EX-99.2 3 financialsandfootnotesq2ju.htm EXHIBIT 99.2 Exhibit
















goldenstarlargea02a01a01a11.jpg
Condensed Interim Consolidated Financial Statements
For the Three and Six Months Ended June 30, 2017 and June 30, 2016





TABLE OF CONTENTS

FINANCIAL STATEMENTS
 
 
 
 
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
 
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
 
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
 
 
 
 
 
1. NATURE OF OPERATIONS
 
2. BASIS OF PRESENTATION
 
3. CHANGES IN ACCOUNTING POLICIES
 
4. FINANCIAL INSTRUMENTS
 
5. INVENTORIES
 
6. MINING INTERESTS
 
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 
8. REHABILITATION PROVISIONS
 
9. DEFERRED REVENUE
 
10. DEBT
 
11. SHARE CAPITAL
 
12. COMMITMENTS AND CONTINGENCIES
 
13. SHARE-BASED COMPENSATION
 
14. INCOME/(LOSS) PER COMMON SHARE
 
15. REVENUE
 
16. COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
 
17. FINANCE EXPENSE, NET
 
18. RELATED PARTY TRANSACTIONS
 
19. OPERATIONS BY SEGMENT AND GEOGRAPHIC AREA
 
20. SUPPLEMENTAL CASH FLOW INFORMATION
 
 
 
 





GOLDEN STAR RESOURCES LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME/(LOSS)
(Stated in thousands of U.S. dollars except shares and per share data)
(unaudited)


Notes
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
15
 
$
77,335

 
$
51,457

 
$
145,880

 
$
112,524

Cost of sales excluding depreciation and amortization
16
 
55,173

 
42,956

 
106,579

 
84,014

Depreciation and amortization
 
 
8,893

 
4,136

 
17,332

 
9,932

Mine operating margin
 
 
13,269

 
4,365


21,969


18,578

 
 
 
 
 
 
 
 
 
 
Other expenses/(income)
 
 
 
 
 
 
 
 
 
Exploration expense
 
 
308

 
539

 
980

 
981

General and administrative
 
 
1,953

 
8,645

 
9,945

 
15,867

Finance expense, net
17
 
2,354

 
2,730

 
5,147

 
4,836

Other income
 
 
(120
)
 
(2,784
)
 
(294
)
 
(2,862
)
(Gain)/loss on fair value of financial instruments, net
4
 
(4,907
)
 
18,071

 
(7,405
)
 
20,278

Loss on conversion of 7% Convertible Debentures, net
10
 
—

 
—

 
165

 
—

Net income/(loss) and comprehensive income/(loss)
 
 
$
13,681

 
$
(22,836
)
 
$
13,431

 
$
(20,522
)
Net loss attributable to non-controlling interest
 
 
(202
)
 
(802
)
 
(622
)
 
(539
)
Net income/(loss) attributable to Golden Star shareholders
 
 
$
13,883

 
$
(22,034
)
 
$
14,053

 
$
(19,983
)
 
 
 
 
 
 
 
 
 
 
Net income/(loss) per share attributable to Golden Star shareholders
 
 
 
 
 
 
 
 
 
Basic
14
 
$
0.04

 
$
(0.08
)
 
$
0.04

 
$
(0.08
)
Diluted
14
 
$
0.02

 
$
(0.08
)
 
$
0.03

 
$
(0.08
)
Weighted average shares outstanding-basic (millions)
 
 
376.2

 
273.1

 
367.7

 
259.9

Weighted average shares outstanding-diluted (millions)
 
 
444.8

 
273.1

 
439.0

 
259.9

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

3


GOLDEN STAR RESOURCES LTD.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Stated in thousands of U.S. dollars)
(unaudited)

 
 
 
As of
 
As of
 
Notes
 
June 30,
2017
 
December 31,
2016
 
 
 
 
 
 
ASSETS
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and cash equivalents
 
 
$
25,899

 
$
21,764

Accounts receivable
 
 
6,429

 
7,299

Inventories
5
 
45,110

 
44,381

Prepaids and other
 
 
5,411

 
3,926

Total Current Assets
 
 
82,849

 
77,370

RESTRICTED CASH
 
 
6,493

 
6,463

MINING INTERESTS
6
 
233,289

 
215,017

Total Assets
 
 
$
322,631

 
$
298,850

 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
Accounts payable and accrued liabilities
7
 
$
86,242

 
$
92,900

Derivative liabilities
4
 
2,174

 
2,729

Current portion of rehabilitation provisions
8
 
4,828

 
5,515

Current portion of deferred revenue
9
 
17,828

 
19,234

Current portion of long term debt
10
 
8,134

 
15,378

Current portion of other liability
13
 
8,634

 
2,073

Total Current Liabilities
 
 
127,840

 
137,829

REHABILITATION PROVISIONS
8
 
71,659

 
71,867

DEFERRED REVENUE
9
 
99,899

 
94,878

LONG TERM DEBT
10
 
86,008

 
89,445

LONG TERM DERIVATIVE LIABILITY
4
 
5,891

 
15,127

LONG TERM OTHER LIABILITY
13
 
3,898

 
10,465

Total Liabilities
 
 
395,195

 
419,611

 
 
 
 
 
 
SHAREHOLDERS' EQUITY
 
 
 
 
 
SHARE CAPITAL
 
 
 
 
 
First preferred shares, without par value, unlimited shares authorized. No shares issued and outstanding
 
 
—

 
—

Common shares, without par value, unlimited shares authorized
11
 
780,261

 
746,542

CONTRIBUTED SURPLUS
 
 
34,908

 
33,861

DEFICIT
 
 
(818,898
)
 
(832,951
)
Deficit attributable to Golden Star shareholders
 
 
(3,729
)
 
(52,548
)
NON-CONTROLLING INTEREST
 
 
(68,835
)
 
(68,213
)
Total Deficit
 
 
(72,564
)
 
(120,761
)
Total Liabilities and Shareholders' Equity
 
 
$
322,631


$
298,850

The accompanying notes are an integral part of the condensed interim consolidated financial statements.


