Toronto Sep 4, 2015 (Thomson StreetEvents) -- Edited Transcript of Golden Star Resources Ltd earnings conference call or presentation Monday, November 4, 2013 at 3:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Sam Coetzer Golden Star Resources Ltd. - President, CEO * Daniel Owiredu Golden Star Resources Ltd. - EVP Operations * Jeff Swinoga Golden Star Resources Ltd. - EVP, CFO * Martin Raffield Golden Star Resources Ltd. - SVP Technical Services ================================================================================ Conference Call Participants ================================================================================ * Paolo Lostritto National Bank Financial - Analyst * Doug Dyer Heartland Advisors - Analyst * Cosmos Chiu CIBC World Markets - Analyst * Andrew Breichmanas BMO Capital Markets - Analyst * Trevor Turnbull Scotiabank - Analyst * Anita Soni Credit Suisse - Analyst * Bill Nasgovitz Heartland Advisors - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Greetings and welcome to the Golden Star third-quarter 2013 financial results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference call is being recorded. Please note, 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. Golden Star Resources financial statements were filed this morning, and these are available on the Company's website at www.gsr.com. On the call today is Sam Coetzer, President and CEO; Jeff Swinoga, Executive Vice President and Chief Financial Officer; Daniel Owiredu, Executive Vice President, Operations; Angela Parr, Director, Investor Relations and Corporate Affairs; and Martin Raffield, Senior Vice President, Technical Services. Sam, Jeff, and Dan will discuss the financial results for the third-quarter 2013 and will provide an update on operations. Please note, for those using the webcast, the forward-looking information and legal disclaimer on the webcast presentation. Mr. Coetzer, you may begin. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [2] -------------------------------------------------------------------------------- Thank you. Good morning, everyone, and thank you for joining us on the call today. Just before I begin, I want to highlight that Dan, Executive VP of our Operations, will be taking this call from Accra in Ghana. Dan, good morning. I hope you can hear us well. -------------------------------------------------------------------------------- Daniel Owiredu, Golden Star Resources Ltd. - EVP Operations [3] -------------------------------------------------------------------------------- Hi, Sam, and everyone. I can hear you clearly from this side. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [4] -------------------------------------------------------------------------------- Great, thanks. Firstly, I would like to take this opportunity to thank the Golden Star team for delivering on our goal to reduce costs and stabilize our operations. With the achievement of both of these, we now have clear sight of where production will come from over the next two years. At Bogoso, we will continue to process ore from Bogoso North and Chujah pits until the first quarter of 2015. This production will be supplemented by recoveries from the tailings retreatment program. At Wassa, mining will continue from the Wassa main and Father Brown pits. The pushback will secure continued access to all. In addition, we have a strong pipeline of development projects ahead and we continue to evaluate based on capital efficiency and rate of return. We have an effective and highly committed team that has accomplished a tremendous amount of work in this year of transition. I thank my team for listening -- I thank my team listening today for their efforts. Before we begin to discuss our quarterly results, I want to remind you of what we set out to do in June. Our focus was and remains on cost reduction, mine optimization, and appropriate capital reallocation. We have a can-do attitude. On June 17, we announced our action plan to deliver on critical components in this new gold price environment. As a reminder, here is what we set out to do. Cost-cutting initiatives were expected to provide savings of $45 million. To date, we have achieved half of these and we expect to see continued cost savings in the next quarter. Mine sequencing and cash flow generation models were updated with new pit shell assumptions of $1,100 per ounce gold price at Wassa and $1,200 an ounce at Dumasi and Mampon. This is now complete. Development capital commitments, excluding betterment stripping, were reduced from $81 million to $37 million and sustaining capital was reduced by $24 million to $36 million. On the same basis, we have spent $57 million year to date. This spending is in line with the revised $73 million of capital expenditure expected for the fiscal year. Jeff will speak in more detail on our spending this quarter. We are now operating at a much higher level of efficiency as result of these changes, meaning we are focused on cost reduction, capital consolidation as we are nearing the end of our investment in the Bogoso North and the Chujah pushbacks. We are well positioned for increased operating cash flow in 2014. I believe that Golden Star is better prepared for downside movements in gold price as a result of the action plan and extremely well leveraged for any upside change. I will start by reviewing the progress we made this quarter in our financial results. Revenue over the period was $118 million. This reflects the lower realized gold price, which was down 6.3% quarter on quarter to $1,329 per ounce. On a consolidated basis, cash operating cost per ounce declined $118 to $960 an ounce, compared to $1,078 an ounce during the last quarter. This result is directly attributable to our focus on lowering cost production and marks the third consecutive quarter of reduced mine operating expenses. Cash generated by operations before working capital changes totaled $12.8 million. This is significantly better than last quarter results of just over $300,000. Our consolidated cash position at the end was about $67 million, with a further $40 million available in existing financing agreements, and Jeff will talk more to this shortly. Our net income attributable to shareholders amounted to $3.5 million or an earnings of $0.01 per share. In the quarter, gold sold increased 5% to nearly 89,000 ounces. This is our highest production quarter since the second quarter 2010, as we had a strong performance at both our Wassa and Bogoso mines. Year to date, gold sold was just over 255,000 ounces on the 30th of September, and you will have seen that we've announced today an upward revision of our 2013 production guidance from -- to 325,000 to 330,000 ounces. This increase is largely due to our tailings facility providing an incremental and stable source of production at a greater rate than expected and to improved productivity at Bogoso, which Dan will provide some detail on. Pleasingly, our three processing plants are operating at near capacity, which is a credit to our on-site teams, improved maintenance protocols, as well as the effect of capital investment made in these plants over the last two years. Although we don't give out a quantified mineral reserve for the tailings, we estimate that tailings retreatment is expected to supply production for at least another five years at the current rate. To update you on the Bogoso North and Chujah pushbacks, we are progressing well, and as a result of improved access to ore, we have seen a stronger-than-anticipated production coming from Bogoso. We expect to complete these pushbacks in the second quarter of next year. As you know, a successful public hearing was held at Prestea South in the third quarter. The project can now advance to the next phase of its environmental permitting. Dan will provide an update on this and our other development projects. I will now turn the call over to Jeff to discuss our financial performance. Jeff? