Golden Star Resources : Q2 2021 PresentationPDF (10.58 MB)

CREATING A LEADING AFRICAN GOLD PRODUCER

Q2 2021 Results | July 2021

DISCLAIMER

Safe Harbour: Some statements contained in this presentation are forward-looking statements or forward-looking information (collectively, "forward-looking statements") within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, respectively. Investors are cautioned that forward- looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Such statements include comments regarding: Gold production, cash operating costs, production and cost guidance; capital and exploration expenditure guidance; the ability to expand the Company and its production profile through the exploration and development of its existing mine; estimated timing of the development of new mineral deposits and sources of funding for such development; expectations regarding the sustainability of current gold prices; implementation of exploration programs at Wassa and the timing thereof; the acceleration of the growth and development of the resource base at Wassa; the investment in drilling and development in 2021 resulting in increased mining rates; the nature, scope and timing of in mine exploration activities at Wassa; the ability to materially increase production at Wassa through development capital investments; the use of the non-hedge gold collar contracts; the delivery of a range of operational initiatives that improve the consistency of the operations and visibility of the longer-term potential of the operations; the life of mine; the future work plan with respect to the PEA; the ability of the Company to repay the 7% Convertible Debentures when due or to restructure them or make alternate arrangements; the term of the Macquarie credit facility, and the step down in capacity; the Company having sufficient cash available to support its operations and mandatory expenditures for the next 12 months; the continued commissioning process for the new paste plant; the introduction of second stopes planned for mining; the Company increasing exploration activities; planned exploration at Wassa and the timing and budget thereof; the ability to generate strong margins and sufficient free cash flow, raise additional financing or establish refinancing options for the Company's current debt; the continued at-the-market equity distribution program from time-to-time; the timing, duration and overall impact of the COVID-19 pandemic on the Company's operations and the ability to mitigate such impact; the quantum of cash flow from the sale of Prestea and the anticipated receipt and timing thereof; the availability of mineral reserves based on the accuracy of the Company's updated mineral reserve and resource models; planned drilling activities; the ability to convert mineral resources to mineral reserves through the planned infill drilling program; the potential to increase the Company's mineral resources outside of its existing mineral resources footprint; the anticipated impact of increased exploration on current mineral resources and mineral reserves; and the potential incurrence of further debt in the future. Generally, forward-looking information and statements can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes" or variations of such words and phrases (including negative or grammatical variations) or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative connotation thereof. Investors are cautioned that forward-looking statements and information are inherently uncertain and involve risks, assumptions and uncertainties that could cause actual facts to differ materially. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Golden Star will operate in the future. Forward-looking information and statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results, performance or achievements of Golden Star to be materially different from those expressed or implied by such forward-looking information and statements, including but not limited to: gold price volatility; discrepancies between actual and estimated production; mineral reserves and resources and metallurgical recoveries; mining operational and development risks; liquidity risks; suppliers suspending or denying delivery of products or services; regulatory restrictions (including environmental regulatory restrictions and liability); actions by governmental authorities; the speculative nature of gold exploration; ore type; the global economic climate; share price volatility; the availability of capital on reasonable terms or at all; risks related to international operations, including economic and political instability in foreign jurisdictions in which Golden Star operates; risks related to current global financial conditions; actual results of current exploration activities; environmental risks; future prices of gold; possible variations in mineral reserves and mineral resources, grade or recovery rates; mine development and operating risks; an inability to obtain power for operations on favourable terms or at all; mining plant or equipment breakdowns or failures; an inability to obtain products or services for operations or mine development from vendors and suppliers on reasonable terms, including pricing, or at all; public health pandemics such as COVID-19, including risks associated with reliance on suppliers, the cost, scheduling and timing of gold shipments, uncertainties relating to its ultimate spread, severity and duration, and related adverse effects on the global economy and financial markets; accidents, labor disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; litigation risks; and risks related to indebtedness and the service of such indebtedness. Although Golden Star has attempted to identify important factors that could cause actual results to differ materially from those contained in forward- looking information and statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in management's discussion and analysis of financial conditions and results of operations for the quarter ended June 30, 2021, and in our annual information form for the year ended December 31, 2020 as filed on SEDAR at www.sedar.com. The forecasts contained in this presentation constitute management's current estimates, as of the date of this presentation, with respect to the matters covered therein. We expect that these estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this presentation represent management's estimate as of any date other than the date of this presentation.

