EX-99.2 3 fsq32019.htm EXHIBIT 99.2 Exhibit
















goldenstarlargea02a01a01a26.jpg
Condensed Interim Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2019 and September 30, 2018





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. COMMITMENTS AND CONTINGENCIES
 
12. REVENUE
 
13. COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
 
14. SHARE-BASED COMPENSATION
 
15. FINANCE EXPENSE, NET
 
16. INCOME TAXES
 
17. INCOME/(LOSS) PER COMMON SHARE
 
18. RELATED PARTY TRANSACTIONS
 
19. SEGMENTED INFORMATION
 
20. SUPPLEMENTAL CASH FLOW INFORMATION
 
21. SUBSEQUENT EVENT
 





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
September 30,
 
Nine Months Ended
September 30,
 
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
12
 
$
69,504

 
$
67,738

 
$
198,676

 
$
215,678

Cost of sales excluding depreciation and amortization
13
 
46,798

 
48,873

 
137,108

 
166,164

Depreciation and amortization
 
 
6,979

 
8,659

 
20,590

 
26,115

Mine operating margin
 
 
15,727

 
10,206

 
40,978

 
23,399

 
 
 
 
 
 
 
 
 
 
Other expenses/(income)
 
 
 
 
 
 
 
 
 
Exploration expense
 
 
862

 
501

 
2,507

 
1,967

General and administrative
 
 
5,491

 
6,166

 
19,101

 
14,184

Finance expense, net
15
 
3,911

 
4,086

 
11,060

 
14,260

Other expense/(income)
 
 
86

 
(1,105
)
 
545

 
(2,148
)
(Gain)/loss on fair value of financial instruments, net
4
 
(4,793
)
 
629

 
(1,344
)
 
(3,512
)
Income/(loss) before tax
 
 
10,170

 
(71
)
 
9,109

 
(1,352
)
Income tax expense
16
 
5,244

 
4,151

 
17,724

 
10,825

Net income/(loss) and comprehensive income/(loss)
 
 
$
4,926

 
$
(4,222
)
 
$
(8,615
)
 
$
(12,177
)
Net loss attributable to non-controlling interest
 
 
(1,034
)
 
(1,044
)
 
(3,615
)
 
(3,372
)
Net income/(loss) attributable to Golden Star shareholders
 
 
$
5,960

 
$
(3,178
)
 
$
(5,000
)
 
$
(8,805
)
 
 
 
 
 
 
 
 
 
 
Net income/(loss) per share attributable to Golden Star shareholders
 
 
 
 
 
 
 
 
 
Basic
17
 
$
0.05

 
$
(0.04
)
 
$
(0.05
)
 
$
(0.12
)
Diluted
17
 
$
0.02

 
$
(0.04
)
 
$
(0.05
)
 
$
(0.12
)
Weighted average shares outstanding-basic (millions)
 
 
109.1

 
76.2

 
108.9

 
76.2

Weighted average shares outstanding-diluted (millions)
 
 
123.3

 
76.2

 
108.9

 
76.2

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
 
September 30,
2019
 
December 31,
2018
 
 
 
 
 
 
ASSETS
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and cash equivalents
 
 
$
56,812

 
$
96,507

Accounts receivable
 
 
5,681

 
3,213

Inventories
5
 
37,274

 
35,196

Prepaids and other
 
 
4,873

 
5,291

Total Current Assets
 
 
104,640

 
140,207

RESTRICTED CASH
 
 
6,545

 
6,545

MINING INTERESTS
6
 
298,008

 
270,640

DEFERRED TAX ASSETS
 
 
—

 
595

Total Assets
 
 
$
409,193

 
$
417,987

 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
 
Accounts payable and accrued liabilities
7
 
$
80,895

 
$
78,484

Current portion of rehabilitation provisions
8
 
9,340

 
7,665

Current portion of deferred revenue
9
 
12,351

 
14,316

Current portion of long term debt
10
 
27,929

 
27,482

Current income tax liabilities
16
 
2,235

 
—

Other liability
14
 
—

 
6,410

Total Current Liabilities
 
 
132,750

 
134,357

REHABILITATION PROVISIONS
8
 
56,453

 
58,560

DEFERRED REVENUE
9
 
101,314

 
105,632

LONG TERM DEBT
10
 
67,447

 
73,224

DERIVATIVE LIABILITY
4
 
3,138

 
4,177

DEFERRED TAX LIABILITY
16
 
11,255

 
—

Total Liabilities
 
 
372,357

 
375,950

 
 
 
 
 
 
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
 
 
909,846

 
908,035

CONTRIBUTED SURPLUS
 
 
38,923

 
37,258

DEFICIT
 
 
(836,345
)
 
(831,283
)
Shareholders' equity attributable to Golden Star shareholders
 
 
112,424

 
114,010

NON-CONTROLLING INTEREST
 
 
(75,588
)
 
(71,973
)
Total Equity
 
 
36,836

 
42,037

Total Liabilities and Shareholders' Equity
 
 
$
409,193

 
$
417,987

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 September 30,
 
Nine Months Ended September 30,
 
Notes
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Net income/(loss)
 
 
$
4,926

 
$
(4,222
)
 
$
(8,615
)
 
$
(12,177
)
Reconciliation of net income/(loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
7,112

