TORONTO,
Nov. 2, 2016 /CNW/
- Golden Star Resources Ltd. (NYSE MKT: GSS; TSX: GSC; GSE: GSR)
("Golden Star" or the "Company") reports its financial and
operational results for the third quarter ended September 30, 2016.
Highlights:
- At the end of the third quarter of 2016, the Company
remains on track to achieve its consolidated 2016 full year
production, cash operating
cost1 and capital
expenditure guidance
- Gold production for the quarter of 44,974 ounces, in line
with expectations
- 22,290 ounces from the Wassa Gold Mine
("Wassa")
- 22,684 ounces from the Prestea Gold Mine ("Prestea"),
representing record quarterly production for the Prestea Open
Pits
- Consolidated cash operating cost1 for the
quarter of $964 per ounce
- $1,110 per ounce at
Wassa
- $835 per ounce at
Prestea
- All-in sustaining cost1 ("AISC") for the
quarter of $1,153 per
ounce
- Capital expenditures of $21.7
million during the quarter, bringing the total spent year to
date to $60.6 million, as the
development of the Wassa Underground Gold Mine ("Wassa
Underground") and the Prestea Underground Gold Mine ("Prestea
Underground") continued
- First stope has been blasted at Wassa Underground and
commercial production is on schedule for early 2017
- Underground mining contractor appointed for high grade
Prestea Underground - commercial production on schedule for
mid-2017
- Post-period end, mining lease received for the high grade
Mampon deposit, further extending the mine life of the surface
production from Prestea, subject to the environmental permit being
received
- 10,300 metres of stope definition drilling completed at
Wassa Underground – long term upside potential created
- Balance sheet strengthened through $34.5 million equity offering and $65 million placement of senior convertible notes
– debt maturity schedule is now better aligned to forecasted cash
flow
- Repayment in full of the remaining $22 million Ecobank Ghana Limited ("Ecobank")
loan
- Mine operating margin of $5.8
million, compared to a mine operating loss of $4.3 million in the third quarter of 2015 ("Q3
2015")
- Consolidated cash balance of $17.5
million, prior to the receipt of the $20 million scheduled advance payment on
October 3, 2016 from
RGLD Gold AG ("RGLD"), a subsidiary of Royal Gold, Inc., pursuant to the
gold purchase and sale agreement, as amended (the "Streaming
Agreement") with RGLD
Sam Coetzer,
President and Chief Executive Officer of Golden Star, commented:
"Strong progress continues to be made at both of our
underground development projects and it is exciting that by the
third quarter of next year, we expect to be producing from multiple
ore sources: both underground and surface deposits. This is
anticipated to transform the risk profile of the Company
significantly and deliver robust production growth and
substantially reduced costs. We expect to be in commercial
production at Wassa Underground in early 2017 and Prestea
Underground in mid-2017, which will complete our transformation
into a high grade, low cost, non-refractory gold producer. At
the end of the third quarter, we remain on track to achieve our
2016 full year guidance for production, cash operating cost per
ounce1 and capital expenditures."
SUMMARY OF CONSOLIDATED OPERATIONAL AND FINANCIAL
RESULTS
|
|
|
|
|
|
Three Months Ended
September 30,
|
OPERATING SUMMARY
|
|
2016
|
|
2015
|
Wassa Main Pit gold sold
|
oz
|
20,229
|
|
28,848
|
Wassa Underground gold sold
|
oz
|
2,202
|
|
—
|
Bogoso/Prestea gold sold
|
oz
|
22,930
|
|
23,050
|
Total gold sold
|
oz
|
45,361
|
|
51,898
|
Total gold produced
|
oz
|
44,974
|
|
51,898
|
Average realized gold price
|
$/oz
|
1,286
|
|
1,088
|
|
|
|
|
|
Cash operating cost per ounce –
Consolidated1
|
$/oz
|
964
|
|
988
|
Cash operating cost per ounce –
Wassa1
|
$/oz
|
1,110
|
|
770
|
Cash operating cost per ounce -
Bogoso/Prestea1
|
$/oz
|
835
|
|
1,261
|
All-in sustaining cost per ounce –
Consolidated1
|
$/oz
|
1,153
|
|
1,151
|
|
|
|
|
|
FINANCIAL SUMMARY
|
|
|
|
|
Gold revenues
|
$'000
|
55,511
|
|
56,452
|
Cost of sales excluding depreciation and
amortization
|
$'000
|
44,608
|
|
55,199
|
Depreciation and amortization
|
$'000
|
5,111
|
|
5,525
|
Mine operating margin/(loss)
|
$'000
|
5,792
|
|
(4,272)
|
General and administrative expense
|
$'000
|
9,370
|
|
3,299
|
Loss/(gain) on fair value of financial instruments,
net
|
$'000
|
5,784
|
|
(5,056)
|
Loss on repurchase of 5% Convertible Debentures,
net
|
$'000
|
12,048
|
|
—
|
|
|
|
|
|
Net loss attributable to Golden Star
shareholders
|
$'000
|
(23,110)
|
|
(6,832)
|
Adjusted net earnings/(loss) attributable to Golden
Star
shareholders1
|
$'000
|
1,148
|
|
(11,205)
|
Loss per share attributable to Golden Star
shareholders - basic
and diluted
|
$/share
|
(0.07)
|
|
(0.03)
|
Adjusted earnings/(loss) per share attributable to
Golden Star
shareholders - basic and diluted1
|
$/share
|
0.01
|
|
(0.04)
|
Cash provided by operations
|
$'000
|
20,964
|
|
45,341
|
Cash provided by operations before working capital
changes1
|
$'000
|
21,500
|
|
43,223
|
Cash provided by operations per share - basic and
diluted
|
$/share
|
0.06
|
|
0.17
|
Cash provided by operations before working capital
changes
per share - basic and diluted
|
$/share
|
0.07
|
|
0.15
|
|
|
|
|
|
Capital expenditures
|
$'000
|
21,656
|
|
17,789
|
|
|
|
|
|
Notes
|
1. See "Non-GAAP
Financial Measures" information on page 19
|
OPERATIONAL PERFORMANCE
Following the second quarter when substantial progress was
made with both underground development projects, the focus of the
third quarter of 2016 continued to be on advancing Wassa
Underground and Prestea Underground towards commercial
production.