Signed on behalf of the Board,

"Timothy C. Baker"                            "Robert E. Doyle"
Timothy C. Baker, Director                        Robert E. Doyle, Director


4


GOLDEN STAR RESOURCES LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of U.S. dollars)
(unaudited)


 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
Notes
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Net income/(loss)
 
 
$
13,681

 
$
(22,836
)
 
$
13,431

 
$
(20,522
)
Reconciliation of net income/(loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
8,902

 
4,141

 
17,346

 
9,942

Share-based compensation
13
 
(1,273
)
 
5,396

 
3,442

 
9,740

Gain on fair value of embedded derivatives
4
 
(4,036
)
 
—

 
(7,167
)
 
—

Loss on fair value of 5% Convertible Debentures
4
 
134

 
15,677

 
317

 
15,166

Recognition of deferred revenue
9
 
(3,096
)
 
(2,831
)
 
(6,385
)
 
(5,606
)
Proceeds from Royal Gold stream
9
 
—

 
20,000

 
10,000

 
20,000

Reclamation expenditures
8
 
(1,503
)
 
(1,169
)
 
(2,994
)
 
(2,701
)
Other
20
 
1,389

 
915

 
3,933

 
4,041

Changes in working capital
20
 
(3,116
)
 
(13,170
)
 
(11,403
)
 
(23,009
)
Net cash provided by operating activities
 
 
11,082

 
6,123

 
20,520

 
7,051

INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Additions to mining properties
 
 
(237
)
 
(348
)
 
(392
)
 
(612
)
Additions to plant and equipment
 
 
(145
)
 
—

 
(145
)
 
—

Additions to construction in progress
 
 
(17,925
)
 
(22,659
)
 
(34,473
)
 
(38,309
)
Change in accounts payable and deposits on mine equipment and material
 
 
787

 
234

 
(906
)
 
(6,056
)
Increase in restricted cash
 
 
—

 
—

 
(29
)
 
—

Net cash used in investing activities
 
 
(17,520
)
 
(22,773
)
 
(35,945
)
 
(44,977
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Principal payments on debt
10
 
(514
)
 
(2,355
)
 
(1,360
)
 
(4,626
)
Proceeds from debt agreements
10
 
10,000

 
—

 
10,000

 
3,000

5% Convertible Debentures repayment
10
 
(13,611
)
 
(1,701
)
 
(13,611
)
 
(1,701
)
Shares issued, net
11
 
(3
)
 
13,706

 
24,521

 
13,706

Exercise of options
 
 
10

 
16

 
10

 
16

Net cash (used in)/provided by financing activities
 
 
(4,118
)
 
9,666

 
19,560

 
10,395

(Decrease)/increase in cash and cash equivalents
 
 
(10,556
)
 
(6,984
)
 
4,135

 
(27,531
)
Cash and cash equivalents, beginning of period
 
 
36,455

 
14,561

 
21,764

 
35,108

Cash and cash equivalents, end of period
 
 
$
25,899

 
$
7,577

 
$
25,899

 
$
7,577

See Note 20 for supplemental cash flow information.

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

5


GOLDEN STAR RESOURCES LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Stated in thousands of U.S. dollars except share data)
(unaudited)
 
 
Number of
Common
Shares  
 
Share
Capital  
 
Contributed
Surplus
 
Deficit
 
Non-Controlling Interest
 
Total
Shareholders'
Equity 
 
 
 
Balance at December 31, 2015
 
259,897,095

 
$
695,555

 
$
32,612

 
$
(793,304
)
 
$
(66,097
)
 
$
(131,234
)
Shares issued
 
22,750,000

 
15,015

 
—

 
—

 
—

 
15,015

Shares issued under DSUs
 
39,744

 
9

 
(9
)
 
—

 
—

 
—

Shares issued under options
 
40,169

 
25

 
(9
)
 
—

 
—

 
16

Options granted net of forfeitures
 
—

 
—

 
475

 
—

 
—

 
475

Deferred share units granted
 
—

 
—

 
217

 
—

 
—

 
217

Issue costs
 
—

 
(1,309
)
 
—

 
—

 
—

 
(1,309
)
Net loss
 
—

 
—

 
—

 
(19,983
)
 
(539
)
 
(20,522
)
Balance at June 30, 2016
 
282,727,008

 
$
709,295

 
$
33,286

 
$
(813,287
)
 
$
(66,636
)
 
$
(137,342
)
Balance at December 31, 2016
 
335,356,450

 
$
746,542

 
$
33,861

 
$
(832,951
)
 
$
(68,213
)
 
$
(120,761
)
Shares issued (see Note 11)
 
40,809,502

 
35,682

 
—

 
—

 
—

 
35,682

Shares issued under options
 
23,750

 
16

 
(6
)
 
—

 
—

 
10

Options granted net of forfeitures
 
—

 
—

 
822

 
—

 
—

 
822

Deferred share units granted
 
—

 
—

 
178

 
—

 
—

 
178

Performance and restricted share units granted
 
—

 
—

 
53

 
—

 
—

 
53

Share issue costs
 
—

 
(1,979
)
 
—

 
—

 
—

 
(1,979
)
Net income/(loss)
 
—

 
—

 
—

 
14,053

 
(622
)
 
13,431

Balance at June 30, 2017
 
376,189,702

 
$
780,261

 
$
34,908

 
$
(818,898
)
 
$
(68,835
)
 
$
(72,564
)

The accompanying notes are an integral part of the condensed interim consolidated financial statements.