 
8,669

 
20,987

 
26,142

Share-based compensation
14
 
614

 
2,164

 
2,618

 
2,746

Income tax expense
16
 
5,244

 
4,151

 
17,724

 
10,825

(Gain)/loss on fair value of 7% Convertible Debentures embedded derivative
4
 
(4,489
)
 
629

 
(1,040
)
 
(3,512
)
Recognition of deferred revenue
9
 
(2,645
)
 
(4,154
)
 
(9,498
)
 
(11,352
)
Reclamation expenditures
8
 
(958
)
 
(943
)
 
(2,328
)
 
(4,220
)
Other
20
 
2,094

 
1,653

 
7,549

 
10,581

Changes in working capital
20
 
(3,761
)
 
2,824

 
(17,667
)
 
(1,912
)
Net cash provided by operating activities
 
 
8,137

 
10,771

 
9,730

 
17,121

INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Additions to mining properties
 
 
—

 
(85
)
 
(288
)
 
(467
)
Additions to plant and equipment
 
 
(98
)
 
—

 
(98
)
 
(245
)
Additions to construction in progress
 
 
(16,852
)
 
(9,699
)
 
(46,699
)
 
(28,941
)
Proceeds from asset disposal
 
 
—

 
38

 
—

 
38

Change in accounts payable and deposits on mine equipment and material
 
 
1,598

 
(426
)
 
4,805

 
(1,236
)
Increase in restricted cash
 
 
—

 
—

 
—

 
(6
)
Net cash used in investing activities
 
 
(15,352
)
 
(10,172
)
 
(42,280
)
 
(30,857
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
Principal payments on debt
10
 
(2,661
)
 
(4,112
)
 
(8,264
)
 
(10,730
)
Proceeds from debt agreements
 
 
—

 
—

 
—

 
35,000

Royal Gold loan repayment
 
 
—

 
—

 
—

 
(20,000
)
Exercise of options
 
 
534

 
—

 
1,119

 
38

Net cash (used in)/provided by financing activities
 
 
(2,127
)
 
(4,112
)
 
(7,145
)
 
4,308

Decrease in cash and cash equivalents
 
 
(9,342
)
 
(3,513
)
 
(39,695
)
 
(9,428
)
Cash and cash equivalents, beginning of period
 
 
66,154

 
21,872

 
96,507

 
27,787

Cash and cash equivalents, end of period
 
 
$
56,812

 
$
18,359

 
$
56,812

 
$
18,359

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, 2017
 
76,116,215

 
$
783,167

 
$
35,284

 
$
(794,180
)
 
$
(66,025
)
 
$
(41,754
)
Impact of adopting IFRS 15 on January 1, 2018
 
—

 
—

 
—

 
(18,980
)
 
—

 
(18,980
)
Balance at January 1, 2018 (restated)
 
76,116,215

 
783,167

 
35,284

 
(813,160
)
 
(66,025
)
 
(60,734
)
Shares issued under DSUs
 
36,196

 
20

 
(165
)
 
—

 
—

 
(145
)
Shares issued under options
 
12,500

 
43

 
(5
)
 
—

 
—

 
38

Options granted net of forfeitures
 
—

 
—

 
1,017

 
—

 
—

 
1,017

Deferred share units granted
 
—

 
—

 
419

 
—

 
—

 
419

Performance and restricted share units granted
 
—

 
—

 
273

 
—

 
—

 
273

Net loss
 
—

 
—

 
—

 
(8,805
)
 
(3,372
)
 
(12,177
)
Balance at September 30, 2018
 
76,164,911

 
$
783,230

 
$
36,823

 
$
(821,965
)
 
$
(69,397
)
 
$
(71,309
)
 
 
 
 
 
 
 
 


 
 
 


Balance at December 31, 2018
 
108,819,009

 
$
908,035

 
$
37,258

 
$
(831,283
)
 
$
(71,973
)
 
$
42,037

Impact of adopting IFRS 16 on January 1, 2019 (see Note 3)
 
—

 
—

 
—

 
(62
)
 
—

 
(62
)
Balance at January 1, 2019 (restated)
 
108,819,009

 
908,035

 
37,258

 
(831,345
)
 
(71,973
)
 
41,975

Shares issued under options
 
359,772

 
1,811

 
(692
)
 
—

 
—

 
1,119

Options granted net of forfeitures
 
—

 
—

 
1,639

 
—

 
—

 
1,639

Deferred share units granted
 
—

 
—

 
563

 
—

 
—

 
563

Performance and restricted share units granted
 
—

 
—

 
461

 
—

 
—

 
461

PRSU settlement, net of tax
 
65,839

 
—

 
(306
)
 
—

 
—

 
(306
)
Net loss
 
—

 
—

 
—

 
(5,000
)
 
(3,615
)
 
(8,615
)
Balance at September 30, 2019
 
109,244,620

 
$
909,846

 
$
38,923

 
$
(836,345
)
 
$
(75,588
)
 
$
36,836



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 NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(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 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, Suite 1200, Toronto, Ontario, M5H 1J9, Canada.
Through our 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 processing plant (collectively, "Wassa"), located northeast of the town of Tarkwa, Ghana. Through our 90% owned subsidiary Golden Star (Bogoso/Prestea) Limited, we own and operate the Bogoso gold mining and processing operations, the Prestea open-pit mining operations and the Prestea underground mine ("Prestea") located near the town of Prestea, Ghana. We hold and manage interests in several gold exploration projects in Ghana and 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, 2018, 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, 2018, except for the changes in accounting policies described below.
These condensed interim consolidated financial statements were approved by the Audit Committee of the Company on October 30, 2019.
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, except for the changes in accounting policies described in Note 3 below. 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
New Accounting Standards Effective 2019
The Company has adopted the following new and revised standards, effective January 1, 2019. These changes were made in accordance with the applicable transitional provisions.
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.