The blasting of the first stope at Wassa Underground was
announced 10 days into the quarter, on July
10, 2016, and the mine remains on track to achieve
commercial production in early 2017. Five stopes are expected
to be mined during the fourth quarter of 2016 in the moderate grade
F Shoot, with production increasing in the first quarter of 2017
when Golden Star begins to access
the higher grade B Shoot.
The underground mining contractor was appointed for
Prestea Underground and the refurbishment work continues to advance
as planned. The first stope is expected to be blasted at
Prestea Underground in the second quarter of 2017, with commercial
production following shortly afterwards in mid-2017.
From an operational perspective, at the end of the third
quarter of 2016, Golden Star remains
on track to achieve its full year 2016 guidance in terms of
production, cash operating cost per ounce1i and capital
expenditures. During the quarter, 44,974 ounces of gold were
produced, in line with expectations. The Prestea Open Pits
delivered a record quarter, producing 22,684 ounces of gold, which
is the strongest result since the mine began non-refractory gold
production in the third quarter of 2015.
Golden Star's annual
production profile is impacted by seasonality, with the most robust
production results expected in the first and fourth quarters of the
year, when Ghana tends to be
driest. The second and third quarters of the year tend to
generate weaker production results due to the rainy season, which
impacts open pit operations. Additionally, the grade profile
in the Wassa Main Pit remains dependent on the horizon being mined
as grade increases at depth. However from mid-2017 when both
underground operations are expected to be in commercial production,
Golden Star anticipates that its
production profile will be less impacted by seasonality and
production will be at a more consistent rate throughout the
year.
The consolidated cash operating cost per ounce1
was $964, which was in line with
Golden Star's expectations for the
quarter. The AISC was $1,153
per ounce for the quarter. Costs are expected to decrease as
the Company continues its transition to non-refractory lower cost
production and moves towards the commencement of commercial
production at both high grade underground projects.
Wassa Gold Mine
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
WASSA FINANCIAL
RESULTS
|
|
|
|
|
|
Revenue
|
$'000
|
$
|
25,958
|
|
$
|
31,702
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
22,473
|
|
23,389
|
|
Severance
charges
|
$'000
|
—
|
|
1,013
|
|
Royalties
|
$'000
|
1,488
|
|
1,617
|
|
Operating costs to
metals inventory
|
$'000
|
(20)
|
|
(1,178)
|
|
Inventory net
realizable value adjustment
|
$'000
|
—
|
|
—
|
|
Cost of sales
excluding depreciation and
amortization
|
$'000
|
23,941
|
|
24,841
|
|
Depreciation and
amortization
|
$'000
|
3,464
|
|
3,713
|
|
Mine operating
(loss)/margin
|
$'000
|
$
|
(1,447)
|
|
$
|
3,148
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
9,699
|
|
8,506
|
|
|
|
|
|
WASSA OPERATING
RESULTS
|
|
|
|
|
|
Ore mined
|
t
|
607,577
|
|
728,046
|
|
Waste
mined
|
t
|
2,742,260
|
|
2,658,218
|
|
Ore
processed
|
t
|
699,006
|
|
635,332
|
|
Grade
processed
|
g/t
|
1.09
|
|
1.51
|
|
Recovery
|
%
|
93.4
|
|
92.9
|
|
Gold
produced
|
oz
|
22,290
|
|
28,848
|
|
Gold sold - Main
Pit
|
oz
|
20,229
|
|
28,848
|
|
Gold sold -
Underground
|
oz
|
2,202
|
|
—
|
|
Gold sold -
Total
|
oz
|
22,431
|
|
28,848
|
|
|
|
|
|
|
Cash operating cost
per ounce1
|
$/oz
|
1,110
|
|
770
|
|
|
|
|
|
|
Notes
|
1. See "Non-GAAP
Financial Measures" information on page 19
|
Wassa Operational Overview
Gold production from Wassa was 22,290 ounces for the third
quarter of 2016. During the quarter, Wassa Main Pit performed
in line with expectations, however on a nine monthly basis,
production from the mine was below budget. This is as a
result of the lower than expected head grade during the second
quarter of 2016, which can be partially attributed to a higher than
expected dilution during mining. Following the identification of
this issue, measures were put in place to reduce dilution, which
resulted in higher grade ore being processed from the open pit in
September 2016. Production in the fourth quarter of 2016 is
forecasted to be in line with expectations.
Golden Star anticipated
that it would be able to offset the lower than expected gold
production encountered at Wassa during the second quarter of 2016
by processing additional tonnes during the third quarter. Due
to the plant upgrade that was undertaken in the second quarter of
2016, throughput in the processing plant has increased by 10%
compared to Q3 2015. 699,006 tonnes of ore were processed
during the third quarter, which equates to approximately 7,766
tonnes per day ("tpd") or 2.8 million tonnes per annum ("Mtpa"),
which is above nameplate capacity. Although Golden Star did
achieve stronger processing rates, the Company was not able to
produce enough in Q3 2016 to offset the weaker performance in the
second quarter of 2016, as hoped.
Wassa reported a cash operating cost per ounce1
for the third quarter of 2016 of $1,110. This was in line with Golden Star's expectations given the average
head grade processed (1.09g/t) was also in line with expectations
due to the horizon of the pit being mined. These costs relate
solely to Wassa Main Pit as Wassa Underground is still in
pre-commercial production and therefore gold production and
operating costs were capitalized.
Capital expenditures at Wassa for the quarter were
$9.7 million, a 14% increase compared
to Q3 2015. The majority of this amount was development
capital, with $6.4 million relating
to Wassa Underground and $1.9 million
for the improvement of the tailings storage facility. The
remaining $1.3 million was sustaining
capital. Approximately $21.0
million has been spent on the development of Wassa
Underground year-to-date, including $2.1
million of capitalized interest. Golden Star now expects total capital
expenditures to be $34.0 million for
Wassa in 2016, with the remaining $10.0
million to be incurred during the fourth quarter.
As part of Wassa Underground's transition from
construction phase to production phase, two key changes were made
to the leadership team at the mine in early September.
Gary Chapman joined Golden Star as General Manager for Wassa and Chris Harmse joined as Wassa
Underground Mine Manager. A geologist by background, Gary was
General Manager for Acacia Mining plc's North Mara mine in
Tanzania prior to joining the
Company and prior to that he worked in Ghana for Gold Fields Limited. Chris has over
30 years' experience of underground mining and has worked on a
variety of continents for companies including Anglo American plc.
