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Golden Star Resources Ltd  (NYSEMKT:GSS)
Q1 2020 Earnings Call
May. 07, 2020, 9:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Golden Star Resources First Quarter 2020 Results Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker, Mr. Michael Stoner, Director of Investor Relations and Business Development. Please go ahead, sir.

Michael Stoner -- Investor Relations & Business Development

Hello everyone, and thank you for joining us on the call. I'm joined this morning North American time by Andrew Wray, our CEO; Graham Crew, our COO; Paul Thomson, our CFO; and Peter Spora, who's the Head of Growth and Operation.

With that, I'll hand over to Andrew to kick off today's call. Thank you.

Andrew Wray -- President and Chief Executive Officer

Thanks very much, Michael. And likewise, good afternoon, good morning wherever you are. If we go to slide four in the presentation, there you've got a brief reminder of why the business is located in the Ashanti Belt in Ghana, the focus that we'll talk through today's presentation and reminder of the guidance, the guidance headlines 2020.

Moving on to slide five, where you can see that the key headline numbers that we reported for Q1 this morning, and those are broadly in line with our expectations for the quarter, and put us firmly on line to meet guidance as we go through 2020. In terms of the key area activity, certainly over the second half of the quarter, I think probably as with all businesses everywhere with COVID-19 and I'll say a little bit more in a moment about how we've been dealing with that and the impacts on the business. In terms of the assets themselves, Wassa had another strong quarter in terms of volumes with an average on the ground delivery of just over 4,300 ore ton per day, slightly lower grade sequentially, but with the volume we delivered ounces in line with our expectations for the quarter.

Graham will give a bit more detail, but we'd expect the grade then to be ahead of where it was in Q1 over the balance of the year, so I think we're well set for 2020. But Wassa, good to see operational costs as well continuing to be very well managed, that operation which helps drive the free cash flow generation. We had a mine operating margin of around $23 million over the quarter. And something Peter will talk a little bit more about, further significant growth in the resource space there which is encouraging.

Prestea, really, the focus continues to be on setting the asset up for the longer term, both with the second level we're bringing in 17 level where there's a lot of work going into development, the infrastructure, and to getting the right people there over time so that we've got the right mining complement to bring that on line later in 2020. And at the same time, 24 level continued to focus on setting up both the northern and southern states there to give us a little bit more flexibility. Over the first quarter, we were short of ore with the main stay that was planned at 13 hung up and relatively few tonnes, so really focused on most of the production coming from a single stope over the quarter.

In terms of the other point that page sustainability that continues to be a focus. Through the recent period over the last couple of months, we've been doing a lot of work in terms of assisting the local communities in terms of health initiatives, and that's been based on both the ongoing corporate work, but also testing the nations from management and the Board, and that is a company we've contributed in industrywide efforts in country to support some of the testing facilities with financial assistance to help the testing regime in Ghana.

Moving on to slide six, I mentioned that we've made a fair bit of progress on 17 level setting that up. But to be honest, that was somewhat overshadowed in the quarter by the fatality that we suffered in March with the loss of a colleague. We've made I think a lot of progress, overall as a business and at Prestea here in terms of a number of safety initiatives, but I think this is showing us that we've still got a lot more to do and we'll redouble our efforts in that respect. I think more broadly on our various CSR initiatives, it's pleasing that most of those were able to continue with some modifications with the current COVID-19 situation, but we were able to continue most of those and help further build those relationships with our host communities.

On the next slide on slide seven, we've communicated during the quarter some of the initiatives that we take them with respect to the challenges posed by COVID-19, really with the first aim of protecting the health of our employees and also those that are in our host communities, and then through that ensuring business continuity. We acted quite early in terms of putting those plans that we had developed from previous Ebola outbreaks in West Africa. And we put those in practice early in the year, both at a site level as well as a corporate level. And that pandemic management plan didn't evolve being as we've gone through the last couple of months.

