G O L D E N S T A R
r e c o r d g o l d
p r o d u c t i o n
2 0 0 9 A N N u A L R E p O R T
Bogoso
Pampe
Wassa
GHANA
Chujah-Dumasi
Buesichem
Bogoso North
Bogoso
Processing
Plants
Prestea South
Prestea Mine
Prestea
Mine &
Processing Plant
Benso
Subriso Pits
Adoikrom
Hwini-Butre
Father Brown
Active Pits
Deposits
Mining Lease
Exploration - GSR
Exploration - JV
100 km
North
Golden Star Resources Ltd. is a 25-year-old mid-tier gold mining
company that produced 409,902 ounces of gold in 2009 and plans to produce 400,000 ounces in 2010. The Company
has two operating mines in Ghana, West Africa. Growth opportunities for the future will be a result of successful
exploration combined with appropriate acquisitions that will be accretive to shareholders.
During the last commodities down cycle, Golden Star was able to acquire property at relatively low prices, allowing
the Company to become the largest holder of mining properties on the prolific Ashanti Gold Trend. This land position,
combined with our two processing plants at Bogoso/Prestea, is the basis for expansion at the Bogoso/Prestea mine
and the source of future growth of the Company. We can now process any ore type found at the mine site.
As we expected from the time we acquired the Wassa assets and, subsequently, the HBB properties, the Wassa
mine has turned into a significantly profitable operation. Profitability was enhanced when Benso commenced ore
delivery to Wassa in 2008 and Hwini-Butre in 2009.
Shares of Golden Star are widely held by both retail and institutional shareholders and are traded on the NYSE
Amex stock exchange, Toronto Stock Exchange and Ghana Stock Exchange under the symbols GSS, GSC and
GSR, respectively.
Front Cover
The end result of all our exploration and mining activities and the source of our market valuations is the amount of gold produced.
From our beginnings as a producing company in 1999 with production around 40,000 ounces and mineral resources of some
200,000 ounces of gold, we have grown to gold production of almost 410,000 ounces, reserves of 3.7 million ounces and
measured and indicated resources of 2.2 million ounces and inferred resources of 1.6 million ounces of gold. The goal of management
continues to be to build shareholder value through increased gold production, increased mineral reserve and resource bases, and
reduced costs across the board, accomplished in a safe manner. These goals will be attained due to the efforts of our employees,
who are the fundamental drivers of our success.
Forward-Looking Statements are made in this report to give the reader an indication of our business prospects, plans and objectives. Although we believe these statements
are reasonable as of the date of this report, readers are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause
actual results, performance or achievements to differ materially from those stated. There can be no assurance that future developments affecting Golden Star will be those
anticipated by us. Readers should refer to the risks involved in making forward-looking statements, which are given on pages 2 and 13 of our Form 10-K, contained herein.
Non-GAAP Measures are used in this report, in particular “total cash cost” and “cash operating cost” on a per-ounce of gold basis. This information differs from measures of
performance prepared in accordance with GAAP. Readers should examine the cautionary and explanatory statement on pages 2 and 34 of our Form 10-K, contained herein.
Cautionary Note to US Investors concerning estimates of Inferred Mineral Resources
This section uses the term “Inferred Mineral Resources.” We advise US investors that while this term is recognized and required by Canada’s National Instrument 43-101,
the US 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 Inferred Mineral Resources will ever be upgraded to a higher category.
In accordance with Canadian rules, estimates of Inferred Mineral Resources cannot form the basis of feasibility or other economic studies. US investors are cautioned
not to assume that part or all of the Inferred Mineral Resource exists, or is economically or legally mineable.
Letter to Shareholders
What a difference a year makes! Golden Star had a
•
Net of mining depletion,
record year by any measure in 2009. Record 2009 gold
increased Proven and
sales of 409,902 ounces were a 39% increase over gold
Probable Mineral
sales in 2008. Revenues were $400.7 million, a 56%
Reserves by 450,000
increase over revenues in 2008. Cash operating costs
ounces or 14% during
were $564 per ounce, a 21% improvement over 2008
2009; and,
costs. We had a year-end cash balance of $154.1 million
compared to $33.6 million at the end of 2008. Our
operations have performed well for six consecutive
quarters. By any measure, Golden Star had a great year.
The highlights for 2009 include:
• Achieved another record production year with
sales of 409,902 ounces of gold;
•
Net income of $16.5
million or $0.070 per share.
Tom Mair
President & CEO
I would like to review some Golden Star history to put
into perspective the significance of our production
growth over the years. Prior to 1999, we were a gold
exploration company and achieved considerable suc-
cess finding two significant deposits which became
•
Improved cash operating costs to $564 per ounce,
mines, developed by another mining company. At the
21% less than costs in 2008;
nadir of the gold market, in 1999 we transformed our-
• Record gold revenues of $400.7 million, up 56%
over revenues in 2008;
• Cash flow from operations before working capital
changes of $123.0 million or $0.518 per share;
selves into a gold producing company with the acquisi-
tion of the Bogoso Mine, which had a mill, an extensive
concession with tremendous exploration potential but
very few ounces in resource. In that first year we pro-
duced about 40,000 ounces of gold and every spare
• Net cash provided by operating activities of $104.6
dollar went into drilling. In the eleven years since, we
million or $0.441 per share;
have sold over 2 million ounces from our Bogoso and
• Year-end cash balance of $154.1 million compared
Wassa Mines and ended 2009 with 3.7 million ounces
to $33.6 million at the end of 2008;
proven and probable reserves, 2.2 million ounces of
measured and indicated resources and 1.6 million ounces
of inferred resources. We continue to drill and continue
2009 Annual Re p or t | 1
Historical Gold Production (ounces)
Stock Price
500,000
400,000
300,000
200,000
100,000
0
$5.00
$4.00
$3.00
$2.00
$1.00
$1,500
$1,200
$900
$600
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
GSS (US Dollars)
GSC (Canadian Dollars)
Gold Price (US Dollars)
to find gold within haulage distance of our three milling
Throughout 2008 and 2009, we worked diligently to
operations in Ghana. This is strong testament to our
decrease our cash operating costs in a generally rising
conviction that Golden Star’s Ghanaian concessions,
cost environment and achieved $564 per ounce for
straddling the Ashanti Trend, one of the most prolific
2009, 21% lower than 2008. The Bogoso/Prestea mine
gold districts in the world, have a long and profitable
produced 186,054 ounces for 2009, a 9% improvement
future ahead.
Financially, Golden Star starts 2010 in the best position
we have ever experienced with strong forward-looking
cash flows and a healthy balance sheet. Net cash
provided by operating activities was $104.6 million or
$0.441 per share and in December added net proceeds
of $71.0 million to the treasury through the equity offering
of 20 million shares at a price of $3.75 per share. We
over 2008. All of this production derived from the sulfide
plant at Bogoso. Our cost containment at Bogoso/Prestea
has yielded positive results with cash operating costs of
$705 for the year 16% lower than 2008 when the cash
operating costs were $837 per ounce. Gold sales from the
Wassa mine totaled 223,848 ounces in 2009, an increase of
78% over 2008. Cash operating costs were $447 per
ounce, an improvement of 19% better than 2008.
ended the the year with $154.1 million in cash, up from
Our primary development projects are Prestea South
$33.6 million at the end of 2008.
and the Prestea Underground. At Prestea South, we are
awaiting the EPA organized public hearing which leads
to the issuance of the environmental permit, the last
2 | Gold e n St ar
hurdle before we can move this project into production.
provides immediate employment in our catchment
Once this final permit is obtained, we will begin con-
areas for several hundred people, an alternative sustain-
struction of the haul road extension and commence
able livelihood for long into the future and should help
mine development. This oxide ore along with oxide ore
reduce the number of people working as illegal miners.
from the Pampe deposit will be treated by the Bogoso
oxide plant to deliver low-cost ounces. The Prestea
Underground project is being re-examined to determine
if a medium sized mining operation utilizing existing
This truly has been an exciting year to be at Golden Star
with record production, record revenues, record cashflow
and an outstanding financial condition. We delivered
what we promised and then some. What a difference a
infrastructure would be viable.
year makes.
The exploration budget for 2009 was a modest $9 million
and the majority of those funds were spent in and around
our operations to increase reserves and resources within
hauling distance of our mines. Exploration activities
were also conducted at our properties in Côte d’Ivoire,
Sierra Leone, Burkina Faso, Niger and Brazil. During
2010 we will double our exploration budget to $18 million,
most of which will be spent on brownfields exploration
In closing, I would like to thank our Board of Directors,
management team and our employees for helping to
deliver these outstanding results. It is through their
continuing efforts to deliver gold production at reasonable
costs that we were able to achieve these results. Lastly,
we thank you, our shareholders for your support throughout
the year. We are looking forward to building on this
success into next year and into the foreseeable future.
around Wassa and Bogoso/Prestea with the intent of
adding new resource ounces and converting existing
Yours sincerely,
resources to reserves.
We continued to invest in the expansion of the Golden
Tom Mair
Star Oil Palm Plantation. In 2008 we handed over the
first 4-hectare farms to 69 smallholders. We added
President & CEO
March 10, 2010
an additional 63 smallholders in 2009. The program
2009 Annual Re p or t | 3
Mineral Reserves
The following table summarizes our estimated Proven and Probable Mineral Reserves as of December 31, 2009 and December 31, 2008:
Property
Bogoso/Prestea
Non Refractory
Refractory
Total
Wassa
Non Refractory
Total
Totals
Non Refractory
Refractory
Total 2009
Total 2008
Proven
Gold
Grade
(g/t)
Tonnes
(millions)
Probable
Total
Ounces
(millions)
Tonnes
(millions)
Gold
Grade
(g/t)
Contained
Ounces
(millions)
Tonnes
(millions)
Gold
Grade
(g/t)
Contained
Ounces
(millions)
1.1
9.7
10.8
0.8
0.8
1.9
9.7
11.6
11.2
1.60
3.08
2.92
1.91
1.91
1.73
3.08
2.86
3.10
0.06
0.96
1.01
0.05
0.05
0.11
0.96
1.06
1.12
5.0
15.5
20.5
16.3
16.3
21.3
15.5
36.8
24.3
2.60
2.65
2.64
1.79
1.79
1.98
2.65
2.26
2.76
0.42
1.32
1.73
0.94
0.94
1.35
1.32
2.67
2.16
6.1
25.1
31.2
17.1
17.1
23.2
25.1
48.3
35.5
2.42
2.81
2.74
1.79
1.79
1.96
2.81
2.40
2.87
0.47
2.27
2.75
0.94
0.94
1.46
2.27
3.73
3.28
Notes to the Mineral Reserves Statement:
Our Mineral Reserves for 2009 and 2008 were determined using a gold price of $850 and $700 per
ounce, respectively, which is approximately equal to the three year average price of gold and is
based on a mine plan derived from an optimized pit shell. The stated Mineral Reserves have been
prepared in accordance with Canada’s National Instrument 43-101 Standards of Disclosure for
Mineral Projects. Mineral Reserves are equivalent to Proven and Probable Reserves as defined by
the US Securities and Exchange Commission Industry Guide 7.