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [5] -------------------------------------------------------------------------------- Thank you, Sam. Good morning to all of our analysts and investors on the call. I will be reviewing major items contributing to our financial performance and changes to our financial condition for the third quarter of 2013. Driven mainly by the improved results at Bogoso, gold sales for the third quarter increased approximately 4,000 ounces to 88,925 ounces. However, with the 6% reduction quarter on quarter in realized gold prices, revenue decreased marginally to $118 million from $121 million in the second quarter. As Sam indicated, the average realized gold price achieved was $1,329 per ounce. Wassa's revenues were down 17% quarter over quarter to $59 million, compared to $73 million in the second quarter of 2013. Despite the increase in tonnes processed at Wassa, revenue was negatively impacted by the decline in the grade process and by lower realized gold prices. Gold production at Wassa decreased to 44,830 ounces for the quarter as a result of lower-grade ore being mined from the Father Brown pit, which was partially offset by the higher-grade ore mined at the Wassa pit. Bogoso performed well during this quarter, with revenues of $59 million. This is approximately $10 million higher than the previous quarter. The increase in throughput and the startup of full production from the tailings reclaim facility contributed very positively to Bogoso's production and revenue results. Accordingly, total gold sales at Bogoso were 44,095 ounces, an increase of 28% from the previous quarter. Now turning to slide 9, in June we announced that we were going to implement $45 million of cost savings for the remainder of this year. The results of our massive efforts to reduce our total operating costs over time and shift our production to higher-margin operations are being realized. To date, we have achieved about half of these savings and are on track to achieve the other half in the fourth quarter, mostly from continued operating expense savings at Bogoso. These savings referred to in our press release were obtained through the following. At Bogoso, we reduced operating expenses by obtaining supplier discounts and reducing the water treatment costs at both plants. With the purchase of two new excavators, we obtained an overall reduction in maintenance and fuel costs. We also reallocated equipment and improved efficiencies. As a result, we are becoming less reliant on contractors and reduced the number of overall contractors, as well. Lastly, we renegotiated our supplier contracts, which resulted in price improvements. At both Bogoso and Wassa, operating results were realized through transport and delivery efficiencies, stockholding cost reductions, and improved purchasing procedures. Although total cash operating costs at Wassa declined slightly quarter over quarter, cash operating costs per ounce increased 9% to $805 per ounce. This was on account of a 12% reduction in grade and additional tonnes processed at the Wassa plant. For Bogoso, we were very pleased to see our cash operating cost per ounce for the third quarter decline 29% to $1,118 per ounce from $1,584 per ounce in the second quarter. This cost reduction is mainly due to an increase in average grade of ore processed in the refractory plant of 2.62 grams per tonne, in comparison to the average grade processed in the second quarter at the refractory plant of 2.15 grams per tonne; the inclusion of low-cost ore from the tailings facility at the non-refractory plant. The positive results from this program are exceeding our initial expectations, as Sam mentioned, and we are pleased with this contribution to the full-year results. And lastly, general cost savings were achieved across the operation, as I mentioned before. All-in sustaining costs on a consolidated basis declined 12% to $1,213 per ounce for the third quarter of 2013, when compared to $1,378 per ounce realized last quarter. We are also targeting to maintain these cost savings going forward. Golden Star's net income attributable to shareholders was approximately $3.5 million, or $0.01 per share, this quarter, versus a net loss of $129 million for Q2. Now, adjusted for the non-cash March market loss on the convertible debentures, net income would have been $4.7 million, or $0.02 per share. This significant improvement from Q2 was largely a result of the non-cash impairment charges of $170 million net of tax that was incurred in the second quarter. I also want to mention third-quarter depreciation and amortization decreased to $9.8 million from $24 million in the second quarter, as our book value of our mining assets decreased with this impairment charge. Now turning to cash flows. Before working capital changes, operations provided $13 million of operating cash flow during the third quarter, up from $300,000 provided in the second quarter this year. This increase was mainly a reflection of lower mining operating expense. Now I would like to take -- walk you through our capital spending. Year-to-date major capital expenditures at Bogoso include $7 million of the Dumasi resettlement project, $3 million for the development expenditures at Mampon and Prestea South, $4 million on Prestea Underground, $1.5 million on completing the construction of a water treatment plant, $11.4 million for mining equipment, $4 million was spent on plant upgrades, and $23.6 million on capitalized betterment stripping. While major capital spending items at Wassa were $10.5 million on development drilling, mostly on the Wassa main pit; $2.2 million on Father Brown development costs; $3 million on the tailings storage facility; and $2.6 million on plant upgrades. Overall, the Company's total capital expenditure for 2013 is expected to be approximately $73 million, with another $29 million would aid to betterment stripping, which we previously expensed under US GAAP. And to date, we remain on track to meet our CapEx. As of September 30, 2013, our cash and cash equivalents balance was approximately $67 million. In addition, we have access to an undrawn term loan from Ecobank for another $40 million, and we also have another $20 million available on our equipment lease facility. Combined, the Company has good liquidity and financial flexibility. This concludes my remarks, and now I would like to pass the call on to Dan. -------------------------------------------------------------------------------- Daniel Owiredu, Golden Star Resources Ltd. - EVP Operations [6] -------------------------------------------------------------------------------- Thank you, Tom and Jeff, and good day, everyone, from Accra. I'm pleased to discuss today the progress on our Wassa and Bogoso operations and our development plans. Let's start with Wassa. Over the quarter, 540,000 tonnes of ore was mined, a 25% increase from last quarter. Tons processed was 675,000 tonnes, marginally up on the last quarter. The reason for this differential is that during the second quarter, we actively reduced our stockpile. Wassa continues to perform well and has demonstrated a stable production profile with lower costs. The grade decline we saw this quarter to 2.24 grams per tonne is as expected and due to the ongoing balancing of mining operations between the Wassa main and Father Brown pits. In the third quarter, we saw lower planned grades coming from the Father Brown pit and higher grades from the Wassa main pit. As you are aware, we revised our pit shells in the middle of the year to optimize production at $1,100 gold price. The result was an increase in grade processed at the Wassa main pit, but the grade processed by the Father Brown pit declined in the quarter, closer to [echo barrel] reserve grade. Our pushback for the Father Brown will commence in the fourth quarter and will extend the life of this pit. At Bogoso, let me begin by focusing on cash operating cost per ounce, which reduced dramatically, underscoring our efforts to reduce operating expenses. Overall, cash costs reduced 29% to [$2,401] per ounce. Quarter 3 was our first quarter of running the tailings retreatment project on a full-time basis, and this added to the strong quarter for Golden Star. At the end of the third quarter, throughput was exceeding target. The initial target was 4,000 tonnes per day, and toward the end of the quarter, we achieved 5,000 tonnes per day. The incremental cost of this outlook is low, and the purchase therefore contributed to the lower overall cost per ounce for Bogoso. We expect this project to continue to deliver production at this rate for at least the next five years. As Sam said earlier, we do not have a quantified mineral reserve for the tailings; however, we do have an actuary accurate assessment of the volume of tailings, as well as a past tailings position, on which we are basing our five-year expectation. Investments in the pushbacks at Bogoso North and Chujah pit continues to improve our [best to all]. The stripping ratio and consequently mining operation expenses are expected to reduce over the life of mine, and I expect our pushbacks to be completed during the second quarter of 2014. Future pipeline. By the end of September, we had drilled 140 holes for approximately 48,000 meters under the Wassa main pit. Drill reports are indicating that the deposit is open out there and to the south of the pit. We have incorporated all the results and are placing our mineral resource estimates in a special analysis shortly. Although studies in this regard are not yet started, initial indications are that the high-grade zone below the pit is amenable to underground mining. As you know, Golden Star has a significant pipeline of projects. Collectively, it is our [first come] to provide meaningful ore sources to both the refractory and non-refractory plants at Bogoso. At Prestea South, as Sam mentioned, we successfully concluded the project area to the Prestea community and we have strong support to develop this pit. We're now awaiting comments from the EPA, which will allow us to conclude the environmental permitting process. In the interim, we are expanding -- we are taking a look at our test work and evaluating optimal process in metals. At Dumasi, which holds the largest deposit of ore (inaudible) development for the year, predevelopment work and capital spending is focused on site preparation for the combination resettlement. EIA work continued in the third quarter and is expected to continue in 2014. As Mampon [switches] to high-grade deposit about 35 kilometers north of Bogoso, our purpose road design work is ongoing. The EIA is currently undergoing internal review, and we plan to submit it to the EPA by the end of the first quarter of 2014. The capital budget for 2014 will review the timing and development spending for these development projects, which are all [potential] environmental permits. We expect to provide our full budget guidance early in 2014. I will now turn the call back to Sam for concluding remarks. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [7] -------------------------------------------------------------------------------- Thank you, Dan and Jeff. On the back of a strong quarter, I'm very pleased to say that we now expect 2013 annual production to be higher than what we said to you a few quarters back, in the range of 325,000 to 330,000 ounces. Although we expect to achieve further reductions in operating costs throughout the Company over the rest of the year, our current cost guidance remains relevant. We will shortly commence the pushback of the Father Brown pit and we will continue with the successful tailings retreatment project. Lastly, we are planning to start infill drilling on the high-grade zone below the Wassa main pit. Over the next two years, production will continue to be sourced from the Father Brown pit, Wassa main, Bogoso North, and Chujah pits. As discussed, this will be supplemented by ounces from the tailings retreatment project. We expect production for the next 18 months to stabilize at an average production rate achieved in 2013 to date. And of course, to secure future production, we will continue the permitting processes at Dumasi, Mampon, and Prestea South. In conclusion, this has been a great quarter in which we have made solid progress towards sustainability, increasing production, and continuing to reducing our costs. Looking ahead, results may vary with planned changes in grade process, but I believe the long-term trend on the key performance metrics is and will remain positive. With the enhanced resilience of our existing operations and the improving prospectivity of our development projects, I am optimistic about the fourth quarter of this year and 2014. I will now turn the call over to the operator for questions that you might have. Thank you. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions). Paolo Lostritto, National Bank. -------------------------------------------------------------------------------- Paolo Lostritto, National Bank Financial - Analyst [2] -------------------------------------------------------------------------------- First question with regards to the DD&A, is the $9 million that you reported -- $9.8 million that you reported in the quarter, is that more sustainable going forward? I recognize that you have written down some of the assets, and so, therefore, you are working off a lower base. So is that exclusive of any other adjustments, so the $9.8 million is more of a go-forward number? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [3] -------------------------------------------------------------------------------- It is Jeff here. Yes, no, good question. Depreciation, of course, is evaluated at the time and over our ore reserves, so as we look to redo our ore reserves at year-end, we are going to relook at what our depreciation will be going forward. -------------------------------------------------------------------------------- Paolo Lostritto, National Bank Financial - Analyst [4] -------------------------------------------------------------------------------- Okay. -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [5] -------------------------------------------------------------------------------- So it really depends on what the new reserves will look like, the mine lives, and so forth, and then we will depreciate over that basis. So I really can't give you any sort of perspective on what depreciation will be going forward, although it's something that we are very appreciative of the fact that we do have a lower depreciation expense this quarter. It will change after we update our new reserves. -------------------------------------------------------------------------------- Paolo Lostritto, National Bank Financial - Analyst [6] -------------------------------------------------------------------------------- Got it. And follow-up question, with regards to the strip ratios coming down at Bogoso next year, can we get maybe some guidance in terms of what that is going to look like over the next four quarters? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [7] -------------------------------------------------------------------------------- Yes, I will take that. As you know, we went on a high -- I think it was in the second quarter was our highest strip. We were round about 16, went down to about 10.9 in the third quarter. We'll see a slight up in the fourth quarter to that basically flat but slightly up, and then down about -- from 6 down to 2 in the first and second quarter. And from -- basically from the second quarter, we will be in a much lower strip, which is what we did our viability test on for those two pits moving forward. And then from that point onwards, it will be in a very low strip environment for -- until the end of 2015. -------------------------------------------------------------------------------- Paolo Lostritto, National Bank Financial - Analyst [8] -------------------------------------------------------------------------------- And the last question I've got with regards to -- I know you're still going through budgets and looking out at different options that you have. Have you provided guidance in terms of 2014 CapEx yet or are you still working on that? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [9] -------------------------------------------------------------------------------- We will be giving that guidance early in the next year. We are looking at that. Obviously, it is a very dynamic mine plan. You can see how the last quarter panned out. Excited what we see from the tailings reclaim. It gives us a new way of looking at that. We are looking at our trigger document. We are looking at how to utilize capital efficiency. What we now have a clear line of sight is our EBITDA for the next two years, and then what we will look at is which of those projects makes good sense for us to develop -- to dovetail into our projects moving towards the end. So we will be giving that guidance early in the next year to you all. -------------------------------------------------------------------------------- Paolo Lostritto, National Bank Financial - Analyst [10] -------------------------------------------------------------------------------- Okay, thank you. Great quarter. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Doug Dyer, Heartland Advisors. -------------------------------------------------------------------------------- Doug Dyer, Heartland Advisors - Analyst [12] -------------------------------------------------------------------------------- What does the per-quarter pushback cost look like going over the next three quarters? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [13] -------------------------------------------------------------------------------- It is Jeff here. So in terms of looking at our fourth quarter, we're estimating about a $5.5 million spend on CapEx for betterment stripping in Q4. Going forward after that, it is probably in the neighborhood of $10 million, roughly, for next year. But again, as Sam mentioned, we will come out with our new CapEx guidance early in the year. But it's roughly the magnitude. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [14] -------------------------------------------------------------------------------- Yes, it should start reducing from the first quarter. But yes, mainly I would say about $10 million to complete that. -------------------------------------------------------------------------------- Doug Dyer, Heartland Advisors - Analyst [15] -------------------------------------------------------------------------------- Okay, all right. And then, with regard to how the convert is carried on the books, I know there was an accounting change that you made here last quarter. Where should we think of that convert being held on the books if it were in US GAAP? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [16] -------------------------------------------------------------------------------- There is not really a change between US GAAP recognition and IFRS. Both are mark to marketed or non-cash unrealized gains and losses that go through our income statement. So I can appreciate how it is a bit confusing when you do have an appreciation of your convertible showing up as a loss, and things like that. But if you'd like, we can talk off-line more about the accounting for that. -------------------------------------------------------------------------------- Doug Dyer, Heartland Advisors - Analyst [17] -------------------------------------------------------------------------------- Okay, fair enough. And when I look at your cash flow statement for the quarter, you have got, it looks like, positive $15 million from proceeds from debt agreements. Is that just taking down the -- taking some cash out of the new debt? Is that what that is? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [18] -------------------------------------------------------------------------------- Yes, Doug. In fact, we actually drew down about $10 million from our Ecobank term loan facility in Q3, and what we also did, we leased some of the -- most of the equipment that we purchased in Q3. So that is the net proceeds coming from debt and lease agreements. -------------------------------------------------------------------------------- Doug Dyer, Heartland Advisors - Analyst [19] -------------------------------------------------------------------------------- Okay, and just a couple more quick ones. Were there any cash flow events, big events, after quarter end? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [20] -------------------------------------------------------------------------------- No. -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [21] -------------------------------------------------------------------------------- No, not -- no. -------------------------------------------------------------------------------- Doug Dyer, Heartland Advisors - Analyst [22] -------------------------------------------------------------------------------- All right, and the final one, do you currently have any reserves booked from the tailings or can we expect to see some forward -- coming forward? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [23] -------------------------------------------------------------------------------- Doug, I'm going to try to explain this to everybody. We have a clear understanding of the volume and how many tailings we have there, and we have all the results over the year of where the tailings grade went into the -- the [date] tailings dams we have. We are now -- Martin Raffield and the team is now looking at the way, how do we go into a tailings dam? The moment you try to drill it, it just caves in on you and you can't get a reserve out of it. But we're going to find ways, probably in this next quarter, to come out, and in the next two quarters, coming out and trying to put a resource or a reserve around this and find ways to how do we affect this going forward. But what we know is we have sufficient tonnes ahead of ourselves. What we saw in the third quarter, we started very slow, and towards the end of the quarter, we were running at a much higher rate than in the first month of the quarter. So we are looking at how do we enhance this project going forward. But at this stage, we can comfortably guide that we know we have at least five years of -- I don't know. I can't even call it resource going forward, but a volume at a certain grade that we expect. But we will be doing more work so we can guide for you the purposes of your models, what we expect to see from that impairment. -------------------------------------------------------------------------------- Doug Dyer, Heartland Advisors - Analyst [24] -------------------------------------------------------------------------------- Okay, thank you very much. -------------------------------------------------------------------------------- Operator [25] -------------------------------------------------------------------------------- Cosmos Chiu, CIBC. -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [26] -------------------------------------------------------------------------------- It's always nice to see improving results. Got a few questions here, Sam and Jeff. Maybe first off if I can focus on the non-refractory mill at Bogoso. I don't think I saw it in the press release, but could you break out the unit cost for production per tonne for us in terms of -- what it costs (multiple speakers) -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [27] -------------------------------------------------------------------------------- Sorry, did I interrupt you -- go (multiple speakers) -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [28] -------------------------------------------------------------------------------- No, it's okay. It's okay. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [29] -------------------------------------------------------------------------------- I'm always being warned that I interrupt, so (multiple speakers). Our Chairman tells me that all the time. In any case, we have two sources. We have the pure tailings, which is where three or four people standing with a monitor, just blowing and unpumping the tailings through the plant. And if we run that operation, when we run that operation, we're looking at about $8 to $10 a tonne, when we do that lower grade. During the times that you do pushbacks and you get ounces from either Chujah or Bogo, which we did at the start of this particular quarter, we get higher-grade ounces than what we do is we [bulk] those ounces through -- we can [paint] it through for a period of two weeks or three weeks. That particular cost is sitting somewhere between $10 and $14 a tonne. So what we are trying to do is optimize how we bulk it, but generally looking over the tailings and the large impairment for the last quarter, we would be looking at somewhere between $8 and $10 a tonne. Going forward, we obviously are trying to see if we can improve that whole project as we just started and we are learning a lot from that, and I think we can still improve on that going forward. -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [30] -------------------------------------------------------------------------------- And remind me again, Sam. How does that compare to the cost for the sulfites, the BIOX? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [31] -------------------------------------------------------------------------------- In terms of processing cost? -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [32] -------------------------------------------------------------------------------- Yes. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [33] -------------------------------------------------------------------------------- I think the processing cost is somewhere between about $35 a tonne, [in my brain], plus [or minus] $35. Now, are we are starting to see better results in that? Only because we have invested, as you remember last year, in the BIOX section, in our power supply, and also we are looking at the new gearboxes that we have installed. The maintenance cost is starting to come down, but at this stage, until we come out next year looking at how that whole business line is going to perform, we are looking at about $35 a tonne, in that range. -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [34] -------------------------------------------------------------------------------- Okay. And then, maybe throughput at [DNO] refractory mill. I saw that you pretty much put through about 434,000 tonnes in terms of throughput in the quarter, but what I recall, Sam, I thought the nameplate capacity was like 1.5 million tonnes per annum. So as you had mentioned earlier during the presentation, you're exceeding that nameplate capacity right now. Do you think it can continue? Is that just a function of putting in more tailings, reprocessing? Is that why you're able to achieve that higher throughput? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [35] -------------------------------------------------------------------------------- Yes, it's a function of a few things. Firstly, it is -- we went in with a target of about 4,000 tonnes per day, and towards the end of the quarter, we started exceeding that. And as you rightly say, with harder rock we do crush and grind, the capacity is in the range of about 1.5 million tonnes. Now with what we see how -- understanding the chemistry, looking at the CIL component, et cetera, and we are getting a much better appreciation of how hard we can push this, so we are looking, going forward with very minor adjustments and operating practices, looking if we can exceed that 5,000 tonnes that we then took order at going forward. And then, I would like to, hopefully, be able to update in this quarter of what we can do to even increase that throughput. -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [36] -------------------------------------------------------------------------------- Okay. And then maybe moving on to a different topic here, thanks, Jeff, for giving us the details in terms of the CapEx that was spent in the quarter. Could you remind us again what is being categorized into development CapEx? I believe it was about $11 million in Q3. -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [37] -------------------------------------------------------------------------------- Sure, in terms of -- you want me to separate between sustaining and development, or just go over the Q3 capital numbers? -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [38] -------------------------------------------------------------------------------- Yes, if you can put it into the two different buckets -- if you give me one, I can back out the other one. -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [39] -------------------------------------------------------------------------------- Okay, well, maybe what I could do is if you look at -- not to refer you back to the MD&A, but if you look at -- we break it out -- we look at all and sustaining cost, and I will just give you the page reference there. It is quite good disclosure. If you look at -- yes, on page 20, you see that what we have is -- for the quarter, we have got about $12 million of sustaining capital and we have got about $12 million of development capital. One thing to note in our development capital, that is where we put our betterment stripping, so we've got $5.3 million of betterment stripping in our development capital. And the reason we do that is because it's such a significant capital investment at our Chujah pit that it makes sense to put it in that development category for the additional mine life and access to ore that we're going to get. If it was rather small or not as material as that, we would certainly look to put that into our sustaining capital. So if you want to look at other items in sustaining capital, we've got plant upgrades of about $2.2 million at Bogoso. We've also got a small amount of plant upgrades for Wassa. The Prestea Underground is in our Bogoso, about $3.5 million. We have the purchase of equipment, the two graders, four drills, two dozers that we have leased. That approximates just over $7 million, and if you look at -- Wassa was -- only had about $4 million overall for the quarter, and most of that was -- about half of that was development and half of that was sustaining. -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [40] -------------------------------------------------------------------------------- And Jeff, I guess on the back of that, I'm just wondering. In terms of sustaining CapEx, are there any plans to ever get down to $11 million or $12 million a quarter in terms of sustaining CapEx, or would it always be, given that there is quite a few things going on at Golden Star in terms of Prestea South and Prestea Underground, is that $12 million number, are you ever going to see that number or is it always going to be higher? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [41] -------------------------------------------------------------------------------- Yes, and maybe just to amplify, the sustaining capital for this quarter was about $12 million, so we certainly, hopefully, have met that goal that you're talking about. And so, going forward, as I am sure Sam will mention, is that we really look closely at our capital allocation program, our trigger point document, how we look at things. It is not just on development; it is also on sustaining, too. As you can see, as Sam just mentioned with the improvement in the plant and how we are reaching our capacity limits, the reason for that now is because of all the good capital investment we have made over the last couple of years to improve our plants, and we are continuing to make those improvements and hopefully we will achieve recoveries that reflect that investment in those plants. So I don't know, Sam, if you want to (multiple speakers) -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [42] -------------------------------------------------------------------------------- Yes, I can tell you what our goal and our vision as where we want to take the Company of my direction. I totally believe in just over the years that I have been in the industry is you want to give you about 8% to 10% of your direct operating costs, and that is the goal that we set ourselves for sustaining capital moving forward. So we've done a lot over the last 18 months. We had to get our plants -- get the bottleneck of our plants out of the way, get our supply sources, invest into equipment moving forward. And we are now starting to stabilize in terms of sustaining capital, and as I said, my goal to take the Company to is somewhere between 8% and 10% of direct operating costs. -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [43] -------------------------------------------------------------------------------- I guess, Sam, I am just wondering if total CapEx can ever be $12 million, or is it always -- total CapEx, including sustaining, would always be higher? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [44] -------------------------------------------------------------------------------- It's a great question. Hopefully, I can interrupt Sam for once. (laughter). But as we look at the magnitude of capital being invested in a company, and I know we are focusing on our company, but it has returned. This is the focus and this is the benefit of having all the processes in place with the trigger point document, because an investment is made to have a return, and I know we can't control the gold price. We run our models all the time. We are very good at planning. So when we make an investment, we do expect on a risk-adjusted basis to achieve that return. So I know -- I can appreciate how you view all-in sustaining capital and all-in cost as very important in looking at what capital is going to be going forward, and as we look to transform this Company, necessary capital investments are made and to the benefit of shareholders and the benefit of the Company going forward to generate additional cash flow and additional margins. So I certainly appreciate your comment, and I don't know if, Sam, you want to jump in? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [45] -------------------------------------------------------------------------------- We have one focus, and part of the focus is to make this a not complex Company. We are looking now already, we're getting to the point where we see for the next two years two pits at Bogoso and two pits at Wassa and a tailings replay. That we consolidate in terms of our operating cash flow and our EBITDA very clearly in how do we maximize that component. So looking forward in terms of that as the approach we're going to take is constantly keeping it in a not too complex environment. If you don't have it as complex, you can easily predict the lowest sustaining capital moving forward, and that is the goal that we want to achieve is not try to do everything, but try to schedule it in such a way that it doesn't burden the CapEx spend going forward. However, I want to -- we will come out early next year to give you the guidance of what we want to do in terms of our CapEx spend for 2014. -------------------------------------------------------------------------------- Cosmos Chiu, CIBC World Markets - Analyst [46] -------------------------------------------------------------------------------- Great, thank you. That's all I have. Thanks a lot. -------------------------------------------------------------------------------- Operator [47] -------------------------------------------------------------------------------- Andrew Breichmanas, BMO Capital Markets. -------------------------------------------------------------------------------- Andrew Breichmanas, BMO Capital Markets - Analyst [48] -------------------------------------------------------------------------------- Congratulations on the cost reductions so far. Not to belabor the plan on sustaining capital, but I have another question on sustaining capital. Originally for the year, the budget was $60 million, and that has been reduced to $36 million. I guess the question is of that reduction, has any of that been deferred into next year or -- what is the level to think about going forward? -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [49] -------------------------------------------------------------------------------- Yes, Andrew, no, and it's maybe going back to Cosmos' questions, too, I didn't mean to suggest anything other than that we all like to see lower capital in the Company, but we do look at this very closely. So when we look at our savings in sustaining capital for 2013, a lot of it has been -- just been the refocus to do things smarter. There has been some deferral, but we are also looking at that and determining what can be even further deferred or, if not, eliminated. So whatever you defer capital, of course, you increase your return on capital for -- that you already employed. So we're really looking at a lot of those metrics, and if we can keep deferring capital, and the plants are running, as Sam mentioned, very well, we have done a lot of good investments in the past. We are looking at where we need to spend our dollars. We are being very myopic about it, and I think everyone can appreciate that we are doing a very good job so far in terms of what we need to spend money on and where it's being spent. So, I'm not sure, Sam, if you want to -- -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [50] -------------------------------------------------------------------------------- We have a deferral, maybe, on the older plant. We are looking at -- but we have a different view of what we are looking at. Now you see the drilling -- we will be coming out with the drilling update below Wassa. Our mine plans are considering different approaches. We're looking holistically at the Company. We are looking at timing differently than what we would have done previously with the starting up of the tailings replay. We have different windows to review. My technical services team are constantly reviewing ways to spread our projects that we currently have. I think we have a very binary approach, maybe 12 months back. We now have options in terms of looking how we would be moving our spend, if you want to call it that, going forward. So this is the quarter where we are really looking at our -- at the Company from a different perspective in terms of our mine planning. I don't know -- I have Dr. Martin Raffield here to comment on any deferrals, but we haven't really gotten to the point of any deferrals. Martin, is there -- in terms of the mine planning? -------------------------------------------------------------------------------- Martin Raffield, Golden Star Resources Ltd. - SVP Technical Services [51] -------------------------------------------------------------------------------- Really, Sam, as you said, we're looking at all our projects. We are looking in the amount of cash flow. We are doing -- making a lot of focus at the moment on looking at our short-term, medium-term cash flows and making our decisions based on that. Those things that we are seeing at Wassa at the moment are really encouraging for us, and over the next quarter and over the next year, we will be working very hard on the Wassa side to see where we can best spend our money. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [52] -------------------------------------------------------------------------------- Andrew, right now, it's probably not what you wanted to hear, but we're getting new information. We are looking at it. But we haven't deferred anything that would injure the Company at this point in time. -------------------------------------------------------------------------------- Andrew Breichmanas, BMO Capital Markets - Analyst [53] -------------------------------------------------------------------------------- Okay, thanks. And I guess another question. The phrase trigger points has been mentioned a number of times. I wonder if you could just elaborate on that, and maybe provide some detail about what kind of returns you are expecting from some of your projects before you (multiple speakers) -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [54] -------------------------------------------------------------------------------- Yes, so the trigger document that we have come up, that Martin and the team has worked with, looks at two things. It looks at near-term cash flow and long-term value to the Company. And based on what we see in terms of our balance sheet moving forward at any particular time, what our feeling is on the momentum that we see in the gold price, we have plans really to go in that direction. So we have a rate of return target that I just don't want to highlight until I have gone through that, but it is a balance at this point in time of our near-term cash flow. We want to be able to continue to go forward with the cash that we have, and we think we can see a way through that, and then deliver on a future pipeline that will make sense under the current environment. But we will be ready. As I said earlier, this Company is greatly leveraged for any upside from this point on where we are sitting today. So we will be ready to pull a trigger should we feel that rate of return, based on the gold price moving forward and also what our efficiencies are at that point in time, and lastly, the risk associated of losing the reserves. So the trigger document is fairly -- it's not binary. It looks at various different alternatives that we want to start up at the point that it meets our forward-looking premise of what we can deliver. -------------------------------------------------------------------------------- Andrew Breichmanas, BMO Capital Markets - Analyst [55] -------------------------------------------------------------------------------- Okay, great. Thanks. -------------------------------------------------------------------------------- Operator [56] -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank. -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [57] -------------------------------------------------------------------------------- With respect to the grades at Wassa, we're shooting in the dark a little bit trying to determine the split between the Wassa pit and the higher-grade stuff you have had from Father Brown. Can you give us any sense of how that split works out? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [58] -------------------------------------------------------------------------------- Yes, Father Brown, as you know, is a high-grade pit. It has two areas on it. It has a Phase 1 and a Phase 2 component, and as we go deeper into the pit, we see higher grades. And for this year, as they are planned, we were in the Phase 1 side of the pit, and we have just started moving and bringing the other side of the pit, which would be the lower grade. But as it goes deeper down, the grades increase, and then we will have the floor of the Father Brown back into the normality, however, which will be back to the higher grades at the bottom of the floor. So it is a question of our mine plan, rather than grades falling off, and it fits. The reason why it fits, because you have to look at it this way, there was some [made] that we have done with the new drilling, and what we see in the upper levels is a much lower cost and a lower haulage cost to be driving a big pit that is close to the plant. So we feel comfortable now that we have worked around about the $800 an ounce that we have the new pit shell at $1,100 an ounce that it will be with a lower cost and with its new grade that we will update everybody very soon. But the balance between how much we mine from Father Brown and how much we mine from the Wassa main in terms of its totality, we can stabilize that moving forward. So it will -- it might appear that there will be a reduction in grade, but what you've got to see is that the cost for time on the two should reduce accordingly. So we have a clear understanding now in this Company of how to manage our pits, and this is also part of the trigger document, but don't be too nervous about just seeing a great drop. You've got to look at the cost-per-tonne impact from being a bigger pit sitting much closer to the plant. To give you a bit of a feeling, we do about 2,500 tonnes a day from Father Brown into the plant and about 5,500 tonnes a day from the Wassa main pit. So looking at that, we might at times increase the Wassa main at a lower cost, while we do the Phase 1 of the Father Brown, which is at a slightly lower grade than what we saw before. Martin, is there anything else on how I explained it? -------------------------------------------------------------------------------- Martin Raffield, Golden Star Resources Ltd. - SVP Technical Services [59] -------------------------------------------------------------------------------- No, I think you have got it exactly right, Sam. The sort of grades that we are getting out of the Wassa main at the moment are in the region of 1.2 to 1.3, and the grades that we are getting out of Father Brown historically have been up in the 5 gram plus range. We are seeing a lower-grade portion of Father Brown at the moment, as we're back up to the top of the pit, but we are doing the pushback and we expect to get down -- in about six months or so, down back into the high grades in Father Brown. So as Sam said, it's really a function of where we are mining and where the planning is and how we get those grades out to make that cash flow work. (multiple speakers) -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [60] -------------------------------------------------------------------------------- So until you're down into that lower -- back down to the floor of Father Brown, does that mean you expect a few more tonnes -- you are biased towards the Wassa tonnage? -------------------------------------------------------------------------------- Martin Raffield, Golden Star Resources Ltd. - SVP Technical Services [61] -------------------------------------------------------------------------------- Yes, but we also -- we are planning on mining more tonnes of the lower-grade Father Brown material, so we are aiming to keep the grade up at the levels we have seen by mining more lower-grade tonnes from Father Brown to get the answers out of there. -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [62] -------------------------------------------------------------------------------- Okay, so actually I had it just backwards, right. So to keep a more stable head grade at the mill, you would put more of the Father Brown tonnes forward because those tonnes are a bit lower grade at the Phase 1 stage. -------------------------------------------------------------------------------- Martin Raffield, Golden Star Resources Ltd. - SVP Technical Services [63] -------------------------------------------------------------------------------- Yes, they are not as high-grade tonnes as they were, but we will put more of them through. (multiple speakers) -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [64] -------------------------------------------------------------------------------- Okay. And you didn't break down, I don't think, in your guidance, where exactly the higher guidance came from, but the sense is most of that is from Wassa, not as much of that is Bogoso. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [65] -------------------------------------------------------------------------------- I knew you were going to go there. Good things about this quarter. The first one is the last possible day of a force, it is on a Monday and it is 31 December. And if you take it back, you can't pour and ship on the weekend before that, and you have to pour really on the Thursday evening. So we're probably going to be a pour short, number one. Although we might produce it, we will be a pour short. Secondly, we are looking really comfortably to continue to produce at the levels that we are seeing, but I always thought that the fourth quarter will be, again, a softer quarter only in relationship to the one more high-strip scenario that we get from Bogo. And it's really a function of the grade supplied from the Chujah into the plant. So although we had fantastic productivity in the third quarter, I remain just saying that it will be a bit softer based on -- the way the pour sits, number one, and, number two, seeing if we can maintain that very good productivity that we have seen in the third quarter in the pushbacks. And as you go down in the pushbacks, the pits get a little bit -- it gets smaller and the congestion is a bit higher at the bottom of the pit. So based on that is why I have given the guidance where it is currently. -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [66] -------------------------------------------------------------------------------- Okay. Just a quick question on the stripping. I think you said a bit earlier in the call that you spoke about the stripping of Bogoso getting down to 2. But I seem to recall there was a presentation where you showed stripping on a quarter-by-quarter basis, one of your presentations a while back, and I thought it was going to be a fair bit higher than that. Is that -- are these new stripping numbers? Have you been able to refine that since, maybe, the last time you updated Bogoso? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [67] -------------------------------------------------------------------------------- We showed a general trend down. I think the previous one. You're right. It's got to be similar between 2 and 4 in the strip, depending on the quarter. It is always quarter related and it's not exactly uniform. The ore body opens up and closes. But we will be much lower than what we have seen in 2013 and will be -- the high end will be on the 4 side. -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [68] -------------------------------------------------------------------------------- Okay. And then, last question, we have had a lot of questions about the tails and all that. But with respect to the grade of the tails, you were doing really well, up over the 2-gram mark in the first half of the year. It's a bit lower now. Can you give us any visibility on how that looks into next year or even into Q4? -------------------------------------------------------------------------------- Martin Raffield, Golden Star Resources Ltd. - SVP Technical Services [69] -------------------------------------------------------------------------------- You are talking about the tailings grade or the -- -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [70] -------------------------------------------------------------------------------- Yes, sorry, the grade of the tails you have been processing, not (multiple speakers) -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [71] -------------------------------------------------------------------------------- (multiple speakers) end of the year, we had the pump [eight bit] supply the oxide plant, and then, as you recall, we had the slipover pump A and we then immediately looked for starting up the tailings, which is a project we completed in 2012 and we are ready to run, should we have anything to issue. So -- which was at a much higher mining cost and -- a higher mining cost and a higher processing cost. Now we have the tailings, which runs by itself, and the tailing is in the 0.94 to 1 gram a tonne, but at a much lower cost and a much better throughput. So you are relating early in the year a pit that supplied which came to an end, and now we are looking at a tailings -- a massive efficient low-cost tailings number going forward. So I think the first quarter, our unrich grade was about 2.75, which was for pump A, and then it went down to 2.08. And then in the third quarter, we were running the tailings at about 0.96 or 1 gram a tonne. So it's two different operations, but this one has now solidified itself, and we keep on seeing better results from the tailings. -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [72] -------------------------------------------------------------------------------- And is the Q3 recovery, that's a pretty typical recovery to work with? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [73] -------------------------------------------------------------------------------- We are new into it. We predicted 0.4. We did our (inaudible) -- I think it was 0.42, the number, 0.425, the recovery, and we still -- the team is excited. We are learning a lot of ways to manage this and the chemical that you put in and take out and retention times. And so, we have had one quarter of exciting results, and the last month, basically, of the third quarter, we produced as much as we did in the first two months of the first quarter, so it was -- we started -- we are continuing to starting to learn how this process is going to enhance Bogoso going forward. -------------------------------------------------------------------------------- Trevor Turnbull, Scotiabank - Analyst [74] -------------------------------------------------------------------------------- Okay, sounds good. That's all I had. -------------------------------------------------------------------------------- Operator [75] -------------------------------------------------------------------------------- Anita Soni, Credit Suisse. -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [76] -------------------------------------------------------------------------------- Just a couple questions with regards to your stockpile levels. Could you just give me a breakout of the Wassa stockpile currently, and the BP stockpile, both in tonnage and grade? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [77] -------------------------------------------------------------------------------- Oh, dear, do we have that (multiple speakers) -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [78] -------------------------------------------------------------------------------- We normally don't give out that much detail on the stockpile. I know (multiple speakers). Sorry, go ahead. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [79] -------------------------------------------------------------------------------- I don't have the numbers with me now, but we managed our stockpile -- firstly at Bogoso last year, we knew we were going to have a tough year in 2013, so we mined in excess about 630,000 tonnes in 2012, and by the second quarter, we mined -- it split about 235,000 tonnes, so we added about 300,000, 400,000 tonnes of stockpile. In the second quarter, we mined 535,000 tonnes, so we added 100,000 tonnes out from stockpile. So we knew this was going to happen, so we managed it that way. I just don't have the Wassa stockpile, but in terms of how we deal with the Wassa, we had a blend between the Father Brown and the Wassa main. And until about the second quarter, we had viscosity issues in the pit, so -- in the plant. Now, that has been rectified by having changed some of the impellers and some of the things that the team has done, so we are much less reliant on having the stockpile going forward as we can put in the ore that we mine directly. I just don't have the stockpile numbers right in front of me, so I don't know -- does anybody have (multiple speakers) -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [80] -------------------------------------------------------------------------------- Yes, we haven't disclosed them, but we do have stockpiles available, as you have seen, and we have been drawing down our stockpiles as we did to fill our plants. We do have additional stockpiles available at Wassa. The breakdown of grades and tonnes -- we don't normally give that out until about year-end. So we will have to get back on that one. -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [81] -------------------------------------------------------------------------------- Sure, I would appreciate it if you get back to me. And secondly, you did say that you have got another five years at the current rate on the tailings. What would you call the current rate in terms of just ounces produced? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [82] -------------------------------------------------------------------------------- We are looking at -- currently, we're taking about 5,000 tonnes a day at about a 92% availability in the plant. It is a very straightforward process. Just have a monitor and you pump it across, and so we're doing more work on that to see if we -- this business line can be really, really important for us, especially next year and for the next few years. So this quarter with the results we have seen, the team is now looking at whether we can do anything to make this look even better. But in the beginning of third quarter, I guided at 4,000. We are now sitting at 5,000, so it keeps on going in the right direction for us. -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [83] -------------------------------------------------------------------------------- So you've got, by my calculation, then, somewhere around 9 million tonnes on the (multiple speakers) -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [84] -------------------------------------------------------------------------------- Yes, [97%]? (multiple speakers). Yes, but 9 million sounds a bit high. -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [85] -------------------------------------------------------------------------------- Sorry, we didn't hear you very (multiple speakers) -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [86] -------------------------------------------------------------------------------- Did you say 9 million? -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [87] -------------------------------------------------------------------------------- Yes, I was going five times five years times 365 days. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [88] -------------------------------------------------------------------------------- Times five years. Sorry, we all thought you said per annum. All right. Yes, 9 million is what we are -- we know have more in volume, but that's what we are giving now. -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [89] -------------------------------------------------------------------------------- Right, and then, could you just clarify for me how long you think the Father Brown pit is going to give you elevated grades to the Wassa mill? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [90] -------------------------------------------------------------------------------- Our current mine plan is to go to mid-2015 on the current Father Brown pit mine plan. -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [91] -------------------------------------------------------------------------------- And if you are doing percentage blends from now until mid-2015 for that, what would you say the blend would be between the Wassa (multiple speakers) -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [92] -------------------------------------------------------------------------------- It is not a blend. We are 85 kilometers away, and we have a certain rate on the pit size, and roughly we do between 2,000, 2,500 tonnes a day from there. So it's just a function of what the pit can physically deliver, and about 2,000, 2,500 tonnes per day is what I'm working on for the mine plan. -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [93] -------------------------------------------------------------------------------- And then, Wassa gives the remaining amount? -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [94] -------------------------------------------------------------------------------- Yes, Wassa, we are looking at -- obviously, we will update on the new resource deliveries shortly. We're looking at it from all angles, and that will be the other pit. So very easy to model, very straightforward operations, and that's where we want to get to. -------------------------------------------------------------------------------- Anita Soni, Credit Suisse - Analyst [95] -------------------------------------------------------------------------------- All right, thank you very much. -------------------------------------------------------------------------------- Operator [96] -------------------------------------------------------------------------------- Bill Nasgovitz, Heartland Advisors. -------------------------------------------------------------------------------- Bill Nasgovitz, Heartland Advisors - Analyst [97] -------------------------------------------------------------------------------- Congratulations on a fine quarter. It's nice to see the trend in costs and cash flow and all those good things. But it seems as if Golden Star is suffering from a Rodney Dangerfield value -- perception valuation. No respect, you get no respect. Certainly in bear markets, high-cost producers such as Golden perhaps are out of favor. But it seems to me, certainly I would enjoy -- appreciate your comments, but -- on this. It seems as if the market is worried about preserving shareholder value. Is there another dilution, another dilutive convertible bond coming, or Lord knows what? Could you just comment on just the firm's -- the Board's view of preserving and building shareholder value, and perhaps anything else which you think is behind this low evaluation? The Street just -- $0.50 targets. The stock is trading, if you annualize the cash flow, at less than 2 times annualized cash flow. It seems absurd. I'd appreciate your comments on both. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [98] -------------------------------------------------------------------------------- Yes, I think you are right, and one thing that -- it's a combination of credibility, of line of sight of the next two to three to four years. It's a question, do you survive this? And I think it's above all is -- will the Company be around to see the future upside? And we are working very hard, and I think on the credibility side, the team has shown that we are looking at the business totally different. We are coming out with the results that fall in line with achieving a future trend, then we can deliver going forward. And I'm like you, extremely optimistic where we can go. And we haven't been able to give the market that comfort, and what we do on a daily basis is delivering the results to show the credibility's there. Jeff, do you want to -- -------------------------------------------------------------------------------- Jeff Swinoga, Golden Star Resources Ltd. - EVP, CFO [99] -------------------------------------------------------------------------------- Sure. Bill, great question. If you look at what we have done so far, we raised the $50 million term loan financing with Ecobank, very flexible piece of debt. At a little bit higher cost, but of course, no financial covenants, no corporate guarantee, early repayment -- no early repayment penalty, sorry. And so, it's something that actually fit our planning going forward to make sure we had the financial flexibility. And as we go forward and we look at our capital spend, and based on this trigger point document, which I think we have discussed probably enough today, but the ability for us to match that investment threshold with the amount of financing that makes sense, that best matches it, if you know what I'm saying. Is it appropriate financing? Is it more debt? Is it -- our preference, of course, is not to have any external financing. So as we march forward, we have to weigh that consideration, those type of trade-offs, and we don't want to have an extremely highly leveraged company in the sense of having additional debt. However, we have to -- if it means lower cost and greater margins and greater capacity to repay that debt to the benefit of shareholders, we will certainly -- that would be certainly be our preference. So that's the way we look at things. So as we formulate our plans for next year and life of mine, those financing plans or lack of financing plans will hopefully best match the plan we put forward. -------------------------------------------------------------------------------- Bill Nasgovitz, Heartland Advisors - Analyst [100] -------------------------------------------------------------------------------- We will look forward to seeing it and congratulations on the transformation of Golden Star. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [101] -------------------------------------------------------------------------------- Thanks. We chip every quarter. We do the things. We are transparent, clear on what we achieve, and we are getting some good things happening to this Company, and hopefully in the next week, we can show you some more of that. -------------------------------------------------------------------------------- Bill Nasgovitz, Heartland Advisors - Analyst [102] -------------------------------------------------------------------------------- Thank you. -------------------------------------------------------------------------------- Operator [103] -------------------------------------------------------------------------------- We have reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments. -------------------------------------------------------------------------------- Sam Coetzer, Golden Star Resources Ltd. - President, CEO [104] -------------------------------------------------------------------------------- Operator, thank you for running this and thanks to everybody, and the good questions and the good compliments, as well, that came our way. Thanks a lot and goodbye. -------------------------------------------------------------------------------- Operator [105] -------------------------------------------------------------------------------- Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.
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