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Golden Star Reports Record Quarterly Gold Sales and Financial Results for Second Quarter 2009
Marketwire
Aug 10, 2009
DENVER, COLORADO -- (Marketwire) -- 08/10/09 -- Golden Star Resources Ltd. (TSX: GSC)(NYSE Amex: GSS)(GSE: GSR) today announced its unaudited second quarter results. All currency in this news release is expressed in U.S. dollars, unless otherwise noted. The Company will host a live webcast and conference call to discuss its quarterly results on Tuesday, August 11, 2009 at 11:00 a.m. ET. To access the webcast and conference call, go to the home page of the Company's website, www.gsr.com.
Tom Mair, President and CEO, said, "Golden Star turned in another solid quarter in terms of production, cash operating costs and cash flow. We are on course to meet our guidance of 400,000 ounces of gold at a cash operating cost of approximately $545 per ounce."
RESULTS AND HIGHLIGHTS
- Quarterly gold sales of 99,011 ounces, a 26% increase over second quarter 2008 and a 2% increase over the first quarter of 2009;
- Gold revenues for the quarter of $91.9 million representing an increase of 30% over second quarter 2008 and a 5% increase over the first quarter 2009 revenues;
- Operating cash flow of $29.3 million for the second quarter of 2009, or $0.124 per share;
- Reduction in electrical power costs by approximately 55% as announced on June 26;
- Quarterly cash operating cost of $558 per ounce, a 23% improvement over second quarter 2008 and a 2% improvement over cash operating costs in the first quarter of 2009;
- Cash balance of $43.2 million up from $28.1 million at the end of the first quarter of 2009;
FINANCIAL SUMMARY
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SUMMARY OF CONSOLIDATED Second First Year To
FINANCIAL RESULTS Quarter Quarter Date
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2009 2009 2009
------- ------- -------
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Bogoso/Prestea gold sold (oz) 45,760 40,546 86,306
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Wassa gold sold (oz) 53,251 56,426 109,677
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Total gold sold (oz) 99,011 96,972 195,983
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Average realized price ($/oz) 928 904 916
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Cash operating cost--combined ($/oz) 558 571 564
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Gold revenues ($000's) 91,868 87,645 179,513
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Cash flow provided by operations ($000's) 29,280 11,093 40,373
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Net income/(loss) ($000's) 380 (1,146) (766)
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Net income/(loss) per share - basic ($) 0.002 (0.005) (0.003)
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BOGOSO/PRESTEA
Gold sales at Bogoso/Prestea in the second quarter were 45,760 ounces, an increase of almost 13% from the first quarter of 2009. Sulfide plant throughput rates improved significantly in the second quarter, as compared to the first quarter, and recovery improved to over 72%.
Cash costs at Bogoso/Prestea during the second quarter of 2009 were $624 per ounce, down 23% from the first quarter of this year. These improvements reflect lower power costs and increased gold sales.
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Second First Year To
OPERATING RESULTS Quarter Quarter Date
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2009 2009 2009
------- ------- -------
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Mining
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Ore mined (000s t)-Refractory 727 653 1,380
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Ore mined (000s t)-Non refractory - - -
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Total ore mined (000's t) 727 653 1,380
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Waste mined (000's t) 3,921 3,352 7,273
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Bogoso Sulfide Plant Results
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Refractory ore processed (000's t) 715 626 1,341
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Refractory grade-(g/t) 2.66 2.68 2.67
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Recovery-Refractory (%) 72.2 71.5 71.9
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Bogoso Oxide Plant Results
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Non refractory ore processed (000's t) - - -
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Non refractory ore grade (g/t) - - -
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Recovery-Non refractory (%) - - -
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Cash operating cost ($/oz) 624 813 713
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Gold sold (oz) 45,760 40,546 86,306
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WASSA
Wassa sold 53,251 ounces of gold in the second quarter of 2009 which was 70% above the second quarter of 2008 gold sales. Higher gold grades, as a result of the ore delivered from the HBB properties, and higher gold prices offset the lower ore tonnage processed in the second quarter.
Cash costs during the second quarter were $502 per ounce at Wassa with most of the increase over the first quarter due to increased haulage and stripping costs of the HB pits. Year-to-date cash operating costs are $448 per ounce which is in line with guidance.