There has been a lot of good coordination with the authorities. They've been very supportive in Ghana and shown good but sensible determination to help keep the industry operating, and with the local communities as well. We've done a lot of contingency planning quite naturally over that period because the threat remains very real. Ghana is behind in terms of evolution of the spread of COVID-19 when you compare it to either North America or most of Europe, so we don't yet know how the situation will evolve. So ensuring that we keep all of our measures fully operational. A lot of communication, internally, externally, with all of our stakeholders. And I'm pleased to say at this point, we obviously have some inconvenience, some logistical challenges, but no material impact on the business. And obviously, we will do everything within our power to ensure that that remains the same.

And with that I'll hand over to Graham, who's going to talk in a bit more detail about the operations. Graham?

Graham Crew -- Chief Operating Officer

Thanks, Andrew. So with that moving on to slide nine and talking more specifically about Wassa, yes, I think that COVID-19 certainly over the second half of the quarter was certainly something that was occupying our attention and managing those controls that Andrew talks about. And we've certainly stepped up all of the screening and social distancing. People that we can have working from home, this is not just through Wassa but right across the business. So it's been a lot of thought and planning going to that. With that happening, Wassa, as Andrew mentioned, continued to show the complexibility and robustness of that operation. Mining rights still continuing to increase, over for that 4,300 tonnes a day as Andrew mentioned and still firmly on track to meet the guidance for the year. I guess pleasingly the key projects that we had over this year, so a significant investment going this year continue. We flagged some potential impacts with those, but it's pleasing to say that those are progressing and remain on schedule at this point in time.

And just some of the highlights to remind people I guess on the growth at Wassa, just looking there on Slide nine at the extent of the inferred resource which Peter will talk more about when we talk about the resource update. But it's an amazing system. We've a lot more potential when we get a chance to really study it. So, yeah, so I guess the phase 1 growth is really about utilizing the declined capacity we have and extending the information in front of us to push down the decline, open up more levels, get those drilled off to be able to optimize the production of panel 2, where we're really just getting started now and on to panel 3. And then the second phase of growth, really understanding that southern extension zone and how we can optimize the operation looking at shaft and tracking options and so on, to utilize the production capacity we have there with the processing plant, almost double what we're doing now in terms of underground production.

Moving on to slide 10. Just a quick update on some of the projects that I briefly mentioned that the paste fill plant, probably one of the biggest projects happening at Wassa at the moment and pleasing that that is progressing on schedule and cost. And even with the challenges of COVID-19 coming in the second half of the quarter, we did flag earlier in the year that we had some equipment coming out of China. That equipment is in transit, which means that the schedule is still intact for that project, which is pleasing. And you can see from the photographs on that slide that it's continuing to progress as we speak today. So it's a really good progress on that. And just a reminder, that's an important project. If the key benefit of that project is improving extraction percentage, and essentially enables us to extract 100% of the ore-body as we go forward. We're looking at ways to recover some of the pillars and etc, that we've had to live up to-date. The electrical upgrade also another key project goes hand in hand with the paste fill and also pumping upgrades as well. So, quite a lot going into Wassa in terms of investment.

Moving on to slide 11, and just having a look at some of the production. As we mentioned, continuing to see improved production in terms of ore tonnes coming out of Wassa without a lot of increase in terms of equipment and so on. So we're just talking about incremental optimizing of the operation as we go. In terms of the grade, a little bit below expectations on grade for the quarter, and really just an odd effect of where we're mining some of the hanging wall stopes, which was the bulk of the production through quarter one for Wassa and a bit of a miss on schedule as with one high grade stope in the quarter. So we certainly expect to see that grade coming out and we've seen that grade coming up through this quarter.

With that, we also made the decision in the quarter to start processing some of the low grade stockpiles. We've got remaining from the open pit really the last of the low grade stockpiles, but with the gold price we saw as an opportunity to utilize the milling capacity and pleasing to see that with a little bit of that material starting to come into the production plan, the recovery still holding up very strongly. So seeing consistent performance out of the processing plant. And as Andrew mentioned, even little bit of a miss on grade at Wassa. We continue to meet production expectations and make cash. So really good to see the progress of the team and the performance there.

