Golden Star Reports Second Quarter 2018 Results
PR Newswire PR NewswireAugust 1, 2018
TORONTO, Aug. 1, 2018 /PRNewswire/ - Golden Star Resources Ltd. (NYSE American: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or the "Company") reports its financial and operational results for the quarter ended June 30, 2018.
Gold production of 61,209 ounces in the second quarter of 2018
Strong production from the Wassa Complex ("Wassa") in the second quarter of 2018, continuing to exceed expectations
Significant improvements delivered at the Prestea Underground Gold Mine ("Prestea Underground") in the second quarter of 2018 compared to the first quarter of 2018, when the mine achieved commercial production
Cash operating cost per ounce1 of $809 and All-In Sustaining Cost ("AISC") per ounce1 of $1,104 in the second quarter of 2018
Capital expenditures of $10.2 million in the second quarter of 2018
Cash provided by operations before changes in working capital of $10.3 million or $0.03 per share in the second quarter of 2018 and mine operating margin of $10.2 million
Consolidated cash balance of $21.9 million at June 30, 2018
Post period end, the creation of a long term, strategic relationship was agreed with La Mancha Holding S.à r.l. ("La Mancha"), including a $125.7 million investment, which will support Golden Star's growth as a leading African gold producer2
Golden Star is on track to achieve its consolidated full year ("FY") 2018 guidance in terms of gold production, cash operating cost per ounce1 and AISC per ounce1
1. See "Non-GAAP Financial Measures".
2. For more information, please see the press release entitled, 'Golden Star announces long term, strategic investment by La Mancha', dated August 1, 2018.
Sam Coetzer, President and Chief Executive Officer of Golden Star, commented:
"During the second quarter of 2018, Prestea Underground delivered more ounces than the Prestea Open Pits, which is testament to the hard work and disciplined approach of our underground team. We expect to see further improvements during the coming months and we anticipate that Prestea Underground will achieve its nameplate production rate during the fourth quarter of 2018. We will also continue to right size this operation with the aim of reducing operating costs and generating a stronger cash margin. Wassa Underground delivered another impressive quarter, with both grades and tonnages exceeding our expectations. I am looking forward to releasing the Preliminary Economic Assessment for Wassa's Inferred Mineral Resources to gain a more thorough understanding of the full potential of this substantial deposit. After two quarters, we are on track to achieve our consolidated full year 2018 production and cost guidance and with our strategic relationship with La Mancha agreed, we are well-positioned to deliver significant value for our shareholders."
La Mancha Transaction and Second Quarter 2018 Conference Call Details
Golden Star will conduct a conference call and webcast to discuss the La Mancha transaction and the results of the second quarter of 2018 on Thursday, August 2, 2018 at 10:00am ET. The Chief Executive Officer of La Mancha, Andrew Wray, will join the Golden Star management team on the call.
The call can be accessed by telephone or by webcast as follows:
Toll Free (North America): +1 866 393 4306
Toronto Local and International: +1 734 385 2616
Conference ID: 3081459
A recording and webcast replay of the call will be available at www.gsr.com following the call.
SUMMARY OF CONSOLIDATED OPERATIONAL AND FINANCIAL RESULTS
Three Months Ended
Wassa gold sold
Prestea gold sold
Total gold sold
Wassa gold produced
Prestea gold produced
Total gold produced
Average realized gold price1
Cost of sales per ounce – Consolidated2
Cost of sales per ounce – Wassa2
Cost of sales per ounce – Prestea2
Cash operating cost per ounce – Consolidated2
Cash operating cost per ounce – Wassa2
Cash operating cost per ounce – Prestea2
All-In Sustaining cost per ounce – Consolidated2
Average realized gold price per ounce excludes pre-commercial production ounces sold at Prestea Underground in 2018 and 2017.
See "Non-GAAP Financial Measures".
Three Months Ended
Cost of sales excluding depreciation and amortization
Depreciation and amortization
Mine operating margin
General and administrative expense
Loss/(gain) on fair value of financial instruments, net
Net (loss)/income attributable to Golden Star shareholders
Adjusted net income attributable to Golden Star shareholders1
(Loss)/income per share attributable to Golden Star shareholders - basic
(Loss)/income per share attributable to Golden Star shareholders - diluted
Adjusted income per share attributable to Golden Star shareholders – basic1
Cash provided by operations
Cash provided by operations before working capital changes1
Cash provided by operations per share - basic
Cash provided by operations before working capital changes per share – basic1
1. See "Non GAAP Financial Measures".
In the second quarter of 2018 Golden Star produced 61,209 ounces of gold. This quarter was the Company's second quarter as a primarily underground-focused gold producer, following the cessation of production from the Wassa Main Pit in January 2018. Production from the Prestea Open Pits is ongoing and ore supply from this operation is expected to continue into the middle of the third quarter of 2018. However once production from the Prestea Open Pits concludes, Golden Star intends to focus on high margin, underground ore with the objective of strengthening its financial position and creating a robust platform to deliver shareholder value.
The Wassa Complex delivered another strong quarter. Gold production increased by 20% in the second quarter of 2018 to 38,532 ounces compared to the second quarter of 2017 and it increased by 9% compared to the first quarter of 2018. 92% of Wassa's production was attributable to Wassa Underground, which delivered higher grades and higher tonnages than expected. Consequently, Wassa delivered its lowest cash operating cost per ounce1 in over seven years of $610.
Gold production from the Prestea Complex ("Prestea") was 22,677 ounces in the second quarter of 2018. The second quarter of 2018 was the first quarter that Prestea Underground delivered more ounces than the Prestea Open Pits (55% of the Prestea Complex's total production), which is a result of the ramp up of production from the underground operation and the Prestea Open Pits approaching the end of their mine life. The grade of the ore processed from Prestea Underground increased by 65% in the second quarter of 2018 compared to the first quarter of 2018 and Golden Star expects the targeted production rate of 650 tpd to be achieved at Prestea Underground during the fourth quarter of 2018.
Golden Star's consolidated cash operating cost per ounce1 was $809 in the second quarter of 2018, which represents a 3% increase compared to the second quarter of 2017. Although Wassa reported a 38% decrease in cash operating cost per ounce1 to $610, this was offset by a 96% increase at Prestea to $1,149.