6


GOLDEN STAR RESOURCES LTD.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2017 and 2016
(All currency amounts in tables are in thousands of U.S. dollars unless noted otherwise)
(unaudited)
1. NATURE OF OPERATIONS
Golden Star Resources Ltd. ("Golden Star" or "the Company" or "we" or "our") is a Canadian federally-incorporated, international gold mining and exploration company headquartered in Toronto, Canada. The Company's shares are listed on the Toronto Stock Exchange (the "TSX") under the symbol GSC, the NYSE American (formerly NYSE MKT) under the symbol GSS and the Ghana Stock Exchange under the symbol GSR. The Company's registered office is located at 150 King Street West, Sun Life Financial Tower, Suite 1200, Toronto, Ontario, M5H 1J9, Canada.
Through a 90% owned subsidiary, Golden Star (Wassa) Limited, we own and operate the Wassa open-pit gold mine, the Wassa underground mine and a carbon-in-leach ("CIL") processing plant (collectively, “Wassa”), located northeast of the town of Tarkwa, Ghana. Through our 90% owned subsidiary Golden Star (Bogoso/Prestea) Limited, the Company owns and operates the Bogoso gold mining and processing operations (“Bogoso”), the Prestea open-pit mining operations and the Prestea underground development project located near the town of Prestea, Ghana. We hold interests in several gold exploration projects in Ghana and in South America we hold and manage exploration properties in Brazil.
2. BASIS OF PRESENTATION
Statement of compliance
These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) including International Accounting Standards ("IAS") 34 Interim financial reporting. These condensed interim consolidated financial statements should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2016, which have been prepared in accordance with IFRS as issued by the IASB. The accounting policies and methods of application adopted are consistent with those disclosed in Note 3 of the Company’s consolidated financial statements for the year ended December 31, 2016, except for the changes in accounting policies as described below.
These condensed interim consolidated financial statements were approved by the Audit Committee of the Company on August 1, 2017.
Basis of presentation
These condensed interim consolidated financial statements include the accounts of the Company and its subsidiaries, whether owned directly or indirectly. The financial statements of the subsidiaries are prepared for the same period as the Company using consistent accounting policies for all periods presented. All inter-company balances and transactions have been eliminated. Subsidiaries are entities controlled by the Company. Non-controlling interests in the net assets of consolidated subsidiaries are a separate component of the Company's equity.
These condensed interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and discharge of all liabilities in the normal course of business.
The condensed interim consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments which are measured at fair value through profit or loss.
3. CHANGES IN ACCOUNTING POLICIES
The Company has adopted the following new and revised standards, effective January 1, 2017. These changes were made in accordance with the applicable transitional provisions.
IAS 7 Statement of cash flows - Disclosures related to financing activities was amended to require disclosures about changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. As a result of the adoption of IAS 7, the Company has included additional disclosure on non-cash changes of debt amounts in Note 20.
IAS 12 Income taxes - Deferred tax was amended to clarify (i) the requirements for recognizing deferred tax assets on unrealized losses; (ii) deferred tax where an asset is measured at a fair value below the asset's tax base, and (iii) certain other aspects of

7


accounting for deferred tax assets. The adoption of this amendment did not result in any impact to the Company's financial statements.
Standards, interpretations and amendments not yet effective
IFRS 9 Financial Instruments was issued in July 2014 and includes (i) a third measurement category for financial assets - fair value through other comprehensive income; (ii) a single, forward-looking "expected loss" impairment model; and (iii) a mandatory effective date of annual periods beginning on or after January 1, 2018. The Company is still assessing the impact of this standard.
IFRS 15 Revenue from Contracts with Customers was amended to clarify how to (i) identify a performance obligation in a contract; (ii) determine whether a company is a principal or an agent; and (iii) determine whether the revenue from granting a license should be recognized at a point in time or over time. In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new standard. The amendments have the same effective date as the standard, which is January 1, 2018. The Company is still assessing the impact of this standard.
IFRS 2 Share-based payments was amended to address (i) certain issues related to the accounting for cash settled awards, and (ii) the accounting for equity settled awards that include a "net settlement" feature in respect of employee withholding taxes effective for years beginning on or after January 1, 2018. The Company is still assessing the impact of this standard.
IFRS 16 Leases specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. IFRS 16 was issued in January 2016 and applies to annual reporting periods beginning on or after January 1, 2019. The Company is still assessing the impact of this standard.
IFRIC 23 Uncertainty over income tax treatments clarifies how the recognition and measurement requirements of IAS 12, Income Taxes, are applied where there is uncertainty over income tax treatments effective for years beginning on or after January 1, 2019. The Company is still assessing the impact of this standard.
4. FINANCIAL INSTRUMENTS
The following tables illustrate the classification of the Company's recurring fair value measurements for financial instruments within the fair value hierarchy and their carrying values and fair values as at June 30, 2017 and December 31, 2016:
 
 
 
June 30, 2017
 
December 31, 2016
 
Level
 
Carrying value
 
Fair value
 
Carrying value
 
Fair value
Financial Liabilities
 
 
 
 
 
 
 
 
 
Fair value through profit or loss
 
 
 
 
 
 
 
 
 
5% Convertible Debentures
3
 
$
—

 
$
—

 
$
13,294

 
$
13,294

Warrants
2
 
2,174

 
2,174

 
2,729

 
2,729

7% Convertible Debentures embedded derivative
3
 
5,891

 
5,891

 
15,127

 
15,127

There were no non-recurring fair value measurements of financial instruments as at June 30, 2017.
The three levels of the fair value hierarchy are:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 - Inputs that are not based on observable market data.
The Company's policy is to recognize transfers into and transfers out of the fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. During the six months ended June 30, 2017, there were no transfers between the levels of the fair value hierarchy.

8


(Gain)/loss on fair value of financial instruments in the Statement of Operations includes the following components:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Loss on fair value of 5% Convertible Debentures
$
134

 
$
15,677

 
$
317

 
$
15,166

Gain on repurchase of 5% Convertible Debentures
—

 
(454
)
 
—

 
(454
)
(Gain)/loss on fair value of warrants
(1,005
)
 
853

 
(555
)
 
1,984

Gain on fair value of 7% Convertible Debentures embedded derivative
(4,036
)
 
—

 
(7,167
)
 
—

Unrealized loss on non-hedge derivative contracts
—

 
1,475

 
—

 
2,729

Loss on settled derivative contracts
—

 
520

 
—

 
853

 
$
(4,907
)
 
$
18,071

 
$
(7,405
)
 
$
20,278


The valuation techniques that are used to measure fair value are as follows:
5% Convertible Debentures
On May 26, 2017, $13.6 million principal and $0.3 million interest was paid in full settlement of the 5% Convertible Debentures.
The debt component of the 5% Convertible Debentures was valued based on discounted cash flows and the conversion feature is valued based on a Black-Scholes model. The risk free interest rate used in the fair value computation was the interest rate on US treasury bills with maturity similar to the remaining life of the 5% Convertible Debentures. The discount rate used was determined by adding our risk premium to the risk free interest rate. A market-based volatility rate was applied to the fair value computation.
The following table presents the changes in the 5% Convertible Debentures for the six months ended June 30, 2017:
 