Moving on to slide 12, just looking at some of the cost metrics there, really just in line with the production. But again, as Andrew mentioned, pretty tightly contained. And if you look at the mining costs of $32 a tonne when it's starting to get the sort of volumes that we are looking to see at Wassa, it's pleasing to see that those mining costs would be competitive anyway. So, yeah, good performance from a cost perspective at Wassa. And as I mentioned earlier, that's delivering cash with significant investment still going into extending development, getting declines down, paste plant, electrical upgrade, pumping system, etc. So some good progress there at Wassa over the quarter.

Moving on to slide 14, and talking about Prestea, and as Andrew mentioned, you would be seriously remiss not to -- remember that we had the loss of a colleague there over the quarter, and it does highlight the challenges that we have in that operation and the work that is reminding to do. And we're very much in providing support to the family and to those people that were affected by that. But in terms of where we're at with Prestea, in terms of progress, two very clear elements of the plan 24 level, working through the recommendations there. Probably slightly behind where we'd like to be in terms of improvement there. We are now developing stopes north and south, which will in life in this quarter into the second half start to improve flexibility on 24 level. We're still really constrained. As Andrew mentioned, we had a problem with one stope early in the quarter -- well, actually light in quarter four that continued through quarter one. And all of the production is hinging on one stope for the quarter.

At 17 level, definitely making good progress there, getting the development in place to start the long haul open stoping. Just outside of the quarter, but in recent weeks we've had the truck turn up on site got that underground. So that will help improve the development rights and the productivity in 17. That being said, we started doing some ore development during the quarter. So we're into the ore development in 17 level getting thing -- at captive level getting a maintenance workshop area set up, getting the ventilation set up. So progressing well with setting up 17 level for long haul open stoping. Little bit impacted with some of the equipment that were purchased coming out of Europe. So some minor delays on equipment there. So just assessing where that leaves us later in the year with the long haul stoping really coming into the plan in quarter four. So, yes, that's really the summary on Prestea.

Moving on to slide 15, really just kind of backing that up in terms of numbers, sort of disappointing production given the stock availability issues that we had with S-13 and then dilution coming into S-14 as we get 24 level set up. Still supplementing a little bit of open pit oxide material to support the plant there at Prestea, but that's really the last of that material. Little bit coming in this quarter, but then really up to the underground to deliver.

Moving on to slide 16 where the costs really reflective of the volume. The one thing I would say about the all-in sustaining cost, you're seeing a lot of the cost of setting up 17 level coming through. And with the production not being quite where we want to be, you're seeing both of those things come through in the all-in sustaining costs. So we're still working to improve flexibility on 24 and then get 17 level set up for long haul open stoping in the second half of the year.

With that, I'll hand over to Paul to talk about how that comes out in the financials.

Paul Thomson -- Chief Financial Officer

Great, thank you, Graham. Could you please turn to slide 18 for the financials, solid quarter. You can see in terms of gold revenues, the average realized gold price is $1,477. So that's 18% up in terms of year-on-year, and 5.5% quarter-on-quarter. This is offset by lower production volumes as we've just gone through and a shipment deferral.

In terms of the shipment deferral, this is one of the impacts of COVID-19. So like many of our peers, commercial flights were cancelled. So it then caused issues in terms of transporting the ore to refining facilities. So at the end of the quarter we had about 44,000 ounces of gold, which was produced, but wasn't actually billed to sales till it was actually transported out pre-quarter-end and then recognized in sales post-quarter-end in April. So the impact of that was about $6.2 million on revenues and cash, $2.5 million impact in EBITDA, and then $3.4 million increase in terms of working capital. As a consequence of that, as been alluded to was an impact in terms of the IA as reflect the two year difference in the IA, the parent [Phonetic] sold and produced. In terms of when this will unwind, it's obviously unwind as soon as commercial flights get back on track again post-COVID-19 restriction, and our actual refining starts in gold or gold at the main site pickup point as opposed to on delivery at verifying facility.