In this presentation, we use the terms "cash operating cost per ounce", "All-In Sustaining Cost per ounce" and "AISC per ounce". These terms should be considered as Non-GAAP Financial Measures as defined in applicable Canadian and United States securities laws and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with International Financial Reporting Standards ("IFRS"). "Cash operating cost per ounce" for a period is equal to the cost of sales excluding depreciation and amortization for the period less royalties, the cash component of metals inventory net realizable value adjustments and severance charges divided by the number of ounces of gold sold (excluding pre-commercial production ounces) during the period. ,"All-In Sustaining Costs per ounce" commences with cash operating costs and then adds sustaining capital expenditures, corporate general and administrative costs, mine site exploratory drilling and greenfield evaluation costs and environmental rehabilitation costs, divided by the number of ounces of gold sold (excluding pre-commercial production ounces) during the period. This measure seeks to represent the total costs of producing gold from operations. These measures are not representative of all cash expenditures as they do not include income tax payments or interest costs. Changes in numerous factors including, but not limited to, mining rates, milling rates, gold grade, gold recovery, and the costs of labor, consumables and mine site general and administrative activities can cause these measures to increase or decrease. We believe that these measures are the same or similar to the measures of other gold mining companies but may not be comparable to similarly totaled measures in every instance. Please see our "Management's Discussion and Analysis of Financial Condition and Results of Operations for the quarter ended June 30, 2021" for a reconciliation of these Non-GAAP measures to the nearest IFRS measure.

INFORMATION: The information contained in this presentation has been obtained by Golden Star from its own records and from other sources deemed reliable, however no representation or warranty is made as to its accuracy or completeness. The mineral reserve and mineral resource estimates have been compiled by the Company's technical personnel in accordance with definitions and guidelines set out in the Definition Standards for Mineral Resources and Mineral Reserves adopted by the Canadian Institute of Mining, Metallurgy, and Petroleum and as required by Canada's National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). All mineral resources are reported inclusive of mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. Mineral reserve estimates reflect the Company's reasonable expectation that all necessary permits and approvals will be obtained and maintained. Mining dilution and mining recovery vary by deposit and have been applied in estimating the mineral reserves. Additional scientific and technical information relating to the mineral properties referenced in this news release are contained in the technical report dated March 1, 2021 titled "NI 43-101 Technical Report on the Wassa Gold Mine, Mineral Resource and Mineral Reserve Update and Preliminary Economic Assessment of the Southern Extension Zone, Western Region, Ghana" effective December 31, 2020, which is available at: www.sedar.com;

The technical contents of this presentation have been reviewed and approved by S. Mitchel Wasel, BSc Geology, a Qualified Person pursuant to NI 43-101. Mr. Wasel is Vice President of Exploration for Golden Star and an active member and Registered Chartered Professional of the Australasian Institute of Mining and Metallurgy. The results for Wassa drilling stated herein are based on the analysis of saw-split HQ/NQ diamond half core or a three-kilogram single stage riffle split of a nominal 25 to 30 kg reverse circulation chip sample which has been sampled over nominal one metre intervals (adjusted where necessary for mineralized structures). Sample preparation and analyses have been carried out at Intertek Laboratories in Tarkwa, Ghana, which are independent from Golden Star, using a 1,000 gram slurry of sample and tap water which is prepared and subjected to an accelerated cyanide leach (LEACHWELL). The sample is then rolled for twelve hours before being allowed to settle. An aliquot of solution is then taken, gold extracted into Di-iso Butyl Keytone (DiBK), and determined by flame Atomic Absorption Spectrophotometry (AAS). Detection Limit is 0.01 ppm. All analytical work is subject to a systematic and rigorous Quality Assurance-Quality Control (QA-QC). At least 5% of samples are certified standards and the accuracy of the analysis is confirmed to be acceptable from comparison of the recommended and actual "standards" results. The remaining half core is stored on site for future inspection and detailed logging, to provide valuable information on mineralogy, structure, alteration patterns and the controls on gold mineralization.