Fair value
Balance, December 31, 2016
$
13,294

Repayment
(13,611
)
Loss in the period included in earnings
317

Balance, June 30, 2017
$
—

Warrants
As part of the term loan transaction with Royal Gold, Inc. ("RGI"), 5,000,000 warrants to purchase Golden Star shares were issued to RGI. The warrants have a $0.27 exercise price and expire on July 28, 2019, being the fourth year anniversary of the date of issuance. These instruments are fair valued based on a Black-Scholes model with the following inputs on June 30, 2017 and December 31, 2016:
 
June 30, 2017
 
December 31, 2016
Warrants
 
 
 
Risk-free interest rate
1.1
%
 
0.8
%
Expected volatility
76.5
%
 
82.6
%
Remaining life (years)
2.1

 
2.6

The following table presents the fair value changes in the warrants for the six months ended June 30, 2017:
 
Fair value
Balance, December 31, 2016
$
2,729

Gain in the period included in earnings
(555
)
Balance, June 30, 2017
$
2,174


9


7% Convertible Debentures embedded derivative
The debt component of the 7% Convertible Debentures is recorded at amortized cost using the effective interest rate method, and the conversion feature is classified as an embedded derivative measured at fair value through profit or loss.
The embedded derivative was valued at June 30, 2017 and December 31, 2016 using a convertible note valuation model. The significant inputs used in the convertible note valuation are as follows:
 
June 30, 2017
 
December 31, 2016
Embedded derivative
 
 
 
Risk-free interest rate
2.3
%
 
1.7
%
Risk premium
9.2
%
 
12.9
%
Borrowing costs
15.0
%
 
10.0
%
Expected volatility
45.0
%
 
45.0
%
Remaining life (years)
4.1

 
4.6

The following table presents the changes in the 7% Convertible Debentures embedded derivative for the six months ended June 30, 2017:
 
Fair value
Balance, December 31, 2016
$
15,127

Gain on conversions
(2,069
)
Gain in the period included in earnings
(7,167
)
Balance, June 30, 2017
$
5,891

If the risk premium increases by 5%, the fair value of the 7% Convertible Debentures embedded derivative would decrease and the related gain in the Statement of Operations would increase by $0.1 million at June 30, 2017.
5. INVENTORIES
Inventories include the following components:
 
As of
 
As of
 
June 30,
2017
 
December 31, 2016
Stockpiled ore
$
21,688

 
$
23,833

In-process ore
3,739

 
5,008

Materials and supplies
18,887

 
14,824

Finished goods
796

 
716

Total
$
45,110

 
$
44,381

The cost of inventories expensed for the six months ended June 30, 2017 and 2016 was $98.8 million and $78.2 million, respectively.
$1.3 million and $2.9 million of net realizable value adjustments were recorded for stockpiled ore in the three and six months ended June 30, 2017, respectively (three and six months ended June 30, 2016 - $nil).

10


6. MINING INTERESTS
The following table shows the breakdown of the cost, accumulated depreciation and net book value of plant and equipment, mining properties and construction in progress:
 
Plant and equipment
 
Mining properties
 
Construction in progress
 
Total
Cost
 
 
 
 
 
 
 
As of December 31, 2016
$
461,438

 
$
746,657

 
$
131,409

 
$
1,339,504

Additions
145

 
392

 
32,238

 
32,775

Transfers
17,286

 
35,401

 
(52,687
)
 
—

Capitalized interest
—

 
—

 
2,235

 
2,235

Change in rehabilitation provision estimate
—

 
1,477

 
—

 
1,477

Disposals and other
(6,930
)
 
—

 
(390
)
 
(7,320
)
As of June 30, 2017
$
471,939

 
$
783,927


$
112,805

 
$
1,368,671

 
 
 
 
 
 
 
 
Accumulated depreciation
 
 
 
 
 
 
 
As of December 31, 2016
$
431,698

 
$
692,789

 
$
—

 
$
1,124,487

Depreciation and amortization
6,277

 
11,295

 
—

 
17,572

Disposals and other
(6,677
)
 
—

 
—

 
(6,677
)
As of June 30, 2017
$
431,298

 
$
704,084


$
—

 
$
1,135,382

 
 
 
 
 
 
 
 
Carrying amount
 
 
 
 
 
 
 
As of December 31, 2016
$
29,740

 
$
53,868


$
131,409

 
$
215,017

As of June 30, 2017
$
40,641

 
$
79,843


$
112,805

 
$
233,289

As at June 30, 2017, equipment under finance leases had net carrying amounts of $0.8 million. The total minimum lease payments are disclosed in Note 10 - Debt.
No depreciation is charged to construction in progress assets. For the six months ended June 30, 2017, the general capitalization rate for borrowing costs was 7%.
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities include the following components:
 
As of
 
As of
 
June 30,
2017
 
December 31, 2016
Trade and other payables
$
45,000

 
$
48,591

Accrued liabilities
33,069

 
35,998

Payroll related liabilities
8,173

 
8,311

Total
$
86,242

 
$
92,900


11


8. REHABILITATION PROVISIONS
At June 30, 2017, the total undiscounted amount of future cash needs for rehabilitation was estimated to be $83.4 million. A discount rate assumption of 2% and an inflation rate assumption of 2% were used to value the rehabilitation provisions. The changes in the carrying amount of the rehabilitation provisions are as follows:
 
Six Months Ended 
 June 30, 2017
 
Year Ended
December 31, 2016
Beginning balance
$
77,382

 
$
79,685

Accretion of rehabilitation provisions
622

 
1,368

Changes in estimates
1,477

 
1,856

Cost of reclamation work performed
(2,994
)
 
(5,527
)
Balance at the end of the period
$
76,487

 
$
77,382

 
 
 
 
Current portion
$
4,828

 
$
5,515

Long term portion
71,659

 
71,867

Total
$
76,487

 
$
77,382

9. DEFERRED REVENUE
During the six months ended June 30, 2017, the Company sold 11,010 ounces of gold to RGLD Gold AG ("RGLD"). Revenue recognized on the ounces sold to RGLD during the six months ended June 30, 2017 consisted of $2.7 million of cash payment proceeds and $6.4 million of deferred revenue recognized in the period (see Note 15). The Company has delivered a total of 41,375 ounces of gold to RGLD since the inception of the Streaming Agreement.
 
