital was invested in the expansion of the tailings storage
facility and improvements to the processing plant at Wassa.
Wassa open pit operations are performing satisfactorily with
48,023 ounces produced in 2015. Expectations remain that the
mine will perform in line with original guidance. In July
Wassa achieved 10 million lost time injury free hours and has had
no medically treated injury recorded for over a year.
With solid production year to date and good progress on its
development projects, Wassa is expected to continue to perform for
the remainder of 2015. Operational and costs expectations
have been refined for the full year with production of 110,000 –
115, 000 ounces at a cash operating cost of $860 – 990 per ounce expected.
Bogoso Operations
Refractory mining in the second quarter was exclusively from the
Chujah pit which is approaching the end of its mine life.
Accordingly tonnes mined declined in line with the mine plan and
stockpiles were reduced with more tonnes processed than
mined. Approximately three quarters of Bogoso's mining fleet
at the start of the year has now been redeployed to Wassa.
The remaining ore at Chujah is being mined by contractors.
Tonnes processed declined from the prior quarter.
Continued voltage fluctuations in the power supply over the quarter
not only impacted the plant's ability to run at full capacity but
also caused extensive damage to the milling circuit. Repairs
to this circuit further reduced the plant's availability over the
quarter. Grade mined and processed in the quarter was also
below expectations.
Bogoso gold production and sales totaled 30,303 ounces in the
second quarter compared to 40,051 ounces in the prior quarter and
which combined with the lower realized gold price resulted in a
decline in revenue to $36.2
million.
|
|
Three
months
ended
Jun.
30,
|
|
Three
months
ended
Mar.
31,
|
|
|
2015
|
|
2015
|
BOGOSO FINANCIAL
RESULTS
|
|
|
|
|
|
Revenue
|
$'000
|
36,181
|
|
48,407
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
35,835
|
|
43,943
|
|
Severance
charges
|
$'000
|
13,038
|
|
3
|
|
Royalties
|
$'000
|
1,810
|
|
2,422
|
|
Operating costs from/
(to) metals inventory
|
$'000
|
2,738
|
|
(2,818)
|
|
Cost of sales
excluding depreciation and amortization
|
$'000
|
53,421
|
|
43,550
|
|
Depreciation and
amortization
|
$'000
|
10,334
|
|
7,685
|
|
Mine operating
loss
|
$'000
|
(27,574)
|
|
(2,828)
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
5,775
|
|
2,356
|
|
|
|
|
|
BOGOSO OPERATING
RESULTS
|
|
|
|
|
|
Ore mined
refractory
|
t
|
427,808
|
|
741,992
|
|
Waste
mined
|
t
|
664,036
|
|
1,439,321
|
|
Refractory ore
processed
|
t
|
513,550
|
|
571,806
|
|
Refractory ore
grade
|
g/t
|
2.06
|
|
2.59
|
|
Gold recovery –
refractory ore
|
%
|
68.1
|
|
70.6
|
|
Non-refractory ore
processed
|
t
|
380,452
|
|
421,566
|
|
Non-refractory ore
grade
|
g/t
|
0.87
|
|
0.92
|
|
Gold recovery -
non-refractory ore
|
%
|
43.7
|
|
41.9
|
|
Gold sold
refractory
|
oz
|
25,702
|
|
34,589
|
|
Gold sold
non-refractory
|
oz
|
4,601
|
|
5,462
|
|
Gold sales
(total)
|
oz
|
30,303
|
|
40,051
|
|
Cash operating cost
per ounce1
|
$/oz
|
1,273
|
|
1,027
|
1 See "Non-GAAP Financial Measures".
Tailings retreatment continued in the quarter at a slower pace
as the anticipated seasonal impact of rainfall limited hydraulic
mining. For the remainder of 2015, tailings retreatment
activities will be reduced to provide processing capacity in the
non-refractory plant for Prestea South ore.
In the second quarter Bogoso's mine operating expenses were
$35.8 million, a notable reduction
from the prior quarter. In addition to these expenses,
$13 million was accrued in
anticipation of severance payments to Bogoso staff in anticipation
of the suspension of the refractory business.
Primarily as a result of lower tonnes processed at lower grades,
cash operating cost per ounce totaled $1,273 for the second quarter, compared to
$1,027 per ounce in the prior
quarter.
Although significant cost and complexity was anticipated in the
suspension of Bogoso's refractory business, expectations were that
production in the second quarter would be far higher.
Significant management time and maintenance capital will be
required to ensure that the remaining ore is mined and processed
profitably. This situation combined with the recent decline
in gold price has led management to conclude that an immediate
suspension of the refractory operation is best to preserve
shareholder value. With production now expected from Prestea
open pits in the third quarter, the guidance for the remainder of
the year has been revised down from 75,000 – 85,000 ounces to
20,000 – 25,000 ounces bringing full year production from Bogoso to
between 95,000 and 100,000 ounces at a cash cost of between
$1,065 - 1,150 per ounce.
