A B O U T T H E C O V E R
Golden Star has risen to and is meeting the
challenge! After several years of restructuring
and building value in a difficult gold market, we
are now profitable and well-funded and looking
to grow—to climb higher and to succeed.
The worker at Bogoso is planting creeping
vines to rehabilitate pit walls. Even before we
finish mining we begin the rehabilitation
process (see page 6).
T A B L E O F C O N T E N T S
Highlights
Letter to Shareholders
Reserves and Resources
Bogoso/Prestea
Wassa
Corporate Responsibility
Board and Management Team
Corporate Information
01
02
04
07
08
11
12
Inside Back Cover
F O R W A R D L O O K I N G A N D C A U T I O N A R Y S T A T E M E N T
Statements Regarding Forward-Looking Information.
Some statements contained in this annual report are forward-
looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and involve uncertainties or risks
that could cause actual results to differ materially. Such state-
ments include comments regarding production, grade, potential
mine life, feasibility studies, development, costs, expenditures,
mine re-opening and exploration. Factors that could cause actual
results to differ materially include unexpected events during con-
struction and start-up; variations in ore grade, tons mined,
crushed or milled; technical, permitting, mining or processing
issues, and fluctuations in gold price and costs. These and other
factors are discussed in our Form 10-K for 2002, which accom-
panies and is incorporated into this annual report, under the
headings “Statements Regarding Forward-Looking Information”
beginning on page 2 of the Form 10-K and “Risk Factors”
beginning on page 8 of the Form 10-K.
Cautionary Note to U.S. Investors concerning estimates of
Measured and Indicated Mineral Resources
This annual report uses the terms “measured mineral
resources” and “indicated mineral resources”. We advise U.S.
investors that while those terms are recognized and required by
Canadian regulations, the U.S. Securities and Exchange
Commission does not recognize them. U.S. investors are cautioned
not to assume that any part or all of the mineral deposits in these
categories will ever be converted into reserves.
Cautionary Note to U.S. Investors concerning estimates of
Inferred Mineral Resources
This annual report uses the term “inferred mineral
resources”. We advise U.S. investors that while this term is recog-
nized and required by Canadian regulations, the U.S. Securities
and Exchange Commission does not recognize it. “Inferred min-
eral resources” have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of the
inferred mineral resources will ever be upgraded to a higher cate-
gory. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or other economic
studies. U.S. investors are cautioned not to assume that part or
all of the inferred mineral resource exists, or is economically or
legally mineable.
H I G H L I G H T S
“We have evolved as a junior gold producer with
broad gold exploration, development and operational skills,
which position us to continue our track record of growth
with the objective of achieving our immediate
term goal to become a mid-tier gold producer.”
Our achievements in 2002 stand by themselves:
First ever net income reported of $4.9 million, or 7 cents per share
Cash flow generated from operations of $5.8 million, or 8 cents per share
Record gold production of 124,400 ounces at cash operating costs of $193 per ounce
Mineral Reserves at Bogoso/Prestea increased by 21% to 2.2 million ounces
Acquired a 90% interest in Wassa
Acquired a joint venture interest in the Prestea Underground
Listed on the American Stock Exchange
SHARE PRICE VS GOLD PRICE
Share Price
Gold Price
GOLD PRODUCTION
(000s ounces)
BOGOSO/PRESTEA GOLD RESERVES (100%)
(000s ounces) at December 31,
300 %
200 %
100 %
0 %
-100 %
1 4 0
1 2 4
1 0 8
8 7
2 , 2 1 1
1,8 2 7
2 2 9
1 7 2
1-02
3-02
6-02
9-02
1 2-02
3-03
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3 ( e )
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
G
O
L
D
E
N
S
T
A
R
R
E
S
O
U
R
C
E
S
L
T
D
.
2
0
0
2
A
N
N
U
A
L
R
E
P
O
R
T
M
e
e
t
i
n
g
t
h
e
C
h
a
l
l
e
n
g
e
❖
❖
❖
❖
❖
❖
❖
L E T T E R T O O U R S H A R E H O L D E R S
2002 was a stellar year for Golden Star
2002 was a stellar year for Golden Star
with our company being profitable
with our company being profitable
for the first time in its history, . . .
for the first time in its history, . . .
2002 was a stellar year for Golden Star with
our company being profitable for the first time
in its history, both for the full year and for each
of the four quarters. Our net income for the
year was $4.9 million, which was attributable
to a number of factors, including record gold
production, improved gold recovery, lower cash
costs arising from the commencement of mining
at Prestea and higher gold prices.
Commencement of mining at Prestea and
the processing of Prestea ore at our processing
facilities at Bogoso, marked a significant mile
stone in our multi-year strategy to consolidate
the southern end of the Ashanti gold belt in
Ghana. The combined Bogoso/Prestea operation
has significant reserves, which will support on-
going production at an average annualized rate
of 135,000 ounces per annum at cash operating
costs of less than $200 per ounce for more than
ten years. This flagship gold mining operation
provides an excellent platform for us to grow
our business to become a mid-tier gold producer.
During the year we also completed the
acquisition of the Wassa gold project in Ghana
and commenced drilling and feasibility study
work to determine the viability of developing a
conventional milling operation at Wassa. We
expect the feasibility study to be complete by
mid-2003 and, if positive, to immediately there-
Bogoso processing plant and crushed ore stockpile.
2
golden star resources ltd. 2002 annual report
after commence construction work, with the aim
the joint venture accordingly. As at December
of achieving first gold production in early 2004.
31, 2002 we had earned a 54% interest in the
Should the development proceed as expected,
joint venture and, based on our forecast expen-
Wassa would deliver immediate-term growth,
diture expect to increase our interest in the joint
resulting in an increase to our group production
venture to 65% during 2003. We do have the
to approximately 250,000 ounces in 2004 at
right to increase our subsidiary’s interest to 90%
sub-$200 per ounce average cash operating costs.
at any time through a pre-agreed payment to
Beyond the potential development of Wassa,
our joint venture partner (with the remaining
we envisage that we will continue to increase
10% being held by the Government of Ghana).
our gold production through a combination of
The majority of our exploration focus
organic growth and acquisitions.
has been, and we expect will continue to be,
Perhaps the greatest opportunity for future
organic growth lies in the Bogoso/Prestea com-
plex where in excess of 11 million ounces have
been historically mined. We have already estab-
concentrated around our current and proposed
processing operations. However, we may continue
earlier stage exploration on our exploration
properties elsewhere in Ghana and in the Guiana
lished combined Mineral Reserves and Mineral
Shield in South America.
Resources in open pit equivalent to about half of
Corporately we raised a significant amount
historical production. We believe that there is
of funding during 2002 and in the first two
significant potential to increase this number
months of 2003. As a result, our company is
through both an expanded surface exploration
well funded with in excess of $50 million of
and the commencement of underground explo-
cash reserves. This strong cash position leaves
us well placed to progress our near term organic
growth development projects and to contemplate
value-adding acquisition opportunities.
Sincerely,
P E T E R B R A D F O R D
President and CEO
ration at Prestea in 2003.
At Bogoso/Prestea we hold the majority of
our rights through our 90% interest in our
subsidiary, Bogoso Gold Limited; however, our
rights to the Prestea underground are held via a
joint venture in which our 90% subsidiary has
a 54% interest. In accordance with this joint
venture we have the right to manage any explo-
ration and re-development. We commenced our
assessment of the Prestea underground in 2002.
We expect to commence exploration drilling in
the second half of 2003, once all of the historical
mining information has been assimilated into a
digital model to give us a better understanding
of the geology and mineralization. We are sole-
funding this work and increasing our interest in
golden star resources ltd. 2002 annual report
3
R E S E R V E S A N D R E S O U R C E S
M I N E R A L R E S E R V E S
Proven and Probable Mineral Reserves at Bogoso/Prestea as at December 31, 2002 are as follows:
Material
Proven Reserves
Probable Reserves
Total
Golden Star 90% Share
Tonnes
(000)
14,170
8,902
23,072
20,765
Gold Grade
(g/t)
3.26
2.54
2.98
2.98
Contained Ounces
1,484,676
726,378
2,211,054
1,989,948
1.
2.
3.
4.
The Mineral Reserves were determined at a gold price of $300 per ounce.
The Mineral Reserves were estimated in conformance with the definitions contained in Canada’s National Policy Instrument 43-101.
The Corporation’s Qualified Person for the estimation of the Mineral Reserves is David Alexander, our employee.
Full details on the methodology used to estimate the Mineral Reserves is included on Page 28 of the Corporation’s Form 10-K for the year ended December 31, 2002.
M I N E R A L R E S O U R C E S
Measured, Indicated and Inferred Mineral Resources as at December 31, 2002 for our Ghana properties are as follows:
(cid:1)
Deposits
Bogoso/Prestea
Wassa
Total Ghana
Golden Star 90% Share
Measured
Indicated
Measured & Indicated
Inferred
Tonnes
(000)
5,861
0
5,861
5,275
Grade
(g/t)
3.64
–
3.64
3.64
Tonnes
(000)
14,101
17,770
31,871
28,684
Grade
(g/t)
2.69
1.29
1.91
1.91
Tonnes
(000)
19,962
17,770
37,732
33,959
Grade
(g/t)
2.97
1.29
2.18
2.18
Tonnes
(000)
23,960
28,843
52,803
47,522
Grade
(g/t)
2.91
1.15
1.95
1.95
The Mineral Resources were estimated at a gold price of $325 per ounce.
The Mineral Resources were estimated in conformance with the definitions contained in Canada’s National Policy Instrument 43-101.
The Mineral Resources are additional to the Mineral Reserves and not inclusive of the Mineral Reserves.
The Corporation’s Qualified Person for the estimation of the Mineral Resources is Mitch Wasel, our employee.
Details on the methodology used to estimate the Mineral Resources is included on Pages 29 and 32 of the Corporation’s Form 10-K for the year ended December 31, 2002.
1.
2.
3.
4.
5.
6. US Investors should review the cautionary statements on pages 6 and 7 of the Corporation’s Form 10-K for the year ended December 31, 2002.
7. Mineral Resources for the Corporation’s South American properties can be found on Pages 7, 39 and 40 of the Corporation’s Form 10-K for the year ended December 31, 2002.
G O L D E N S T A R P R O P E R T I E S
I N G H A N A
(cid:1)
Kanses
Sagon
Newmont Centenary
(cid:1)
(cid:1)
AFRICA
GHANA
Map Area
Accra
Sefwi-Bibiani Belt
KUMASI
0
25
50
(cid:2)
75
100km
(cid:1)
(cid:1)
(cid:1)
Ashanti Bibiani
Oboum
(cid:1)
Obotan
(cid:1)
Ayanfuri
(cid:1)
Ashanti Obuasi
Ashanti Belt
(cid:1)
Mampon
Mansiso
(cid:1)
(cid:1)
Newmont Akim
(cid:1)
Kibi Belt
(cid:1)
Bogoso
Wassa
(cid:1)
(cid:1)
Goldfields Abosso
Goldfields Tarkwa
Ashanti Iduapriem
(cid:1)
Prestea
(cid:1)
(cid:1)
Foremost Netas
CAPE COAST
TAKORADI
Wassa
(cid:1)
(cid:1)
(cid:1)
ACCRA
Bogoso
(cid:1)
Prestea
(cid:1)
(cid:1)
OPTION AGREEMENTS
(EARNING IN-90%)
APPLICATIONS MADE FOR
PROPERTY LICENSES 90%
MINING LEASES 90%
PROPERTY LICENSES 100%
UNDER CONTRACT
4
golden star resources ltd. 2002 annual report
Blast hole drilling in the Prestea Plant-North pit. (cid:2)
B O G O S O / P R E S T E A G O L D M I N E
We have a 90% interest in the
Bogoso/Prestea open pit gold mining
operation through our subsidiary,
Bogoso Gold Limited.
Bogoso/Prestea has evolved, through
our regional consolidation strategy, to
bring together the modern processing
facilities and well developed infrastruc-
ture at Bogoso, originally developed by
Billiton in the early 1990s, with known
open-pittable reserves at Prestea. Since
the consolidation of Bogoso and Prestea,
the proven and probable reserves for
the combined property has increased
to approximately 2.2 million ounces of
reserves. There is significant opportunity
to grow these reserves and we have
committed significant additional funds
to exploration and technical studies at
Bogoso/Prestea in 2003.
Operations
During 2002, we recorded our
strongest year of operations since
acquiring our initial interest in 1999. A
record gold production level of 124,400
ounces was achieved at significantly
improved gold prices resulting in record
revenues. All gold production from
Bogoso/Prestea in 2002 was uncommitted
and sold into the spot gold market.
Our owner-operated mining
equipment continued to work well,
maintaining the supply of ore to the
processing facility while developing new
haulroads to connect the new Prestea
deposits with the processing plant at
Bogoso. In 2003, our mining activities
will be concentrated at the Plant-North
deposit on the Prestea concession, with
no new work to develop haulroads, and
we can therefore expect a commensurate
improvement in mining efficiency and
mining unit costs in 2003.
The processing plant performed
well, achieving a record throughput of
2.27 million tonnes for the year at an
improved gold recovery rate of 74%.
Our gravity plant, installed in 2000,
continued to perform well - processing
Prestea ore, which has a higher compo-
nent of gravity recoverable gold. In 2003
(cid:2)
Mining in the Prestea Beposo pit. Note the early
stages of revegetation in the pit walls.
The end of the process - pouring gold at Bogoso.
During 2002, we recorded our strongest year of
operations since acquiring our initial interest in 1999.
we will upgrade the gravity plant to
further increase the percentage of gold
recovered in this circuit. Plant availabil-
ities continued at a high level of 98%.
Prestea Underground
In 2002, we acquired an initial
45% joint venture interest in the Prestea
underground and commenced a program
to assimilate all of the historical mining
information from the past 130 years of
operations into a digital model. In
parallel, we are carrying out check map-
ping, surveys and sampling to verify the
historical record and are reinterpreting
the structural geology. The aim is to
create a digital model to be used as a
targeting tool in readiness for exploration
drilling in the second half of 2003.
We have also invested in the
underground to improve the safety and
efficiency of the existing underground
infrastructure, including the dewatering
pumps required to keep the mine dry
and so preserve access.
Our ownership interest in the joint
venture increases commensurate with
our expenditure on work on the under-
ground exploration and refurbishment.
As at December 31, 2002, our joint
venture interest was 54% and, based
on our forecast expenditure for 2003,
we expect our joint venture interest to
increase to 65% in 2003.
Outlook
In 2003 we expect to produce
about 140,000 of gold from Bogoso/
Prestea at a cash operating cost of
approximately $185 per ounce.
We will also plan to accelerate our
surface exploration program and carry
out the first underground exploration
during 2003, with the aim of developing
a better understanding of the Bogoso/
Prestea potential. This will be a critical
element in our studies to assess the
viability of upgrading production
capacity in the area.
golden star resources ltd. 2002 annual report
7
W A S S A G O L D P R O J E C T
We have a 90% interest in the Wassa
Exploration and Feasibility Study
gold project in Ghana, which we hold
through our subsidiary, Wexford
Goldfields Limited.
We acquired Wassa out of receiver-
ship in 2002, having recognized the
opportunity to re-engineer the project
with conventional milling/carbon in leach
(“CIL”) processing technology. Laboratory
testing has demonstrated significantly
better metallurgical recoveries for con-
ventional milling and CIL compared to
heap leaching technology used previously.
Since acquiring Wassa, we have
successfully carried out significant
drilling to better understand the geology
and to improve our confidence in the
project’s mineral resources. This was a
forerunner to the current technical
studies required to complete a feasibility
study and demonstrate the viability of
Wassa’s redevelopment.
The focus of our exploration work
at Wassa during 2002 has been the
validation of the pre-existing reserve.
Although this involved significantly more
drilling than originally contemplated,
we now have a good understanding of
the Wassa geology and mineralization
controls. From this platform of knowl-
edge we plan to broaden our exploration
activities at Wassa in 2003 to delineate
new mineralization.
We commenced our feasibility
study in late 2002, with the assistance
of MDM (lead and process design),
Lakefield Laboratories (metallurgical
testing), SRK (geology and reserves),
Scott Wilson (environmental) and
Knight Piésold (tailings and geotechni-
cal). As a result of the significant
amount of existing equipment and
infrastructure located on the property,
Since acquiring Wassa, we have successfully carried out
significant drilling to better understand the geology and to
improve our confidence in the project’s mineral resources.
Our geologist mapping structures around one of the existing pits at Wassa.
the scope of the feasibility study is
relatively narrow and is aimed at deter-
mining the viability of developing a 3
million tonne per annum conventional
milling/CIL operation at Wassa using the
existing crushing circuit and gold room.
Metallurgical testwork is progress-
ing well and has returned results the
same or better than the metallurgical
assumptions made in our acquisition
due diligence.
The feasibility study is expected
to be completed in mid-2003 and,
subject to the project’s viability, we
expect to commence construction
immediately thereafter.
Outlook
A positive decision on Wassa’s
redevelopment should result in the first
gold being produced from Wassa in
early 2004, at an estimated construction
cost, based on our work to date, of
about $14 million.
Recognizing that the expected
timetable between the completion of
the feasibility study and our planned
commencement of production is rela-
tively short, we have proceeded with
the selection and acquisition of two
second hand grinding mills which have
subsequently been shipped to Ghana
and are now stored on the property. The
drive trains for these mills are currently
being overhauled in South Africa.
We expect Wassa to produce at an
average annualized gold production
rate of about 120,000 ounces per annum
and at average cash operating costs of
about $185 per ounce.
8
golden star resources ltd. 2002 annual report
Our geologists collecting structural
data from oriented drill core at Wassa.
(cid:2)
C O R P O R A T E R E S P O N S I B I L I T Y
Safety
During 2002, we maintained our
very high standard of safety, achieving
an average Lost Time Injury Frequency
Rate, which includes all regular
employees, including contract employees,
of 0.63 lost time injuries per million
man-hours. This compares very well
with the average for U.S. open pit
mines of 9.4.
We believe our achievements in
this area are a direct result of our con-
tinuing commitment to training and
safety education programs.
The Environment
Compliance with environmental
monitoring, reporting and rehabilitation
responsibilities is of primary importance
to us and we work closely with and
enjoy a positive and constructive
relationship with the relevant agencies
in the areas where we operate.
We continue to be at the forefront
of the mining industry in Ghana with
our rehabilitation initiatives. During
2002, we rehabilitated a total land area
of approximately 34.5 hectares with
nitrogen fixing and productive tree
species. In addition, a further 37.5
hectares were planted with vetiveria
zizanoides (vetiver grass) for erosion
control purposes. Of particular interest
was our new initiative to stabilize pit
slopes during the mining phase using
creeping vines along with seeds that
germinate and grow insitu.
Significant milestones during the
year were the completion of definitive
environmental impact studies and
permitting for the Beposo/Brumase and
Plant-North areas of the Prestea property.
Community Relations
Maintaining excellent community
relations is a high priority to our
operations, particularly at Prestea where
we inherited an elevated level of unem-
ployment and social disruption resulting
from the curtailment of underground
operations by the previous operator. We
have made significant efforts over the
(cid:2)
Environmental officer testing water quality in the water
courses as part of the Company’s regular monitoring program.
Early stages of waste dump stabilization immediately following the completion of mining.
In new mining areas, environmental reclamation commences
as soon as the first material
is removed from the new pit.
last two years to consult with community
leaders and many stakeholder groups
regarding the benefits and impacts of
surface mining in the area.
During 2002, we commenced a
program to assist the development of
sustainable alternative livelihoods and
have increased our commitment to this
program in 2003. Key programs which
have been initiated in consultation and
cooperation with a number of
Governmental agencies and third party
groups, include: our farming assistance
program (consisting of both materials
and training); apprenticeship scheme;
and small scale community development
projects. Other areas of concern to the
communities where we have a continu-
ing high level of involvement are water
supply, education and sports facilities.
Perhaps the single greatest impact
that we may have on employment in
the area is the potential reopening of
the Prestea underground mine, which
could follow our assessment and explo-
ration activities. There is therefore keen
community interest in our activities
and progress in this area.
SAFETY STATISTICS
(Incidents per million manhours)
0 . 9 9
0 . 6 9
0 . 6 3
0 . 3 2
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
The US open pit metal mine incidence rate for 2001 was 9.4
golden star resources ltd. 2002 annual report
11
D I R E C T O R S
O F F I C E R S
J A M E S E . A S K E W
Jim Askew, a mining engineer, brings a wealth
of experience in all facets of the mining industry to
the Board.
P E T E R J . B R A D F O R D
Peter Bradford, President and Chief Executive Officer,
is a seasoned manager with in excess of 20 years of
operating and development experience in the mining
industry, including eight years in Ghana.
P E T E R J . B R A D F O R D
Peter Bradford, President and Chief Executive Officer
of the Corporation since 1999.
R I C H A R D Q . G R A Y
Richard Gray, Senior Vice President and Chief
Operating Officer, is a qualified mining engineer with
about 20 years experience in the gold mining industry,
primarily in Africa.
D A V I D K .
F A G I N
A L L A N J . M A R T E R
David Fagin has a long career in the North American
mining industry and continues to be active as a corpo-
rate director and with a number of professional and
non-profit organizations.
Allan Marter, Senior Vice President and Chief
Financial Officer, brings more than 20 years of experi-
ence in investment banking and financial management
in the mining industry to Golden Star.
I A N M A C G R E G O R
Ian MacGregor has practiced law for over 35 years
and brings an abundance of knowledge and experience
to the Board in the area of public financings, mergers
and acquisitions and international joint venture
transactions.
D R . D O U G L A S A . J O N E S
Dr. Doug Jones, Vice President, Exploration, joined
Golden Star in 2003 bringing some 20 years
exploration experience in Africa, South America and
Australia to our exploration efforts.
R O B E R T R . S T O N E
Robert Stone, Chairman of the Board of the Corporation,
is a business consultant and corporate director with
a strong financial background as CFO and director
of a major Canadian base metal producer based
in Vancouver.
R O G E R D .
P A L M E R
Roger Palmer, Controller, has over 25 years experience
in the mining business including exploration, mining
and as a corporate controller for various publicly
traded companies.
12
golden star resources ltd. 2002 annual report
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 2002
Commission file number 1-12284
GOLDEN STAR RESOURCES LTD.
(Exact Name of Registrant as Specified in Its Charter)
Canada
(State or other Jurisdiction of
Incorporation or Organization)
10579 Bradford Road, Suite 103
Littleton, Colorado
(Address of Principal Executive Office)
98-0101955
(I.R.S. Employer
Identification No.)
80127-4247
(Zip Code)
Registrant's telephone number, including area code
(303) 830-9000
Securities registered or to be registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of each exchange on which registered
Common Shares American Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Warrants Issued July 2002
Warrants Issued February 2003
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form l0-K. _____
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes _X No__
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was
approximately $109.8 million as of June 28, 2002, based on the closing price of the shares on the American Stock Exchange
of $1.80 per share.
Number of Common Shares outstanding as at March 14, 2003: 106,317,535.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A in connection with the 2003 Annual Meeting of Shareholders are incorporated by reference to Part
III of this Report on Form 10-K.
REPORTING CURRENCY, FINANCIAL AND OTHER INFORMATION
All amounts in this Report are expressed in United States dollars, unless otherwise indicated. Canadian currency is
denoted as “Cdn$”, French currency is denoted as “FF” in 2001 and as “Euro” afterward, and Ghanaian currency is
denoted as “Cedi” or “Cedis”.
Financial information is presented in accordance with accounting principles generally accepted in Canada (“Cdn
GAAP”). Differences between accounting principles generally accepted in the United States (“US GAAP”) and
those applied in Canada, as applicable to the Registrant, are explained in Note 26 to the Consolidated Financial
Statements.
Information in Part I of this report includes data expressed in various measurement units and contains numerous
technical terms used in the mining industry. To assist readers in understanding this information, a conversion table
and glossary are provided at the end of Item 1 of Part I.
References to “we”, “our”, and “us” mean Golden Star Resources Ltd., its predecessors and consolidated
subsidiaries, or any one or more of them, as the context requires.
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This Form 10-K contains forward-looking statements, within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act, with respect to our financial condition, results of operations, business, prospects,
plans, objectives, goals, strategies, future events, capital expenditure, and exploration and development efforts.
Words such as “anticipates,” “expects,” “intends,” “plans,” “forecasts”, “budgets”, “believes,” “seeks,” “estimates,”
“may,” “will,” and similar expressions identify forward-looking statements. Although we believe that our plans,
intentions and expectations reflected in these forward-looking statements are reasonable, we cannot be certain that
these plans, intentions or expectations will be achieved. Actual results, performance or achievements could differ
materially from those contemplated, expressed or implied by the forward-looking statements contained or
incorporated by reference in this Form 10-K.
The following, in addition to the factors described in “Risk Factors” discussed in this Form 10-K, are among the
factors that could cause actual results to differ materially from the forward-looking statements:
• unexpected changes in business, legal, regulatory and economic conditions;
• significant increases or decreases in gold prices;
• timing and amount of production;
• unanticipated grade changes;
• unanticipated recovery or production problems;
• mining and milling costs;
• mining, metallurgy, processing, access, availability of materials and equipment, transportation of supplies and
availability of utilities, including water and power;
• uncertainties associated with developing a new mining operation, including potential cost over-runs and
unreliability of estimates in early stages of mine development
• determination of reserves;
2
• changes in project parameters;
• costs and timing of development of new reserves;
• results of current and future exploration activities;
• results of pending and future feasibility studies;
• joint venture relationships;
• political or economic instability, either globally or in the countries in which we operate;
• local and community impacts and issues;
• availability, terms, conditions and timing of receipt of government approvals;
• accidents and labor disputes;
• environmental costs and risks;
• competitive factors, including competition for property acquisitions; and
• financial market conditions and the availability of financing on reasonable terms.
These factors are not intended to represent a complete list of the general or specific factors that may affect us. We
may note additional factors elsewhere in this Form 10-K and in any documents incorporated by reference into this
Form 10-K. We undertake no obligation to update forward-looking statements.
3
ITEM 1.
DESCRIPTION OF BUSINESS
Overview
PART I
We are an international gold mining and exploration company producing gold in Ghana in West Africa. Through
our various subsidiaries and joint ventures we own a controlling interest in four gold properties in Ghana, the
Bogoso property (“Bogoso”), the Prestea property (“Prestea”), the Wassa property (“Wassa”) and the Prestea
underground property (“Prestea Underground”). Bogoso and Prestea are adjoining properties and both are owned by
our 90% owned subsidiary Bogoso Gold Limited (“BGL”). These two properties now function as a single operation
referred to as (“Bogoso/Prestea”) and are expected to produce approximately 140,000 ounces of gold in 2003.
We own a 90% equity interest in Wexford Goldfields Limited (“Wexford”), which owns the Wassa gold property,
located some 35 kms east of Bogoso/Prestea. A feasibility study is currently underway which seeks to establish the
economic viability of this property.
The Prestea Underground, acquired in 2002, is located on the Prestea property and consists of a currently inactive
underground gold mine and associated support facilities, which ceased operating in early 2002 following a strike by
workers. As of December 31, 2002 BGL owned a 54% operating interest in this mine, and studies are now
underway to determine if the underground mine can be reactivated on a profitable basis.
We also hold other active exploration properties in Suriname and in Ghana and through our 73%-owned subsidiary,
Guyanor Ressources S.A. (“Guyanor”), we have interests in several gold exploration properties in French Guiana.
Business Strategy and Development
Bogoso/Prestea: Faced with a continuing low gold price environment and the difficulty in raising funds from the
equity markets for pure exploration, management decided in 1999 to change its business strategy from a pure
exploration company to a production, development, and advanced stage exploration company. The first step in the
implementation of our new strategy was the September 1999 acquisition of a 70% beneficial interest in Bogoso in
Ghana. The Bogoso acquisition provided us with an operating gold mine and a source of internally generated cash
flow. In 2001, we acquired an additional 20% beneficial interest in Bogoso, raising our ownership to 90%. The
Government of Ghana retains a 10% interest.
Immediately after acquiring Bogoso, our focus shifted to the acquisition of additional oxide gold reserves in the
immediate vicinity of Bogoso, which could be processed through the Bogoso mill once the Bogoso oxide and
transition ore reserves were exhausted in late 2001. We were successful in this endeavor acquiring, in mid-2001, a
surface mining lease for Prestea located adjacent to Bogoso. We commenced mining gold from Prestea in the third
quarter of 2001.
We were successful, through exploration efforts in 2000 and 2001, in delineating several zones of sulfide gold
mineralization at Bogoso. In late 2001 we completed a feasibility study that established a sulfide gold Mineral
Reserve of approximately 0.8 million ounces. Approximately $20 million of capital expenditures would be
required at the Bogoso mill to allow processing of sulfide ore. In our current mining plan, mining of sulfide Mineral
Reserves would not take place until oxide and other non-refractory Mineral Reserves from Bogoso/Prestea are
exhausted, which is now expected to occur no earlier than 2007 at current production rates.
While most of the past production at Prestea came from underground operations, there are several zones of oxide
and other non-refractory reserves which can be accessed via surface operations and which can be efficiently
processed in the existing Bogoso mill. Currently our Mineral Reserves at Prestea are sufficient to provide non-
refractory feed for the Bogoso mill for approximately five years. In addition, we have identified 0.3 million ounces
of additional sulfide Mineral Reserves at Prestea and this material has been incorporated into the Bogoso sulfide
feasibility study. Other zones of near-surface, oxide gold mineralization are known to exist within truckable
distance of the Bogoso mill and efforts to evaluate and acquire more of these properties continues.
4
Wassa: On September 13, 2002, we completed the acquisition of a 90% beneficial interest in Wassa in Ghana, with
the remaining 10% interest being retained by the Government of Ghana. Wassa was developed by its former owner
in the late 1990s at a capital cost of approximately $43 million as a conventional open pit, heap leach gold operation.
Operations under the former owner ceased in mid-2001. While operating as a heap leach property, Wassa produced
approximately 90,000 ounces of gold per annum for a period of just over two years. In mid-2001, the secured
lenders to the project (“the Wassa Sellers”) enforced their security rights in the project and, following a bidding
process, agreed to sell the Wassa asset to us.
We paid the Wassa Sellers an initial cash consideration of approximately $1.6 million at closing, assumed
approximately $1.8 million of seller-financed five-year debt and agreed to pay a royalty on future production at a
rate of $8.00 per ounce up to a maximum of $5.5 million. In addition, a second gold production royalty is payable
to the Wassa Sellers on future gold production from Wassa. This royalty is to be paid quarterly and will be
determined by multiplying the quarterly production from Wassa by a base royalty rate of $7.00 per ounce. The
royalty is increased above the base rate by $1.00 per ounce for each $10.00 increase in the average market price of
gold above $280 per ounce up to a maximum of $15.00 per ounce at gold prices of $350 and above.
We have initiated a drilling program at Wassa designed to evaluate its gold potential. Engineering studies are also
underway to evaluate the feasibility of redeveloping Wassa as a conventional Carbon-in-Leach (“CIL”) operation.
The feasibility study is scheduled for completion in mid-2003.
Prestea Underground: In March 2002, BGL formed a joint venture with Prestea Gold Resources Limited (“PGR”),
former owner of the Prestea Underground, and the Government of Ghana to evaluate and, if warranted, to restart and
operate the Prestea Underground mine. BGL is the managing partner in the joint venture and has the sole right to
finance the exploration and development of, and operate the mine. BGL paid $2.4 million to PGR for a 45% interest
in the joint venture, and PGR contributed its ownership position in the Prestea Underground mine to earn its 45%
interest. The Government of Ghana continues to hold the remaining 10% interest. Subsequent cash contributions to
the joint venture by BGL have raised its interest in the joint venture to 54%. Geologic and engineering studies are
now underway, and care and maintenance efforts have been undertaken to keep the mine and its shafts in a workable
condition.
Guiana Shield Transaction: In May 2002, we sold our interests in the Gross Rosebel, Headleys and Thunder
Mountain properties in Suriname, and our interest in Omai Gold Mines Limited (“OGML”) in Guyana, to Cambior
Inc. (“Cambior”), our former partner in the exploration, development and/or operation of these properties.