7


On January 1, 2019, the Company adopted the requirements of IFRS 16 Leases. As a result, the Company updated its accounting policy for leases to align with the requirements of IFRS 16. The Company elected to use the modified retrospective approach to initially adopt IFRS 16 which resulted in recognizing the cumulative effect of prior period amounts as an adjustment to the opening balance sheet through opening deficit on January 1, 2019.
Under IFRS 16, the Company recognized lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 7.5%.
The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. The change in accounting policy affected the following items in the balance sheet on January 1, 2019:
•
Mining interests (plant and equipment) - increase of $0.7 million
•
Long term debt (finance leases) - increase of $0.5 million
The net impact on retained earnings on January 1, 2019 was a decrease of $0.1 million
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. There was no accounting impact to the financial statements on adoption 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 September 30, 2019 and December 31, 2018:
 
 
 
September 30, 2019
 
December 31, 2018
 
Level
 
Carrying value
 
Fair value
 
Carrying value
 
Fair value
Financial Liabilities
 
 
 
 
 
 
 
 
 
Fair value through profit or loss
 
 
 
 
 
 
 
 
 
7% Convertible Debentures embedded derivative
3
 
3,138

 
3,138

 
4,177

 
4,177

Financial Assets
 
 
 
 
 
 
 
 
 
Non-hedge derivative contracts
2
 
304

 
304

 
—

 
—

There were no non-recurring fair value measurements of financial instruments as at September 30, 2019.
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 nine months ended September 30, 2019, there were no transfers between the levels of the fair value hierarchy.
(Gain)/loss on fair value of financial instruments in the Statements of Operations and Comprehensive Income/(Loss) consists of the following:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
(Gain)/loss on fair value of 7% Convertible Debentures embedded derivative
$
(4,488
)
 
$
629

 
$
(1,039
)
 
$
(3,512
)
Unrealized gain on non-hedge derivative contracts
(304
)
 
—

 
(304
)
 
—

 
$
(4,792
)
 
$
629

 
$
(1,343
)
 
$
(3,512
)

8


The valuation technique that is used to measure fair value is as follows:
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 September 30, 2019 and December 31, 2018 using a convertible note valuation model. The significant inputs used in the convertible note valuation are as follows:
 
September 30, 2019
 
December 31, 2018
Embedded derivative
 
 
 
Risk premium
8.5
%
 
5.0
%
Borrowing costs
7.5
%
 
10.0
%
Expected volatility
45.0
%
 
45.0
%
Remaining life (years)
1.9

 
2.6

The following table presents the changes in the 7% Convertible Debentures embedded derivative for the nine months ended September 30, 2019:
 
Fair value
Balance at December 31, 2018
$
4,177

Gain on fair value of 7% Convertible Debentures embedded derivative
(1,039
)
Balance at September 30, 2019
$
3,138

If the risk premium increases by 10%, 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 September 30, 2019.
If the borrowing costs increases by 10%, 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 September 30, 2019.
If the expected volatility increases by 10%, the fair value of the 7% Convertible Debentures embedded derivative would increase and the related gain in the Statement of Operations would decrease by $0.8 million at September 30, 2019.
Non-hedge derivative contracts
During the nine months ended September 30, 2019, the Company entered into costless collars consisting of puts and calls, on 50,000 ounces of gold with a floor price of $1,400 per ounce and a ceiling price of $1,750 per ounce with maturity dates ranging from October 2019 to September 2020.
The non-hedge accounted collar contracts are considered fair value through profit or loss financial instruments with fair value determined using pricing models that utilize a variety of observable inputs that are a combination of quoted prices, applicable yield curves and credit spreads. The non-hedge derivative contracts are included with Prepaids and Other on the Balance Sheet.
During the nine months ended September 30, 2019, the Company recognized an unrealized gain of $0.3 million on the non-hedge accounted collar contracts.
5. INVENTORIES
Inventories include the following components:
 
As of
 
As of
 
September 30,
2019
 
December 31,
2018
Stockpiled ore
$
6,661

 
$
6,613

In-process ore
2,880

 
4,188

Materials and supplies
26,815

 
23,659

Finished goods
918

 
736

Total
$
37,274

 
$
35,196


9


The cost of inventories expensed for the nine months ended September 30, 2019 and 2018 was $126.8 million and $154.9 million, respectively.
Net realizable value adjustments of $nil and $1.1 million were recorded for stockpiled ore in the three and nine months ended September 30, 2019, respectively (three and nine months ended September 30, 2018 - $0.4 million and $2.3 million, respectively).
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
 
 
 
 
 
 
 
Balance at December 31, 2018
$
478,760

 
$
930,230

 
$
28,569

 
$
1,437,559

Additions
859

 
288

 
46,699

 
47,846

Transfers
(1,192
)
 
