fy 2014 financial results 02 - s1.q4cdn.coms1.q4cdn.com › 789791377 › files ›...

F Y 2 0 1 4 F I N A N C I A L R E S U L T S0 2 . 1 5

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DISCLAIMER AND OTHER MATTERS SAFE HARBOR: Some statements contained in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 andapplicable Canadian securities laws. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actualresults to differ materially. Such statements include comments regarding: transformation of Golden Star to a non-refractory miner with a declining cash cost profile; gradeforecasts, strip ratios and production expectations for 2015, including our cash operating costs and expected operational improvements; life of mine cash operating costs forcombined operations from the start of 2016; the timing for completing refractory mining at Bogoso and placing refractory operations on care and maintenance; estimated capitalexpenditures; the timing for continuing processing at Bogoso; expectations regarding the impact of weather in 2015; expectations regarding production from tailings retreatment;use of the existing Wassa processing plant and Bogoso oxide and sulfide processing plants; matters relating to the PEA for Wassa, including estimated post-tax internal rate ofreturn and net present value of Wassa underground (including assumed discount rates), the timing for first production from Wassa underground, pre-production capitalexpenditures, and the life of mine cash operating costs and sustaining costs at Wassa underground; matters relating to the PEA for Prestea, including estimated post-tax internalrate of return and net present value of Prestea (including assumed discount rates), the timing for first production from Prestea, pre-production capital expenditures, and the life ofmine cash operating costs and sustaining costs at Prestea; cost contraction and margin growth; timing for receiving underground mining permits; timing of feasibility studies atWassa and Prestea; timing for commencing construction at Wassa Underground and commencing development at Prestea; timing for updated mineral reserves and resources;; andour mineral reserve and mineral resource estimates. Factors that could cause actual results to differ materially include timing of and unexpected events at the Bogoso oxide andsulfide processing plants and/or at the Wassa processing plant; variations in ore grade, tonnes mined, crushed or milled; variations in relative amounts of refractory, non-refractoryand transition ores; delay or failure to receive board or government approvals and permits; the availability and cost of electrical power; timing and availability of external financingon acceptable terms; technical, permitting, mining or processing issues, including difficulties in establishing the infrastructure for Wassa Underground; changes in U.S. andCanadian securities markets; and fluctuations in gold price and input costs and general economic conditions. There can be no assurance that future developments affecting theCompany will be those anticipated by management. Please refer to the discussion of these and other factors in our Annual Information Form for the year ended December 31,2013. Additional factors, if applicable, will be included in our Annual Information Form for the year ended December 31, 2014, which will be 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 thereby. We expectthat 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 updatethese 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 thatany forecasts in this presentation represent management's estimate as of any date other than the date of this presentation.NON-GAAP FINANCIAL MEASURES: In this presentation, we use the terms "cash operating cost per ounce" or “CoC per ounce” and "all-in sustaining cost per ounce“ or “AISCper 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 inisolation or as a substitute for measures of performance prepared in accordance with GAAP. "Cash operating cost per ounce" for a period is equal to the cost of sales excludingdepreciation and amortization for the period less royalties and production taxes, minus the cash component of metals inventory net realizable value adjustments and severancecharges divided by the number of ounces of gold sold during the period. "All-in sustaining costs per ounce" commences with cash operating costs and then adds sustaining capitalexpenditures, corporate general and administrative costs, mine site exploratory drilling and greenfield evaluation costs and environmental rehabilitation costs. This measure seeksto 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 orinterest costs. These measures are not necessarily indicative of operating profit or cash flow from operations as would be determined under International Financial ReportingStandards. 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 sitegeneral 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 goldmining companies, but may not be comparable to similarly titled measures in every instance. In order to indicate to stakeholders the company's earnings excluding the non-cash(gain)/loss on the fair value of debentures, non-cash impairment charges and severance charges, the Company calculates adjusted net loss attributable to Golden Starshareholders" and "adjusted net loss per share attributable to Golden Star shareholders" to supplement the condensed interim consolidated financial statements.INFORMATION: The information contained in this presentation has been obtained by Golden Star from its own records and from other sources deemed reliable, however norepresentation or warranty is made as to its accuracy or completeness. The technical information relating to Golden Star's material properties disclosed herein is based upontechnical reports prepared and filed pursuant to National Instrument 43-101 Standards for Disclosure of Mineral Properties ("NI 43-101") and other publicly available informationregarding the Company, including the following: (i) “NI 43-101 Technical Report on a Preliminary Economic Assessment of the Wassa Open Pit Mine and Underground Project inGhana” effective October 30, 2014 prepared by SRK Consulting (UK) Limited; (ii) “NI 43-101 Technical Report on Resources and Reserves, Golden Star Resources Ltd., BogosoPrestea Gold Mine, Ghana” effective December 31, 2013 prepared by SRK Consulting (UK) Limited, and (iii) “NI 43-101 Technical Report on Preliminary Economic Assessment ofShrinkage Mining of the West Reef Resource, Prestea Underground Mine, Ghana”. Additional information is included in Golden Star's Annual Information Form for the year endedDecember 31, 2013 which is filed on SEDAR. Mineral Reserves were prepared under the supervision of Dr. Martin Raffield, Senior Vice President Technical Services for theCompany. Dr. Raffield is a "Qualified Person" as defined by Canada's National Instrument 43-101. The Qualified Person reviewing and validating the estimation of the MineralResources is S. Mitchel Wasel, Golden Star Resources Vice President of Exploration.CURRENCY: All monetary amounts refer to United States dollars unless otherwise indicated.