We received $5.0 million cash in 2002 and $1.0 million in 2003 for the sale of the Gross Rosebel property and
expect to receive two additional deferred payments of $1.0 million each in 2004 and 2005 based on Cambior’s
development and operation of Gross Rosebel. In addition, Cambior will pay us a royalty equal to 10% of the excess
of the average quarterly market price above a gold price hurdle on the first 7 million ounces of gold production from
Gross Rosebel. For soft and transitional rock the gold price hurdle is $300 per ounce and for hard rock the gold
price hurdle is $350 per ounce.
For the Headleys and Thunder Mountain properties, we will receive a deferred consideration of $0.5 million per
property when and if Cambior commences commercial mining from each of these properties.
As payment for our 30% equity interest and preferred shares in OGML, we received a release and waiver from
OGML, Cambior and the Guyana Government in respect of all liabilities, of any nature, related to the Omai gold
mine. In the transaction we also acquired Cambior’s 50% interests in the Yaou and Dorlin exploration properties in
French Guiana.
Growth Strategy: Since 1999, we have focused primarily on the acquisition of producing and development stage
gold properties in Ghana and on the exploration, development and operation of these properties. As a result, we
now have Proven and Probable Mineral Reserves, at Bogoso/Prestea, from which we expect to produce an average
of approximately 135,000 ounces per annum for an estimated mine life in excess of ten years, assuming sulfide ores
are processed as contemplated in the feasibility study. If the feasibility study at our Wassa property is favorable, we
plan to commence development of Wassa in the third quarter of 2003. If we are able to fast-track development and
start-up, we believe that Wassa could commence production in early 2004 at an estimated capital cost of $14
5
million. However, there can be no assurance that the feasibility study will be favorable, that development and start-
up can be completed in early 2004, or that our production goals will be achieved.
Our objective is to grow our business to become a mid-tier gold producer (which we understand to be a producer
with annual production of approximately 500,000 ounces) over the next few years. Due to higher gold prices and
our improved financial condition, we believe we are well placed to pursue the acquisition of producing,
development and advanced stage exploration gold properties and companies, primarily in Ghana and elsewhere in
Africa. We are actively investigating potential acquisition and merger candidates, some of which have indicated to
potential acquirers or their advisors that they or certain of their properties may be available for acquisition.
However, we presently have no agreement or understanding with respect to any potential transaction.
We also intend to significantly increase exploration activities and expenditures on our current exploration properties,
primarily in Ghana, as well as on properties we may acquire.
Reserves
The following table summarizes our estimated Proven and Probable Mineral Reserves of gold as of December 31,
2002, which have been prepared by qualified members of our staff.
PROVEN AND PROBABLE MINERAL RESERVES
at December 31, 2002
Tonnes
Gold Grade g/t
Contained Ounces
Golden Star’s 90% share of
Contained Ounces
Bogoso/Prestea
Proven Reserves
14,170,046
Probable Reserves
8,902,235
Total
23,072,281
3.26
2.54
2.98
1,484,676
726,378
2,211,054
1,336,208
653,739
1,989,947
The Proven and Probable Mineral Reserves at Bogoso/Prestea at December 31, 2002 of 23.1 million tonnes at an
average grade of 2.98 g/t, representing approximately 2.2 million ounces, were determined using a gold price of $300
per ounce, and are compared to Mineral Reserves at December 31, 2001 of 19.1 million tonnes at an average grade of
2.97 g/t, representing approximately 1.8 million ounces of gold, which were calculated at a gold price of $275 per
ounce. Included in the Proven Mineral Reserves category are 1.26 million tonnes of ores at an average grade of 1.47
g/t in stockpiles at Bogoso.
Our Proven and Probable Mineral Reserves are estimated in conformance with definitions set out in Canada’s
National Instrument 43-101 as more fully described “Item 2: Description of Properties”. Also see our “Glossary of
Terms”. The Proven and Probable Mineral Reserves are those ore tonnages contained within either engineered pits or
economically optimized pit envelopes, designed for the oxide, transition and refractory sulfide resources, and using
current and predicted mine operating costs and performance parameters.
We consider that the definitions of Proven and Probable Mineral Reserves are consistent with the definition of proven
and probable reserves prescribed for use in the United States by the U.S. Securities and Exchange Commission and
set forth in SEC Industry Guide 7.
Non-Reserves
Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Mineral
Resources
This section uses the terms “measured mineral resources” and ‘indicated mineral resources”. We advise
U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to
assume that any part or all of the mineral deposits in these categories will ever be converted into
reserves.
6
The following table summarizes our Measured and Indicated Mineral Resources as at December 31, 2002 which have
been estimated by qualified members of our staff, unless otherwise indicated, in conformance with required standards
as better set out in “Item 2. Description of Properties”.
Project
Bogoso/Prestea
Wassa
Yaou and Dorlin
Paul Isnard
MEASURED AND INDICATED MINERAL RESOURCES
at December 31, 2002
Tonnes
(100%)
19,962,000
17,770,000
13,800,000
6,178,000
Golden Star’s
Tonnes
Gold Grade
Ownership
(Golden Star ’s share)
90%
90%
87%
73%
17,965,000
15,993,000
11,900,000
4,485,000
g/t
3.0
1.3
2.1
2.8
Our Measured and Indicated Mineral Resources, which are reported exclusive of that part of the Mineral Resource
converted to Proven and Probable Mineral Reserves, have been estimated in conformance with definitions set out in
Canada’s National Instrument 43-101 as more fully described in “Item 2: Description of Properties”. Also see our
“Glossary of Terms”.
The Measured and Indicated Mineral Resource for our properties, with the exception of Yaou and Dorlin, have been
estimated at an economic cut off grade based on a $325 per ounce gold price and economic constraints that are
believed to be realistic. At Yaou and Dorlin a gold price of $300 per ounce was used.
Inferred Mineral Resources
Cautionary Note to U.S. Investors concerning estimates of Inferred Mineral Resources
This section uses the term “inferred mineral resources”. We advise U.S. investors that while this term is
recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not
recognize it. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of the
inferred mineral resources will ever be upgraded to a higher category. Under Canadian rules estimates of
inferred mineral resources may not form the basis of feasibility or other economic studies. U.S. investors
are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically
or legally mineable.
INFERRED MINERAL RESOURCES
at December 31, 2002
Tonnes
(100%)
23,960,000
28,843,000
Golden Star’s
Tonnes
Gold Grade
Ownership
(Golden Star’s share)
90%
90%
21,564,000
25,958,000
g/t
2.9
1.2
Project
Bogoso/Prestea
Wassa
Employee Relations
As of March 14, 2003, we had a total of 1,084 full-time employees and contract employees, an 82% increase from
the 594 people employed at the end of 2001. The total includes seven employees at our headquarters in Littleton,
Colorado.
Customers
As is customary in the gold mining business, all of our gold production is sold to a single customer in accordance
with an annually negotiated contract. In accordance with the refining/sales agreement, cash payment for gold sold is
7
received in our account two to three working days after each shipment and gold is shipped weekly. The gold
refining business is competitive with numerous refineries willing to buy on short notice. As such we believe that the
loss of our customer would not materially delay or disrupt revenues.
Competition
We compete with major mining companies and other natural resource companies in the acquisition, exploration,
financing and development of new prospects. Many of these companies are larger and better capitalized than we
are. There is significant competition for the limited number of gold acquisition and exploration opportunities. Our
competitive position depends upon our ability to successfully and economically explore, acquire and develop new
and existing mineral prospects. Factors that allow producers to remain competitive in the market over the long term
include the quality and size of the ore body, cost of operation, and the acquisition and retention of qualified
employees. We also compete with other mining companies for skilled mining engineers, mine and mill operators
and mechanics, geologists, geophysicists and other technical personnel. This may result in higher turnover and
greater labor costs.
Incorporation
Golden Star Resources Ltd. was established under the Canada Business Corporations Act on May 15, 1992 as a
result of the amalgamation of South American Goldfields Inc., a corporation incorporated under the federal laws of
Canada, and Golden Star Resources Ltd., a corporation originally incorporated under the provisions of the Alberta
Business Corporations Act on March 7, 1984 as Southern Star Resources Ltd. Our fiscal year ends on December 31.
Our head office is located at 10579 Bradford Road, Suite 103, Littleton, Colorado 80127-4247, and the registered
and records office is located at 19th Floor, 885 West Georgia Street, Vancouver, British Columbia, Canada V6C
3H4.
Available Information
We make available free of charge on or through our Internet website our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC. Our Internet address is http://www.gsr.com. Our
Internet website and the information contained therein or connected thereto are not intended to be incorporated into
this Annual Report on Form 10-K.
RISK FACTORS
You should consider carefully the following discussions of risks, in addition to the other information contained in, or
incorporated by reference into, this report.
Our business is substantially dependent on gold prices.
Financial Risks
The price of our common shares, our financial results and our exploration, development and mining activities have
previously been, and may in the future be, significantly adversely affected by declines in the price of gold. The
price of gold is volatile and is affected by numerous factors beyond our control such as the sale or purchase of gold
by various central banks and financial institutions, inflation or deflation, fluctuation in the value of the United States
dollar and foreign currencies, global and regional demand, and the political and economic conditions of major gold-
producing countries throughout the world. If gold prices were to decline significantly or for an extended period of
time, we might be unable to continue our operations, develop our properties or fulfill our obligations under our
agreements with our partners or under our permits and licenses. As a result, we could lose our interest in, or may be
forced to sell, some of our properties.
8
Furthermore, reserve calculations and life-of-mine plans using significantly lower gold prices could result in
material write-downs of our investment in mining properties and increased amortization, reclamation and closure
charges.
We have recorded substantial losses in recent years.
While we were profitable in 2002, we reported net losses of $20.6 million in 2001, $14.9 million in 2000,
$24.4 million in 1999 and $22.2 million in 1998. Numerous factors, including declining gold prices, lower than
expected ore grades or higher than expected operating costs, and impairment write-offs of mine property and/or
exploration property costs could cause us to become unprofitable in the future. Any future operating losses may
make financing our operations and our business strategy, or raising additional capital, difficult or impossible and
may materially and adversely affect our operating results and financial condition.
Our obligations may strain our financial position and impede our business strategy.
We have total debts and liabilities as of December 31, 2002 of $19.8 million, including $3.3 million payable to
financial institutions, $2.0 million due to the former owners of BGL, $7.3 million of current trade payables and
accrued current liabilities and $7.2 million in environmental rehabilitation liabilities. We expect that our liabilities
will increase as a result of our corporate development activities. This indebtedness may have important
consequences, including the following:
• increasing our vulnerability to general adverse economic and industry conditions;
• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, operating
and exploration costs and other general corporate requirements;
• requiring us to dedicate a significant portion of our cash flow from operations to make debt service payments,
which would reduce our ability to fund working capital, capital expenditures, operating and exploration costs and
other general corporate requirements;
• limiting our flexibility in planning for, or reacting to, changes in our business and the industry; and
• placing us at a disadvantage when compared to our competitors that have less debt relative to their market
capitalization.
Our estimates of reserves and mineralized material may be inaccurate.
There are numerous uncertainties inherent in estimating proven and probable reserves and mineralized material,
including many factors beyond our control. The estimation of mineralized material and reserves is a subjective
process, and the accuracy of any such estimates are a function of the quantity and quality of available data and of the
assumptions made and judgments used in engineering and geological interpretation, which may prove to be
unreliable. There can be no assurance that these estimates will be accurate, that reserves and other mineralization
figures will be accurate, or that reserves or mineralization could be mined or processed profitably. In 1998, we had
to revise estimates of mineralized material disclosed with respect to two of our projects.
Fluctuation in gold prices, results of drilling, metallurgical testing and production and the evaluation of mine plans
subsequent to the date of any estimate may require revision of such estimate. The volume and grade of reserves
mined and processed and recovery rates may not be the same as currently anticipated. Any material reductions in
estimates of our reserves and other mineralization, or of our ability to extract these reserves or mineralization, could
have a material adverse effect on our results of operations and financial condition.
We currently have only one source of operational cash flows.
While we have recently received significant infusions of cash from sales of equity, our only internal source of funds
is operational cash flows from Bogoso/Prestea. The anticipated continuing exploration and development of our
properties will require significant expenditures over the next several years. We expect that these expenditures will
exceed free cash flows generated by Bogoso/Prestea during that period, and therefore we may be required to use our
excess cash and may in the future require additional outside capital. Lower gold prices during the five years prior to
2002 adversely affected our ability to obtain financing, and recurring lower gold prices could have similar effects in
the future. We cannot assure you that in the future we will be able to obtain adequate financing on acceptable terms.
If we are unable to obtain additional financing, we may need to delay or indefinitely postpone further exploration
9
and development of our properties, and as a result, we could lose our interest in, or may be forced to sell, some of
our properties.
Implementation of a hedging program might be unsuccessful and incur losses.
We continue to review whether or not, in light of the potential for gold prices to fall, if it would be appropriate to
establish a hedging program. To date, we have not decided to implement a hedging program, although we have
purchased and expect to continue to purchase puts from time to time, which give us the right to sell gold in the
future at a fixed price. The implementation of a hedging program may not, however, protect adequately against
declines in the price of gold.
In addition, although a hedging program may protect us from a decline in the price of gold, it might also prevent us
from benefiting fully from price increases. For example, as part of a hedging program, we could be obligated to sell
gold at a price lower than the then-current market price. Finally, if unsuccessful, the costs of any hedging program
may further deplete our financial resources.
We are subject to fluctuations in currency exchange rates, which could materially adversely affect our
financial position.
Our revenues are in United States dollars, and we maintain most of our working capital in United States dollars or
United States dollar-denominated securities. We convert funds to foreign currencies as payment obligations become
due. A significant portion of the operating costs at Bogoso/Prestea is based on the Ghanaian currency, the Cedi.
BGL is required to convert only 20% of the foreign exchange proceeds that BGL receives from selling gold into
Cedis, but the Government of Ghana could require BGL to convert a higher percentage of such sales proceeds into
Cedis in the future. In addition, we currently have future obligations that are payable in Euros, and receivables
collectible in Euros. Accordingly, we are subject to fluctuations in the rates of currency exchange between the
United States dollar and these currencies, and such fluctuations may materially affect our financial position and
results of operations. We currently do not hedge against currency exchange risks.
There may be no opportunity to evaluate the merits or risks of any future acquisition undertaken by us.
As a key element of our growth strategy, we have stepped up the active pursuit of acquisitions of producing,
development and advanced stage exploration properties and companies. We are actively investigating potential
acquisition and merger candidates. Acquisition and merger transactions in our business are often initiated and
completed over a particularly short period of time. Risks related to acquiring and operating acquired properties and
companies, could have a material adverse effect on our results of operations and financial condition. In addition, to
acquire properties and companies, we would use available cash, incur debt, issue our common shares or other
securities, or a combination of any one or more of these. This could limit our flexibility to raise capital, to operate,
explore and develop our properties and to make additional acquisitions, and could further dilute and decrease the
trading price of our common shares. There may be no opportunity for our shareholders to evaluate the merits or
risks of any future acquisition undertaken by us except as required by applicable laws and regulations.
Risks inherent in acquisitions that we may undertake could adversely affect our growth and financial
condition.
We are actively pursuing the acquisition of producing, development and advanced stage exploration properties and
companies. Acquisition transactions involve inherent risks, including:
• accurately assessing the value, strengths, weaknesses, contingent and other liabilities and potential profitability of
acquisition candidates;
• ability to achieve identified and anticipated operating and financial synergies;
• unanticipated costs;
• diversion of management attention from existing business;
• potential loss of our key employees or the key employees of any business we acquire; and
• unanticipated changes in business, industry or general economic conditions that affect the assumptions
underlying the acquisition.
10
Any one or more of these factors or other risks could cause us not to realize the benefits anticipated to result from
the acquisition of properties or companies, and could have a material adverse effect on our ability to grow and on
our financial condition.
We are subject to litigation risks.
All industries, including the mining industry, are subject to legal claims, with and without merit. We are involved in
various routine legal proceedings incidental to our business. We believe it is unlikely that the final outcome of these
legal proceedings will have a material adverse effect on our financial position or results of operation. However,
defense and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent
uncertainty of the litigation process, there can be no assurance that the resolution of any particular legal proceeding
will not have a material effect on our financial position or results of operations.
Operational Risks
The technology, capital costs and cost of production of sulfide reserves and mineralized material at Bogoso/
Prestea are still subject to a number of uncertainties, including funding uncertainties.
Based upon the completion of our Bogoso sulfide mining feasibility study in 2001 and its subsequent review by a
qualified, independent mineral reserves consultant, the sulfide material on Bogoso and on various portions of Prestea
has been included in our proven and probable reserves and constitutes approximately 40% of our reserves. While
the sulfide feasibility study indicates that sulfide reserves can be profitably mined and processed at gold prices at or
above $275 per ounce, the cost to retrofit the Bogoso mill to process sulfide ore would require a minimum of
$20 million of new capital. We cannot assure you that we will have access to capital, whether from internal or
external sources, in the required amounts or on acceptable terms. While the processing technology envisioned in the
feasibility study has been successfully utilized at other mines, we cannot assure you, in spite of our testing,
engineering and analysis, that the technology will perform successfully at commercial production levels on the
Bogoso/Prestea ores. However, we do not presently anticipate start-up of sulfide processing operations prior to
2007, after currently known oxide and non-refractory ores are exhausted.
Development of Wassa in Ghana is subject to a number of uncertainties.
We are in the process of completing a feasibility study regarding the possible development of and commencement of
production at Wassa in Ghana using conventional carbon-in-leach processing techniques. We cannot assure you that
the results of the Wassa feasibility study will be favorable or that development or production will commence when
we currently anticipate. If the feasibility study is favorable, we cannot assure you that development will be
completed at the cost and on the schedule predicted in the feasibility study, or that production rates or costs
anticipated in the feasibility study will be achieved. Any development of Wassa is subject to all of the risks
described in this Form 10-K, including “Risk Factors — Operational Risks — The development and operation of
our mining projects involve numerous uncertainties”.
Declining gold prices could reduce our estimates of reserves and mineralized material and could result in
delays in development until we can make new estimates and determine new potential economic development
options under the lower gold price assumptions.
In addition to adversely affecting our reserve estimates and our financial condition, declining gold prices can impact
operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the
result of a management decision or may be required under financing arrangements related to the project. Even if the
project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause
substantial delays or may interrupt operations until the reassessment can be completed.
We are subject to a number of operational hazards that can delay production or result in liability to us.
Our activities are subject to a number of risks and hazards including:
• environmental hazards;
• discharge of pollutants or hazardous chemicals;
• industrial accidents;
11
• labor disputes;
• supply problems and delays;
• unusual or unexpected geological or operating conditions;
• slope failures;
• cave-ins of underground workings;
• failure of pit walls or dams;
• fire;
• changes in the regulatory environment; and
• natural phenomena such as inclement weather conditions, floods and earthquakes.
These or other occurrences could result in damage to, or destruction of, mineral properties or production facilities,
personal injury or death, environmental damage, delays in mining, delayed production, monetary losses and possible
legal liability. We may incur liability as a result of pollution and other casualties. Satisfying such liabilities may be
very costly and could have a material adverse effect on our financial position and results of operations.
Our mining operations are subject to numerous environmental laws and regulations that can adversely affect
operating and development costs.
We cannot assure you that compliance with existing regulations governing the discharge of materials into the
environment, or otherwise relating to environmental protection, in the jurisdictions where we have projects will not
have a material adverse effect on our exploration activities, results of operations or competitive position. New or
expanded regulations, if adopted, could affect the exploration or development of our projects or otherwise have a
material adverse effect on our operations.
As a result of the foregoing risks, project expenditures, production quantities and rates and cash operating costs,
among other things, may be materially and adversely affected and may differ materially from anticipated
expenditures, production quantities and rates, and costs. In addition, estimated production dates may be delayed
materially. Any such events could materially and adversely affect our business, financial condition, results of
operations and cash flows.
The development and operation of our mining projects involve numerous uncertainties.
Mine development projects, including our planned projects, typically require a number of years and significant
expenditures during the development phase before production is possible.
Development projects are subject to the completion of successful feasibility studies, issuance of necessary
governmental permits and receipt of adequate financing. The economic feasibility of development projects is based
on many factors such as:
• estimation of reserves;
• anticipated metallurgical recoveries;
•
• anticipated capital and operating costs of such projects.
future gold prices; and
Our mine development projects may have limited relevant operating history upon which to base estimates of future
operating costs and capital requirements. Estimates of proven and probable reserves and operating costs determined
in feasibility studies are based on geologic and engineering analyses.
Any of the following events, among others, could affect the profitability or economic feasibility of a project:
• unanticipated changes in grade and tonnage of ore to be mined and processed;
• unanticipated adverse geotechnical conditions;
• incorrect data on which engineering assumptions are made;
• costs of constructing and operating a mine in a specific environment;
• availability and cost of processing and refining facilities;
• availability of economic sources of power;
12
• adequacy of water supply;
• adequate access to the site;
• unanticipated transportation costs;
• government regulations (including regulations relating to prices, royalties, duties, taxes, restrictions on
production, quotas on exportation of minerals, as well as the costs of protection of the environment and
agricultural lands);
• fluctuations in gold prices; and
• accidents, labor actions and force majeure events.
Adverse effects on the operations or further development of a project may also adversely affect our business,
financial condition, results of operations and cash flow.
We need to continually obtain additional reserves for gold production.
Because mines have limited lives based on proven and probable reserves, we must continually replace and expand
our reserves as our mines produce gold. We currently estimate that Bogoso/Prestea has ten plus years of mine life
remaining without the development of additional reserves, but our estimates may not be correct. Our ability to
maintain or increase our annual production of gold will be dependent in significant part on our ability to bring new
mines into production and to expand existing mines.
Gold exploration is highly speculative, involves substantial expenditures, and is frequently non-productive.
Gold exploration involves a high degree of risk and exploration projects are frequently unsuccessful. Few prospects
that are explored end up being ultimately developed into producing mines. To the extent that we continue to be
involved in gold exploration, the long-term success of our operations will be related to the cost and success of our
exploration programs. We cannot assure you that our gold exploration efforts will be successful. The risks
associated with gold exploration include:
• the identification of potential gold mineralization based on superficial analysis;
• the quality of our management and our geological and technical expertise; and
• the capital available for exploration and development.
Substantial expenditures are required to determine if a project has economically mineable mineralization. It may
take several years to establish proven and probable reserves and to develop and construct mining and processing
facilities. As a result of these uncertainties, we cannot assure you that current and future exploration programs will
result in the discovery of reserves, the expansion of our existing reserves and the development of mines.
We face competition from other mining companies in connection with the acquisition of properties.
We face strong competition from other mining companies in connection with the acquisition of properties
producing, or capable of producing, precious metals. Many of these companies have greater financial resources,
operational experience and technical capabilities. As a result of this competition, we may be unable to maintain or
acquire attractive mining properties on terms we consider acceptable or at all. Consequently, our revenues,
operations and financial condition could be materially adversely affected.
Title to our mineral properties may be challenged.
Our policy is to seek to confirm the validity of our rights to title to, or contract rights with respect to, each mineral
property in which we have a material interest. However, we cannot guarantee that title to our properties will not be
challenged. Title insurance generally is not available, and our ability to ensure that we have obtained secure claim to
individual mineral properties or mining concessions may be severely constrained. We may not have conducted
surveys of all of the properties in which we hold direct or indirect interests and, therefore, the precise area and
location of these claims may be in doubt. Accordingly, our mineral properties may be subject to prior unregistered
agreements, transfers or claims, and title may be affected by, among other things, undetected defects. In addition,
we may be unable to operate our properties as permitted or to enforce our rights with respect to our properties.
13
We depend on the services of key executives.
We are dependent on the services of key executives including our President and Chief Executive Officer and a small
number of highly skilled and experienced executives and personnel. Due to the relatively small size of our
company, the loss of these persons or our inability to attract and retain additional highly skilled employees may
adversely affect the exploration and development of our properties, which could have a material adverse effect on
our business and future operations.
Our insurance coverage may be insufficient.
Our business is subject to a number of risks and hazards generally, including:
• adverse environmental conditions;
• industrial accidents;
• labor disputes;
• unusual or unexpected geological conditions;
• ground or slope failures;
• cave-ins;
• changes in the regulatory environment; and
• natural phenomena such as inclement weather conditions, floods and earthquakes.
Such occurrences could result in:
• damage to mineral properties or production facilities;
• personal injury or death;
• environmental damage to our properties or the properties of others;
• delays in mining;
• monetary losses; and
• possible legal liability.
Although we maintain insurance in amounts that we believe to be reasonable, our insurance will not cover all the
potential risks associated with our business. We may also be unable to maintain insurance to cover these risks at
economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to
cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a
result of exploration and production is not generally available to us or to other companies in the mining industry on
acceptable terms. We might also become subject to liability for pollution or other hazards which we cannot insure
against or which we may elect not to insure against because of premium costs or other reasons. Losses from these
events may cause us to incur significant costs that could have a material adverse effect upon our financial
performance and results of operations.
Governmental and Regulatory Risks
As a holding company, limitations on the ability of our operating subsidiaries to make distributions to us
could adversely affect the funding of our operations.
We are a holding company that conducts operations through foreign (principally African) subsidiaries and joint
ventures, and substantially all of our assets consist of equity in such entities. Accordingly, any limitation on the
transfer of cash or other assets between the parent corporation and such entities, or among such entities, could
restrict our ability to fund our operations efficiently. Any such limitations, or the perception that such limitations
may exist now or in the future, could have an adverse impact on our valuation and stock price.
We are subject to changes in the regulatory environment in Ghana.
Our mining operations and exploration activities in Ghana are subject to extensive regulation governing various
matters, including:
• licensing
• production
• development
• exports
14
• taxes
• water disposal
• toxic substances
• mine safety
• imports
• labor standards
• occupational health and safety
• environmental protections
Compliance with these regulations increases the costs of the following:
• planning
• designing
• drilling
• operating
• developing
• constructing
• mine and other facilities closure
We believe that we are in substantial compliance with current laws and regulations in Ghana. However, these laws
and regulations are subject to frequent change. For example, the Ghanaian government has adopted new, more
stringent environmental regulations. Amendments to current laws and regulations governing operations and
activities of mining companies or more stringent implementation or interpretation of these laws and regulations
could have a material adverse impact on us, cause a reduction in levels of production and delay or prevent the
development or expansion of our properties in Ghana.
Government regulations limit the proceeds from gold sales that may be withdrawn from Ghana. Changes in
regulations that increase these restrictions could have a material adverse impact on us, as Bogoso/Prestea is our
principal source of internally generated cash.
The Government of Ghana has the right to participate in the ownership and control of BGL and Wexford.
The Ghanaian government currently has a 10% carried interest in BGL, the Prestea Underground and Wexford. The
Ghanaian government also has or will have the right to acquire up to an additional 20% equity interest in BGL and
Wexford for a price to be determined by agreement or arbitration. We cannot assure you that the government will
not seek to acquire additional equity interests in our Ghanaian operations, or as to the purchase price that the
Government of Ghana would pay for any additional equity interest. A reduction in our equity interest could reduce
our income or cash flows from Bogoso/Prestea and amounts available to us for reinvestment.
We are subject to risks relating to exploration, development and operations in foreign countries.
Certain laws, regulations and statutory provisions in certain countries in which we have mineral rights could, as they
are currently written, have a material negative impact on our ability to develop or operate a commercial mine. For
countries where we have exploration or development stage projects we intend to negotiate mineral agreements with
the governments of these countries and seek variances or otherwise be exempted from the provisions of these laws,
regulations and/or statutory provisions. We cannot assure you, however, that we will be successful in obtaining
mineral agreements or variances or exemptions on commercially acceptable terms.
Our assets and operations are affected by various political and economic uncertainties, including:
• the risks of war or civil unrest;
• expropriation and nationalization;
• renegotiation or nullification of existing concessions, licenses, permits, and contracts;
• illegal mining;
• changes in taxation policies;
• restrictions on foreign exchange and repatriation; and
• changing political conditions, currency controls and governmental regulations that favor or require the awarding
of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a
particular jurisdiction.
Illegal mining occurs on our properties, is difficult to control, can disrupt our business and expose us to
liability.
In Ghana and French Guiana, artisanal miners illegally work on our properties from time to time, despite the fact
that we have hired security personnel to protect our properties. The presence of illegal miners could lead to project
15
delays and disputes regarding the development or operation of commercial gold deposits. The work performed by
the illegal miners could cause environmental damage or other damage to our properties, or personal injury or death
for which we could potentially be held responsible.
Our activities are subject to complex laws, regulations and accounting standards that can adversely affect
operating and development costs, the timing of operations, the ability to operate and financial results.
Our business, mining operations and exploration and development activities are subject to extensive Canadian, U.S.,
Ghanaian and other foreign, federal, state, provincial, territorial and local laws and regulations governing
exploration, development, production, exports, taxes, labor standards, waste disposal, protection of the environment,
reclamation, historic and cultural resources preservation, mine safety and occupational health, toxic substances,
reporting and other matters, as well as accounting standards. We are currently evaluating the impact of compliance
with Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (“SFAS
No. 143”), which establishes a uniform methodology for accounting for estimated reclamation and abandonment
costs under US GAAP. SFAS No. 143 will be required for our US GAAP reconciliation reporting for periods after
January 1, 2003. We may also adopt the principles of SFAS No. 143 for our financial statements for periods after
January 1, 2003, as it is expected that SFAS No. 143 will be mirrored by requirements under Cdn GAAP for periods
ending after January 1, 2004.
Market Risks
The market price of our common shares may experience volatility and could decline significantly.
Our common shares are listed on the American Stock Exchange, the Toronto Stock Exchange and the Berlin Stock
Exchange. Securities of micro-cap and small-cap companies have experienced substantial volatility in the past,
often based on factors unrelated to the financial performance or prospects of the companies involved. These factors
include macroeconomic developments in North America and globally and market perceptions of the attractiveness
of particular industries. Our share price is also likely to be significantly affected by short-term changes in gold
prices or in our financial condition or results of operations as reflected in our quarterly earnings reports. Other
factors unrelated to our performance that may have an effect on the price of our common shares include the
following:
• the extent of analytical coverage available to investors concerning our business may be limited if investment
banks with research capabilities do not continue to follow our securities;
• the limited trading volume and general market interest in our securities may affect an investor’s ability to trade
significant numbers of common shares;
• the relatively small size of the public float will limit the ability of some institutions to invest in our securities;
• under certain circumstances, our common shares could be classified as “penny stock” under applicable SEC
rules; in that event, broker-dealers in the United States executing trades in our common shares would be subject
to substantial administrative and procedural restrictions which could limit broker interest in involvement in our
common shares; and
• a substantial decline in our stock price that persists for a significant period of time could cause our securities to be
delisted from the American Stock Exchange, the Toronto Stock Exchange and the Berlin Stock Exchange, further
reducing market liquidity.
As a result of any of these factors, the market price of our common shares at any given point in time may not
accurately reflect our long-term value. Securities class action litigation often has been brought against companies
following periods of volatility in the market price of their securities. We may in the future be the target of similar
litigation. Securities litigation could result in substantial costs and damages and divert management’s attention and
resources.
You may have difficulty or be unable to enforce certain civil liabilities on us, certain of our directors and our
experts.
We are a Canadian corporation. Substantially all of our assets are located outside of Canada and the United States,
and our head office is located in the United States. Additionally, a number of our directors and the experts named in
this prospectus are residents of Canada. Although we have appointed Koffman Kalef, Suite 1900, 885 West Georgia
16
Street, Vancouver, British Columbia and Field Atkinson Perraton LLP, 1900, 350 - 7th Avenue S.W., Calgary,
Alberta as our agents for service of process in the Provinces of British Columbia and Alberta respectively, it may
not be possible for investors to collect judgments obtained in Canadian courts predicated on the civil liability
provisions of securities legislation. It may also be difficult for you to effect service of process in connection with
any action brought in the United States upon such directors and experts. Execution by United States courts of any
judgment obtained against us, any of the directors, executive officers or experts named in this prospectus in United
States courts would be limited to the assets of Golden Star Resources Ltd. or the assets of such persons or
corporations, as the case may be, in the United States. The enforceability in Canada of United States judgments or
liabilities in original actions in Canadian courts predicated solely upon the civil liability provisions of the federal
securities laws of the United States is doubtful.
