Golden Star Resources says it will remain focused on the execution of its strategy for transforming Golden Star to a low cost non-refractory gold producer.
Consolidated cash
operating costs per ounce finished the year 2014 at their lowest point in over
three years, an improvement that is estimated to continue into 2015.
With the
development of the underground mines at Wassa and Prestea, the average life of
mine cash operating costs for the company are expected to decline to below
US$700 per ounce from 2016 onwards. Similarly all-in sustaining costs are
expected to be below US$750 per ounce from 2016 onward.
The company is in
discussions with a number of providers of capital to secure financing to
complete these projects.
Prestea
Mine’s evaluation and exploration continues
Prestea, an
underground mine that has been in existence for over 100 years and has produced
an estimated 9 million ounces of gold to date, is currently on care and
maintenance while evaluation and exploration activities are taking place.
In 2015, US$12.6million
of capital expenditures is expected to be spent at Prestea Mine.
In line with the company's
strategy to pursue growth from low cost ounces, the decision was taken to
review the optimal mining method for Prestea initially as announced in June
2013.
“In November 2014,
a revised PEA for Prestea was published. This PEA is based on the
development of a non-mechanised mining operation for which the associated
capital expenditure is substantially lower and the IRR superior.
“Based on the
assumption of a gold price of US$1,200 per ounce, the results indicate an IRR
of 72%, NPV at a 5% discount rate of US$121million and a payback period of 2.5
years from the start of development,” the company said.
Construction
of Wassa Mine to commence in 2015
As Wassa was
successful in securing financing in September 2014, the construction of an
exploration decline is expected to commence in the second quarter of
2015.
The permits
necessary to construct the decline were obtained in late 2014. A
feasibility study to improve the accuracy of the economics and reduce the
associated risks to this project is currently underway, and the results are
expected to be released in the first quarter of 2015.
The Environmental Impact
Assessment (EIA) is also underway and expected to be submitted in late
2015. First production from test stoping at Wassa underground is expected
in the first half of 2016, and the mine life is currently estimated at ten
years thereafter.
The intention of
Golden Star Resources to develop an underground mine at Wassa that will operate
in conjunction with the existing open pit mine, and as such a preliminary
economic assessment ("PEA") of this combined operation was completed
during the third quarter of 2014.
The PEA indicates
a post-tax IRR of 78% with a NPV for the entire mine of US$271million, assuming
a gold price of US$1,200 per ounce and a 5% discount rate.
The PEA indicates
that with the expansion to underground mining in 2016, cash operating costs per
ounce and all-in sustaining costs per ounce are estimated to reduce to
approximately US$680 and US$780, respectively, for the life of the Wassa Mine.
Mr. Sam Coetzer,
President and CEO of Golden Star, noted that the last quarter of 2014 marked
the company’s fourth consecutive quarter of cost reductions, which were
achieved across all operations and at the corporate level. Combined with
the 18% quarter on quarter increase in ounces produced, these cost savings
resulted in a shift to profitability for the company in the quarter.”
Commenting on the
end of year results, he said management “anticipate these lower costs to be
achieved again in 2015 and subsequently improved upon as we progress our two
development projects into production.
“In the fourth
quarter, we placed orders for the bulk of Wassa's construction equipment and
received the necessary permit to start construction of the exploration decline
later this year.
“At Prestea we
announced the findings of a PEA that indicates this mine can be run at
remarkably low cash costs for a modest capital investment. As such, I believe
the company is entering 2015 well-positioned to fulfil our stated strategy of shifting
to low-cost production through the expansion of our non-refractory business
line.”
The mining giant
Golden Star Resources, releasing its financial results for the quarter and full
year ended December 31, 2014, revealed that gold sold during 2014 totalled
260,788 ounces (FY 2013: 330,806 ounces) of which 72,085 ounces were sold in
the fourth quarter (Q3 2014: 61,170 ounces)
Revenue for the
year was US$328.9million (FY 2013: US$467.8million) and US$86.6million for the
fourth quarter (Q3 2014: US$77.8million) Mine operating expenses and cost of
sales before depreciation and amortisation in 2014 reduced by 12% and 19%
respectively from the prior year
Cash operating
cost per ounce1 totalled US$1,090 for 2014 (FY 2013: US$1,049) and US$919 for
the fourth quarter (Q3 2014: US$1,052). Cash provided by operations before
working capital changes for the year totalled US$3.1million (FY 2013: US$30.3million)
and US$11.7million in the fourth quarter (Q3 2014: US$1.4million).
Profitability
improving with adjusted net loss attributable to shareholders reduced to US$12.2million
(FY 2013: US$21.5 million) Consolidated cash balance of US$39million at year
end, with access to further US$25million in an agreed facility.
Two development
projects progressed to PEA with very favourable results. 2015 is expected to
deliver lower operating costs with reduced mine operating risk.
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