Golden Star Resources Ltd.
TSX : GSC
NYSE Amex : GSS

Golden Star Resources Ltd.

November 09, 2009 17:15 ET

Golden Star Reports Another Quarterly Record for Gold Sales of Over 107,000 Ounces

DENVER, COLORADO--(Marketwire - Nov. 9, 2009) - Golden Star Resources Ltd. (TSX:GSC)(NYSE Amex:GSS)(GSE:GSR) today announced its unaudited third 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, November 10, 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, commented, "We are pleased to report another record quarter in terms of gold sales, revenues and operating cash flow. Golden Star is on track to sell over 400,000 ounces of gold in 2009. Our properties in Ghana are situated on one of the historically most prolific gold districts in the world. Consequently, our brownfields drilling programs continue to show exciting results and resource additions."

RESULTS AND HIGHLIGHTS

- Record quarterly gold sales of 107,433 ounces, a 45% increase over third quarter 2008 and a 9% increase over the second quarter of 2009;

- Gold revenues for the quarter of $103.8 million representing an increase of 62% over third quarter 2008 and an 18% increase over the second quarter 2009 revenues;

- Operating cash flow, before working capital adjustments, of $30.5 million for the third quarter of 2009 or $0.129 per share;

- Operating cash flow of $26.3 million for the third quarter of 2009 or $0.111 per share;

- Quarterly cash operating cost of $586 per ounce, a 33% improvement over third quarter 2008;

- Cash balance of $57.6 million up from $28.1 million at the end of the first quarter of 2009 and up from $43.2 million at the end of the second quarter of this year;

- Average realized gold price of $967 for the third quarter of 2009, up 12% over the realized price for the third quarter of 2008.



FINANCIAL SUMMARY

SUMMARY OF CONSOLIDATED For three months ended For nine months ended
FINANCIAL RESULTS September 30, September 30,
----------------------- ----------------------
2009 2008 2009 2008
--------- --------- -------- --------
--------- --------- -------- --------
Bogoso/Prestea gold sold (oz) 53,069 51,959 139,375 130,307
Wassa gold sold (oz) 54,364 22,083 164,041 79,475
--------- --------- -------- --------
Total gold sold (oz) 107,433 74,042 303,416 209,782

Average realized price ($/oz) 967 866 934 895
Cash operating cost
--combined ($/oz) 586 871 572 750
Gold revenues ($000's) 103,804 64,099 283,317 187,713
Cash flow provided/(used)
by operations ($000's) 26,299 (2,064) 66,673 2,589
Net loss ($000's) (2,342) (22,236) (3,108) (32,583)
Net loss per share - basic ($) (0.010) (0.094) (0.013) (0.138)


BOGOSO/PRESTEA

At Bogoso/Prestea, third quarter gold sales were a record 53,069 ounces, an increase of 16% from the second quarter of 2009 and up 31% over the first quarter of this year. Ore processed was 11% higher than in the second quarter and the gold grade increased to 2.98 g/t, up from 2.66 g/t during the preceding quarter.



For three months ended For nine months ended
OPERATING RESULTS September 30, September 30,
----------------------- ----------------------
2009 2008 2009 2008
--------- --------- -------- --------
--------- --------- -------- --------
Mining
Ore mined (000's t)-Refractory 751 668 2,131 2,046
Ore mined (000's t)-Non refractory - 51 - 136
Total ore mined (000's t) 751 719 2,131 2,182
Waste mined (000's t) 3,925 4,891 11,197 15,397
----------------------------------------------------------------------------
Bogoso Sulfide Plant Results
Refractory ore processed
(000's t) 797 731 2,139 2,034
Refractory grade-(g/t) 2.98 2.73 2.79 2.83
Recovery-Refractory (%) 69.4 67.5 70.9 64.9
----------------------------------------------------------------------------
Bogoso Oxide Plant Results
Ore processed (000's t) - 127 - 360
Ore grade-(g/t) - 2.38 - 2.38
Recovery (%) - 50.3 - 60.0
----------------------------------------------------------------------------
Cash operating cost ($/oz) 704 903 710 848
Gold sold (oz) 53,069 51,959 139,375 130,307


WASSA

Gold sold from Wassa's production during the third quarter 2009 was 54,364 ounces, up 2% over the previous quarter and up 146% over the third quarter of 2008. A primary driver for this increase was greater amounts of higher grade ore from the HBB properties that is being delivered and blended with the Wassa ore.



For the three For the nine
months ended months ended
OPERATING RESULTS September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
--------- --------- -------- --------
--------- --------- -------- --------
Ore mined (000's t) 560 521 1,746 2,228
Waste mined (000's t) 4,249 1,274 12,215 3,840
Ore processed (000's t) 612 722 1,996 2,505
Grade processed (g/t) 3.12 1.26 2.75 1.18
Recovery (%) 95.5 92.0 95.4 92.8
Cash operating cost ($/oz) 470 793 455 588
Gold sold (oz) 54,364 22,083 164,041 79,475


EXPLORATION

In 2009, we increased our exploration budget to approximately $10 million. The majority of drilling in the third quarter of this year has been focused on resource definition drilling surrounding our operating areas. At Wassa, drills are turning on the Benso, Hwini-Butre and Chichiwelli deposits, situated along our haul road. We expect significant reserve and resource additions.