43-101. Additional information on the estimation of our Mineral Reserves can be found in the Form 10-K
report filed at www.sedar.com and www.sec.gov and contained within this document.
Mineral Reserves are expressed on a 100% basis. Our share of the Mineral Reserves is subject to the
Government of Ghana’s 10% carried interest, which entitles it to a 10% dividend once our capital costs
have been recovered.
The 2009 Mineral Reserves were prepared under the supervision of Karl Smith, Vice President Technical
Services and the 2008 Mineral Reserves were prepared by Peter Bourke, former Vice President Technical
Services. Both Smith and Bourke are a “Qualified Person” as defined by Canada’s National Instrument
The terms “non refractory” and “refractory” refer to the metallurgical characteristics of the ore. We plan to
process the refractory ore in our sulfide processing plant at Bogoso and to process the non refractory
ore using our more conventional gravity, flotation and cyanidation techniques.
Mineral Resources
Measured
Indicated
Measured & Indicated
Inferred
Property
Bogoso/Prestea
Prestea Underground
Wassa
Benso
Hwini-Butre
Chichiwelli Manso
Goulagou
Total 2009
Total 2008
Tonnes
(millions)
Gold Grade
(g/t)
Tonnes
(millions)
Gold Grade
(g/t)
Tonnes
(millions)
Gold Grade
(g/t)
Tonnes
(millions)
Gold Grade
(g/t)
4.7
–
0.1
–
–
–
–
4.8
5.4
1.90
–
0.82
–
–
–
–
1.87
2.24
12.9
1.4
4.3
0.2
0.3
–
2.7
21.8
21.6
2.20
13.36
0.89
1.73
5.38
–
1.75
2.66
2.89
17.6
1.4
4.4
0.2
0.3
–
2.7
26.6
27.0
2.12
13.36
0.89
1.73
5.38
–
1.75
2.52
2.76
3.8
4.1
0.1
0.3
0.4
1.9
0.5
11.0
20.2
3.10
7.79
1.70
3.98
5.28
1.91
1.02
4.62
3.68
Notes to the Mineral Resources Statement:
The Mineral Resources, other than for Goulagou, were estimated using optimized pit shells at a gold price of
$1,000 per ounce from which Mineral Reserves have been subtracted. Other than gold price, the same
optimized pit shell parameters and modifying factors used to determine the Mineral Reserves were used
to determine the Mineral Resources. The Mineral Resources are not included in and are in addition to the
Mineral Reserves described above. The Mineral Resources for Goulagou were estimated using optimized
pit shells at a gold price of $560. Pit optimization parameters for the Goulagou Mineral Resources were
estimated based on feasibility studies on other similar gold deposits in Burkina Faso, Golden Star’s
experience in West Africa, and from limited metallurgical test work on the Goulagou ores. Heap leach
processing was the assumed processing option for this deposit. The Qualified Person for the estimation
of the Mineral Resources is S. Mitchel Wasel, Golden Star Resources Vice President of Exploration.
Mineral Resources are shown on a 100% basis. The Mineral Resources shown above, other than for
Goulagou, are subject to the Government of Ghana’s 10% carried interest, which entitles it to a 10%
dividend once capital costs have been recovered. The Mineral Resources at Prestea Underground are
subject to the Government of Ghana’s 19% minority interest, with Golden Star having an 81% beneficial
interest. Goulagou is 10% owned by a third party. The Mineral Resources for Goulagou were estimated
using optimized pit shells at a gold price of $560. Pit optimization parameters for the Goulagou Mineral
Resources were estimated based on feasibility studies on other similar gold deposits in Burkina Faso,
Golden Star’s experience in West Africa, and from limited metallurgical test work on the Goulagou ores.
Heap leach processing was the assumed processing option for this deposit. The Hwini Butre Indicated
Mineral Resource includes 0.29 million tonnes at a grade of 5.38 g/t which occurs below the $1,000 pit
shells and which we believe may be exploitable by underground mining.
4 | Gold e n St ar
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 2009
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)
98-0101955
(I.R.S. Employer Identification No.)
10901 West Toller Drive, Suite 300
Littleton, Colorado
(Address of Principal Executive Office)
80127-6312
(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
Common Shares
Name of each exchange on which registered
NYSE Amex
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No
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 (the “Act”) 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 No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interac-
tive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incor-
porated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. (See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act). (Check one):
Large accelerated filer: o
Accelerated filer:
Non-accelerated filer: o
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes o No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was approximately
$482.2 million as of June 30, 2009, based on the closing price of the shares on the NYSE Amex as of that date of $2.05 per share.
Number of Common Shares outstanding as at February 23, 2010: 257,407,061.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation
14A in connection with the 2010 Annual Meeting of Shareholders are incorporated by reference to Part III of this Annual
Report on Form 10-K.
2009 Annual Re p or t | 1
REPORTING CURRENCY,
FINANCIAL AND OTHER
INFORMATION
All amounts in this report are expressed in United States (“US”)
dollars, unless otherwise indicated. Canadian currency is denoted
as “Cdn$.”
Financial information is presented in accordance with accounting
principles generally accepted in Canada (“Cdn GAAP” or “Cana-
dian GAAP”). Differences between accounting principles gener-
ally accepted in the US (“US GAAP”) and Canadian GAAP, as
applicable to Golden Star Resources Ltd., are explained in Note 26
to the Consolidated Financial Statements.
References to “Golden Star,” the “Company,” “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.
Resources; geological, environmental, community and engineer-
ing studies; expectations of the resettlement of communities; ex-
ploration efforts and activities; availability, cost and efficiency of
mining equipment; ore grades; reclamation work; expected recla-
mation expenditures over the next five years; expected PFIC (as
defined below) status in 2010 and in the future; our anticipated
investing and exploration spending in 2010; identification of
acquisition and growth opportunities; power costs; the ability to
meet total power requirements; completion of construction of the
Bogoso power plant; retention of earnings from our operations;
our objectives for 2010; and sources of and adequacy of liquidity
to meet capital and other needs in 2010.
The following, in addition to the factors described under “Risk
Factors” in Item 1A below, are among the factors that could
cause actual results to differ materially from the forward-looking
statements:
• significant increases or decreases in gold prices;
• losses or gains in Mineral Reserves from changes in operating
costs and/or gold prices;
NON-GAAP FINANCIAL MEASURES
• failure of exploration efforts to expand Mineral Reserves
In this Form 10-K, we use the terms “total cash cost per ounce”
and “cash operating cost per ounce” which are considered Non-
GAAP financial measures as defined in Securities and Exchange
Commission (“SEC”) Regulation S-K Item 10 and applicable Ca-
nadian securities law and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with Cdn GAAP or US GAAP. See Item 7 Management’s Discus-
sion and Analysis of Financial Condition and Results of Opera-
tions for a definition of these measures as used in this Form 10-K.
STATEMENTS REGARDING FORWARD-
LOOKING INFORMATION
This Form 10-K contains forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933, as amend-
ed and Section 21E of the Securities Exchange Act of 1934, as
amended, and within the meaning of applicable Canadian securi-
ties law, with respect to our financial condition, results of opera-
tions, business prospects, plans, objectives, goals, strategies, future
events, capital expenditures, and exploration and development ef-
forts. Words such as “anticipates,” “expects,” “intends,” “forecasts,”
“plans,” “believes,” “seeks,” “estimates,” “may ,” “will,” and similar
expressions (including negative and grammatical variations) tend
to 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 in this Form 10-K.
These statements include comments regarding: anticipated attain-
ment of gold production rates; production and cash operating cost
estimates for 2010; anticipated commencement dates of mining
and production at Prestea South and Pampe development of the
Dumasi pit; production capacity, production rates, and production
costs; cash operating costs generally; gold sales; mining operations
and recovery rates; ore delivery; ore processing; potential mine life;
permitting; establishment and estimates of Mineral Reserves and
2 | Gold e n St ar
around our existing mines;
• unexpected changes in business and economic conditions;
• inaccuracies in Mineral Reserves and non-reserves estimates;
• changes in interest and currency exchange rates;
• timing and amount of gold production;
• unanticipated variations in ore grade, tonnes mined and
crushed or milled;
• unanticipated recovery or production problems;
• effects of illegal mining on our properties;
• changes in mining and processing costs, including changes to
costs of raw materials, supplies, services and personnel;
• changes in metallurgy and processing;
• availability of skilled personnel, contractors, materials, equip-
ment, supplies, power and water;
• changes in project parameters or mine plans;
• costs and timing of development of new Mineral Reserves;
• weather, including drought or excessive rainfall in West
Africa;
• changes in regulatory frameworks based upon perceived cli-
mate trends;
• results of current and future exploration activities;
• results of pending and future feasibility studies;
• acquisitions and joint venture relationships;
• political or economic instability, either globally or in the
countries in which we operate;
• changes in regulations affecting our operations, particu-
larly in Ghana, where our principal producing properties
are located;
• local and community impacts and issues, including
resettlement;
• availability and cost of replacing Mineral Reserves;
• timing of receipt and maintenance of government approvals
and permits;
• unanticipated transportation costs and shipping incidents
and losses;
• accidents, labor disputes and other operational hazards;
• environmental costs and risks;
• unanticipated title issues;
• competitive factors, including competition for property
acquisitions;
• possible litigation; and
• availability of capital at reasonable rates or at all.
These factors are not intended to represent a complete list of the
general or specific factors that could affect us. Your attention is
drawn to other risk factors disclosed and discussed in Item 1A
below. We undertake no obligation to update forward-looking
statements except as may be required by applicable laws.
CONVERSION FACTORS AND ABBREVIATIONS
For ease of reference, the following conversion factors are provided:
1 acre
1 foot
= 0.4047
hectare
1 mile
= 0.3048 meter 1 troy ounce
= 1.6093
kilometers
= 31.1035
grams
1 gram per
metric tonne
1 short ton
(2000 pounds)
= 0.0292 troy
ounce/short
ton
= 0.9072 tonne
1 tonne
1 hectare
= 1,000 kg or
2,204.6 lbs
= 10,000
square meters
1 square mile
= 2.59 square
kilometers
1 square
kilometer
1 kilogram
= 100 hectares
= 2.204
pounds or
32.151 troy oz
1 hectare
= 2.471 acres
The following abbreviations may be used herein:
Au
g
g/t
ha
km
km 2
kg
m
= gold
= gram
= grams per
tonne
m2
m3
mg
= hectare
mg/m3
= square meter
= cubic meter
= milligram
= milligrams
per cubic meter
= kilometer
T or t
= tonne
= square kilo-
meters
= kilogram
= meter
oz
ppb
Ma
= troy ounce
= parts per
billion
= million years
Note: All units in this report are stated in metric measurements unless
otherwise noted.