FY2014 Financial Results Presentation 2

MANAGEMENT PARTICIPANTS

Sam CoetzerPresident and Chief Executive Officer

André van NiekerkExecutive Vice President and Chief Financial Officer

Martin RaffieldSenior Vice President, Technical Services

Angela ParrVice President, Investor Relations and Corporate Affairs

DELIVERING ON STRATEGY


STRATEGY ACTION

Favour operating margin over total ounces produced

150,000 ounces of historic annual Bogoso production to be replaced with 75,000 high margin ounces from Prestea

Leverage off existing infrastructure

IRR on development projects in excess of 70% achieved through operationalleverageFinancing for both projects in progress

Reduce costs at existing operationsthrough behavioural change and productivity enhancements

Costs and expenses declined for four consecutive quarters in 2014Full year cost of sales (before D&A) reduced 19% from prior year

Disciplined focus on return on capital

Investment in development drilling extended Wassa’s LOM and increased resource gradeDecision taken not to continue refractory operations

Q4 2014 OPERATIONAL PERFORMANCE SOLID

5 FY2014 Financial Results Presentation

MINING DEVELOPMENT OPTIMISATION

Head GRADEimprovements at both mines

Prestea PEA shows

HIGH RETURNSand QUICK PAYBACK

EFFECTIVE PLANNING limited load shedding impact to both mines

72,085 ounces produced and sold,

18% improvement on Q3’14

PERMITRECEIVED to commence decline at Wassa

HUMAN CAPITALDEVELOPMENT allows for reduced expat headcount and lower G&A

LARGE STOCKPILES accumulated by year end - derisks 2015 production

Underground mining

EQUIPMENT ORDERED for Wassa

18% HEAD COUNT REDUCTION at Bogoso has not impacted productivity

Q4 2014 FINANCIALS MARK RETURN TO PROFITABILITY


REVENUE MARKEDLY HIGHERRevenue for Q4 2014 increased 11% , with 18% more ounces at 6% lower realised price thanQ3 2014

COSTS CONTINUE TO REDUCETotal mine operating expenses were flat quarter over quarter at $71 MCOC per ounce1 reduced 13% from prior quarter to $919

IMPROVED PROFITABILITYAdjusted net income to shareholders of $8.8 M

1. See note on slide 2 regarding Non-GAAP Financial Measures

FY 2014 FINANCIALS REFLECT IMPROVED MARGINS


REVENUE DECLINEDRevenue declined over prior year with 21% reduction in ounces sold at 11% lower realised prices

COSTS SIGNIFICANTLY REDUCED AGAINMine operating expenses reduced 12% to $298 M year on year but COC per ounce1 increased marginally with lower production

