Golden Star Resources Ltd. (GSS, GSC), at year lows, today
reported an operations update regarding previously announced cost
reduction measures reflected in its press release dated May 8,
2013. The operational review process contemplated three themes:
cost reduction measures, mine plan re-optimization and capital
It said: Since the release of the first quarter 2013 financial
and operating results, management of Golden Star has completed a
comprehensive review of the company's operations. After
re-designing the pits to reflect lower gold prices, the company is
confident that operations are viable in the current gold price
environment and that existing cash and cash flow from operations
can cover its sustaining capital requirements for 2013. As a result
of the re-optimization of the mining schedule, Golden Star's 2013
gold production estimate is now expected to range from 290,000
ounces to 310,000 ounces of gold production, approximately 10%
lower than previously announced guidance. Cash operating costs are
expected to remain in the range of $1,050 to $1,150 per ounce.
It added: Year-to-date production as of June 12, 2013 is
approximately 154,000 oz of gold. Production increases from the
company's lower cost Wassa operations at the Father Brown pit
offset ounces lost at the recently suspended Pampe pit. The
company's current cash position as of June 17, 2013, remains strong
at $51 million and together with operating cash flow are sufficient
to fund sustaining capital for 2013. Capital spending for
development projects has been rationalized to reflect current
Highlights of the operational review include:
Capital budget reductions underway for the remainder of 2013:
sustaining capital has been reduced to $40 million, reduced by
approximately $20 million. Development capital has been reduced to
$34 million, reduced by approximately $47 million. The company's
total capital expenditure for 2013 is now expected to be
approximately $74 million.
Operating cost reduction initiatives for 2013 total an estimated
$45 million, representing approximately 10% of expected annual
operating expenses, thereby offsetting the revised gold production
Exploration spending for 2013 has been reduced to $16.5 million,
from $20 million, of which approximately $11 million has been spent
Pit re-optimization at Wassa, Dumasi, and Mampon are completed.
The pit shells are based on a $1,100/oz gold price for Wassa and a
$1,200/oz gold price at Dumasi and Mampon relative to original
$1,450/oz pit shells used for the 2012 reserve estimate.
Pit pushbacks at both Bogoso North and Chujah continue, leading
to expected lower cost mining operations in 2014. Hence the Bogoso
operations remain viable under current market conditions.
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