Six Months Ended 
 June 30, 2017
 
Year Ended
December 31, 2016
Beginning balance
$
114,112

 
$
65,379

Deposits received
10,000

 
60,000

Deferred revenue recognized
(6,385
)
 
(11,267
)
Balance at the end of the period
$
117,727

 
$
114,112

 
 
 
 
Current portion
$
17,828

 
$
19,234

Long term portion
99,899

 
94,878

Total
$
117,727

 
$
114,112


12


10. DEBT
The following table displays the components of our current and long term debt instruments:
 
As of
 
As of
 
June 30, 2017
 
December 31, 2016
Current debt:
 
 
 
Equipment financing credit facility
$
192

 
$
931

Finance leases
698

 
1,153

Ecobank Loan III
1,111

 
—

5% Convertible Debentures at fair value (see Note 4)
—

 
13,294

Vendor agreement
6,133

 
—

Total current debt
$
8,134

 
$
15,378

Long term debt:
 
 
 
Equipment financing credit facility
$
96

 
$
188

Finance leases
731

 
806

Ecobank Loan III
8,398

 
—

7% Convertible Debentures
41,557

 
47,617

Royal Gold loan
18,655

 
18,496

Vendor agreement
16,571

 
22,338

Total long term debt
$
86,008

 
$
89,445

 
 
 
 
Current portion
$
8,134

 
$
15,378

Long term portion
86,008

 
89,445

Total
$
94,142


$
104,823

5% Convertible Debentures
On May 26, 2017, $13.6 million principal and $0.3 million interest was paid in full settlement of the 5% Convertible Debentures.
7% Convertible Debentures
A total of 9,445,552 shares were issued on conversion of $8.5 million principal amount of 7% Convertible Debentures during the first quarter of 2017. The Company recorded a net loss on conversions of $0.2 million. The Company also made make-whole interest payments of $1.4 million as a result of the conversions. There were no conversions during the second quarter of 2017. As at June 30, 2017, $51.5 million principal amount of 7% Convertible Debentures remains outstanding.
The changes in the carrying amount of the 7% Convertible Debentures are as follows:
 
Six Months Ended 
 June 30, 2017
 
Year Ended
December 31, 2016
Beginning balance
$
47,617

 
$
—

Principal value of debt issued
—

 
65,000

Embedded derivative fair value at debt issuance
—

 
(12,259
)
Transaction costs
—

 
(2,271
)
Conversions
(6,947
)
 
(3,708
)
Accretion of debt
887

 
855

Balance at the end of the period
$
41,557

 
$
47,617

Ecobank Loan III
On February 22, 2017, the Company through its subsidiary Golden Star (Wassa) Limited closed a $25 million secured Medium Term Loan Facility ("Ecobank Loan III") with Ecobank Ghana Limited. This $25 million loan has a term of 60 months from the date of initial drawdown and is secured by, among other things, Wassa's existing plant, and certain machinery and equipment. The interest rate on the loan is three month LIBOR plus 8%, per annum, payable monthly in arrears beginning a month following the

13


initial drawdown. Repayment of principal commences six months following the initial drawdown and is thereafter payable quarterly in arrears. The Company has twelve months to drawdown the loan.
During the three months ended June 30, 2017, the Company drew down $10.0 million on Ecobank Loan III.
Schedule of payments on outstanding debt as of June 30, 2017:
 
 
Six months ending December 31, 2017
 
Year ending December 31, 2018
 
Year ending December 31, 2019
 
Year ending December 31, 2020
 
Year ending December 31, 2021
 
Year ending December 31, 2022
 
Maturity
Equipment financing loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
$
100

 
$
188

 
$
—

 
$
—

 
$
—

 
$
—

 
 2017 to 2018
Interest
 
13

 
4

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
623

 
806

 
—

 
—

 
—

 
—

 
2018
Interest
 
40

 
24

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ecobank Loan III
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
—

 
2,222

 
2,222

 
2,222

 
2,500

 
834

 
2022
Interest
 
455

 
831

 
629

 
429

 
245

 
56

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7% Convertible Debentures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
—

 
—

 
—

 
—

 
51,498

 
—

 
August 15, 2021
Interest
 
1,802

 
3,605

 
3,605

 
3,605

 
3,605

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Royal Gold loan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal 1
 
—

 
—

 
20,000

 
—

 
—

 
—

 
2019
Interest 2
 
750

 
1,500

 
875

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vendor agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
—

 
12,266

 
12,266

 
—

 
—

 
—

 
 
Interest
 
920

 
1,418

 
498

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total principal
 
$
723

 
$
15,482

 
$
34,488

 
$
2,222

 
$
53,998

 
$
834

 
 
Total interest
 
3,980

 
7,382

 
5,607

 
4,034

 
3,850

 
56

 
 
 
 
$
4,703

 
$
22,864

 
$
40,095

 
$
6,256

 
$
57,848

 
$
890

 
 
1 Beginning with the three months ending June 30, 2017, the excess cash flow provision of the Royal Gold loan comes into effect. The excess cash flow provision as defined in the Royal Gold loan agreement requires the Company to make mandatory repayments of 25% of excess cash flow for the remainder of 2017 and mandatory repayments of 50% excess cash flow beginning 2018 until maturity. As excess cash flow is dependent upon factors beyond the Company's control such as gold price, no excess cash flow repayments have been considered. The schedule of payments shows the total principal amount outstanding settled at maturity.
2 Interest payments on the Royal Gold loan are based on the average daily London Bullion Market Association ("LBMA") gold price multiplied by 62.5% divided by 10,000 to a maximum interest rate of 11.5% per annum. The estimated interest payments are calculated based on $1,200 per ounce LBMA gold price.