Wassa Underground Development
Wassa Underground commenced pre-commercial production in
early July 2016. The successful
blasting of the first stope delivered the first ore from the new
underground mine to the Wassa processing plant, where it was
blended with ore from Wassa Main Pit. Underground ore was
mined using longitudinal longhole stoping, although the primary
mining method that will be used in Wassa Underground is transverse
stoping.
The development of Wassa Underground's infrastructure is
at an advanced stage, with all surface infrastructure and plant
modifications complete. Underground development has
progressed sufficiently in order to accommodate the near term mine
plan, including a twin decline and a ventilation system.
Construction activities are expected to be complete at the end of
the fourth quarter of 2016.
The first stope is in the upper part of the F Shoot, which
is one of the more moderate grade areas of the underground
mine. Golden Star is using the
F Shoot mineralization to establish grade control and final stope
design protocols before the mine plan moves on to the higher grade
B Shoot.
Initial gold production from the F Shoot was lower than
anticipated due to higher than expected internal dilution within
the stopes. Golden Star drilled
10,300 metres in this area during the quarter in order to update
the short range block models and delineate the stopes more
effectively. With more informed stope design, the mining team
will target the best areas of mineralization with minimal internal
dilution during the fourth quarter of 2016.
Due to this focus on the F Shoot, Golden Star expects to begin mining the first
stopes of the B Shoot in the first quarter of 2017. This
means that during the fourth quarter of 2016 only development ore
will be mined and processed from the B Shoot and planned 2016
production from the B Shoot will be deferred until Q1 2017.
Accordingly, production from Wassa Underground in 2016 is now
expected to be 11,000-15,000 ounces and the total production from
Wassa (open pit and underground operations) is expected to be
100,000-112,000 ounces. Wassa's 2016 full year guidance for
cash operating cost per ounce1 is $900-990. Golden
Star's consolidated production guidance remains unchanged at
180,000-205,000 ounces at a cash operating cost per
ounce1 of $815-$925.
This short term change in the mine plan is expected to
allow for more ounces to be mined from the F Shoot over the life of
mine than was previously anticipated, creating longer term
upside. Generating production from two sources of ore (the F
Shoot and the B Shoot) will also minimize the risk of the
underground operations during the first half of 2017, when Wassa
Underground is still ramping up to its nameplate
capacity.
Wassa Underground is expected to achieve commercial
production in early 2017 and the full production rate is expected
to be achieved in 2018. From 2017 onwards, the average life
of mine combined production from Wassa Main Pit and Wassa
Underground is expected to be 175,000 ounces of gold per
annum.
Prestea Gold Mine
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
BOGOSO/PRESTEA
FINANCIAL RESULTS
|
|
|
|
|
|
Revenue
|
$'000
|
$
|
29,553
|
|
$
|
24,750
|
|
|
|
|
|
|
Mine operating
expenses
|
$'000
|
19,959
|
|
30,963
|
|
Royalties
|
$'000
|
1,515
|
|
1,294
|
|
Operating costs to
metals inventory
|
$'000
|
(807)
|
|
(1,899)
|
|
Cost of sales
excluding depreciation and
amortization
|
$'000
|
20,667
|
|
30,358
|
|
Depreciation and
amortization
|
$'000
|
1,647
|
|
1,812
|
|
Mine operating
margin/(loss)
|
$'000
|
$
|
7,239
|
|
$
|
(7,420)
|
|
|
|
|
|
|
|
Capital
expenditures
|
$'000
|
11,913
|
|
9,283
|
|
|
|
|
|
BOGOSO/PRESTEA
OPERATING RESULTS
|
|
|
|
|
|
Ore mined
refractory
|
t
|
—
|
|
60,533
|
|
Ore mined
non-refractory
|
t
|
469,075
|
|
179,186
|
|
Total ore
mined
|
t
|
469,075
|
|
239,719
|
|
Waste
mined
|
t
|
1,212,431
|
|
605,715
|
|
Refractory ore
processed
|
t
|
—
|
|
435,185
|
|
Refractory ore
grade
|
g/t
|
—
|
|
1.66
|
|
Gold recovery -
refractory ore
|
%
|
—
|
|
60.4
|
|
Non-refractory ore
processed
|
t
|
386,621
|
|
289,346
|
|
Non-refractory ore
grade
|
g/t
|
2.20
|
|
1.35
|
|
Gold recovery -
non-refractory ore
|
%
|
82.7
|
|
68.0
|
|
Gold produced -
refractory
|
oz
|
—
|
|
15,648
|
|
Gold produced -
non-refractory
|
oz
|
22,684
|
|
7,402
|
|
Gold produced -
total
|
oz
|
22,684
|
|
23,050
|
|
Gold sold -
refractory
|
oz
|
—
|
|
15,648
|
|
Gold sold -
non-refractory
|
oz
|
22,930
|
|
7,402
|
|
Gold sold -
total
|
oz
|
22,930
|
|
23,050
|
|
|
|
|
|
|
Cash operating cost
per ounce1
|
$/oz
|
835
|
|
1,261
|
|
|
|
|
|
|
Notes
|
1. See "Non-GAAP
Financial Measures" information on page 19
|
Prestea Operational Overview
During the third quarter of 2016 Prestea achieved record
quarterly production, with 22,684 ounces of gold produced.
This is the most gold produced by the Prestea Open Pits since
production began from the oxide surface deposits in the third
quarter of 2015. Prestea has produced 65,646 ounces year to
date and as a result of this very strong performance, Golden Star is increasing its 2016 full year
production guidance for the Prestea Open Pits to 80,000-93,000
ounces. This represents an expected outperformance of
approximately 30% compared to previous guidance.
Production of 22,684 ounces in the third quarter of 2016
compares to 7,402 ounces of non-refractory production in the same
period for 2015. This is due to the fact that the mining and
processing of the Prestea oxide ore did not commence until Q3 2015
and therefore the majority of production for that period was from
low grade tailings. Refractory gold production, which was suspended
in the third quarter of 2015, was 15,648 ounces of gold during Q3
2015.
Prestea reported a cash operating cost per
ounce1 of $835 for the
third quarter of 2016, which is below the full year guidance range
of $840-970 per ounce for
Prestea. This is as a result of the exceptionally strong
production results during the period, and accordingly the mine's
2016 guidance for cash operating cost per ouncei is now
$800-$890.
