DENVER, COLORADO — (Marketwire) — 08/08/11 — Golden Star Resources Ltd. (TSX: GSC)(NYSE Amex: GSS)(GSE: GSR) („Golden Star“ or the „Company“) today announced its unaudited second quarter 2011 results. All currency in this news release is expressed in U.S. dollars. The Company will host a live webcast and conference call to discuss its quarterly results on Tuesday, August 9, 2011 at 11:00 a.m. Eastern time (9:00 a.m. Mountain Time). To access the webcast and conference call, go to the home page of the Company-s website, .
Tom Mair, President and CEO, said, „During the second quarter we continued to see progress at Bogoso/Prestea. Waste stripping was accelerated and the increased availability of fresh sulfide ore resulted in improved recovery at the Bogoso Processing Plant. The trends in mining and processing are positive and these improvements are reflected in our guidance. We continue to focus on cost and productivity at both mines and expect these efforts to have a positive impact in the near term.“
SECOND QUARTER 2011 RESULTS
FINANCIAL SUMMARY
BOGOSO/PRESTEA
Gold sales from Bogoso/Prestea totaled 34,077 ounces during the second quarter of 2011 as previously disclosed. Revenues from Bogoso/Prestea totaled $51.6 million in the second quarter of this year. Ounces sold in the second quarter of 2011 exceeded the number of ounces sold in both the first quarter of 2011 (30,576 ounces) and the fourth quarter of 2010 (28,021 ounces).
The Bogoso/Prestea mine focused its efforts in the second quarter of 2011 on returning the Bogoso North and Chujah pits to design plan by mining 32% more waste than in the first quarter. This resulted in a temporary increase in the stripping ratio to 10.5:1 versus design of 8:1, lower ore mining rate and processing throughput, and a commensurate increase in cash operating costs. We expect to mine extra waste through the end of 2011 with the stripping ratio dropping to design for the whole of 2012.
While the processed ore grade was down 6% in the second quarter of 2011, quarter on quarter, this was offset by the higher metallurgical recovery attained in the sulfide plant. The higher recovery was a direct consequence of processing an appropriate blend of fresh and transition ores rather than milling a higher proportion of transition material. Quarterly sulfide recovery rates are improved from 56.2% in the fourth quarter of 2010, 61.0% for the first quarter of 2011, and 66.0% for the second quarter of 2011. The recovery rate for June 2011 was approximately 69.4%. As the pits are returned to design over the next two quarters, we anticipate being able to feed a more optimal blend of ore at a higher and more consistent rate; which should achieve higher recoveries and higher gold production.
Our focus at Bogoso/Prestea going forward is to concentrate our efforts on returning the Bogoso North and Chujah pits to design plan, mining at Buesichem North pit, preparing for mining the oxide deposit at Pampe, optimizing and stabilizing the ore feed blend at the sulfide processing plant resulting in improved throughput, enhanced metallurgical recoveries and resultant gold production, and moving the tailings retreatment and Prestea South oxide pit projects toward production.
WASSA/HBB
As previously disclosed, gold sales from Wassa/HBB totaled 38,463 ounces for the second quarter. Revenues for Wassa/HBB totaled $58.2 million for the period, an increase of $1.1 million over the revenues for the second quarter of 2010.
As at Bogoso/Prestea, we are evaluating the mining and processing programs at Wassa/HBB to identify potential cost reductions and efficiency improvements as we move forward through the remainder of the year and beyond.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at June 30, 2011 totaled $127.9 million.
Cash used during the six months included $41.1 million used in investing activities which included $7.5 million for mining property development projects, $2.4 million for the purchase of a residual minority interest in the Prestea Underground project, $19.9 million for the acquisition of new equipment and facilities at the mine sites, $8.1 million for mine site drilling, and $3.2 million for other items.
We expect to spend approximately $111 million for capital projects at Bogoso/Prestea and Wassa/HBB during 2011. In 2012, we expect to spend approximately $86.3 million on capital projects and equipment at Bogoso/Prestea and Wassa/HBB. These investments will be made with the primary purpose of expanding our productive capacity and reducing unit costs.
Along with our cash position, we hold a $40.5 million revolving credit facility and have an additional $24.9 million of borrowing capacity under our equipment financing credit facility.
EXPLORATION
During the second quarter, a total of seven drill rigs were active in areas in and surrounding our mine sites. Bogoso/Prestea drilling focused on the Buesichem South, Beposo and Bogoso North open pits. Drilling at Wassa/HBB concentrated on targets near Wassa, Hwini-Butre and Benso targets in proximal distance to the haul road and processing facilities.