Turning now to EBITDA and adjusted EBITDA, so we can see that in the quarter we had EBITDA of $18.5 million. There were two primary adjustments here, so we took the gain and the financial instruments of $4.1 million, so that breaks down into two components. You've got the gain on the convertible debentures $2.7 million. And then there's a $0.4 million gain in terms of the hedges. These are zero-cost collars that we have in place. Other expenses of $2.7 million, which are essentially one-offs in terms of severance. We had the contribution to the chamber of mining in Ghana, as mentioned by Andrew earlier, in respect of the COVID-19 efforts, and then we also had the change in the rehabilitation calculation following changes in interest rates and discount rates used to prepare that calculation.

One thing from an accounting perspective to highlight as there is in terms of the EPS and the adjusted loss per share, which is of course a known GAAP measure in terms of how the adjustment was prepared historically and previously, this has actually been changed now. So it was decided that it was more appropriate to actually exclude some of the adjustments which were made historically, specifically in relation to the share-based compensation cost and the total income cost. This means that these are not adjusted for as one-off items in these calculations. So it's been -- we've obviously restated these, and they're non-GAAP measures, but it's really important to know that there's no impact in the consolidated statement of comprehensive income balance sheet or the cash flow statement itself.

If we could turn to slide 19 now. We've got the cash flow here. So we started the quarter with just over $53 million and ended the quarter at $42 million, a movement of $11.5 million. When we exclude the impact of the working capital movement and one-off costs, the business is broadly cash-neutral. So of the $11.5 million movement in the cash we have $9.8 million, which is accredited to working capital. And then we have one-off costs of $1.8 million, which are broadly $0.9 million of salaries, $0.6 million of other one-off costs; and then our office relocation from Toronto to London, as I'm sure you're all aware of, which was completed in April. So within the working capital movement of the $9.8 million, we have had a bit of a rollover in terms of accounts payable from Q4 2019. So that was a total cash outflow of $2.7 million, and then we had an inventory buildup of approximately $5.2 million, and that relates to the gold in terms of that 44,000 ounces, which was actually sold and booked to revenue at the quarter-end. There's also an increase in some of the other inventories there on hand in terms of maintenance type provisions and this is in relation to our estimate to get action that's referenced to COVID-19.

Overall, cash and the net debt following the adjustment for the impact of the shipment would have been $40 million and positive cash and then net debt of $59.2 million respectively. Looking forwards, we've got the Macquarie principal repayments, which commences in June next year, which is $5 million a quarter. And then the other point of note in terms of our balance sheet position is the convertible debenture, which is not due to be repaid until August 2021.

And with that, I'd like to hand over to Peter in terms of exploration and geology.

Peter Spora -- Executive Vice President Growth & Exploration

Thank you, Paul. Okay, thank you. Over the past two years, our exploration efforts have really been focused on growing the western Prestea underground ore-bodies beyond the limits of their reserves and beyond making any indicated resources. At Wassa we've completed more than 71,000 meters of surface drilling over the last two years, primarily targeting extensions of the Wassa ore-body to the point now that we have total resources of more than 10 million ounces, consisting of approximately 2 million ounces of measured and indicated and $7.1 million ounces of inferred underground resources. That surface drilling at Wassa was completed in 2019. At that point, the Wassa system had been defined over 2.5 kilometers of strike length and to 1.5 kilometers of depth and still remains open to the sale. However, going forward, we plan to do infield drilling on the southern extension areas and the inferred resource using our mine geology team doing this from underground drilling.

And as part of that strategy going forward, the exploration group themselves will focus on a shift to in-mine and near-mine targets both at western Prestea targeting extensions to these systems and also to parallel loads that are adjacent to the existing infrastructure. And what we're targeting there is to try and provide the biggest short-term impacts to our operations by taking advantage of those latent no capacity especially at Wassa, especially where we see additional potential for hanging wall and footwall zones parallel to the B-Shoot 9 ore system. At the same time, the strategy is that we are developing a strategy to develop our exploration and development pipeline in the search for new discoveries within our Ghana regional high-speed bay properties, as well as identifying other exploration properties for joint venture and acquisition.

