The Dumasi, Prestea South, Mampon, Chujah, and Bogoso North pits, have all been re-optimized at lower gold prices, and the Company is developing mining schedules which reflect current market conditions. At Mampon, we continue to be encouraged with the higher-grade potential of this pit, based on the recent drilling.
At Wassa, over the last 18 months, Golden Star has focused on strengthening operations through investment in the Father Brown pit, upgrading the carbon-in-leach ("CIL") circuit and accelerating the extensive exploration drilling program below the Wassa pits. Wassa operations continue to perform strongly, and margin growth continues with a cash operating cost for the first quarter of $809/oz, as previously reported. The Wassa expansion plan continues with 240 additional holes being drilled since the last resource update, totaling 84,485 meters, results of which will be used to update the resource models in the third quarter this year.
The main assets for the Company remain the three processing plants within a 40 kilometer radius, having an installed capacity of 7.5 million tonnes per year, providing the Company with tremendous options and operating flexibility to process any type of ore found on the Ashanti gold trend."
Bogoso operations update
After the review of the Bogoso refractory operations, the operations are expected to remain viable in the future. This is based on the following:
•Bogoso refractory pits will reduce strip ratios from an average high of 11:1 to an average expected strip ratio of 3:1, within the next three quarters approximately. The Company is expected to fund the pushbacks using existing cash, and additional funds available as a result of the cost savings described below; •The Company has reviewed the timing of the capital expenditures related to Mampon, Dumasi, and Prestea South pits and is deferring these capital expenditures until second quarter 2014; •Mine operating expenses at Bogoso are expected to peak in December 2013, and then gradually decline by an estimated 30% during the first half 2014; and •We expect fourth quarter production at Bogoso to be the lowest production quarter for 2013 due to the higher strip ratio required from the revised mine plan.
Cost reduction measures
The Company is reducing its operating costs. These measures are expected to provide savings of approximately $45 million for 2013. Cost cutting initiatives include the following:
•Bogoso operations have reduced operating expenses by approximately 20% through restructuring the workforce and as a result of reducing labour costs, supplier discounts, and reducing the number of contractors. •Maintenance cost savings and fuel cost reductions were achieved through the recent purchase of two new excavators. •Contracted trucks were replaced with an owner-operated truck fleet. •The Company completed re-negotiations of certain supplier contracts resulting in price improvements. •Operating improvements were initiated at Bogoso and Wassa, including transport and delivery efficiencies, stock holding cost reductions, and improved purchasing procedures.
Longer-term cost reduction initiatives include a review of all pending contracts and service providers and development capital plans for 2013 and 2014. Risk assessments related to cost savings in metallurgy, plant maintenance, mining and mine maintenance, and community and environment initiatives are ongoing.
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