Due to improvements in the political situation in Cote d-Ivoire, we plan to commence drilling some of the soil anomalies that have been identified to date. Additionally, subject to drill rig availability, we plan to drill at the Sonfon project in Sierra Leone in the second half of 2011.
Exploration activities in Brazil were accelerated in the second quarter. Sampling crews were mobilized to commence geochemical surface sampling programs and we anticipate increasing the number of sampling crews in the third quarter to enable us to complete geochemical stream sediment sampling over the entire 3,400 square kilometers of the Iriri joint venture property.
LOOKING AHEAD
Our objectives for the second half of 2011 include:
GUIDANCE
Production results for the first half of 2011 and updated guidance are as follows:
FINANCIAL STATEMENTS: The following information is derived from the Company-s unaudited, US GAAP consolidated financial statements contained in our Form 10-Q, which we filed with the SEC. It is also available on our website at .
COMPANY PROFILE
Golden Star holds a 90% equity interest in Golden Star (Bogoso/Prestea) Limited and Golden Star (Wassa) Limited, which respectively own the Bogoso/Prestea and Wassa/HBB open-pit gold mines in Ghana. In addition, Golden Star has an 81% interest in the currently inactive Prestea Underground mine in Ghana, as well as gold exploration interests elsewhere in Ghana, in other parts of West Africa and in Brazil in South America. Golden Star has approximately 258.6 million shares outstanding.
Statements Regarding Forward-Looking Information: Some statements contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Such statements include comments regarding permitting and the mining at Prestea South, Pampe and Mampon; our 2011 exploration budget and planned exploration activities and drilling, including exploration at Bogoso/Prestea, and Wassa/HBB, and elsewhere in West Africa and Brazil and the timing and impact of the Bogoso Tailings Retreatment project; the ability to fund cash needs including capital and operating expenditures; the expected impact of our initiatives at Bogoso/Prestea; our 2011 and 2012 production and cash operating cost estimates, projected water treatment costs at Bogoso/Prestea in 2013 and beyond; capital expenditure estimates, our objectives for 2011; and sources of and adequacy of cash to meet capital and other needs in 2011. Factors that could cause actual results to differ materially include timing of and unexpected events at the Bogoso/Prestea oxide and sulfide processing plant; variations in ore grade, tonnes mined, crushed or milled; variations in relative amounts of refractory, non-refractory and transition ores; delay or failure to receive board or government approvals and permits; the availability and cost of electrical power, timing and availability of external financing on acceptable terms; technical, permitting, mining or processing issues, changes in U.S. and Canadian securities markets, and fluctuations in gold price and costs and general economic conditions. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in our Form 10-K for 2010. The forecasts contained in this press release constitute management-s current estimates, as of the date of this press release, with respect to the matters covered thereby. We expect that these estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this press release represent management-s estimate as of any date other than the date of this press release.
Non-GAAP Financial Measures: in this news release, we use the terms „cash operating cost per ounce.“ Cash operating cost per ounce is equal to total cash costs less production royalties and production taxes, divided by the number of ounces of gold sold during the period. We use cash operating cost per ounce as a key operating indicator. We monitor this measure monthly, comparing each month-s values to prior period-s values to detect trends that may indicate increases or decreases in operating efficiencies. This measure is also compared against budget to alert management to trends that may cause actual results to deviate from planned operational results. We provide this measure to our investors to allow them to also monitor operational efficiencies of our mines. We calculate this measure for both individual operating units and on a consolidated basis. Cash operating cost per ounce should be considered as Non-GAAP Financial Measures as defined in SEC Regulation S-K Item 10 and other applicable securities laws and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. There are material limitations associated with the use of such non-GAAP measures. Since this measure does not incorporate revenues, changes in working capital and non-operating cash costs, it is not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Changes in numerous factors including, but not limited to, mining rates, milling rates, gold grade, gold recovery, and the costs of labor, consumables and mine site general and administrative activities can cause these measures to increase or decrease. We believe that these measures are the same or similar to the measures of other gold mining companies, but may not be comparable to similarly titled measures in every instance.
Contacts: GOLDEN STAR RESOURCES LTD. Bruce Higson-Smith Vice President Corporate Development +1-800-553-8436
GOLDEN STAR RESOURCES LTD. Anne Hite Investor Relations Manager +1-800-553-8436
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