Golden Star Resources, Ltd (GSS)

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Golden Star Resources Ltd (GSS)

Operations Update Conference

June 18, 2013 10:00 am ET


Belinda Labatte - Principal

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

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


Rahul Paul - Canaccord Genuity, Research Division

Cosmos Chiu - CIBC World Markets Inc., Research Division

Andrew Breichmanas - BMO Capital Markets Canada

Craig Johnston

Doug Dyer

Robert Reynolds



Greetings, and welcome to the Golden Star Operations Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Please note this call does contain forward-looking information. Please refer to the company's statement regarding forward-looking information in the company's Form 10-K filed March 4, 2013.

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

Belinda Labatte

Thank you, operator. Good morning, everyone, and thank you for joining us to discuss Golden Star Resources operational review updates. The press release was filed yesterday and is available on the company's website at Joining me on the call today is Sam Coetzer, President and Chief Executive Officer; and Jeff Swinoga, Executive Vice President and Chief Financial Officer. Sam will provide an update on operations.

I draw your attention to our forward-looking statement and legal disclaimer that was on our press release filed yesterday. And now hand the call over to Sam.

Samuel T. Coetzer

Thank you, Belinda. Good morning, everyone. Thanks for joining us on today's call. We are hosting the call this morning in conjunction with our press release filed yesterday evening. As I indicated to you earlier, GSR was committed to do 2 things during this quarter: one, to update you on the Prestea Underground feasibility study; and number two, to update you on our review process, including cost reduction measures, mine plan re-optimization and capital reallocation. I'm happy to state that my team, in this difficult gold price environment, has been able to complete all the work we set out to do. It was a phenomenal area [ph] for this especially recognizing that in the difficult market conditions, our production continued strongly.

Our investment in the last 18 months to enhance our planning function is paying off, and I am pleased with the progress we have made to date. So my plan today is to take you through the essence of the update press release of last night, and then I will take some questions.

Over the last month and a half, we embarked on a review that comprise the following activities: a review of the viability of Bogoso under the current market conditions; discussions with our suppliers, government and communities to address potential support from external groups; working with our employees to establish a set of principles during this time; and lastly, reviewing mine plans using various scenarios of gold prices.

Over the last several weeks, it became clear to me that Golden Star operations are resilient, and that we can manage the current market challenges as a result of what we have been implementing over the last few years. What makes our operations resilient today are the following: strong community and employee support, what had [ph] been strengthened over the last 14 months for starting up the Father Brown pit, investing in the CIL plant and having drilled below the Wassa pits. At Bogoso, we have upgraded the BIOX section of the plant and availability is an efficient -- efficiencies are markedly better. Clarity of mine plans now allow us to understand the risk associated by reducing development capital and adjusting our future production and development profile, introduction of a committed senior management team and a strong board support.

With that said, I want to highlight to you that our production profile into midyear is strong. I also want to highlight that our cash balance as of June 17, yesterday, was just over $51 million. We have closed the Denver office at the end of May, and we now have a full functioning executive team in Toronto. That transition went smoothly.

Regarding the essence of the press release, GSR focused on cost reductions, mine plan re-optimization and capital reallocation. Each of these is risk rated and has a full risk assessment associated with our decisions.

Our Bogoso -- our Chujah and Bogoso North pits are currently both in pushback, which on average, has a high strip ratio of 11:1, and is anticipated with approximately 3 quarters to reduce to 3:1 strip ratio. This is expected to significantly reduce Bogoso's cost structure. This, to me, is an important investment. We've adjusted the way we plan to do the pushback at $1,600 an ounce versus a $1,400-an-ounce scenario.

First, I want to highlight to everyone as most profound impact of what we saw in our review. The Bogoso refractory business will alter these pushbacks to a period of nearly 2 years of a cost balance reduction of nearly 30% from the expected operating -- from the expected operating expense peak anticipated to occur in December 2013. Slowing down our development projects, i.e., Dumasi, Mampon and Prestea South is anticipated to allow the company to self-fund these projects. Should the gold price react favorably, we could then decide on increasing the pace of development. We are currently reviewing the impact this might have in future years, which I'm confident can be dealt with. This pits, therefore, remain in our current profile.

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