Golden Star Achieves 2016 Production Guidance and Provides Guidance for 2017
TORONTO, Jan. 11, 2017 /CNW/ - Golden Star Resources Ltd. (NYSE MKT: GSS; TSX: GSC; GSE: GSR) ("Golden Star" or the "Company") is pleased to announce its production results for the fourth quarter and full year of 2016 and its guidance for 2017.
- Gold production of 194,054 ounces in 2016, in the top half of the guidance range of 180,000 to 205,000 ounces
- Gold production by asset in 2016, as follows:
- Wassa Main Pit: 93,319 ounces
- Wassa Underground Gold Mine ("Wassa Underground"): 11,062 ounces
- Prestea Open Pits: 89,673 ounces
- Gold production of 53,403 ounces during the fourth quarter of 2016, representing Golden Star's strongest quarterly performance of the year
- Wassa Underground's mining rates accelerated strongly during the quarter, culminating in the declaration of commercial production on January 1, 2017
- Prestea Open Pits achieved record quarterly production for the second consecutive quarter, with production of 24,128 ounces
- Cash and cash equivalents balance of $21.7 million as of December 31, 2016, which does not include the receipt of the $10 million scheduled advance payment on January 3, 2017 from RGLD Gold AG ("RGLD"), a subsidiary of Royal Gold, Inc., pursuant to the gold purchase and sale agreement, as amended, with RGLD
- Full year 2017 guidance of:
- 255,000-280,000 ounces of gold production
- $780-$860 per ounce cash operating cost1
- $970-$1,070 per ounce All-In Sustaining Cost ("AISC")1
1. See "Non-GAAP Financial Measures".
Sam Coetzer, President and Chief Executive Officer of Golden Star, commented:
"2016 was a transformational year for Golden Star as it represented our transition into a combined open pit and underground gold mining company and our first full year as a wholly non-refractory producer. It is testament to the hard work and determination of our teams at both operations that we achieved our 2016 production guidance in the top half of the range, at the same time as progressing two underground development projects. In 2017 we are focused on expanding our production and continuing to reduce our costs as Golden Star continues on its path to become a high grade, low cost producer."
2016 Production Results and Operations Update
Golden Star produced 194,054 ounces of gold in 2016, in the top half of its 2016 production guidance range of 180,000-205,000 ounces. The fourth quarter of 2016 represented the Company's strongest quarterly production of the year, with gold production of 53,403 ounces.
As at December 31, 2016, Golden Star had a cash and cash equivalents balance of $21.7 million, which does not include the receipt of the $10 million scheduled advance payment from RGLD on January 3, 2017.
Wassa Gold Mine (Main Pit and Underground)
Total gold production from Wassa Main Pit in 2016 was 93,319 ounces and in the fourth quarter of 2016, gold production was 21,411 ounces.
Total gold production from Wassa Underground in 2016 was 11,062 ounces and in the fourth quarter of 2016, gold production was 7,865 ounces. This represents an increase of 257% compared to the third quarter of 2016 and may be attributed to a strong acceleration of mining rates. As previously reported, the Company achieved commercial production at Wassa Underground on January 1, 2017, on time and within budget. At December 31, 2016, 3,818 metres of development had been completed and seven stopes had been accessed by the Company.
The total ore processed by the Wassa processing plant during 2016 was 2.6 million tonnes at a blended grade of 1.32 grams per tonne ("g/t") and with a metallurgical recovery of 94%.
Prestea Open Pits
Gold production from the Prestea Open Pits was 89,673 ounces in 2016, which was 28% higher than the top end of the Company's original 2016 guidance for these assets. Gold production in the fourth quarter of 2016 was 24,127 ounces, delivering record quarterly production from the Prestea Open Pits for the second consecutive quarter.
The total ore processed by the Prestea processing plant during 2016 was 1.5 million tonnes at a grade of 2.21g/t, and with a metallurgical recovery of 84%.
Construction of Prestea Underground continued on time and on budget, with the first Alimaks having arrived at Prestea Underground in December 2016. Other equipment also continued to arrive, including underground haulage equipment such as ore trucks and man carts.