We do not anticipate paying dividends in the foreseeable future.
We anticipate that we will retain all future earnings and other cash resources for the future operation and
development of our business. We do not intend to declare or pay any cash dividends in the foreseeable future.
Payment of any future dividends will be at the discretion of our board of directors after taking into account many
factors, including our operating results, financial condition, and current and anticipated cash needs.
Future sales of our common shares by our existing shareholders could decrease the trading price of the
common shares.
Sales of a large number of our common shares in the public markets, or the potential for such sales, could decrease
the trading price of our common shares and could impair our ability to raise capital through future sales of our
common shares. We completed sales of units, comprised of common shares and warrants, in January, July and
December 2002 at prices significantly less than the current market price of our common shares. Accordingly, a
significant number of our shareholders have an investment profit in our securities that they may seek to liquidate.
Substantially all of our common shares not held by affiliates can be resold without material restriction in the United
States, and Canada.
The existence of outstanding rights to purchase common shares may impair our ability to raise capital.
As of March 14, 2003, approximately 29.3 million common shares are issuable on exercise of warrants, option or
other rights to purchase common shares at prices ranging from Cdn$1.02 to $4.60. During the life of the warrants,
options and other rights, the holders are given an opportunity to profit from a rise in the market price of our common
shares with a resulting dilution in the interest of the other shareholders. Our ability to obtain additional financing
during the period such rights are outstanding may be adversely affected, and the existence of the rights may have an
adverse effect on the price of our common shares. The holders of the warrants, options and other rights can be
expected to exercise them at a time when we would, in all likelihood, be able to obtain any needed capital by a new
offering of securities on terms more favorable than those provided by the outstanding rights.
17
CONVERSION FACTORS AND ABBREVIATIONS
For ease of reference, the following conversion factors are provided:
1 acre
1 foot
1 gram per tonne
1 short ton (2000
pounds)
1 metric tonne
= 0.4047 hectare
1 mile
1 troy ounce
= 0.3048 meter
= 0.0292 ounce per short ton 1 square mile
= 0.9072 tonne
1 square kilometer
= 1.6093 kilometers
= 31.1035 grams
= 2.59 square kilometers
= 100 hectares
= 1,000 kg or 2,204.6
pounds
1 kilogram
= 2.2 pounds or 32.151 troy
ounces
The following abbreviations of measurements are used herein:
Au
g
g/t
ha
km
kms
kg
M
Note: All units in the text are stated in metric measurements unless otherwise noted.
= gold
= gram
= grams of gold per tonne
= hectare
= kilometer
= square kilometers
= kilogram
= meter
m2
m3
mg
mg/m3
t
oz
ppb
Ma
= square meter
= cubic meter
= milligram
= milligrams per cubic meter
= metric tonne
= troy ounce
= parts per billion
= million years
GLOSSARY OF TERMS
Note: The definitions of Proven and Probable Mineral Reserves and the definitions for Measured, Indicated and
Inferred Mineral Resources set forth below are those used in Canada as required in accordance with National
Instrument 43-101. The definitions of Proven and Probable Mineral Reserves are consistent with those prescribed
for use in the United States by the Securities and Exchange Commission and set forth in SEC Industry Guide 7.
Mineral Reserve
Proven Mineral Reserves
Probable Mineral Reserves
Mineral Resource
A Mineral Reserve is the economically mineable part of a Measured or Indicated
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at the time of reporting, that
economic extraction can be justified. A Mineral Reserve includes diluting
materials and allowances for losses that may occur when the material is mined.
A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting, that
economic extraction is justified.
A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated,
and in some circumstances a Measured Mineral Resource demonstrated by at least
a Preliminary Feasibility Study. This Study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be justified.
A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or
fossilized organic material in or on the Earth’s crust in such form and quantity and
of such a grade or quality that it has reasonable prospects for economic extraction.
The location, quantity, grade, geological characteristics and continuity of a
Mineral Resource are known, estimated or interpreted from specific geological
evidence and knowledge.
18
Measured Mineral Resource A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which
quantity, grade or quality, densities, shape, physical characteristics are so well
established that they can be estimated with confidence sufficient to allow the
appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely enough to
confirm both geological and grade continuity.
Indicated Mineral Resource An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which
quantity, grade or quality, densities, shape and physical characteristics, can be
estimated with a level of confidence sufficient to allow the appropriate application
of technical and economic parameters, to support mine planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and
reliable exploration and
through appropriate
techniques from locations such as outcrops, trenches, pits, workings and drill holes
that are spaced closely enough for geological and grade continuity to be
reasonably assumed.
information gathered
testing
Inferred Mineral Resource
Qualified Person
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which
quantity and grade or quality can be estimated on the basis of geological evidence
and limited sampling and reasonably assumed, but not verified, geological and
grade continuity. The estimate is based on limited information and sampling
gathered through appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes.
A “Qualified Person” means an individual who is an engineer or geoscientist with
at least five years of experience in mineral exploration, mine development,
production activities and project assessment, or any combination thereof, including
experience relevant to the subject matter of the project or report and is a member
in good standing of a Self-Regulating Organization.
We use the following definitions of the stages of the exploration and development process. There can be no
assurance that the terminology used by us is consistent with the terminology used by other companies in the mining
industry or by industry analysts.
exploration stage
feasibility stage
an exploration stage prospect typically involves testing one or more targets within an area
which have been determined to merit, first with a combination of geological, geochemical
and geophysical analysis, and then, once better defined targets have been established, by
testing at depth, typically by trenching and drilling, and generating the information
necessary to develop a three dimensional geologic model of the mineralized zone, which
may be used to demonstrate mineralized materials and/or reserves.
during the feasibility stage, exploration continues to further increase confidence in
mineralization while attempting to further expand them. During this stage, management
develops in detail the necessary engineering and costing for mining, processing, power
and infrastructure, as well as the designs for the plant and equipment required to
construct and operate a modern mining operation. It is at the end of this stage that
mineralization may be categorized as proven and/or probable reserves if a positive
mining decision is justified. The feasibility stage normally incorporates several phases of
work, which involve increasing levels of detail including (i) scoping study, (ii) pre-
feasibility study, and (iii) bankable feasibility study.
19
mine
mining is the process of transforming a reserve into benefits for its owners (debt, equity
and employees), governments and communities. Exploration continues during the
mining process and, in many cases, reserves are expanded during the life of the mine
operations as the exploration potential of the deposit is realized.
alteration any change in the mineral composition of a rock
brought about by physical or chemical means
anomaly a deviation from uniformity or regularity in
geochemical or geophysical quantities
assay to analyze the proportions of metals in an ore
basic an igneous rock having a relatively low silica
content, sometimes delimited arbitrarily as less than 54%
bio-oxidation a processing method that uses bacteria to
oxidize refractory sulfide ore to make it amenable to
normal oxide ore processing techniques such as carbon-in-
leach
Birimian a thick and extensive sequence of Proterozoic
age metamorphosed sediments and volcanics first identified
in the Birim region of southern Ghana
cash operating costs per ounce includes direct mining
and milling costs, stripping costs, mine site general and
administrative costs, third party smelting and refining costs
and by-product credits, but excludes
royalties and
production taxes. This is consistent with the Gold
Institute’s definition
CIL or carbon-in-leach an ore processing method
involving the use of cyanide where activated carbon which
has been added to the leach tanks is used to absorb gold
containing solutions
clastic a rock or sediment composed of broken fragments
derived from preexisting rocks or minerals
diamond drilling a variety of rotary drilling in which
diamond bits are used as the rock-cutting tool to produce a
recoverable core of rock for observation and assay
dip the angle that a structural surface, a bedding or fault
plane, makes with the horizontal, measured perpendicular
to the strike of the structure
disseminated where minerals occur as scattered particles
in the rock
dyke a near vertical fracture in the earth's crust, which has
been filled by an intrusive rock
fault a surface or zone of rock fracture along which there
has been displacement
felsic an adjective describing an igneous rock having most
light colored minerals and rich in Si, K and Na
fold a curve or bend of a planar structure such as rock
strata, bedding planes, foliation, or cleavage
formation a distinct layer of sedimentary rock of similar
composition
geochemistry the study of the distribution and amounts of
the chemical elements in minerals, ores, rocks, solids,
water, and the atmosphere
geological mapping the recording of geologic information
such as the distribution and nature of rock units and the
occurrence of structural features, mineral deposits, and
fossil localities
geophysics the study of the earth; in particular the physics
of
the earth’s
magnetosphere
geotechnical the study of ground stability
the atmosphere and
the solid earth,
a sequence of usually metamorphosed
granite a medium to coarse grained igneous intrusive rock
in which quartz constitutes 10 to 50 percent of the felsic
components
granodiorite
a medium to coarse-grained intrusive
igneous rock, intermediate in composition between quartz
diorite and quartz monzonite
greenstone
volcanic-sedimentary rock assemblages
heap leach a mineral processing method involving the
crushing and stacking of an ore on an impermeable liner
upon which solutions may be sprayed that dissolve metals
i.e. gold/copper etc.; the solutions containing the metals are
then collected and treated to recover the metals
hydrothermal the products of the actions of heated water,
such as a mineral deposit precipitated from a hot solution
intrusion; intrusive molten rock which is intruded
(injected) into spaces or fractures created in existing rock;
spaces are created by a combination of melting and
displacement
laterite highly weathered residual surficial soils and
decomposed rocks, rich in iron and aluminum oxides that
are characteristically developed in tropical climates
mafic an adjective describing an igneous rock composed
mostly of one or more ferromagnesian, dark-colored
minerals; also, said of those minerals
massive said of a mineral deposit, especially characterized
by a great concentration of ore in one place, as opposed to a
disseminated or vein-like deposit
metasediment a sedimentary rock which shows evidence
of having been subjected to metamorphism
metavolcanic a volcanic rock which shows evidence of
having been subjected to metamorphism
mineral
a naturally formed chemical element or
compound having a definite chemical composition and,
usually, a characteristic crystal form
mineralization a natural occurrence in rocks or soil of one
or more metalliferous minerals
non-refractory
that can be
ore containing gold
satisfactorily recovered by basic gravity concentration or
simple cyanidation
outcrop that part of a geologic formation or structure that
appears at the surface of the earth
Proterozoic
the
the more recent
Precambrian; rocks aged between 2500 and 550 million
years old
puts a financial instrument that provides the right but not
the obligation, to sell a specified number of ounces of gold
at a specified price.
pyritization the in situ alteration of a rock involving the
additional of sulfur to the rock mass in fluids which reacts
with both iron oxides and mafic minerals resulting in the
formation of Iron Sulfide (Pyrite) often referred to as “fools
gold”
quartz crystalline silica; silicon dioxide
refractory ore containing gold that cannot be satisfactorily
recovered by basic gravity concentration or simple
cyanidation
time division of
20
reverse circulation drilling (RC) a drilling method used in
geological appraisals whereby air or drilling fluid passes
inside the inner tube of a double tube system to a down-the-
hole percussion bit and returns to the surface outside the
inner tube but inside the outer tube carrying chips of rock
rotary air blast drilling (RAB), a drilling method used in
geological appraisals whereby the drilling fluid passes
inside the drill stem to a down-the-hole precision bit and
returns to the surface outside the drill stem carrying chips
of rock
thoroughly
a soft, earthy, clay-rich and
saprolite
decomposed rock formed in place by chemical weathering
of igneous, sedimentary or metamorphic rocks which
retains the original structure of the unweathered rock
shear zone a tabular zone of rock that has been crushed
and brecciated by many parallel fractures due to shear
strain
shear a form of strain resulting from stresses that cause or
tend to cause contiguous parts of a body of rock to slide
relatively to each other in a direction parallel to their plane
of contact
shield a large area of exposed basement rocks often
surrounded by younger rocks, e.g. Guyana Shield
silicification the in situ alteration of a rock which
involves an increase in the proportion of silica minerals
including quartz. The silica is frequently introduced by
hydrothermal solutions as for example in hot springs.
stock an igneous intrusion that is less than 100 square
kilometers in surface exposure
stockwork a mineral deposit in the form of a network of
veinlets diffused in the country rock
strike the direction or trend that a structural surface, e.g. a
bedding or fault plane, takes as it intersects the horizontal
strip to remove overburden in order to expose ore
sulfide a mineral including sulfur (S) and Iron (Fe) as well
as other elements
surficial situated, formed, or occurring on or close to the
Earth’s surface
syncline a concave downward fold, the core of which
contains the stratigraphically younger rocks
Tarkwaian a scattered group of mainly shallow water
sedimentary rocks of Proterozoic age named after the town
of Tarkwa in southern Ghana where they were found to be
gold bearing
total cash cost per ounce equals cash operating cost per
ounce plus royalties and production taxes. This is
consistent with the Gold Institute’s definition
ultramafic an igneous rock composed chiefly of mafic
minerals with unusually high % of Mg, Ca and Fe
vein a thin, sheetlike crosscutting body of hydrothermal
mineralization, principally quartz
volcanic massive sulfide (VMS) mineral deposits formed
by volcanic processes and the activities of thermal springs
at the bottom of bodies of water
volcanics those originally molten rocks, generally fine
grained, that have reached or nearly reached the Earth’s
surface before solidifying
volcano/sedimentary rocks composed of materials of both
volcanic and sedimentary origin
wall rock the rock adjacent to a vein
weathering the destructive process constituting that part of
erosion whereby earthy and rocky materials on exposure to
atmospheric agents at or near the Earth’s surface are
changed in character with little or no transport of the
loosened or altered material
21
ITEM 2. DESCRIPTION OF PROPERTIES
Introduction
The maps below show the locations of Bogoso, Prestea, Wassa and the Prestea Underground in Ghana, and of our
Paul-Isnard, Yaou and Dorlin exploration properties in French Guiana.
22
The table below summarizes information regarding certain of our properties, described in further detail below.
Property Status Table at December 31, 2002:
Property
Type of Interest
Bogoso
Prestea
Wassa
Prestea
Underground
Akropong
Trend
Obuom
Dorlin2
Yaou2
Paul Isnard
Government granted
mining leases held by
a 90% owned
subsidiary
Government granted
mining lease held by a
90% owned subsidiary
Government granted
mining lease held by a
90% owned subsidiary
Government granted
mining lease, held by a
54%1 managing
interest in joint venture
Option agreements.
100% ownership
56% interest in joint
venture
PER (Permit
Exclusif de
Recherches). 87%
including direct and
indirect ownership
PER (Permit
Exclusif de
Recherches). 87%
including direct and
indirect ownership
8 Concessions. 73%
ownership
Expiration
Date
8/21/17
8/16/18
7/6/31
9/16/22
129 square
kms
102 square
kms
7/6/31
129 square km
Property size
Status
Comments
95 square kms Operating mill facility
Sulfide feasibility
study complete
Ore from Prestea
processed at
Bogoso
Feasibility study
completion
scheduled by mid-
2003
Project managed
by BGL
Operating open pit mine
Inactive open pit mine with
past production. Feasibility
stage
Inactive underground mine
with extensive past production.
Currently being evaluated for
future production potential
Various
514 square km Active exploration properties
Exploration stage
Awaiting
renewal
1/31/06
44 square kms Active exploration property
Exploration stage
84 square kms Care and maintenance
Exploration stage
1/31/06
52 square kms Care and maintenance
Exploration stage
12/31/18
150 square km Care and maintenance
Exploration stage
PER (Permit
Exclusif de
Recherches). 73%
ownership
12/1/02
permit
applied for
283 square
kms
Care and maintenance
Exploration stage
1. Owned by BGL, our 90% owned subsidiary.
2. We own a 50% interest in Yaou and Dorlin and our 73% owned subsidiary, Guyanor owns a 50% interest.
BOGOSO/PRESTEA
Bogoso/Prestea consists of a gold mining/milling operation located along the Ashanti Trend in western Ghana,
approximately 35 kms northwest of the town of Tarkwa from where it can be reached by paved roads. A paved road
runs down most of the 18.5 kms length of the property and connects the town of Bogoso in the northeast with the
town of Prestea in the southwest. Another paved road provides access to a sealed airstrip located at the town of
Obuasi, some 115 kms to the north. The mining areas are connected by paved and gravel haul-roads to the Bogoso
mill.
Bogoso/Prestea is owned by BGL, one of our 90% owned Ghanaian subsidiaries. The Government of Ghana owns
the remaining 10% of BGL. The Government of Ghana is entitled at all times to hold a 10% carried interest in all
23
the rights and obligations of BGL. The Government of Ghana acquired this interest for no consideration and is not
required to contribute any funds to pay any BGL expenses.
Equipment and facilities at Bogoso/Prestea include several open pit mines, a nominal 6,000 tonne per day CIL gold
mill and a fleet of haul trucks, loaders and mining support equipment. In addition there are numerous ancillary
support facilities such as power and water supply equipment, haul roads, housing for management and technical
staff, a medical clinic, tailings storage facility, waste dumps, a warehouse, maintenance shops, offices and
administrative facilities.
Between our 1999 acquisition of Bogoso and 2001, we mined gold from pits at Bogoso, processing the ore at the
Bogoso mill to produce between 88,000 and 130,000 ounces of gold per year. In late 2001 we acquired Prestea
located adjacent to Bogoso and have since mined gold ore from Prestea, transporting the Prestea ore by truck to the
Bogoso mill for processing. Production in 2002, utilizing Prestea ores, was 124,000 ounces. We expect that the
main source of ore to the Bogoso mill for at least the next five years will be from Prestea.
The Government of Ghana initially granted BGL a 30-year mining lease for Bogoso in August 1987, giving BGL
the exclusive right to work, develop and produce gold in a mining area of 50 square kms. In August 1988, the
Government of Ghana granted BGL a second 30-year gold mining lease covering an additional 45 square kms area
adjacent to the first mining area.
In June 2001, BGL was granted a 30-year surface mining lease for Prestea by the Government of Ghana. The
surface lease allows mining of ores down to a depth of 200 meters below the surface. Prestea is located immediately
south of, and adjacent to Bogoso, and covers an aggregate area of 129 square kms. Under the three mining leases,
BGL holds gold mining rights in a mining area totaling 224 square kms, subject to the payment of nominal annual
rents.
The Bogoso Acquisition
On September 30, 1999, we and an unrelated company acquired 70% and 20%, respectively, of the common shares
of BGL. Total acquisition cost, including initial payments, future payments, financing costs and administrative costs
was $14.7 million with the Government of Ghana retaining a 10% equity interest. The Bogoso sellers received $6.5
million cash at September 30, 1999 and agreed to receive both contingent and non-contingent additional payments in
the future. Payment of all non-contingent amounts was completed by mid-2002.
Two contingent payments were still outstanding as of December 31, 2002. The original 1999 purchase agreement
required that a $2.0 million reserve acquisition linked payment would be due the Bogoso sellers if mineable reserves
equivalent to 50,000 ounces of gold or greater were to be acquired elsewhere in Ghana for processing at the Bogoso
mill before September 30, 2001. Acquisition of the Prestea surface mining lease, with its contained reserves in
excess of 50,000 ounces, triggered the reserve acquisition payment and in February 2003 we made the $2.0 million
payment to the Bogoso sellers.
We were also required to pay the Bogoso sellers an amount equal to $5.0 million plus subsequent increases for
inflation. The payment date is the first anniversary of the commencement of treatment of sulfide ore at the Bogoso
Mine, which we presently expect by no earlier than 2007. The Bogoso sellers agreed to accept an immediate
payment of $2.0 million to satisfy this obligation and this payment was made in February 2003.
In June 2001 we purchased the 20% minority interest of BGL, thereby raising our ownership to 90%. We paid
3,000,000 shares of our common stock and we cancelled a $1.9 million note receivable from the minority
shareholder. The stock and note together brought the total purchase price of the 20% minority interest to $2.9
million.
The Prestea Acquisition
A surface mining lease for Prestea was granted to us by the Government of Ghana on June 29, 2001, following
extended negotiations with PGR, Barnato Exploration Limited (“Barnex”) and the Government of Ghana. Two
separate transactions, one with Barnex and one with PGR, were required to facilitate the granting of the lease. Both
24
transactions were required to remove all prior claims on the property, which thereby allowed the Government of
Ghana to grant the new surface mining lease.
Pursuant to the agreement with Barnex, we issued to Barnex 3,333,333 common shares and 1,333,333 warrants to
subscribe for our common shares at a price of $0.70 per share for three years. In addition, we are paying a royalty to
Barnex on the first 1,000,000 ounces of production from Bogoso/Prestea. The royalty will vary, according to a gold
price formula, from a minimum of $6.00 per ounce at gold prices less than $260 per ounce to a maximum of $16.80
per ounce at gold prices at or above $340 per ounce. The royalty is to be paid quarterly and is determined by
multiplying the production for the quarter by a royalty rate that varies depending on the average spot gold price for
the quarter, as per the following table:
Average Spot Gold Price ($/oz)
Less than $260
More than $260 but less than $270
More than $270 but less than $280
More than $280 but less than $290
More than $290 but less than $300
More than $300 but less than $310
More than $310 but less than $320
More than $320 but less than $330
More than $330 but less than $340
More than $340
Royalty Rate ($/oz)
$6.00
$7.20
$8.40
$9.60
$10.80
$12.00
$13.20
$14.40
$15.60
$16.80
We also paid $2.1 million in cash to PGR, in connection with the Prestea acquisition, including $1.3 million in 2001
and $0.8 million in January 2002.
The total cost of acquiring Prestea was $8.0 million. This included $2.2 million for our stock and warrants issued to
Barnex, $2.1 million of cash paid to PGR, $2.0 million for the contingent liability to the Bogoso sellers which was
triggered by the acquisition of Prestea, $0.7 million of pre-production development costs and approximately $1.0
million in transactions costs. In addition to the $8.0 million of direct purchase costs listed above, $0.4 million of
unamortized Bogoso purchase costs and $1.4 million of costs associated with the purchase of the 20% minority
interest position in BGL during 2001, were included in the new Prestea amortization base, bringing the total
amortizable cost basis to $9.8 million.
Geology of Bogoso/Prestea
Bogoso/Prestea lies within the Eburnean Tectonic Province (1,800-2,166 Ma) in the West African Precambrian
Shield. The paleoproterozoic rocks that comprise most of the West African craton and host the major gold
mineralization in Ghana are subdivided into metasedimentary and volcanic rocks of the Lower Birimian, Upper
Birimian and Tarkwaian sequences.
The Lower Birimian is composed largely of phyllites, schists, greywackes and volcanoclastics, and grades into the
dominantly metavolcanic rocks (including lavas, pyroclastics, and some finer-grained metasedimentary rocks) of the
Upper Birimian. Unconformably overlying the Birimian are the continental clastics of the Tarkwaian sequence.
These clastics were derived from the weathering of Birimian rocks and granitic intrusions found within the Birimian.
The area is dominated by a major northeast-southwest trending structural fault zone referred to as the Ashanti Trend,
which hosts the Prestea, Bogoso, Obuasi and Konongo gold deposits, among others. Parallel to the Ashanti Trend is
the Akropong trend, which hosts the Ayanfuri deposit. The Akropong Trend is about 15 kms west of the Ashanti
Trend in the Bogoso region, and gradually converges with it, coalescing at Obuasi and forming the basis for the
world class Obuasi deposit, owned and operated by Ashanti Goldfields Company Limited.
In the Bogoso area, the faulted contact zone is known as the “Main Crush Zone” and passes through the central part
of the Bogoso property for its entire 18.5 km length. The Main Crush Zone lies within a structural corridor that
varies in width from 1,000 to 2,500 meters. Some 90% of the gold mined to date at Bogoso has come from the Main
25
Crush Zone with the larger deposits being located at bends and junctions along this major fault. Additional faults
and splays in the structural corridor may also be prospective for gold. The oxide ores tend to have fine-grained free
gold that has been liberated during the weathering of pre-existing sulfides and oxidation extends from surface down
to the approximate elevation of the water table. Below this, a transition zone of up to 20 meters of partially oxidized
material directly overlies fresh sulfide mineralization.
Prestea covers a 22 km stretch of the Ashanti Trend located immediately south of Bogoso. Within the concession,
the fault belt comprises an anastomosing network of faults with a dominant set of three or more northeasterly
striking faults that define a sinistral shear zone. These shears host the Prestea Main, East and West reef zones, in
addition to other minor reefs. Towards the south, in the vicinity of the Bondaye-Tuapem shafts, the braided shear
zone splits into two groups of discrete widely separated shears. The Tuapem mineralization continues along strike
of the fault belt, whereas the Bondaye mineralization bends southwards towards a highly prospective mineralized
target zone at Nsuta.
Historical Mining Operations at Bogoso
Initial commercial mining at Bogoso dates back to the early years of the 20th century, Marlu Gold Mining Areas
Ltd. began the first major mining operation in the Bogoso area in 1935, mining high-grade oxide ore from a series of
open pits extending along the north-east, south-west Ashanti trend at Bogoso. During its 20-year period of
operations from 1935 to 1955, Marlu produced over 900,000 ounces of gold at an average recovered grade of 3.73
g/t.
Billiton International Metals took control of Bogoso in the late 1980’s. Their initial feasibility study established a
mineable reserve of 5.96 million tonnes grading 4.0 grams gold per tonne, of which 461,000 tonnes (or less than
8%) comprised oxide ore. The feasibility study forecast gold recoveries of 83% from sulfide ore and 78% from
oxide ore and estimated a waste to ore ratio of 5.6:1. Construction of a mining and processing facility was
completed in 1991. The facility was designed to process oxide ores by using conventional CIL technology at a
design capacity of 1.36 million tonnes per year and to process sulfide ores by using flotation, fluid bed roasting and
CIL technology at a design capacity of 0.9 million tonnes per year. Operational difficulties with the fluid bed
roaster, forced closure of the flotation circuit and roaster in early 1994. Following closure of the roaster, Billiton
focused the Bogoso operations on oxide ore. Billiton’s exploration efforts were successful in adding to the available
quantity of oxide ore and Bogoso has operated as an oxide-only operation since 1994.
Historical Mining Operations at Prestea
Underground mining has been conducted at Prestea for more than 130 years. From 1873 to 1965, Prestea was then
comprised of a number of different licenses operated by independent mining companies, which, in 1965, were
amalgamated by the Government of Ghana into Prestea Goldfields Limited, under the aegis of the State Gold
Mining Corporation.
In 1994 JCI Limited (“JCI”) won a bid for participation in the Prestea mining operation. Subject to an agreement
between the Government of Ghana, JCI and Barnex, a subsidiary of JCI, assumed management of the Prestea
Underground in June 1996. While improvements were made in the productivities and efficiencies of the
underground operation, an exploration program aimed at delineating near surface resources amenable to open pit
mining was commenced.
However, owing to the declining gold price and continued financial losses, JCI terminated its management role of
the underground mining operation in September 1998, and elected to shut down the underground workings. This
action was opposed by the Prestea workforce and management, who subsequently pooled their severance payments
and formed PGR to operate the mine. They were granted a six-month permit by the Government of Ghana to run the
mine in December 1998.
In response to local political pressure, and to the de facto continuation of underground operations by PGR, in
November 2000 the Government of Ghana abrogated the Barnex lease over Prestea, and formally awarded it to
PGR. This was followed in 2000 and 2001 by negotiations involving the Government of Ghana, PGR, BGL and
JCI, over the mining potential of the Prestea area. The eventual outcome of these discussions was the issuance in
26
June 2001 of two separate leases for the property, one being for surface rights down to a depth of 200 meters below
general ground elevation, and one for all mineralization below the 200 meters mark. The surface lease was awarded
to BGL and the underground lease to PGR, with the joint commitment of both parties to work together to ensure
effective and harmonious relations between the two operations.
BGL started surface mining operations on the Prestea concession in September 2001, with the first ore being
processed at the Bogoso mill in October 2001. Total gold production from the Prestea area since recorded mining
commenced in the 1870s is reported by the Ghana Chamber of Mines to be in excess of nine million ounces, making
it the second largest historical gold producing area in Ghana, after the Obuasi mine.
Production
Gold production from the existing Bogoso mill from start-up in 1991 through 2002 has totaled 1,227,384 ounces.
Gold production from January to December 2002 was 124,400 ounces, compared to 87,936 ounces in 2001. This
41% increase in gold production for 2002 compared to 2001, is attributable to higher gold recoveries achieved when
operating on Prestea ore during 2002 versus Bogoso transition ores during much of 2001.
Comparisons of operating parameters and production with previous years are as follows:
Gold Produced
Ounces
2002
2001
2000
124,400
87,936
108,643
Cash Cost
(excluding
Royalties)
$/oz
193
263
201
Ore Tonnes
Milled
Tonnes
2,271,747
2,098,165
2,139,279
Ore Grade
Milled
g/t
2.31
2.69
2.56
Recovery
%
Throughput
tpd
74.4
49.6
64.4
6,223
5,748
5,845
During 2002, all ore feed to the Bogoso process plant came from oxide and non-refractory deposits at Prestea. Until
November 2002, the feed came from the Buesichem, Beposo and Brumasi pits, at the northern end of Prestea. In
November 2002, an environmental permit was received to allow mining from the Plant North pit, in the center of
Prestea, close to the Prestea township, and this has now become the sole producing pit, with the previously mined
pits being rehabilitated.
Reserves
The following table presents the estimated Proven and Probable Mineral Reserves for Bogoso/Prestea, including
stockpile ores, as of December 31, 2002 and 2001. See “Item 2. - Bogoso/Prestea” for a description of
Bogoso/Prestea and “Risk Factors” for a discussion of factors that could affect the following estimates.
Oxide, transition and non-refractory sulfide ores are suitable for processing in the existing Bogoso mill. Refractory
transition and sulfide ores will be processed through the planned sulfide mill facility.
27
Bogoso/Prestea Proven and Probable Mineral Reserves
December 31, 2002
December 31, 2001
Proven &
Probable
Reserves
(tonnes)
4,848,844
1,662,503
4,921,864
1,938,718
9,700,352
23,072,281
20,765,052
Ore type
Oxide
Transition
Non-
refractory
sulfide
Refractory
Transition
Refractory
Sulfide
Total
90% Share
Grade
(g/t)
Contained
Gold (oz)
Proven &
Probable
Reserves
(tonnes)
Grade
(g/t)
2.01
2.77
3.62
2.92
3.19
2.98
2.98
313,727
148,058
5,351,395
834,295
572,834
3,600,781
181,720
1,987,397
994,715
2,211,054
1,989,948
7,322,678
19,096,546
17,186,891
2.07
2.78
3.29
3.01
3.50
2.97
2.97
Contained
Gold (oz)
356,340
74,457
380,305
192,582
823,642
1,827,326
1,644,593
We have reported Proven and Probable Mineral Reserves for year-end 2002 using a $300 per ounce gold price
versus $275 per ounce which was used in 2001. The Mineral Reserves are those ore tonnages contained within
practical design pit envelopes or within economically optimized pit envelopes, designed for the various ore types
including oxide, transition, non-refractory sulfide and refractory sulfide mineralized material. Gold recovery
assumptions vary by ore type: gold recovery from oxide ores are estimated to be 80% to 92%, for transition ores
79% to 85%, for non-refractory sulfides 83% to 85% and for refractory sulfides 83% to 89%. We have used
appropriate current and predicted mine operating costs and performance parameters.
Our Proven and Probable Mineral Reserves are estimated in conformance with definitions set out in Canada’s
National Instrument 43-101. Also see our “Glossary of Terms”. The definitions of Proven and Probable Mineral
Reserves are considered consistent with the definitions for proven and probable reserves prescribed for use in the
United States by the U.S. Securities and Exchange Commission and set forth in SEC Industry Guide 7. The Proven
and Probable Mineral Reserves are those ore tonnages contained within economically optimized pit envelopes,
designed for the oxide, transition and refractory sulfide mineral deposits.