GLOSSARY OF TERMS
We report our Mineral Reserves to two separate standards to meet
the requirements for reporting in both Canada and the United
States. Canadian reporting requirements for disclosure of mineral
properties are governed by National Instrument 43-101 (“NI 43-
101”). The definitions in NI 43-101 are adopted from those given
by the Canadian Institute of Mining, Metallurgy and Petroleum.
US reporting requirements for disclosure of mineral properties are
governed by the SEC Industry Guide 7. These reporting standards
have similar goals in terms of conveying an appropriate level of
confidence in the disclosures being reported, but embody differing
approaches and definitions.
We estimate and report our Mineral Resources and Mineral Re-
serves according to the definitions set forth in NI 43-101 and
modify them as appropriate to conform to SEC Industry Guide
7 for reporting in the US. The definitions for each reporting stan-
dard are presented below with supplementary explanation and de-
scriptions of the similarities and differences.
NI 43-101 DEFINITIONS
Mineral Reserve The term “Mineral Reserve” refers to the eco-
nomically mineable part of a Measured or Indicated Mineral
Resource demonstrated by at least a preliminary feasibility
study. The study must include adequate information on min-
ing, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that eco-
nomic extraction can be justified. A Mineral Reserve includes
diluting materials and allowances for losses that may occur
when the material is mined.
Proven Mineral Reserve The term “Proven Mineral Reserve”
refers to the economically mineable part of a Measured Min-
eral Resource demonstrated by at least a preliminary feasibility
study. This study must include adequate information on min-
ing, processing, metallurgical, economic, and other relevant fac-
tors that demonstrate, at the time of reporting, that economic
extraction is justified.
Probable Mineral Reserve The term “Probable Mineral Reserve”
refers to the economically mineable part of an Indicated, and
in some circumstances, a Measured Mineral Resource demon-
strated by at least a preliminary feasibility study. This study must
include adequate information on mining, processing, metallur-
gical, economic, and other relevant factors that demonstrate, at
the time of reporting, that economic extraction is justified.
Mineral Resource The term “Mineral Resource” refers to a con-
centration or occurrence of diamonds, natural solid inorganic
material, or natural solid fossilized organic material including
base and precious metals, coal, and industrial minerals 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 extrac-
tion. The location, quantity, grade, geological characteristics and
continuity of a Mineral Resource are known, estimated or inter-
preted from specific geological evidence and knowledge.
Measured Mineral Resource The term “Measured Mineral Re-
source” refers to that part of a Mineral Resource for which
quantity, grade or quality, densities, shape and physical char-
acteristics 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 explora-
tion, 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.
2009 Annual Re p or t | 3
Indicated Mineral Resource The term “Indicated Mineral Re-
source” refers to that part of a Mineral Resource for which quan-
tity, 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 param-
eters, to support mine planning and evaluation of the economic
viability of the deposit. The estimate is based on detailed and
reliable exploration and testing information gathered 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.
Inferred Mineral Resource The term “Inferred Mineral Resource”
refers to that part of a Mineral Resource for which quantity and
grade or quality can be estimated on the basis of geological evi-
dence and limited sampling and reasonably assumed, but not
verified, geological and grade continuity. The estimate is based
on limited information and sampling gathered through appro-
priate techniques from locations such as outcrops, trenches, pits,
workings and drill holes.
Qualified Person (1) The term “qualified person” refers to an indi-
vidual who is an engineer or geoscientist with at least five years
of experience in mineral exploration, mine development or op-
eration or mineral project assessment, or any combination of
these, has experience relevant to the subject matter of the min-
eral project and the technical report and is a member in good
standing of a professional association.
SEC INDUSTRY GUIDE 7 DEFINITIONS
reserve The term “reserve” refers to that part of a mineral deposit
which could be economically and legally extracted or produced
at the time of the reserve determination. Reserves must be sup-
ported by a feasibility (2) study done to bankable standards that
demonstrates the economic extraction. (“bankable standards”
implies that the confidence attached to the costs and achieve-
ments developed in the study is sufficient for the project to
be eligible for external debt financing.) A reserve includes ad-
justments to the in-situ tonnes and grade to include diluting
materials and allowances for losses that might occur when the
material is mined.
proven reserve The term “proven reserve” refers to reserves for
which (a) quantity is computed from dimensions revealed in
outcrops, trenches, workings or drill holes; grade and/or quality
are computed from the results of detailed sampling and (b) the
sites for inspection, sampling and measurement are spaced so
closely and the geologic character is so well defined that size,
shape depth and mineral content of reserves are well-established.
probable reserve The term “probable reserve” refers to reserves
for which quantity and grade and/or quality are computed from
information similar to that used for proven (measured) reserves,
but the sites for inspection, sampling, and measurement are far-
ther apart or are otherwise less adequately spaced. The degree of
assurance, although lower than that for proven reserves, is high
enough to assume continuity between points of observation.
mineralized material (3) The term “mineralized material” refers
to material that is not included in the reserve as it does not meet
all of the criteria for adequate demonstration for economic or
legal extraction.
non-reserves The term “non-reserves” refers to mineralized mate-
rial that is not included in the reserve as it does not meet all of
the criteria for adequate demonstration for economic or legal
extraction.
exploration stage An “exploration stage” prospect is one which is
not in either the development or production stage.
development stage A “development stage” project is one which
is undergoing preparation of an established commercially mine-
able deposit for its extraction but which is not yet in production.
This stage occurs after completion of a feasibility study.
production stage A “production stage” project is actively engaged
in the process of extraction and beneficiation of Mineral Re-
serves to produce a marketable metal or mineral product.
(1.) Industry Guide 7 does not require designation of a qualified person.
(2.) For Industry Guide 7 purposes the feasibility study must include ad-
equate information on mining, processing, metallurgical, economic,
and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified.
(3.) This category is substantially equivalent to the combined categories of
Measured Mineral Resource and Indicated Mineral Resource specified
in NI 43-101.
ADDITIONAL DEFINITIONS
alteration — any change in the mineral composition of a rock
brought about by physical or chemical means
arsenopyrite — a gray-to-white metallic mineral consisting of sul-
fide of iron and arsenic
Archean — the earliest eon of geologic time, dating from about
3800-2500 million years ago
assay — a measure of the valuable mineral content
Au — gold
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 cost — total cash costs for the period less produc-
tion royalties and production taxes
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 as it is leached by cyanide
craton — a stable relatively immobile area of the earth’s crust
cut-off grade — when determining economically viable Mineral
Reserves, the lowest grade of mineralized material that quali-
fies as ore, i.e. that can be mined and processed at a profit
cyanidation — the process of introducing cyanide to ore to
recover gold
diamond drilling — rotary drilling using diamond-set or dia-
mond-impregnated bits, to produce a solid continuous core of
rock sample
dip — the angle that a structural surface, a bedding or fault plane,
makes with the horizontal, measured perpendicular to the strike
of the structure
4 | Gold e n St ar
diorite — a group of intrusive rocks intermediate in composition
between acidic and basic, characteristically composed of dark-
colored amphibole, acid plagioclase, pyroxene and sometimes a
small amount of quartz.
disseminated — where minerals occur as scattered particles in the
rock
doré — unrefined gold bullion bars containing various impurities
such as silver, copper and mercury, which will be further refined
to near pure gold
fault — a surface or zone of rock fracture along which there has
been displacement
feasibility study — a comprehensive study of a mineral de-
posit in which all geological, engineering, legal, operating,
economic, social, environmental and other relevant factors
are considered in sufficient detail that it could reasonably
serve as the basis for a final decision by a financial institu-
tion to finance the development of the deposit for mineral
production.
formation — a distinct layer of sedimentary rock of similar
composition
gabbro — a group of dark-colored basic intrusive igneous rocks
(the intrusive equivalent to basalt)
gabbroic — rock masses made up of gabbro and other similar
dark-colored basic igneous rock
geochemistry — the study of the distribution and amounts of the
chemical elements in minerals, ores, rocks, solids, water, and the
atmosphere
geochemical prospecting — a prospecting technique which mea-
sures the content of certain metals in soils and rocks used to
define anomalies for further testing
geophysics — the study of the mechanical, electrical, gravitational
and magnetic properties of the earth’s crust
geophysical surveys — a survey method used primarily in the
mining industry as an exploration tool, applying the methods of
physics and engineering to the earth’s surface
geotechnical — the study of ground stability
grade — quantity of metal per unit weight of host rock
greenstone — a sequence of usually metamorphosed volcanic-
sedimentary rock assemblages
granodiorite — a group of coarse-grained plutonic rocks interme-
diate in composition between quartz diorite and quartz mon-
zonite containing quartz, plagioclase, potassium feldspar with
biotite and hornblende
granophyric — of or pertaining to granophyre which is an igne-
ous rock containing mainly of crystals of feldspar and quartz
that have crystallized together
heap leach — a mineral processing method involving the crush-
ing and stacking of an ore on an impermeable liner upon which
solutions are sprayed to dissolve metals i.e. gold, copper etc.; the
solutions containing the metals are then collected and treated to
recover the metals
host rock — the rock in which a mineral or an ore body may be
contained
hydrothermal — the products of the actions of heated water, such
as a mineral deposit precipitated from a hot solution
in-situ — in its natural position
laterite — a reddish mixture of clayey iron and aluminum oxides
and hydroxides formed by the weathering of basalt under
humid, tropical conditions.
