Golden Star Achieves 2017 Production Guidance and Provides Guidance for 2018
38% increase in gold production in 2017 compared to 2016
TORONTO, Jan. 11, 2018 /PRNewswire/ - Golden Star Resources (NYSE American: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or the "Company") is pleased to announce its production results for the fourth quarter and full year ("FY") of 2017 and its guidance for FY 2018.
HIGHLIGHTS
Q4 and FY 2017 Production Results
38% increase in consolidated gold production in FY 2017 to 267,565 ounces compared to FY 2016
Gold production by asset in FY 2017, as follows:
Wassa Main Pit: 75,736 ounces
Wassa Underground Gold Mine ("Wassa Underground"): 61,498 ounces
Prestea Open Pits: 121,757 ounces
Prestea Underground Gold Mine ("Prestea Underground"): 8,574 ounces
34% increase in consolidated gold production in the fourth quarter of 2017 to 71,769 ounces compared to the fourth quarter of 2016. Other highlights of the fourth quarter of 2017 included:
55% increase in Wassa Underground's head grade to 4.04 grams per tonne ("g/t") of gold ("Au") compared to the third quarter of 2017 and a 78% increase compared to the fourth quarter of 2016
57% increase in gold production from Prestea Underground compared to the third quarter of 2017
Processing of ore from the Prestea Open Pits expected to continue until the end of the first half of 2018
Consolidated cash balance of $27.8 million as at December 31, 2017
FY 2018 Guidance
FY 2018 consolidated guidance for gold production of 230,000-255,000 ounces, focusing on higher margin ore
Significant decrease in operating cost per ounce expected in 2018:
FY 2018 consolidated cash operating cost per ounce1 expected to be 11-21% lower than the midpoint of the 2017 guidance range ($820) at $650-730
FY 2018 consolidated All-In Sustaining Cost ("AISC")1 per ounce expected to be 7-17% lower than the midpoint of the 2017 guidance range ($1,020) at $850-$950
Notes:
1. See "Non-GAAP Financial Measures".
Sam Coetzer, President and Chief Executive Officer of Golden Star, commented:
"Achieving our 2017 production guidance while simultaneously operating two underground mines in the early stages of production is a great achievement and I would like to thank our teams at both operations for their hard work and commitment. I'm particularly pleased to see the strong results from Wassa Underground in the fourth quarter of 2017, including a 55% increase in grade compared to the third quarter, and I look forward to stronger production in 2018 as we increase the mining rate further. In 2018 our primary focus will be high grade, high margin underground ounces. Although production in 2018 is anticipated to be lower than in 2017, our operating cost guidance is also significantly reduced and thus we believe this strategy delivers the best value for all of our stakeholders. We will also continue with our exploration strategy, which seeks to increase the mine lives of both Wassa and Prestea and to find additional high margin ore sources to fully utilize the excess capacity at both of our processing plants."
2017 PRODUCTION RESULTS AND OPERATIONS UPDATE
Golden Star produced 267,565 ounces of gold in FY 2017, achieving the middle of the FY 2017 consolidated production guidance range of 255,000-280,000 ounces. Consolidated gold production in the fourth quarter of 2017 increased by 34% to 71,769 ounces, compared to the same period in 2016.
As at December 31, 2017, Golden Star had a consolidated cash balance of $27.8 million.
Wassa Gold Mine
Gold production from the Wassa complex increased by 31% in FY 2017 to 137,234 ounces, compared to FY 2016. In the fourth quarter of 2017, gold production was 42,001 ounces, an increase of 43% compared to the fourth quarter of 2016.
The total ore processed by the Wassa processing plant during FY 2017 was 2.6 million tonnes at a blended grade of 1.73 g/t Au and with a metallurgical recovery of 95%.
Wassa Main Pit
Gold production from Wassa Main Pit was 75,736 ounces in FY 2017 and 21,149 ounces in the fourth quarter of 2017. As previously announced, Golden Star took the decision during the third quarter of 2017 to defer the next pushback of Wassa Main Pit, Cut 3. This followed an internal study to assess capital expenditure requirements and margins in light of the current gold price. The purpose of this change is to focus on the higher grade, higher margin underground ounces. Wassa is expected to become an underground-only operation by the end of January 2018, although 341,000 tonnes of lower grade, stockpiled ore will continue to be fed to the processing plant during the first nine months of 2018.