CAUTIONARY NOTE TO US INVESTORS: This presentation uses the terms "measured mineral resources", "indicated mineral resources" and "inferred mineral resources." The Company advises US investors that while these terms are recognized and required by NI 43-101, the US Securities and Exchange Commission ("SEC") does not recognize them. Also, although disclosure of contained ounces is permitted under Canadian regulations, the SEC generally requires mineral resource information to be reported as in-place tonnage and grade. US Investors are cautioned not to assume that any part or all of the mineral deposits in the measured and indicated categories will ever be converted into mineral reserves. US investors should also note that "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of inferred mineral resources will ever be upgraded to a higher category. In accordance with Canadian rules, estimates of inferred mineral resources cannot form the basis of feasibility or other economic studies. US investors are cautioned not to assume that any part or all of the inferred mineral resource exists or is economically or legally mineable.

CURRENCY: All monetary amounts refer to United States dollars unless otherwise indicated.

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PARTICIPATINGMANAGEMENT

Andrew Wray		Graham Crew
Chief Executive Officer		Chief Operating Officer

Paul Thomson

Mitch Wasel

Chief Financial Officer

VP, Exploration

GOLDEN STAR - Overview

Wassa | Underground gold mine in Ghana

Reserve Mine Plan

400
		Production		AISC	1,125

300	1,000

Ave. production	Average AISC1,2
177 koz/year	$881 /oz

Production (koz)

200

100

875	($/oz)2
750
625	AISC
500	Site
375

Wassa Growth Opportunity

Mine life	NPV3, 7	-							250
6 years	$336 M
2021	2022	2023	2024	2025	2026

PEA Life of Mine Extension (excludes Reserve plan)

	Ave. production		Average AISC1,2			Mine life				NPV4,7
	294 koz/year		$778 /oz			11 years				$783 M
	500												1000
								Production			AISC
Production(koz)	400										875
								750	($/oz)AISCSite2,8
300
									625
	200
									500
	100
									375
	0												250

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Q2 2021 - Performance Summary & Key Events

Production And Sales (Continuing operations)

Production		Gold Sold
Q2 2021 37.9koz		Q2 2021 37.7koz
Q1 2021 40.1koz		Q1 2021 38.9koz
Unit Costs (Continuing operations)
Cash opex/oz1		AISC/oz1
Q2 2021	$752/oz		Q2 2021	$1,182/oz
Q1 2021	$718/oz		Q1 2021	$1,100/oz

Financial Performance

Adj. EBITDA1		Operating Cash
Q2 2021	$26.0m		Flow5
Q1 2021	$27.2m		Q2 2021	$23.2m
			Q1 2021	$23.3m
Cash		Net Debt
Q2 2021	$72.7m		Q2 2021	$31.0m
Q1 2021	$66.1m		Q1 2021	$39.5m

Q2 2021 Key Events

Wassa

• The mining rate averaged 3,963tpd in Q2 2021, 12% lower than Q1 2021 due to lower than planned development rates
• Underground mined grade averaged 3.1g/t, in line with the underground reserve grade of 3.1g/t and 4% higher than the grade achieved in Q1 2021
• Processing of low-grade stockpiles continued during Q2 2021, generating 5koz of production
• Investment in infrastructure continued throughout Q2 2021 to provide additional mining flexibility with the objective of increasing mining rates. Capex totaled $12m

Balance Sheet

• The cash position increased by $6.6m to $72.7m in Q2 2021
• At-the-MarketProgram - Limited use, $5.2m of net proceeds in April and May
• Macquarie senior secured credit facility was restructured and upsized to a three-year $90m revolving credit facility
• Adequate liquidity available to settle convertible debenture on maturity in August

Paste Fill Commissioning

• The commissioning was delayed by some quality assurance testing returning lower than expected fill strengths in the test stope in April 2021
• Recent results, particularly at a higher cement content of 7-10%, support progression of the commissioning process onto filling of a second test stope
• Anticipate re-commencement of the filling schedule in Q4 2021 allowing for production from secondary stopes as planned in 2022

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