life-of-mine — a term commonly used to refer to the likely term
of a mining operation and normally determined by dividing the
tonnes of Mineral Reserve by the annual rate of mining and
processing
lithology — the character of the rock described in terms of its
structure, color, mineral composition, grain size and arrange-
ment of tits component parts, all those visible features that in
the aggregate impart individuality to the rock
mafic — an adjective describing a silicate mineral or rock that is
rich in magnesium and iron. Common mafic rocks include
basalt and gabbro
mapped or geological mapping — the recording of geologic
information including rock units and the occurrence of struc-
tural features, and mineral deposits on maps
metavolcanic — a volcanic rock which shows evidence of having
been subjected to metamorphism
mineral — a naturally occurring inorganic crystalline material
having a definite chemical composition
mineralization — a natural accumulation or concentration in
rocks or soil of one or more potentially economic minerals, also
the process by which minerals are introduced or concentrated
in a rock
National Instrument 43-101 or NI 43-101 — standards of dis-
closure for mineral projects prescribed by the Canadian Securi-
ties Administration
non-refractory — ore containing gold that can be satisfactorily
recovered by basic gravity concentration or simple cyanidation
outcrop — that part of a geologic formation or structure that ap-
pears at the surface of the earth
open pit or open cut — surface mining in which the ore is ex-
tracted from a pit or quarry, the geometry of the pit may vary
with the characteristics of the ore body
ore — mineral bearing rock that can be mined and treated prof-
itably under current or immediately foreseeable economic
conditions
ore body — a mostly solid and fairly continuous mass of mineral-
ization estimated to be economically mineable
ore grade — the average weight of the valuable metal or mineral
contained in a specific weight of ore i.e. grams per tonne of ore
oxide — gold bearing ore which results from the oxidation of near
surface sulfide ore
Precambrian — period of geologic time, prior to 700 million
years ago
preliminary assessment — a study that includes an economic
analysis of the potential viability of Mineral Resources taken at
an early stage of the project prior to the completion of a prelimi-
nary feasibility study
2009 Annual Re p or t | 5
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. Guiana Shield
stratigraphic or stratigraphically — geology that deals with the
origin and succession of strata
strike — the direction or trend that a structural surface, e.g. a bed-
ding 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; metallic sulfur-bearing mineral often associated
with gold mineralization
tailings — fine ground wet waste material produced from ore after
economically recoverable metals or minerals have been extracted
Tarkwaian — a group of sedimentary rocks of Proterozoic age
named after the town of Tarkwa in southern Ghana where they
were found to be gold bearing
tectonic — relating to the forces that produce movement and
deformation of the Earth’s crust
tonne — metric tonne, equal to 1,000 kilograms or 2,204.6
pounds
total cash cost — cost of sales costs for the period less: mining
related depreciation and amortization, accretion of asset retire-
ment obligations costs, inventory write-offs and operations-
related foreign exchange gains/losses
transition ore — is an ore zone lying between the oxide ore
and the sulfide ore; ore material that is partially weathered
and oxidized
vein — a thin, sheet-like crosscutting body of hydrothermal min-
eralization, principally quartz
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 vol-
canic and sedimentary origin
wall rock — the rock adjacent to a vein
weathering — near surface alteration and oxidation of minerals
and rocks by exposure to the atmosphere or ground water
wire frame — a mesh of triangles used to define a volume in gen-
erating computerized geological Resources.
preliminary feasibility study and pre-feasibility study —
each mean a comprehensive study of the viability of a min-
eral project that has advanced to a stage where the min-
ing method, in the case of underground mining, or the pit
configuration in the case of an open pit, has been estab-
lished and an effective method of mineral processing has
been determined, and includes a financial analysis based
on reasonable assumptions of technical, engineering, legal,
operating, economic, social, and environmental factors and
the evaluation of other relevant factors which are sufficient
for a qualified person, acting reasonably, to determine if
all or part of the Mineral Resource may be classified as a
Mineral Reserve
Proterozoic — the more recent time division of the Precambrian;
rocks aged between 2,500 million and 550 million years old
put — a financial instrument that provides the right, but not the
obligation, to sell a specified number of ounces of gold at a
specified price
pyrite — common sulfide of iron
QA/QC — Quality Assurance/Quality Control is the process of
controlling and assuring data quality for assays and other explo-
ration and mining data
quartz — a mineral composed of silicon dioxide, SiO2 (silica)
RAB (rotary air blast) drilling — relatively inexpensive and quick
exploration drilling method returning rock chips from the drill
hole using high pressure air
RC (reverse circulation) drilling — a drilling method using a
tri-cone bit, during which rock cuttings are pushed from the
bottom of the drill hole to the surface through an outer tube, by
liquid and/or air pressure moving through an inner tube
reef — general term that typically refers to a tabular ore body
refractory — ore containing gold that cannot be satisfactorily
recovered by basic gravity concentration or simple cyanidation
resettlement – the relocation or resettlement of a community or
part of a community
rock — indurated naturally occurring mineral matter of various
compositions
sampling and analytical variance/precision — an estimate of
the total error induced by sampling, sample preparation and
analysis
schist — rocks derived from clays and muds which have passed
through a series of metamorphic processes involving the pro-
duction of shales, slates and phyllites as intermediate steps
sediment — particles transported by water, wind or ice
sedimentary rock — rock formed at the earth’s surface from solid
particles, whether mineral or organic, which have been moved
from their position of origin and re-deposited
sericitic — a rock with abundant amounts of sericite, a white fine
grained potassium mica occurring as an alteration product of
various aluminosilicate minerals
6 | Gold e n St ar
PART I
Item 1. BUSINESS
OVERVIEW OF GOLDEN STAR
We are a Canadian federally–incorporated, international gold
mining and exploration company producing gold in Ghana, West
Africa. We also conduct gold exploration in other countries in
West Africa and in South America. 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 origi-
nally incorporated under the provisions of the Alberta Business
Corporations Act on March 7, 1984 as Southern Star Resources
Ltd. Our principal office is located at 10901 West Toller Drive,
Suite 300, Littleton, Colorado 80127, and our registered and re-
cords offices are located at 66 Wellington St. W, Suite 4200, P.O.
Box 20, Toronto Dominion Bank Tower—Toronto Dominion
Centre, Toronto, Ontario M5K 1N6.
We own controlling interests in several gold properties in south-
west Ghana:
• Through a 90% owned subsidiary, Golden Star (Bogoso/Pre-
stea) Limited (“GSBPL”), we own and operate the Bogoso/
Prestea gold mining and processing operations (“Bogoso/
Prestea”) located near the town of Bogoso, Ghana. We have
a nominal 3.5 million tonnes per year processing facility at
Bogoso/Prestea that uses bio-oxidation technology to treat
refractory sulfide ore (“sulfide plant”). In addition, Bogoso/
Prestea has a carbon-in-leach processing facility next to the
sulfide plant which is suitable for treating oxide ores (“oxide
plant”). Bogoso/Prestea produced and sold 170,499 ounces
of gold in 2008 and 186,054 ounces in 2009.
• Through another 90% owned subsidiary, Golden Star (Was-
sa) Limited (“GSWL”), we own and operate the Wassa open-
pit gold mine and carbon-in-leach processing plant (“Was-
sa”), located approximately 35 km east of Bogoso/Prestea.
The design capacity of the carbon-in-leach processing plant at
Wassa is nominally 3.0 million tonnes per annum but varies
depending on the ratio of hard to soft ore. GSWL also owns
the Hwini-Butre and Benso concessions (the “HBB proper-
ties”) in southwest Ghana. The Benso mine began shipping
ore to Wassa late in 2008, and the Hwini-Butre mine began
shipping ore to Wassa in May 2009. The Hwini-Butre and
Benso concessions are located approximately 80 and 50 km,
respectively, by road south of Wassa. Wassa/HBB produced
and sold 125,427 ounces of gold in 2008 and 223,848
ounces in 2009.
We also hold interests in several gold exploration projects in Gha-
na and elsewhere in West Africa including Sierra Leone, Burkina
Faso, Niger and Côte d’Ivoire, and hold exploration properties in
South America.
All of our operations, with the exception of certain exploration
projects, transact business in US dollars and keep financial records
in US dollars. Our accounting records are kept in accordance with
Canadian GAAP. Our fiscal year ends December 31. We are a
reporting issuer or the equivalent in all provinces of Canada, in
Ghana and in the United States and file disclosure documents with
securities regulatory authorities in Canada and Ghana and with
the United States Securities and Exchange Commission.
GOLD SALES AND PRODUCTION
Ghana has been a significant gold producing country for over
100 years with AngloGold Ashanti’s Obuasi mine and our inac-
tive underground mine at Prestea historically being the two major
producers. Several other areas in Ghana have also produced large
amounts of gold. Annual gold production in Ghana has exceeded
two million ounces in recent years.
Currently, all our gold production is shipped to a South African
gold refinery in accordance with a long-term gold sales contract.
Our gold is sold in the form of doré bars that average approximately
90% gold by weight with the remaining portion being silver and
other metals. The sales price is based on the London P.M. fix on
the day of shipment to the refinery.
GOLD PRICE HISTORY
The price of gold is volatile and is affected by numerous factors
all of which are beyond our control such as the sale or purchase of
gold by various central banks and financial institutions, inflation,
recession, fluctuation in the relative values of the US dollar and for-
eign currencies, changes in global and regional gold demand, and
the political and economic conditions of major gold-producing
countries throughout the world.
The following table presents the high, low and average London
P.M. fixed prices for gold per ounce on the London Bullion
Market over the past ten years.
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
High
313
293
349
416
454
537
725
841
1,011
1,213
Low
264
256
278
320
375
411
525
608
713
810
Average Price
Received by
Golden Star
280
Average
279
271
310
363
410
445
603
695
872
972
271
311
364
410
446
607
713
870
978
NA
To February
24, 2010
1,153
1,058
1,107
2009 Annual Re p or t | 7
The following diagram depicts the organizational structure of
Golden Star and its significant subsidiaries:
also evaluating gold properties in Brazil. See Item 2 – “De-
scription of Properties” for additional details on our assets.
Golden Star
Resources Ltd.
(Canada)
Caystar
Holdings
(Cayman Island)
100%
Bogoso
Holdings
(Cayman Islands)
100%
Wasford
Holdings
(Cayman Islands)
100%
Golden Star
Exploration Holdings
(Cayman Islands)
100%
Golden Star
(Bogoso/Prestea)
Limited
(Ghana)
90%
Golden Star
(Wassa)
Limited
(Ghana)
90%
Various Exploration
Entities
(West Africa &
South America)
100%
BUSINESS STRATEGY AND DEVELOPMENT
Our business and development strategy has been focused primar-
ily on the acquisition of producing and development-stage gold
properties in Ghana and on the exploration, development and
operation of these properties. We have also pursued exploration
activities in South America and other countries in West Africa.
We acquired Bogoso in 1999 and have operated a nominal 1.5
million tonne per annum carbon-in-leach (“CIL”) processing
plant most of the time since then to process oxide and other non-
refractory ores (“Bogoso oxide plant”). In 2001, we acquired the
Prestea property located adjacent to our Bogoso property and
mined surface deposits at Prestea from late 2001 to late 2006.
In late 2002, we acquired Wassa, and constructed a new nomi-
nal 3.0 million tonne per annum CIL processing plant at Wassa,
which began commercial operation in April 2005. In July 2007,
we completed construction and development of a new nominal
3.5 million tonnes per annum processing facility at Bogoso/Prestea
that uses bio-oxidation technology to treat refractory sulfide ore
(“Bogoso sulfide plant”).
In late 2005, we acquired the HBB properties consisting of the
Benso and Hwini-Butre properties. Benso development activities
started in late 2007, and in the third quarter of 2008, we began
trucking ore from the Benso mine to the Wassa plant for
processing. Hwini-Butre development was initiated in the fourth
quarter of 2008, and in May 2009 the Hwini-Butre mine began
shipping ore to the Wassa plant for processing.