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Second First Year To
OPERATING RESULTS Quarter Quarter Date
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2009 2009 2009
------- ------- -------
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Ore mined (000's t) 530 656 1,186
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Waste mined (000's t) 4,396 3,569 7,965
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Ore processed (000's t) 637 746 1,383
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Grade processed (g/t) 2.62 2.55 2.58
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Recovery (%) 94.9 95.6 95.3
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Cash operating cost ($/oz) 502 397 448
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Gold sold (oz) 53,251 56,425 109,677
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EXPLORATION
Our 2009 exploration budget has been increased from $7.5 million to $9.8 million in order to further expand reserves and resources surrounding our operating mines and to evaluate other areas of the HBB properties. At Wassa, further exploration of the SAK pits has been successful and, as a result, we have increased our resource base by an additional 3.13 million tonnes grading 1.56 g/t gold.
CASH AND CASH FLOW
Our cash and cash equivalents totaled $43.2 million at the end of the second quarter of 2009 compared to $28.1 million at the end of the first quarter. Cash flow from operations totaled $29.3 million in the second quarter of 2009 compared to $11.1 million for the first quarter of 2009.
A revolving credit facility was put in place during the quarter. This revolver initially gave us access to $15 million of credit and was increased to $30 million on July 30, 2009. We have drawn down $5.0 million of this facility which was partially used to purchase the 1.5% Benso royalty.
Liquidity Outlook
Our original capital budget for 2009 has been increased from $38 million to approximately $47 million. We will spend $2 million more on resource drilling with the balance of the increase being spent on sustaining capital at both mining operations.
We anticipate that all of our cash needs for the second half of 2009 will be met by the $43.2 million cash on hand, amounts available on the $30 million revolver facility, cash generated from current operations and amounts available on our equipment financing facility.
LOOKING AHEAD
Our objectives for 2009 include the following:
- Further optimization of the Bogoso sulfide processing plant to further improve throughput and recovery rates and reduce costs;
- Permitting and development of the Prestea South deposits to provide oxide ore in 2010 for the Bogoso oxide processing plant; and
- Continued exploration at Bogoso/Prestea, Wassa and the HBB properties.
Our updated guidance for 2009 is as follows:
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2009
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Guidance Gold Production Cash Operating Cost
-------------------------- ----------------- ---------------------
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Bogoso/Prestea 190,000 $650
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Wassa 210,000 $450
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Total 400,000 $545
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Effective August 5, 2009, Mr. Michael A. Terrell has resigned from the Board of Directors of Golden Star.
FINANCIAL STATEMENTS The following information is derived from the Company's unaudited consolidated financial statements contained in our Form 10-Q, which we filed with the SEC today and is available on our website.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of US dollars except shares issued and outstanding)
(unaudited)
As of As of
June 30, December 31,
ASSETS 2009 2008(1)
CURRENT ASSETS
Cash and cash equivalents $ 43,173 $ 33,558
Accounts receivable 4,682 4,306
Inventories 47,101 49,134
Deposits 4,502 3,875
Prepaids and other 1,901 1,100
------------- --------------
Total Current Assets 101,359 91,973
RESTRICTED CASH 3,804 4,249
DEFERRED EXPLORATION AND DEVELOPMENT COSTS 13,104 13,713
PROPERTY, PLANT AND EQUIPMENT 245,820 271,528
INTANGIBLE ASSETS 10,534 -
MINING PROPERTIES 301,131 312,029
OTHER ASSETS 109 807
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Total Assets $ 675,861 $ 694,299
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LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 29,315 $ 43,355
Accrued liabilities 32,400 30,879
Fair value of derivatives - 1,690
Asset retirement obligations 1,779 1,620
Current debt 10,504 12,778
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Total Current Liabilities 73,998 90,322
LONG TERM DEBT 114,846 112,649
ASSET RETIREMENT OBLIGATIONS 30,222 30,036
FUTURE TAX LIABILITY 27,702 33,125