Capital expenditures at Bogoso were negligible in the second
quarter.
Review of Development Projects
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 were announced and
the decision to progress with the construction of the underground
mine was affirmed. The underground mine will operate in
conjunction with the existing open pit mine and the primary access
will be a twin decline from the Wassa Main pit.
Infrastructure preparations for the exploration decline
progressed well during the second quarter of 2015. The
following is a summary of the major recent advances:
- Mining equipment has arrived on site;
- The installation of the electrical infrastructure, including
4MVA generator capacity, is progressing well;
- The first blast for the development of the decline took place
in July 2015 and development of the
decline is ongoing; and
- The construction of support infrastructure is on target.
It is anticipated that the stoping will commence late in the
first quarter of 2016 with first gold from underground expected in
the second quarter 2016.
Capital expenditures of $3.4
million on the underground development in the quarter
included support and electrical infrastructure construction and
installation and the procurement of mobile mining equipment.
Aprroximately$10 million in capital expenditure is expected at
Wassa underground for the remainder of the year.
Prestea Mine
Prestea mine consists of an underground mine that has been in
existence for over 100 years along with adjacent surface deposits.
The mine is located 16 km south of the Bogoso mine and
processing plants in the town of Prestea. The underground
mine is currently on care and maintenance. A number of high
grade surface deposits exist to the south of the underground mine
that have historically been exploited by artisanal miners.
There are associated support facilities for both these
operations.
The surface deposits are host to 122,000 ounces of
non-refractory Mineral Reserves at an average grade of 2.24 g/t
Au. The environmental permit required to commence mining was
issued by the Environmental Protection Agency in June 2015 after extensive impact assessment
studies and local community consultations were undertaken.
Mining of these surface operations began early in the third quarter
and this material will be processed at the Bogoso non-refractory
plant where tailings retreatment has been ongoing of late.
Prestea South production is included in the guidance for Bogoso for
the remainder of 2015 and is expected to contribute meaningfully in
the last quarter of the year.
The preliminary economic assessment ("PEA") on the development
of the Prestea underground mine was completed and published on
SEDAR in 2014. The PEA, which is based on development of a
non-mechanized mining operation, indicated a post-tax IRR of 72%
and net present value of $121 million
at a $1,200 per ounce gold
price. Cash operating costs of $370 per ounce and all-in sustaining costs of
$518 per ounce were estimated over
the life of mine.
The Feasibility Study to confirm this assessment is ongoing and
work is progressing well with opportunities for improved capital
efficiency recently identified. Results of the study are
expected to be published this quarter. The Company plans to
bring Prestea underground mine into production by 2016 pending the
completion of the study and receipt of environmental permits.
During the second quarter of 2015, the Company incurred capital
expenditures totaling $5.5 million at
Prestea. The Company plans to spend a further $20 million on capital at Prestea in 2015.
Outlook
Bogoso refractory operations will be discontinued during the
third quarter to preserve shareholder value. All focus will
be on bringing Prestea South into production and continuing the
infrastructure upgrade at Prestea Underground to ensure production
in 2016 is achieved. As a result full year consolidated
production is now expected to be 205,000 – 215,000 ounces at a cash
cost per ounce of $955 – 1,050.
The Board and management are confident that this transition is
critical to ensuring the optimal allocation of funds recently
raised and achieving the Company's strategy of transforming to a
low cost non-refractory producer by 2016.
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 June
30,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
65,796
|
|
$
|
79,567
|
|
Cost of sales
excluding depreciation and amortization
|
|
78,738
|
|
78,432
|
|
Depreciation and
amortization
|
|
13,175
|
|
5,182
|
Mine operating
loss
|
|
(26,117)
|
|
(4,047)
|
|
|
|
|
|
Other
expenses/(income)
|
|
|
|
|
|
|
Exploration
expense
|
|
325
|
|
182
|
|
General and
administrative
|
|
4,829
|
|
4,120
|
|
Finance expense,
net
|
|
2,104
|
|
894
|
|
Other
income
|
|
(49)
|
|
(143)
|
|
Loss/(Gain) on fair
value of 5% Convertible Debentures
|
|
1,266
|
|
(2,392)
|
|
Impairment
charges
|
|
34,396
|
|
—
|
Net
loss
|
|
$
|
(68,988)
|
|
$
|
(6,708)
|
Net loss attributable
to non-controlling interest
|
|
(7,485)
|
|
(1,555)
|
Net loss
attributable to Golden Star shareholders
|
|
$
|
(61,503)
|
|
$
|
(5,153)
|
|
|
|
|
|
Net loss per share
attributable to Golden Star shareholders
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.24)
|
|
$
|
(0.02)
|
Weighted average
shares outstanding-basic and diluted (millions)
|
|
259.5
|
|
259.4
|
|
|
|
|
GOLDEN STAR
RESOURCES LTD.