Our overall objective is to grow our business to become a mid-tier
gold producer. We continue to evaluate potential acquisition and
merger opportunities that could further increase our annual gold
production. However, we presently have no agreement or under-
standing with respect to any specific potential transaction.
In addition to our gold mining and development activi-
ties, we actively explore for gold in West Africa and South
America, investing approximately $15.8 million on such
activities during 2008 and approximately $9.0 million during
2009. We are conducting regional reconnaissance projects in
Ghana, Cote d’Ivoire and Sierra Leone and have drilled more
advanced targets in Ghana, Niger and Burkina Faso. We are
8 | Gold e n St ar
GOLD PRODUCTION AND UNIT COSTS
The following table shows historical and projected gold produc-
tion and cash operating costs.
Production and
Cost Per Ounce(1) (2)
BOGOSO/PRESTEA
Gold Sales
(thousands of ounces)
Cash Operating Cost
($/oz)
WASSA/HBB
Production
(thousands of ounces)
Cash Operating Cost
($/oz)
CONSOLIDATED
Consolidated Total
Sales
(thousands of ounces)
Consolidated Cash
Operating Cost ($/oz)
2007
2008
2009
2010
Projected
120.2
170.5
186.1
200.0
766
837
705
650
126.1
125.4
223.8
200.0
443
554
447
520
246.3
295.9
409.9
400.0
602
717
564
585
(1) See “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” for definitions of cash operating cost per
ounce.
(2) Gold production is shown on a 100% basis, which represents our cur-
rent beneficial interest in gold production and revenues. The Govern-
ment of Ghana, which has a 10% carried interest in Bogoso/Prestea
and Wassa/HBB, would receive 10% of any dividends distributed from
Bogoso/Prestea and Wassa/HBB once all capital costs have been repaid.
See “Management’s Discussion and Analysis of Financial Condi-
tion and Results of Operations” for discussion of increasing trends
in gold sales.
MINERAL RESERVES
Our Proven and Probable Mineral Reserves are estimated in con-
formance with definitions set out in NI 43-101. We have filed
Technical Reports regarding the initial disclosure of Mineral Re-
serves and Mineral Resources for Bogoso / Prestea and Wassa/
HBB as required by NI 43-101. The Proven and Probable Mineral
Reserves are those ore tonnages contained within economically op-
timized pits, configured using current and predicted mining and
processing methods and related operating costs and performance
parameters. We believe that our Mineral Reserves are estimated
on a basis consistent with the definition of proven and probable
reserves prescribed for use in the US by the US Securities and Ex-
change Commission and set forth in SEC Industry Guide 7. See
our “Glossary of Terms.”
In estimating Mineral Reserves, we first design an economically
optimized pit based on all operating costs, including the costs
to mine. Since all material lying within the optimized pit will be
mined, the cut-off grade used in determining our Mineral Reserves
is estimated based on the material that, having been mined, is
economic to transport and process without regard to primary
mining costs (i.e. mining costs that were appropriately applied at
the economic optimization stage).
The QA/QC controls program used in connection with the estimation of our Mineral Reserves consists of regular insertion and analysis
of blanks and standards to monitor laboratory performance. Blanks are used to check for contamination. Standards are used to check for
grade-dependence biases.
The following table summarizes our estimated Proven and Probable Mineral Reserves as of December 31, 2009 and December 31, 2008:
PROVEN AND PROBABLE MINERAL RESERVES
Property Mineral Reserve Category
Bogoso/Prestea(1)
Proven Mineral Reserves
Non-refractory
Refractory
Total Proven
Probable Mineral Reserves
Non-refractory
Refractory
Total Probable
Total Proven and Probable
Non-refractory
Refractory
Total Bogoso/Prestea Proven and Probable
Wassa(2)
Proven Mineral Reserves
Non-refractory
Probable Mineral Reserves
Non-refractory
Total Wassa Proven & Probable
Totals
Proven Mineral Reserves
Non-refractory
Refractory
Total Proven
Probable Mineral Reserves
Non-refractory
Refractory
Total Probable
Total Proven and Probable
Non-refractory
Refractory
Total Proven and Probable
As at December 31, 2009
As at December 31, 2008
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
1.1
9.7
10.8
5.0
15.5
20.5
6.1
25.1
31.2
0.8
16.3
17.1
1.9
9.7
11.6
21.3
15.5
36.8
23.2
25.1
48.3
1.60
3.08
2.92
2.60
2.65
2.64
2.42
2.81
2.74
1.91
1.79
1.79
1.73
3.08
2.86
1.98
2.65
2.26
1.96
2.81
2.40
0.06
0.96
1.01
0.42
1.32
1.73
0.47
2.27
2.75
0.05
0.94
0.99
0.11
0.96
1.06
1.35
1.32
2.67
1.46
2.27
3.73
1.2
9.6
10.8
3.9
9.1
13.0
5.1
18.7
23.8
0.4
11.3
11.7
1.6
9.6
11.2
15.2
9.1
24.3
16.8
18.7
35.5
1.89
3.34
3.18
2.90
3.07
3.02
2.66
3.21
3.09
1.01
2.47
2.42
1.68
3.34
3.10
2.58
3.07
2.76
2.49
3.21
2.87
0.08
1.03
1.11
0.36
0.90
1.26
0.43
1.93
2.36
0.01
0.90
0.91
0.09
1.03
1.12
1.26
0.90
2.16
1.35
1.93
3.28
Notes to the Mineral Reserve Statement:
(1) The stated Mineral Reserve for Bogoso/Prestea includes Prestea South, Pampe and Mampon.
(2) The stated Mineral Reserve for Wassa includes the Hwini-Butre and Benso properties.
(3) The stated Mineral Reserves have been prepared in accordance with Canada’s National Instrument 43-101 Standards of Disclosure for Mineral Projects
and are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum’s “CIM Definition Standards – For Mineral Resources
and Mineral Reserves”. Mineral Reserves are equivalent to Proven and Probable Reserves as defined by the SEC Industry Guide 7. Mineral Reserve
estimates reflect the Company’s reasonable expectation that all necessary permits and approvals will be obtained and maintained. Mining dilution and
mining recovery vary by deposit and have been applied in estimating the Mineral Reserves.
(4) The 2009 Mineral Reserves were prepared under the supervision of Mr. Karl Smith, Vice President Technical Services for the Company. Mr. Smith is a
“Qualified Person” as defined by Canada’s National Instrument 43-101. The 2008 Mineral Reserves were prepared under the supervision of Mr. Peter
Bourke, P. Eng., the former Vice President Technical Services for the Company. Mr. Bourke is a “Qualified Person” as defined by Canada’s National
Instrument 43-101.
(5) The Mineral Reserves at December 31, 2009 were estimated using a gold price of $850 per ounce, which is approximately equal to the three-year average
gold price. At December 31, 2008, Mineral Reserves were estimated using a gold price of $700 per ounce.
(6) The terms “non-refractory” and “refractory” refer to the metallurgical characteristics of the ore and are defined in the Glossary of Terms. We plan to
process the refractory ore in our sulfide bio-oxidation plant at Bogoso and to process the non-refractory ore using our more traditional gravity, flotation
and/or cyanidation techniques.
2009 Annual Re p or t | 9
(7) The slope angles of all pit designs are based on geotechnical criteria as established by external consultants. The size and shape of the pit designs are guided
by consideration of the results from a pit optimization program. The parameters for the pit optimization program are based on a gold price of $850 per
ounce, historical and projected operating costs at Bogoso/Prestea, Wassa and Hwini-Butre and Benso. Metallurgical recoveries are based on historical
performance or estimated from test work and typically range from 80% to 95% for non-refractory ores and from 70% to 85% for refractory ores. A
government royalty of 6% is allowed as are other applicable royalties.
(8) Mineral Reserves are expressed on a 100% basis. Our share of the Mineral Reserves is subject to the Government of Ghana’s 10% carried interest which
entitles it to a 10% dividend once our capital costs have been recovered.
(9) Numbers may not add due to rounding.
Stockpiled Ores
Stockpiled ores are included in the Mineral Reserves for both Bogoso/Prestea and Wassa. Details of the proven stockpiles included in the
Mineral Reserves at year-end 2009 and 2008 are summarized in the table below.
PROVEN AND PROBABLE STOCKPILES INCLUDED IN MINERAL RESERVES
Property Mineral Reserve Category
Bogoso/Prestea
Proven Stockpiles
Non-refractory
Refractory
Total Proven Stockpiles
Probable Stockpiles
Non-refractory
Refractory
Total Probable Stockpiles
Total Proven and Probable
Non-refractory
Refractory
Total Bogoso/Prestea Proven and Probable
Wassa
Proven Stockpiles
Non-refractory
Probable Stockpiles
Non-refractory
Total Wassa Proven and Probable Stockpiles
Totals
Proven Stockpiles
Non-refractory
Refractory
Total Proven Stockpiles
Probable Stockpiles
Non-refractory
Refractory
Total Probable Stockpiles
Total Proven and Probable Stockpiles
Non-refractory
Refractory
Total Proven and Probable Stockpiles
As at December 31, 2009
As at December 31, 2008
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
0.0
0.1
0.1
0.0
0.7
0.7
0.0
0.7
0.8
0.3
2.7
3.0
0.3
0.1
0.4
2.7
0.7
3.4
3.0
0.7
3.8
2.32
2.67
2.57
0.00
2.34
2.34
2.32
2.37
2.37
1.08
0.52
0.57
1.20
2.67
1.49
0.52
2.34
0.87
0.59
2.37
0.93
0.00
0.01
0.01
0.00
0.05
0.05
0.00
0.06
0.06
0.01
0.05
0.06
0.01
0.01
0.02
0.05
0.05
0.10
0.06
0.06
0.11
0.0
0.1
0.1
0.0
0.7
0.7
0.0
0.8
0.8
0.3
0.8
1.1
0.4
0.1
0.5
0.8
0.7
1.5
1.2
0.8
1.9
2.32
2.32
2.32
0.00
2.52
2.52
2.32
2.50
2.49
0.98
0.45
0.56
1.10
2.32
1.36
0.45
2.52
1.39
0.61
2.50
1.36
0.00
0.01
0.01
0.00
0.05
0.05
0.00
0.06
0.06
0.01
0.01
0.02
0.01
0.01
0.02
0.01
0.05
0.07
0.02
0.06
0.08
Reconciliation of Mineral Reserves as shown under NI 43-101 and under SEC Industry Guide 7
Since we report our Mineral Reserves to both NI 43-101 and SEC Industry Guide 7 standards, it is possible for our Mineral Reserve
figures to vary between the two. Where such a variance occurs it will arise from the differing requirements for reporting Mineral Reserves.
