Golden Star Resources Ltd., (NYSE MKT: GSS; TSX: GSC; GSE: GSR), which operates the Wassa and Prestea mines in the Western region of Ghana, has announced that its first quarter production exceeded expectations with approximately 53,000 ounces of gold produced.
Preliminary cash operating costs for the first quarter are estimated at below $750 per ounce, also lower than expected.
In addition, the Company received $20 million from RGLD Gold AG (RGLD), a subsidiary of Royal Gold, Inc., on April 1, 2016, as per the payment schedule established in the amended streaming agreement announced on December 31, 2015.
“As we began demonstrating our ability to deliver reliable production and stability in costs in the fourth quarter last year, these first quarter 2016 results continue to enhance confidence in our ability to deliver on the low-cost producer strategy that was introduced in 2013,” commented Sam Coetzer, President and CEO of the Company.
“The payment from Royal Gold was also an important milestone for the Company as it indicates Royal Gold’s ongoing confidence in the final design of our Prestea Underground project which the funds are earmarked for. With all of the necessary funding committed in order to develop and place into production our two new underground projects over the next year and a half, the Company can continue to focus on its balance sheet and the generation of cash flow that can be used to further reduce debt,” Mr Coetzer said.
First Quarter Production and Costs
Production in the first quarter of 2016 was from the open pit operations with approximately 22,000 ounces of production from Prestea and approximately 31,000 ounces from Wassa. The open pit operations at both Wassa and Prestea are expected to be the primary source of production through 2016 as development work continues on the respective underground projects, Golden Star said.
The new underground projects are scheduled to begin contributing to production beginning late this year from the Wassa Underground and in mid-2017 for the Prestea Underground, thereby increasing annualised production levels by approximately 25% beginning in late 2017.
The preliminary cash operating costs estimated for the first quarter of 2016 are below $750 per ounce reflecting a level that is consistent with the new lower cost structure that has been established by the Company. “This significant change in the cost structure was achieved through the suspension of the high-cost, high power-consuming refractory production that was suspended last year, other operational improvements and cost management measures that have been implemented,” the miner said. As the Company’s entire mineral reserve base and sources of planned production are comprised solely of non-refractory ounces, the Company is confident that its lower cost structure is sustainable going forward as further improvements are being evaluated.
Streaming Agreement Funds Received
The $20 million payment from RGLD was paid on April 1, 2016, after the Company met certain conditions, which include the acceptance by RGLD of the final design of the Prestea Underground mine. “This payment brings the total payments made to date to $95 million of the total $145 million expected before the end of 2016 and is an important milestone for the Company. The development of the Prestea Underground project continues and is on track to commence production in mid-2017,” Golden Star said.
First Quarter Results Release
The Company will release its first quarter financial results after the close of market on May 4, 2016 followed by a conference call and webcast at 8:30 a.m. EDT on May 5, 2016.
Annual & Special Meeting of Shareholders
Golden Star said its annual & special meeting of shareholders will take place on Thursday May 5, 2016 at 11:30 a.m. EDT at the offices of Fasken Martineau DuMoulin LLP, Huron / Escarpment Boardrooms, 333 Bay Street, Suite 2400, Bay Adelaide Centre, Toronto, Ontario, Canada.
Golden Star is an established gold mining company that owns and operates the Wassa and Prestea mines situated on the prolific Ashanti Gold Belt in western Ghana, Africa. Listed on the NYSE MKT, the TSX, and the GSE, Golden Star is strategically focused on increasing operating margins and cash flow through the development of two high grade, low cost underground mines both in conjunction with existing open pit operations. The Wassa Underground is expected to commence production in 2016 with the Prestea Underground commencing production in 2017. Both projects are fully funded and on track to begin production as expected. Production in 2016 is expected to be between 180,000 – 205,000 ounces of gold with costs of $815 – $925 per ounce.