Read the Golden Star Resources Limited 2018 q3 financial results

Golden Star Resources Limited,  listed on the Ghana Stock Exchange under the share code GSR is a gold mining and exploration company.The company operates the Wassa open pit and underground Ghanaian mines in addition to the Tarkwa processing plant. The company also holds gold interests in Brazil.

Golden Star Resources Limited experienced a 20% increase in gold production from Wassa Complex as compared to the third quarter from the previous year. Underground production contributed 96% and 83% in the Wassa Complex output and the general output respectively. In this same quarter, the highest mining average rate of more than 3,400 tpd was achieved. From 57,659 ounces a figure of $67.7 million was received with the average price being 1,175 per ounce. Consolidated cash balance of the company sat at $18.4 million as of 30 September 2018. Golden Star Resources Limited intends to focus on maximum underground ore production in order to generate strong cash flow with the company being on track to deliver the production targeted gold units.

OPERATIONAL PERFORMANCE

In the third quarter of 2018 Golden Star produced 57,113 ounces of gold, with 83% of production attributable to underground sources. During the fourth quarter of 2018 the Company plans to cease production from the Prestea Open Pits, with the objective of commencing FY 2019 from a robust position as an underground-only producer. Going forward, Golden Star intends to focus on high margin, underground ore with the aim of generating strong cash flow and creating a robust platform to deliver sustainable shareholder value.

Gold production from the Wassa Complex was 38,097 ounces in the third quarter of 2018, representing a 20% increase compared to the third quarter of 2017 and in line with the second quarter of 2018. Of this, 96% of Wassa’s production was attributable to Wassa Underground, which achieved its highest average mining rate to date of over 3,400 tpd.

The AISC per ounce 1 in the third quarter of 2018 was $994, an increase of 17% compared to the third quarter of 2017. The cost of sales per ounce 1 was $998. Golden Star expects its operating costs to decrease in the fourth quarter of 2018 as cost reduction measures at Prestea continue to be implemented.

Other Financial Highlights

Gold revenues for the third quarter of 2018 totaled $67.7 million from gold sales of 57,659 ounces at an average realized gold price of $1,175 per ounce. Gold revenues decreased by 23% in the third quarter of 2018 compared to the same period in 2017 as a result of a decrease in the average realized gold price and the 53% decrease in revenue from Prestea, which was only partially offset by the 14% increase in revenue from Wassa.

The Company’s consolidated cash balance was $18.4 million at September 30, 2018, which does not include the $125.7 million investment (net cash of $125.0 million) from La Mancha, which was received on October 1, 2018. Working capital provided $2.8 million during the three months ended September 30, 2018, compared to using $0.2 million in the same period in 2017. The working capital changes in the third quarter of 2018 included an increase in accounts payable and accrued liabilities of $2.0 million, a decrease in accounts receivable of $1.1 million, offset by an increase in prepaids and other of $0.2 million.

Outlook

Golden Star is on track to achieve its FY 2018 consolidated guidance in terms of gold production, cash operating cost per ounce 1 and AISC per ounce 1 . On a consolidated basis, the Company expects to produce 225,000-235,000 ounces of gold at a cash operating cost per ounce 1 of between $790 and $830 and an AISC per ounce 1 of between $1,050 and $1,100.

Following the strategic investment by La Mancha, expected capital expenditures for 2018 increased from $36.5 million to $45.1 million, which includes $10.9 million for exploration. The expected increase of $8.6 million in comparison to previous guidance is due to a $4.3 million increase in Wassa Underground development and a $4.3 million increase in exploration spending.