In Q1, as you can see from the slide, we completed and published the December 29 mineral resource and reserve update. We commenced our inline exploration drill programs at Wassa and Prestea targeting extensions to the nine zones of Prestea and also targeting parallel zones to the 9 B-Shoot at Wassa in the footwall. Regional desktop evaluation work also started on historical data on the Wassa and HBB properties and we're still ongoing at the end of the quarter and will continue for the next couple of quarters. However, we suspended field activities in quarter one 2020 due to the COVID situation, and we'd probably expect to recommence those activities sometime in Q3.

Next slide please. slide 22. In terms of mineral reserves and resources update, I guess the key things to highlight from this slide are the significant increase in the reserves at Wassa, 228,000 ounces bringing total underground proven probable mineral reserves to 889,000 ounces at 3.72 grams per tonne. This increase is a result of focusing resources and capital development on the hanging wall exploration decline, putting in drill platforms and then drilling more than 45,000 meters last year on definition infill drilling. The aim of this drilling was to continue, and the aim was to continue pushing this underground resource definition drilling at Wassa going forward with another 42,000 meters planned for 2020. We remain on track to meet that target and with the aim of that drilling to improve geological and resource understanding going into -- continuing 2020 and 2021 for mining ahead.

The second point from the slide really is that the increase in measured and indicated incurred resources at Wassa Underground increased 18% and 19% respectively. This upgrade was due to more than 45,000 meters of drilling during 2019, going into the year-end December 29th resource. Incurred resources were about 5, the biggest change increasing to 7.1 million ounces at 3.75 grams with more than 60% of the drilling now at a 100 meters space [Indecipherable]. As I said, the Wassa ore-body remains open to the south end on the next slide. Thank you, Marco. You can see the footprint of the Wassa system. I just point a couple of things on this slide. The green blocks in the image, the mined stopes up-to-date. The 2019 reserves are highlighted in the grey panels and the planned development is shown there as well as the exploration decline extending to the right hand side of the slide into the stipple box which contains the bulk of the inferred resource extension that we're referring to and we had a bulk of the drilling for the last -- during 2019 was targeted.

And to point out that the system was also open below 1.5 kilometers depth, and if you look at that image, we are also going to be targeting that up-lunge underneath the currently mined areas and the year-end 2019 reserves blocks to see if the deep mineralization extends back up to surface and that will form part of our footwall drilling and well [Indecipherable] programs over the next couple of years at Wassa. I think that one point important to note is that during 2019 a lot of the drilling was taking the drilling from 200-meter space drilling on the inferred resource extension area down to 100 meters, some doing a 150 meters, but then significantly below 100 meters in the drilling platform. One thing we noticed all the way through Wassa is the more drill holes we put into it, the more metal we find actually in the deposit, whether it's through parallel zones, zones between drill holes on the very broad space exploration drilling or extensions to previously nine zones.

So as Graham said in his commentary, the system is huge and now endowment is greater than 10 million ounces and we expect the system to continue to grow with time. But as I said going forward, our targeting -- targeting from an exploration point of view will be in the hanging walls and footwall, adjacent to panel 1 and panel 2 those green blocks on the image, time to identify parallel zones easily accessible from existing infrastructure where we can leverage also lighting capacity in the existing mill.

Thanks, Marco, next slide. This slide just aims to show basically go-forward strategy for exploration. And I just wanted to before we talk about the regional stuff on the HBB projects which the tenements in the southern or they be central part of the image on the right hand side, just want to talk to the Wassa Brownfield opportunities. The yellow circle on the inset on the left-hand side is the surface and underground footprint of the Wassa system. You can see there that it's the 2.5 kilometer that we talk about on the previous slide. You can also see that and what's shown on the image is all of the surface soil sampling and auger sampling has been undertaken on the Wassa ML. But we still have another 5.5 kilometer to 6 kilometer strike expand which has been variously tested in history with shallow drilling, but using our understanding of Wassa and the understanding that these high grades systems have a shallow plunge, we expect to develop more targets on the Wassa mining license itself. And you can also see there's the sect corridor, the left-hand gold arrow, which is another set of pits on the northern end of that which we can also see a similar trend expanding over that 6 kilometers and combined there's at least 10 drill targets sitting on the property aligned at Wassa.