Wassa Underground
Gold production from Wassa Underground increased by 456% in FY 2017 to 61,498 ounces, compared to FY 20161. In the fourth quarter of 2017, gold production was 20,852 ounces, representing a 165% increase compared to the fourth quarter of 20161 and a 31% increase compared to the third quarter of 2017. Mining rates at Wassa Underground continued to be strong in the fourth quarter of 2017 at approximately 1,900 tonnes per day ("tpd"), which represents a 36% outperformance compared to the planned mining rate for 2017 of 1,400 tpd. The head grade of Wassa Underground's ore being delivered to the processing plant increased by 55% in the fourth quarter of 2017 to 4.04 g/t Au, compared to the third quarter of 2017, and by 78% compared to the fourth quarter of 20161.
The targeted mining rate for Wassa Underground in 2018 is 2,700-3,000 tpd, with the potential to expand further in time. The mining team is well-positioned to increase the tonnage profile in 2018, with the mining sequence working well and an increasing number of stopes prepared and developed. Additionally, four new underground haulage trucks were purchased and arrived on site early in the fourth quarter of 2017 and a new stope drill has been commissioned. Golden Star will provide further details of the new mine plan for the Wassa complex later in the first quarter of 2018.
From the commencement of development of Wassa Underground to December 31, 2017, 8,900 metres of development had been completed and the mining operations had accessed 25 stopes.
Notes
1. Wassa Underground was in pre-commercial production until December 31, 2016.
Prestea Gold Mine
Gold production from the Prestea complex was 130,331 ounces in FY 2017, which represents a 45% increase compared to FY 2016, primarily as a result of the contribution from the high grade Mampon deposit and Prestea Underground. The Prestea complex also exceeded the top end of its upwardly revised FY 2017 production guidance of 120,000-130,000 ounces. Gold production in the fourth quarter of 2017 increased by 23% to 29,768 ounces compared to the same period in 2016.
The total ore processed by the Prestea processing plant during FY 2017 was 1.6 million tonnes at a grade of 2.85 g/t Au, and with a metallurgical recovery of 86%.
Prestea Open Pits
Gold production from the Prestea Open Pits increased by 36% to 121,757 ounces in FY 2017, compared to FY 2016. This represents a 74% outperformance compared to the top end of the Company's original 2017 guidance for these assets. In the fourth quarter of 2017 the mine delivered 24,723 ounces, which is a 2% increase compared to the same period in 2016.
The Prestea Open Pits were expected to complete gold production at the end of 2017 but it is now anticipated that mining will continue until late in the first quarter of 2018 and processing of stockpiled ore will continue until the end of the first half of 2018. This is due to additional ore being sourced from the Tuapim pit and the Beta South pit, which are close to Prestea, and the Aboronye pit, which is close to Mampon. Golden Star will continue to review additional targets for ore supply and will provide updates as the year progresses.
Prestea Underground
Gold production from Prestea Underground was 8,574 ounces in FY 2017 and 5,045 ounces in the fourth quarter of 2017, which represents a 57% increase compared to the third quarter of 2017. However production in the fourth quarter of 2017 was lower than anticipated due to weaker than expected blasting performance in the first stope. After conducting an internal review, various adjustments have been made to drill design patterns, blasting practices and raise layouts in order to improve blasting efficiencies. As a result, in-stope productivity has increased and progress with subsequent stopes has accelerated.
The blasting of the first stope is expected to be complete by mid-January 2018, at which point the stope will be filled with ore and the contained ounces held in stope inventory. The operations team have been mucking the swell from the stope as the blasting progressed and when blasting is complete they will begin the final draw down of the ore at a planned rate of 300-400 tpd. The longhole drilling of the second stope is progressing well, with blasting of this stope expected to begin in early February 2018. Golden Star expects to draw down 150 tpd from this stope during February 2018, with the final draw down anticipated to begin in early March 2018.
The screening of the third stope is nearing completion and the operations team will then begin the cable bolting process. The development of the fourth raise has advanced by approximately 68 metres and the fifth nest is complete, with the Alimak installed and ready to begin raise development. The sixth nest is developed and installation of the Alimak is expected to begin in early February 2018 when the equipment will be transferred from the first stope.