13,311

 
(12,119
)
 
—

Change in rehabilitation provision estimate
—

 
623

 
—

 
623

Disposals and other
(621
)
 
—

 
—

 
(621
)
Balance at September 30, 2019
$
477,806

 
$
944,452

 
$
63,149

 
$
1,485,407

 
 
 
 
 
 
 
 
Accumulated depreciation
 
 
 
 
 
 
 
Balance at December 31, 2018
$
432,799

 
$
734,120

 
$
—

 
$
1,166,919

Depreciation and amortization
7,972

 
12,977

 
—

 
20,949

Disposals and other
(469
)
 
—

 
—

 
(469
)
Balance at September 30, 2019
$
440,302

 
$
747,097

 
$
—

 
$
1,187,399

 
 
 
 
 
 
 
 
Carrying amount
 
 
 
 
 
 
 
Balance at December 31, 2018
$
45,961

 
$
196,110

 
$
28,569

 
$
270,640

Balance at September 30, 2019
$
37,504

 
$
197,355

 
$
63,149

 
$
298,008

As at September 30, 2019, equipment under finance leases had net carrying amounts of $2.7 million (December 31, 2018 - $3.0 million). The total minimum lease payments are disclosed in Note 10 - Debt.
During the third quarter of 2019, the Company continued to undertake a review of the Prestea mining operations with a third party consultant to re-define the mine plan and operating activities. This plan is being further reviewed and should the review result in unfavourable financial outcomes for the operations the Company would consider this an indicator of impairment and will test for the cash generating units recoverable amount at that time. The recoverable amount would be most sensitive to changes in, amongst other things, discount rates, future production and sales volumes, metal prices, reserves and resource quantities, metal grades, future operating and capital costs and reclamation costs to the end of the mine’s life. The carrying value of the Prestea mine is $132.6 million as at September 30, 2019.

7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities include the following components:
 
As of
 
As of
 
September 30,
2019
 
December 31,
2018
Trade and other payables
$
44,110

 
$
42,947

Accrued liabilities
26,427

 
25,522

Payroll related liabilities
10,358

 
10,015

Total
$
80,895

 
$
78,484


10


8. REHABILITATION PROVISIONS
At September 30, 2019, the total undiscounted amount of future cash needs for rehabilitation was estimated to be $70.4 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:
 
For the Nine Months Ended September 30,
2019

 
For the Year Ended December 31, 2018
Beginning balance
$
66,225

 
$
70,712

Accretion of rehabilitation provisions
546

 
691

Changes in estimates
1,350

 
138

Cost of reclamation work performed
(2,328
)
 
(5,316
)
Balance at the end of the period
$
65,793

 
$
66,225

 
 
 
 
Current portion
$
9,340

 
$
7,665

Long term portion
56,453

 
58,560

Total
$
65,793

 
$
66,225


9. DEFERRED REVENUE
The Company through its subsidiary Caystar Finance Co. completed a $145 million gold purchase and sale agreement (“Streaming Agreement”) with RGLD Gold AG ("RGLD"), a wholly-owned subsidiary of Royal Gold, Inc. Golden Star will deliver 10.5% of gold production from Wassa and Prestea at a cash purchase price of 20% of spot gold until 240,000 ounces have been delivered. Thereafter, 5.5% of gold production from Wassa and Prestea at a cash purchase price of 30% of spot gold price will be delivered. The Company has delivered a total of 93,934 ounces of gold to RGLD since the inception of the Streaming Agreement.
During the nine months ended September 30, 2019, the Company sold 15,472 ounces of gold to RGLD. Revenue recognized on the ounces sold to RGLD during the nine months ended September 30, 2019 consisted of $4.2 million of cash payment proceeds and $9.5 million of deferred revenue recognized in the period (see Note 12).
 
Nine Months Ended September 30,
 
Year Ended December 31,
 
2019
 
2018
Beginning balance
$
119,948

 
$
109,956

Impact of adopting IFRS 15 on January 1, 2018
—

 
18,980

Deferred revenue recognized
(9,498
)
 
(13,738
)
Interest on financing component of deferred revenue
3,215

 
4,750

Balance at the end of the period
$
113,665

 
$
119,948

 
 
 
 
Current portion
$
12,351

 
$
14,316

Long term portion
101,314

 
105,632

Total
$
113,665

 
$
119,948



11


10. DEBT
The following table displays the components of our current and long term debt instruments:
 
As of
 
As of
 
September 30,
2019
 
December 31, 2018
Current debt:
 
 
 
Finance leases
$
1,049

 
$
1,151

Ecobank Loan III
5,555

 
5,555

Ecobank Loan IV
4,000

 
4,000

Vendor agreement
17,325

 
16,776

Total current debt
$
27,929

 
$
27,482

Long term debt:
 
 
 
Finance leases
$
39

 
$
532

Ecobank Loan III
10,289

 
14,380

Ecobank Loan IV
10,750

 
13,700

7% Convertible Debentures
46,369

 
44,612

Total long term debt
$
67,447

 
$
73,224

 
 
 
 
Current portion
$
27,929

 
$
27,482

Long term portion
67,447

 
73,224

Total
$
95,376

 
$
100,706


7% Convertible Debentures
As at September 30, 2019, $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:
 