The Proven and Probable Mineral Reserves at Bogoso/Prestea on December 31, 2002 stood at 23.1 million tonnes at
an average grade of 2.98 g/t, representing approximately 2.2 million ounces of gold. This is compared to Proven
and Probable Mineral Reserves at December 31, 2001 of 19.1 million tonnes at an average grade of 2.97 g/t,
representing approximately 1.8 million ounces of gold. The Qualified Person responsible for supervising the
estimation of reserves at Bogoso/Prestea is Mr. Dave Alexander, Projects Planning Manager. Mr. Alexander is a
qualified mining engineer, is a member of the Institution of Mining and Metallurgy, and is a Chartered Engineer
under the auspices of the Engineering Council of UK.
The increase in our Mineral Reserves since December 31, 2001 is the result of ongoing exploration work largely at
Prestea. This work has identified significant additional mineralized material both along the strike of the deposits
and at depth and resulted in greater certainty in some of the existing mineralized material. Drill results and test work
carried out on samples from the Prestea mineral deposits indicates that the material can be successfully treated
through the Bogoso mill and consequently this material has been converted into Mineral Reserves with due regard of
the effects of mining losses and dilution, and incorporated into the current Bogoso/Prestea mining plan.
Non Reserves
Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Mineral
Resources
This section uses the terms “measured mineral resources” and ‘indicated mineral resources”. We advise
U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to
28
assume that any part or all of the mineral deposits in these categories will ever be converted into
reserves.
Cautionary Note to U.S. Investors concerning estimates of Inferred Mineral Resources
This section uses the term “inferred mineral resources”. We advise U.S. investors that while this term is
recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not
recognize it. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of the
inferred mineral resources will ever be upgraded to a higher category. Under Canadian rules estimates of
inferred mineral resources may not form the basis of feasibility or other economic studies. U.S investors
are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically
or legally mineable.
At December 31, 2002, the estimated Measured and Indicated Mineral Resources, exclusive of that part of the
Mineral Resources converted to Proven and Probable Mineral Reserves, at Bogoso/Prestea was 19.9 million tonnes
grading 2.97 g/t. In addition, there are 23.9 million tonnes of Inferred Mineral Resource at an average grade of 2.91
g/t.
Bogoso/Prestea Mineral Resource Estimates as of December 31, 2002
Measured
Indicated
Measured & Indicated
Inferred
Grade g/t
Tonnes
(000)
Grade g/t
Tonnes
(000)
Grade g/t
Ounces
Gold (000)
Tonnes
(000)
Grade g/t
Tonnes
(000)
1,823
578
Deposits
Oxide
Transition
Non-
refractory
Sulfide
Refractory
Transition
Refractory
Sulfide
Total
90% Share
3.44
3.00
0
490
0
2.12
1,823
1,068
879
5.35
8,318
2.66
9,197
369
2.98
518
2.81
886
2,212
5,861
5,275
3.41
3.64
3.64
4,775
14,101
12,691
2.77
2.69
2.69
6,987
19,962
17,965
3.44
2.59
2.92
2.88
2.97
2.97
2.97
202
89
1,298
631
2.33
2.87
864
14,973
3.09
82
199
0.00
667
1,904
1,714
6,859
23,960
21,564
2.71
2.91
2.91
Our Mineral Resources for Bogoso/Prestea, which are reported exclusive of the Proven and Probable Mineral
Reserves, have been estimated in conformance with definitions set out in Canada’s National Instrument 43-101.
Also see our “Glossary of Terms”.
The Mineral Resources have been estimated using a $325 per ounce gold price and historic and predicted mining
and processing costs and metallurgical recoveries. The cut off grades used vary between 0.9 and 1.4 g/t for non-
refractory oxide, transition and non-refractory sulfide resources and between 1.8 and 2.0 g/t for refractory sulfide
and transition resources.
The Mineral Resource has been estimated using mining-processing costs between $7.49 to $9.16 per tonne for oxide
material, between $13.80 and $15.17 per tonne for refractory transition material, between $15.13 and $15.41 per
tonne for refractory sulfide material, between $9.51 and $9.96 per tonne for transitional material and between
$10.43 and $10.88 per tonne for non-refractory sulfide material. Processing recoveries between 80% to 87%, 80%
to 83%, and 83% to 86% were used for non-refractory oxide, transition, non-refractory sulfide, refractory transition
and refractory sulfide material respectively. An overall mining recovery of 95% of the ore tonnes was also applied
for all materials. Processing costs and recoveries for transition and oxide materials are based on historic numbers
achieved with the existing CIL plant. Refractory sulfide processing costs and recoveries has been based on estimates
for bio-oxidation based on variability and pilot test work conducted on drill core.
29
During October 2001, as required by the Ontario Securities Commission, an independent technical report was
produced by Associated Mining Consultants Ltd (“AMC”) on our behalf. This report is still current under the
guidelines contained in Canada’s National Instrument 43-101.
The Refractory sulfide portion of the Mineral Resource estimate was derived from 1,139 reverse circulation drill
holes totaling 35,251 meters, 517 diamond drill holes totaling 52,654 meters and 5,941 rotary air blast holes totaling
137,677 meters. Included in the drilling above were 221 new drill holes totaling 24,450 meters which were drilled
during 2000 and 2001 as part of our sulfide feasibility study, of which 8,187 meters were HQ or PQ core. This
includes 1,110 meters of oriented core for geotechnical and hydrogeological modeling.
Resource estimates for Prestea are based on drilling carried out by JCI and Barnex, who completed 1,003 drill holes
totaling 88,331 meters of diamond, reverse circulation and rotary air blast drilling between July 1995 and April
1999. This comprised 48,604 meters of reverse circulation drilling, 36,915 meters of diamond drilling and 2,813
meters of rotary air blast drilling and resulted in 95,182 analytical samples. During 2002 we completed additional
drilling on the Prestea property including, 140 reverse circulation holes totaling 14,237 meters, 462 rotary air blast
holes totaling 11,779 meters, and five diamond drill holes totaling 933 meters. This new drilling combined with the
existing data has been used to produce the end of 2002 Mineral Resource estimates.
The information in this report that relates to the estimation of the Bogoso/Prestea Mineral Resource is based on
information compiled and/or validated by Mr. S. Mitchel Wasel, Exploration Manager-Ghana. Mr. Wasel qualifies
as the Qualified Person being a qualified geologist who has 15 years of experience in gold and base metal
exploration and is a Member of the Australasian Institute of Mining and Metallurgy.
THE WASSA PROPERTY
Wassa is located in western Ghana approximately 35 kms east of Bogoso/Prestea. Wassa is currently inactive but
includes an open pit mine, heap leach pads, processing equipment (crusher, agglomeration plant, conveyors, and
gold recovery plant), parts and supplies inventory, maintenance shops, administrative offices, an electric power
generating facility, housing for employees, a community center and miscellaneous other ancillary facilities. All
assets are less than five years old, functional and in good repair.
Paved roads are complete from Cape Coast to Twifu-Praso, some 28 kms from the project site. The laterite road
from Twifu-Praso to Akyempim has been recently upgraded as far as Ateiku. The mine can be reached from Bogoso
via Tarkwa via a paved road to the town of Abosso or via Insu which is a shorter un-paved route.
Wassa Acquisition
We acquired our 90% interest in Wassa on September 13, 2002. The remaining 10% interest is owned by the
Government of Ghana. Wassa was developed by a former owner in the late 1990s at a capital cost of $43 million as
a conventional open pit, heap leach gold operation and operated for approximately two years producing
approximately 90,000 ounces per year. Operations were suspended in mid-2001. In 2001, the secured lenders to the
project enforced their security rights in the project and, following a bidding process, agreed to sell the Wassa asset to
us.
We paid the Wassa Seller, a syndicate of banks led by Standard Bank London Limited, an initial consideration of
$1.6 million at closing and assumed debt of $1.8 million. We also agreed to pay to the Wassa Sellers two separate
royalties on future production. The seller-provided debt is repayable over a four-year term beginning on December
13, 2003 with installments following every three months thereafter, with the final payment on September 13, 2007.
The interest rate is LIBOR plus 2.5% until gold production begins and LIBOR plus 2.0% after gold production
begins. Interest on the initial $1.8 million accruing prior to the initiation of gold production at Wassa will be
capitalized into the loan.
The first royalty is to be paid quarterly and the amount of the payments will be determined by multiplying the
production from Wassa for each quarter by a royalty rate of $7.00 per ounce produced. The royalty rate is subject to
increase by $1.00 per ounce for each $10.00 increase in the average market price for gold for each quarter above
30
$280 per ounce up to a maximum of $15.00 per ounce at gold prices of $350 per ounce and above. The second
royalty is a flat $8.00 per ounce, and is capped at $5.5 million.
We also assumed a reclamation liability of approximately $2.3 million for restoration of the environmental
disturbance at Wassa as of the date of the acquisition. The amount of the restoration liability was determined by an
independent environmental engineering firm, commissioned by us to establish the amount of the liability.
Geology of Wassa
Wassa lies within the Eburnean Tectonic Province (1,800-2,166 Ma) in the West African Precambrian Shield. The
paleoproterozoic rocks that comprise most of the West African craton and host the major gold mineralization in
Ghana are subdivided into metasedimentary and volcanic rocks of the Birimian, and Tarkwaian sequences.
Birimian rocks are composed largely of phyllites, schists, greywackes, volcanoclastics, and metavolcanic rocks
(including lavas and pyroclastic rocks). Overlying the Birimian are the continental clastics of the Tarkwaian
sequence. The Tarkwaian clastics were derived from the weathering of an uplifted continental edifice partially
composed of Birimian rocks and granitic intrusions.
Wassa is hosted within the same Birimian volcano-sedimentary greenstone package as Bogoso/Prestea. Wassa is
situated on the southeastern limb of the Tarkwa Syncline while Bogoso and Prestea occur along the northwestern
limb. The northwestern belt hosts the Obuasi, Prestea, and Bogoso gold mines the southeastern limb also is
characterized by gold mines and mineral occurrences. Tarkwaian hosted deposits along the south eastern limb
include Goldfield’s Tarkwa and Abosso mines, Birimian hosted gold occurrences include St. Jude’s Hwini-Butre
property and Wassa.
Birimian rocks at Wassa have been affected by at least three phases of deformation, producing a polyphase fold
pattern in the region. Discrete high-strain zones locally dissect this fold system. The structural history of the Wassa
area is important in that the various deformational events have been responsible for the emplacement of the gold
mineralization as well as the current day geometry of the ore zones themselves. Ore shoots at the Wassa mine are
related to vein swarms and associated sulfides that formed during the first and second phase of ductile deformation,
some mineralization may also be hosted in tensional veins of the third phase of deformation.
Stratigraphically the Wassa area is underlain by mafic and felsic volcanics with minor interdigitated graphitic shales
and terrigeneous sediments (greywacke). The stratigraphy can be generally subdivided into three principal
sequences from youngest to oldest: interlayered thin mafic and felsic volcanic flows; a relatively thick felsic
volcanic flow; and interlayered greywacke, mafic volcanic flows and a basal diorite.
The first two phases of deformation have severely buckled the entire stratigraphic sequence underlying the region,
producing tight fold patterns and discrete shear zones. The third phase of deformation is enigmatic in the sense that
it produced a flat lying crenulation cleavage that can only be associated with a rock load that would have been
superimposed onto the region. Rock loading likely was superimposed tectonically by the means of thrust faulting
and the subsequent stacking of rock on top of the now exposed Wassa stratigraphic packages.
Non Reserves
Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Mineral
Resources
This section uses the terms “measured mineral resources” and ‘indicated mineral resources”. We advise
U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to
assume that any part or all of the mineral deposits in these categories will ever be converted into
reserves.
Cautionary Note to U.S. Investors concerning estimates of Inferred Mineral Resources
This section uses the term “inferred mineral resources”. We advise U.S. investors that while this term is
recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not
31
recognize it. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of the
inferred mineral resources will ever be upgraded to a higher category. Under Canadian rules estimates of
inferred mineral resources may not form the basis of feasibility or other economic studies. U.S investors
are cautioned not to assume that part or all of the inferred mineral resource exists, or is economically
or legally mineable.
At December 31, 2002, the estimated Measured and Indicated Mineral Resource at Wassa was 17.8 million tonnes
grading 1.29 g/t. In addition, there are 26.0 million tonnes of Inferred Mineral Resource at an average grade of 1.15
g/t.
Wassa Mineral Resource Estimates as of December 31, 2002
Measured
Indicated
Measured & Indicated
Inferred
Deposits
Oxide
Non-
refractory
Sulfide
Heap Leach
Pads
Total
90% Share
Tonnes
(000)
Grade g/t
Tonnes
(000)
Grade g/t
Tonnes
(000)
Grade g/t
Ounces
Gold (000)
Tonnes
(000)
Grade g/t
0
0
0
0
0
0.00
3,305
1.13
3,305
1.13
120
3,319
1.07
0.00
9,287
1.64
9,287
0.00
0.00
0.00
5,177
17,770
15,993
0.75
1.29
1.29
5,177
17,770
15,993
1.64
0.75
1.29
1.29
489
25,523
1.16
126
735
661
0
28,843
25,958
0.00
1.15
1.15
Our Mineral Resource estimate for Wassa has been estimated in conformance with definitions set out in Canada’s
National Instrument 43-101. Also see our “Glossary of Terms”.
The Mineral Resource has been estimated using a $325 per ounce gold price and historic and predicted mining and
processing costs and metallurgical recoveries. The cut off grades used vary between 0.4 g/t and 0.6 g/t. The
resource estimates have been estimated using mining-processing costs between $5.66 to $6.40 per tonne and
processing recoveries between 92 and 93%. An overall mining recovery of 95% of the ore tonnes was also applied
for all materials.
As required by the Ontario Securities Commission, an independent technical report is currently being produced by
Associated Mining Consultants Ltd (“AMC”) on our behalf and we expect it to be filed in Canada and the U.S. in
April 2003.
Mineral Resource estimates for Wassa were based on the data set collected by SGL consisting of 934 reverse
circulation drill holes totaling 74,485 meters, and 124 diamond drill holes totaling 17,822 meters. As part of the due
diligence and ongoing feasibility exercise GSR completed 765 RAB holes totaling 18,710 meters, 295 RC holes
totaling 15,198 meters, 5,215 meters of RC pre-collar and 76 diamond drill holes totaling 9,357 meters.
The information in this report that relates to the estimation of the Wassa Mineral Resource is based on information
compiled and/or validated by Mr. S. Mitchel Wasel, Exploration Manager-Ghana. Mr. Wasel qualifies as the
Qualified Person being a qualified geologist who has 15 years of experience in gold and base metal exploration and
is a Member of the Australasian Institute of Mining and Metallurgy.
Historical Mining Operations at Wassa
Mechanized gold mining began at Wassa in 1999 following approximately 10 years of exploration work by various
parties. The property was developed by a consortium of European mining entities under the name of Satellite
Goldfields Ltd. (“Satellite”). The Satellite operation consisted of an open pit mine and a three million tonne per
year conventional heap leach operation. Gold production was approximately 90,000 ounces per year in 2001 and
32
2000. Operations under the Satellite entity, ceased in mid-2001. See “Wassa Acquisition” above for subsequent
details.
Our Involvement
We are currently working on a feasibility study to determine if Wassa can be reactivated on a profitable basis. A
drilling program has been designed and carried out in conjunction with a feasibility study to evaluate the gold
potential of the property. We are also conducting engineering and design studies which indicate that it may be
possible to establish profitable operations at Wassa utilizing conventional CIL technology. CIL technology should
provide better gold recovery and lower unit costs than was achieved during the earlier heap leach operational phase.
We expect to complete the reserve analysis and feasibility study by mid-2003 and if warranted, construction of a
CIL mill facility would begin immediately thereafter. The estimated capital cost of the CIL plant and associated
start-up costs is expected to be approximately $14 million. Gold production could begin by early 2004. Most of the
existing infrastructure, including the crushers, conveyors, the power plant, haul roads and adsorption plant, as well
as the town site and administrative facilities would be useable in a CIL operation.
PRESTEA UNDERGROUND PROPERTY
The Prestea Underground has produced approximately nine million ounces of gold during the last 130 years, the
second highest output of any Ghanaian mine. The underground workings are extensive, reaching depths of
approximately 1,400 meters and extending along strike for approximately ten kms. Underground workings can
currently be accessed via two shafts, one near the town of Prestea and a second approximately four kms to the
southwest. Past mining was concentrated along a steeply dipping tabular northeast trending shear zone that was
mineralized with gold-bearing quartz veins. Gold was also disseminated in the crushed rock of shear zones. Cut-
and-fill mining methods were employed in most of the past operations due to the rock conditions in the shear zones.
Underground operations ceased in early 2002, following an extended period of low gold prices.
Access to the mine site is via a paved road maintained by the Ghanaian government. A rail line connects the town
of Prestea to the town of Tarkwa, a major mining supply center approximately 25 kms to the east, but there is
currently no service on the line.
We are currently engaged in a program to recondition the two shafts and their associated hoists, which are in good
operational condition. Ancillary facilities include an administrative office, maintenance shops, a warehouse and
electrical substations. The 70 year-old mill facility was demolished by BGL in 2002 to gain access to the surface
reserves now being produced by BGL. Any potential future production from the Prestea Underground would likely
be trucked to the Bogoso mill for processing.
The Prestea Underground is contained within a mining lease which covers the same area as the surface mining lease
granted to BGL on June 29, 2001. The surface mining lease is restricted to a depth of 200 meters below the surface
and the underground mining lease is restricted to material deeper than 200 meters below the surface. The
underground mine lies directly beneath some of the surface reserves now being mined by BGL. The consolidation of
the underground mine with the activities of BGL is therefore a natural progression to the orderly and economic
development of the area.
Prestea Underground Acquisition
In March 2002, BGL entered into an agreement with PGR, the Ghana Mineworkers Union and the Ghana
government, among others, relating to the Prestea Underground. The salient features of the agreement are as
follows:
(i)
the Prestea Underground would be shut down and put on care and maintenance;
(ii)
the mining lease over the Prestea Underground would be transferred from PGR to BGL, to be held by
BGL on behalf of a joint venture between BGL, PGR and Government. BGL had an initial 45%
interest in the joint venture, as did PGR. The Government of Ghana retained a 10% interest;
(iii)
BGL would take over the management of the Prestea Underground;
33
(iv)
(v)
BGL would commence an assessment of the safety and economic viability of the underground mine,
which could take as much as two years to complete; and
certain infrastructure associated with the Prestea Underground would be decommissioned and
demolished by BGL to make way for the development of BGL’s surface mining operations at Prestea.
Pursuant to the new agreement, BGL, on behalf of PGR, paid $1.9 million of employee back pay and severance
costs to PGR’s former employees, each of whom entered into individual separation agreements with PGR. In
addition, BGL paid approximately $0.2 million cash to PGR during 2002 and made an additional payment of $0.3
million, bringing the total cost of our initial 45% interest in the joint venture to $2.4 million.
All aspects of the joint venture agreement as listed above, were carried out in 2002. BGL’s subsequent spending on
care and maintenance and on geological and engineering studies raised BGL’s interest in the joint venture to 54% by
the end of 2002.
Geology of the Prestea Underground
Three major Proterozoic stratigraphic units can be identified in the area: the Lower Birimian, made up mostly of
argillaceous and arenaceous sediments, overlain by the Upper Birimian (basic to acid volcanics mixed with
tuffaceous sediments) which are in turn overlain by the Tarkwaian Group (conglomerates, quartzites and phyllites).
This sequence has been intruded by large Cape Coast and smaller Dixcove granitoids as well as by mafic dykes and
sills. All these units have undergone low to moderate greenschist metamorphism at approximately 1.8 Ma during
the waning stages of the Eburnean Orogeny. It is also during that period that ore-related folding and shearing
occurred.
The Prestea deposits are associated with the same Konongo-Axim shear zone which extends over 220kms and which
accounts for 80% to 90% of the total quartz lode-hosted gold extracted in Ghana. Other mines located along the
same shear are the Bogoso pits, Obuasi and Konongo.
Prestea is located on the western limb of an overturned isoclinal mega syncline. The rocks strike NE-SW and dip
steeply 65° to 75° to the NW. The younging direction is towards the SE. Both the Birimian and the Tarkwaian have
been subjected to complex polyphase deformation. Folding is intense, tending to be isoclinal with the fold axis
trending parallel to the rock units. Faulting also tends to follow the fold axis strike and lies close to the contact
between the lower and upper Birimian units.
Two types of gold hosts have historically been recognized at Prestea: shear-related hydrothermal quartz veins; and
disseminated sulfide-hosted gold mineralization associated with metavolcanic pods.
The veins are crack-and-seal types with country rock enclaves (generally phyllites which are often mineralized
themselves) encapsulated within the composite vein mass. The veins (locally called “reefs”) are intermittently
developed, steeply plunging pod-shaped quartz lenses located either within the shear itself or in the extension joints
in the footwall of the shear. They are typically narrow (1-2 meters) and have short strike length relative to their
down plunge extension. The shear itself is marked by a carbonaceous or graphitic gouge horizon. Where the shear
is devoid of quartz veining, it usually carries little or no gold.
Anastomozing branches from the main shear zone occur in places, giving rise to both footwall and hanging wall
veins that transgress stratigraphy.
There are essentially three reefs which have been mined at Prestea, by decreasing order of importance:
•
•
•
the Main Reef,
the West Reef,
the East Reef.
The Main Reef is the most laterally persistent of the three and has been extensively mined. The West Reef lies in
the Main Reef’s hanging wall whereas the East Reef is found in the footwall. Cross-sections show that the Main and
34
West Reefs diverge at depth. While the East Reef is a minor ore body in the Central Shaft sector, it is the principal
source of gold in the southern portion of the mine around Bondaye Shaft.
Towards the south the shear splays out which may result in a greater number of ore bodies over a larger structural
corridor.
The shear zone also encompasses altered metavolcanic pods within which stock work sulfide (mainly pyrite and
acicular arsenopyrite) and associated gold mineralization have been recorded. These pods tend to be found in the
footwall of the Main Reef and may have acted as buttresses against which the shear could jog and create dilatational
traps for hydrothermal fluids to precipitate. The metavolcanics have en-echelon type arrangements and are
elongated parallel to the shear strike while cross-sections show the pods pinching and swelling downdip. They
range in thickness from a few meters to several 10’s of meters. Their true nature is still open to question as some
workers have categorized them as strongly carbonatized and sericitized greywackes whiles others have identified
saussuritized glass shards and remnants of ferro-magnesian minerals that would qualify them as basic to
intermediate tuffs.
MINING IN GHANA
Ghana is situated on the West Coast of Africa, approximately 750 kms north of the equator on the Gulf of Guinea.
Accra, the capital city of Ghana, is located on the Greenwich Meridian. After a period as a British colony, Ghana
achieved independence in 1957 and it is now a republic with a democratically elected government. Ghana has a
population of approximately 19 million people. English is the official and commercial language. The total land area
of the country is approximately 238,000 square kms and the topography is relatively flat. Ghana has a tropical
climate with two rainy seasons and two dry seasons.
Rights to explore and develop a mine are controlled through the Minerals Commission, a governmental organization
designed to promote and control the development of Ghana’s mineral wealth. A company or individual can apply to
the Minerals Commission for a renewable exploration concession granting exclusive rights to explore for a
particular mineral in a selected area for a period of two years. When exploration has successfully delineated a
mineable reserve, an application is made to the Minerals Commission for conversion to a mining lease, granting a
company the right to produce a specific product from the concession area for a period of normally 20 years.
Production must begin within two years of the date of granting a mining lease.
Government of Ghana Special Rights
The Government of Ghana has a 10% carried interest in BGL and Wexford and is entitled to acquire up to an
additional 20% interest in BGL and/or Wexford. The carried interest entitles the Government of Ghana to a pro-rata
share of future dividends, if any, from BGL and Wexford once all third party loans and shareholder loans owed to us
are repaid. If the Government of Ghana wishes to exercise the additional acquisition right, it must first give
reasonable notice. It must pay such purchase price for the additional 20% interest as the Government of Ghana and
BGL and/or Wexford may agree at the time. If there is no agreement, the purchase price will be the fair market
value of such interest at such time as determined by arbitration conducted by the International Center for the
Settlement of Investment Disputes. The Government of Ghana may also acquire further interests in BGL and/or
Wexford on terms mutually acceptable to the Government and BGL and/or Wexford. To date the government has
indicated no desire to obtain additional ownership in any of our properties.
The Government of Ghana is entitled to acquire a special or golden share in any mining company at any time for no
consideration or such consideration as the Government of Ghana and BGL and/or Wexford may agree. The special
share will constitute a separate class of shares with such rights as the Government of Ghana and BGL and/or
Wexford may agree. In the absence of such agreement, the special share will have the following rights:
•
•
the special share will carry no voting rights, but the holder will be entitled to receive notice of and attend and
speak at any general meeting of the members or any separate meeting of the holders of any class of shares;
the special share may only be issued to, held by or transferred to the Government or a person acting on behalf of
the Government;
35
•
•
the written consent of the holder of such special share must be obtained for all amendments to the
organizational documents of the company, the voluntary winding-up or liquidation of the company or the
disposal of any mining lease or the whole or any material part of the assets of the company; and
the holder of the special share will be entitled to the payment of a nominal sum of 1,000 Ghanaian Cedis in a
winding-up or liquidation of the company in priority to any payment to other members and may require the
company to redeem the special share at any time for a nominal sum of 1,000 Cedis.
BGL and Wexford have not issued or been requested to issue to date, any such special share to the Government of
Ghana.
The Government of Ghana has a pre-emptive right to purchase all gold and other minerals produced by BGL and
Wexford. The purchase price will be such price as the Government of Ghana and BGL and Wexford may agree on,
or the price established by any gold hedging arrangement between BGL and any third party approved by the
Government, or the publicly quoted market price prevailing for the minerals or products as delivered at the mine or
plant where the right of preemption was exercised. The purchase price must be paid in foreign exchange. The
Government of Ghana has agreed to take no preemptive action pursuant to its right to purchase such gold or other
minerals so long as BGL and Wexford sells gold in accordance with certain procedures for selling gold approved by
the Bank of Ghana.
Government Royalties
Under the laws of Ghana, a holder of a mining lease is required to pay a quarterly royalty of not less than 3% and
not more than 12% of the total revenues earned from the lease area. The Government of Ghana determines the
royalty percentage each year based on the ratio that the operating margin bears to the value of gold produced from
the lease in that year. In 2002, 2001 and 2000 the royalty rate for BGL was 3% of revenues, and the amounts paid
were $1.2 million, $0.7 million and $0.9 million, respectively.
Environment
BGL and Wexford are in substantial compliance with the environmental requirements imposed by Ghanaian laws
and guidelines and applicable guidelines and standards published by the World Bank. BGL completed significant
work during 1999 to identify the outstanding reclamation liability and to prepare a rehabilitation work plan.
Significant work has been performed during 2000, 2001 and 2002 to advance this plan and to reduce the outstanding
reclamation liability. Expenditures for ongoing rehabilitation work, including the capping of sulfide material,
backfilling of worked out pits, and the contouring and re-vegetation of waste dumps, were approximately $0.5
million during 2002 and $0.7 million during 2000. An additional $0.2 million was spent on reclamation activities
during 2001. As at December 31, 2002, BGL had $3.3 million of restricted funds set aside for environmental
reclamation of Bogoso.
A reclamation liability of $2.3 million was recognized upon the acquisition of Wassa, such amount representing the
estimated cost of reclamation as of the date of the acquisition.
EXPLORATION PROJECTS IN GHANA
We have entered into five option agreements along the Akropong trend since the acquisition of BGL in September
1999. Each option agreement entitles BGL to acquire a 90% interest, with a 10% government carried interest, in
mineral properties located on the Akropong trend and within approximately 20 to 25 kms from the BGL plant. In
addition to the option agreements, BGL has been granted two prospecting licenses to the south and east of the
Akropong trend and has one application for a prospecting license on the western side of the trend. The total surface
area of the mineral properties covered in the option agreements and applications is approximately 514 square kms.
The objective of this work is to acquire potential mining opportunities in the immediate vicinity of Bogoso/Prestea
that may, in the future, provide additional sources of mill feed for the Bogoso mill. All these projects are at an early
36
stage of exploration and to date they do not have, and ultimately may not have, proven and probable reserves. The
eight properties are referred to hereinafter as the “Akropong Projects”.
In 2002, exploration activities on the Akropong Projects involved regional stream sampling over the entire
concession area. Anomalies were prioritized and follow-up soil geochemistry programs were planned. Initial RAB
drilling of the Riyadh anomaly commenced in December and will continue into 2003. Exploration expenditures for
the Akropong Projects totaled just over $100,000 during 2002.
We expect to spend approximately $300,000 on Akropong Projects during 2003. Exploration work for 2003 will
involve soil geochemistry surveys, mechanized trenching and RAB drilling. Testing of positive deep auger
anomalies and up dip extensions of mineralization intersected in previous diamond drill holes and a preliminary
RAB drilling program will be initiated along the Pampe South anomaly. Follow up soil geochemistry will be
conducted at Amenfi to delineate the source of the alluvial gold defined by the stream sampling program.
Geochemical soil sampling is planned to test stream anomalies defined in 2002. Pending positive results from the
soil geochemistry these anomalies will be RAB drilled in 2004. Expenditures given are estimates and may vary.
We signed letters of intent with seven Ghanaian concession holders in 2002. These concessions are located south of
the Prestea property and south east of Tarkwa. As part of our due diligence we have conducted stream sediment and
soil sampling surveys on the concessions and have signed joint venture agreements on five of these properties. The
total land area encompassed by these five concessions totals 192 square kms. We expect to spend approximately
$180,000 on these projects in 2003, including property payments.
The Obuom concession is currently under reapplication which is expected to be granted in 2003. Exploration work
scheduled for Obuom will involve confirmation of the gold in soil anomalies previously defined by JCI.
At Wassa, exploration efforts are planned to investigate the potential in the immediate vicinity of the existing
infrastructure. Located just north of the Wassa property is the Adasse prospecting license. Exploration scheduled
for Adasse includes regional stream sampling followed by wide spaced soil geochemistry. Any economic gold
mineralization delineated at Adasse could be processed through at Wassa. We have applied for three reconnaissance
permits east, southeast and north west of the Wassa mining lease. These concessions are currently under application
and are expected to be granted in 2003.
Exploration activities at Prestea during 2002 concentrated on delineating additional zones of mineralized material
amenable to open pit mining. Zones of mineralized materials were delineated along approximately 12 kms of the 22
km Ashanti trend on the Prestea property. These zones were delineated through soil geochemistry and then
followed up by RAB and RC drilling. Mineralization on the remaining 10 km portion of Prestea has been defined
with soil geochemistry and will be tested during the 2003 exploration programs.
Exploration for 2003 is expected to include both surface and underground evaluation at Prestea. RAB and RC
drilling has been planned to test the continuity of mineralization between the Plant North and Beta Boundary pits.
Additional drilling has also been planned to better define the Beta Boundary mineralization. RAB drilling to test the
10 km southern extension of the mineralized trend has also been budgeted for 2003.
Compilation of the Prestea Underground data commenced in 2002 and will continue for much of 2003. Underground
drilling targets are currently being delineated and drilling is expected to commence in the second half of 2003.
EXPLORATION PROJECTS IN SOUTH AMERICA
Guiana Shield Transaction
In May 2002, we sold our interests in the Gross Rosebel, Headleys and Thunder Mountain properties in Suriname,
and our interest in OGML in Guyana, to Cambior.
We received $5.0 million cash in 2002 and $1.0 million in 2003 for the sale of Gross Rosebel and expect to receive
two additional deferred payments of $1.0 million each in 2004 and 2005 based on Cambior’s development and
operation of Gross Rosebel. In addition, Cambior will pay us a royalty equal to 10% of the excess of the average
37
quarterly market price above a gold price hurdle on the first 7 million ounces of gold production from Gross
Rosebel. For soft and transitional rock the gold price hurdle is $300 per ounce and for hard rock the gold price
hurdle is $350 per ounce.