14


11. SHARE CAPITAL
 
 
 
Number of Common Shares
 
Share Capital
Balance at December 31, 2016
 
 
335,356,450

 
$
746,542

Bought deal
a
 
31,363,950

 
26,203

Conversion of 7% Convertible Debentures
b
 
9,445,552

 
9,479

Shares issued under options
 
 
23,750

 
16

Share issue costs
 
 
—

 
(1,979
)
Balance at June 30, 2017
 
 
376,189,702

 
$
780,261

a.
On February 7, 2017, the Company closed a bought deal offering of 31,363,950 common shares, which includes shares issued upon full exercise of the over-allotment option, at a price of C$1.10 per share, for net proceeds to the Company of $24.5 million.
b.
During the six months ended June 30, 2017, a total of 9,445,552 common shares were issued on conversion of $8.5 million principal amount of 7% Convertible Debentures. The Company recorded a $9.5 million increase in equity offset by capitalized share issue costs of $0.3 million, resulting in a net equity increase of $9.2 million. The Company recorded a net loss on conversions of $0.2 million.
12. COMMITMENTS AND CONTINGENCIES
The Company has capital commitments of $15.2 million, all of which are expected to be incurred within the next six months.
Due to the nature of the Company’s operations, various legal matters arise in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management, these matters will not have a material effect on the Condensed Interim Consolidated Financial Statements of the Company.
13. SHARE-BASED COMPENSATION
Non-cash employee compensation expenses recognized in general and administrative expense in the Statements of Operations and Comprehensive Income are as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Share options
$
219

 
$
169

 
$
822

 
$
475

Deferred share units
83

 
88

 
178

 
217

Share appreciation rights
(297
)
 
135

 
19

 
349

Performance share units
(1,278
)
 
5,004

 
2,423

 
8,699

 
$
(1,273
)
 
$
5,396

 
$
3,442

 
$
9,740

Share options
The fair value of option grants is estimated at the grant dates using the Black-Scholes option-pricing model. Fair values of options granted during the six months ended June 30, 2017 and 2016 were based on the weighted average assumptions noted in the following table:
 
Six Months Ended 
 June 30,
 
2017
 
2016
Expected volatility
73.70%
 
71.96%
Risk-free interest rate
1.86%
 
1.32%
Expected lives
5.99 years
 
5.02 years
Dividend yield
0%
 
0%
The weighted average fair value per option granted during the six months ended June 30, 2017 was $0.84 (six months ended June 30, 2016 - $0.35). As at June 30, 2017, there was $0.9 million of share-based compensation expense (June 30, 2016 - $0.5 million)

15


relating to the Company's share options to be recorded in future periods. For the six months ended June 30, 2017, the Company recognized an expense of $0.8 million (six months ended June 30, 2016 - $0.5 million). 
A summary of option activity under the Company's Fourth Amended and Restated 1997 Stock Option Plan during the six months ended June 30, 2017 are as follows: 
 
Options
(‘000)
 
Weighted–
Average
Exercise
price ($CAD)
 
Weighted–
Average
Remaining
Contractual
Term (Years)
Outstanding as of December 31, 2016
16,119

 
1.29

 
5.9

Granted
2,352

 
1.28

 
9.7

Exercised
(24
)
 
0.55

 
7.8

Forfeited
(626
)
 
2.20

 
2.4

Expired
(1,064
)
 
2.03

 
—

Outstanding as of June 30, 2017
16,757

 
1.21

 
6.3

 
 
 
 
 
 
Exercisable as of December 31, 2016
11,738

 
1.55

 
4.8

Exercisable as of June 30, 2017
12,882

 
1.30

 
5.6

Deferred share units ("DSUs")
For the six months ended June 30, 2017, the DSUs that were granted vested immediately and a compensation expense of $0.2 million was recognized for these grants (six months ended June 30, 2016 - $0.2 million). As of June 30, 2017, there was no unrecognized compensation expense related to DSUs granted under the Company's DSU Plan.
A summary of DSU activity during the six months ended June 30, 2017 and 2016:
 
 
Six Months Ended 
 June 30,
 
 
2017
 
2016
Number of DSUs, beginning of period ('000)
 
5,734

 
4,496

Grants
 
209

 
906

Exercises
 
—

 
(40
)
Number of DSUs, end of period ('000)
 
5,943

 
5,362

Share appreciation rights ("SARs")
As of June 30, 2017, there was approximately $0.8 million of total unrecognized compensation cost related to unvested SARs (June 30, 2016 - $0.4 million). For the six months ended June 30, 2017, the Company recognized an expense of $0.02 million related to these cash settled awards (six months ended June 30, 2016 - $0.3 million).
A summary of the SARs activity during the six months ended June 30, 2017 and 2016:
 
 
Six Months Ended 
 June 30,
 
 
2017
 
2016
Number of SARs, beginning of period ('000)
 
2,687

 
2,934

Grants
 
1,460

 
1,470

Exercises
 
(158
)
 
—

Forfeited
 
(270
)
 
(170
)
Number of SARs, end of period ('000)
 
3,719

 
4,234

Performance share units ("PSUs")
For the six months ended June 30, 2017, the Company recognized an expense of $2.4 million related to PSU's (six months ended June 30, 2016 - $8.7 million). As at June 30, 2017, the long term PSU liability is $3.9 million, recognized on the Balance Sheet as Other Long Term Liability and the current portion of $8.6 million is recognized on the Balance Sheet as Other Liability.

16


A summary of the PSU activity during the six months ended June 30, 2017 and 2016:
 
 
Six Months Ended 
 June 30,
 
 
2017
 
2016
Number of PSUs, beginning of period ('000)
 
15,480

 
9,618

Grants
 
—

 
6,058

Redeemed
 
(1,876
)
 
—

Forfeited
 
—

 
(196
)
Number of PSUs, end of period ('000)
 
13,604

 
15,480

2017 Performance and restricted share units ("PRSUs")
On May 4, 2017, the Company adopted a 2017 performance and restricted share unit plan (the “2017 PRSU Plan”). Pursuant to the 2017 PRSU Plan, performance share units (“2017 PSUs”) and restricted share units (“2017 RSUs” and, together with the 2017 PSUs, the “Share Units”) may be issued to any employee or officer of the Corporation or its designated affiliates. Share Units may be redeemed for: (i) common shares issued from treasury; (ii) common shares purchased in the secondary market; (iii) a cash payment; or (iv) a combination of (i), (ii) and (iii). On March 21, 2017, the Company issued 1,694,491 Share Units.
Each PRSU represents one notional common share that is redeemed for common shares or common shares plus cash subject to the consent of the Company based on the value of a common share at the end of the three year performance period, to the extent performance and vesting criteria have been met. The PRSUs vest at the end of a three year performance period based on the Company’s total shareholder return relative to a performance peer group of gold companies as listed in the 2017 PRSU Plan. The award is determined by multiplying the number of units by the performance adjustment factor, which range from 0% to 200%. The performance adjustment factor is determined by comparing the Company's share price performance to the share price performance of a peer group of companies. As the Company is required to settle these awards in common shares or common shares plus cash subject to the consent of the Company, they are accounted for as equity awards with corresponding compensation expense recognized. For the six months ended June 30, 2017, the Company recognized an expense of $0.1 million.
14. INCOME/(LOSS) PER COMMON SHARE
The following table provides reconciliation between basic and diluted income/(loss) per common share:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Net income/(loss) attributable to Golden Star shareholders
$
13,883