Nine Months Ended
September 30, 2019
 
Year Ended December 31, 2018
Beginning balance
$
44,612

 
$
42,515

Accretion of 7% Convertible Debentures discount
1,757

 
2,097

Balance at the end of the period
$
46,369

 
$
44,612



12


Schedule of payments on outstanding debt as of September 30, 2019:
 
 
Three months ending December 31, 2019
 
Year ending December 31, 2020
 
Year ending December 31, 2021
 
Year ending December 31, 2022
 
Year ending December 31, 2023
 
Maturity
Finance leases
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
$
390

 
$
698

 
$
—

 
$
—

 
$
—

 
2020
Interest
 
18

 
12

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ecobank Loan III
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
1,389

 
5,555

 
5,555

 
3,611

 
—

 
2022
Interest
 
385

 
1,189

 
632

 
101

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ecobank Loan IV
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
1,000

 
4,000

 
4,000

 
4,000

 
2,000

 
2023
Interest
 
373

 
1,250

 
847

 
448

 
74

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7% Convertible Debentures
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
—

 
—

 
51,498

 
—

 
—

 
2021
Interest
 
—

 
3,605

 
3,605

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vendor agreement
 
 
 
 
 
 
 
 
 
 
 
 
Principal
 
17,508

 
—

 
—

 
—

 
—

 
2019
Interest
 
937

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total principal
 
$
20,287

 
$
10,253

 
$
61,053

 
$
7,611

 
$
2,000

 
 
Total interest
 
1,713

 
6,056

 
5,084

 
549

 
74

 
 
 
 
$
22,000

 
$
16,309

 
$
66,137

 
$
8,160

 
$
2,074

 
 
On October 17, 2019, the Company closed the $60 million senior secured credit facility with Macquarie Bank Limited (the "Credit Facility"). Golden Star has used the proceeds to repay the Ecobank Loan III, Ecobank Loan IV, and the long-term payable under the Vendor Agreement with Volta River Authority. The remaining balance is available for general corporate purposes (see Note 21).

11. COMMITMENTS AND CONTINGENCIES
The Company has capital commitments of $17.3 million, all of which are expected to be incurred within the next year.
Due to the nature of the Company’s operations, various legal matters from time to time 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


12. REVENUE
Revenue includes the following components:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Revenue - Streaming Agreement
 
 
 
 
 
 
 
Cash payment proceeds
$
1,273

 
$
1,592

 
$
4,186

 
$
4,897

Deferred revenue recognized
2,645

 
4,154

 
9,498

 
11,352

 
3,918

 
5,746

 
13,684

 
16,249

Revenue - Spot sales
65,586

 
61,992

 
184,992

 
199,429

Total revenue
$
69,504

 
$
67,738

 
$
198,676

 
$
215,678

13. COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
Cost of sales excluding depreciation and amortization include the following components:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Mine operating expenses
$
42,749

 
$
43,400

 
$
125,418

 
$
133,002

Severance charges
13

 
6

 
337

 
4,976

Operating costs from/(to) metal inventory
361

 
1,559

 
(12
)
 
12,108

Inventory net realizable value adjustment and write-off
—

 
445

 
1,051

 
4,785

Royalties
3,675

 
3,463

 
10,314

 
11,293

 
$
46,798

 
$
48,873

 
$
137,108

 
$
166,164

14. SHARE-BASED COMPENSATION
Share-based compensation expenses recognized in general and administrative expense in the Statements of Operations and Comprehensive Loss, are as follows:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Share options
$
376

 
$
169

 
$
1,639

 
$
1,017

Deferred share units
166

 
144

 
563

 
419

Share appreciation rights
(61
)
 
(59
)
 
(45
)
 
(359
)
Performance share units
133

 
1,910

 
461

 
1,669

 
$
614

 
$
2,164

 
$
2,618

 
$
2,746

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 nine months ended September 30, 2019 and 2018 were based on the weighted average assumptions noted in the following table:
 
Nine Months Ended
September 30,
 
2019
 
2018
Expected volatility
51.20%
 
72.16%
Risk-free interest rate
1.73%
 
2.38%
Expected lives
5.7 years
 
5.7 years
The weighted average fair value per option granted during the nine months ended September 30, 2019 was $2.54 CAD (nine months ended September 30, 2018 - $2.89 CAD). As at September 30, 2019, there was $0.8 million of share-based compensation

14


expense (September 30, 2018 - $0.9 million) relating to the Company's share options to be recorded in future periods. For the nine months ended September 30, 2019, the Company recognized an expense of $1.6 million (nine months ended September 30, 2018 - $1.0 million). 
A summary of option activity under the Company's Stock Option Plan during the nine months ended September 30, 2019 is as follows: 
 
Options
('000)
 
Weighted–
Average
Exercise
price ($CAD)
 
Weighted–
Average
Remaining
Contractual
Term (Years)
Outstanding as of December 31, 2018
3,498

 
5.28

 
6.3

Granted
806

 
5.21

 
9.5

Exercised
(360
)
 
4.09

 
7.9

Forfeited
(33
)
 
5.52

 
7.9

Expired
(55
)
 
8.50

 
—

Outstanding as of September 30, 2019
3,856

 
5.33

 
4.9

 
 
 
 
 
 
Exercisable as of December 31, 2018
2,664

 
5.42

 
5.5

Exercisable as of September 30, 2019
3,263

 
5.36

 
4.1

As of September 30, 2019, there were 1,200,333 common shares available for grant under the Stock Option Plan (December 31, 2018 - 1,917,767).