And then looking further at fields, the red line on the image is our haul road that extends 85 kilometers from Wassa plant all the way down to Father Brown, which was previously mined as an open pit and it passes through the [Indecipherable] properties, past a couple of previous open pits at Chichiwelli and Benso, extending back up to Wassa. On these properties we've got over 45 kilometers of prospective green sand belt. We have collected over 20,000 soil and auger samples across these properties. And really these properties haven't had a good local -- a decent exploration budget for the past five or six years. There's a lot of targets on this property that have not had the appropriate amount of tool testing. So our focus during this COVID situation is that we will be doing desktop work throughout Q2 and into the beginning of Q3 with the plant start actually getting on the ground and putting some [Indecipherable] vehicle reconnaissance drilling into some of these targets in Q3 and beyond.

So in summary, from the exploration point of view Wassa reserves and resources have significantly increased as has our confidence in the understanding of the system particularly in the more detailed drilling areas. The mines will continue to push the infill definition drilling to ensure their reserves are significantly ahead of production. The stockers going forward to the exploration team will be on brownfield in mine and near mine drilling on Wassa in the hanging wall and the footwall as well as these strike expansions near surface and our original properties will be continuing to do desktop work ahead of drilling programs in H2 2020.

And with that, I'll hand it back to Andrew.

Andrew Wray -- President and Chief Executive Officer

Thanks very much, Peter. If we just go to slide 25 and we finish up on this slide. In summary, the focus very much remains for us on driving value through optimizing the existing assets and then over time looking to add it to our asset base. Wassa, I think as Peter set out very clearly, significant growth, a massive 10 million ounce ore-body now. And really the focus is now on infrastructure investment which Graham set out I think quite clearly. Better understanding that ore-body with the infield drilling and then working out what is the optimal mining strategy as we go forward with the aim of bringing that value forward and making sure that asset continues to deliver and expand.

At Prestea, it's embedding the operational improvements that we're working on, on the existing mining level and then setting up that second level to really give us the scale there to work toward the end of the year getting that asset close to or at cash flow breakeven, and then positioning ourselves for 2021 for that asset to start making a real contribution to the business. And that together then gives us a strong platform to look to grow this business.

So with that, I think we'll stop the formal presentation. I'll hand back over for Q&A. So back to the operator. Thank you.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Justin Chan.

Justin Chan -- Numis Securities Limited -- Analyst

Hi guys, thanks. Just took a sec to unmute myself, but thanks for hosting the call. I hope all of you are doing well and I hope things will ease up and I can see some of you soon. My first one is just on the grade profile at Wassa for the rest of the year, if you could give us any sense of trends? And then related to that on the open pit stockpiled material, what are your expectations there at current gold prices? And I guess relative to the guidance you put out what are the embedded expectations for that stockpiled material?

Andrew Wray -- President and Chief Executive Officer

Thanks very much, Justin, good to hear from you. I'll pass over to Graham in terms of the Wassa grade and the profile of the grade over 2020. I mean, in terms of the stockpiled material, we've very much seen as these kind of gold prices is a good margin on that material. There's obviously slightly higher costs, the run of mine underground material, but we'll use that to supplement the available capacity we've got in the plant. We've got -- Graham, correct me, but I think there's just in excess of 400,000 tonnes there, that we've been feeding through -- looking to feed it through now at around 1,000, 1,500 tonnes a day subject to what other materials going through the plant and what we don't want to do is impact the recoveries.

