Golden Star Resources, Ltd. (GSS) reported earnings per share of 3 cents, in line with the year-ago quarter results as well as the Zacks Consensus Estimate.
Golden Star saw a 26% year-over-year increase in its net income to $9.1 million in the quarter. Included in net income is a gain of $9.2 million on the sale of Golden Star’s Saramacca exploration asset, which more than offset the $2.5 million in higher general and administrative costs, mainly due to charges associated with the head office shift to Toronto.
Revenues jumped 26% year over year to $149.7 million on the back of higher gold sales and improvement in average realized price of gold. Gold sales came in at 85,544 ounces in the quarter, 24% higher than last year. Average realized gold price increased 6% year over year to $1,710 per ounce in the quarter. Golden Star’s cash operating costs inched up 1% year over year to $1105 per ounce.
In fiscal 2012, revenue improved 17% to $550.5 million from $471.0 million in 2011, helped by an increase in gold sales and higher gold prices. Gold sales were higher due to the restart of ore processing at Bogoso's non-refractory processing plant in early 2012, which contributed an incremental 38,113 ounces to 2012's total gold sales. For the year, Golden Star incurred a loss per share of 4 cents compared with loss per share of 1 cent in 2011.
Golden Star’s cash flow from operations was $94.3 million in 2012, a significant improvement from $23.6 million generated last year. Cash and cash equivalents were $78.9 million as of Dec 31, 2012, down from $103.6 million as of Dec 31, 2011. Long-term debt increased to $110.5 million as of Dec 31, 2012, up from $10.7 million as of Dec 31, 2011.
Golden Star expects total gold production in the range of 320,000–350,000 ounces in 2013. The Bogoso/Prestea mine is expected to produce 170,000–190,000 ounces of gold, while Wassa/HBB is expected to produce 150,000–160,000 ounces of gold. Cash operating costs is expected in the range of 1,050–1,150 per ounce.
Golden Star’s capital budget for 2013 is estimated at $141 million including both sustaining ($60 million) and development capital ($81 million). Development capital projects have been defined as the Dumasi development, the Mampon and Prestea South development, Prestea Underground, HBB development, additional tailings capital, and the Wassa drilling program. Sustaining capital requirements are anticipated to be covered by existing cash balances and expected operating cash flows while development capital is expected to be funded with operating cash flows along with additional external financing as required.
Among other operational objectives set for 2013, Golden Star plans to complete the Prestea Underground feasibility study and initiate Phase 1 operations at the Prestea Underground mine. It plans to continue drilling at Wassa to follow up on the 2012 drilling results and an update of 2012 reserves and start construction of the new tailings storage facility at Wassa. Furthermore, it remains committed to achieve further reductions in operating costs throughout the organization.
Golden Star engages in the acquisition, exploration, development, and operation of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operations along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine and carbon-in-leach processing plant located to the east of Bogoso/Prestea in southwest Ghana. Golden Star competes with AngloGold Ashanti Ltd. ( AU).
Golden Star currently carries a Zacks Rank #3 (Hold) rating. Among the other stocks in the same industry, Sandstorm Gold Ltd. ( SAND) and Seabridge Gold, Inc. ( SA) hold a Zacks Rank #2 (Buy) and are favorable options for investors.
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