Mr. Tom Mair reports
GOLDEN STAR RESOURCES REPORTS FIRST QUARTER FINANCIAL RESULTS
Golden Star Resources Ltd. is releasing its unaudited financial results for the first quarter ending March 31, 2012.
Total first quarter 2012 gold sales increased to 77,725 ounces, up 10 per cent over fourth quarter 2011 gold sales of 70,811 ounces. Compared with the first quarter of 2011, gold sales in the first quarter of 2012 were down 7 per cent, but the higher gold price drove revenues higher by 12 per cent to $131-million.
Total material mined in the first quarter of 2012 was 13.3 million tonnes, 38 per cent higher than the first quarter of 2011, and 6 per cent lower than the fourth quarter of 2011. Nevertheless, cash operating costs at Bogoso/Prestea came down from $1,370 per ounce in the first quarter of 2011, to $1,222 per ounce in the first quarter of 2012, partially as a result of the more efficient mining operations. At Wassa, in the same period, cash operating costs increased from $757 per ounce to $999 per ounce, predominantly as a result of lower-grade ore processed. Quarter on quarter, the cash operating costs across both mines were similar despite lower grades of ore processed in each case.
The company generated $17.9-million in net cash from operations in the first quarter of 2012, compared with $5.9-million of cash used in operations in the first quarter last year. Net income attributable to Golden Star shareholders in the first quarter of 2012 increased 54 per cent to $9.1-million, from $5.9-million in the same quarter last year. Diluted earnings per share in the first quarter were 3.5 cents, up from 2.3 cents in the first quarter of 2011. The company recognized a $22.4-million gain on sale of assets in the first quarter related to the sale of its Goulagou-Rounga property in Burkina Faso to Riverstone Resources Inc.
"We generated solid revenue and earnings growth in the first quarter, and recorded our third consecutive quarter of positive cash flow from operations," said Tom Mair, president and chief executive officer. "While sequential quarter gold production continued to increase and metallurgical recoveries remained solid, we are experiencing higher-than-desired cash operating costs due to various maintenance and power grid issues. We are confident we'll overcome these issues and be successful in lowering operating costs while steadily increasing gold production through a combination of successful drilling programs and improved operational efficiencies. In the meantime, we are highly encouraged by results of our drilling under the Wassa pits and by the results of our recently published preliminary economic assessment on the Prestea underground mine."
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
Three months ended
March 31, March 31, Dec. 31,
2012 2011 2011
Bogoso/Prestea gold sold (oz) 41,242 30,576 35,475
Wassa/HBB gold sold (oz) 36,483 53,332 35,336
Total gold sold (oz) 77,725 83,908 70,811
Average realized gold price ($/oz) 1,686 1,389 1,678
Cash operating cost, combined
($/oz) 1,118 980 1,089
Gold revenues ($000s) 131,020 116,506 118,814
Cash flow provided by (used in)
operations ($000s) 17,884 (5,865) 19,491
Net income attributable to
shareholders ($000s) 9,113 5,928 7,241
Net income attributable to
shareholders ($/share) 0.035 0.023 0.028
Bogoso/Prestea recap
Bogoso/Prestea gold sales in the 2012 first quarter increased 35 per cent to 41,242 ounces, from 30,576 ounces in the same quarter last year, and increased 16 per cent over the 35,475 ounces produced in the fourth quarter of 2011.
Cash operating costs were $1,222 per ounce gold sold in the first quarter of 2012, comparing favourably with $1,370 per ounce in the first quarter last year. First quarter sulphide cash operating costs of $1,188 per ounce were comparable with those of the fourth quarter of 2011. Due to the start-up of the oxide plant in the first quarter, oxide cash operating costs were $1,390 per ounce, a number that is expected to decline as the oxide plant reaches optimum production levels.
During the quarter, mining at Chujah and Bogoso North pits was back to design with stripping ratios at normal levels of between five and six. Sulphide stockpiles have increased to more than 500,000 tonnes, which is expected to minimize wet weather risk and allow slowdown of mining operations for the rest of the year. The sulphide plant at Bogoso made progress in the first quarter with fewer Biox reactor gearbox and agitator issues due to management taking over operation of the Bogoso back-up power supply and improved plant maintenance.
At Pampe, two bench slips occurred in the first quarter, affecting approximately 1.25 million tonnes of material. This will result in an increased stripping ratio at Pampe for the next several months and has resulted in deviations from the planned mining sequence. In turn, this will require the continued processing of stockpiled oxide and transition material, which is anticipated to result in lower-than-expected metallurgical recoveries until the mine can be returned to plan.
Wassa/HBB recap
Wassa/HBB gold sales in the first quarter of 2012 met expectations at 36,483 ounces, down from 53,332 ounces in the same quarter last year, but up sequentially from 35,336 ounces and 33,485 ounces in the fourth and third quarters of 2011, respectively. Cash operating costs in the 2012 first quarter declined to $999 per ounce, from $1,012 per ounce in the fourth quarter of 2011, as a result of higher gold production.