The cash operating cost per ounce in Q3 2016 represents a
34% decrease compared to the same period in 2015. This
$426 per ounce reduction is due to
the change in cost profile at Prestea. Mining and processing costs
in the third quarter of 2016 were attributable to the lower cost
non-refractory operation, whereas 68% of gold sold in the same
period in 2015 was attributable to the higher cost, higher power
consuming refractory operation.
Total capital expenditures for the third quarter of 2016
were $11.9 million, a 28% increase
compared to the same period in 2015. This is as a result of
an increase in development capital expenditures, which comprised
96% of the total capital during the quarter, and were used to
continue to advance Prestea Underground towards production.
Golden Star continues to expect
total capital expenditures for Prestea Underground to be
$36.0 million during 2016, of which
$26.0 million have been incurred to
date, including $1.3 million of
capitalized interest.
Post-period end, Golden
Star announced the receipt of the mining lease for the
Mampon deposit. Mampon is a high grade, oxide
deposit, containing a Mineral Reserve of 45,000 ounces of gold
(304Kt at 4.60 g/t), approximately 65 kilometres to the north of
the Company's carbon-in-leach processing plant at the Bogoso
site. There is an existing, good quality road connecting the
deposit and the processing plant for the majority of the distance,
so limited capital expenditures will be required in order to bring
Mampon into production. Following the receipt of the mining
lease, the next step for the Company is to obtain an environmental
permit
Higher grade ore from Mampon will be blended with ore from
the Prestea Open Pits, which is expected to enhance Golden Star's cash flow in 2017.
Golden Star expects to start mining
Mampon in the first half of 2017 and therefore represents upside on
the Company's current production profiles as per the Wassa
operations and Prestea Underground feasibility studies.
Prestea Underground Development
Refurbishment work continued to progress as expected at
the high grade Prestea Underground Gold Mine during the third
quarter of 2016. With ore body development expected to begin
in the fourth quarter of 2016, Golden
Star took the important step of appointing an underground
mining contractor. Manroc Developments Inc. ("Manroc") was
selected following a competitive bid process, involving a number of
large mining contractors. Manroc specializes
in Alimak stoping, a mechanized shrinkage mining
method. The contractor has worked on major projects on a
variety of continents and its clients have included Barrick
Gold Corporation, Goldcorp Inc. and Nyrstar. Manroc
has previously operated
in Ghana and Tanzania.
Alimak stoping was selected as the mining method for
Prestea Underground due to its safety and efficiency benefits over
conventional shrinkage mining. Prestea Underground is a
narrow, high grade deposit, with Mineral Reserves of 1.0Mt at
14.02g/t for 469,000 ounces and substantial exploration upside
potential.
In line with the refurbishment plan, development of
underground infrastructure commenced during the third quarter of
2016, with rehabilitation works along 24 Level to improve the track
for high-speed haulage and the installation of new electrical and
water supply services now complete. Work is continuing to
advance with other engineering, procurement, rehabilitation and
construction activities on-going, including the construction of a
workshop and electrical bays and the slashing of existing drives to
a size suitable for mechanized load-haul-dump equipment.
The winder upgrade is also progressing with manufacturing
of key electrical and mechanical items, which combined with the
shaft rehabilitation, will enable an increase in hoisting capacity
to satisfy the production profile in 2017. The mining rate in
the Prestea Underground Feasibility Study is 650 tpd and the
shaft's capacity is 1,200 tpd, so if further Mineral Reserves are
delineated, as is expected by Golden
Star, there is capacity for the mine's production rate to be
increased substantially.
Construction activities continue to advance according to
schedule and stoping is expected to start in the second quarter of
2017, with commercial production anticipated to be declared in
mid-2017.
Exploration
During the quarter, Golden
Star's exploration program focused on stope definition at
Wassa Underground and further Mineral Resource definition at the
Prestea South open pit.
Wassa Underground stope definition drilling totaled 10,300
metres for the third quarter of 2016, bringing the year to date
drilling total to 20,800 metres. Drilling results for the F
Shoot have determined that the higher grades are concentrated along
fold noses, which plunge gently to the south. They have also
demonstrated that the mineralized zones extend to the North, which
indicates the potential to increase the deposit's Mineral
Resources. The majority of the F Shoot drilling is scheduled
to be completed in the fourth quarter of 2016 and the focus of the
drilling program will then shift to the B Shoot.
Drilling at Prestea South concentrated on Mineral Resource
definition within the planned oxide pit shells as well as strike
extensions on several of the mineralized trends. Results have
confirmed the mine plan and several holes have intersected
mineralized zones outside the current pit limits along
strike. During the fourth quarter, drilling will focus on
confirming these positive results and if it is successful, the
exploration team will then conduct Mineral Resource definition
drilling with the objective of further extending the mine life of
the Prestea South pit.
Golden Star expects to
provide an update on its exploration strategy in the first quarter
of 2017. There is an opportunity to expand the Mineral
Reserves and extend the mine lives of both Wassa and Prestea
through further drilling. In addition, Golden Star has 3.1 million ounces of Inferred
Mineral Resources (20.3Mt at 4.82g/t). Through further
drilling there is the potential to convert these ounces to
Indicated Mineral Resources.
There is also substantial potential to increase
Golden Star's Mineral Resources
outside of the existing Mineral Resource footprint. The
Company's concession areas total 1,156 square
kilometres of the Ashanti Gold Belt in Ghana, which is one of the largest land
package of any company operating in country, including the major
gold producers. Once the current capital expenditures
programs are complete, Golden Star
plans to ramp up its exploration program, which is expected to
expand its Mineral Resource and Mineral Reserve base and increase
the lives of its operations.
FINANCIAL PERFORMANCE
Capital Expenditures
Similarly to the second quarter of 2016, during the third
quarter Golden Star continued to
incur substantial capital expenditures as a result of the
development work being undertaken at Wassa Underground and Prestea
Underground. In the first half of the year, development
capital expenditures at both underground projects were at similar
levels, however in the third quarter $6.4
million was incurred at Wassa Underground, whereas
$11.4 million was incurred at Prestea
Underground. This reflects the construction phase at Wassa
Underground coming to an end in early 2017, following the blasting
of the first stope at the start of the third quarter, whereas the
refurbishment work and ore body development phase is expected to be
on-going at Prestea Underground until the second quarter of
2017.
