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Golden Star Resources: Valuation Becoming Attractive After The Drop

Aug. 03, 2021 5:18 PM ETGolden Star Resources Ltd. (GSS)9 Comments
Taylor Dart profile picture
Taylor Dart


  • Golden Star Resources released its Q2 results last week, reporting quarterly gold production of ~37,900 ounces, a 15% decline from the year-ago period.
  • Given the lower gold output and sales, all-in sustaining costs spiked to $1,182/oz in the period, an increase of more than 20% year-over-year.
  • While the cut guidance and early challenges with paste fill are not ideal, Golden Star is now trading at 0.9x NPV (5%) on a mine plan that includes solely reserves.
  • Given Golden Star's undervaluation, I would view the stock as a Speculative Buy below $2.45 from a trading standpoint.
Underground loader.
Alfio Manciagli/iStock via Getty Images

The Q2 Earnings Season for the Gold Juniors Index (GDXJ) has finally begun, and Golden Star Resources (NYSE:GSS) was one of the first names to report its Q2 results. Unfortunately, the company had a tough Q2 report, as evidenced by

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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/we have a beneficial long position in the shares of GLD either through stock ownership, options, or other derivatives. 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 (9)

mrmrmrj profile picture
GSS got hammered because it looked like a debt default was coming. Management averted that. Shares should head back to $3+. Production has to get better to get back to $4+.
@Taylor Dart, FTCO earnings came out today. You should have been chasing it :)
Taylor Dart profile picture
Why? I said not to chase FTCO above $8.80. We're at $7.80. What did I miss?
panzer profile picture
Excellent article (of course per usual!) but I have a question if you might consider having a go at it: It is hard to invest in the miners, in lieu of the folllowing: in 1929, in 2000, in 2008 GFC, and yet again, in 2020 (the pandemic) the miners simply got torched as we know during any sort of market emergency/breakdown/panic).......the miners actually have performed far worse than general equities during these events although the duration varies, and various reasons have been proposed, but regardless, it seems that it is best to wait for these drastic drawdowns before getting in the sector? I would reckon they come alone sooner these days as well, do to the radical money printing? thoughts.? Thanks
Taylor Dart profile picture
Hi Panzer,

Thank you. From an investment standpoint, the best buys are after significant drawdowns, from a trading standpoint, there are opportunities every day. It's a market of stocks, not a stock market. One also has to be right on the market if one chooses to stay out of miners at depressed valuations since if the market doesn't crash, one could sit out and miss significant rallies. I'm not saying the market can't correct, but many, myself included, would have argued that the market shouldn't have got this high in the first place, so watching the market as a cue for investing in miners has not been a great timing indicator.

I think it's best to just keep it simple. Trade miners off of miners, buy with a massive margin of safety, and stick to the best. If market does get hit by 25% - 30% and you get a drawdown, the best miners shouldn't decline more than 15-20% from the correct buy points. For example, if one bought KL at $33.50, and we assume market crashes, maybe KL drops back to $29.00 - $30.00. I can easily stomach that.
@panzer “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” Peter Lynch
panzer profile picture
@Bundubus @Taylor Dart Both sound and wise comments. Wisdom "pays dividends." Peter Lynch one of my favorites. Thanks guys. It doesn't matter what I think, and with inflation running at 6% to 10% (John Williams of Shawdow stats says more than 10%), it appears as if investors across the board are forced now (and for quite some time) to buy equities. The market does not have to retrace or crash; we are dealing with an entirely new paradigm: 120 Billion pumped in by the fed, communist western governments run by the oligarchs who all have their money on the line as well, margin debt soaring, insider selling at all time highs, the charts now way past 1929, rivaling internet mania of 1999; the charts are off the board, the debt bubble also massive.....everybody in europe and north america with their pensions in the markets, at insanity valuations...........How long can they keep it going?....Who is to say, a month, a year, 2 or 3 years. I think we are heading to some sort of civil war, terrorized periodically by the never ending 1st 2nd and now 3rd Jabs!.(to punish people, "bring them into compliance" and "lock them down" to, -- an expession that inmates are used to hearing in prisons (I am a lawyer)....The funny thing is Pfizer is the biggest manufacturer, and the CEO refuses to let his own product go into his arm! true.
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