At Wassa/HBB, mining continued at the Wassa and Father Brown pits. The SAK 1 pit and Benso pits completed mining in the first quarter, although the company may return to Benso pending the outcome of an exploration review. Over all, Wassa performance in the first quarter was solid despite a seven-day grid power shutdown.
Exploration
The company has budgeted approximately $10-million for exploration activities in 2012, the majority of which will involve brownfields exploration around the Wassa and Bogoso/Prestea mine sites.
The company continued to delineate higher-grade shoots beneath the Wassa pits, with 24 holes drilled to a total of 7,300 metres (full drill results, plans and sections are available at the company's website). Drilling for the balance of 2012 is planned to continue testing the continuity of higher-grade mineralization defined thus far. The company expects to update its estimate of mineral resources at Wassa in the second half of the year.
At Bogoso/Prestea, rotary air blast (RAB) drilling continued on the Opon East deposit situated on the northern edge of the Bogoso concession. Results are pending.
In Cote d'Ivoire, the first phase of deep auger drilling has been completed, with results pending. If the results are positive, the company expects to initiate a RAB drill program in coming months.
In Brazil, the company continued with regional soil and stream sediment sampling on the Iriri joint venture with Votorantim Metals. In the first quarter, the joint venture rationalized its landholdings, dropping non-prospective ground.
Liquidity and capital resources
As at March 31, 2012, Golden Star has approximately $103.8-million in cash and cash equivalents, versus $103.6-million at Dec. 31, 2011. In addition, the company has $17.1-million in borrowing capacity under its equipment financing credit facility.
Golden Star invested approximately $24.7-million in capital projects in the first quarter, including $9.1-million for development projects, $12.1-million for the acquisition of new equipment and facilities at its mine sites, and $3.5-million for mine site drilling. The company expects to invest up to $70-million in capital projects during the rest of 2012.
The company has $125-million of convertible debentures due in November, 2012. If the debentures are not refinanced, the liability must be met by either payment in cash or payment in common shares or a combination of shares and cash, based on a share issue value which is 95 per cent of the weighted average trading price of the company's common shares on the New York Stock Exchange Amex for the 20 consecutive trading days ending five days preceding the maturity date and a maximum share issuance of 46.7 million shares. If the value of the 46.7 million shares is less than $125-million, the company would be required to pay cash, in addition to the shares issued, in an amount equal to the difference between the total value of the shares issued and the $125-million.
Guidance
The company's guidance for the year remains unchanged and its latest estimate for the second quarter is 83,000 to 87,000 ounces.
2012 forecast Bogoso/Prestea Wassa/HBB Combined
Ounces produced 210,000 to 225,000 140,000 to 145,000 350,000 to 370,000
Cash operating cost
($/oz) 1,100 to 1,180 950 to 985 1,040 to 1,100
First quarter news release and conference call
The company will conduct a conference call and webcast at 11 a.m. Eastern Time on May 10, 2012. Please call in at least five minutes prior to the conference call start time to ensure prompt access to the conference. The call can be accessed by telephone or by webcast as follows.
North American participants: 877-407-8289
Participants outside the United States and Canada: 201-689-8341
Webcast: At the company's website
A recording of the conference call will be available until May 31, 2012, through the company's website or by dialling the following.
North America: 877-660-6853, replay account No. 329, conference ID No. 392836
International outside the U.S. and Canada: 201-612-7415, replay account No. 329, conference ID No. 392836
CONSOLIDATED STATEMENTS OF OPERATIONS
(stated in thousands of U.S. dollars, except per-share data)
For the three months
ended March 31,
2012 2011
Revenue
Gold revenues $ 131,020 $ 116,506
Cost of sales 117,145 107,751
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Mine operating margin 13,875 8,755
Exploration expense 1,264 579
General and administrative expense 6,767 7,102
Derivative mark-to-market loss 162 4,249
(Gain) loss on fair value of convertible
debentures 892 (18,185)
Property holding costs 2,074 2,674
Foreign exchange loss 861 257
Interest expense 2,773 2,358
Interest and other (income) (138) (39)
Loss on sale of assets 15 --
Gain on sale of investments (22,385) --
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Income before income tax 21,590 9,760
Income tax expense (12,531) (4,305)
------------ ------------
Net income $ 9,059 $ 5,455
Net (loss) attributable to non-controlling
interest (54) (473)
------------ ------------
Net income attributable to Golden Star
shareholders $ 9,113 $ 5,928
============ ============
Net income per share attributable to Golden Star
shareholders
Basic $ 0.035 $ 0.023
Diluted $ 0.035 $ 0.023
We seek Safe Harbor.
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