 
$
(22,034
)
 
$
14,053

 
$
(19,983
)
Adjustments:
 
 
 
 
 
 
 
Interest expense on 7% Convertible Debentures
899

 
—

 
1,840

 
—

Amortization of 7% Convertible Debentures discount
451

 
—

 
888

 
—

Gain on fair value of 7% Convertible Debentures embedded derivative
(4,036
)
 
—

 
(7,167
)
 
—

Gain on fair value of warrants
(1,005
)
 
—

 
(555
)
 
—

Diluted income/(loss)
$
10,192


$
(22,034
)
 
$
9,059

 
$
(19,983
)
 
 
 
 
 
 



Weighted average number of basic shares (millions)
376.2

 
273.1

 
367.7

 
259.9

Dilutive securities:
 
 
 
 
 


Options
2.4

 
—

 
2.8

 
—

Warrants
3.1

 
—

 
3.3

 
—

Deferred stock units
5.9

 
—

 
5.9

 
—

Convertible Debentures
57.2

 
—

 
59.3

 
—

Weighted average number of diluted shares (millions)
444.8

 
273.1

 
439.0

 
259.9

 
 
 
 
 
 
 
 
Income/(loss) per share attributable to Golden Star shareholders:
 
 
 
 
 
 
 
Basic
$
0.04

 
$
(0.08
)
 
$
0.04

 
$
(0.08
)
Diluted
$
0.02

 
$
(0.08
)
 
$
0.03

 
$
(0.08
)

17


15. REVENUE
Revenue includes the following components:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Revenue - Streaming Agreement
 
 
 
 
 
 
 
Cash payment proceeds
$
1,338

 
$
1,107

 
$
2,715

 
$
2,121

Deferred revenue recognized
3,096

 
2,831

 
6,385

 
5,606

 
4,434

 
3,938

 
9,100

 
7,727

Revenue - Spot sales
72,901

 
47,519

 
136,780

 
104,797

Total revenue
$
77,335

 
$
51,457

 
$
145,880

 
$
112,524

16. COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
Cost of sales excluding depreciation and amortization include the following components:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Mine operating expenses
$
49,268

 
$
41,945

 
$
94,321

 
$
83,392

Severance charges
—

 
—

 
954

 
(71
)
Operating costs from/(to) metal inventory
388

 
(1,670
)
 
1,759

 
(5,148
)
Inventory net realizable value adjustment
1,299

 
—

 
1,804

 
—

Royalties
4,218

 
2,681

 
7,741

 
5,841

 
$
55,173

 
$
42,956

 
$
106,579

 
$
84,014

17. FINANCE EXPENSE, NET
Finance income and expense includes the following components:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Interest income
$
(23
)
 
$
(5
)
 
$
(57
)
 
$
(10
)
Interest expense, net of capitalized interest (see Note 6)
1,437

 
2,348

 
3,667

 
4,355

Net foreign exchange loss/(gain)
629

 
45

 
(530
)
 
(193
)
Accretion of rehabilitation provision
311

 
342

 
622

 
684

Conversion make-whole payment
—

 
—

 
1,445

 
—

 
$
2,354

 
$
2,730

 
$
5,147

 
$
4,836


18


18. RELATED PARTY TRANSACTIONS
There were no material related party transactions for the six months ended June 30, 2017 and 2016 other than the items disclosed below.
Key management personnel
Key management personnel is defined as members of the Board of Directors and certain senior officers. Compensation of key management personnel are as follows, with such compensation made on terms equivalent to those prevailing in an arm's length transaction:
 
Three Months Ended 
 June 30,

Six Months Ended 
 June 30,
 
2017

2016

2017

2016
Salaries, wages, and other benefits
$
581


$
618


$
1,367


$
1,189

Bonuses
328


285


656


531

Share-based compensation
(830
)

4,039


616


7,030

 
$
79


$
4,942


$
2,639


$
8,750

19. OPERATIONS BY SEGMENT AND GEOGRAPHIC AREA
The Company has reportable segments as identified by the individual mining operations. Segments are operations reviewed by the executive management. Each segment is identified based on quantitative and qualitative factors.
Three Months Ended June 30,
 
Wassa
 
Bogoso/Prestea
 
Other
 
Corporate
 
Total
2017
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
38,942

 
$
38,393

 
$
—

 
$
—

 
$
77,335

Mine operating expenses
 
28,408

 
20,860

 
—

 
—

 
49,268

Operating costs from/(to) metal inventory
 
2,948

 
(2,560
)
 
—

 
—

 
388

Inventory net realizable value adjustment
 
1,299

 
—

 
—

 
—

 
1,299

Royalties
 
2,024

 
2,194

 
—

 
—

 
4,218

Cost of sales excluding depreciation and amortization
 
34,679

 
20,494

 
—

 
—

 
55,173

Depreciation and amortization
 
4,827

 
4,066

 
—

 
—

 
8,893

Mine operating (loss)/margin
 
(564
)
 
13,833

 
—

 
—

 
13,269

Net (loss)/income attributable to non-controlling interest
 
(263
)
 
61

 
—

 
—

 
(202
)
Net (loss)/income attributable to Golden Star
 
$
(1,051
)
 
$
12,911

 
$
219

 
$
1,804

 
$
13,883

 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
3,611

 
$
14,696

 
$
—

 
$
—

 
$
18,307

 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
25,649

 
$
25,808

 
$
—

 
$
—

 
$
51,457

Mine operating expenses
 
23,291

 
18,654

 
—

 
—

 
41,945

Operating costs (to)/from metal inventory
 
(2,733
)
 
1,063

 
—

 
—

 
(1,670
)
Royalties
 
1,361

 
1,320

 
—

 
—

 
2,681

Cost of sales excluding depreciation and amortization
 
21,919

 
21,037

 
—

 
—

 
42,956

Depreciation and amortization
 
3,149

 
987

 
—

 
—

 
4,136

Mine operating margin
 
581

 
3,784

 
—

 
—

 
4,365

Net loss attributable to non-controlling interest
 
(199
)
 