For the Headleys and Thunder Mountain properties, we will receive a deferred consideration of $0.5 million each,
when and if Cambior commences commercial mining from these properties.
As payment for our 30% equity interest and preferred shares in OGML, we received a release and waiver from
OGML, Cambior and the Guyana Government in respect of all liabilities, of any nature, related to the Omai gold
mine. In the transaction we also acquired Cambior’s 50% interests in the Yaou and Dorlin exploration properties in
French Guiana.
French Guiana Properties
Most of our properties in South America are now located in French Guiana and held through Guyanor, our 73%
owned subsidiary, Guyanor Ressources S.A. (“Guyanor”). French Guiana is part of French national territory and
has been an overseas “Département” of France since 1946. The Département, with an area of 90,000 square kms
and a population of approximately 160,000, has two representatives in the French National Assembly and one
representative in the French Senate. Under the French Constitution, French Guiana is governed by the same laws as
metropolitan France, subject to modifications (including those affecting tax and mining laws and regulations) that
may be adopted to reflect the historical, cultural, geographical and economic characteristics of French Guiana and
provide for regional administration.
In French Guiana, artisanal miners illegally work on our properties from time to time. Local government authorities
are striving to deal with the situation, but given the remote location of our properties, the situation has still not been
fully resolved.
Guyanor is a société anonyme incorporated under the laws of France on April 20, 1993 with its head and registered
offices located at 9 Lot. Mont Joyeux, B.P. 750, 97337 Cayenne-Cedex, French Guiana.
At December 31, 2002, Guyanor owned mineral rights (either directly or through its subsidiaries) for the Yaou,
Dorlin and Paul Isnard properties. All of the properties are in the exploration stage. Application was made in
September 2002 for a new 5 km by 5 km exploration permit for the Bois Canon exploration property in French
Guiana.
On October 18, 2002, our subsidiary Societe des Mines de Saint-Elie s.a.r.l. was sold to Companie Miniere
Esperance S.A for $0.5 million.
During 2002 Guyanor spent approximately $0.3 million on care and maintenance of its exploration properties.
During 2001, Guyanor spent $1.0 million on exploration and care and maintenance, of which $0.8 million was
furnished by a joint venture partner.
YAOU AND DORLIN
The Properties
The Yaou exploration permit covers an area of 52 square kms located some 210 kms southwest of Cayenne, French
Guiana. Access to the property is by helicopter or four-wheel drive vehicle on 17 kms of dirt road from the town of
Maripasoula, which is accessible by chartered and daily scheduled fixed-wing aircraft from Cayenne.
The Dorlin exploration permit covers an area of 84 square kms located some 180 kms southwest of Cayenne and
60 kms east of Maripasoula. The property is accessible by helicopter and a 500 meter airstrip located on the
property is suitable for fixed wing aircraft. Access is also available by boat during the rainy season.
Yaou and Dorlin are owned by an entity called Societe Miniere Yaou and Dorlin S.A.S. (“SMYD”). SMYD was
originally established as a joint venture with Guyanor and Cambior each owning a 50% interest. In conjunction with
38
the Guiana Shield Transaction discussed above, Cambior transferred its 50% ownership of SMYD to us in May
2002. Guyanor, our 73% owned subsidiary, retained its 50% interest.
Geology
The geology of the Yaou project area consists of a folded and sheared sequence of Lower “Paramaca” Proterozoic
mafic and ultramafic volcanics and volcanoclastics, with minor intercalations of fine-grained clastic sediments.
Prior to folding, these were intruded by dioritic bodies. Two generations of granitic plutons bound the property to
the east and south. A north-north-west striking dolerite dyke of late Proterozoic age cuts through the property.
Exploration has defined three principal zones of gold mineralization, mainly associated with narrow, deformed felsic
intrusive bodies and finely laminated felsic tuffs. These zones have been evaluated by deep augering, trenching and
core drilling.
The geology of the Dorlin project area consists of sheared and folded greenstone units of Lower Paramaca sequence.
Exploration has identified an 11km long zone of soil geochemistry anomalies associated with a radiometric
potassium anomaly. Within this anomalous zone one major, N-S trending gold mineralized system, Montagne
Nivre, associated with tourmalinization, silicification and pyritization, has been intensively explored by deep auger,
trenching and core drilling.
Work Program
In 2002, the Yaou and Dorlin properties remained on care and maintenance. In 2002 and in 2001, expenditures on
Yaou and Dorlin totaled less than $0.1 million in each year.
Non Reserves
Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Mineral
Resources
This section uses the terms “measured mineral resources” and ‘indicated mineral resources”. We advise
U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to
assume that any part or all of the mineral deposits in these categories will ever be converted into
reserves.
Our current share of the Measured and Indicated Mineral Resources for Yaou and Dorlin, including 73% of
Guyanor’s 50% share and all of our 50% share, is estimated to be 11.9 million tonnes grading 2.1 g/t. This estimate
was made at the end of 2000, using a long-term gold price assumption of $300/oz. The Qualified Person responsible
for the estimation of Mineral Resource for the Yaou and Dorlin project is Mr. Francis Clouston, our employee, who
is a former project evaluation geologist for Cambior with over 20 years of experience in the modeling and
assessment of gold and base metal projects. Mr. Clouston is a member of the Canadian Institute of Mining and
Metallurgy and the Quebec Order of Engineers. The amount of the Mineral Resource which may have been
removed by illegal mining is not known.
PAUL ISNARD
On October 29, 1994, Guyanor acquired an interest in the Paul Isnard exploration projects by way of the acquisition
of all of the outstanding shares of Société de Travaux Publics et de Mines Aurifères en Guyane (“SOTRAPMAG”).
SOTRAPMAG holds eight mineral concessions which will expire on December 31, 2018 but which can be renewed
for an additional 25 years. Total area of the original eight concessions is 150 square km.
Guyanor also has additional exploration permits known as Exclusive Exploration permits (“P.E.R.”). They were
granted to Guyanor on November 30, 1999 for an initial period of three years, covering an area of approximately
283 square kms. Their validity period expired on December 1, 2002. An application for renewal for a five-year
period and reduced surface area (100 square km) was sent to the French Administration on July 30, 2002. The
application is still under review, awaiting a final decision from the Ministry of Industry.
39
The Properties
The Paul Isnard project is located in the western part of French Guiana, some 180 kms west of Cayenne. The
property is accessible by air or from St-Laurent-du-Maroni, by means of a 115 kms lateritic road. The first 62 kms
section of this road is maintained by the government and the remaining 53 kms section by SOTRAPMAG.
Geology
The Paul Isnard project covers a Lower Proterozoic greenstone belt comprised dominantly of mafic metavolcanic
rocks with lesser felsic meta volcanic rocks, metavolcaniclastics and meta sediments associated with intermediate,
mafic and minor ultramafic intrusives of similar age.
The Decou-Decou mountains located to the south of the property are formed of volcanic rocks that, at the summit,
are covered by degraded lateritic layers. The Lucifer mountains to the northeast are formed of basic intrusive rocks.
The basin between the mountains is underlain by a Proterozoic sequence of mafic to felsic volcanics and clastic
sediments of the Paramaca and Orapu groups, cut by ultramafic to felsic intrusives.
At Montagne D’Or, located on the northern slopes of Decou-Decou, the host stratigraphy for mineralization is a
+400 meter thick section of bi-modal felsic and mafic volcanics with lesser volcanoclastics, particularly at the base.
The eastern part of the section contains more mafic volcanics than the western section. The section is intruded by a
largely post mineral and later deformation swarm of mafic dykes or sills. The section contains at least two unique
time stratigraphic horizons marked by chemical sediments and thin lithologically distinctive flows designated as
“favorable sequences”.
Mineralization consists of two principal types: disseminated zones or stringer mineralization and semi-massive
(SMS) mineralization. The SMS occurs mainly within the favorable sequences that can be reasonably correlated
between the widely spaced (200 meter) drill sections. Both contain mainly pyrite with lesser pyrrhotite,
chalcopyrite, sphalerite and arsenopyrite. A third more localized mineralization type, “highly chloritic one” has also
been identified.
Work Program
No work was carried out at Paul Isnard during 2002 other than routine maintenance, and total costs incurred were
less than $0.1 million. Total expenditures in 2001 were $1.0 million for Paul Isnard. During 2001 the remaining
$6.9 million of deferred exploration costs were also written off bringing the capitalized basis to zero. There is
currently no plan for further work in Paul Isnard during 2003.
Non Reserves
Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Mineral
Resources
This section uses the terms “measured mineral resources” and ‘indicated mineral resources”. We advise
U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to
assume that any part or all of the mineral deposits in these categories will ever be converted into
reserves.
In 1999 we have estimated our share of Measured and Indicated Mineral Resources to be 4.4 million tonnes grading
2.8 g/t, using a $325 gold price. This reflects only Measured and Indicated Mineral Resource estimated to be
present within open pits as modeled by our staff. The Qualified Person responsible for the estimation of resource for
the Paul Isnard project was Declan Costelloe, former Manager Mining Geology, for Golden Star. The amount of the
Mineral Resource which may have been removed by illegal mining is not known.
40
Exploitation Authorization Given for Alluvial Mining Titles by Third Parties
Guyanor has granted the right to 16 small-scale mining companies or individuals to apply for Exploitation
Authorization on specific areas located at Paul Isnard. The French government created this new type of mining title
in connection with revisions to the Mining Code in 2000. This new title, referred to as an “AEX”, grants to small-
scale alluvial miners the right to mine alluvial deposits on our concessions and exploration permits, within a specific
area of one square km. The title-holder of an AEX is responsible for all potential environmental damages. During
the period 2000 to 2002, under separate agreements with each AEX applicant, Guyanor received a certain
percentage of the value of the gold extracted. However, recent revisions in French Mining law may have exempted
AEX holders from such payments. If this royalty exception becomes effective, our AEX royalty income may cease.
Guyanor’s AEX royalty income was approximately $0.45 million in 2002.
ITEM 3.
LEGAL PROCEEDINGS
We are not currently subject to any material pending legal proceedings. We are, however, engaged in routine
litigation incidental to our business. No material legal proceedings, involving us nor our business are pending, or, to
our knowledge, contemplated, by any governmental authority. We are not aware of any material events of
noncompliance with environmental laws and regulations.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of 2002.
41
PART II
ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
In June 2002 our common shares began trading on the American Stock Exchange under the symbol GSS and on the
Berlin exchange under the symbol “GS5”. Our common shares also traded on the Toronto Stock Exchange (“TSX”)
throughout 2002 under the trading symbol “GSC”. Prior to June 2002 our common shares had traded in the United
States on the Nasdaq OTC Bulletin Board. As of March 14, 2003, 106,317,535 common shares were outstanding
and we had 591 shareholders of record. On March 14, 2003, the closing price per share for our common shares, as
reported by the TSX was Cdn$2.50 and as reported by the American Stock Exchange was $1.70.
The following table sets forth, for the periods indicated, the high and low market closing prices per share of our
common shares as reported by the TSX, the OTC Bulletin Board and the American Stock Exchange.
2002:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2001:
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Toronto Stock Exchange
Cdn$
Cdn$
High
Low
2.90
2.70
3.58
2.90
1.66
1.34
1.70
0.86
OTC Bulletin Board
American Stock Exchange1
$
High
1.90
1.80
2.33
1.82
$
Low
1.04
0.84
1.06
0.54
Toronto Stock Exchange
Cdn$
Cdn$
High
Low
OTC Bulletin Board
$
$
Low
High
1.53
1.45
1.15
0.76
0.88
0.62
0.45
0.43
0.97
0.90
0.72
0.50
0.55
0.42
0.29
0.28
1. During 2002 our stock traded on the OTC Bulletin Board until June 18, 2002 and on the American Stock Exchange from June 19,
2002.
We have not declared or paid cash dividends on our common shares since our inception and we expect for the
foreseeable future to retain all of our earnings from operations for use in expanding and developing our business.
Future dividend decisions will consider then current business results, cash requirements and our financial condition.
RECENT SALES OF UNREGISTERED SECURITIES
The issuances discussed under this section were exempted from registration under Section 4(2) of the Securities Act
or Rule 506 thereunder as indicated. All purchasers of the following securities acquired the shares for investment
purposes only and all stock certificates reflect the appropriate legends.
Common Stock
1.
In January 2002, we issued 300,000 shares as payment for financial advisory fees valued at $150,000
2.
In March 2002, we issued 150,000 shares as payment for financial advisory fees valued at $250,000
3.
In June 2002, we issued 515,160 shares as payment for financial advisory fees valued at $360,000
42
4.
5.
6.
In April 2002, 1,370,000 common shares were issued upon conversion of warrants. The warrants exercised
were originally issued in January 2002 with a $0.70 exercise price. Total value of shares issued was $959,000.
In May 2002, 125,800 common shares were issued upon conversion of warrants. The warrants exercised were
originally issued in January 2002 with a $0.70 exercise price. Total value of shares issued was $88,060.
In June 2002, 1,040,160 common shares were issued upon conversion of warrants. The warrants exercised were
originally issued in January 2002 with a $0.70 exercise price. Total value of shares issued was $728,112.
Units
1. On January 11, 2002, we issued 11,516,000 units consisting of one common share and one half of one warrant
in a private placement to a group of investors pursuant to Rule 506 under the Securities Act, for a purchase
price of $5.6 million. Each whole warrant provides the right to purchase one common share for $0.70 until
January 11, 2004.
2. On December 12, 2002, we issued 3,440,000 units consisting of one common share and one fourth of one
warrant in a private placement to a group of investors pursuant to Rule 506 under the Securities Act, for a
purchase price of $4.3 million. Each whole warrant provides the right to purchase one common share for $1.50
until December 12, 2004
Warrants
1. On July 19, 2002, we issued 333,334 warrants as payment for the purchase of the common shares of an acquired
company. Each warrant provides the right to purchase one common share for $0.70 until July 19, 2005.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following summarizes the principal Canadian federal income tax considerations applicable to the holding and
disposition of a common share of the Company (a “Common Share”) by a holder (the “Holder”) of one or more
Common Shares, for tax purposes, who is resident in the United States of America and holds the Common Shares as
capital property. This summary is based on the current provisions of the Canada-United States Income Tax
Convention (1980) (the “Treaty”), Income Tax Act (Canada) (the “Tax Act”), the regulations there under and all
amendments to the Tax Act publicly proposed by the government of Canada to the date hereof. It is assumed that
each such amendment will be enacted as proposed and there is no other relevant change in any governing law,
although no assurance can be given in these respects.
Every Holder is liable to pay a withholding tax on every dividend that is or is deemed to be paid or credited to him
on his Common Shares. Under the Act, every non-resident person shall pay a tax at 25%. Under the Treaty, the rate
of withholding tax is reduced to 5% of the gross amount of the dividend where the Holder is a company that owns at
least 10% of our voting stock and beneficially owns the dividend, and 15% in any other case.
Under the Tax Act, a Holder will not be subject to Canadian tax on any capital gain realized on an actual or deemed
disposition of a Common Share, including a deemed disposition at death, provided that he did not hold the Common
Share as capital property used in carrying on a business in Canada, and that neither he nor persons with whom he did
not deal at arm's length alone or together owned 25% or more of the issued shares of any class of our stock at any
time in the 60 month period immediately preceding the disposition.
A Holder who is liable under the Tax Act for Canadian tax in respect of a capital gain realized on an actual or
deemed disposition of a Common Share may be relieved under the Treaty from such liability unless
(a)
the Common Share formed part of the business property of a permanent establishment or fixed
base in Canada that the Holder has or had within the twelve-month period preceding the
disposition, or
(b)
the Holder
43
(i)
(ii)
was resident in Canada for 120 months during any period of 20 consecutive years
preceding the disposition, and
was resident in Canada at any time during the ten years immediately preceding the
disposition, and
(iii)
owned the Common Share when he ceased to be a resident of Canada.
This summary is of a general nature and is not intended, nor should it be construed, to be legal or tax advice to any
particular Shareholder. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO
THE INCOME AND OTHER TAX CONSEQUENCES ARISING IN THEIR PARTICULAR
CIRCUMSTANCES.
44
ITEM 6.
SELECTED FINANCIAL DATA
The selected financial data set forth below are derived from our audited consolidated financial statements for the
years ended December 31, 2002, 2001, 2000, 1999 and 1998, and should be read in conjunction with those financial
statements and the foot notes thereto. The consolidated financial statements have been prepared in accordance with
Cdn GAAP. Selected financial data derived in accordance with US GAAP has also been provided and should be
read in conjunction with footnote 26 to the financial statements. For US GAAP reconciliation items, see the
attached consolidated financial statements and notes. Reference should also be made to “Item 7. Management's
Discussion and Analysis of Financial Conditions and Results of Operations”.
Summary of Financial Condition Data at End of Period:
(Amounts in thousands except per share data)
Cdn GAAP
Working capital
Current assets
Total assets
Current liabilities
Shareholders' equity
As of
December 31,
2002
$ 21,963
32,843
74,135
10,880
49,384
As of
December 31,
2001
$ (5,149)
9,636
36,552
14,785
12,342
As of
December 31,
2000
$ 4,452
12,960
49,469
8,508
26,040
As of
December 31,
1999
$ 6,020
13,957
74,352
7,937
40,501
As of
December 31,
1998
$ 6,516
8,216
68,597
1,700
58,471
Cdn GAAP
Revenue
Net income/(loss)
Net income/(loss)
per share – basic
For the
Year Ended
December 31,
2002
$ 38,802
4,856
For the
Year Ended
December 31,
2001
$ 24,658
(20,584)
For the
Year Ended
December 31,
2000
$ 31,171
(14,881)
For the
Year Ended
December 31,
1999
$ 11,254
(24,366)
For the
Year Ended
December 31,
1998
$ 635
(22,248)
0.07
(0.49)
(0.40)
(0.76)
(0.74)
US GAAP
Working capital
Current assets
Total assets
Current liabilities
Shareholders' equity
As of
December 31,
2002
$22,511
33,391
62,644
10,880
41,069
As of
December 31,
2001
$(5,149)
9,636
24,232
14,785
1,533
As of
December 31,
2000
$ 4,452
12,960
24,020
8,508
(478)
As of
December 31,
1999
$ 6,020
13,957
45,635
7,937
11,145
As of
December 31,
1998
$ 3,901
5,601
27,240
1,700
16,899
US GAAP
Revenue
Net income/(loss)
Net income/(loss)
per share - basic
For the
Year Ended
December 31,
2002
$38,802
6,752
For the
Year Ended
December 31,
2001
$24,658
(5,352)
For the
Year Ended
December 31,
2000
$31,171
(12,465)
For the
Year Ended
December 31,
1999
$11,254
(11,335)
For the
Year Ended
December 31,
1998
$ 635
(15,395)
0.09
(0.13)
(0.33)
(0.35)
(0.51)
45
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial
statements and related notes. The financial statements have been prepared in accordance with generally accepted
accounting principles in Canada (“Cdn GAAP”). For a reconciliation of our financial statements to statements
prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”), see Note
26 to the accompanying consolidated financial statements and “Results of Operations”.
INTRODUCTION
Acquisitions
Since 1999, we have focused primarily on the acquisition of producing and development stage gold properties in
Ghana and on the exploration, development and operation of these properties. We have acquired two operating
properties since 1999 and two development stage properties which we are now evaluating for production potential.
Our acquisitions have included a 70% interest in Bogoso Gold Limited (“BGL”) in 1999, which we increased to
90% in 2001. BGL provided us with an operating open pit gold mine and mill. We acquired a 90% interest in the
adjoining Prestea gold property (“Prestea”) in 2001, and commenced open-pit mining at Prestea in late 2001, with
ore being processed at the Bogoso mill. We expect to produce approximately 140,000 ounces from our
Bogoso/Prestea operations (“Bogoso/Prestea”) in 2003. Mining at Bogoso/Prestea is expected to continue for
approximately ten years, assuming sulfide ores are mined from Bogoso and Prestea, once the non-refractory ores
have been mined, as is currently contemplated.
In September 2002, we acquired a 90% interest in the Wassa gold property (“Wassa”), previously operated by a
former owner as an open pit, heap leach operation. We are currently conducting a feasibility study regarding a
conventional carbon-in leach operation. If the feasibility study is favorable, we believe that Wassa could re-
commence production in early 2004. In 2001, via a joint venture agreement, our 90% owned subsidiary BGL,
acquired a 45% managing interest in the Prestea underground gold property (“Prestea Underground”), which
includes a currently inactive underground mine. We are evaluating the possibility of restarting underground
production from this acquisition.
We are actively investigating the acquisition of producing, development and advanced stage exploration gold
properties and companies, primarily in Ghana and elsewhere in Africa. We also intend to increase significantly our
exploration activities on our current exploration properties in Ghana as well as in other areas in West Africa.
Operating Results in 2002
For the first time in the Company’s history we recorded a profit for the full year. We earned $4.9 million in 2002,
versus a loss of $20.6 million in 2001. There were no impairment write-offs in 2002 versus a $15.0 million write-
off in 2001. Earnings also improved on higher gold prices and better gold recovery as we commenced mining of
Prestea ores. We received an average gold price of $311 per ounce in 2002, $40 per ounce higher than in 2001.
Higher gold output, from improved gold recoveries, reduced our average cash operating costs from $263 per ounce
in 2001 to $193 in 2002.
Future operating results are directly related to the price of gold, which can fluctuate widely and is affected by
numerous factors beyond our control. If gold sales revenues fall for a substantial period below our cost of
production, we could cease production at any or all of our operations and development of some or all of our projects.
Financing Activities
Our liquidity improved in 2002. Cash balances increased from $0.5 million at the end of 2001 to $20.0 million at
year-end 2002. We raised net proceeds of approximately $17.6 million in a public offering, $ 9.3 million in two
46
private placements, and approximately $5.5 million through the sale of certain exploration properties. And in
February 2003, we completed a public offering for net proceeds of approximately $31.5 million.
Significant Events During 2002 and Recent Developments
January 2002 Private Placement – We sold 11,516,000 units in a private placement at a price of $0.49, each unit
consisting of one common share and one half warrant, for net proceeds of $5.1 million. Each whole warrant is
exercisable for one common share at an exercise price of $0.70 until January 11, 2004.
Guiana Shield Transaction - In May 2002, we sold our interest in most of our exploration properties in Suriname
and Guyana, including the Gross Rosebel property (“Gross Rosebel”), Headleys, Thunder Mountain and Omai Gold
Mines Limited (“OGML”), to Cambior Inc. (“Cambior”), our former partner in exploration, development and/or
operation of these properties.
We received $5.0 million cash in 2002 and $1.0 million of deferred payments in 2003 for the sale of Gross Rosebel
and are entitled to receive two additional deferred payments of $1.0 million each in 2004 and 2005. In addition,
Cambior is obligated to pay us a royalty equal to 10% of the excess of the average quarterly market price above a
gold price hurdle on the first 7 million ounces of gold production from Gross Rosebel. For soft and transitional rock
the gold price hurdle is $300 per ounce and for hard rock the gold price hurdle is $350 per ounce.
For the Headleys and Thunder Mountain properties, we will receive a deferred consideration of $0.5 million per
property when and if, Cambior commences commercial mining from these properties. As payment for our 30%
equity interest and preferred shares in OGML, we received a release and waiver from OGML, Cambior and the
Guyana Government in respect of all liabilities, of any nature, related to the Omai gold mine. In the transaction we
also acquired Cambior’s 50% interests in the Yaou and Dorlin exploration properties in French Guiana.
Acquisition of an Interest in the Prestea Underground – In March 2002, our 90% owned subsidiary, BGL
entered into a joint venture agreement with Prestea Gold Resources Limited (“PGR”) and the Government of Ghana,
relating to the Prestea Underground. The Prestea Underground operated for 130 years, producing approximately
nine million ounces of gold prior to 2001.
The joint venture agreement called for the following: shutting down the Prestea Underground and putting it on a
care and maintenance basis; the Prestea Underground mining lease was transferred from PGR to BGL, to be held by
BGL on behalf of a joint venture; BGL and PGR would each own an initial 45% interest in the joint venture and the
government of Ghana would have a 10% interest; and BGL would take over the day-to-day management of the
Prestea Underground. Under BGL’s direction, an assessment of the safety and economic viability of the Prestea
Underground is now underway. The assessment could take as much as two years to complete. The joint venture
agreement also allowed certain infrastructure items, associated with the Prestea Underground, to be decommissioned
and demolished to make way for the development of BGL’s surface mining operations at Prestea.
The Prestea Underground is contained within a mining lease which covers the same area as the Prestea surface
mining lease granted to BGL on June 29, 2001. The surface mining lease is to a depth of 200 meters below the
surface and the underground mining lease is restricted to material deeper than 200 meters below the surface.
BGL paid $2.4 million for its initial 45% interest in the joint venture. Subsequent investments in the joint venture
increased BGL’s ownership to 54% by December 31, 2002.
Listings on the American Stock Exchange and the Berlin Stock Exchange - Our common shares were listed on
the American Stock Exchange and began trading on June 19, 2002 under the symbol “GSS”. Our shares were also
listed on the Berlin Stock Exchange in June 2002 under the symbol “GS5”.
Bogoso/Prestea Reserve Addition – On June 20, 2002, we announced an increase in Proven and Probable Mineral
Reserves at Bogoso/Prestea of 263,000 ounces contained in approximately 1.5 million tonnes of ore at an average
grade of 5.32 grams per tonne. This increase is approximately two additional years production at Bogoso/Prestea.
47
July 2002 Public Offering - On July 24, 2002, we completed a public offering in the United States and Canada for
the sale of 16.1 million units at Cdn$1.90 (approximately $1.20) per unit, to raise total gross proceeds of $19.4
million or net cash of $17.6 million. Each unit consisted of one common share and one-half of one common share
purchase warrant. Each whole warrant is exercisable during the two year period ending July 24, 2004 at a price of
Cdn$2.28 (approximately $1.46) to purchase an additional common share. The share purchase warrants have been
listed with and trade on the Toronto Stock Exchange under the symbol “GSC.WT”.
Acquisition of Wassa - On September 13, 2002, we completed the acquisition of a 90% interest in Wassa in Ghana.
The remaining 10% interest was retained by the Government of Ghana. Prior to our purchase, Wassa had operated
for approximately two years, as a conventional open pit, heap leach gold operation producing approximately 90,000
ounces per year. In 2001, following cessation of operation, the secured lenders to the project enforced their security
rights in the project and, following a bidding process, agreed to sell the Wassa assets to us.
Wassa was acquired via our acquisition of a 90% equity position in Wexford Goldfields Limited (“Wexford”).
Assets at Wassa include an open pit mine, heap leach pads, processing equipment (crusher, agglomeration plant,
conveyors, and a gold recovery plant), parts and supplies inventory, maintenance shops, administrative offices,
housing for employees, a community center and miscellaneous other ancillary facilities. Total cost of the Wassa
assets was $6.9 million, including approximately $1.6 million in cash, assumption of $1.8 million of debt provided
by the seller, assumption of approximately $2.3 million of liabilities and $1.2 million of other costs. In addition we
agreed to pay the Wassa sellers two separate royalties.
We are currently working on a feasibility study to determine if Wassa can be redeveloped on a profitable basis. A
drilling program has been designed and carried out in conjunction with the feasibility study to evaluate the gold
potential of the property. We are also conducting engineering and design studies which indicate that it may be
possible to establish profitable operations at Wassa utilizing conventional CIL technology. CIL technology should
provide better gold recovery and lower unit costs than was achieved during the earlier heap leach operational phase.
We expect to complete the reserve analysis and feasibility study by mid-2003 and if warranted, construction of a
CIL mill facility would begin immediately thereafter. The estimated capital cost of the CIL plant and associated
start-up costs are expected to be approximately $14 million. Gold production could begin by early 2004. Much of
the existing infrastructure, including the crusher, conveyors, the power plant, haul roads and a gold recovery plant,
as well as the town site and administrative facilities would be useable in a CIL operation.
December 2002 Private Placement - On December 12, 2002 we completed a private placement of 3.44 million
units at a price of $1.25 per unit for gross proceeds of $4.3 million. Each unit consists of one common share and
one-quarter of a warrant. Each whole warrant entitles the holder to the right, for a period of two years, to acquire
one common share at an exercise price of $1.50.
February 2003 Equity Offering - On February 14, 2003 we completed a fully underwritten public offering of
17,000,000 units at Cdn$3.00 (approximately $1.97) per unit, for gross proceeds of Cdn$51 million (approximately
$33.5 million). Each unit consisted of one common share and one-half of one warrant to purchase a common share.
Each whole warrant is exercisable for a period of 48 months from its date of issue and shall entitle the holder to
purchase one common share for Cdn$4.60 (approximately $3.02) per share. The warrants have been listed with and
trade on the Toronto Stock Exchange under the symbol GSC.WT.A.
Payments to the Sellers of Bogoso - Provisions of the 1999 Bogoso purchase agreement specified that if a sulfide
mining operation was ever initiated at Bogoso, utilizing sulfide ores from Bogoso, an additional payment would be
due to the original Bogoso sellers. The agreement called for a payment of $5.0 million, plus the agreement provided
for the amount to escalate each year by an inflation factor. Negotiations with the Bogoso sellers resulted in this
potential future payment being extinguished by the payment of $2.0 million in February 2003. On the same date,
the remaining $2.0 million liability due the Bogoso sellers, triggered by acquiring more than 50,000 ounces of gold
from outside of Bogoso, was made, thereby liquidating and satisfying all liabilities to the Bogoso sellers associated
with the original Bogoso purchase.
48
RESULTS OF OPERATIONS
2002 Compared to 2001
We generated net income of $4.9 million or $0.07 per share for the twelve months ended December 31, 2002,
compared to a loss of $20.6 million or $0.49 per share during the twelve months ended December 31, 2001. The
major factors contributing to the marked improvement were higher gold production primarily from Prestea, an
improvement in the gold prices, and completion of write-offs of deferred exploration costs in 2001.
During much of 2001, mill feed to the Bogoso mill consisted of transition ores mined from Bogoso. The chemical
composition of the transition ores was not well suited for processing in the Bogoso mill, and a low gold recovery
rate of 49.6% was experienced during 2001 as a result. During 2002 all of the Bogoso mill feed came from Prestea
acquired in late 2001, and the milling characteristics of the Prestea ores are much better suited for processing in the
Bogoso mill, resulting in a 74.4% recovery rate during 2002. The improved recovery added just over 41,000 ounces
to our output versus what would have occurred had recoveries stayed at the 2001 rate of 49.6%.
Bogoso/Prestea Operating Results
Revenues rose from $24.7 million in 2001 to $38.8 million in 2002. In addition to the higher gold output for the
year, 2002 gold prices were significantly higher than in the prior year. Our realized sales price averaged $311 per
ounce in 2002, up $40 per ounce from $271 per ounce in 2001. The higher gold price contributed approximately $5
million additional dollars to our revenues versus the average price in 2001. Gold shipments, all from
Bogoso/Prestea, totaled 124,400 ounces during 2002. This 41% increase over 2001 was due to the better gold
recoveries on the Prestea ores milled in 2002 and to an 8% increase in tonnes milled.
While the cost of mining operations, as shown on the income statement, increased 8% from the 2001 level, mostly
due to an 8% increase in the number of tonnes milled, the improvement in gold output yielded a 27% decrease in
cash operating cost per ounce, from $263 in 2001 to $193 in 2002. Improved gold recoveries were the most
significant factor contributing to the lower cash operating cost per ounce.
Bogoso Operating Parameters
Ore milled (t)
Rate (t/day)
Grade (g/t)
Recovery %
Gold production (oz)
Cash operating cost ($/oz)
For the Twelve Months ended December 31,
2001
2,098,165
5,748
2.69
49.6
87,936
263
2002
2,271,747
6,223
2.31
74.4
124,400
193
2000
2,139,279
5,845
2.56
64.4
108,643
201
Depreciation and depletion charges in 2002 were down substantially from 2001 levels because essentially all of the
initial BGL purchase cost, which included the full purchase price of the Bogoso mill, mine equipment and other
facilities, was amortized over ounces produced from Bogoso during the two year period between the September
1999 purchase and the September 2001 closure of the oxide mining from Bogoso. Ounces from Prestea incurred
amortization and depreciation only to the extent of the Prestea purchase cost and for equipment purchased after
September 1999.
