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Golden Star Resources: Digging Into The Q1 Results

May 08, 2020 4:00 AM ETGolden Star Resources Ltd. (GSS)7 Comments
Taylor Dart profile picture
Taylor Dart


  • Golden Star Resources released its Q1 results this week, with 50,000 ounces of gold produced in the quarter.
  • The company's exorbitant all-in sustaining costs at Prestea continue to drag on consolidated costs, with all-in sustaining costs coming in at $1,201/oz in Q1.
  • Based on Golden Star continuing to be a high-cost producer in a Tier-3 jurisdiction, I continue to see the stock as an Avoid, and a sell into rallies above $3.05.

We're more than one-third through the Q1 earnings season for the Gold Miners Index (GDX), and we've seen some miners surprise to the upside with minimal guidance changes, while others operating out of jurisdictions with shutdowns have had to withdraw their FY-2020 outlook completely. While Golden Star Resources (NYSE:GSS) hasn't had many issues despite the COVID-19 related challenges, and the company has maintained its FY-2020 guidance. However, assuming the company's FY-2020 outlook is met, Golden Star is targeting costs of $1,130/oz, a figure more than 15% above the industry average. Thus far, the Prestea Mine continues to operate at some of the highest costs in the industry, at $2,248/oz in Q1. Unfortunately, this makes an investment in Golden Star Resources difficult to justify as any progress at the Wassa Mine is wiped out by Prestea's weakness. Based on Golden Star continuing to be a high-cost, sub-par jurisdiction producer, I continue to see the stock as an Avoid.

(Source: GHHeadlines.com)

Golden Star Resources released its Q1 earnings results this week and reported quarterly gold production of 50,000 ounces at all-in sustaining costs of $1,201/oz. While the company's quarterly production came in roughly in line with its FY-2020 outlook, cost guidance is tracking a little high, above its guidance point of $1,115/oz for FY-2020. Fortunately, some of this increase in costs year over year was due to non-recurring expenses of $0.9 million related to the relocation of the corporate office from Toronto to London, and we saw a minor impact from a deferred shipment which resulted in lower sales. Therefore, if stated on purely a production basis for all-in sustaining costs, costs came in at $1,165/oz, only 4% above the guidance midpoint. The good news is that we haven't seen the company's guidance adjusted despite the COVID-19 challenges, with an expectation for FY-2020 production of 202,000 gold ounces at $1,115/oz. Let's take a closer look at the operations

This article was written by

Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, new positions I am entering/exiting, and proprietary sentiment indicators for gold miners in my newsletter below.  Returns Link: https://imgur.com/a/6fcWjD6Subscription Link: https://buy.stripe.com/3cseV37nl9Y7dUcaEI - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I am/we are long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

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Comments (7)

bengalesq profile picture
Shrekish profile picture
Thank you Taylor for your work! Personally I am very leery of African and most Asian jurisdictions, and reluctant to most in South America. Although that has yet to be an issue for American stockholders, I fear that one day in the future it may be, and it will become so quite abruptly.
The only places I will consider mines are in the US, Canada, Australia and to a lesser extent, Mexico. Obviously Venezuela is fresh out, and I think that Argentina would be a gamble for me. Mix that in with lousy AISCs and that usually cinches it for me. Ditto for large debt and large floats. As Grandpa Shrekish use to say, "There's better deals out there, sonny." Again, thank you for sharing with us. Be well. Be safe.
Taylor Dart profile picture
Hi Skrekish,

Thanks for reading. I agree, I actually prefer Africa to South America in most countries, as at least Africa doesn't deal with the environmental issues that SA countries often do where mines are despised. You be safe too, happy the work continues to be of value.
Chris Guenther profile picture
I appreciate the work you share to help us know who are the better bets in this industry, and who are not. Seriously, I am not sure you you keep up this prolific pace, but thank you!
Taylor Dart profile picture
Hi Chris,

Thanks a lot for the kind words, that means a lot.
boo 1 profile picture
Thanks as always for sharing this |Taylor. You are one of the few I follow on SA and I have benefited over the years from your expertise. Keep it coming. Cheers David.
Taylor Dart profile picture
Hi David,

Thanks so much for the kind words and for taking the time to reach out. That means a lot, so glad the work is helpful to others as that's the ultimate goal.


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