Golden Star Resources Limited (GSR.gh) HY2021 Interim Report
Toronto, ON – July 28, 2021 – Golden Star Resources Ltd. (NYSE American: GSS; TSX: GSC; GSE: GSR) (“Golden Star” or the “Company”) reports its financial and operational results for the three and six months ended June 30, 2021.
All references herein to “$” are to United States dollars.
Q2 2021 HIGHLIGHTS:
- Q2 2021 production totaled 37.9 thousand ounces (“koz”) from Wassa, at an all-in sustaining cost (“AISC”) of $1,182 per ounce (“/oz”). H1 2021 production totaled 78.0koz at an AISC of $1,140/oz, and the Company remains on track to deliver on the recently revised production guidance of 145-155koz for 2021.
- The Wassa underground grade averaged 3.1 grams per tonne (“g/t”) in Q2 2021, in line with the reserve grade and 4% higher than achieved in Q1 2021.
- Paste fill test work continued during the quarter with recent positive results supporting a second test stope currently in progress which, if successful, will lead to the restart of the planned filling schedule in Q4 2021.
- Q2 2021 saw continued investment in infill drilling and development at Wassa, ahead of planned future production expansion. Q2 2021 capital expenditure totaled $12 million (“m”).
- Cash increased by $6.6m in Q2 2021 to total $72.7m at June 30, 2021, with net debt reducing to $31m.
- The senior secured credit facility with Macquarie Bank Limited (the “Macquarie Credit Facility”) was restructured and upsized to a three-year $90m revolving credit facility (“RCF”), with $30m of undrawn liquidity. The amortization profile was also restructured, releasing $30m of liquidity in 2021 and 2022.
- The refinancing plus the cash on hand position Golden Star for the repayment of the 7% convertible debentures maturing in August 2021 (the “Convertible Debentures”). This deleveraging event will further strengthen the Company’s balance sheet and deliver a lower cost of capital.
- In-mine exploration continued to deliver positive drill results adjacent to the current and planned reserve mining areas, with infill drilling now underway aimed at identifying mineral resources by the year end.
Andrew Wray, Chief Executive Officer of Golden Star, commented:
“Our primary objectives for H1 2021 were to continue positioning the business for future production growth, as well as to be able to address the repayment of the $51.5m Convertible Debentures in August 2021. With the increase in the cash position to $72.7m during the quarter and the successful refinancing of the Macquarie Credit Facility, we now have adequate liquidity to be able to cash settle the Convertible Debentures on maturity.
Following the recent revision of our 2021 guidance, our key operational focus is the completion of the commissioning of the paste fill plant by the end of the year. Recent paste strength test work has yielded positive results and supports the advancement of a second test stope during Q3 2021. We will issue further updates through H2 2021 as we progress towards our target of production from secondary stopes in 2022.
While the paste fill test work progresses, we are also continuing to make operating changes aimed at unlocking further improvements in development rates in order to improve the operational flexibility. This work enabled the decline development to reach the 495 level during the quarter. This milestone was critical in providing the operations with more flexibility – this opens up the new production areas needed to provide access to the primary stopes that were originally planned for 2022 and are now being brought forward to partially replace the secondary stopes that were deferred as a result of the ongoing paste fill strength test work.
The step up in the investment in exploration in 2021 is yielding positive results, particularly the in-mine program where we are now reallocating resources from regional targets to carry out additional in-fill drilling to delineate resource in targets proximal to existing and planned reserve infrastructure.
As we go into H2 2021, the repayment of the convertible debenture represents another significant step in the restructuring and strengthening of our balance sheet while the operational focus on full commissioning of paste fill activities and consistent delivery of the increased development metres will return the operation to where we planned it to be to deliver further growth in 2022 and beyond.”
Q2 2021 RESULTS WEBCAST AND CONFERENCE CALL
The Company will conduct a Q2 2021 results conference call and webcast on Thursday July 29, 2021 at 10.00 am ET.
Toll Free (North America): +1 888 390 0546
Toronto Local and International: +1 416 764 8688
Toll Free (UK): 0800 652 2435
Conference ID: 98666950
Following the conference call, a recording will be available on the Company’s website at: www.gsr.com.
KEY EVENTS – Q2 2021
Wassa Operational Performance and Infrastructure Investment
- The mining rate averaged 3,963 tonnes per day (“tpd”) in Q2 2021, representing a 10% decrease on the 4,418tpd achieved in Q2 2020 and 12% lower than the mining rate of 4,499tpd achieved in Q1 2021 driven predominantly by an enforced change in the mine plan due to stoping constraints caused by lower than planned development rates.
- Underground mined grade averaged 3.1g/t, in line with the underground reserve grade of 3.1g/t and 4% higher than the grade achieved in Q1 2021.
- Processing of low-grade stockpiles continued during Q2 2021, given the continued strength of the gold price. This initiative, which utilizes latent capacity in the process plant without compromising gold recovery rates, contributes additional cash flow, albeit at a slightly higher AISC than achieved by the underground mine. This initiative contributed 5koz of production during Q2 2021.
- Investment in infrastructure continued throughout Q2 2021 to provide additional mining flexibility with the objective of increasing mining rates. Capital expenditure at Wassa totaled $12m during Q2 2021, including capitalized drilling of $1.9m.
- Operational improvements and recruitment of additional jumbo operators has seen an increase in development rates over the second half of the quarter, with June seeing rates in line with plan and representing a 15% increase compared to 2020. During the quarter, decline develo