Due to low gold prices between 1996 and 2001, the lack of funds to continue development work on many of our
exploration properties and a new emphasis on operations rather than exploration after 1999, most of our capitalized
deferred exploration costs were deemed impaired and written off between 1999 and 2001. Cumulative deferred
acquisition and exploration write-offs during this three-year period totaled $55.6 million, including $15.0 million in
2001. Exploration property write-offs were the single largest contributing factor to the $20.6 million loss in 2001.
By the end of 2001, all of our deferred exploration properties had been written off or down to their recoverable
values.
General and administrative costs rose from $2.7 million in 2001 to $3.9 million in 2002. Most of the increase was
related to expanded investor relations spending and to operations at Guyanor where a lack of active exploration
49
projects required that certain costs be expensed as general and administrative costs that would have been capitalized
as project costs in prior periods. Severance costs at Guyanor also contributed to the increase as down-sizing
continued at Guyanor.
We recorded a $0.4 million gain in 2002 on the sale of the St. Elie property in Guyanor. The property was sold to a
mining company in French Guiana in October 2002 for $0.5 million cash. Interest expense for 2002 was
substantially lower than in 2001, due to reduced balances on the convertible debentures and other debt. Foreign
exchange gains were mostly related to operations in Ghana where the local currency continues to devalue against the
dollar.
2001 Compared to 2000
We experienced a net loss of $20.6 million during 2001 as compared to a net loss of $14.9 million in 2000. The
major factors contributing to the losses in both years, were non-cash write-offs of deferred exploration costs incurred
in earlier years of our existence when our focus was on exploration. Given sharp decreases in gold prices, a lack of
funds to continue development work on many of the exploration properties, unimpressive drill results and a new
emphasis on operations rather than exploration, most of our deferred exploration projects suffered impairments and
were written off in the three-year period beginning in 1999. Cumulative deferred acquisition and exploration write-
offs have totaled $31.7 million during 2000 and 2001.
Write-offs in 2001 included $6.9 million at the Paul Isnard property, triggered by a joint venture partner’s decision
to withdraw from a multi-year joint exploration agreement because of disappointing drill results from work done
during 2001. In addition, an $8.1 million write-down of Gross Rosebel was made in 2001 to reflect its fair market
value based upon the proposed sale of this property to Cambior.
Lower gold sales also contributed to the larger loss in 2001 than in 2000, mostly caused by lower gold production.
For 2001, gold output dropped to 87,936 ounces from 108,643 ounces in 2000. As Bogoso neared the end of its
oxide and transition ore reserves in 2001, more complex ores were mined which were not well suited to processing
in the existing Bogoso mill. As a result, in the first nine months of 2001, when Bogoso was supplying ore to the
Bogoso mill, mill feed grades actually increased slightly to 3.0 g/t from 2.6 g/t, but gold recovery dropped to 44.4%
from 65.5% in the same periods of 2000. The net result was that gold production for the first nine months of 2001
dropped to 63,331 ounces from 89,447 ounces in 2000.
Once Prestea ores became available in the fourth quarter, ore grades dropped but recovery increased to more than
off-set the lower grades and gold production in the fourth quarter increased to 24,605 ounces compared to an
average of only 21,111 ounces in the first three quarters of 2001 and 19,195 ounces in the fourth quarter of 2000.
Realized gold prices averaged $271 per ounce in 2001, down from $280 in 2000. The impact on sales revenues of
the lower gold prices was $0.8 million. All sales in 2001 were at spot. There was no gold price hedging activity in
2001 or 2000. Total cash operating cost per ounce averaged $271 per ounce in 2001, up from $201 per ounce in
2000.
Cost of mining operations for 2001 fell 3% from the prior year. The more complex nature of the Bogoso ore
resulted in higher processing costs, most notably for increased use of various chemical reagents in the milling
process, but mining property depletion was sharply lower than in 2000, reflecting lower gold output and a lower
mining property cost basis. BGL’s mining property depletable basis was reduced by $2.7 million in December 2000
after it became apparent that gold prices were trending lower than initially anticipated, which, per the terms of the
original BGL purchase agreement, resulted in a lower ultimate cost basis for the mining property.
Exploration costs decreased further in 2001, reflecting our decision to temporarily de-emphasize exploration.
Deferred exploration spending in Ghana totaled $1.4 million in 2001, down from $2.6 million in 2000. In both 2001
and in 2000 the majority of the deferred exploration costs in Ghana were related to the sulfide feasibility study, with
such costs tapering off in 2001 as the feasibility work came to its conclusion. In addition to the $1.0 million spent
on the feasibility study in 2001, $0.4 million was spent on exploration activities at various properties in the
50
Bogoso/Prestea vicinity. Comparable costs for 2000 were $2.4 million for the sulfide feasibility and $0.2 million for
work on exploration properties in Ghana.
Deferred exploration costs in South America, net of partner recoveries, totaled $1.4 million, up from $0.7 million in
2000. Of the total spent in 2001, $1.0 million was related to the Paul Isnard property and the balance is related to
the holding cost of Gross Rosebel.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity situation experienced a marked improvement during 2002. While capital projects consumed much
larger amounts of cash than was typical of the past few years, cash generated from operations, cash from the sale of
assets and new equity more than compensated, leaving the December 31, 2002 cash balance at $20.0 million, up
from $0.5 million at the end of 2001.
Operating activities generated $5.8 million during the year, up from $2.4 million in 2001. Higher gold prices and
higher gold output were directly responsible for the improvement. Investing activities consumed $16.7 million of
cash during the year while the sale of Gross Rosebel in Suriname and St. Elie in French Guiana contributed $5.4
million of cash. The acquisition and development of Wassa used $5.9 million. Development work and new
property, plant and equipment at Bogoso/Prestea consumed $6.1 million. We also invested $3.5 million in the
Prestea Underground during 2002.
Issuance of new common shares contributed $26.8 million of cash during 2002. Stock option exercises provided
$0.5 million during the year, and warrant exercises contributed an additional $1.8 million of cash. Liquidation of
several liabilities, including the amount due the Bogoso sellers, consumed $6.5 million of cash.
At December 31, 2002, working capital stood at $22.0 million, versus a working capital deficit of $5.1 million at the
end of 2001.
In February 2003 a fully underwritten equity offering raised gross proceeds of $33.5 million bringing total cash on
hand to approximately $50 million by the end of February 2003.
It is possible, even with the current cash balances of approximately $50 million, that additional funding could be
required or desirable during 2003 to pursue acquisition and growth opportunities. While capital funding has become
somewhat easier to acquire in the past year, we cannot assure you that we would be successful in raising additional
amounts during 2003 if the need arose.
Outlook
Our main objectives in 2003 are: (i) continued orderly and efficient mining of Prestea ore allowing an adequate flow
of oxide and other non-refractory ores to the Bogoso mill; (ii) completion of the Wassa feasibility study and re-
development of Wassa as a CIL operation if warranted by the feasibility study; (iii) evaluation of the Prestea
Underground reserve potential, and (iv) a substantial increase in exploration efforts with a focus on Ghana and
follow-up of certain properties in South America.
We will also continue to seek out and evaluate acquisition and growth opportunities in Ghana and elsewhere in
Africa. We will strive to maximize the value of our South American assets via joint venture financed exploration
activities and/or mergers and acquisitions where practical.
We expect gold production of approximately 140,000 ounces in 2003 at a projected cash operating cost of $185 per
ounce. Consolidated net exploration and development expenditures are forecast to be up to approximately $11
million during 2003, most of which will be spent in Ghana. Meanwhile our activities in the Guiana Shield will be
primarily care and maintenance, although we will continue to seek joint venture funded opportunities in Suriname
and Guyana. There is no budgeted exploration spending at Guyanor in 2003, although we are actively seeking joint
venture partners which could fund additional work at Paul Isnard or at our other properties.
51
During 2003 we expect to be able to fund currently anticipated expenditures from cash generated by operations and
cash on hand.
As more fully disclosed under Risk Factors, numerous factors could cause our budget estimates to be wrong or could
lead our management to make changes in our plans and budgets. Under any of these circumstances, the estimates
described above would likely change materially.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2001, the CICA issued AcG 13 - "Hedging Relationships" ("AcG 13"). The guideline presents the
views of the Canadian Accounting Standards Board on the identification, designation, documentation and
effectiveness of hedging relationships, for the purpose of applying hedge accounting. The guideline is effective for
all fiscal years beginning on or after July 1, 2003, which is the fiscal year beginning January 1, 2004 in our case.
We do not believe that the adoption of this guideline will have a material impact on our results of operations or
financial position, unless we were to enter into significant hedging relationships prior to the implementation date.
In 2003, the CICA issued AcG 14 - "Disclosure of Guarantees" ("AcG 14"). The guideline presents the views of the
Canadian Accounting Standards Board on financial statement disclosures to be made by a guarantor about its
obligations under guarantees. The guideline is effective for all fiscal years beginning on or after January 1, 2003,
which is the fiscal year beginning January 1, 2003 in our case. We believe that the adoption of this guideline will
not have a material impact on our results of operations or financial position.
In 2002, the CICA issued Section 3063 - "Impairment of Long-Lived Assets" ("CICA 3063). The guidelines in
CICA 3063 establish standards for the recognition, measurement and disclosure of the impairment of non-monetary
long-lived assets held for use. The guideline is effective for all fiscal years beginning on or after April 1, 2003,
which is the fiscal year beginning January 1, 2004 in our case. We have not yet determined the expected effect, if
any, on our results of operations or financial position upon the implementation of this guideline.
In 2002, the CICA issued Section 3475 - "Disposal of Long-Lived Assets and Discontinued Operations" ("CICA
3475"). The guidelines in CICA 3475 establish standards for the recognition, measurement, presentation and
disclosure of the disposal of long-lived assets. It also establishes standards for the presentation and disclosure of
discontinued operations, whether or not they include long-lived assets. The guideline is effective for asset disposals
after May 1, 2003. We have not yet determined the expected effect, if any, on our results of operations or financial
position upon the implementation of this guideline.
In 2002, the CICA issued Section 3110 - "Asset retirement Obligations" ("CICA 3110). The guideline establishes
standards for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the
associated costs. The guideline is effective for all fiscal years beginning on or after January 1, 2004, which is the
fiscal year beginning January 1, 2004 in our case. We have not yet determined the expected effect on our results of
operations or financial position upon the implementation of this standard.
SEASONALITY
Most of our operations are in tropical climates which experience annual rainy seasons. Mining operations are not
materially affected by the rainy seasons in Ghana but exploration efforts in Ghana and in the Guiana Shield are
generally timed to avoid the rainy periods to ease transportation logistics associated with wet roads.
RELATED PARTY TRANSACTIONS
Our President and CEO, Peter J. Bradford, participated in our private placement in January 2002, paying $98,000 for
200,000 units, each unit consisting of one share of our common stock and one half warrant to purchase our common
shares at $0.70 until January 11, 2004.
During 2002 we obtained legal services from a legal firm in which one of our directors is of counsel. Our director
did not personally perform any legal services for us.
52
During 1999, we, in conjunction with Anvil, acquired BGL. Our President and CEO, was then and still is a director
of Anvil. Based on the heads of agreement with Anvil to effect the 1999 BGL acquisition, we provided Anvil with a
promissory note for their share of the purchase price and also a note for their share of the acquisition costs. In June
2001, we acquired Anvil’s 20% equity interest in BGL in return for the issuance of 3,000,000 common shares of our
common stock, and forgave the remaining note receivable.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements reflect the application of Cdn GAAP, which is different in certain material respects from
US GAAP. The accounting policies reflected therein are generally those applied by similarly situated mining
companies in Canada. As disclosed in the notes to our financial statements, the assessment of our financial
condition and results of operations reflected in our financial statements are significantly affected by estimates that
we, or experts that we have retained, have made as to our proven and probable reserves and the value of our
exploration properties. Reserve estimates involve the exercise of subjective judgment and are based on numerous
assumptions that may prove to have been incorrect. Decisions to write off (or not to write off) all or a portion of our
investment in various properties are based on our judgment as to the actual value of the properties and are therefore
subjective in most cases. As noted elsewhere in this report, we have elected, over the past several years to write off
substantially all of our investment in exploration properties even though we retain some of these properties and they
may ultimately prove to have significant value.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk includes, but is not limited to, the following risks: changes in interest rates on our
investment portfolio, changes in foreign currency exchange rates and commodity price fluctuations.
Interest Rate Risk
When appropriate we invest excess cash in short-term debt instruments of the United States Government and its
agencies on a fixed interest rate basis. We may also invest in short term debt instruments of the government of
Canada. Over time the rates received on such investments may fluctuate with changes in economic conditions. As a
result our investment income may fall short of expectations during periods of lower interest rates. We may in the
future actively manage our exposure to interest rate risk.
Foreign Currency Exchange Rate Risk
The price of gold is denominated in United States dollars and the majority of our revenues and expenses are
denominated in United States dollars. As a result of the limited exposure, we believe that we are not exposed to a
material risk as a result of any changes in foreign currency exchange rate changes, so we currently do not utilize
market risk sensitive instruments to manage our exposure.
Commodity Price Risk
We are engaged in gold mining and related activities, including exploration, extraction, processing and reclamation.
Gold bullion is our primary product and, as a result, changes in the price of gold could significantly affect results of
operations and cash flows. According to current estimates, a $25 change in the price of gold could result in a $3.5
million effect on our results of operations and cash flows. In late 2002 we entered into put agreements which locked
in a floor price of $280 for 96,000 ounces of production (8,000 ounces per month) during 2003. The cost of the puts
is equivalent to $2.00 per ounce of gold for a total cost of $192,000. Other than puts, we have no other program to
hedge, or otherwise manage our exposure to commodity price risk. We may in the future more actively manage our
exposure through hedging programs.
53
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements of
Golden Star Resources Ltd. and Subsidiaries
Management's Responsibility for Financial Information ........................................................................... 55
Auditors' Report ......................................................................................................................................... 56
Consolidated Balance Sheets as of December 31, 2002 and 2001............................................................. 57
Consolidated Statements of Operations for the years ended
December 31, 2002, 2001 and 2000 ............................................................................................ 58
Consolidated Statement of Changes in Shareholders' Equity for the years ended
December 31, 2002, 2001 and 2000 ............................................................................................ 59
Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000 ........................................................................................... 60
Notes to the Consolidated Financial Statements ........................................................................................ 61 - 81
54
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION
To the Shareholders of
Golden Star Resources Ltd.
The consolidated financial statements and all information in the Annual Report are the responsibility of the Board of
Directors and management. The consolidated financial statements have been prepared by management based on
information available to March 19, 2003, and are in accordance with accounting principles generally accepted in
Canada.
A system of internal accounting and administrative controls is maintained by management in order to provide
reasonable assurance that financial information is accurate and reliable, and that our assets are safeguarded.
Limitations exist in all cost effective systems of internal controls. Our systems have been designed to provide
reasonable but not absolute assurance that financial records are adequate to allow for the completion of reliable
financial information and the safeguarding of its assets. We believe that the systems are adequate to achieve the
stated objectives.
The Audit Committee of the Board of Directors is comprised of three outside directors, operates in accordance with
its charter and meets quarterly with management and the independent auditors to ensure that management is
maintaining adequate internal controls and systems and to approve the annual and quarterly consolidated financial
statements of the Company. The committee also reviews the audit plan of the independent auditors and discusses
the results of their audit and their report prior to submitting the consolidated financial statements to the Board of
Directors for approval.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants,
who were appointed by the shareholders. The auditors’ report outlines the scope of their examination and their
opinion on the consolidated financial statements.
/s/ Peter J. Bradford
Peter J. Bradford
President and
Chief Executive Officer
March 19, 2003
/s/ Allan J. Marter
Allan J. Marter
Senior Vice President and
Chief Financial Officer
55
To the Shareholders of
Golden Star Resources Ltd.
AUDITORS’ REPORT
We have audited the consolidated balance sheets of Golden Star Resources Ltd. as of December 31, 2002 and
2001 and the consolidated statements of operations, changes in shareholders’ equity and cash flows for each of
the three years in the period ended December 31, 2002. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted in Canada and in the United
States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Company as of December 31, 2002 and 2001, and the consolidated results of its
operations and cash flows for each of the three years in the period ended December 31, 2002, in accordance with
accounting principles generally accepted in Canada.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants
Calgary, Canada
March 19, 2003
56
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of United States dollars except share amounts)
ASSETS
CURRENT ASSETS
Cash and short-term investments (Note 4)
Marketable securities (Note 3)
Accounts receivable
Inventories (Note 7)
Due from sale of property (Note 15)
Other current assets
Total Current Assets
RESTRICTED CASH (Note 24)
ACQUISITION, DEFERRED EXPLORATION AND DEVELOPMENT COSTS (Note 15)
DUE FROM SALE OF PROPERTY (Note 15)
INVESTMENT IN OMAI GOLD MINES LIMITED (Note 16)
MINING PROPERTIES (Net of accumulated depletion of $12,608 and $10,852, respectively) (Note
10)
PROPERTY, PLANT AND EQUIPMENT (Net of accumulated depreciation of $5,837 and $5,134,
respectively) (Note 9)
OTHER ASSETS
Total Assets
LIABILITIES
CURRENT LIABILITIES
Accounts payable
Accrued liabilities
Accrued wages and payroll taxes
Current debt (Note 8)
Total Current Liabilities
CONVERTIBLE DEBENTURES (Note 8)
LONG TERM DEBT (Note 8)
ENVIRONMENTAL REHABILITATION LIABILITY (Note 24)
Total Liabilities
MINORITY INTEREST
COMMITMENTS AND CONTINGENCIES (Note 24)
SHAREHOLDERS’ EQUITY
SHARE CAPITAL
As of
December 31,
2002
As of
December 31,
2001
$ 20,016 $ 509
-
906
1,977
1,231
7,666
8,421
-
1,000
523
230
9,636
32,843
3,365
4,743
2,000
-
3,365
12,280
-
141
21,513
8,353
9,100
2,268
571 509
$ 74,135 $ 36,552
$ 4,109 $ 4,365
2,783
3,135
124
73
3,563 7,513
14,785
10,880
-
1,727
7,246
19,853
2,358
-
5,407
22,550
4,898
1,660
First Preferred Shares, without par value, unlimited shares authorized. No shares issued
Common shares, without par value, unlimited shares authorized. Shares issued and
outstanding: 87,400,702 at December 31, 2002; 49,259,548 at December 31, 2001
Equity component of convertible debentures
DEFICIT
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
The accompanying notes are an integral part of these consolidated financial statements.
-
-
201,039
-
(151,655)
49,384
168,308
545
(156,511)
12,342
$ 74,135 $ 36,552
By: /s/ Robert R. Stone - Director
By: /s/ Peter J. Bradford - Director
57
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of United States dollars except per share amounts)
REVENUE
Gold sales
Interest and other
EXPENSES
Mining operations
Depreciation and depletion
Exploration expense
General and administrative
Abandonment and impairment of mineral properties
Gain on sale of assets
Interest expense
Foreign exchange gain
For the Years ended December 31,
2000
2001
2002
$ 38,091 $ 23,801 $ 30,405
711 857 766
38,802 24,658 31,171
26,747 24,824 21,693
2,459 3,420 7,289
485 204 946
3,886 2,669 2,905
- 15,010 16,706
(425) - (50)
265 833 805
(139) (50) (254)
33,278 46,910 50,040
INCOME/(LOSS) BEFORE THE UNDERNOTED
5,524 (22,252) (18,869)
Omai preferred share redemption premium
Income/(loss) before minority interest
Minority interest
NET INCOME/(LOSS)
170 583 479
5,694 (21,669) (18,390)
(838) 1,085 3,509
$ 4,856 $ (20,584) $ (14,881)
NET INCOME/(LOSS) PER COMMON SHARE – BASIC (Note 22)
NET INCOME/(LOSS) PER COMMON SHARE – DILUTED (Note 22)
$ 0.07
$ 0.06
$ (0.49) $ (0.40)
$ (0.49) $ (0.40)
WEIGHTED AVERAGE SHARES OUTSTANDING
(in millions of shares)
72.4 42.2 37.5
The accompanying notes are an integral part of these consolidated financial statements.
58
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Stated in thousands of United States dollars except share amounts)
Common
Stock
Number of
Shares
Share
Capital
Warrants
Equity
Component
of
Convertible
Debentures
Deficit
Balance at December 31, 1999
36,943,731
$
159,161
$
1,341
$
1,045
$
(121,046)
Shares Issued Under Options
Shares Issued Under Warrants
Stock Bonus
Debenture Conversions
Net Loss
62,400
150,000
40,000
392,857
-
66
105
35
275
-
-
-
-
-
-
-
-
-
(61)
-
-
-
-
-
(14,881)
Balance at December 31, 2000
37,588,988
159,642
1,341
984
(135,927)
Shares Issued Under Warrants
Warrants Issued
Debenture Conversions
Shares Issued
Net Loss
2,738,660
-
2,098,567
6,833,333
-
1,282
-
1,469
4,147
-
-
427
-
-
-
Balance at December 31, 2001
49,259,548
166,540
1,768
Shares Issued
Issue Costs
Shares Issued Under Options
Shares Issued Under Warrants
Stock Bonus
Debenture Conversions
Warrants Issued to Acquire Property
Other
Net Income
31,506,000
-
547,916
2,535,960
107,000
2,994,278
-
450,000
-
29,355
(2,558)
520
1,778
78
2,903
-
400
-
-
-
-
-
-
-
255
-
-
-
-
(439)
-
-
545
-
-
-
-
-
(545)
-
-
-
-
-
-
-
(20,584)
(156,511)
-
-
-
-
-
-
-
-
4,856
Balance at December 31, 2002
87,400,702
$
199,016
$
2,023
$
-
$
(151,655)
The accompanying notes are an integral part of these consolidated financial statements.
59
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of United States dollars)
Operating Activities:
Net income/(loss)
Reconciliation of net income/(loss) to net cash used in operating activities:
Depreciation, depletion and amortization
Convertible debentures accretion (Note 8g)
Premium on Omai preferred share redemption (Note 16)
Non-cash employee compensation (Note 21a)
Abandonment and impairment of mineral properties
Gain on sale of assets (Note 14)
Change in note receivable
Restricted cash
Reclamation expenditures
Minority interest
Changes in assets and liabilities:
Accounts receivable
Inventories
Accounts payable
Other
Total changes in non-cash operating working capital
Net Cash Provided by Operating Activities
Investing Activities:
Expenditures on exploration properties
Expenditures on mining properties
Expenditures on fixed assets
Omai preferred share redemption (Note 16)
Investment in Prestea Underground Joint Venture (Note 13)
Marketable securities
Sale of property (Notes 14 and 15)
Releases from environmental rehabilitation fund
Other
Net Cash Used in Investing Activities
Financing Activities:
Issuance of share capital, net of issue costs
Debt repayment (Note 8)
Increase in debt (Note 8)
Other
Net Cash Provided by/(Used in) Financing Activities
Increase/(decrease) in cash and short-term investments
Cash and short-term investments, beginning of period
Cash and short-term investments, end of period
For the Years ended December 31,
2000
2001
2002
$ 4,856 $ (20,584) $ (14,881)
3,423 7,289
2,459
46
209 209
(170) (583) (479)
- 35
78
-
15,010 16,706
(425) - (50)
(89) (215)
-
-
782 -
(465) (244) (1,070)
(1,085) (3,509)
838
(746) (255) 1,000
(424) 3,139 (1,900)
45
2,742 (199)
(293) (36) (407)
(1,418) 5,590 (1,506)
5,799
2,429 2,529
(208) (2,798) (3,224)
(8,949) (2,376) (102)
(3,430) (1,018) (2,804)
310
1,068 876
(3,126) - -
(906)
- 55
5,425
-
- 1,853
(392) (62) 57
(11,276) (5,186) (3,289)
29,095
2,282 171
(6,502) (1,068) (2,286)
826 947
2,384
7
235 14
24,984
2,275 (1,154)
19,507
509
(482) (1,914)
991 2,905
$ 20,016 $ 509 $ 991
The accompanying notes are an integral part of these consolidated financial statements.
60
GOLDEN STAR RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of United States Dollars unless noted otherwise)
1. Formation of the Company
In May 1992, the shareholders of Golden Star Resources Ltd. (“Golden Star” or the “Company” or “we”) and South
American Goldfields Inc., respectively agreed to a business combination of the two companies. Neither company
was under common control prior to the amalgamation. This combination was considered to be an amalgamation
under the Canada Business Corporations Act and was effective May 15, 1992. The amalgamation was treated as a
purchase for accounting purposes. Concurrent with the amalgamation, our common shares were consolidated on a
one-for-two basis. Our fiscal year-end is December 31, and commencing on May 15, 1992 we changed our
reporting currency to the United States dollar. However, if we were to declare a dividend to our shareholders, it
would be paid in Canadian dollars.
2. Description of Business
We are an international gold mining and exploration company producing gold in Ghana in West Africa. Through
our various subsidiaries and joint ventures we own a controlling interest in four gold properties in Ghana, the
Bogoso property (“Bogoso”), the Prestea property (“Prestea”), the Wassa property (“Wassa”) and the Prestea
underground property (“Prestea Underground”). Bogoso and Prestea are adjoining properties and both are owned by
our 90% owned subsidiary Bogoso Gold Limited (“BGL”). These two properties now function as a single operation
referred to as “Bogoso/Prestea”.
The Prestea Underground, acquired in 2002 via a joint venture, is located under our Prestea property and consists of
a currently inactive, underground gold mine and associated support facilities, which ceased operating in mid-2001.
BGL owns a 54% managing interest in this joint venture and studies are now underway, under our direction, to
determine if the Prestea Underground can be profitably reactivated under our management.
We also own a 90% equity interest in Wexford Goldfields Limited (“Wexford”) which owns Wassa and associated
mining rights, located some 35 kms east of Bogoso/Prestea. A feasibility study is currently underway which seeks
to establish the economic viability of this property.
We hold active exploration properties in Suriname, and in Ghana and, through our 73%-owned subsidiary, Guyanor
Ressources S.A. (“Guyanor”),we have interests in several gold exploration properties in French Guiana.
3. Summary of Significant Accounting Policies
These consolidated financial statements have been prepared in accordance with generally accepted accounting
principles (“GAAP”) in Canada. We have adopted the following policies.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and its more than 50%-owned
subsidiaries and joint ventures. All material inter-company balances and transactions have been eliminated. The
consolidated group includes the following as of December 31, 2002 (all entities are 100%-owned, unless otherwise
noted):
61
2002:
Caystar Holdings
Bogoso Holdings
Bogoso Gold Limited (90%)
Caystar Holdings
2001:
Bogoso Holdings
Bogoso Gold Limited (90%)
Prestea Underground JV (54%)
GSR (IOM) Limited
Barnex (Ghana) Limited
Barnex (Prestea) Limited (90%)
Guyanor Ressources S.A. (72.6%)
Société de Travaux Publics
et de Mines Aurifères en Guyane
Société des Mines de St-Elie (“SMSE”)
Société des Mines de Yaou & Dorlin
(“SMYD”) (50%)
Wasford Holdings
Wexford Goldfields Limited (90%)
GSR (IOM) Limited
Barnex (Ghana) Limited
Barnex (Prestea) Limited (90%)
JCI Ghana
Société des Mines de Yaou & Dorlin
(“SMYD”) (50%)
Guyanor Ressources S.A. (72.6%)
Société de Travaux Publics
et de Mines Aurifères en Guyane
Société des Mines de Yaou & Dorlin
(“ SMYD”) (50%)
Fiscal Year
Our fiscal year runs from January 1 to December 31.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Significance estimates are required to establish ore reserves and reclamation accruals. Reserve
estimates are based upon our professional assessment of all available data including drill results, geologic data,
geophysical data and estimated future operating costs. Amortization expense of mine property is in turn based on
the reserves estimates. Estimates are also required to develop projections of future reclamation costs. Actual results
could differ materially from those estimates with corresponding material adjustments to our financial results.
Cash and Short-term Investments
We consider any liquid investments with an original maturity of three months or less to be cash equivalents.
Inventories
Stockpiled ore, in-process and finished inventory are recorded at the lower of cost or market, including direct
production costs and attributable operating expenses. Materials and supplies are valued at the lower of average cost
or replacement cost.
Marketable Securities
Short term investments in publicly traded marketable securities are recorded at the lower of cost or quoted market
prices, with unrealized losses included in income. The market value of our marketable securities is based on the
closing price at December 31, 2002, as reported on recognized securities exchanges. The quoted market value of the
securities held at December 31, 2002 is $1.5 million. The carrying value at December 31, 2002 was $0.9 million.
Restricted Cash
In certain countries where we conduct business, governments may require performance bonds to be placed for
certain amounts of the agreed-upon exploration and/or reclamation expenditures. The cash collateral for these bonds
is shown as a non-current asset as the funds are not available for use in operations until the bond amounts are
62
reduced or released by the governments. In relation to BGL, funds are restricted in accordance with the BGL
acquisition agreement for the final environmental rehabilitation of the mine site.
Exploration Property Acquisition, Deferred Exploration and Development Costs
Acquisition, exploration and development costs of properties are generally capitalized as incurred.
Management reviews the carrying value of its investments in acquisition, deferred exploration and development
costs. A decision to abandon, reduce or expand a specific project is based upon many factors including general and
specific assessments of reserves and mineralized material, anticipated future mineral prices, the anticipated future
costs of exploring, developing and operating a producing mine, the expiration term and ongoing expenses of
maintaining leased mineral properties and the general likelihood that we will continue exploration. We do not set a
pre-determined holding period for properties with unproven reserves; however, properties which have not
demonstrated suitable metal concentrations at the conclusion of each phase of an exploration program are re-
evaluated to determine if future exploration is warranted and if their carrying values are appropriate.
If an exploration property is abandoned or it is determined that its carrying value cannot be supported by future
production or sale, the related costs are charged against operations in the year of abandonment or determination of
value. Any costs incurred for a particular project afterward are expensed as incurred.
The accumulated costs of mineral properties are depleted on a units-of-production basis at such time as production
commences.
Impairment of Long-Lived Assets
We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the
related carrying value may not be recoverable. If deemed impaired, an impairment loss is measured and recorded
based upon the recoverable value of the asset which generally will be computed using undiscounted future cash
flows. Estimates of future cash flows are subject to risks and uncertainties. Therefore, it is possible that changes
could occur which may affect the recoverability of our investments in long-lived assets.
Property, Plant and Equipment
Property, plant and equipment assets are stated at cost and include buildings, machinery, equipment, facilities and
vehicles. Depreciation is computed using the straight-line method at rates calculated to depreciate the cost of the
assets less their anticipated residual values, if any, over the estimated useful lives. Buildings and processing
facilities are depreciated over the life of the reserves of the associated mining property. Mining equipment,
miscellaneous equipment and light vehicles are depreciated over five years. The net book value of property, plant
and equipment assets at property locations is charged against income if the site is abandoned and it is determined
that the assets cannot be economically transferred to another project or sold. Major overhauls of mining equipment
that extend the life of such equipment are capitalized and depreciated on a straight-line basis.
Environmental Rehabilitation
Estimate of future reclamation and closure costs are based primarily upon environmental and regulatory
requirements of the various jurisdiction in which we operate. Estimates of future costs are accrued, on a non-
discounted basis, over the expected life of the reserves at each property. Cash costs incurred prior to the end of the
properties productive life are netted against the accrual.
Foreign Currencies and Foreign Currency Translation
Our functional currency is the United States dollar. Monetary assets and liabilities are translated at the rate of
exchange prevailing at the end of the period. Non-monetary assets and long-term liabilities are translated at the rates
of exchange prevailing when the assets were acquired or the liabilities assumed. Revenue and expense items are
translated at the average rate of exchange during the year. Translation gains or losses are included in the
63
determination of net income for the period. Fully integrated foreign subsidiary accounts are translated using the
same method.