In addition to drilling at Wassa, we plan to drill deep targets at Bogoso that were identified from the VTEM geophysical survey completed in 2008. These drill holes will determine deeper ore potential at Bogoso.

Other exploration plans going forward include a soil geochemistry study at the Amelekia and Abengourou concessions in the Ivory Coast, ground geophysics at the Sonfon property, a joint venture with African Aura Mining Inc., in Sierra Leone, preliminary geological assessments for two new concessions in Burkina Faso, continuation of exploration activities at Saramacca, our joint venture with Newmont in Suriname, and continuing property evaluations and project generation in Brazil.

CASH AND CASH FLOW

At September 30, 2009, our cash and cash equivalents totaled $57.6 million compared to $43.2 million at the end of the second quarter and $28.1 million at the end of the first quarter.

Liquidity Outlook

The capital forecast for 2009 is estimated to be approximately $45 million. This includes development work at Hwini-Butre, pit development at Bogoso, deferred exploration and mine site drilling and sustaining capital for both mine sites.

LOOKING AHEAD

Our objectives for the remainder of 2009 include the following:

- Further optimization of the Bogoso sulfide processing plant to 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 to delineate reserves and resources.

Our guidance for 2009 is as follows:



----------------------------------------------------------------------------
2009
-----------------------------------------------------
Guidance Gold Production Cash Operating Cost Per Ounce
--------------- --------------- ------------------------------
Bogoso/Prestea 190,000 $685
Wassa 215,000 $460
--------------- --------------- ------------------------------
Total 405,000 $565
----------------------------------------------------------------------------


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
September 30, December 31,
ASSETS 2009 2008
CURRENT ASSETS
Cash and cash equivalents $ 57,634 $ 33,558
Accounts receivable 5,626 4,306
Inventories 51,490 49,134
Deposits 4,724 3,875
Prepaids and other 677 1,100
----------- -----------
Total Current Assets 120,151 91,973
RESTRICTED CASH 3,804 4,249
DEFERRED EXPLORATION AND DEVELOPMENT COSTS 11,245 13,713
PROPERTY, PLANT AND EQUIPMENT 239,052 271,528
INTANGIBLE ASSETS 10,007 -
MINING PROPERTIES 286,804 312,029
OTHER ASSETS 183 807
----------- -----------
Total Assets $ 671,246 $ 694,299
----------- -----------
----------- -----------

LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 30,465 $ 43,355
Accrued liabilities 31,641 30,879
Fair value of derivatives 251 1,690
Asset retirement obligations 1,858 1,620
Current tax liability 616 -
Current debt 10,256 12,778
----------- -----------
Total Current Liabilities 75,087 90,322
LONG TERM DEBT 113,359 112,649
ASSET RETIREMENT OBLIGATIONS 30,651 30,036
FUTURE TAX LIABILITY 24,506 33,125
----------- -----------
Total Liabilities 243,603 266,132
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: 236,744,561
at September 30, 2009, and 235,945,311 at
December 31, 2008 616,444 615,463
CONTRIBUTED SURPLUS 16,685 15,197
EQUITY COMPONENT OF CONVERTIBLE DEBENTURES 34,542 34,542
ACCUMULATED OTHER COMPREHENSIVE INCOME 27 (88)
DEFICIT (240,055) (236,947)
----------- -----------
Total Shareholders' Equity 427,643 428,167
----------- -----------
Total Liabilities and Shareholders' Equity $ 671,246 $ 694,299
----------- -----------
----------- -----------



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
September 30, June 30,
---------------------- ---------------------
REVENUE 2009 2008 2009 2008
----------- ---------- ---------- ----------
Gold revenues $ 103,804 $ 64,099 $ 283,317 $ 187,713
Cost of sales 96,241 81,017 268,518 201,342
----------- ---------- ---------- ----------
Mine operating margin 7,563 (16,918) 14,799 (13,629)
OTHER EXPENSES, (GAINS) AND
LOSSES
Exploration expense 223 552 570 1,499
General and administrative
expense 3,290 3,740 10,449 11,949
Abandonment and impairment 2,787 1,539 3,077 1,539
Derivative mark-to-market
losses 1,003 1,395 1,087 1,638
Property holding costs 768 - 2,770 -
Foreign exchange (gain)/loss 540 (1,111) (3,673) (1,132)
Interest expense 3,942 3,616 11,476 11,028
Interest and other income (69) (142) (152) (777)
Loss on sale of assets 1 588 305 588
Gain on sale of investments - (3,570) - (5,075)
----------- ---------- ---------- ----------
Loss before minority interest (4,922) (23,525) (11,110) (34,886)
Minority interest - 1,289 - 2,303
----------- ---------- ---------- ----------
Net loss before income tax (4,922) (22,236) (11,110) (32,583)
Income tax benefit 2,580 - 8,002 -
----------- ---------- ---------- ----------
Net income/(loss) $ (2,342) $ (22,236) $ (3,108) $ (32,583)
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------