Third Quarter 2016 Capital Expenditures
Breakdown
|
|
|
|
Item
|
Sustaining
|
Development
|
Total
|
|
Wassa Open Pit and
Processing Plant
|
1.3
|
|
1.3
|
|
Wassa Tailings
Expansion
|
|
1.9
|
1.9
|
|
Wassa
Underground
|
|
6.4
|
6.4
|
Wassa
Subtotal
|
1.3
|
8.3
|
9.7
|
|
Prestea Open Pit
Mines
|
0.5
|
|
0.5
|
|
Prestea
Underground
|
|
11.4
|
11.4
|
Prestea
Subtotal
|
0.5
|
11.4
|
11.9
|
Consolidated
|
1.8
|
19.7
|
21.7
|
Please note numbers may not add due to
rounding.
|
During the first nine months of the year, Golden Star spent $60.6
million of the total $90.0
million capital expenditures guidance for the year.
The remainder of the $90.0 million is
expected to be incurred during the fourth quarter of
2016.
Other Financial Highlights
During the quarter gold revenues totaled $55.5 million from gold sales of 43,159 ounces,
which excludes the 2,202 ounces sold from Wassa Underground, at an
average realized gold price of $1,286
per ounce. This represents a 2% decrease in revenue compared
to the third quarter of 2015, which is mainly as a result of fewer
ounces sold at Wassa but offset by the higher realized gold
price.
Cost of sales excluding depreciation and amortization was
$44.6 million in the quarter, which
is a 19% decline from the same period of 2015. This is as a
result of fewer ounces sold and lower mine operating expenses
following the closure of the high cost Bogoso refractory
operation.
Depreciation and amortization totaled $5.1 million, compared to $5.5 million in the third quarter of 2015.
Although this represents just a 7% decline, for the first three
quarters of 2016 depreciation and amortization totaled $15.0 million compared to $30.3 million in the same period in 2015.
This 50% decrease is as a result of lower production from both
operations and higher Mineral Reserve and Mineral Resource
estimates at Prestea compared to the prior year.
Mine operating margin also increased significantly to
$5.8 million compared to a
$4.3 million mine operating loss in
Q3 2015. This is a function of lower cost of sales during the
third quarter of 2016 as gold revenues and depreciation and
amortization largely remained the same during the two
periods.
General and administrative ("G&A") expenses were
$9.4 million for the quarter, which
included $6.4 million of non-cash
share-based compensation expense reflecting the significant
improvement in the Company's share price. G&A expenses
excluding non-cash share-based compensation costs totaled
$2.9 million for the quarter, which
were slightly lower than in the same period in 2015.
The Company also recorded $5.8
million of fair value losses on financial instruments
comprised of a $1.9 million non-cash
revaluation loss on its 5% convertible senior unsecured debentures
due June 1, 2017 (the "5% Convertible
Debentures"), $3.3 million non-cash
revaluation loss on the derivative liability on the 7% Convertible
Debentures, $0.8 million non-cash
revaluation loss on warrants, offset by a $0.3 million non-cash revaluation gain on forward
and collar contracts. This compares to a fair value gain of
$5.1 million in the third quarter of
2015, which was comprised of a $4.9
million non-cash revaluation gain on the 5% Convertible
Debentures and a $0.2 million
non-cash revaluation gain on warrants.
The net loss attributable to Golden Star shareholders in the quarter was
$23.1 million or $0.07 loss per share, compared to a net loss of
$6.8 million or $0.03 loss per share for the same period in
2015. The increase in net loss attributable to Golden Star shareholders for Q3 2016 was due
mainly to a $12.0 million realized
loss on the repurchase of the 5% Convertible Debentures, a
$10.9 million increase in loss on
fair value of financial instruments and a $6.7 million increase in non-cash share-based
compensation expense, offset by a $10.1
million increase in mine operating margin and a $3.6 million decrease in net finance
expenses.
After certain adjustments, the adjusted net earnings
attributable to Golden Star
shareholders1 was $1.1
million, a significant improvement from the adjusted net
loss attributable to Golden Star
shareholders reported in the third quarter of 2015 of $11.2 million. The stronger adjusted net
earnings was due principally to the higher mine operating margin at
Prestea in the third quarter of 2016 compared to Q3 2015, when the
high cost Bogoso operation was still in operation.
Cash provided by operations for the quarter was
$21.0 million or $0.06 per share, which compares to $45.3 million or $0.17 per share in the same period in 2015.
Cash provided by operations before changes in working capital for
the quarter was $21.5 million or
$0.07 per share. During Q3
2016, an advance payment of $20
million was received from RGLD in line with the Streaming
Agreement, however during the same period in 2015, Golden Star received advance payments of
$55 million from RGLD and this is
primarily the reason for the stronger result in Q3
2015.
The consolidated cash balance was $17.5 million at the end of the third quarter of
2016, which does not reflect the $20
million received on October 3,
2016 from RGLD.
For further information about Golden Star's operational and financial
performance, please visit the Financial and Operational database
at
http://apps.indigotools.com/IR/IAC/?Ticker=GSC&Exchange=TSX.
The data relating to the third quarter of 2016 will be
available 24 hours after release at the latest.
Other Corporate Developments
Offering of Common Shares and Private Placement of
Convertible Debentures
During the quarter the Company undertook an offering of
equity and an offering of convertible debentures in order to
strengthen its balance sheet and reduce its risk profile
significantly. The two financing transactions closed on
August 3, 2016.
The net cash proceeds of the equity offering were
approximately $31.8 million and the net cash proceeds of
the private placement of 7% convertible debentures were
approximately $20.7 million. The funds from the
offerings were used repay the Ecobank loan (further details are
included below), to repurchase additional 5.0% Convertible
Debentures due June 1, 2017 in privately negotiated
transactions and for other corporate purposes. After the above
mentioned transactions, the remaining balance of the 5.0%
Convertible Debentures is $13.6 million principal
amount. Golden Star expects to
be able to repay its outstanding debt obligations through future
cash flow.
Repayment in full of Ecobank II Loan
With a portion of the proceeds from the financing
transactions, Golden Star repaid in
full its loan with Ecobank during the quarter. The loan was
a $25 million medium term facility ("Ecobank II") and
since the facility became available to the Company
in September 2014, Golden Star
had previously repaid $3 million.