And I think as you can see, so far recovery is pretty stable. I would expect that going forward and we've seen that through April, where we've stepped up the material. So that's really -- it's the margins, but it's incremental cash flow at $1,600, $1,700 gold helps offset any small incremental costs or pressures we see through COVID-19. And it makes sense to take marketing that material now.

But over to Graham in terms of the underground grade profile.

Graham Crew -- Chief Operating Officer

Hope you're well as well. Yes, in terms of Wassa, really unchanged on the guidance. Average production over the years have got over 4,100 tonnes per day, so it's slightly less than what we achieved in Q1. So, yes, you can sort of infer the grade from that. We're expecting the grade to be better and even more closely aligned. So on average -- I mean obviously there's going to be some ups and downs, but on average more closely aligned to the reserve grade, which is now sitting at about 3.7 grams. So around the 3.5 grams-3.7 grams is what we expect to see over the year.

Justin Chan -- Numis Securities Limited -- Analyst

Okay, perfect. And as a follow up on the stockpiles, is the guidance that you've given accounting for that stockpiled material if prices stay where they are? Or should we think of that as that will probably result in higher all in sustaining kind of relative to the picture that you've -- the view of the world that sort of reflected inherent in the guidance?

Graham Crew -- Chief Operating Officer

Yeah.

Andrew Wray -- President and Chief Executive Officer

Sorry, Graham.

Graham Crew -- Chief Operating Officer

I wouldn't change the guidance expectations. We knew this material was there. There are other probably a few swings around about as I mentioned with the current situation. So the sites shown themselves pretty adept at managing their cost profile. So I would for now assume guidance unchanged. And we'll just review that as we go through the year and we see what the impacts are from all of the different forces that we're seeing at the moment, but we're well on track for the guidance range.

Justin Chan -- Numis Securities Limited -- Analyst

Got you. Yeah, it was just, I guess from a cash perspective, it's certainly incrementally positive. I was just trying to make sure that we've kind of backed out with the numbers correctly.

Graham Crew -- Chief Operating Officer

Yeah.

Justin Chan -- Numis Securities Limited -- Analyst

[Indecipherable].

Graham Crew -- Chief Operating Officer

Yeah, we can build that. Once we've got a full quarter's work, then we did it really as at the end of Q4 just for a week to make sure that we could get down to the cost we expected without disturbing anything else going on the plant. So I think probably as Q2, if we've got a full quarter's experience, and we'll split it out, and you can then -- I think that will help to model what the impact could be over the rest of the year.

Justin Chan -- Numis Securities Limited -- Analyst

Got you. Great. That's very helpful. And then just a couple more. One on Wassa, just in terms of the longer term kind of plan, what should we be thinking in terms of when to expect perhaps a new technical report or new mine plan or new outlook, et cetera. And in advance of that will we kind of -- is that medium-term profile perhaps going to -- where we had some sense of the evolution of that maybe if the technical report takes a while.

Andrew Wray -- President and Chief Executive Officer

Yeah. Graham, do you want to answer that one?

Graham Crew -- Chief Operating Officer

Yeah, certainly. Yeah thanks, Justin. Yeah, I think -- so I had my VP tech services start in January. So that's been pretty busy getting up to speed. I was feeding him some work in the background prior to that, but they're full-time in January. So he's had a lot to get up to speed on. I guess the first thing is looking at overall what's our strategy for tech services, but certainly expect that over this year, we'll do a lot more work on Wassa, and we've done some spreadsheeting work, but in terms of updating that kind of strategic plan, that's work that we'll do over Q3, and -- yes, and hopefully have something toward the end of the year that we can share more broadly.

Justin Chan -- Numis Securities Limited -- Analyst

Okay, thanks.

Andrew Wray -- President and Chief Executive Officer

Justin.

Operator

Your next question comes from James Huntington with Scotiabank. James, go ahead with your question. Your line is open. All right. We will move to the next person in the queue. We have Heiko Ihle with H.C. Wainwright. Caller, please go ahead with your question. Right. You have Justin Chan back up for a follow-up question. Justin, can you hear me? Hello Justin?

