TORONTO, May 31, 2021 /CNW/ - Golden Star
Resources Ltd. (NYSE American: GSS) (TSX: GSC) (GSE:
GSR) ("Golden Star" or the "Company") is
pleased to announce the restructuring and upsizing of the senior
secured credit facility (the "Credit Facility" or "Facility") with
Macquarie Bank Limited ("Macquarie"). All monetary amounts refer to
United States dollars.
Highlights
- The Credit Facility, an amortizing term loan, has been
restructured to a three-year revolving credit facility
("RCF").
- The capacity of the Facility has been extended to
$90 million, representing a
$20 million increase.
- With $60 million of the
Facility currently drawn, Golden
Star has $30 million of
available liquidity from the upsized Facility.
- The change in the structure of the Facility removes the near
term capital repayment amortization profile, providing up to
$50 million of additional liquidity
in 2021 and 2022.
- Interest charge of LIBOR plus 4.00%-5.25%. The Company
expects to remain in the lower end of this range based on forecast
net debt:EBITDA ratios. The revised pricing is therefore expected
to result in a 0.25%-0.50% saving relative to the current pricing
of 4.5% plus LIBOR.
- As part of the restructuring of the Facility, Golden Star has entered into zero cost collar
hedges for 84,375 ounces with a floor price of $1,600 per ounce and a ceiling price of
$2,115 which amortize on a quarterly
basis over a three-year period.
Andrew Wray, President and
Chief Executive Officer of Golden
Star, commented:
"Restructuring the Credit Facility
to an RCF and increasing the capacity reflect the progress made
over the last year in improving the financial position of the
business. The RCF structure removes the capital repayment
amortization profile of the Credit Facility and better aligns the
Facility with the investment in the growth of the Wassa gold mine
outlined in the recent updated technical report.
Following the repayment of the higher cost convertible
debentures in August 2021, overall
indebtedness is expected to be at a conservative level and forecast
net debt:EBITDA ratios should see us achieve the lower end of the
interest cost range. We expect to achieve an improvement in our
cost of capital, equating to an annual saving of up to $2.7 million.
The extension of the gold price protection program into 2024
secures an attractive floor and ceiling price for the period,
further de-risking the Company's ability to deliver on its
financial obligations while also investing in the growth of
Wassa."
Revolving Credit Facility
The Credit Facility has
transitioned from an amortizing term loan to a three-year RCF. The
capacity of the Facility has also been upsized to $90 million, a $20
million increase on the current capacity. This immediately
creates $30 million of liquidity over and above the current
drawn balance of $60 million. In
order to draw down the incremental debt capacity, the Company must
meet a $35 million forecast minimum
cash covenant at the time of draw down, net of an assumed repayment
of the 7% convertible debentures maturing in August 2021, before reducing to $25 million for the remaining life of the
Facility.
The restructuring also removes the $5 million quarterly
capital repayment amortization profile which was due to come into
effect in Q3 2021 if the Facility was fully drawn, or Q1 2022 if
the current $60 million drawn amount was sustained. Therefore,
this releases a further $10 million of liquidity in 2021 and
$20 million in 2022.
The capacity of the restructured Facility remains at
$90 million to June 30, 2023,
when it steps down to $50 million until maturity on
June 30, 2024. The term of the RCF
and the step down in the capacity will be reviewed annually and
could be further extended, subject to the successful conversion of
mineral resources to mineral reserves through the planned infill
drilling program.
Hedging
As a condition of amending the Facility, the
Company has extended its gold price protection hedging program into
2023 and the first half of 2024 by entering into zero cost collars
with Macquarie on an additional 84,375 ounces. This brings the
total hedging to 160,938 ounces with 10,938 ounces maturing on
June 30, 2021, and the remainder at a
rate of 12,500 ounces per quarter from September 30, 2021 to June
30, 2024. The hedging program now covers 25-30% of the
forecast production during the current term of the RCF. All hedges
have a floor of $1,600 and an average
ceiling of $2,171 in 2021 and
$2,179 in 2022 and a flat ceiling of
$2,115 in 2023 and 2024.
Company Profile:
Golden
Star is an established gold mining company that owns and
operates the Wassa underground mine in Ghana, West Africa. Listed on the NYSE
American, the Toronto Stock Exchange and the Ghanaian Stock
Exchange, Golden Star is focused on
delivering strong margins and free cash flow from the Wassa
mine. As the winner of the Prospectors & Developers
Association of Canada 2018
Environmental and Social Responsibility Award, Golden Star remains committed to leaving a
positive and sustainable legacy in its areas of operation.
Statements Regarding Forward-Looking Information
Some statements contained in this news release are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and "forward looking
information" within the meaning of Canadian securities laws and
include but are not limited to, statements and information
regarding the Company's ability to achieve an improvement in
the cost of capital; the Company's ability to repay the convertible
debentures maturing in August 2021,
to repay the Facility when it becomes due, and to deliver on its
financial obligations, generally; the ability to further extend the
Facility; and the ability to continue to convert mineral resources
to mineral reserves, and achieve the growth of Wassa.
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 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,
including the price of gold, anticipated costs and ability to
achieve goals. 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; the ability to complete the sale
transaction and realize the anticipated benefits therefrom; the
ability to obtain all necessary consents and approvals for the sale
transaction; 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; foreign exchange rate fluctuations; risks related to
streaming agreements and joint venture operations; 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 including financial and other
risks resulting from the impact of the COVID-19 global pandemic;
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 year ended
December 31, 2019 and in our annual
information form for the year ended December
31, 2019 as filed on SEDAR at www.sedar.com. The
forecasts contained in this press release constitute management's
current estimates, as of the date of this press release, with
respect to the matters covered thereby. We expect that these
estimates will change as new information is received. While
we may elect to update these estimates at any time, we do not
undertake any estimate at any particular time or in response to any
particular event.
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SOURCE Golden Star Resources Ltd.