The repayment of Ecobank II is expected to result in a
saving of approximately $600,000 in interest charges
during the remainder of 2016. It also is expected to have a
significant positive impact on Golden
Star's cash flows, as the Company was due to use its
operating cash flows to make principal (and interest payments)
of $8.4 million to Ecobank by the end of 2017: $2.8
million in the second half of 2016 and $5.6
million in 2017.
$20 Million Received from
Streaming Agreement with Royal
Gold
Golden Star received a
scheduled advance payment from RGLD of $20
million on July 1, 2016 and
post-period end, it received another payment of $20 million on October 3,
2016, pursuant to the Streaming
Agreement. This second payment brings the payments made to
date to $135 million of the total
$145 million expected before the end
of January 2017. Payments under the Streaming Agreement are
being used to enable Golden Star to
continue its transformation to becoming a low cost, non-refractory
gold producer.
Appointment of Gil
Clausen to the Board of Directors
On July 18, 2016 Golden Star
further strengthened its Board by appointing Gil Clausen. Mr. Clausen is the President
and Chief Executive Officer of Brio Gold and former President,
Chief Executive Officer and Director of Augusta Resource
Corporation. He also serves as an independent director
of Plata Latina Minerals Corporation. With over 30 years of
executive, financial, developmental and operational industry
experience, Mr. Clausen has been responsible for executing growth
strategies for mining companies on a range of continents and across
a variety of commodities.
Outlook
Golden Star remains on
track to achieve its consolidated full year production of
180,000-205,000 ounces of gold in 2016. The
Company also maintains its cash operating cost per
ounce1 guidance of between $815
and $925 and its capital expenditure guidance of
$90 million, which includes
$81 million of development capital
and $9 million of sustaining
capital. Golden Star expects
its cash operating costs to decrease further as both underground
development projects commence commercial production and the Company
completes its transformation into a high grade, low cost gold
producer.
Third Quarter 2016 Conference Call
The Company will conduct a conference call and webcast to
discuss its results for the third quarter of 2016 on Thursday, November 3, 2016 at 10:00am ET.
The quarterly results call can be accessed by telephone or
by webcast as follows:
Toll Free (North
America): +1 888 390
0605
Toronto Local and International:
+1 416 764 8609
Webcast:
www.gsr.com
A recording of the call will be available until
November 10, 2016 by
dialing:
Toll Free (North
America): +1 888 390
0541
Toronto Local and International:
+1 416 764 8677
Replay passcode:
329269#
The webcast will also be available after the call
at www.gsr.com
All monetary amounts refer to United States dollars unless otherwise
indicated.
Notes
1. See "Non-GAAP Financial Measures"
information on page 19
Company Profile
Golden Star is an
established gold mining company that owns and operates the Wassa
and Prestea mines situated on the prolific Ashanti Gold Belt in
western Ghana, Africa. Listed on the NYSE MKT, the TSX, and
the GSE, Golden Star is
strategically focused on increasing operating margins and cash flow
through the development of two high grade, low cost underground
mines both in conjunction with existing open pit operations. The
Wassa Underground commenced pre-commercial production in mid-2016
and the Prestea Underground is expected to commence production in
mid-2017. Both projects are fully funded and on track to begin
production as expected. Production in 2016 is expected to be
between 180,000–205,000 ounces of gold with costs of $815-$925 per ounce.
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
September 30,
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
55,511
|
|
$
|
56,452
|
|
Cost of sales
excluding depreciation and amortization
|
44,608
|
|
55,199
|
|
Depreciation and
amortization
|
5,111
|
|
5,525
|
Mine operating
margin/(loss)
|
5,792
|
|
(4,272)
|
|
|
|
|
Other
expenses/(income)
|
|
|
|
|
Exploration
expense
|
408
|
|
381
|
|
General and
administrative
|
9,370
|
|
3,299
|
|
Finance expense,
net
|
2,001
|
|
5,573
|
|
Other
(income)/expense
|
(27)
|
|
57
|
|
Loss/(gain) on fair
value of financial instruments, net
|
5,784
|
|
(5,056)
|
|
Loss on repurchase of
5% Convertible Debentures, net
|
12,048
|
|
—
|
Net loss and
comprehensive loss
|
$
|
(23,792)
|
|
$
|
(8,526)
|
Net loss attributable
to non-controlling interest
|
(682)
|
|
(1,694)
|
Net loss
attributable to Golden Star shareholders
|
$
|
(23,110)
|
|
$
|
(6,832)
|
|
|
|
|
Net loss per share
attributable to Golden Star shareholders
|
|
|
|
Basic and
diluted
|
$
|
(0.07)
|
|
$
|
(0.03)
|
Weighted average
shares outstanding-basic and diluted (millions)
|
325.3
|
|
259.7
|
GOLDEN STAR RESOURCES LTD.
|
CONDENSED INTERIM CONSOLIDATED BALANCE
SHEETS
|
(Stated in thousands of U.S.
dollars)
|
(Unaudited)
|
|
|
As
of
|
|
September 30,
2016
|
|
December 31,
2015
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
17,494
|
|
$
|
35,108
|
|
Accounts
receivable
|
5,464
|
|
5,114
|
|
Inventories
|
43,657
|
|
36,694
|
|
Prepaids and
other
|
5,219
|
|
5,754
|
|
|
Total Current
Assets
|
71,834
|
|
82,670
|
RESTRICTED
CASH
|
6,463
|
|
6,463
|
MINING
INTERESTS
|
195,435
|
|
149,849
|
|
|
Total
Assets
|
$
|
273,732
|
|
$
|
238,982
|
|
|
|
|
LIABILITIES
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
87,603
|
|
$
|
110,811
|
|
Derivative
liabilities
|
4,324
|
|
407
|
|
Current portion of
rehabilitation provisions
|
5,961
|
|
3,660
|
|
Current portion of
long term debt
|
15,535
|
|
22,035
|
|
Current portion of
deferred revenue
|
17,422
|
|
11,507
|
|
|
Total Current
Liabilities
|
130,845
|
|
148,420
|
LONG TERM
DEBT
|
92,990
|
|
91,899
|
DEFERRED
REVENUE
|
79,462
|
|
53,872
|
REHABILITATION
PROVISIONS
|
70,724
|
|
76,025
|
LONG TERM DERIVATIVE
LIABILITY
|
15,600
|
|
—
|
OTHER LONG TERM
LIABILITY
|
13,097
|
|
—
|
|
|
Total
Liabilities
|
402,718
|
|
370,216
|
|
|
|
|
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
|
741,079
|
|
695,555
|
CONTRIBUTED
SURPLUS
|
33,650
|
|
32,612
|
DEFICIT
|
(836,397)
|
|
(793,304)
|
|
Deficit
attributable to Golden Star
|
(61,668)
|
|
(65,137)
|
NON-CONTROLLING
INTEREST
|
(67,318)
|
|
(66,097)
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
273,732
|
|
$
|
238,982
|
GOLDEN STAR RESOURCES LTD.