Justin Chan -- Numis Securities Limited -- Analyst

Hello. Can you hear me? Hello? Anybody?

Andrew Wray -- President and Chief Executive Officer

Yeah. We can hear you. Yeah.

Justin Chan -- Numis Securities Limited -- Analyst

Okay. Great. Sorry, I muted myself, so I don't know if I've started an unfortunate trend, but just one more on taxes. I was just wondering, so the taxes coming through from Wassa, it was relatively large number relative to pre-tax. Just wondering on some guidance there. Is the best way to think of that just Wassa margins and apply the tax right there or will that number relative to pre-tax profits start to normalize?

Andrew Wray -- President and Chief Executive Officer

Paul, do you want to take that one?

Paul Thomson -- Chief Financial Officer

Yeah, it's a good question. Thank you. I would say that everything is really all of our taxes for Wassa obviously because it's cost-generating, tax-generating. So we're not able to use the losses from Prestea, again, it's [Technical Issues] continue to use that profitability in line, that tax number in line with the profitability going forward.

Justin Chan -- Numis Securities Limited -- Analyst

Okay, and I think those are the questions.

Andrew Wray -- President and Chief Executive Officer

Sorry, Justin, that you've seen -- it looks odd, particularly in this quarter where obviously a loss press there, which is to a degree offsetting the operating margin that we're seeing coming through from Wassa. So on a consolidated basis, you obviously get a very high effective tax rate, but purely a function of that being the applicable corporate tax rate, the operating profit that's coming out of Wassa.

Justin Chan -- Numis Securities Limited -- Analyst

Got you.

Paul Thomson -- Chief Financial Officer

I was just going to say that we've obviously got all the capital allowances from the investment program which will be offset as well going forward.

Justin Chan -- Numis Securities Limited -- Analyst

Okay. So that's helpful. I guess are there any central costs that do offset versus the tax at the Wassa level?

Paul Thomson -- Chief Financial Officer

Sorry, just say that again, Justin. Are there any tax --

Justin Chan -- Numis Securities Limited -- Analyst

[Speech Overlap]

Paul Thomson -- Chief Financial Officer

[Speech Overlap] against Wasa

Justin Chan -- Numis Securities Limited -- Analyst

Yeah, I'm just wondering for the Wassa -- I guess calculating tax from Wassa, to what extent would for example your central exploration cost or any of your other central costs be applicable in calculating that rate?

Paul Thomson -- Chief Financial Officer

Yeah. Well, what's that exploration cost if it's done at Wassa, and within that footprint it will be -- we will be able to use it there in terms of being a tax proffer offset. So just in addition to that, we have got the $60 million of carry forward allowances released in the quarter. So for each side, it means that you are able to offset those domains.

Justin Chan -- Numis Securities Limited -- Analyst

Okay, perfect. Perhaps we can have another discussion at another time just about the definition of the calculation here though.

Paul Thomson -- Chief Financial Officer

Yeah.

Justin Chan -- Numis Securities Limited -- Analyst

Okay, great. Thanks. I appreciate it.

Operator

[Operator Instructions] And we do have Heiko Ihle with H.C. Wainwright back up in queue. Your line is open, sir. If your line is muted, please unmute. [Operator Instructions] And we will clear that question and there are no other questions in queue at this time.

Andrew Wray -- President and Chief Executive Officer

Thank you very much operator. And both Heiko and James, if there were issues actually getting through, then give us a shout if you can hear us, which hopefully you can after the call and obviously we can deal with those questions offline. Same applies to anybody else. But thank you very much, everybody. I hope everybody keeps safe and well and look forward to speaking soon. Thank you.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

Michael Stoner -- Investor Relations & Business Development

Andrew Wray -- President and Chief Executive Officer

Graham Crew -- Chief Operating Officer

Paul Thomson -- Chief Financial Officer

Peter Spora -- Executive Vice President Growth & Exploration

Justin Chan -- Numis Securities Limited -- Analyst

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