LOSSES REDUCEDAdjusted net loss reduced to $12 M from $21 M in FY 2013


COST OF SALES REDUCING


$84

$78

$71 $71

$50

$55

$60

$65

$70

$75

$80

$85

$90

Q1 2014 Q2 2014 Q3 2014 Q4 2014

Cost of Sales before Depreciation and Amortization ($ M)

— Improved operating practices reduced costs throughout year—Reduced reagent usage—Improved maintenance practices—Lower head count

— FY14 mine operating expenses and cost of sales 12% and 19% lower than FY 2013 respectively

— Cash operating costs per ounce1 declined consistently through 2014— Q4 2014 lowest cash costs since 2010

— Q4 2014 cost performance bodes well for 2015 guidance— FY 2014 cash operating costs per ounce higher than prior year, but

AISC 6% lower— LOM cash costs expected to reduce to below $700/oz from 20163

CASH OPERATING COSTS PER OUNCE REDUCING

1. See note on slide 2 regarding Non-GAAP Financial Measures2. AISC is All-in Sustaining Costs. See note on slide 2 regarding Non-GAAP Financial Measures.3. LOM is from 2016 onwards and assumes Wassa construction and Prestea development proceed as per respective PEA reports.


$1,206 $1,201 $1,052

$919

Q1 2014 Q2 2014 Q3 2014 Q4 2014

$1,349 AISC2: $1,523

$1,049 $1,090 $860 -980

FY 2013 FY 2014 FY 2015

$1,030 – 1,160

$1,326 $1,252

$1,222$1,059

WASSA Q4’14 OPERATIONAL PERFORMANCE IMPROVED

Q4 2014 Q3 2014

Ore mined kt 653 631 Good equipment availability and improved weather conditions

Waste mined kt 2,830 2,317Stripping progressed to allow for construction of underground decline in Q1 2015

Ore processed kt 651 613Ore processed increased with effectiveplanning to manage load shedding

Grade processed g/t 1.32 1.20 Grade generally increases with depth

Recovery % 93.4 91.9 Recovery driven largely by grade

Gold sales oz 25,831 22,716


WASSA FINANCIAL PERFORMANCE STEADYING

Cash operating cost per oz1

$955 $967

$1,072

$908

$971

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

Q1 14 Q2 14 Q3 14 Q4 14 FY 14

— Q4 2014 revenues improved on prior quarter with increased gold sales, despite lower price achieved

— Q4 2014 cost of sales (before D&A) reduced 5% from prior quarter

— Cash operating costs per ounce declined in Q4’14 with improved grade

— Capital expenditure increased in Q4’14 with construction of new tailings facility

— Full year capital expenditure of $16.4 M (FY 2013: $33.6 M) — Development capital $7.9 M— Tailings facility $2.9 M — Other sustaining capital $4.6 M



— Grade forecast to improve consistently across quarters, to average 1.4 – 1.5 g/t Au for 2015

— Production forecast to be stable in 2015 at between105,000-120,000 ounces—Production increases with each quarter, Q4 2015 strongest quarter

— Cash operating costs per ounce reducing to $850–990 in line with grade improvement and lower strip

— Impact of load shedding on processing throughput is a key risk— Capital expenditure expected to be $41 M

—Sustaining capital of $14 M including $6 M on tailings facility—Wassa underground development capital of $27 M

WASSA GEARING UP IN 2015


BOGOSO Q4 2014 OPERATIONAL PERFORMANCE STRONG


Q4 2014 Q3 2014

Ore mined refractory kt 730 775Good access to ore maintained in the quarter

Waste mined kt 1,694 2,143 Strip ratio continues to reduce

Refractory ore processed kt 665 559Plant operating at capacity despite load shedding

Refractory grade g/t 2.73 2.67 Improved grade in line with plan

Gold recovery – refractory % 72.2 72.7 Recoveries stable in Biox plant

Non-refractory ore processed kt 332 315Tailings retreatment performing satisfactorily

Non-refractory grade g/t 1.02 1.07 Mining in higher grade benches continues

Gold recovery - non-refractory % 39.4 42.4 Recovery impacted by grade

Gold sold refractory oz 41,968 33,610

Gold sold non-refractory oz 4,286 4,844

Total gold sold oz 46,254 38,454

BOGOSO FINANCIAL PERFORMANCE

Cash operating cost per oz1

$1,489 $1,415

$1,041

$926

$1,180

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Q1 14 Q2 14 Q3 14 Q4 14 FY 14