For example, NI 43-101 has a minimum requirement that Mineral Reserves be supported by a pre-feasibility study, whereas SEC Indus-
try Guide 7 requires support from a detailed feasibility study that demonstrates that economic extraction is justified.
For the Mineral Reserves at December 31, 2009 and 2008, there is no difference between the Mineral Reserves as disclosed under NI
43-101 and those disclosed under SEC Industry Guide 7, and therefore no reconciliation is provided.
10 | Gold e n St ar
Reconciliation of Proven and Probable Mineral Reserves—December 31, 2008 to December 31, 2009
Mineral Reserves at December 31, 2008
Gold Price Increase(1)
Exploration Changes(2)
Mining Depletion(3)
Engineering(4)
Mineral Reserves at December 31, 2009(5)
Tonnes
(millions)
35.5
Contained Ounces
(millions)
3.28
4.9
5.9
(4.9)
6.8
48.3
0.17
0.25
(0.47)
0.52
3.73
Tonnes
(% of Opening)
Ounces
(% of Opening)
100%
14%
17%
(14)%
19%
136%
100%
5%
7%
(14)%
16%
114%
Notes to the reconciliation of Mineral Reserves:
(1) Gold Price Increase represents changes resulting from an increase in gold price used in the Mineral Reserve estimates from $700 per ounce in 2008 to
$850 per ounce in 2009.
(2) Exploration Changes include changes due to geological modeling, data interpretation and resource block modeling methodology as well as due to
exploration discovery of new mineralization.
(3) Mining Depletion represents the 2008 Mineral Reserve within the volume mined in 2009 with adjustments to account for stockpile addition and
depletions during 2009 and therefore does not correspond with 2009 actual gold production.
(4) Engineering includes changes as a result of engineering facts such as changes in operating costs, mining dilution and recovery assumptions, metallurgical
recoveries, pit slope angles and other mine design and permitting considerations.
(5) Numbers may not add due to rounding.
NON-RESERVES—MEASURED AND INDICATED MINERAL RESOURCES
Cautionary Note to US Investors concerning estimates of Measured and Indicated Mineral Resources
This Section uses the terms “Measured Mineral Resources” and “Indicated Mineral Resources.” We advise US investors that while those
terms are recognized and required by Canadian regulations, the US Securities and Exchange Commission does not recognize them. US
investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into
Mineral Reserves.
Our Measured and Indicated Mineral Resources which are reported in this Form 10-K do not include that part of our Mineral Resourc-
es that have been converted to Proven and Probable Mineral Reserves as shown above, and have been estimated in compliance with defi-
nitions set out in NI 43-101. Golden Star Resources has filed Technical Reports regarding the initial disclosure of Mineral Reserves and
Mineral Resources for Bogoso/Prestea, Wassa and the HBB properties as required by NI 43-101 regulations. See our “Glossary of Terms.”
Except as otherwise provided, the total Measured and Indicated Mineral Resources for all properties have been estimated at an economic
cut-off grade based on a gold price of $1000 per ounce for December 31, 2009 and $800 per ounce for December 31, 2008 and on
economic parameters deemed realistic. The economic cut-off grades for Mineral Resources are lower than those for Mineral Reserves and
are indicative of the fact that the Mineral Resource estimates include material that may become economic under more favorable condi-
tions including increases in gold price.
The following table summarizes our estimated non-reserves—Measured and Indicated Mineral Resources as of December 31, 2009 as
compared to the totals for December 31, 2008:
Property
Bogoso/Prestea(1)
Prestea Underground
Wassa
Benso
Hwini-Butre(9)
Goulagou(8)
Total 2009
Total 2008
Measured
Tonnes
(millions)
4.7
Gold Grade
(g/t)
1.90
Indicated
Tonnes
(millions)
12.9
Gold Grade
(g/t)
2.20
Measured & Indicated
Tonnes
(millions)
17.6
Gold Grade
(g/t)
2.12
—
0.1
—
—
—
4.8
5.4
—
0.82
—
—
—
1.87
2.24
1.4
4.3
0.2
0.3
2.7
21.8
21.6
13.36
0.89
1.73
5.38
1.75
2.66
2.89
1.4
4.4
0.2
0.3
2.7
26.6
27.0
13.36
0.89
1.73
5.38
1.75
2.52
2.76
Notes to Non-Reserves—Measured and Indicated Mineral Resources Table:
(1) The Mineral Resources for Bogoso/Prestea include Pampe and Mampon.
(2) The Mineral Resources were estimated in accordance with the definitions and requirements of Canada’s National Instrument 43-101. The Mineral
Resources are equivalent to Mineralized Material as defined by the SEC Industry Guide 7.
(3) The Mineral Resources, other than for Goulagou (see Note 8), were estimated using optimized pit shells at a gold price of $1,000 per ounce from which
the Mineral Reserves have been subtracted. Other than gold price, the same optimized pit shell parameters and modifying factors used to determine the
Mineral Reserves were used to determine the Mineral Resources. The Prestea Underground resource was estimated using a $1,000 per ounce gold price
and operating cost estimates. In 2008, we used a gold price of $800 per ounce for the optimized shell.
(4) The Mineral Resources are not included in and are in addition to the Mineral Reserves described above.
(5) The Qualified Person for the estimation of the Mineral Resources is S. Mitchel Wasel, Golden Star Resources Vice President of Exploration.
2009 Annual Re p or t | 11
(6) Numbers may not add due to rounding.
(7) Mineral Resources are shown on a 100% basis. The Mineral Resources
shown above, other than for Goulagou, are subject to the Government
of Ghana’s 10% carried interest, which entitles it to a 10% dividend
once capital costs have been recovered. The Mineral Resources at Pre-
stea Underground are subject to the Government of Ghana’s 19% mi-
nority interest, with Golden Star having an 81% beneficial interest.
Goulagou is 10% owned by a third party.
(8) The Mineral Resources for Goulagou were estimated using optimized
pit shells at a gold price of $560. Pit optimization parameters for the
Goulagou Mineral Resources were estimated based on feasibility stud-
ies on other similar gold deposits in Burkina Faso, Golden Star’s ex-
perience in West Africa, and from limited metallurgical test work on
the Goulagou ores. Heap leach processing was the assumed processing
option for this deposit.
(9) The Hwini Butre Indicated Mineral Resource includes 0.29 million
tonnes at a grade of 5.38 g/t which occurs below the $1,000 pit shells
and which we believe may be exploitable by underground mining.
NON-RESERVES—INFERRED
MINERAL RESOURCES
Cautionary Note to US Investors concerning estimates of
Inferred Mineral Resources
This Section uses the term “Inferred Mineral Resources.” We ad-
vise US investors that while this term is recognized and required
by NI 43-101, the US 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 Inferred Mineral Resources will ever be upgraded to
a higher category. In accordance with Canadian rules, estimates
of Inferred Mineral Resources cannot form the basis of feasibility
or other economic studies. US investors are cautioned not to
assume that part or all of the Inferred Mineral Resource exists,
or is economically or legally mineable.
Our Inferred Mineral Resources have been estimated in compli-
ance with definitions defined by NI 43-101. Golden Star Re-
sources has filed Technical Reports regarding the initial disclosure
of Mineral Reserves and Mineral Resources for Bogoso/Prestea,
Wassa and the HBB properties as required by NI 43-101. See our
“Glossary of Terms.”
The total Inferred Mineral Resources for all of our open pit
deposits are those ore tonnages contained within economically
optimized pits, configured using current and predicted mining and
processing methods and related operating costs and performance
parameters. Except as otherwise indicated, the Inferred Mineral
Resources for all properties have been estimated at economic cut-
off grades based on gold prices of $1,000 per ounce and $800 per
ounce as of December 31, 2009 and December 31, 2008, respec-
tively, and economic parameters deemed realistic.
The following table summarizes estimated non-reserves – Inferred
Mineral Resources as of December 31, 2009 as compared to the
total for December 31, 2008:
Property
Bogoso/Prestea (1)
Prestea Underground
Wassa
Benso
Hwini-Butre (10)
Chichiwelli Manso
Goulagou (8)
Total 2009
Total 2008
Tonnes
(millions)
Gold Grade
(g/t)
3.8
4.1
0.1
0.3
0.4
1.9
0.5
11.0
20.2
3.10
7.79
1.70
3.98
5.28
1.91
1.02
4.62
3.68
Notes to Non-Reserves—Inferred Mineral Resources Table
(1) The Inferred Mineral Resources for Bogoso/Prestea incorporates
Pampe and Mampon.
(2) The Inferred Mineral Resources were estimated in accordance with the
definitions and requirements of Canada’s National Instrument 43-101.
Inferred Mineral Resources are not recognized by the United States
Securities and Exchange Commission.
(3) The Inferred Mineral Resources, other than for Goulagou, were esti-
mated using an optimized pit shell at a gold price of $1,000 per ounce
from which the Mineral Reserves have been subtracted. Other than
gold price, the same optimized pit shell parameters and modifying fac-
tors used to determine the Mineral Reserves were used to determine the
Mineral Resources. For Goulagou optimized pit shell at a gold price of
$560 was used. The Prestea Underground resource was estimated using
an $1,000 per ounce gold price and operating cost estimates.
(4) The Inferred Mineral Resources are not included in and are in addition
to the Mineral Reserves described above.
(5) The Qualified Person for the estimation of the Inferred Mineral Re-
sources is S. Mitchel Wasel, Golden Star Resources Vice President of
Exploration.
(6) Numbers may not add due to rounding.
(7) Inferred Mineral Resources are shown on a 100% basis. Except for
Goulagou and the Prestea Underground, the Inferred Mineral Resourc-
es shown are subject to the Government of Ghana’s 10% carried inter-
est which entitles it to a 10% dividend once our capital costs have been
recovered. The Inferred Mineral Resources at Prestea Underground,
are subject to the Government of Ghana’s 19% minority interest, with
Golden Star currently having an 81% beneficial interest. A private
party owns 10% of Goulaogu.
(8) Pit optimization parameters for the Goulagou Inferred Mineral Re-
sources were estimated based on feasibility studies on other similar gold
deposits in Burkina Faso, Golden Star’s experience in West Africa, and
from limited metallurgical test work on the Goulagou ores. Heap leach
processing was the assumed processing option for this deposit.
(9) The Hwini Butre Inferred Mineral Resource includes 0.26 million
tonnes at a grade of 5.87 g/t which occurs below the $1,000 pit shells
and which we believe may be exploitable by underground mining.
EMPLOYEES
As of December 31, 2009, Golden Star, including our majority-
owned subsidiaries, had approximately 2,000 full time employees
and approximately 200 contract employees, for a total of 2,200
a 21% decrease from the approximately 2,800 people employed
at the end of 2008. The 2009 total includes 18 employees at our
principal office in Littleton, Colorado and 5 exploration personnel
in South America.