|
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(Stated in thousands of U.S.
dollars)
|
(Unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
2016
|
|
2015
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
$
|
(23,792)
|
|
$
|
(8,526)
|
Reconciliation of
net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
5,114
|
|
5,533
|
|
Share-based
compensation
|
6,426
|
|
(229)
|
|
Loss on fair value of
embedded derivatives
|
3,341
|
|
—
|
|
Loss/(gain) on fair
value of 5% Convertible Debentures
|
1,920
|
|
(4,911)
|
|
Loss on repurchase of
5% Convertible Debentures, net
|
12,048
|
|
—
|
|
Loss/(gain) on fair
value of warrants
|
820
|
|
(145)
|
|
Gain on fair value of
non-hedge derivative contracts
|
(297)
|
|
—
|
|
Realized loss on
non-hedge derivative contracts
|
(1,320)
|
|
—
|
|
Recognition of
deferred revenue
|
(2,889)
|
|
(4,874)
|
|
Proceeds from Royal
Gold stream
|
20,000
|
|
55,000
|
|
Reclamation
expenditures
|
(1,325)
|
|
(275)
|
|
Other
|
1,454
|
|
1,650
|
|
Changes in working
capital
|
(536)
|
|
2,118
|
|
|
Net cash provided by
operating activities
|
20,964
|
|
45,341
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Additions to mining
properties
|
(261)
|
|
(373)
|
|
Additions to plant
and equipment
|
—
|
|
(237)
|
|
Additions to
construction in progress
|
(21,395)
|
|
(17,179)
|
|
Change in accounts
payable and deposits on mine equipment
and material
|
146
|
|
3,542
|
|
Increase in
restricted cash
|
—
|
|
(4,419)
|
|
|
Net cash used in
investing activities
|
(21,510)
|
|
(18,666)
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Principal payments on
debt
|
(23,803)
|
|
(39,175)
|
|
Proceeds from 7%
Convertible Debentures, net
|
20,729
|
|
—
|
|
5% Convertible
Debentures repurchase
|
(18,240)
|
|
—
|
|
Proceeds from Royal
Gold loan, net
|
—
|
|
18,725
|
|
Shares issued,
net
|
31,771
|
|
—
|
|
Exercise of
options
|
6
|
|
—
|
|
|
Net cash provided
by/(used in) financing activities
|
10,463
|
|
(20,450)
|
Increase in cash and
cash equivalents
|
9,917
|
|
6,225
|
Cash and cash
equivalents, beginning of period
|
7,577
|
|
21,448
|
Cash and cash
equivalents, end of period
|
$
|
17,494
|
|
$
|
27,673
|
Non-GAAP Financial Measures
In this press release, we use the terms "cash operating
cost per ounce", "all-in sustaining costs per ounce", "cash
provided by operations before changes in working capital", "cash
flow generated before changes in working capital" and "adjusted net
earnings/ (loss) attributable to shareholders". 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. "Cash operating cost per
ounce" for a period is equal to "Cost of sales excluding
depreciation and amortization" for the period less royalties,
the cash component of metals inventory net realizable value
adjustments and severance charges 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 third 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").
"All-In Sustaining Costs" commences with cash operating
costs and then adds sustaining capital expenditures, corporate
general and administrative costs excluding non-cash share based
compensation, 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. Non-cash share-based compensation expenses are
now also excluded from the Company's current method of calculating
All-In Sustaining Costs, as the Company believes that such expenses
may not be representative of the actual payout on the equity and
liability based awards. Non-cash share-based compensation expenses
were previously included in the calculation of all-in sustaining
costs. The Company has presented comparative figures to conform
with the computation of All-in Sustaining Costs as currently
calculated by the Company.
"Cash provided by operations before working capital
changes" and "cash flow generated before changes in working
capital" are calculated by subtracting the "Changes in working
capital" from "Net cash provided by operating activities" as found
in the statements of cash flows.
In order to indicate to stakeholders the Company's
earnings excluding the non-cash loss on the fair value of the
Company's outstanding convertible debentures, non-cash loss on
repurchase of 5% Convertible Debentures and non-cash
impairment charges, non-cash gain on reduction of asset retirement
obligations, the non-cash share based compensation and severance
charges the Company calculates "adjusted net earnings/ (loss)
attributable to shareholders" to supplement the condensed
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 are
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 full year ended December
31, 2015 and in the Company's Management Discussion and
Analysis for the three months ended September 30, 2016, both of which are available
at www.sedar.com and at
www.gsr.com/investors/financials/
Cautionary note regarding forward-looking
information
This press release contains "forward looking information"
within the meaning of applicable Canadian securities laws and
"forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995, concerning
the business, operations and financial performance and condition of
Golden Star. Generally,
forward-looking information and statements can be identified by the
use of forward-looking terminology such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes" or variations of such words
and phrases (including negative or grammatical variations) or
statements that certain actions, events or results "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative connotation thereof. Forward-looking information
and statements in this press release include, but are not limited
to, information or statements with respect to: the ability to
achieve consolidated 2016 full year production, cash operating cost
and capital expenditure guidance; expected reductions in all-in
sustaining costs; the ability to achieve, and the timing of,
commercial production and full production at Wassa Underground and
Prestea Underground; the extension of mine life at the Prestea Open
Pits; production increases, and the quantum of such increases, at F
Shoot; the transformation of the Company and its risk profile and
accompanying production growth and reduced costs; the number of
stopes to be mined at Wassa Underground during the fourth quarter
of 2016, and the timing for accessing and mining the B Shoot and
its impact on production; the timing of the first stope at Prestea
Underground; the impact of seasonality on the Company's production
profile when the underground mines are in production; expected
production during the fourth quarter of 2016; the ability of the
Company to target the best areas of mineralization with minimal
internal dilution when five F Shoot stopes are mined during the
fourth quarter of 2016; Wassa Underground and consolidated Wassa
production during 2016; production from the F Shoot and the B Shoot
minimizing the risk of the Wassa Underground operations during the
first half of 2017; average annual life of mine combined production
from Wassa Main Pit and Wassa Underground; total 2016 production
from the Prestea Open Pits; Prestea cash operating cost guidance
for 2016; the receipt of an environmental permit for Mampon;
the start of mining at Mampon and the timing thereof; higher grade
ore from Mampon being blended with ore from the Prestea Open Pits,
and the impact on Golden Star's cash
flow in 2017; the commencement of ore body development at Prestea
Underground in the fourth quarter of 2016; the safety and
efficiency benefits of Alimak stoping over conventional shrinkage
mining; the exploration upside potential at Prestea Underground;
the delineation of further Mineral Reserves at Prestea Underground;
the timing from completing the F Shoot drilling and the subsequent
focus of the drilling program on the B Shoot; fourth quarter of
2016 drilling at Prestea South pit and subsequent Mineral Resource
definition drilling at such pit; the time for updating the
Company's mineral exploration strategy; the opportunity to extend
the mine lives of both Wassa and Prestea through further drilling;
the ability to convert Inferred Mineral Resources to Indicated
Mineral Resources; the potential to increase Golden Star's Mineral Resources outside of the
existing Mineral Resource footprint; ramping up the Company's
exploration program in order to expand its Mineral Resource and
Mineral Reserve base and increase the lives of its operations; the
Company's ability to repay its remaining outstanding debt
obligations through future cash flow; the expected decrease in cash
operating costs as both underground development projects commence
commercial production and the Company completes its transformation
into a high grade, low cost gold producer; sustaining, development
and total capital expenditures for 2016; future work to be
completed at Prestea Underground Gold Mine; and the ability of the
Company to repay the 5% Convertible Debentures when due.