The Company expects to blast the first stope during the second quarter of 2017. Development at Prestea Underground is anticipated to remain on track for commercial production to be achieved in mid-2017.
As previously announced, Golden Star received a mining lease for the Mampon deposit in October 2016. Mampon is a higher grade, oxide deposit (304Kt at 4.60g/t for 45,000 ounces) that is intended to be mined in conjunction with the Prestea Open Pits.
Golden Star expects to begin mining Mampon during the second quarter of 2017. Due to its relatively high grade nature compared to the Prestea Open Pits, Mampon is expected to enhance the Company's 2017 cash flow.
Golden Star intends to release an update on its exploration strategy for 2017 and beyond, in addition to further drilling results from the B Shoot zone of the Wassa Underground ore body, during the first quarter of 2017.
Full Year 2017 Guidance
The following tables set out Golden Star's full year 2017 guidance in terms of gold production, cash operating costs1, AISC1, and capital expenditures.
Gold Production and Operating Cost Guidance
|Asset||Gold Production(ounces)||Cash Operating
|Wassa Main Pit||85,000-95,000|
|Prestea Open Pits2||65,000-70,000|
Capital Expenditures Guidance
Capital ($ millions)
Capital ($ millions)
Expenditures ($ millions)
|Wassa Main Pit and Surface Infrastructure||5.9||1.1||7.0|
|Prestea Open Pits||5.0||-||5.0|
|Prestea Underground4 and Processing Plant||0.4||31.2||31.6|
|Notes to tables:|
Golden Star's production guidance for 2017 represents an increase of 31% to 44% compared to full year production in 2016. This increase is expected to be achieved due to the following factors:
- Production from Wassa Underground, which has Mineral Reserves grading 4.59g/t, is expected to continue to ramp-up during the year. The Company anticipates that production will increase significantly from the third quarter of 2017 onwards as Golden Star begins to access the transverse stopes of the higher grade B Shoot zone;
- Commercial production at Prestea Underground, which has Mineral Reserves grading 14.02g/t, is expected to be achieved in mid-2017; and
- Production from the Mampon deposit is expected to commence during the second quarter of 2017
As a result of the above factors being anticipated to occur primarily during the second half of 2017, Golden Star expects gold production to be weighted towards the second half of the year. Gold production in the first and second quarters of 2017 is expected to be in line with the production results for the fourth quarter of 2016.
Consequently, Golden Star anticipates that its cash operating cost per ounce1 and AISC per ounce1 will be higher during the first half of 2017, due to the lower grade ore being fed to both processing plants during this period. If higher grade ore begins to be processed in the second half of 2017, Golden Star expects its cash operating cost per ounce1 and AISC per ounce1 to decrease accordingly, which is expected to result in the Company achieving its full year 2017 cost guidance.
Currently, Golden Star expects production to conclude at the Prestea Open Pits and Mampon during the third quarter of 2017, however if the Company's exploration campaign is successful, it may be possible to extend production from these deposits.
Capital expenditures are expected to be higher in the first half of 2017 than in the second half of 2017 due to the costs associated with the continued construction of Prestea Underground and accessing the Mampon deposit. If Prestea Underground achieves commercial production as expected during mid-2017, capital expenditures are expected to reduce accordingly.
Golden Star expects to release its fourth quarter and full year 2016 Financial Results on February 21, 2017. The Company's 2016 cash operating cost per ounce1 and AISC per ounce1 will also be reported at that time.
All monetary amounts refer to United States dollars unless otherwise indicated.
1. See "Non-GAAP Financial Measures"
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 Ghana, West 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 its two high grade, low cost underground mines both in conjunction with existing open pit operations. The Wassa Underground Gold Mine commenced commercial production in January 2017 and the Prestea Underground Gold Mine is expected to achieve commercial production in mid-2017. Gold production in 2017 is expected to be 255,000-280,000 ounces with cash operating costs of $780-860 per ounce.