Canadian currency in these financial statements is denoted as “Cdn$”, French currency is denoted as “FF” in 2001
and as “Euro” afterward, and Ghanaian currency is denoted as “Cedi” or “Cedis”.
Net Income/ (Loss) per Share
Basic earning (loss) per share is calculated by dividing net earnings (loss) available to common shareholders by the
weighted average number of common shares outstanding during the period. The calculation of diluted earnings
(loss) per common share uses the treasury stock method to compute the dilutive effects of stock options and
warrants and the “if converted” method to compute the dilutive effect of convertible debentures.
Revenue Recognition
Revenue from the sale of gold is recognized when title and the risk of ownership passes to the buyer. Title and risk
of ownership passes to the buyer on the day the gold dore is shipped from the mine site.
Stock Based Compensation
Effective January 1, 2002, we adopted the new Canadian Institute of Chartered Accountants' standard for stock-
based compensation. Compensation awards not required to be expensed under the new standard, such as stock
options, are accounted for as capital transactions when the options are exercised. Accordingly, no compensation
cost has been recognized in the consolidated statement of operations for common share options granted.
The fair value of options is established at the date of the grant, using the Black-Scholes option-pricing model.
Recognition of compensation costs occurs in the period in which the options vest.
4. Cash and Short Term Investments
Following a July 2002 public offering we instituted a new cash investment policy to manage cash balances. The
policy objectives, in order of importance, are safety of principal, liquidity as needed, and maximization of yields
subject to the two prior objectives. Permitted investment vehicles include United States government securities
including those of its agencies and all securities bearing the direct and indirect guarantee of the United States
government. Each individual investment must have a maturity of less than one year and, collectively, all
investments must have a maturity of less than nine months on a weighted average basis.
At December 31, 2002, all of our investments are in compliance with the new policy, with all amounts invested in a
series of 90-day U.S. treasury notes.
5. Supplemental Cash Flow Information
The following is a summary of non-cash transactions:
Investing:
Depreciation charged to projects
Repayment of note by minority interest holder
Adjustment to minority interest from note payments
Mining properties
Anvil Purchase transaction:
Purchase of Anvil’s minority interest
Stock issued for purchase of Anvil’s minority interest
Mining property
Extinguishment of note receivable from Anvil
Mine property Prestea reserve liability (Note 11)
64
2002
2001
2000
$ -
-
-
-
-
-
-
-
-
$ 3
150
(150)
85
(1,549)
1,081
(1,388)
1,857
(2,000)
$ 52
-
-
-
-
-
-
-
-
Mine property Prestea (Note 11)
Prestea acquisition costs paid with common shares
Shares issued for Prestea acquisition cost
Receivable on sale of property
Acquisition, deferred exploration and development
Wassa property acquisition (Note 12)
Property, plant and equipment
Reclamation liability assumed
Assumption of bank debt
Minority interest in Prestea Underground (Note 13)
Mine property Prestea Underground (Note 13)
Warrants issued for Obuom acquisition
Obuom property acquisition
Acquisition of properties in French Guiana
Guiana Shield transaction property exchange
Financing:
Equity component of convertible debentures
Shares issued upon conversion of convertible debentures
(Note 8g)
Conversion of convertible debentures (Note 8g)
Adjustment of final amount due sellers of BGL
Accrual of liability due the sellers (Note 8f)
Common stock issued to Barnex for Prestea purchase
-
(400)
400
(3,000)
3,000
(4,120)
2,302
1,818
2,400
(2,400)
255
(255)
(66)
66
(2,493)
-
-
-
-
-
-
-
-
-
(545)
(439)
2,903
(2,358)
-
-
-
1,469
(1,030)
(85)
2,000
2,493
-
-
-
-
-
-
-
-
-
-
(61)
275
(214)
-
-
-
There was no cash paid for taxes during 2002 and 2001. Cash paid for interest was $0.4 million during 2002 and
$0.4 million during 2001.
6. Financial Instruments
(a) Fair Value - Our financial instruments are comprised of short-term investments, accounts receivable, restricted
cash, accounts payable, accrued liabilities, accrued wages, payroll taxes and debt. The fair value of cash and short-
term investments, accounts receivable, accounts payable, accrued liabilities and accrued wages, payroll taxes and
debt equals their carrying value due to the short-term nature of these items. The fair value of restricted cash is equal
to the carrying value as the cash is invested in short-term, high-quality instruments.
(b) Commodity Instruments - Put options contracts provide us the right, but not the obligation, to sell a specified
number of ounces of gold at a specified price on a specified future transaction date. Put options thereby provide a
floor price for a portion of our future production but they do not limit the upside potential of higher gold prices in
excess of the specified price. If we opt to forego exercising a put option to sell at the put price, the put expires on its
specified transaction date. In December 2002 we entered into put options for 96,000 ounces for delivery of 8,000
ounces per month during 2003 with a strike price of $280 per ounce. The cost of the puts was $0.2 million or $2.00
per ounce. The cost of the puts was capitalized in current assets and one twelfth of the cost will be expensed each
month during 2003. We have not entered into any hedging program nor do we currently otherwise manage
exposure to commodity price risk other than through the puts described above. We may in the future more actively
manage our commodity price exposure through hedging programs.
7. Inventories
Stockpiled ore
In-process
Materials and supplies
December 31,
2002
$ 2,039
965
5,417
$ 8,421
December 31,
2001
$ 1,278
951
5,437
$7,666
65
8. Current Debt and Long Term Debt
Current Debt
Note due Omai Gold Mines Limited (Note 8a)
Amounts due to the sellers of BGL (Note 8b)
Due financial institution (Note 8c)
Overdraft facility at BGL (Note 8d)
Bank loan at BGL (Note 8e)
Accrual of liability to Bogoso Sellers (Note 8f)
Current portion bank loan at Wassa (Note 8h)
Total Current debt
Long Term debt
Convertible debentures (Note 8g)
Bank loan at Wassa (Note 8h)
Total Long Term debt
December 31,
2002
$ -
-
-
914
534
2,000
115
$ 3,563
December 31,
2001
$ 310
2,874
500
1,003
826
2,000
0
$ 7,513
$ -
1,727
$ 1,727
$ 2,358
-
$ 2,358
(a) Note due Omai Gold Mines Limited - In December 1998, Omai Gold Mining Limited (“OGML”) advanced
$3.2 million to us as an unsecured loan to be repaid as and when Class I preferred shares of OGML held by us are
redeemed by OGML. The loan was non-interest bearing until September 30, 2010. Subsequent redemption of
preferred shares reduced this liability to zero by the time the final payment was made in the first quarter of 2002.
(b) Amounts due to the Sellers of Bogoso Gold Limited - Amounts owed to the sellers of BGL per terms of the
September 1999 Bogoso purchase agreement. The final installment of $2.9 million was paid in the first quarter of
2002.
(c) Due to a Financial Institution - Gold production related payment due to a financial institution retained in
1999 to provide bridge financing for the BGL acquisition. The final payment of $0.25 million was made in
September 30, 2002.
(d) Overdraft facility at BGL - Revolving Over-draft Facility at BGL from Barclays Bank (Ghana) in the amount
of $1.0 million.
(e) BGL Bank Loan - A term loan to BGL from CAL Merchant Bank in Ghana in the original amount of $0.8
million. It is denominated in U.S. dollars, carries an interest rate of six-month LIBOR plus 3.5% and is repayable in
six quarterly installments beginning September 2002.
(f) Accrual of Liability to Bogoso Sellers - The original BGL purchase agreement of September 1999 included a
contingent $2.0 million reserve-acquisition payment, due the Bogoso sellers, which was triggered by BGL’s
acquisition of the Prestea reserves in late 2001. This liability was liquidated in February 2003 by a $2.0 million cash
payment to the Bogoso sellers.
(g) Convertible Debentures - On August 24, 1999, we issued $4.15 million of subordinated convertible debentures
to raise financing for the acquisition of BGL. The debentures had a maturity date of August 24, 2004 and bore
interest at the rate of 7.5% per annum from the date of issue, payable semi-annually on February 15 and August 15,
to the debenture-holders as of February 1 and August 1, respectively, commencing on February 15, 2000.
The debentures were convertible at the option of the holder into our common shares at a conversion price of $0.70
per share, prior to the August 24, 2004 maturity date. Each $1,000 principal amount of debentures also entitled the
holder to warrants exercisable for 200 of our common shares at a price of $1.50 per share until August 24, 2001 and
$1.75 per share for the remaining two years until August 24, 2003.
66
During 2002, debentures with a face value of $2.4 million were converted into 3,444,278 shares of common stock.
As of December 31, 2002, all of the outstanding debentures had been converted to common stock. All of the
831,000 associated warrants were still outstanding as of December 31, 2002.
(h) Wassa Bank Loan – A $1.8 million term loan provided by the Wassa sellers. Repayment will begin on
December 13, 2003 with installments following every three months thereafter, with the final payment on September
13, 2007. The interest rate is LIBOR plus 2.5% until gold production begins at Wassa and LIBOR plus 2.0% after
gold production begins. Interest from September 13, 2002 until repayment begins will be capitalized into the loan.
9. Property, Plant & Equipment
As of December 31, 2002
As of December 31, 2001
Property,
Plant and
Equipment
At Cost
Accumulated
Depreciation
Property,
Plant and
Equipment
Net Book
Value
Property,
Plant and
Equipment
At Cost
Property,
Plant and
Equipment
Net Book
Value
Accumulated
Depreciation
$ 5,829
$ 3,180
$ 2,649
$ 4,720
$ 2,472
$ 2,248
325
1,981
6,070
732
$ 14,937
-
1,940
-
717
$ 5,837
325
41
6,070
15
$ 9,100
-
1,944
-
738
$ 7,420
-
1,932
-
730
$ 5,134
-
12
-
8
$ 2,268
Bogoso/Prestea
Prestea
Underground
Guyanor
Wassa
Other
Total
10. Mine Property
As of December 31, 2002
As of December 31, 2001
Mine
Property At
Cost
$ 24,564
Accumulated
Amortization
$12,608
5,525
-
4,032
-
$ 34,121
-
-
-
-
$12,608
Mine
Property
Net Book
Value
$ 11,956
5,525
-
4,032
-
$ 21,513
Mine
Property At
Cost
$ 19,155
Accumulated
Amortization
$ 10,852
-
-
50
-
$ 19,205
-
-
-
-
$ 10,852
Mine
Property
Net Book
Value
$ 8,303
-
-
50
-
$ 8,353
Bogoso/Prestea
Prestea
Underground
Guyanor
Wassa
Other
Total
11. Acquisition of Prestea
We acquired Prestea in June 2001. Prestea lies immediately south of and adjacent to Bogoso and contains gold
reserves suitable for processing in our Bogoso mill. Currently identified gold reserves at Prestea are expected to
provide non-refractory feed for the Bogoso mill until at least 2007.
Two transactions were required to acquire Prestea, one with Barnato Exploration Limited (“Barnex”), and one with
Prestea Gold Resources Limited (“PGR”). Both transactions were required to remove all prior claims on the
property, which thereby allowed the Government of Ghana to grant BGL a new surface mining lease over the
property, which it did in June 2001. As payment to Barnex we issued 3,333,333 common shares and 1,333,333
warrants to subscribe for our common shares at a price of $0.70 per share for three years.
In addition, we agreed to pay a royalty to Barnex on the first 1,000,000 ounces of production from Bogoso/Prestea.
The royalty will vary, according to a gold price formula, from a minimum of $6.00 per ounce at gold prices less than
67
$260 per ounce to a maximum of $16.80 per ounce at gold prices at or above $340 per ounce. The royalty is to be
paid quarterly and is determined by multiplying the production for the quarter by a royalty rate that varies depending
on the average spot gold price for the quarter.
The purchase accounting method was applied to the Prestea acquisition. Total direct costs of acquiring Prestea were
$8.0 million. This included $2.2 million for our stock and warrants issued to Barnex, $2.1 million of cash paid to
PGR, $2.0 million for the contingent liability to the Bogoso sellers which was triggered by obtaining the Prestea
surface lease, $0.7 million of pre-production development costs and approximately $1.0 million in transactions
costs. In addition to the $8.0 million of direct purchase costs listed above, $0.4 million of unamortized Bogoso
purchase costs and $1.4 million of costs associated with the purchase of the 20% minority interest position in BGL
during 2001, were included in the new Prestea amortization base, bringing the total amortizable cost basis to $9.8
million.
12. Acquisition of Wassa
On September 13, 2002, we completed the acquisition of a 90% interest in Wassa in Ghana, the remaining 10%
interest being retained by the Government of Ghana. Wassa was developed by a former owner in the late 1990s at a
capital cost of $43 million as a conventional open pit, heap leach gold operation and operated for approximately two
years producing approximately 90,000 ounces per year. In 2001, the secured lenders to the project enforced their
security rights in the project and, following a bidding process, agreed to sell the Wassa asset to us.
Wassa includes an open pit mine, heap leach pads, processing equipment (crusher, agglomeration plant, conveyors,
and a gold recovery plant), parts and supplies inventory, maintenance shops, administrative offices, housing for
employees, a community center and miscellaneous other ancillary facilities.
We paid the Wassa sellers, a syndicate of banks led by Standard Bank London Limited, an initial consideration of
$1.6 million at closing. We also assumed $1.8 million of debt and we agreed in addition to pay two separate
royalties on future production. The seller-provided debt is repayable over a four-year term beginning on December
13, 2003 with installments following every three months thereafter, with the final payment on September 13, 2007.
The interest rate is LIBOR plus 2.5% until gold production begins and LIBOR plus 2.0% after gold production
begins. Interest on the initial $1.8 million accruing prior to the initiation of gold production at Wassa will be
capitalized into the loan.
The first royalty is to be paid quarterly and the amount of the payments will be determined by multiplying the
production from Wassa for each quarter by a royalty rate of $7.00 per ounce produced. The royalty rate is subject to
increase by $1.00 per ounce for each $10.00 increase in the average market price for gold for each quarter above
$280 per ounce up to a maximum of $15.00 per ounce at gold prices of $350 per ounce and above. The second
royalty is a flat $8.00 per ounce, and is capped at $5.5 million.
We also assumed a $2.3 million reclamation liability for restoration of the environmental disturbance at Wassa as of
the date of the acquisition. The amount of the restoration liability was determined by an independent environmental
engineering firm, commissioned by us to establish the amount of the liability.
Cost of the purchased assets was allocated as follows:
Purchase costs:
Bank loan assumed
Cash payment at closing
Environmental liabilities assumed
Pre-acquisition costs incurred
Total purchase costs
Allocation of purchase costs:
Inventory
Property, plant and equipment
Mine property
Total allocation
68
$ 1,818
1,584
2,302
1,157
$ 6,861
$ 331
5,460
1,070
$ 6,861
We have initiated a drilling program at Wassa designed to evaluate its gold potential. Engineering studies are also
underway to evaluate the feasibility of redeveloping Wassa as a conventional CIL operation. The feasibility study is
scheduled for completion in mid-2003 and if the study results are favorable, mill construction would begin shortly
thereafter. Assuming favorable results from the feasibility study, gold production could begin at Wassa as early as
the first quarter of 2004.
13. Acquisition of Prestea Underground
In March 2002, our 90% owned subsidiary, BGL entered into a joint venture agreement with PGR and the Ghana
Government, relating to the Prestea Underground. The Prestea Underground operated for 130 years, producing
approximately nine million ounces of gold prior to its closure in 2001.
The joint venture agreement called for the following: shutting down the Prestea Underground and putting it on a
care and maintenance basis; the Prestea Underground mining lease was transferred from PGR to BGL, to be held by
BGL on behalf of a joint venture; BGL and PGR would each own an initial 45% interest in the joint venture and the
government of Ghana would have a 10% interest; and BGL would take over the day-to-day management of the
Prestea Underground. Under BGL’s direction, an assessment of the safety and economic viability of the Prestea
Underground is now underway. The assessment could take as much as two years to complete. The joint venture
agreement also allowed certain infrastructure items, associated with the Prestea Underground, to be decommissioned
and demolished to make way for the development of BGL’s surface mining operations at Prestea.
The Prestea Underground is contained within a mining lease which covers the same area as the surface mining lease
granted to BGL on June 29, 2001. The surface mining lease is restricted down to a depth of 200 meters below the
surface and the underground mining lease is restricted to material deeper than 200 meters below the surface.
BGL paid $2.4 million for its initial 45% interest in the joint venture. Subsequent investments in the joint venture
increased BGL’s ownership to 54% by December 31, 2002.
14. Sale of St Elie
On October 21, 2002, Guyanor closed the transaction with Compagnie Minière Espérance S.A. (“CME”) for the sale
of Guyanor’s 100% interest in Société des Mines de St-Elie SARL ("SMSE"), which holds the mining rights to the
St. Elie gold property in French Guiana (“St Elie”).
The total consideration was as follows:
(1) $0.5 million of cash at closing;
(2) the release by CME of a royalty obligation (approximately 3,000 ounces of gold) owed by Guyanor on
future production from St. Elie; and
(3) the payment of a 2.5% royalty on all future gold production from St. Elie. In addition, at gold prices above
$350 per ounce, an additional royalty payment of 2.5% will be made by CME to Guyanor on the
incremental revenue above $350 per ounce. These payments are capped at the amount of the shareholder
debt owed by SMSE to Guyanor at closing, provided that such shareholder debt does not exceed $ 7.5
million.
Guyanor utilized the cash proceeds of the transaction to repay a portion of the inter-company advances received
from us in the past.
69
15. Acquisition, Deferred Exploration and Development Costs
The consolidated property expenditures and abandonment costs for our exploration projects for the fiscal year ended
December 31, 2002 were as follows:
Acquisition,
Deferred
Exploration &
Development Costs
as of 12/31/01
Capitalized
Exploration
Expenditures
2002
Acquisitions
2002
Sale of
Property
2002
Acquisition,
Deferred
Exploration &
Development Costs
as of 12/31/02
$
8,066
$
-
$
-
$
(8,066)
$
-
-
-
-
-
-
14
3,572
274
330
38
12,280
$
49
13
25
107
208
$
$
33
33
255
-
-
-
-
321
-
-
-
-
-
-
-
(8,066)
$
$
33
33
269
3,621
287
355
145
4,743
SURINAME:
Gross Rosebel(1)
FRENCH GUIANA
Yaou
Dorlin
AFRICA:
Obuom
Bogoso Gold Limited (2)
Bogoso Sulfide Project
Riyadh
Pampey Flag Base
Other Bogoso Projects
TOTAL
(1) In May 2002 we sold our interest in most of our exploration properties in Suriname and Guyana, including Gross Rosebel,
Headleys, Thunder Mountain and Omai Gold Mines Limited, to Cambior. We received $5.0 million cash in 2002 and in early
2003, the first of three deferred $1.0 million deferred payments for the sale of the Gross Rosebel property. We expect to receive
two additional deferred payments of $1.0 million each in 2004 and 2005. In addition, Cambior will pay us a royalty equal to 10%
of the excess of the average quarterly market price above a gold price hurdle on the first 7 million ounces of gold production
from Gross Rosebel. For soft and transitional rock the gold price hurdle is $300 per ounce and for hard rock the hurdle is $350
per ounce. For the Headleys and Thunder Mountain properties, we will receive a deferred consideration of $0.5 million per
property when and if, Cambior commences commercial mining from these properties. As payment for our 30% equity interest
and preferred shares in OGML, we received a release and waiver from OGML, Cambior and the Guyana Government in respect
of all liabilities, of any nature, related to the Omai gold mine and we received Cambior’s 50% interests in the Yaou and Dorlin
exploration properties in French Guiana.
(2) A 90% owned subsidiary
The consolidated property expenditures and abandonment costs for our exploration projects for the fiscal year ended
December 31, 2001 were as follows:
Acquisition,
Deferred
Exploration and
Development
Costs as of
12/31/00
Capitalized
Exploration
Expenditures in
2001
Joint Venture
Recoveries in
2001
Property
Abandonments and
Adjustments in 2001
Acquisition,
Deferred
Exploration and
Development
Costs as of
12/31/01
$15,818
15,818
$ 691
691
$ (340)
(340)
$ (8,103)
(8,103)
$ 8,066
8,066
5,827
5,827
239
-
2,608
-
2,847
-
$24,492
1,037
1,037
35
330
964
38
1,367
43
$3,138
-
-
-
-
-
-
$ (340)
(6,864)
(6,864)
-
-
-
(43)
$(15,010)
-
-
274
330
3,572
38
4,214
-
$12,280
SURINAME
Gross Rosebel (1)
Sub-total
FRENCH GUIANA
(Guyanor Ressources S.A.) (2)
Paul Isnard / Eau Blanche
Sub-total
AFRICA
(Bogoso Gold Limited) (3)
Riyadh
Pampe/Flagbase
Bogoso Sulfide Project
Other Bogoso Area Projects
Sub-total
OTHER
TOTAL
(1) Sold to Cambior in 2002. (2) Approximately 73% owned. (3) A 90% owned subsidiary.
70
Deferred exploration and acquisition costs of the Paul Isnard property were deemed impaired and written off in 2001
following disappointing results from exploration work during the year and lower gold prices. An $8.1 million
impairment related write-off was deemed necessary at the Gross Rosebel project following an agreement in
September 2001 to sell this property to our joint venture partner.
The recoverability of amounts shown for deferred acquisition and exploration is dependent upon sale or the
discovery of economically recoverable reserves, our ability to obtain necessary financing to complete the
development, and upon future profitable production or proceeds from the disposition thereof. The amounts deferred
represent costs to be charged to operations in the future and do not necessarily reflect the present or future values of
the properties.
16. Investment in Omai Gold Mines Limited
In May 2002 we sold our 30% common share equity investment and preferred shares in OGML to Cambior. As
payment for our 30% equity interest and preferred shares in OGML, we received a release and waiver from OGML,
Cambior and the Guyana Government in respect of all liabilities, of any nature, related to the Omai gold mine and
we received Cambior’s 50% interests in the Yaou and Dorlin exploration properties in French Guiana.
OGML was a Guyana company established to build and operate the Omai mine in Guyana. The common share
investment in OGML was accounted for using the equity method but, as of December 31, 2001 and 2000 our share
of cumulative losses of OGML exceeded the value of our initial common equity investment, and accordingly, we
discontinued applying the equity method in these years. Our unrecorded share of OGML’s losses was $33.6 million
and $32.4 million at December 31, 2001 and 2000, respectively.
We also acquired a redeemable preferred share equity interest (Class I preferred redeemable shares) in OGML in
recognition of cumulative exploration costs of $5.0 million which we incurred on the Omai project. The aggregate
redemption value of these shares approximated $11.0 million of which all $11.0 million was received, as of
December 31, 2002.
17. Warrants
At December 31, 2002 there were six series of warrants outstanding to purchase a total of 16.1 million common
shares. Of the 16.1 million total, 14.0 million were issued during 2002, 1.3 million were issued during 2001 and 0.8
million were issued in 1999:
Issued with
Date issued
Convertible debentures August 24, 1999
Prestea purchase
Private Placement
Purchase of Obuom
Equity offering
Private placement
Total
June 21, 2001
January 11, 2002
July 19, 2002
July 24, 2002
December 12, 2002
1. Strike price is quoted in Cdn$ at Cdn$2.28.
Amount
outstanding
831,000
1,333,333
3,913,000
333,334
8,820,000
860,000
16,090,667
Exercise
price
$1.75
0.70
0.70
0.70
1.461
1.50
Life
Expiration
date
4 years August 24, 2004
3 years
2 years
3 years
2 years
2 years December 12, 2004
June 21, 2004
January 11, 2004
July 19, 2005
July 24, 2004
The warrants issued in conjunction with the July 24, 2002 equity offering are traded on the Toronto Stock Exchange
under the symbol GSC.WT. There is no public market for our other warrants at December 31, 2002.
18. Stock Option Plan
We have one stock option plan, the 1997 Stock Option Plan, as amended (the “GSR Plan”) and options are granted
under this plan from time to time at the discretion of the Board of Directors. Options granted are non-assignable and
are exercisable for a period of ten years or such other period as stipulated in a stock option agreement between
Golden Star and the optionee. Under the GSR Plan, we may grant options to employees, consultants and directors
of the Company or its subsidiaries for up to 9,000,000 shares of common stock. Options may take the form of non-
71
qualified stock options, and the exercise price of each option shall not be less than the market price of our stock on
the date of grant. Options vest over periods ranging from immediately, to four years from the date of grant. Vesting
periods are determined at the discretion of the Board of Directors. The number of common shares vested and
exercisable under the plan at December 31, 2002 was 4,006,477. The number of common shares vested and
exercisable under the plan as of December 31, 2001 was 3,606,617.
The following table summarizes information about options under the GSR Plan:
GSR Plan
Outstanding at beginning of year
Granted
Exercised
Forfeited
Outstanding at end of year
Options exercisable at year-end
Weighted-average fair value of
options granted during the year
2002
Weighted-Average
Exercise Price
(Cdn$)
1.42
1.17
1.49
1.76
1.36
1.40
Shares
(000)
4,595
640
(548)
(198)
4,489
4,006
Shares
(000)
4,821
938
-
(1,164)
4,595
3,607
2001
Weighted-Average
Exercise Price
(Cdn$)
1.56
1.02
-
1.69
1.42
Shares
(000)
3,730
1,695
(62)
(542)
4,821
3,520
2000
Weighted-Average
Exercise Price
(Cdn$)
1.56
1.39
1.55
1.73
1.56
0.86
1.02
1.23
GSR Plan
Range of Exercise
Prices (Cdn$)
0.60 to 1.15
1.16 to 1.64
1.65 to 1.80
Number
Outstanding at
Dec. 31, 2002
(000)
897
2672
920
4,489
Options Outstanding
Options Exercisable
Weighted-Average
Remaining
Contractual Life
8.5
7.5
4.0
7.0
Weighted-Average
Exercise Price
(Cdn$)
1.02
1.33
1.79
1.36
Number Exercisable
at
Dec. 31, 2002
(000)
627
2,460
919
4,006
Weighted-Average
Exercise Price
(Cdn$)
1.02
1.34
1.79
1.40
19. Income Taxes
We recognize future tax assets and liabilities based on the difference between the financial reporting and tax basis of
assets and liabilities using the enacted tax rates expected to be in effect when the taxes are paid or recovered. We
provide a valuation allowance against future tax assets for which we do not consider realization of such assets to
meet the required “more likely than not” standard.
We have not provided current nor future income tax for any of the periods presented because our loss carryovers and
other future tax assets exceed our future tax liabilities. A full valuation allowance has been provided against our net
future tax assets.
Our future tax assets and liabilities at December 31, 2002 and 2001 include the following components:
2002
2001
Future tax assets:
Mine reclamation costs
Investment in OGML
Mine Property Costs
Offering costs
Loss carryovers
Valuation allowance
Future tax assets
Future tax liabilities:
Mine property costs
Future tax liabilities
$
1,607
-
-
1,604
47,153
(47,759)
2,605
$
1,892
601
4,474
855
41,517
(49,339)
$
-
$
$
$
2,605
2,605
-
$
$
-
72
A reconciliation of expected federal income tax on net income/(loss) before minority interest at statutory rates with the
actual expenses (benefit) for income taxes is as follows:
2002
2001
2000
Net income (loss) before minority interest
Statutory tax rate
Tax expense (benefit) at statutory rate
$
5,694
42.0%
2,391
$
(22,252)
45.6%
(10,151)
$
(18,869)
45.6%
(8,608)
Foreign tax rates
Change in tax rates
Expired loss carryovers
Ghana investment allowance
Foreign exchange (gain) loss
Change in valuation allowance
Income tax expense (benefit)
210
2,234
2,328
(298)
(4,203)
(2,662)
$
-
(391)
-
1,214
(79)
1,130
8,277
$
-
(141)
-
526
-
965
7,258
$
-
During 2002 and 2001, we recognized $2,576,626 and $1,873,975, respectively, of share offering costs. Shareholders’
equity had been credited in the amounts of $1,082,000 and $787,000 for the tax benefits of these deductions; however
a valuation allowance had been provided against the full amount of these tax benefits.
At December 31, 2002 we had loss carryovers expiring as follows:
2003
2004
2005
2006
2007
2008
2009
Indefinite
Total
Canada
$
France
$
Ghana
-
$
-
-
21,836
2,982
-
-
6,589
31,407
$
4,479
3,705
6,253
6,247
50
1,127
10,634
-
32,496
4,398
9,558
17,756
33,777
5,115
-
-
-
70,604
$
$
20. Operations by Geographic Area
The following geographic data includes revenues based on product shipment origin and long-lived assets based on
physical location. The corporate entity has locations in Canada and in the United States.
Revenues
Net
Income(Loss)
Identifiable
Assets
2002
Total
2001
Total
South America
Africa
Corporate
South America
Africa
Corporate
$ (1,106)
8,089
(2,127)
$ 4,856
$ (15,373)
(3,019)
(2,192)
$ (20,584)
$ 189
50,707
23,239
$ 74,135
$ 8,429
27,572
551
$ 36,552
$ 466
38,199
137
$ 38,802
$ 548
24,105
5
$ 24,658
73
2000
Total
South America
Africa
Corporate
21. Stock Based Compensation
$ 29
30,916
226
$ 31,171
$ (14,009)
18
(890)
$ (14,881)
$ 21,960
24,625
2,884
$ 49,469
(a) Stock Bonus Plan - In December 1992, we established an Employees’ Stock Bonus Plan (the “Bonus Plan”)
for any full-time or part-time employee (whether or not a director) of the Company or any of our subsidiaries who
has rendered meritorious services, which contributed to the success of the Company or any of its subsidiaries. The
Bonus Plan provides that a specifically designated committee of the Board of Directors may grant bonus common
shares on terms that it may determine, within the limitations of the Bonus Plan and subject to the rules of applicable
regulatory authorities. The Bonus plan, as amended, provided for the issuance of 900,000 shares of bonus stock of
which 388,620 have been issued as of December 31, 2002.
During 2002, 2001 and 2000 a total of 107,000, nil and 40,000 common shares respectively were issued to certain
employees pursuant to the Bonus Plan. We recognized compensation expense related to bonuses under the Bonus
Plan during 2002, 2001 and 2000 of $78,000, nil and $35,000 respectively.
(b) Options - On January 29, 2002, we granted to eligible employees and directors, options to acquire a total of
608,000 common shares at Cdn$1.16. The average fair value of the common share options granted was determined
to be Cdn$0.83. On July 29, 2002, a second grant of options to acquire common shares was made in the amount of
32,000 shares, with an exercise price of Cdn$1.40. The fair value of this grant has been estimated to be Cdn$1.27
per option. We do not recognize compensation costs related to stock options granted. Had compensation costs been
recognized for options vesting in 2002, our net income and earnings per share would have been reduced to the pro
forma amounts shown below:
Net income/(loss)
Net income/(loss) per share
As reported
Pro forma
As reported
Pro forma
2002
$ 4,856
4,339
0.07
0.06
2001
$ (20,584)
(21,073)
(0.49)
(0.50)
2000
$(14,881)
(15,565)
(0.40)
(0.42)
The fair value of each option granted during 2002, 2001 and 2000 is estimated on the date of grant using the Black-
Scholes option-pricing model with the following weighted average assumptions:
Expected volatility
Risk-free interest rate
Expected lives
Dividend yield
2002
88.9% -
102.2%
3.68% –
4.47%
5 years
0%
2001
81.0% -
84.0%
4.94% - 5.08
5 years
0%
2002
87.8%
6.10% -
6.79%
5 years
0%
74
22. Earnings per Common Share
The following table provides a reconciliation between basic and diluted earnings per common share:
Net Earnings/(Loss)
Shares (in millions)
Weighted average number of common shares
Dilutive Securities:
Convertible debentures
Options
Warrants
Weighted average number of dilutive common shares
For the Years
Ended December 31,
2001
$ (20,584)
2002
$ 4,856
2000
$ (14,881)
72.4
42.2
37.5
-
1.6
2.7
76.7
-1
-1
-1
42.2
-1
-1
-1
37.5
Basic Earning/(Loss) Per Share
Diluted Earnings/(Loss) Per Share
$ 0.07
$ 0.06
$ (0.49)
$ (0.49)
$ (0.40)
$ (0.40)
1. Since there was a loss in 2001 and 2000, inclusion of dilutive securities would have been anti-dilutive.
23. Related Parties
Our President and CEO, Peter J. Bradford, participated in our private placement in January 2002, paying $98,000 for
200,000 units, each unit consisting of one share of our common stock and one half warrant to purchase our common
shares at $0.70 until January 11, 2004.