(603
)
 
—

 
—

 
(802
)
Net income/(loss) attributable to Golden Star
 
$
287

 
$
5,639

 
$
(1,871
)
 
$
(26,089
)
 
$
(22,034
)
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
13,413

 
$
9,594

 
$
—

 
$
—

 
$
23,007


19


Six Months Ended June 30,
 
Wassa
 
Prestea
 
Other
 
Corporate
 
Total
2017
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
76,192

 
$
69,688

 
$
—

 
$
—

 
$
145,880

Mine operating expenses
 
56,633

 
37,688

 
—

 
—

 
94,321

Severance charges
 
954

 
—

 
—

 
—

 
954

Operating costs from/(to) metal inventory
 
4,430

 
(2,671
)
 
—

 
—

 
1,759

Inventory net realizable value adjustment
 
1,804

 
—

 
—

 
—

 
1,804

Royalties
 
3,937

 
3,804

 
—

 
—

 
7,741

Cost of sales excluding depreciation and amortization
 
67,758

 
38,821

 
—

 
—

 
106,579

Depreciation and amortization
 
10,131

 
7,201

 
—

 
—

 
17,332

Mine operating (loss)/margin
 
(1,697
)
 
23,666

 
—

 
—

 
21,969

Net loss attributable to non-controlling interest
 
(517
)
 
(105
)
 
—

 
—

 
(622
)
Net (loss)/income attributable to Golden Star
 
$
(1,888
)
 
$
22,869

 
$
(1,370
)
 
$
(5,558
)
 
$
14,053

 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
6,644

 
$
28,366

 
$
—

 
$
—

 
$
35,010

 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
61,598

 
$
50,926

 
$
—

 
$
—

 
$
112,524

Mine operating expenses
 
47,326

 
36,066

 
—

 
—

 
83,392

Severance charges
 
113

 
(184
)
 
—

 
—

 
(71
)
Operating costs to metal inventory
 
(4,968
)
 
(180
)
 
—

 
—

 
(5,148
)
Royalties
 
3,225

 
2,616

 
—

 
—

 
5,841

Cost of sales excluding depreciation and amortization
 
45,696

 
38,318

 
—

 
—

 
84,014

Depreciation and amortization
 
7,428

 
2,504

 
—

 
—

 
9,932

Mine operating margin
 
8,474

 
10,104

 
—

 
—

 
18,578

Net income/(loss) attributable to non-controlling interest
 
454

 
(993
)
 
—

 
—

 
(539
)
Net income/(loss) attributable to Golden Star
 
$
6,878

 
$
11,683

 
$
(3,950
)
 
$
(34,594
)
 
$
(19,983
)
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
21,951

 
$
16,970

 
$
—

 
$
—

 
$
38,921


 
Wassa
 
Prestea
 
Other
 
Corporate
 
Total
June 30, 2017
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
177,286

 
$
140,006

 
$
2,063

 
$
3,276

 
$
322,631

 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
175,738

 
$
109,691

 
$
8,786

 
$
4,635

 
$
298,850

Currently, approximately 90% of our gold production is sold through a South African gold refinery. Except for the sales to RGLD as part of the Streaming Agreement, the refinery arranges for sale of the gold on the day it is shipped from the mine sites and we receive payment for gold sold two working days after the gold leaves the mine site. The global gold market is competitive with numerous banks and refineries willing to buy gold on short notice. Therefore, we believe that the loss of our current customer would not materially delay or disrupt revenue.

20


20. SUPPLEMENTAL CASH FLOW INFORMATION
During the six months ended June 30, 2017 and 2016, there was no payment of income taxes. The Company paid $4.8 million of interest during the six months ended June 30, 2017 (six months ended June 30, 2016 - $4.2 million).
Changes in working capital for the six months ended June 30, 2017 and 2016 are as follows:
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2017
 
2016
 
2017
 
2016
(Increase)/decrease in accounts receivable
 
$
(2,270
)
 
$
(2,351
)
 
$
870

 
$
(1,703
)
Increase in inventories
 
(542
)
 
(2,553
)
 
(2,303
)
 
(6,204
)
Decrease/(increase) in prepaids and other
 
185

 
1,942

 
(1,183
)
 
876

(Decrease)/increase in accounts payable and accrued liabilities
 
(489
)
 
74

 
(8,787
)
 
(2,609
)
Decrease in current portion of vendor agreement
 
—

 
(10,282
)
 
—

 
(13,369
)
Total changes in working capital
 
$
(3,116
)
 
$
(13,170
)
 
$
(11,403
)
 
$
(23,009
)
Other includes the following components:
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2017
 
2016
 
2017
 
2016
Loss on disposal of assets
 
$
—

 
$
—

 
$
513

 
$
—

Net realizable value adjustment on inventory
 
1,299

 
—

 
1,804

 
—

(Gain)/loss on fair value of warrants (see Note 4)
 
(1,005
)
 
853

 
(555
)
 
1,984

Loss/(gain) on fair value of marketable securities
 
62

 
(68
)
 
(37
)
 
(84
)
Unrealized loss on non-hedge derivative contracts
 
—

 
1,475

 
—

 
2,729

Gain on repurchase of 5% Convertible Debentures (see Note 4)
 
—

 
(454
)
 
—

 
(454
)
Gain on deferral of payables
 
—

 
(2,682
)
 
—

 
(2,682
)
Accretion of vendor agreement
 
183

 
1,338

 
366

 
1,642

Accretion of rehabilitation provisions (see Note 8)
 
311

 
342

 
622

 
684

Amortization of financing fees
 
88

 
111

 
167

 
222

Amortization of 7% Convertible Debentures discount
 
451

 
—

 
888

 
—

Loss on conversion of 7% Convertible Debentures, net
 
—

 
—

 
165

 
—

 
 
$
1,389


$
915


$
3,933


$
4,041

Non-cash changes of liabilities arising from financing activities
During the six months ended June 30, 2017, the non-cash changes relating to the changes in liabilities arising from financing activities were $6.9 million relating to the conversion of the 7% Convertible Debentures, $1.1 million accretion of debt and $0.3 million fair value loss on the 5% Convertible Debentures.

21