Deferred share units ("DSUs")
For the nine months ended September 30, 2019, the DSUs that were granted vested immediately and a compensation expense of $0.6 million was recognized for these grants (nine months ended September 30, 2018 - $0.4 million). As of September 30, 2019, there was no unrecognized compensation expense related to DSUs granted under the Company's DSU Plan.
A summary of DSU activity during the nine months ended September 30, 2019 and 2018:
 
 
Nine Months Ended
September 30,
 
 
2019
 
2018
Number of DSUs, beginning of period ('000)
 
1,086

 
1,018

Granted
 
144

 
110

Exercised
 
—

 
(82
)
Number of DSUs, end of period ('000)
 
1,230

 
1,046

Share appreciation rights ("SARs")
As of September 30, 2019, there was approximately $0.2 million of total unrecognized compensation cost related to unvested SARs (September 30, 2018 - $0.3 million). For the nine months ended September 30, 2019, the Company recognized $nil expense related to these cash settled awards (nine months ended September 30, 2018 - $0.4 million recovery).
A summary of the SARs activity during the nine months ended September 30, 2019 and 2018:
 
 
Nine Months Ended
September 30,
 
 
2019
 
2018
Number of SARs, beginning of period ('000)
 
674

 
533

Granted
 
285

 
304

Exercised
 
(130
)
 
(18
)
Forfeited
 
(152
)
 
(50
)
Expired
 
(3
)
 
—

Number of SARs, end of period ('000)
 
674

 
769


15


Performance share units ("PSUs")
The final PSU grant vested on December 31, 2018 and, as a result, the Company did not recognize a PSU expense in 2019. For the nine months ended September 30, 2018 the Company recognized a $1.4 million expense related to PSU's. The Company paid out the final amount owing of $6.4 million in April 2019 and as at September 30, 2019 there is no longer a PSU liability recognized on the Balance Sheet.
A summary of the PSU activity during the nine months ended September 30, 2019 and 2018:
 
 
Nine Months Ended
September 30,
 
 
2019
 
2018
Number of PSUs, beginning of period ('000)
 
1,172

 
2,720

Settled
 
(1,172
)
 
(1,548
)
Number of PSUs, end of period ('000)
 
—

 
1,172

2017 Performance and restricted share units ("PRSUs")
PRSUs are accounted for as equity awards with a corresponding compensation expense recognized. For the nine months ended September 30, 2019, the Company recognized $0.5 million expense (nine months ended September 30, 2018 - $0.3 million).
A summary of the PRSU activity during the nine months ended September 30, 2019 and 2018:
 
 
Nine Months Ended
September 30,
 
 
2019
 
2018
Number of PRSUs, beginning of period ('000)
 
791

 
338

Granted
 
561

 
479

Settled
 
(142
)
 
—

Forfeited
 
(239
)
 
—

Number of PRSUs, end of period ('000)
 
971

 
817


15. FINANCE EXPENSE, NET
Finance income and expense includes the following components:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Interest income
$
(280
)
 
$
(50
)
 
$
(1,201
)
 
$
(65
)
Interest expense, net of capitalized interest
3,040

 
3,145

 
9,004

 
10,119

Interest on financing component of deferred revenue (see Note 9)
1,072

 
1,187

 
3,215

 
3,562

Net foreign exchange (gain)/loss
(102
)
 
(369
)
 
(504
)
 
126

Accretion of rehabilitation provision
181

 
173

 
546

 
518

 
$
3,911

 
$
4,086

 
$
11,060

 
$
14,260

On February 1, 2018, Prestea Underground mine achieved commercial production, therefore no capitalized interest was recorded since.
16. INCOME TAXES
Income tax expense is recognized based on management's estimate of the weighted average annual income tax rate expected for the full financial year. The provision for income taxes includes the following components:

16


 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Current expense:
 
 
 
 
 
 
 
Canada
$
—

 
$
—

 
$
—

 
$
—

Foreign
4,519

 
—

 
5,874

 
—

Deferred tax expense:
 
 
 
 
 
 
 
Canada
—

 
—

 
—

 
—

Foreign
725

 
4,151

 
11,850

 
10,825

Tax expense
$
5,244

 
$
4,151

 
$
17,724

 
$
10,825

17. INCOME/(LOSS) PER COMMON SHARE
The following table provides a reconciliation between basic and diluted loss per common share:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net income/(loss) attributable to Golden Star shareholders
$
5,960

 
$
(3,178
)
 
$
(5,000
)
 
$
(8,805
)
Adjustments:
 
 
 
 
 
 
 
Interest expense on 7% Convertible Debentures
909

 
—

 
—

 
—

Accretion of 7% Convertible Debentures discount
612

 
—

 
—

 
—

Gain on fair value of 7% Convertible Debentures embedded derivative
(4,488
)
 
—

 
—

 
—

Diluted income/(loss)
$
2,993

 
$
(3,178
)
 
$
(5,000
)
 
$
(8,805
)
 
 
 
 
 
 
 