— Higher production increasedQ4 2014 revenues over prior quarter, despite lower gold price

— Expenses and costs largely in line with Q3 2014, but unit costs reduced

— Mine operating margin increased in Q4 2014 to $5.5 M

— Q4 2014 represents lowest cash operating costs per ounce in 4 years

— Capital expenditure for FY 2014 minimised and focused on Prestea mines

1. See note on slide 2 regarding non-GAAP financial measures


— In excess 400,000 tonnes of ore currently on stockpile— Production of 145,000-155,000 ounces forecast for 2015— Refractory mining complete in Q3 2015, processing to continue

in Q4 2015— Weather not expected to impact mining in 2015

— Grade of 2.5 g/t Au forecast for hard rock mining — Tailings retreatment continue in 2015, expected to contribute

circa 17k ounces — Refractory operations to be placed on care and maintenance in

Q4 2015— $15 M of capital expenditure forecast for 2015, $13 M of which

on Prestea mines

BOGOSO MINE GENERATING RETURNS IN 2015


BROWNFIELD PROJECTS LEVERAGE OFF EXISTING INFRASTRUCTURE

PROJECT WASSA UNDERGROUND PRESTEA COMBINED

MINING Underground miningbelow existing open pit

Underground mining inwell established mine

Low risk development at established mines

PROCESSING Existing Wassa processing plant

Modified Bogoso processing plant

Operational leverage achieved

SUPPORT INFRASTRUCTURE Fully in place 15km haul road

improvementsMinimal new

infrastructure required

CAPEX $41M $40M Low capex projects

FIRST GOLD H1 2016 H2 2016 Near term production


*Assumption of a gold price of $1,200 per ounce used in these calculations. For further critical assumptions used in these assessments, please refer to the reports titled “NI 43-101 Technical Report on a Preliminary Economic Assessment of the Wassa Open Pit Mine and Underground Project in Ghana” and “NI 43-101 Technical Report on Preliminary Economic Assessment of Shrinkage Mining of the West Reef Resource, Prestea Underground Mine, Ghana” both of which are filed on SEDAR.

BOTH PROJECTS OFFER SUPERIOR RETURNS


PROJECT WASSA UNDERGROUND PRESTEA COMBINED

COC PER OZ $684 $370 LOM below $700 from 2016

AISC PER OZ $778 $518 LOM below $750from 2016

IRR 78% 72% Superior riskadjusted returns

NPV5% $271M $121M Offers substantial valueto shareholders

PAY BACK PERIOD N/A 2.5 years Quick payback

*Assumption of a gold price of $1,200 per ounce used in these calculations. For further critical assumptions used in these assessments, please refer to the reports titled “NI 43-101 Technical Report on a Preliminary Economic Assessment of the Wassa Open Pit Mine and Underground Project in Ghana” and “NI 43-101 Technical Report on Preliminary Economic Assessment of Shrinkage Mining of the West Reef Resource, Prestea Underground Mine, Ghana” both of which are filed on SEDAR.

— Golden star is transforming to a non-refractory miner with a declining cash cost profile

— Potential for new ore sources to add near and long term production

COST CONTRACTION AND MARGIN GROWTH

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1. See note on slide 2 regarding Non-GAAP Financial Measures of Cash Operating Costs and All-in Sustaining Costs per ounce

FY2014 Financial Results Presentation

300

400

500

600

700

800

900

1,000

0

100,000

200,000

300,000

400,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Prestea

Bogoso

Wassa

CoC

AISC

DEVELOPMENT PROJECTS WAY FORWARD

— First phase permits in place, underground mining permit to follow in 2015

— Wassa funded with existing debt facility, Prestea funding discussions underway

— Feasibility studies on both projects due in H1 2015— Wassa construction expected to commence Q2 2015— Pending conclusion of successful capital raising for Prestea,

first production from both projects expected in 2016


Golden Star will continue to assess and develop its existing assetsto lower our group cost profile and improve shareholder returns