OTHER COMPREHENSIVE
INCOME/(LOSS)
Unrealized gains/(losses) on
investments 74 (5,555) 115 (2,950)
----------- ---------- ---------- ----------
Comprehensive income/(loss) $ (2,268) $ (27,791) $ (2,993) $ (35,533)
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------

Deficit, beginning of period (237,713) (127,991) (236,947) (117,644)
----------- ---------- ---------- ----------
Deficit, end of period (240,055) (150,227) (240,055) (150,227)
----------- ---------- ---------- ----------

Net income/(loss) per common
share - basic $ (0.010) $ (0.094) $ (0.013) $ (0.138)
Weighted average shares
outstanding (millions) 236.5 235.9 236.2 235.6
----------- ---------- ---------- ----------



CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of US dollars)
(unaudited)

Three months ended Six months ended
September 30, June 30,
---------------------- ---------------------
OPERATING ACTIVITIES: 2009 2008 2009 2008
----------- ---------- ---------- ----------
Net income/(loss) $ (2,342) $ (22,236) $ (3,108) $ (32,583)
Reconciliation of net income/
(loss) to net cash used in
operating activities:
Depreciation, depletion and
amortization 29,344 14,697 82,036 37,319
Amortization of loan
acquisition cost 478 291 805 566
Abandonment and impairment 2,787 1,539 3,077 1,539
Gain on sale of equity
investments - (3,570) - (5,075)
Loss on sale of assets (1) 588 305 588
Stock compensation 424 436 1,489 1,575
Income tax benefit (2,580) - (8,002) -
Reclamation expenditures (481) (437) (1,212) (759)
Fair value of derivatives 647 1,067 (1,542) 1,102
Accretion of convertible debt 1,669 1,562 4,926 4,609
Accretion of asset retirement
obligations 539 222 1,616 585
Minority interests - (1,288) - (2,303)
----------- ---------- ---------- ----------
30,484 (7,129) 80,390 7,163

Changes in assets and
liabilities:
Accounts receivable (877) (757) (1,236) (569)
Inventories (3,409) 2,281 (2,568) (10,063)
Prepaids and other 819 (327) 501 (1,331)
Deposits (222) (2,576) (1,323) (2,261)
Accounts payable and accrued
liabilities (496) 6,444 (9,053) 9,650
Other - - (38) -
----------- ---------- ---------- ----------
Net cash provided by/(used
in) operating 26,299 (2,064) 66,673 2,589
INVESTING ACTIVITIES:
Expenditures on deferred
exploration and development (928) (3,467) (1,598) (7,389)
Expenditures on mining
properties (3,637) (18,056) (23,532) (39,002)
Expenditures on property,
plant and equipment (4,614) (3,442) (9,466) (8,859)
Cash (used to)/refunded
from secure letters of credit - 497 445 (3,145)
Proceeds from sale of equity
investment - 5,730 - 6,532
Proceeds from the sale assets - 1,341 - 1,341
Change in payable on capital
expenditures 827 6,126 (3,135) (2,220)
Change in deposits on mine
equipment and material - - 474 -
----------- ---------- ---------- ----------
Net cash used in investing
activities (8,352) (11,271) (36,812) (52,742)
FINANCING ACTIVITIES:
Issuance of share capital,
net of issue costs 395 - 981 6,255
Principal payments on debt (2,870) (4,436) (10,062) (13,321)
Proceeds from debt agreements
and equipment financing - 6,104 5,478 7,218
Other (1,011) (193) (2,182) (466)
----------- ---------- ---------- ----------
Net cash (used in)/provided
by financing (3,486) 1,475 (5,785) (314)
Increase/(decrease) in cash
and cash equivalents 14,461 (11,860) 24,076 (50,467)
----------- ---------- ---------- ----------
Cash and cash equivalents,
beginning of period 43,173 37,147 33,558 75,754
----------- ---------- ---------- ----------
Cash and cash equivalents
end of period $ 57,634 $ 25,287 $ 57,634 $ 25,287
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------


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 237 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 planned exploration activities and drilling, including exploration at Bogoso/Prestea, Wassa, and the HBB properties; our expectations regarding increases in reserve and resource estimates; 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.

Contact Information

  • Golden Star Resources Ltd.
    Bruce Higson-Smith
    Vice President Corporate Development
    +1-800-553-8436
    or
    Golden Star Resources Ltd.
    Anne Hite
    Investor Relations Manager
    +1-800-553-8436
    www.gsr.com