 
Weighted average number of basic shares (millions)
109.1

 
76.2

 
108.9

 
76.2

Dilutive securities:
 
 
 
 
 
 
 
Options
0.6

 
—

 
—

 
—

Deferred share units
1.2

 
—

 
—

 
—

Performance and restricted share units
1.0

 
—

 
—

 
—

7% Convertible Debentures
11.4

 
—

 
—

 
—

Weighted average number of diluted shares (millions)
123.3

 
76.2

 
108.9

 
76.2

 
 
 
 
 
 
 
 
Income/(loss) per share attributable to Golden Star shareholders:
 
 
 
 
 
 
 
Basic
$
0.05

 
$
(0.04
)
 
$
(0.05
)
 
$
(0.12
)
Diluted
$
0.02

 
$
(0.04
)
 
$
(0.05
)
 
$
(0.12
)

17


18. RELATED PARTY TRANSACTIONS
There were no material related party transactions for the nine months ended September 30, 2019 and 2018 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
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Salaries, wages, and other benefits
$
1,411

 
$
678

 
$
4,952

 
$
2,185

Bonuses
415

 
333

 
2,147

 
999

Share-based compensation
377

 
1,892

 
1,996

 
2,674

 
$
2,203


$
2,903


$
9,095


$
5,858


18


19. SEGMENTED INFORMATION
Segmented revenue and results
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 September 30,
 
Wassa
 
Prestea
 
Other
 
Corporate
 
Total
2019
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
48,384

 
$
21,120

 
—

 
—

 
$
69,504

Mine operating expenses
 
25,040

 
17,709

 
—

 
—

 
42,749

Severance charges
 
—

 
13

 
—

 
—

 
13

Operating costs (to)/from metal inventory
 
(246
)
 
607

 
—

 
—

 
361

Royalties
 
2,579

 
1,096

 
—

 
—

 
3,675

Cost of sales excluding depreciation and amortization
 
27,373

 
19,425

 
—

 
—

 
46,798

Depreciation and amortization
 
3,879

 
3,100

 
—

 
—

 
6,979

Mine operating margin/(loss)
 
17,132

 
(1,405
)
 
—

 
—

 
15,727

Income tax expense
 
5,244

 
—

 
—

 
—

 
5,244

Net income/(loss) attributable to non-controlling interest
 
973

 
(2,007
)
 
—

 
—

 
(1,034
)
Net income/(loss) attributable to Golden Star
 
$
9,026

 
$
(449
)
 
$
(1,180
)
 
$
(1,437
)
 
$
5,960

 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
13,768

 
$
3,182

 
—

 
—

 
$
16,950

 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
45,029

 
$
22,709

 
$
—

 
$
—

 
$
67,738

Mine operating expenses
 
21,694

 
21,706

 
—

 
—

 
43,400

Severance charges
 
—

 
6

 
—

 
—

 
6

Operating costs from/(to) metal inventory
 
1,770

 
(211
)
 
—

 
—

 
1,559

Inventory net realizable value adjustment and write-off
 
232

 
213

 
—

 
—

 
445

Royalties
 
2,309

 
1,154

 
—

 
—

 
3,463

Cost of sales excluding depreciation and amortization
 
26,005

 
22,868

 
—

 
—

 
48,873

Depreciation and amortization
 
5,284

 
3,375

 
—

 
—

 
8,659

Mine operating margin/(loss)
 
13,740

 
(3,534
)
 
—

 
—

 
10,206

Income tax expense
 
4,151

 
—

 
—

 
—

 
4,151

Net income/(loss) attributable to non-controlling interest
 
770

 
(1,814
)
 
—

 
—

 
(1,044
)
Net income/(loss) attributable to Golden Star
 
$
7,785

 
$
(1,951
)
 
$
(1,564
)
 
$
(7,448
)
 
$
(3,178
)
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
7,033

 
$
2,751

 
$
—

 
$
—

 
$
9,784



19


Nine Months Ended September 30,
 
Wassa
 
Prestea
 
Other
 
Corporate
 
Total
2019
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
150,269

 
$
48,407

 
—

 
—

 
$
198,676

Mine operating expenses
 
72,540

 
52,878

 
—

 
—

 
125,418

Severance charges
 
225

 
112

 
—

 
—

 
337

Operating costs from/(to) metal inventory
 
713

 
(725
)
 
—

 
—

 
(12
)
Inventory net realizable value adjustment and write-off
 
—

 
1,051

 
—

 
—

 
1,051

Royalties
 
7,817

 
2,497

 
—

 
—

 
10,314

Cost of sales excluding depreciation and amortization
 
81,295

 
55,813

 
—

 
—

 
137,108

Depreciation and amortization
 
12,477

 
8,113

 
—

 
—

 
20,590

Mine operating margin/(loss)
 
56,497

 
(15,519
)
 
—

 
—

 
40,978

Income tax expense
 
17,724

 
—

 
—

 
—

 
17,724

Net income/(loss) attributable to non-controlling interest
 
3,292

 
(6,907
)
 
—

 
—

 
(3,615
)
Net income/(loss) attributable to Golden Star
 
$
29,885

 
$
(11,562
)
 
$
(3,927
)
 
$
(19,396
)
 
$
(5,000
)
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
38,456

 
$
8,629

 
—

 
—

 
$
47,085

 
 