NEAR TERM CATALYSTS FOR VALUE CREATION

Q1 2015 Q2 20152014 Q3 2015 2016

First production from Wassa Underground

First production from Prestea

* Development of projects dependent on positive study results and adequate access to finance

PEA for Wassa Underground released

Updated Mineral Resource estimate for Wassa

Wassa Feasibility study complete

Prestea Feasibility study complete

Revised PEA for Prestea complete

Prestea development commences


Q4 2015

Wassa decline construction begins

Updated Mineral Reserves & Resources announced

Investment Case

Established gold mining company with 15 years of production history in Ghana

Successfully reduced overall operating costs over last two years

Development projects to deliver low cost ounces through 2026

Largest land package on the Ashanti Gold belt

Low political risk in a stable African mining jurisdiction

Significant exploration & development upside development

Offers investors leveraged, un-hedged exposure to the gold price

MANAGEMENT AND BOARD

Sam CoetzerPresident and CEO

Sam was appointed CEO in January 2013 after joining Golden Star in March 2011 as COO. Sam is a mining engineer and a member of the World Gold Council. He has over 26 years of international mining experience with Kinross, Xstrata, Xstrata Coal and Placer Dome.

André van NiekerkEVP and CFO

André joined Golden Star in 2006 and spent five years in Ghana as the head of finance and business operations, after which he transferred to the corporate office as Controller. André was appointed to the role of CFO in 2014. Prior to joining Golden Star, André spent six years with KPMG serving clients in the mining and oil and gas industries

Daniel OwireduEVP and COO

Daniel was appointed COO in January 2013, after joining Golden Star in September 2006 as VP, Ghana Operations. He has more than 20 years of experience in the mining sector in Ghana and West Africa. Most recently, Daniel was Deputy Chief Operating Officer for AngloGold Ashanti where he successfully managed the construction and operation of the Bibiani, Siguiri, and the Obuasi mines.

Tim BakerChairman

Tim was appointed Chairman in January 2013. Tim most recently served as the COO of Kinross. He is a geologist with over 30 years of global project development and operational experience in Chile, Tanzania, United States, Venezuela, Kenya and Liberia.

Tony JensenDirector

Tony has over 25 years of mining industry experience and is CEO of Royal Gold Inc. Prior to joining Royal Gold, Tony was the Mine General Manager of the Cortez Joint Venture and spent eighteen years with Placer Dome. Tony has extensive experience in operations in the United States and Chile where he held several senior management positions.

Chris ThompsonDirector

Chris has 40 years of experience in international mining. Chris formerly served as Chairman and CEO of Gold Fields Limited, Chairman of the World Gold Council and Founder, President and CEO of Castle Group Inc. Chris has held directorships at over 25 public gold mining companies

Anu is the Managing Director of Miniqs Limited, a private group primarily interested in developing resource projects. She is also a Director of Atlatsa Resources, Frontier Rare Earths, and of Energulf Resources. Prior to founding Miniqs, Anu was VP, Corporate Development and Company Secretary at Katanga Mining.

Anu DhirDirector

MANAGEMENT AND BOARD

Craig is a geologist with over 30 years of experience in the mining business. He is Founder, CEO and Director of Avanti Mining. Formerly, Craig was EVP, Exploration of Gold Fields Limited; Founder, CEO and Chairman of the former Metallica Resources (now New Gold), and held a variety of strategic positions at Lac Minerals.

Robert has more than 30 years of mining; from international resource exploration, development, and fundraising, to production. Most recently, he was Founder, and CEO of Medoro Resources, now Gran Colombia Gold Corp. Prior to this, he served as CFO of Pacific Stratus Energy, CFO of Coalcorp Mining and CFO of Bolivar Gold Corp. Currently, Robert serves as a Director of Mandalay Resources and Detour Gold

Craig NelsonDirector

Rob DoyleDirector

Bill YeatesDirector

Bill was one of the founding partners of Hein & Associates LLP where he served on the Executive Committee and was their National Director of Auditing and Accounting. Bill has over 40 years of auditing experience working with public companies specializing in extractive industries. From 2005 to 2009, he served on the Financial Accounting Standards Advisory Council.

www.gsr.com [email protected]

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