Golden Star has moderate growth
On April 13, 2016 Golden Star Resources reported it's first quarter operational results.Financial results will follow.It says that it's operational results exceeded expectations at 53,000 ounces.This comes from two mines-the Prestea and the Wassa mines.Golden Star(GSC) has been mired in the $.20 to $.25 price range since last August.But as the price of gold moved up in February the price of GSC moved in tandem with it.Now it is almost $.90 per share.GSC has a new streaming agreement with Royal Gold and as part of it received a $20 million royalty payment.Golden Star also says that it has worked on productivity and cost changes and so now cash costs are $750 an ounce.This is a reduction and lower than expected.
Conclusion
This is not the financial report;it is the operational report.Gold production from the mines is 53,000 ounces and on track to hit 220,000 to 225,000 ounces for the year.Golden Star has enhanced revenues with a streaming agreement that brought in $20 million this quarter.But Golden Star has had a low level of gross profit because it's expenses have been too high in the past.Lately they have made a concerted effort to reduce cash costs of production and have done so.EBITDA will be higher in 2016 than in 2015.This blog expects the stock price to move above $1.00 per share in this quarter even with a stagnant price of gold.They will need a new gold streaming agreement and the expected almost 25% increase in production from their underground operations.To date all production comes from open pit operations but this will be added to in 2016.Investors should expect production in the next quarter to hit 60,000 ounces and the stock price around $1.00 to $1.25 per share.
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