Golden Star Resources, Ltd (GSS)

GSS 
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Golden Star Resources (GSS)

Q4 2012 Earnings Call

March 05, 2013 8:00 am ET

Executives

Belinda Labatte - Principal

Samuel T. Coetzer - Chief Executive Officer, President and Director

Jeffrey A. Swinoga - Chief Financial Officer and Executive Vice President

Analysts

Cosmos Chiu - CIBC World Markets Inc., Research Division

Paolo Lostritto - National Bank Financial, Inc., Research Division

Andrew Breichmanas - BMO Capital Markets Canada

Presentation

Operator

Greetings. Welcome to the Golden Star Resources Fourth Quarter and Year-end 2012 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Please note that this call contains forward-looking information. Please refer to the company's statements regarding forward-looking information in the company's Form 10-K, filed March 4, 2013.

The call will now begin. It is now my pleasure to introduce Belinda Labatte, Investor Relations representative for Golden Star Resources. Thank you, Ms. Labatte, you may now begin.

Belinda Labatte

Thank you, operator. Good morning, everyone, and thank you for joining us to discuss Golden Star Resources fourth quarter 2012 and year-end financial results and operational update today. Yesterday, we filed our financial statements. That means, they're available on EDGAR and SEDAR and are filed on the company's website at www.gsr.com.

Joining me on the call today is Sam Coetzer, President and CEO; Jeff Swinoga, Executive Vice President and Chief Financial Officer; and Daniel Owiredu, Executive Vice President, Operations. Sam and Jeff will provide a brief overview of the company's strategy going into 2013, the 2012 financial highlights and also the 2013 capital plan. We will then open the call to questions from analysts and investors.

Sam?

Samuel T. Coetzer

Good morning, all, and thank you for joining us this morning. I'm pleased to discuss the financial highlights for our year ended 2012, along with our strategy for 2013 and going forward. I will then hand the call to our CFO, Jeff Swinoga, for details on changes in our financial condition and capital plan going into 2013. Also on the line today is Daniel Owiredu, who can answer questions on our operations in Ghana; and Bruce Higson-Smith.

Let me begin by giving you direction on where we are taking Golden Star and how the 2012 year is setting us up for growth ahead. We have a new management team in place, and we are now established in Toronto, from where we are calling you today. Tim Baker taking on the new role of Executive Chairman is also a significant and positive change at the board level, indicating the level of renewal of Golden Star's direction and region. With our newly established headquarters in Toronto, Golden Star is taking many steps to reposition the company for future sustainable and profitable growth.

2012 was a defining year for Golden Star and sets the stage for change. In Ghana, productions and costs met or exceeded budget at just over 331,000 ounces of gold sold at consolidated cash operating cost of $1,033 per ounce, below the 2012 guidance of $1,040 to $1,100 per ounce, and meeting our target guidance range for the year. Operating cash flows increased significantly, which has sustained our strong cash position of $78.9 million and represent a track record of 6 consecutive quarters of positive cash flow from operations and positions us extremely well to meet our capital priorities. On a per-share basis, we saw our operating cash flow per share increase to $0.36 per share from $0.09 in the previous year. Net loss on earnings per share of $0.04 per share this year primarily due to the mark-to-market noncash loss on our new 5% convertible debentures.

So we met or exceeded our internal targets for production, cash costs, and we continue to generate stable operating income. We also completed the operational improvements that you've heard me discuss in previous calls. The refurbishment of the oxide plant, unlocking of synergies between the 2 operations and starting up the Pampe pit within the Bogoso/Prestea non-refractory operations. We will now be looking to unlock value by focusing on reducing costs on a consolidated basis.

A note on the Dumasi Pit, Bogoso operations, as we have just released this morning, we are pleased to have signed negotiated resettlement agreement with the Dumasi community, which will allow us to commence the relocation process. This relocation has funds earmarked at $15 million for 2013 and will allow us to process the 1-million-ounce orebody. Our priorities for 2013 are to deliver, unlock and ultimately sustain value. The company will unlock value by shifting production to lower cost per ounce through our non-refractory operations. The company is in the fortunate position to own 3 processing plants within a 40-kilometer radius, shown here on the slide, and coupled this with a large ownership on a very prolific gold belt with various targets to mine, we believe we can optimize our supply into these plants.

The company, between Wassa and Bogoso, has a current capacity to process 4.5 million tonnes per annum of non-refractory ore and 2.7 million tonnes per annum of refractory ore. Our efforts to explore for and develop future targets will be focused on creating throughput into the non-refractory processing plant. Lean oxide operations are expected to enable margin expansion as of the midterm. This overall goal has 3 areas of focus to ensure margin expansion, including: number one, all-in cost reductions to focus on lower cash costs generated by non-refractory ore and reduced G&A expenses, both corporately and at a mine level; number two, the level on the Wassa potential that conceives one single pit beneath the existing pits; and number three, increase our reserves with the development of the Prestea Underground mine, a high-grade, high-potential, mine with our non-refractory operations, and increase reserves with current Wassa drilling underway.

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