During 2002 we obtained legal services from a legal firm in which one of our directors is of counsel. Our director
did not personally perform any legal services for us.
During 1999, we, in conjunction with Anvil, acquired BGL. Our President and CEO was then and still is a director
of Anvil. Based on the heads of agreement with Anvil to effect the 1999 BGL acquisition, we provided Anvil with a
promissory note for their share of the purchase price and also a note for their share of the acquisition costs. In June
2001, we acquired Anvil’s 20% equity interest in BGL in return for the issuance of 3,000,000 common shares of our
common stock, and forgave the remaining note receivable.
24. Commitments and Contingencies
Environmental Regulations
We are not aware of any event of material non-compliance with environmental laws and regulations in our
operations with, which could have a material adverse effect on our operations or financial condition. The exact
nature of environmental control problems, if any, which we may encounter in the future cannot be predicted,
primarily because of the changing character of environmental requirements that may be enacted within the various
jurisdictions. The environmental rehabilitation liability for reclamation and closure costs at Bogoso was $4.9
million at December 31, 2002 and $5.4 million at December 31, 2001. Estimates of the final reclamation and
closure costs for Prestea were prepared in 2002 and an accrual for its reclamation liability will be recorded during
2003. A $2.3 million reclamation liability was recorded in conjunction with the Wassa acquisition in September
2002. This amount is estimated to be the cost to reclaim environmental disturbances caused by the prior owner, as
of the date of our purchase. There have been no additional environmental disturbances at Wassa since our
September 2002 acquisition.
75
Restricted Cash Long-Term (for the Environmental Rehabilitation Liability)
Upon the closing of the acquisition of BGL in 1999, we were required, according to the acquisition agreement, to
restrict $6.0 million in cash, which was put on deposit in a bank. These funds are to be used for the ongoing and
final reclamation and closure costs relating to Bogoso. The withdrawal of these funds must be agreed to by the
sellers of BGL, who are ultimately responsible for the reclamation in the event of our non-performance. There were
no drawdowns of restricted cash during 2002. At December 31, 2002, the remaining balance in the BGL
reclamation cash fund was $3.3 million.
Royalties
(a) Wassa - As part of the consideration for the purchase of the Wassa assets, a gold production royalty (“First
Royalty”) will be paid to the sellers on future production from Wassa. The First Royalty is set at $7.00 per ounce of
gold produced and increased by $1.00 per ounce for each $10.00 increase in the price of gold above $280 per ounce
up to a maximum royalty of $15.00 per ounce at gold prices of $350 per ounce and above. This royalty is capped at
$38 million (see Note 12 above.)
We and the lenders agreed, subject to Bank of Ghana approval, that the $5.0 million deferred purchase price will be
converted to a gold production royalty of $8.00 per ounce capped at $5.5 million. This royalty would be in addition
to the First Royalty described above.
(b) Bogoso/Prestea - A gold production royalty was included as a component of total consideration paid for
Prestea in October 2001. The royalty is due on the first 1.0 million ounces of gold produced from Bogoso/Prestea
following our purchase of Prestea in October 2001. The amount of the royalty will vary, according to a gold price
formula, from a minimum of $6.00 per ounce at gold prices less than $260 per ounce to a maximum of $16.80 per
ounce at gold prices at or above $340 per ounce.
(c) Government of Ghana - Under the laws of Ghana, a holder of a mining lease is required to pay a royalty of
not less than 3% and not more than 12% of the total revenues earned from the lease area. The royalty is payable on
a quarterly basis. We currently pay a 3% royalty on gold production from Bogoso/Prestea and would expect to pay
a royalty at a similar rate at Wassa, once it is in production.
(d) Royalties receivable - We also have royalties receivable from the sale of our interests in the Gross Rosebel
property and the St. Elie property (see Note 14), contingent on future production from these properties.
25. Subsequent Events
Payments to the Sellers of Bogoso
Provisions of the 1999 Bogoso purchase agreement specified that if a sulfide mining operation was ever initiated at
Bogoso, utilizing sulfide ores from Bogoso, an additional payment would be due to the original Bogoso sellers. The
agreement called for a payment of $5.0 million which escalated each year by an inflation factor. In early 2003,
negotiations with the Bogoso sellers resulted in this potential future payment being capped at $2.0 million and it was
further agreed that, in return for the reduction in the amount, the payment would be accelerated. This payment was
made in February 2003. On the same date, the remaining $2.0 million liability due the Bogoso sellers, triggered by
acquiring more than 50,000 ounces of non-sulfide ores acquired from outside Bogoso, was made, thereby liquidating
and satisfying any and all liabilities to the Bogoso sellers associated with the original Bogoso purchase.
Equity Offering
On January 30, 2003 we entered into an agreement with an underwriting group for the purchase by the underwriters
of 17,000,000 units at Cdn$3.00 per unit for gross proceeds of Cdn$51,000,000. Each unit consisted of one
common share and one-half of one warrant to purchase a common share. Each whole warrant is exercisable for a
period of 48 months from its date of issue and shall entitle the holder to purchase one common share for Cdn$4.60
per share. The closing took place on February 14, 2003.
76
26. Generally Accepted Accounting Principles in Canada and the United States
Our consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in Canada which differ from US GAAP. The effect of applying US GAAP to our financial statements is
shown below.
(a) Balance Sheets in US GAAP
Cash
Trade accounts receivable, net
Inventories
Due from sale of property
Marketable securities (note d1)
Other current assets
Total current assets
2001
As of December 31,
2002
$ 20,016
1,977
8,421
1,000
1,454
523
33,391
$ 509
1,231
7,666
-
-
230
9,636
Restricted cash
Acquisition, deferred exploration and development
costs (note d2)
Due from sale of property
Investment in OGML (note d3)
Mining property (note d4)
Property, plant and equipment, net
Other assets
Total Assets
3,365
3,365
-
2,000
-
14,216
9,101
571
$62,644
-
-
-
8,303
2,268
660
$24,232
Current liabilities
$10,880
$14,785
Convertible debentures (note d5)
Long term debt
Environmental rehabilitation liability
Other
Total Liabilities
Minority interest
Share capital (notes d5 and d6)
Equity component of the convertible debentures (note
d5)
Cumulative translation adjustments (note d7)
Accumulated comprehensive income (notes d1)
Deficit
Total Liabilities and Shareholders’ Equity
-
1,727
7,246
-
19,853
1,722
198,070
-
1,595
269
(158,865)
$ 62,644
2,411
-
5,407
-
22,603
96
165,833
-
1,595
(279)
(165,616)
$ 24,232
77
(b) Statements of Operations in US GAAP
Net income/(loss) under Cdn GAAP
Acquisition and deferred exploration expenditures
expensed under US GAAP) (note d2)
Gain on sale of exploration property (note d8)
Capitalized mine property acquisition costs expensed for
US GAAP (note d4)
Effect of mining property depletion (note d4)
Other (notes d3 and d5)
Net income/(loss) under US GAAP before minority
interest
Minority interest, as adjusted (notes d2 and d4)
Net income/(loss) under US GAAP
Other comprehensive income - gain on marketable
securities (note d1)
Comprehensive income/(loss)
Basic net income/(loss) per share under US GAAP
Diluted net income/(loss) per share under US GAAP
For the Years Ended December 31,
2002
$ 4,856
2001
$ (20,584)
2000
$ (14,881)
(529)
8,066
(7,246)
-
(7)
5,140
1,612
6,752
548
$ 7,300
$ 0.09
$ 0.09
13,815
-
-
500
633
(5,636)
334
(5,302)
-
$ (5,302)
$ (0.13)
$ (0.13)
12,166
-
(11,302)
683
563
(12,771)
560
(12,211)
-
$(12,211)
$ (0.33)
$ (0.33)
Weighted average common shares outstanding are the same under US GAAP as under Cdn GAAP for the periods
presented.
(c) Statements of Cash Flows in US GAAP
Cash provided by (used in):
Operating Activities
Investing activities
Financing activities
Increase (decrease) in cash and cash equivalents for the
year
Cash and cash equivalent beginning of year
Cash and cash equivalents end of year
(d) Footnotes
For the Years Ended December 31,
2001
2002
2000
$ 1,040
(6,517)
24,984
19,507
509
$ 20,016
$ 799
(3,556)
2,275
(482)
991
$ 509
$ 206
(966)
(1,154)
(1,914)
2,905
$ 991
(1) Under US GAAP, marketable securities available for sale are marked to market and gains or losses are
recognized in Other Comprehensive Income until the securities are sold. Under Cdn GAAP, marketable securities
are accounted for at the lower of cost or market.
(2) Under US GAAP, exploration, acquisition and general and administrative costs related to exploration projects
are charged to expense as incurred. Under Cdn GAAP, exploration, acquisition and general and administrative costs
related to exploration projects are capitalized. In each subsequent period, the exploration, engineering, financial and
market information for each exploration project is reviewed by management to determine if any of the capitalized
costs are impaired.
(3) Under US GAAP, the preferred share investment in OGML would have a carrying value of nil since the
preferred shares were received in recognition of past exploration costs incurred by us, all of which were expensed
for US GAAP purposes. Therefore, the entire OMGL preferred share redemption premium would have been
78
included in income. Under Cdn GAAP, a portion of the premium on the OGML preferred share redemption
premium is included in income with the remainder reducing the carrying value of our preferred stock investment.
(4) Under US GAAP, the initial purchase cost of mining properties is capitalized. Pre-acquisition costs and
subsequent development costs incurred, until such time as a feasibility study had been completed, are expensed in
the period incurred. Under Cdn GAAP, all costs of new mine properties as well as costs incurred after acquisition
are capitalized, and subsequently reviewed each period for impairment.
(5) Cdn GAAP requires that convertible debentures should be classified into their component parts, as either a
liability or equity, in accordance with the substance of the contractual agreement. Under US GAAP, the convertible
debenture would be classified entirely as a liability.
(6) We eliminated our accumulated deficit through the amalgamation (defined as a reorganization under US GAAP)
effective May 15, 1992. Under US GAAP the cumulative deficit was greater than the deficit under Cdn GAAP due
to the write-off of certain deferred exploration costs described in (2) above.
(7) For periods prior to May 15, 1992, our reporting currency was the Canadian dollar. Subsequent to our
amalgamation and moving our headquarters to the United States, the reporting currency was changed to the United
States dollar. As such, for the financial statements for the period prior to May 15, 1992, our financial statements
were translated into United States dollars using a translation of convenience. US GAAP required translation in
accordance with the current rate method.
(8) The US GAAP basis in the Gross Rosebel deferred exploration had been expensed in prior periods. Thus under
US GAAP the full amount of the sales price was a gain. In Cdn GAAP, this property’s basis approximated the sales
price and thus there was no material impact on the statement of operations from the sale.
(e) Impact of Recently Issued Accounting Standards
In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” that established a
uniform methodology for accounting for estimated reclamation and abandonment costs. The statement was effective
January 1, 2003. At that time we will record the estimated present value of reclamation liabilities and increase the
carrying amount of property, plant and mine development. Subsequently, reclamation costs will be allocated to
expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and
revisions to either the timing or amount of the original present value estimate. We are currently in the process of
quantifying the effect of adoption on January 1, 2003 for both US GAAP and Cdn GAAP purposes.
The FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." This
statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. It
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions," for the disposal of a segment of a business. It also amends APB
No. 51, "Consolidated Financial Statements," to eliminate the exception to consolidation for a subsidiary for which
control is likely to be temporary. The provisions of this statement are effective for financial statements issued for
fiscal years beginning after December 15, 2001, and interim periods within those fiscal years, with early application
encouraged. The provisions of this statement generally are to be applied prospectively. The adoption of this
statement did not have a material effect on our financial statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections" (11 SFAS No. 145). SFAS No. 145 updates, clarifies and
simplifies existing accounting pronouncements, by rescinding SFAS No. 4, which required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income
tax effect. As a result, the criteria in Accounting Principles Board Opinion No. 30 will now be used to classify those
gains and losses. Additionally, SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that
have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback
transactions. Finally, SFAS No. 145 also makes technical corrections to existing pronouncements. While those
79
corrections are not substantive in nature, in some instances, they may change accounting practice. The provisions of
SFAS No. 145 that amend SFAS No. 13 are effective for transactions occurring after May 15, 2002, with all other
provisions of SFAS No. 145 being required to be adopted by us in our consolidated financial statements for the first
quarter of fiscal year 2003. We believe that the adoption of SFAS No. 145 will not have a material impact on our
consolidated financial statements.
On July 30, 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal
Activities." SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by
the standard include lease termination costs and certain employee severance costs that are associated with a
restructuring, discontinued operation, plant closing or other exit or disposal activity. SFAS No. 146 replaces the
prior guidance that was provided by EITF Issue No. 94-3 "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146
is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. We believe that the
adoption of SFAS No. 146 will not have a material impact on our consolidated financial statements.
In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based Compensation, Transition and
Disclosure, an amendment of FASB Statement No. 123." SFAS No. 148 provides alternative methods of transition
for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the
effects of reported net income of an entity's accounting policy decisions with respect to stock-based employee
compensation. Finally, this statement amends APB Opinion No. 28, "Interim Financial Reporting," to require
disclosure about those effects in interim financial information. The amendments to SFAS No. 123, which provides
alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation is effective for financial statements for fiscal years ending after December
15, 2002. The amendment to SFAS No. 123 relating to disclosures and the amendment to Opinion 28 is effective
for financial reports containing condensed financial statements for interim periods beginning after December 15,
2002. We do not intend to adopt the fair value accounting provisions of SFAS No. 123 and currently believe that the
adoption of SFAS No. 148 will not have a material impact on our financial statements.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's Accounting for Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57 and 107 and rescission of FASB Interpretation No. 34, Disclosure of Indirect Guarantees of
Indebtedness of Others" (FIN 45). FIN 45 clarifies the requirements for a guarantor's accounting for and disclosure
of certain guarantees issued and outstanding. It also requires a guarantor to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. This interpretation also
incorporates without reconsideration the guidance in FASB Interpretation No. 34, which is being superseded. The
adoption of FIN 45 will not have a material effect on our consolidated financial statements and will be applied
prospectively.
In January 2003, the FASB issued FAS Interpretation No. 46, "Consolidation of Variable Interest Entities, an
interpretation of Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements" (FIN 46). FIN
46 clarifies the application of ARB No. 51 to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties. The adoption of FIN 46 will not have
a material effect on our consolidated financial statements.
27. Quarterly Financial Data - Unaudited
(In thousands except per share amounts)
Net Sales
Gross Profit
Net Income
Earning Per Common Share
2002
First
Quarter
$ 9,332
2,447
1,454
$0.02
Second
Quarter
$ 9,699
2,954
1,557
$0.02
Third
Quarter
$ 8,350
1,762
834
$0.01
Fourth
Quarter
$ 11,421
1,948
1,011
$0.02
80
(In thousands except per share amounts)
Net Sales
Gross Loss
Net Income
Loss Per Common Share
First
Quarter
$ 4,835
(1,026)
(1,851)
$ (0.05)
Second
Quarter
$ 6,906
(1,174)
(1,422)
$ (0.04)
2001
Third
Quarter
$ 5,856
(561)
(9,000)
$ (0.21)
Fourth
Quarter
$ 7,061
(1,029)
(8,311)
$ (0.19)
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements with PricewaterhouseCoopers LLP, our chartered accountants, regarding any
matter of accounting principles or practices or financial statement disclosure.
ITEMS 10, 11, 12 AND 13
PART III
In accordance with General Instruction G(3), the information required by Part III is hereby incorporated by reference
from our proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the fiscal year covered
by this report.
ITEM 14 Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our principal executive officer and
principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) within 90 days prior to the filing date of this report. Based on this evaluation, the
principal executive officer and principal financial officer have concluded that our disclosure controls and procedures
are effective.
We periodically conduct an evaluation, under the supervision and with the participation of our principal executive
officer and principal financial officer as well as our Audit Committee, of our internal controls and procedures.
There have been no significant changes in our internal controls or in other factors that could significantly affect our
internal controls subsequent to the date of the most recent evaluation.
81
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
PART IV
(a)
The following documents are filed as part of this Report:
1. Financial Statements
• Management's Report
• Auditors' Report
• Consolidated Balance Sheets as of December 31, 2002 and 2001
• Consolidated Statements of Operations for the Years Ended December 31, 2002, 2001and 2000
• Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31,
2002, 2001 and 2000
• Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000
• Notes to Consolidated Financial Statements
2. Financial Statement Schedules
Financial Statement schedules have been omitted since they are either not required, are not applicable, or
the required information is shown in the financial statements or related notes.
(b)
Reports on Form 8-K.
1. A report on Form 8-KA was filed with the Securities and Exchange Commission on November 29, 2002
defining the nature of the Wassa acquisition as a purchase of assets.
2. A report on form 8-K was filed with the Securities and Exchange Commission on December 13, 2002
announcing completion of a private placement of 3,440,000 units at $1.25 each. Each unit consists of one
share of our common stock and one fourth of one warrant to acquire our common shares at a price of $1.50.
(c)
Exhibits
3(i)
3(ii)
Incorporating Documents of the Company, including: Articles of Arrangement dated May 14,
1992, with Plan of Arrangement attached, with Certificate of Amendment with respect thereto
dated May 15, 1992; Certificate of Amendment dated May 15, 1992, with Articles of
Amendment; Certificate of Amendment dated March 26, 1993, with Articles of Amendment;
Articles of Arrangement dated March 7, 1995, with Plan of Arrangement attached, with
Certificate of Amendment with respect thereto dated March 14, 1995; Certificate of Amendment
dated July 29, 1996, with Articles of Amendment; and Certificate of Amendment dated July 10,
2002, with Articles of Amendment (all incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K filed on January 23, 2003)
Bylaws of the Company, including: Bylaw Number One, amended and restated as of April 3,
2002 (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on
Form S-3 (Reg. No. 333-102225) filed on December 27, 2002); Bylaw Number Two, effective
May 15, 1992 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on
January 23, 2003); and Bylaw Number Three, effective May 15, 1992 (incorporated by
reference to Exhibit 4.2 to the Company’s Form 8-K filed on January 23, 2003)
4.1
Form of Specimen Certificate for Common Shares (incorporated by reference to Exhibit 4.1 to
the Company's Registration Statement on Form S-3/A (Reg. No. 333-91666) filed on July 15,
2002)
82
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
10.1
10.2
10.3
10.4
10.5
10.6
Rights Agreement dated as of April 24, 1996, between the Company and the R-M Trust
Company as Rights Agent (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K
filed on January 23, 2003); Amendment to Rights Agreement between the Company and CIBC
Mellon Trust Company (formerly, the R-M Trust Company) dated as of June 30, 1999
(incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the period ended
June 30, 1999)
Form of Four-Year Warrant (incorporated by reference to Exhibit 4.4 to the Company's Form 8-
K filed August 31, 1999)
Warrants dated as of September 11, 2001, between the Company and Barnato Exploration
Limited.
Warrant, dated July 19, 2002, between the Company and Ware Limited.
Form of Warrant, dated as of January 2, 2002 (incorporated by reference to the Company’s
Form S-3 (Reg. No. 333-82106) filed on February 4, 2002)
Warrant Indenture, dated July 17, 2002, among the Company and CIBC Mellon Trust, as
Trustee, including the Form of Warrant (incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K filed on August 5, 2002)
Form of Underwriters’ Warrants (incorporated by reference to Exhibit 4.3 to the Company’s
Registration Statement on Form S-3/A (Reg. 333-91666) filed on July 15, 2002)
Form of Warrant, dated December 12, 2002 (incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K filed on December 13, 2002)
Warrant Indenture, dated as of February 14, 2003, between Golden Star Resources Ltd. and
CIBC Mellon Trust Company, including the Form of Warrant (incorporated by reference to
Exhibit 4.1 of the Company’s Form 8-K filed on February 14, 2003)
Form of Underwriters’ Warrant, dated February 14, 2003 (incorporated by reference to Exhibit
4.2 of the Company’s Form 8-K filed on February 14, 2003)
Summary of Executive Management Performance Bonus Plan (incorporated by reference to
Exhibit 10.1 of the Company’s Form 8-K filed on January 23, 2003)
Amended and Restated 1997 Stock Option Plan, effective as of April 3, 2002 (incorporated by
reference to Exhibit 10.2 of the Company’s Form 8-K filed on January 23, 2003)
Form of Indemnification Agreement between the Company and its officers and directors
(incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on January 23,
2003)
Summary of Severance Arrangements between the Company and certain executive officers
(incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed on January 23,
2003)
Employees' Stock Bonus Plan amended and restated to April 6, 2000 (incorporated by reference
to Exhibit 10(j) to the Company's Form 10-K for the year ended December 31, 2000)
Guyanor Ressources S.A. Stock Option Plan amended and restated as of June 15, 1999 (English
translation) (incorporated by reference to Exhibit 10.35(a) to the Company's Form 10-K for the
year ended December 31, 1999)
83
10.7
10.8
10.9
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
Standardized Adoption Agreement for a 401-K Savings Plan adopted January 1, 1996
(incorporated by reference to Exhibit 10.28 to the Company's Form 10-K for the year ended
December 31, 1995)
Employment contract with Mr. Peter Bradford dated November 1, 1999 (incorporated by
reference to Exhibit 10.38 (c) to the Company's form 10-K for the year ended December 31,
1999)
Agreements between the Company and its outside directors granting them options to purchase
Guyanor Class "B" common shares, (1) dated December 8, 1995, and December 10, 1996
(incorporated by reference as Exhibit 10.39 to the Company's Form 10-K for the year ended
December 31, 1996), (2) dated December 9, 1997 (incorporated by reference to Exhibit 10.39(a)
to the Company's Form 10-K for the year ended December 31, 1997), (3) dated December 8,
1998 (incorporated by reference to Exhibit 10.39(b) to the Company's Form 10-K for the year
ended December 31, 1998), (4) dated June 15, 1999 (incorporated by reference to Exhibit
10.39(c) to the Company's Form 10-K for the year ended December 31, 1999), and (5) dated
August 16, 2001
Agreement for the Sale and Purchase of Certain of the Assets of Satellite Goldfields Limited
between The Law Debenture Trust Corporation P.L.C. and Wexford Goldfields Limited dated
March 1, 2002 (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed on
September 30, 2002)
Agreement for the Sale and Purchase of Certain of the Assets of Satellite Goldfields Limited
between Satellite Goldfields Limited, The Law Debenture Trust Corporation P.L.C. and
Wexford Goldfields Limited dated March 15, 2002 (incorporated by reference to Exhibit 2.2 of
the Company’s Form 8-K filed on September 30, 2002)
Common Terms Agreement for Wassa Gold Project between Wexford Goldfields Limited, any
other Obligor Party thereto from time to time, Standard Bank London Limited and The Law
Debenture Trust Corporation P.L.C. dated June 26, 2002 (incorporated by reference to Exhibit
2.3 of the Company’s Form 8-K filed on September 30, 2002)
Wassa Project Facility Agreement between Wexford Goldfields Limited, the lenders listed in
Schedule 1 thereto and Standard Bank London Limited dated June 25, 2002 (incorporated by
reference to Exhibit 2.4 of the Company’s Form 8-K filed on September 30, 2002)
Royalty Agreement between Wexford Goldfields Limited and The Law Debenture Trust
Corporation P.L.C. dated June 26, 2002 (incorporated by reference to Exhibit 2.5 of the
Company’s Form 8-K filed on September 30, 2002)
Agreement for the Sale and Purchase of 90% of the Issued Capital of Wexford Goldfields
Limited between The Law Debenture Trust Corporation P.L.C. and Wasford Holdings dated
June 26, 2002, and amendment thereto dated September 13, 2002 (incorporated by reference to
Exhibit 2.6 of the Company’s Form 8-K filed on September 30, 2002)
Support Agreement for Wassa Gold Project between Golden Star Resources Ltd. and Standard
Bank London Limited dated September 13, 2002 (incorporated by reference to Exhibit 2.7 of
the Company’s Form 8-K filed on September 30, 2002)
Wassa Project Conversion Agreement between Wexford Goldfields Limited, Bayerische Hypo-
Und Vereinsbank AG, Dresdner Bank AG London Branch, Fortis Bank (Nederland) N.V. and
Standard Bank London Limited dated September 13, 2002 (incorporated by reference to Exhibit
2.8 of the Company’s Form 8-K filed on September 30, 2002)
84
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
Wassa Gold Project Second Royalty Agreement between Wexford Goldfields Limited, the
persons from time to time party thereto and Standard Bank London Limited dated September
13, 200 (incorporated by reference to Exhibit 2.9 of the Company’s Form 8-K filed on
September 30, 2002)
Sale of Shares Agreement with Barnato Exploration Ltd., dated June 21, 2001, for the purchase
of Prestea mining lease rights and Barnex Isle of Man (incorporated by reference to Exhibit
10(z) of the Company’s Form 10-K for the year ended December 31, 2001)
Agreement, dated November 16, 2001, between Bogoso Gold Limited and Prestea Gold
Resources Limited for the purchase of Prestea mining lease rights and option payments
(incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed on March 6, 2002)
Share and Asset Acquisition Agreement, dated August 6, 2001, among Anvil Mining NL, Anvil
International Finance Limited and the Company, regarding purchase of 20% interest in Bogoso
Gold Limited (incorporated by reference to Exhibit 10(bb) to the Company’s Form 10-K for the
year ended December 31, 2001)
Guiana Shield Transaction Agreement with Cambior Inc. dated October 25, 2001 for the sale
and swap of Golden Star's interest in Gross Rosebel and other properties (incorporated by
reference to Exhibit 10.3 to the Company's Form 8-K filed March 6, 2002)
Mining lease, dated June 29, 2001, between the Government of the Republic of Ghana and
Bogoso Gold Limited, relating to the Prestea property (incorporated by reference to Exhibit 10.1
to the Company's Form 8-K filed on March 6, 2002)
Joint Operating Agreement, dated January 31, 2002, between Bogoso Gold Limited and Prestea
Gold Resources Limited.
Memorandum of Agreement, dated March 14, 2002, among Prestea Gold Resources, Bogoso
Gold Limited and others
21.1
Subsidiaries of the Company
23.1
Consent of PricewaterhouseCoopers LLP
99.1
99.2
Certificate of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002)
Certificate of Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002)
85
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
GOLDEN STAR RESOURCES LTD.
Registrant
By:
/s/ Peter J. Bradford
Peter J. Bradford
President and CEO
Date:
March 25, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated:
By:
/s/ Peter J. Bradford
By:
/s/ Allan J. Marter
Name:
Peter J. Bradford
Name:
Allan J. Marter
Title:
President and CEO
Title:
Senior Vice-President and CFO
Date:
March 25, 2003
Date:
March 25, 2003
By:
/s/ James E. Askew
By:
/s/ David K. Fagin
Name:
James E. Askew
Name:
David K. Fagin
Title:
Director
Title:
Director
Date:
March 25, 2003
Date:
March 25, 2003
By:
/s/ Ian MacGregor
By:
/s/ Robert R. Stone
Name:
Ian MacGregor
Name:
Robert R. Stone
Title:
Director
Title:
Director
Date:
March 25, 2003
Date:
March 25, 2003
86
I, Peter J. Bradford, certify that:
CERTIFICATIONS
1. I have reviewed this report on Form 10-K of Golden Star Resources Ltd. (“Registrant”);
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in this annual report;
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and procedures as of a date within 90 days prior
to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the
Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the Registrant's internal controls; and
6. The Registrant's other certifying officer and I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 25, 2003
/s/ Peter J. Bradford
Peter J. Bradford
President and CEO
87
I, Allan J. Marter, certify that:
1. I have reviewed this annual report on Form 10-K of Golden Star Resources Ltd. (“Registrant”);
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as
of, and for, the periods presented in this annual report;
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure controls and procedures as of a date within 90 days prior
to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the
Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the Registrant's internal controls; and
6. The Registrant's other certifying officer and I have indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 25, 2003
/s/ Allan J. Marter
Allan J. Marter
Senior Vice President and Chief Financial Officer
88
C O R P O R A T E
I N F O R M A T I O N
F O R M 1 0 - K
The Company’s 2002 Annual Report on Form 10-K
is contained herein. Exhibits to the Form 10-K will
be available upon payment of reproduction costs.
Requests should be addressed to:
Golden Star Resources Ltd.
Investor Relations
10579 Bradford Road, Suite 103
Littleton, Colorado 80127
U.S.A.
R E G I S T E R E D O F F I C E
Golden Star Resources Ltd.
19th Floor, 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3H4
S T O C K E X C H A N G E L I S T I N G S / T R A D I N G
Toronto Stock Exchange Symbol: GSC
Warrants Expiring July 2004: GSC.WT
Warrants Expiring February 2007: GSC.WT.A
American Stock Exchange Symbol: GSS
Berlin Stock Exchange Symbol: GS5
R E G I S T R A R A N D T R A N S F E R A G E N T
Questions regarding the change of stock ownership,
consolidation of accounts, lost certificates, change of
address and other such matters should be directed to:
CIBC Mellon Trust Company
Attention: Shareholder Services
P.O. Box 1900
Vancouver, British Columbia
Canada V6C 3K9
Toll Free: (800) 387-0825
A U D I T O R S
PricewaterhouseCoopers LLP
Calgary, Alberta, Canada
A N N U A L M E E T I N G
The Annual General Meeting of Shareholders of
Golden Star Resources Ltd. will be held on Thursday,
May 29, 2003 at 2:30 p.m. at the Fairmont Royal
York Hotel, Manitoba Room, 100 Front Street West,
Toronto, Ontario, Canada
G U Y A N O R R E S S O U R C E S S . A .
Guyanor Ressources S.A. (TSX: GRL.B, Noveau Marché:
GUYN) is a 73% owned subsidiary of Golden Star.
D I R E C T O R S
James E. Askew 3*
Denver, Colorado
Corporate Director
Peter J. Bradford
Littleton, Colorado
President and Chief Executive Officer of the Corporation
David K. Fagin 1*, 2
Denver, Colorado
Corporate Director
Ian MacGregor 1, 2*
Toronto, Ontario, Canada
Counsel with Fasken Martineau DuMoulin LLP
Robert R. Stone 1, 2, 3
Vancouver, British Columbia, Canada
Non-Executive Chairman of the Board,
Corporate Director and Business Consultant
* Board Committee Chairman
1 Audit Committee Member
2 Legal and Corporate Governance Committee Member
3 Compensation Committee Member
M A N A G E M E N T
Peter J. Bradford
President and Chief Executive Officer
Richard Q. Gray
Senior Vice President and Chief Operating Officer
Allan J. Marter
Senior Vice President, Chief Financial Officer and
Corporate Secretary
Dr. Douglas A. Jones
Vice President, Exploration
Peter Claringbull
Vice President and General Manager of
Bogoso Gold Limited
C O R P O R A T E H E A D Q U A R T E R S
Golden Star Resources Ltd.
10579 Bradford Road, Suite 103
Littleton, Colorado 80127
U.S.A.
Telephone: (303) 830-9000
Toll Free: (800) 553-8436
Facsimile: (303) 830-9094
R E P R E S E N T A T I V E O F F I C E
Bogoso Gold Limited
32 Akosombo Road
Airport Residential Area
P.O. Box 16075
Airport Post Office
Accra, Ghana
Telephone: 233-21-779-040
Facsimile: 233-21-777-700
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G O L D E N S T A R
R E S O U R C E S LT D.
800.553.8436
www.gsr.com
Toronto Stock Exchange: GSC
American Stock Exchange: GSS