------------- --------------
Total Liabilities 246,768 266,132
MINORITY INTEREST - -
COMMITMENTS AND CONTINGENCIES
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. Shares issued and
outstanding: 236,428,061 at June 30,
2009, and 235,945,311 at December 31, 2008 616,050 615,463
CONTRIBUTED SURPLUS 16,261 15,197
EQUITY COMPONENT OF CONVERTIBLE DEBENTURES 34,542 34,542
ACCUMULATED OTHER COMPREHENSIVE INCOME (47) (88)
DEFICIT (237,713) (236,947)
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Total Shareholders' Equity 429,093 428,167
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Total Liabilities and Shareholders' Equity $ 675,861 $ 694,299
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(1) Some prior year period amounts in these financial statements have been
adjusted to reflect retroactive adoption of new Canadian accounting
rules.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in thousands of US dollars except share and per share data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
REVENUE 2009 2008 2009 2008
---------- ---------- ---------- ----------
Gold revenues $ 91,868 $ 70,431 $ 179,513 $ 123,614
Cost of sales (87,760) (71,422) (172,277) (120,324)
---------- ---------- ---------- ----------
Mine operating margin 4,108 (991) 7,236 3,290
OTHER EXPENSES, (GAINS) AND
LOSSES
Exploration expense 237 558 347 947
General and administrative
expense 3,745 3,870 7,159 8,209
Abandonment and impairment - - 290 -
Derivative mark-to-market
(gain)/loss 396 (199) 84 243
Property holding costs 660 - 2,002 -
Foreign exchange (gain)/loss (2,542) 341 (4,213) (21)
Interest expense 3,824 3,719 7,534 7,412
Interest and other income (43) (255) (83) (635)
Loss on sale of assets 125 - 304 -
Gain on sale of investments - (1,505) - (1,505)
---------- ---------- ---------- ----------
Loss before minority
interest (2,294) (7,520) (6,188) (11,360)
Minority interest - 866 - 1,014
---------- ---------- ---------- ----------
Net loss before income
tax (2,294) (6,654) (6,188) (10,346)
Income tax benefit 2,674 - 5,422 -
---------- ---------- ---------- ----------
Net income/(loss) $ 380 $ (6,654) $ (766) $ (10,346)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
OTHER COMPREHENSIVE INCOME/
(LOSS)
Other comprehensive income
- unrealized gain on
investments 14 31 41 2,605
---------- ---------- ---------- ----------
Comprehensive income/(loss) $ 394 $ (6,623) $ (725) $ (7,741)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Deficit, beginning of period (238,093) (121,336) (236,947) (117,644)
---------- ---------- ---------- ----------
Deficit, end of period (237,713) (127,990) (237,713) (127,990)
---------- ---------- ---------- ----------
Net income/(loss) per common
share - basic $ 0.002 $ (0.028) $ (0.003) $ (0.044)
Net income/(loss) per common
share - diluted $ 0.002 $ (0.028) $ (0.003) $ (0.044)
Weighted average shares
outstanding (millions) 236.2 235.9 236.0 235.4
---------- ---------- ---------- ----------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of US dollars)
(unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
OPERATING ACTIVITIES: 2009 2008 2009 2008
---------- ---------- ---------- ----------
Net income/(loss) $ 380 $ (6,654) $ (766) $ (10,346)
Reconciliation of net
income/(loss) to net cash
used in operating
activities:
Depreciation, depletion and
amortization 28,371 11,870 52,692 22,620
Amortization of loan
acquisition cost 161 110 327 275
Abandonment and impairment - - 290 -
Gain on sale of equity
investments - (1,505) - (1,505)
Loss on sale of assets 126 - 305 -
Stock compensation 455 450 1,065 1,139
Income tax benefit (2,674) - (5,422) -
Reclamation expenditures (490) (259) (731) (322)
Fair value of derivatives 1,611 (129) (2,189) 35
Accretion of convertible
debt 1,642 1,540 3,257 3,047
Accretion of asset
retirement obligations 539 146 1,077 363
Minority interests - (866) - (1,014)
---------- ---------- ---------- ----------
30,121 4,703 49,905 14,292
Changes in assets and
liabilities:
Accounts receivable 4,889 (4,162) (359) 188
Inventories (669) 3,141 841 (12,344)
Prepaids and other 615 (791) (318) (1,004)
Deposits (150) 2,749 (1,101) 315
Accounts payable and accrued
liabilities (5,526) 4,051 (8,557) 3,206
Other - - (38) -
---------- ---------- ---------- ----------
Net cash provided by
operating activities 29,280 9,691 40,373 4,653
INVESTING ACTIVITIES:
Expenditures on deferred
exploration and development (268) (1,970) (670) (3,922)
Expenditures on mining
properties (9,854) (13,231) (19,894) (20,946)
Expenditures on property,
plant and equipment (3,984) (3,164) (4,852) (5,417)
Cash (used to)/refunded
from secure letters of
credit 371 18 445 (3,642)
Proceeds from sale of
equity investment - 802 - 802
Change in payable on
capital expenditures (2,472) (6,314) (3,962) (8,346)
Change in deposits on
mine equipment and material - - 474 -