CUSTOMERS
Currently all of our gold production is shipped to a South African
gold refinery in accordance with a long-term gold sales contract.
The refiner arranges for sale of the gold on the day it is shipped
from the mine site and we receive payment for gold sold approxi-
mately two working days after the gold leaves the mine site. The
global gold market is competitive with numerous banks and
12 | Gold e n St ar
refineries willing to buy gold on short notice. Therefore we believe
that the loss of our current customer would not materially delay or
disrupt revenues.
COMPETITION
Our competitive position depends upon our ability to successfully
and economically explore, acquire and develop new and exist-
ing gold properties. Factors that allow gold producers to remain
competitive in the market over the long term include the quality
and size of ore bodies, cost of operation, and the acquisition and
retention of qualified employees. We compete with other min-
ing companies and other natural mineral resource companies in
the acquisition, exploration, financing and development of new
mineral properties. 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.
We also compete with other mining companies for skilled mining
engineers, mine and processing plant operators and mechanics, ge-
ologists, geophysicists and other experienced technical personnel.
SEASONALITY
All of our operations are in tropical climates that experience annual
rainy seasons. Ore output from our surface mining operations can
be reduced during wet periods but mine plans are formulated to
compensate for the periodic decreases and typically mining opera-
tions are not materially affected by rainy seasons. Exploration ac-
tivities are generally timed to avoid the rainy periods to ease trans-
portation logistics associated with wet roads and swollen rivers.
AVAILABLE INFORMATION
We make available, free of charge, on or through our Internet web-
site, our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to those re-
ports 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 www.gsr.com. Our Internet website
and the information contained therein or connected thereto are
not intended to be, and are not incorporated into this Annual
Report on Form 10-K.
Item 1A. RISK FACTORS
RISK FACTORS
You should consider the following discussion of risks in addition to the
other information contained in or included by reference in this Form
10-K. In addition to historical information, the information in this
Form 10-K contains “forward-looking” statements about our future
business and performance. Our actual operating results and financial
performance may be very different from what we expect as of the date
of this Form 10-K. The risks below address material factors that may
affect our future operating results and financial performance.
Financial Risks
A substantial or prolonged decline in gold prices would have a
material adverse effect on us.
The price of our common shares, our financial results and our
exploration, development and mining activities have previously
been, and would in the future be, significantly adversely affected
by a substantial or prolonged decline 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. Any drop
in the price of gold adversely impacts our revenues, profits and cash
flows. In particular, a sustained low gold price could:
• cause suspension of our mining operations at Bogoso/Prestea
and Wassa/HBB if these operations become uneconomic at
the then-prevailing gold price, thus further reducing revenues;
• cause us to be unable to fulfill our obligations under agree-
ments with our partners or under our permits and licenses
which could cause us to lose our interests in, or be forced to
sell, some of our properties;
• cause us to be unable to fulfill our debt payment obligations;
• halt or delay the development of new projects; and
• reduce funds available for exploration, with the result that
depleted mineral reserves are not replaced.
Furthermore, the need to reassess the feasibility of any of our proj-
ects because of declining gold prices could cause substantial delays
or could interrupt operations until a reassessment could be com-
pleted. Mineral reserve estimations and life-of-mine plans using
significantly lower gold prices could result in reduced estimates of
mineral reserves and non-reserve mineral resources and in material
write-downs of our investment in mining properties and increased
amortization, reclamation and closure charges.
We have incurred and may in the future incur substantial losses
that could make financing our operations and business strat-
egy more difficult and that may affect our ability to service our
debts as they become due.
While we had net income of $16.5 million in 2009, we experi-
enced net losses of $119.3 million and $35.3 million in 2008 and
2007, respectively, and have experienced net losses in other prior
fiscal years. In recent years, the start-up of the Bogoso sulfide plant,
lower than expected ore grades or recoveries, higher than expected
operating costs, and impairment write-offs of mine property and/
or exploration property costs have been the primary factors
contributing to such losses. In the future, these factors, as well
as declining gold prices, could cause us to continue to be unprofit-
able. Future operating losses could adversely affect our ability to
raise additional capital if needed, and could materially and
adversely affect our operating results and financial condition. In
addition, continuing operating losses could affect our ability to
meet our debt payment obligations.
2009 Annual Re p or t | 13
Our obligations could strain our financial position and impede
our business strategy.
We had total consolidated debt and liabilities as of December 31,
2009 of $233.6 million, including $2.5 million payable to banks
($5.0 before netting loan fees); $21.0 million in equipment
financing loans; $101.0 million ($125.0 million including the
loan’s equity portion) pursuant to the convertible debentures;
$63.1 million of current trade payables, accrued current and other
liabilities; $14.0 million of future taxes; and a $32.0 million
accrual for environmental rehabilitation liabilities. Our indebted-
ness and other liabilities may increase as a result of general corpo-
rate activities. These liabilities could 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 fu-
ture working capital, capital expenditures, 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 expendi-
tures, exploration 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 competi-
tors that have less debt relative to their market capitalization.
Our estimates of Mineral Reserves and non-reserves could be
inaccurate, which could cause actual production and costs to
differ from estimates.
There are numerous uncertainties inherent in estimating Proven
and Probable Mineral Reserves and non-reserve Measured, In-
dicated and Inferred Mineral Resources, including many factors
beyond our control. The accuracy of estimates of Mineral Reserves
and non-reserves is a function of the quantity and quality of avail-
able data and of the assumptions made and judgments used in
engineering and geological interpretation, which could prove to be
unreliable. These estimates of Mineral Reserves and non-reserves
may not be accurate, and Mineral Reserves and non-reserves may
not be able to be mined or processed profitably.
Fluctuation in gold prices, results of drilling, metallurgical testing,
changes in operating costs, production, and the evaluation of mine
plans subsequent to the date of any estimate could require revi-
sion of the estimates. The volume and grade of Mineral Reserves
mined and processed and recovery rates might not be the same as
currently anticipated. Any material reductions in estimates of our
Mineral Reserves and non-reserves, or of our ability to extract these
Mineral Reserves and non-reserves, could have a material adverse
effect on our results of operations and financial condition.
We currently have only two sources of operational cash flows,
which could be insufficient by themselves to fund our continu-
ing exploration and development activities.
While we have received significant infusions of cash from sales of
equity and debt securities, our only current significant internal
sources of funds are operational cash flows from Bogoso/Prestea
and Wassa/HBB. The anticipated continuing exploration and
development of our properties are expected to require significant
expenditures over the next several years. Although we expect suffi-
cient internal cash flow to cover all of these projects, such expendi-
tures may exceed free cash flows generated by Bogoso/Prestea and
Wassa/HBB in future years and therefore we may require addi-
tional external debt or equity financing. Our ability to raise signifi-
cant new capital will be a function of macroeconomic conditions,
future gold prices, our operational performance and our then cur-
rent cash flow and debt position, among other factors. In light of
the current limited global availability of credit, we may not be able
to obtain adequate financing on acceptable terms or at all, which
could cause us to delay or indefinitely postpone further exploration
and development of our properties. As a result, we could lose our
interest in, or could be forced to sell, some of our properties.
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 our United States funds
to foreign currencies as certain payment obligations become due.
Accordingly, we are subject to fluctuations in the rates of currency
exchange between the United States dollar and these foreign cur-
rencies, and these fluctuations could materially affect our financial
position and results of operations. A significant portion of the op-
erating costs at Bogoso/Prestea and Wassa/HBB is based on the
Ghanaian currency, the Cedi. We are required by the Government
of Ghana to convert into Cedis 20% of the foreign exchange pro-
ceeds that we receive from selling gold, but the Government could
require us to convert a higher percentage of gold sales proceeds into
Cedis in the future. In addition, we currently have future obliga-
tions that are payable in South African Rand and Euros. We obtain
construction and other services and materials and supplies from
providers in South Africa and other countries. The costs of goods
and services could increase or decrease due to changes in the value
of the United States dollar or the Cedi, the Euro, the South African
Rand or other currencies. Consequently, operation and develop-
ment of our properties could be more costly than anticipated.
Our hedging activities might be unsuccessful and incur losses.
During September 2009, we entered into structured gold option
agreements to address a significant increase in gold price volatility.
All of these contracts had terms of 180 days or less. As of December
31, 2009, all of these agreements had expired. We may enter into
additional hedging arrangements in the future, however, further
hedging activities might not protect adequately against declines in
the price of gold. In addition, although a hedging program could
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.
Risks inherent in acquisitions that we might undertake could
adversely affect our current business and financial condition
and our growth.
We plan to continue to pursue the acquisition of producing, devel-
opment and advanced stage exploration properties and companies.
The search for attractive acquisition opportunities and the comple-
tion of suitable transactions are time consuming and expensive, di-
vert management attention from our existing business and may be
unsuccessful. Success in our acquisition activities depends on our
ability to complete acquisitions on acceptable terms and integrate
14 | Gold e n St ar
the acquired operations successfully with our operations. Any ac-
quisition would be accompanied by risks. For example, there may
be a significant change in commodity prices after we have commit-
ted to complete a transaction and established the purchase price or
exchange ratio, a material ore body may prove to be below expecta-
tions or the acquired business or assets may have unknown liabili-
ties which may be significant. We may lose the services of our key
employees or the key employees of any business we acquire or have
difficulty integrating operations and personnel. The integration of
an acquired business or assets may disrupt our ongoing business
and our relationships with employees, suppliers and contractors.
Any one or more of these factors or other risks could cause us not
to realize the anticipated benefits of an acquisition of properties or
companies, and could have a material adverse effect on our current
business and financial condition and on our ability to grow.
We are subject to litigation risks.
All industries, including the mining industry, are subject to legal
claims, with and without merit. We are currently involved in
litigation relating to crop compensation. We believe this action is
frivolous and entirely without merit, and we are vigorously
defending against this action on numerous grounds. We are also
involved in various routine legal proceedings incidental to our
business. 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, the resolution of any par-
ticular legal proceeding could have a material effect on our future
financial position and results of operations.
Operational Risks
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:
• power shortages;
• mechanical and electrical equipment failures;
• parts availability;
• unexpected changes in ore grades;
• unexpected changes in ore chemistry and gold recoverability;
• environmental hazards;
• discharge of pollutants or hazardous chemicals;
• industrial accidents;
• labor disputes and shortages;
• supply and shipping problems and delays;
• shortage of equipment and contractor availability;
• unusual or unexpected geological or operating conditions;
• cave-ins of underground workings;
• slope failures and failure of pit walls or dams;
• fire;
• marine and transit damage and/or loss;
• changes in the regulatory environment;
• delayed or restricted access to ore due to community
interventions; and
• natural phenomena such as inclement weather conditions,
floods, droughts and earthquakes.