|
CONDENSED INTERIM
CONSOLIDATED STATEMENTS
|
OF COMPREHENSIVE
LOSS
|
(Stated in
thousands of U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
|
|
For the three
months
ended June
30,
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE LOSS
|
|
|
|
|
|
Net
loss
|
|
|
$
|
(68,988)
|
|
$
|
(6,708)
|
Comprehensive
loss
|
|
|
(68,988)
|
|
(6,708)
|
Comprehensive loss
attributable to non-controlling interest
|
|
|
(7,485)
|
|
(1,555)
|
Comprehensive loss
attributable to Golden Star shareholders
|
|
|
$
|
(61,503)
|
|
$
|
(5,153)
|
GOLDEN STAR
RESOURCES LTD.
|
CONDENSED INTERIM
CONSOLIDATED BALANCE SHEETS
|
(Stated in
thousands of U.S. dollars)
|
(Unaudited)
|
|
|
|
|
|
As
of
June
30,
|
|
As
of
December
31,
|
|
|
2015
|
|
2014
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
21,448
|
|
$
|
39,352
|
|
Accounts
receivable
|
10,208
|
|
14,832
|
|
Inventories
|
27,586
|
|
54,279
|
|
Prepaids and
other
|
5,618
|
|
4,767
|
|
Total Current
Assets
|
64,860
|
|
113,230
|
Restricted
cash
|
2,043
|
|
2,041
|
Mining
interests
|
132,414
|
|
142,782
|
|
Total
Assets
|
$
|
199,317
|
|
$
|
258,053
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
124,971
|
|
$
|
123,451
|
|
Current portion of
rehabilitation provisions
|
7,087
|
|
4,562
|
|
Current portion of
long term debt
|
19,111
|
|
17,181
|
|
Total Current
Liabilities
|
151,169
|
|
145,194
|
Long term
debt
|
108,024
|
|
85,798
|
Rehabilitation
provisions
|
77,537
|
|
81,254
|
|
Total
Liabilities
|
336,730
|
|
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
|
32,413
|
|
31,532
|
Deficit
|
(800,253)
|
|
(725,623)
|
|
Total Golden Star
(Deficit)/ Equity
|
(72,574)
|
|
1,175
|
Non-controlling
interest
|
(64,839)
|
|
(55,368)
|
|
Total
Equity
|
(137,413)
|
|
(54,193)
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
199,317
|
|
$
|
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 June
30,
|
|
|
2015
|
2014
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
|
$
|
(68,988)
|
$
|
(6,708)
|
Reconciliation of
net income to net cash (used in)/ provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
13,185
|
5,213
|
|
Net realizable value
adjustment on inventory
|
|
721
|
—
|
|
Impairment
charges
|
|
34,396
|
—
|
|
Accrued
severance
|
|
9,420
|
—
|
|
Loss on retirement of
asset
|
|
—
|
27
|
|
Share-based
compensation
|
|
1,530
|
430
|
|
Loss/ (gain) on fair
value of 5% Convertible Debentures
|
|
1,266
|
(2,392)
|
|
Accretion of other
long term liabilities
|
|
304
|
—
|
|
Accretion of
rehabilitation provisions
|
|
441
|
437
|
|
Amortization of
deferred financing fees
|
|
62
|
62
|
|
Reclamation
expenditures
|
|
(1,007)
|
(871)
|
|
Changes in working
capital
|
|
6,006
|
4,753
|
|
|
Net cash provided by/
(used in)operating activities
|
|
(2,664)
|
951
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Additions to mining
properties
|
|
(77)
|
(4,601)
|
|
Additions to plant
and equipment
|
|
(874)
|
—
|
|
Additions to
construction in progress
|
|
(11,131)
|
(1,671)
|
|
Capitalized
interest
|
|
(672)
|
—
|
|
Change in accounts
payable and deposits on mine equipment and material
|
|
2,063
|
(5,394)
|
|
|
Net cash used in
investing activities
|
|
(10,691)
|
(11,666)
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Principal payments on
debt
|
|
(4,379)
|
(3,695)
|
|
Proceeds from debt
agreements
|
|
15,000
|
—
|
|
|
Net cash provided by/
(used in) financing activities
|
|
10,621
|
(3,695)
|
|
|
Decrease in cash and
cash equivalents
|
|
(2,734)
|
(14,410)
|
|
Cash and cash
equivalents, beginning of period
|
|
24,182
|
57,822
|
|
Cash and cash
equivalents, end of period
|
|
$
|
21,448
|
$
|
43,412
|
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 for construction at Wassa;
timing for the suspension of the Bogoso refractory operations, the
timing for completion of the Feasibility Study at Prestea; gold
production and cash operating costs forecasts for 2015; the
Company's strategy of transforming its business to being a lower
cost non-refractory producer and the timing thereof; the timing for
first production from Wassa underground and Prestea underground;
capital expenditures at Wassa and Prestea underground and further
work required at Prestea underground.
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.