 
 
 
 
 
 
 
 
 
2018
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
138,969

 
$
76,709

 
$
—

 
$
—

 
$
215,678

Mine operating expenses
 
64,872

 
68,130

 
—

 
—

 
133,002

Severance charges
 
4,970

 
6

 
—

 
—

 
4,976

Operating costs from metal inventory
 
6,395

 
5,713

 
—

 
—

 
12,108

Inventory net realizable value adjustment and write-off
 
3,335

 
1,450

 
—

 
—

 
4,785

Royalties
 
7,192

 
4,101

 
—

 
—

 
11,293

Cost of sales excluding depreciation and amortization
 
86,764

 
79,400

 
—

 
—

 
166,164

Depreciation and amortization
 
16,473

 
9,642

 
—

 
—

 
26,115

Mine operating margin/(loss)
 
35,732

 
(12,333
)
 
—

 
—

 
23,399

Income tax expense
 
10,825

 
—

 
—

 
—

 
10,825

Net income/(loss) attributable to non-controlling interest
 
2,010

 
(5,382
)
 
—

 
—

 
(3,372
)
Net income/(loss) attributable to Golden Star
 
$
19,373

 
$
(8,401
)
 
$
(6,836
)
 
$
(12,941
)
 
$
(8,805
)
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
$
21,522

 
$
10,032

 
$
—

 
$
—

 
$
31,554

Segmented Assets
The following table presents the segmented assets:
 
 
Wassa
 
Prestea
 
Other
 
Corporate
 
Total
September 30, 2019
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
213,908

 
$
151,328

 
$
1,943

 
$
42,014

 
$
409,193

 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
181,446

 
$
147,815

 
$
898

 
$
87,828

 
$
417,987

Information about major customers
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 the sale of 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.

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20. SUPPLEMENTAL CASH FLOW INFORMATION
During the three and nine months ended September 30, 2019, the Company paid interest of $2.6 million and $6.4 million, respectively (three and nine months ended September 30, 2018 - $2.9 million and $6.8 million, respectively). During the three and nine months ended September 30, 2019, the Company paid income taxes of $nil and $3.6 million, respectively (three and nine months ended September 30, 2018 - $nil).
Changes in working capital for the nine months ended September 30, 2019 and 2018 are as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
(Increase)/decrease in accounts receivable
 
$
(354
)
 
$
1,101

 
$
(2,468
)
 
$
57

(Increase)/decrease in inventories
 
(380
)
 
(28
)
 
(3,167
)
 
7,676

(Increase)/decrease in prepaids and other
 
(428
)
 
(240
)
 
(296
)
 
261

(Decrease)/increase in accounts payable and accrued liabilities
 
(2,599
)
 
1,991

 
(1,687
)
 
(9,906
)
Decrease in current income tax liabilities
 
—

 
—

 
(3,639
)
 
—

Decrease in other liability (see Note 14)
 
—

 
—

 
(6,410
)
 
—

Total changes in working capital
 
$
(3,761
)
 
$
2,824

 
$
(17,667
)
 
$
(1,912
)
Other includes the following components:
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Loss/(gain) on disposal of assets
 
$
152

 
$
(525
)
 
$
152

 
$
(305
)
Inventory net realizable value adjustment and write-off
 
—

 
445

 
1,051

 
4,785

Loss/(gain) on fair value of marketable securities
 
13

 
(4
)
 
18

 
155

Accretion of vendor agreement
 
183

 
183

 
549

 
549

Accretion of rehabilitation provisions (see Note 8)
 
181

 
173

 
546

 
518

Amortization of financing fees
 
41

 
42

 
125

 
1,280

Accretion of 7% Convertible Debentures discount
 
611

 
536

 
1,757

 
1,542

Interest on lease obligation (see Note 3)
 
5

 
—

 
19

 
—

Loss/(gain) on change in rehabilitation provisions
 
140

 
(384
)
 
727

 
(1,505
)
Interest on financing component of deferred revenue (see Note 9)
 
1,072

 
1,187

 
3,215

 
3,562

Unrealized gain on non-hedge derivative contracts
 
(304
)
 
—

 
(304
)
 
—

PRSU settlement
 
—

 
—

 
(306
)
 
—

 
 
$
2,094


$
1,653


$
7,549


$
10,581

Non-cash changes of liabilities arising from financing activities
During the three and nine months ended September 30, 2019 and 2018, the non-cash change related to the changes in liabilities arising from financing activities is as follows:
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Accretion of debt
 
$
835

 
$
761

 
$
2,431

 
$
3,371

21. SUBSEQUENT EVENT
On October 17, 2019, the Company closed the $60 million senior secured credit facility with Macquarie Bank Limited (the "Credit Facility"). The Credit Facility is repayable $5 million quarterly, commencing on June 30, 2020. The final maturity date is March 31, 2023. The interest rate is 4.5% plus the applicable USD LIBOR rate. The Credit Facility is subject to normal course financial covenants including a Debt Service Coverage Ratio of greater than 1.20:1 and a Net Debt to EBITDA ratio of less than 3.00:1.
Golden Star has used the proceeds to repay the Ecobank Loan III, Ecobank Loan IV, and the long-term payable under the Vendor Agreement with Volta River Authority. The remaining balance is available for general corporate purposes.

21