Forward-looking information and statements are made based
upon certain assumptions and other important factors that, if
untrue, could cause the actual results, performances or
achievements of Golden Star to be
materially different from future results, performances or
achievements expressed or implied by such statements. Such
statements and information are based on numerous assumptions
regarding present and future business strategies and the
environment in which Golden Star
will operate in the future, including the price of gold,
anticipated costs and ability to achieve goals. Forward-looking
information and statements are subject to known and unknown risks,
uncertainties and other important factors that may cause the actual
results, performance or achievements of Golden Star to be materially different from
those expressed or implied by such forward-looking information and
statements, including but not limited to: risks related to
international operations, including economic and political
instability in foreign jurisdictions in which Golden Star operates; risks related to current
global financial conditions; risks related to joint venture
operations; actual results of current exploration activities;
environmental risks; future prices of gold; possible variations in
Mineral Reserves, grade or recovery rates; mine development and
operating risks; accidents, labor disputes and other risks of the
mining industry; delays in obtaining governmental approvals or
financing or in the completion of development or construction
activities and risks related to indebtedness and the service of
such indebtedness. Although Golden Star has attempted to
identify important factors that could cause actual results to
differ materially from those contained in forward-looking
information and statements, there may be other factors that cause
results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove
to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
information and statements. Forward-looking information and
statements are made as of the date hereof and accordingly are
subject to change after such date. Forward-looking information and
statements are provided for the purpose of providing information
about management's current expectations and plans and allowing
investors and others to get a better understanding of the Company's
operating environment. Golden Star
does not undertake to update any forward-looking information and
statements that are included in this news release except in
accordance with applicable securities laws.
Technical Information and Quality
Control
The technical contents of this press release, in relation
to Mineral Resources, have been reviewed and approved by S. Mitchel
Wasel, BSc Geology, a "Qualified Person" pursuant to National
Instrument 43-101 ("NI 43-101"). Mr. Wasel is Vice President
Exploration for Golden Star and an
active member of the Australasian Institute of Mining and
Metallurgy.
The technical contents of this press release, in relation
to Mineral Reserves, have been reviewed and approved by Dr.
Martin Raffield, P. Eng., a
"Qualified Person" pursuant to NI 43-101. Dr. Raffield is
Senior Vice President, Project Development and Technical Services
for Golden Star.
Additional scientific and technical information relating
to the mineral properties referenced in this news release are
contained in the following current technical reports for those
properties available at www.sedar.com: (i) Wassa - "NI 43-101
Technical Report on feasibility study of the Wassa open pit mine
and underground project in Ghana"
effective date December 31, 2014;
(ii) Prestea Underground - "NI 43-101 Technical Report on a
Feasibility Study of the Prestea Underground Gold Project in
Ghana" effective date November 3, 2015; and (iii) Bogoso - "NI 43-101
Technical Report on Resources and Reserves Golden Star Resources
Ltd., Bogoso Prestea Gold Mine, Ghana" effective date December 31, 2013.
Cautionary Note to U.S. investors
This news release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which differ materially from the
requirements of United States
securities laws applicable to U.S. companies. The terms "mineral
reserve", "proven mineral reserve" and "probable mineral reserve"
are Canadian mining terms as defined in accordance with NI 43-101.
These definitions differ from the definitions of the Securities and
Exchange Commission (the "SEC") set forth in Industry Guide 7 under
the United States Securities Exchange Act of 1934, as amended (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.
In addition, the terms "mineral resource", "measured
mineral resource", "indicated mineral resource" and "inferred
mineral resource" are defined in and required to be disclosed by NI
43-101; however, these terms are not defined terms under SEC
Industry Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. Investors
are cautioned not to assume that any part or all of mineral
deposits in these categories will ever be converted into reserves.
"Inferred mineral resources" have a great amount of uncertainty as
to their existence, and great uncertainty as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Investors are cautioned not to assume that all or any
part of an inferred mineral resource exists or is economically or
legally mineable. Disclosure of "contained ounces" in a resource is
permitted disclosure under Canadian regulations; however, the SEC
normally only permits issuers to report mineralization that does
not constitute "reserves" by SEC Industry Guide 7 standards as in
place tonnage and grade without reference to unit
measures.
For the above reasons, information contained in this news
release or in the documents referenced herein containing
descriptions of our mineral deposits may not be comparable to
similar information made public by U.S. companies subject to the
reporting and disclosure requirements under the United States federal securities laws and
the rules and regulations thereunder.
__________________________
1 See "Non-GAAP Financial Measures"
information on page 19
SOURCE Golden Star Resources Ltd.