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

Golden Star Resources Ltd.

August 10, 2009 17:13 ET

Golden Star Reports Record Quarterly Gold Sales and Financial Results for Second Quarter 2009

DENVER, COLORADO--(Marketwire - Aug. 10, 2009) - 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

 For the quarters of 2008
  For the nine months ended
 
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
           
 Q3
  Q2
  Q1
  September 30, 2008
 
Bogoso/Prestea gold sold (oz)
51,959
  46,934
  31,414
  130,307
 
Wassa gold sold (oz)
22,083
  31,379
  26,013
  79,475
 
 Total gold sold (oz)
74,042
  78,313
  57,427
  209,782
 
Average realized price ($/oz)
863
  900
  926
  894
 
Cash operating cost--combined ($/oz)
854
  730
  624
  744
 
Gold revenues ($000's)
64,099
  70,431
  53,183
  187,713
 
Cash flow provided by operations ($000's)
1,507
  9,691
  (5,038
)
 6,160
 
Net income/(loss) ($000's)
(27,313
)
 (6,935
)
 (3,914
)
 (10,849
)
Net income/(loss) per share - basic ($)
(0.092
)
 (0.029
)
 (0.017
)
 (0.138
)
            
            
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
Second Quarter
  First Quarter
  Year To Date
    
 2009
  2009
  2009
    
Bogoso/Prestea gold sold (oz)
45,760
  40,546
  86,306
    
Wassa gold sold (oz)
53,251
  56,426
  109,677
    
 Total gold sold (oz)
99,011
  96,972
  195,983
    
Average realized price ($/oz)
928
  904
  916
    
Cash operating cost--combined ($/oz)
558
  571
  564
    
Gold revenues ($000's)
91,868
  87,645
  179,513
    
Cash flow provided by operations ($000's)
29,280
  11,093
  40,373
    
Net income/(loss) ($000's)
380
  (1,146
)
 (766
)
   
Net income/(loss) per share - basic ($)
0.002
  (0.005
)
 (0.003
)
   

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.

      
OPERATING RESULTSFirst Quarter Fourth Quarter  First Quarter
 2009 2008 2008
Mining     
Ore mined (000s t)—Refractory654 558 853
Ore mined (000s t)—Non refractory- 4 25
Total ore mined (t)654 562 878
Waste mined (t)3,352 4,154 5,493
Bogoso Sulfide Plant Results     
Refractory ore processed (t)627 703 828
Refractory grade—(g/t)3.00 2.78 2.67
Recovery—Refractory (%)71.5 71.1 59.0
Cash operating cost ($/oz)813 799 764
Gold sold (oz)40,546 40,192 31,414
      
      
OPERATING RESULTSSecond Quarter First Quarter Year To Date
 2009 2009 2009
Mining     
Ore mined (000s t)—Refractory727 653 1,380
Ore mined (000s t)—Non refractory- - -
Total ore mined (000's t)
727
 653
 1,380
Waste mined (000's t)
3,921
 3,352
 7,273
Bogoso Sulfide Plant Results     
Refractory ore processed (000's t)715 626 1,341
Refractory grade—(g/t)2.66 2.68 2.67
Recovery—Refractory (%)72.2 71.5 71.9
Bogoso Oxide Plant Results     
Non refractory ore processed (000's t)- - -
Non refractory ore grade (g/t)- - -
Recovery—Non refractory (%)- - -
Cash operating cost ($/oz)624 813 713
Gold sold (oz)45,760 40,546 86,306

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.

OPERATING RESULTSSecond Quarter First Quarter Year To Date
2009 2009 2009
Ore mined (000's t)530 656 1,186
Waste mined (000's t)4,396 3,569 7,965
Ore processed (000's t)637 746 1,383
Grade processed (g/t)2.62 2.55 2.58
Recovery (%)94.9 95.6 95.3
Cash operating cost ($/oz)502 397 448
Gold sold (oz)53,251 56,425 109,677

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:

 2009
Guidance Gold Production
 Cash Operating Cost
Bogoso/Prestea 190,000 $650
Wassa 210,000 $450
Total 400,000 $545

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, 
ASSETS2009  2008(1)
CURRENT ASSETS     
 Cash and cash equivalents$          43,173  $               33,558 
 Accounts receivable4,682  4,306 
 Inventories47,101  49,134 
 Deposits4,502  3,875 
 Prepaids and other1,901  1,100 
  Total Current Assets101,359  91,973 
RESTRICTED CASH3,804  4,249 
DEFERRED EXPLORATION AND DEVELOPMENT COSTS13,104  13,713 
PROPERTY, PLANT AND EQUIPMENT245,820  271,528 
INTANGIBLE ASSETS10,534  - 
MINING PROPERTIES301,131  312,029 
OTHER ASSETS109  807 
  Total Assets$        675,861  $             694,299 
      
LIABILITIES     
CURRENT LIABILITIES     
 Accounts payable$          29,315  $               43,355 
 Accrued liabilities32,400  30,879 
 Fair value of derivatives-  1,690 
 Asset retirement obligations1,779  1,620 
 Current debt10,504  12,778 
  Total Current Liabilities73,998  90,322 
LONG TERM DEBT114,846  112,649 
ASSET RETIREMENT OBLIGATIONS30,222  30,036 
FUTURE TAX LIABILITY27,702  33,125 
  Total Liabilities246,768  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.616,050  615,463 
  Shares issued and outstanding: 236,428,061 at June 30, 2009, and 235,945,311 at December 31, 2008 
CONTRIBUTED SURPLUS16,261  15,197 
EQUITY COMPONENT OF CONVERTIBLE DEBENTURES34,542  34,542 
ACCUMULATED OTHER COMPREHENSIVE INCOME(47) (88)
DEFICIT(237,713) (236,947)
  Total Shareholders' Equity429,093  428,167 
  Total Liabilities and Shareholders' Equity$        675,861  $             694,299 
      
      
(1) Some prior year period amounts in these financial statements have been adjusted to reflect retroactive adoption of new Canadian accounting rules. 
      
Note on prior years financials:  The amounts shown in Mine Property and Deficit have been adjusted for the impact of adopting 
CICA 3064.  This is different from what was filed in 2008.     
      
      

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
 
            
            
 Prior years cost of sales was adjusted for the adoption of CICA 3064 by $281 for the 2nd qtr and $503 for ytd 2008 in deprecation adjustment.  NBV at 1/1/08 was $2,671. 
   

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 activities
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
 
            
            
Prior years net income and depreciation was adjusted to relfect the effects of adoption of 3064.  Adjusting by the depreciation amount of $281 for the 2nd qtr and $503 ytd 2008.

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.

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