---------- ---------- ---------- ----------
Net cash used in investing
activities (16,207) (23,859) (28,459) (41,471)
FINANCING ACTIVITIES:
Issuance of share capital,
net of issue costs 505 7 586 6,255
Principal payments on debt (2,783) (4,542) (7,192) (8,885)
Proceeds from debt
agreements and equipment
financing 5,443 1,114 5,478 1,114
Other (1,172) 59 (1,171) (273)
---------- ---------- ---------- ----------
Net cash (used in)/
provided by financing 1,993 (3,362) (2,299) (1,789)
Increase/(decrease) in cash
and cash equivalents 15,066 (17,530) 9,615 (38,607)
---------- ---------- ---------- ----------
Cash and cash equivalents,
beginning of period 28,108 54,677 33,558 75,754
---------- ---------- ---------- ----------
Cash and cash equivalents
end of period $ 43,174 $ 37,147 $ 43,173 $ 37,147
---------- ---------- ---------- ----------
COMPANY PROFILE
Golden Star holds a 90% equity interest in Golden Star (Bogoso/Prestea) Limited and Golden Star (Wassa) Limited, which respectively own the Bogoso/Prestea and Wassa open-pit gold mines through subsidiaries in Ghana. In addition, Golden Star has an 81% interest in the currently inactive Prestea Underground mine in Ghana, as well as gold exploration interests elsewhere in Ghana, in other parts of West Africa and in the Guiana Shield of South America. Golden Star has approximately 236 million shares outstanding.
Statements Regarding Forward-Looking Information: Some statements contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Such statements include comments regarding the; permitting and the mining at Prestea South; planned exploration activities and drilling, including exploration at Bogoso/Prestea, Wassa, and the HBB properties; the ability to fund sustaining capital requirements; optimization of throughput and recovery rates at the Bogoso sulfide processing plant; our 2009 production and cash operating cost estimates, capital expenditure estimates, sources of and adequacy of cash to meet capital and other needs in 2009;2009 planned capital budget spending; and our 2009 objectives. Factors that could cause actual results to differ materially include timing of and unexpected events at the Bogoso/Prestea oxide and sulfide processing plant; variations in ore grade, tonnes mined, crushed or milled; variations in relative amounts of refractory, non-refractory and transition ores; delay or failure to receive board or government approvals and permits; the availability and cost of electrical power, timing and availability of external financing on acceptable terms; technical, permitting, mining or processing issues, changes in U.S. and Canadian securities markets, and fluctuations in gold price and costs and general economic conditions. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in our Form 10-K for 2008 and the quarterly reports on Form 10-Q filed in 2009. The forecasts contained in this press release constitute management's current estimates, as of the date of this press release, with respect to the matters covered thereby. We expect that these estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this press release represent management's estimate as of any date other than the date of this press release.
Non-GAAP Financial Measures: in this news release, we use the terms "cash operating cost per ounce." Cash operating cost per ounce is equal to total cash costs less production royalties and production taxes, 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 period's values to detect trends that may indicate increases or decreases in operating efficiencies. This measure is also compared against budget to alert management to trends that may cause actual results to deviate from planned operational results. We provide this measure to our investors to allow them to also monitor operational efficiencies of our mines. We calculate this measure for both individual operating units and on a consolidated basis. Cash operating cost per ounce should be considered as Non-GAAP Financial Measures as defined in SEC Regulation S-K Item 10 and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. There are material limitations associated with the use of such non-GAAP measures. Since this measure does not incorporate revenues, changes in working capital and non-operating cash costs, it is not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Changes in numerous factors including, but not limited to, mining rates, milling rates, gold grade, gold recovery, and the costs of labor, consumables and mine site general and administrative activities can cause these measures to increase or decrease. We believe that these measures are the same or similar to the measures of other gold mining companies, but may not be comparable to similarly titled measures in every instance.
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