Waste development within Prestea Underground is well advanced, so the operations team is now focused on advancing the reef drive, which runs from the twelfth stope onwards and travels along the reef for 14 stopes. As at December 31, 2017, 2,400 metres of development had been completed since the start of the project.
Prestea Underground has been delivering a consistent quantity of material to the processing plant throughout December 2017 and early January 2018. From mid-January 2018 the grade is expected to increase significantly as the final draw down of the first stope begins. The Company intends to blend 300-400 tpd of ore from the first stope with 100 tpd of material from the subsequent raises and the reef drive to deliver 400-500 tpd to the processing plant. In early February 2018, the production rate is scheduled to ramp up further to 600-700 tpd as a result of the blasting of the second stope commencing and the mucking of the swell from this stope contributing to production. With the production sequence now progressing well, commercial production at Prestea Underground is expected in early February 2018.
Exploration
Golden Star intends to release its exploration strategy for 2018 later in the first quarter of 2018. It will include an update on the Company's key exploration targets, which have the potential to be additional high margin ore sources to fill the under-utilized processing capacity of Golden Star's two existing plants.
The Company also expects to release further drilling results from the B Shoot zone of Wassa Underground and the West Reef ore body of Prestea Underground later in the first quarter of 2018.
FY 2018 GUIDANCE
For the second consecutive year, the top end of the consolidated guidance range for the current year (FY 2018) for cash operating cost per ounce1 and AISC per ounce1 is below the bottom end of the guidance range for the previous year (FY 2017) on the same metrics, reflecting Golden Star's significantly reducing cost structure.
The following tables set out Golden Star's full year 2018 guidance in terms of gold production, cash operating cost per ounce1, AISC per ounce1, and capital expenditures.
Gold Production and Operating Cost Guidance
Asset
Gold Production
(ounces)
Cash
Operating Cost1
($/ounce)
AISC1
($/ounce)
Wassa
137,000-142,000
600-650
-
Prestea
93,000-113,000
740-880
-
Consolidated
230,000-255,000
650-730
850-950
Expected gold production in FY 2018 is lower than in FY 2017 due to the Company's transition to being a primarily underground-focused producer. Gold production from the Wassa complex in FY 2018 is anticipated to be solely from Wassa Underground, with the exception of a small contribution from Wassa Main Pit stockpiles, as disclosed above. Gold production from Prestea is expected to comprise ounces from the Prestea Open Pits and Prestea Underground during the first half of 2018, with production during the second half of 2018 relating solely to Prestea Underground.
Golden Star expects gold production to be weighted towards the second half of the year, despite the anticipated cessation in production from the Prestea Open Pits. This is due primarily to an anticipated increase in both mining rate and grade from Wassa Underground during the second half of the year, as the mining operations progress to a deeper, higher grade area of the B Shoot zone and begin to access larger stopes.
Consequently, Golden Star anticipates that its cash operating cost per ounce1 and AISC per ounce1 will be higher during the first half of 2018, due to the continuing ramp up of both underground operations.
Notes:
1. See "Non-GAAP Financial Measures".
Capital Expenditures Guidance
Asset
Sustaining
Capital
($ millions)
Development
Capital
($ millions)
Total Capital
Expenditures
($ millions)
Wassa
14.7
5.9
20.6
Prestea
3.0
6.3
9.3
Exploration
-
6.6
6.6
Consolidated
17.7
18.8
36.5
Capital expenditures for the two operations are budgeted to be significantly lower in FY 2018 than in FY 2017 and are expected to be incurred at a steady rate throughout the year. The $5.9 million of development capital expenditures at Wassa are expected to be incurred primarily on the construction a ventilation intake/exhaust raise and a rock pass and on the purchase of additional mining equipment. The $6.3 million of development capital expenditures at Prestea are anticipated to be incurred primarily on developing ore passes and ventilation raises and on the remaining modifications to the processing plant.
Total capital expenditures at Prestea are budgeted to be lower than at Wassa due to the existing historical workings within Prestea Underground and the smaller scale of the operations. The cost to modernize historical workings is lower than the cost to build new workings and therefore the sustaining capital required for Prestea Underground is anticipated to be significantly lower than for Wassa Underground going forwards.
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