These or other occurrences could result in damage to, or destruc-
tion of, mineral properties or production facilities, personal injury
or death, environmental damage, delays in mining, delayed pro-
duction, monetary losses and possible legal liability. Satisfying such
liabilities could 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 environmen-
tal laws, regulations and permitting requirements and bonding
requirements that can delay production and adversely affect
operating and development costs.
Compliance with existing regulations governing the discharge of
materials into the environment, or otherwise relating to environ-
mental protection, in the jurisdictions where we have projects may
have a material adverse effect on our exploration activities, results
of operations and competitive position. New or expanded regu-
lations, if adopted, could affect the exploration, development, or
operation of our projects or otherwise have a material adverse effect
on our operations.
A portion of our Dunkwa property and portions of our Wassa
property, as well as some of our exploration properties in Ghana,
are located within forest reserve areas. Although Dunkwa and
Wassa have been identified by the Government of Ghana as eli-
gible for mining permits, subject to normal procedures and a site
inspection, permits for projects in forest reserve areas may not be
issued in a timely fashion, or at all, and such permits may contain
special requirements with which it is burdensome or uneconomic
to comply.
Mining and processing gold from the south end of the Prestea
property and from the Mampon property as well as the other
planned activities will require mining, environmental, and other
permits and approvals from the Government of Ghana. These per-
mits and approvals may not be issued on a timely basis or at all,
and such permits and approvals, when issued, may be subject to
requirements or conditions with which it is burdensome or uneco-
nomic to comply. Such permitting issues could adversely affect our
projected production commencement dates, production amounts
and costs.
Developing our pit at Dumasi will require us to implement a re-
settlement action plan and reach agreements with the residents
that live close to the pit. These negotiations could be difficult or
unsuccessful and may materially affect our ability to access these
mineral reserves and mineral resources.
Due to an increased level of non-governmental organization
activity targeting the mining industry in Ghana, the potential for
the Government of Ghana to delay the issuance of permits or
impose new requirements or conditions upon mining operations
in Ghana may increase. Any changes in the Government of
Ghana’s policies may be costly to comply with and may delay min-
ing operations. The exact nature of other environmental control
problems, if any, which we may encounter in the future cannot be
predicted, primarily because of the changing character of envi-
ronmental requirements that may be enacted within the various
jurisdictions where we operate.
As a result of the foregoing risks, project expenditures, production
quantities and rates and cash operating costs, among other things,
2009 Annual Re p or t | 15
could be materially and adversely affected and could differ ma-
terially from anticipated expenditures, production quantities and
rates, and costs. In addition, estimated production dates could 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 that could affect the feasibility or prof-
itability of such projects.
Mine development projects, including our recent development at
Benso and Hwini-Butre, typically require a number of years and
significant expenditures during the development phase before pro-
duction is possible.
Development projects are subject to the completion of successful
feasibility studies and environmental and socioeconomic assess-
ments, issuance of necessary governmental permits and receipt of
adequate financing. The economic feasibility of development proj-
ects is based on many factors such as:
• estimation of mineral reserves and mineral resources;
• mining rate, dilution and recovery;
• anticipated metallurgical characteristics of the ore and gold
recovery rates;
• environmental and community considerations including re-
settlement, permitting and approvals;
• future gold prices; and
• anticipated capital and operating costs.
Estimates of proven and probable mineral reserves and operating
costs developed in feasibility studies are based on reasonable as-
sumptions including geologic and engineering analyses and might
not prove to be accurate.
The management of mine development projects and start up of
new operations are complex. Completion of development and the
commencement of production may be subject to delays, as oc-
curred in connection with the Bogoso sulfide expansion project.
Any of the following events, among others, could affect the profit-
ability or economic feasibility of a project:
• unanticipated changes in grade and tonnage of ore to be
mined and processed;
• government regulations and changes to existing regulations
(including regulations relating to prices, royalties, duties,
taxes, permitting, restrictions on production, quotas on ex-
portation of minerals, protection of the environment and
agricultural lands, including bonding requirements);
• fluctuations in gold prices; and
• accidents, labor actions and force majeure events.
Adverse effects on the operations or further development of a proj-
ect could also adversely affect our business (including our ability to
achieve our production estimates), financial condition, results of
operations and cash flow.
We need to continually discover, develop or acquire additional
Mineral Reserves for gold production and a failure to do so
would adversely affect our business and financial position in
the future.
Because mines have limited lives based on Proven and Probable
Mineral Reserves, we must continually replace and expand Min-
eral Reserves as our mines produce gold. We are required to esti-
mate mine life in connection with our estimation of reserves, but
our estimates may not be correct. In addition, mine life would be
shortened if we expand production or if we lose reserves due to
changes in gold price or operating costs. 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 or extend the life of existing mines.
Gold exploration is highly speculative, involves substantial
expenditures, and is frequently non-productive.
Gold exploration, including the exploration of the Prestea Under-
ground and other projects, involves a high degree of risk. Explora-
tion projects are frequently unsuccessful. Few prospects that are ex-
plored are ultimately developed into producing mines. We cannot
assure you that our gold exploration efforts will be successful. The
success of gold exploration is dependent in part on the following
factors:
• the identification of potential gold mineralization based on
surface analysis;
• availability of prospective land;
• availability of government-granted exploration and exploita-
tion permits;
• unanticipated adverse geotechnical conditions;
• the quality of our management and our geological and tech-
• incorrect data on which engineering assumptions are made;
nical expertise; and
• costs of constructing and operating a mine in a specific
• the funding available for exploration and development.
Substantial expenditures are required to determine if a project has
economically mineable mineralization. It could take several years
to establish proven and probable mineral reserves and to develop
and construct mining and processing facilities. Because of these
uncertainties, we cannot assure you that current and future explo-
ration programs will result in the discovery of mineral reserves, the
expansion of our existing mineral reserves and the development
of mines.
environment;
• cost of processing and refining;
• availability of economic sources of power;
• availability of qualified staff;
• adequacy of water supply;
• adequate access to the site including competing land uses
(such as agriculture and illegal mining);
• unanticipated transportation costs and shipping incidents
and losses;
• significant increases in the cost of diesel fuel, cyanide or other
major components of operating costs;
16 | Gold e n St ar
We face competition from other mining companies in connec-
tion with the acquisition of properties.
We face strong competition from other mining companies in con-
nection with the acquisition of properties producing, or capable of
producing, gold. Many of these companies have greater financial
resources, operational experience and technical capabilities. As a
result of this competition, we might be unable to maintain or ac-
quire attractive mining properties on terms we consider acceptable
or at all. Consequently, our future revenues, operations and finan-
cial condition could be materially adversely affected.
Title to our mineral properties could be challenged.
We 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. We have mining leases with respect to our Bo-
goso/Prestea, Wassa, Prestea Underground and HBB properties.
Title insurance generally is not available, and our ability to ensure
that we have obtained a secure claim to individual mineral proper-
ties or mining concessions is limited. We generally do not conduct
surveys of our properties until they have reached the development
stage, and therefore, the precise area and location of such properties
could be in doubt. Accordingly, our mineral properties could be
subject to prior unregistered agreements, transfers or claims, and
title could be affected by, among other things, undetected defects.
In addition, we might be unable to operate our properties as per-
mitted or to enforce our rights with respect to our properties.
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 executive personnel. Due to the
relatively small size of our management team, the loss of one or
more of these persons or our inability to attract and retain addi-
tional highly skilled employees could have an adverse effect on our
business and future operations.
Our insurance coverage could 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;
• environmental damage to our properties or the properties
of others;
• delays in mining, processing and development;
• monetary losses; and
• possible legal liability.
Although we maintain insurance in amounts that we believe to be
reasonable, our insurance might not cover all the potential risks
associated with our business. We might also be unable to maintain
insurance to cover these risks at economically feasible premiums.
Insurance coverage might not continue to be available or might
not be adequate to cover any resulting liability. Moreover, insur-
ance 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 might
elect not to insure against because of premium costs or other rea-
sons. Losses from these events might 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 oper-
ating subsidiaries to make distributions to us could adversely
affect the funding of our operations.
We are a holding company that conducts operations through for-
eign (principally Ghanaian) subsidiaries and joint ventures, and
substantially all of our assets consist of equity in these entities.
Accordingly, any limitation on the transfer of cash or other assets
between the parent corporation and these entities, or among these
entities, could restrict our ability to fund our operations efficiently,
or to repay the convertible debentures or other debt. Any such lim-
itations, or the perception that such limitations might exist now or
in the future, could have an adverse impact on available credit and
our valuation and stock price.
We are subject to changes in the regulatory environment where
we operate which may increase our costs of compliance.
Our mining operations and exploration activities are subject to ex-
tensive regulation governing various matters, including:
• licensing;
• production;
• taxes;
• disposal of process water or waste rock;
• changes in the regulatory environment;
• toxic substances;
• marine transit and shipping damage and/or losses;
• development and permitting;
• natural phenomena such as inclement weather conditions,
• exports and imports;
floods and earthquakes; and
• political risks including expropriation and civil war.
Such occurrences could result in:
• damage to mineral properties or production facilities and
equipment;
• personal injury or death;
• loss of legitimate title to properties;
• labor standards;
• mine and occupational health and safety;
• environmental protection and corporate responsibility, and
• mine reclamation and closure plans.
2009 Annual Re p or t | 17
Compliance with these regulations increases the costs of the
following:
• planning;
• designing;
• drilling;
• operating;
• developing;
• constructing; and
• closure, reclamation and rehabilitation.
We believe that we are in substantial compliance with current laws
and regulations in Ghana and elsewhere. However, these laws and
regulations are subject to frequent change and reinterpretation.
Amendments to current laws and regulations governing operations
and activities of mining companies or more stringent implementa-
tion or interpretation of these laws and regulations could have a
material adverse impact on us. These factors could cause a reduc-
tion in levels of production and delay or prevent the development
or expansion of our properties in Ghana.
The implementation of changes in regulations that limit the
amount of proceeds from gold sales that could be withdrawn from
Ghana could also have a material adverse impact on us, as Bogoso/
Prestea and Wassa are currently our only sources of internally gen-
erated operating cash flows.
Environmental bonding requirements are under review in
Ghana and bonding requirements may be increased.
As part of its periodic assessment of mine reclamation and closure
costs, the Ghana Environmental Protection Agency (the “EPA”)
reviews the adequacy of reclamation bonds and guarantees. In
certain cases it has requested higher levels of bonding based on
its findings. If the EPA were to require additional bonding at our
properties, it may be difficult, if not impossible, to provide suffi-
cient bonding given the current disruptions in the world financial
markets. If we are unable to meet any such increased requirements
or negotiate an acceptable solution with the Ghanaian govern-
ment, our operations and exploration and development activities
in Ghana may be materially adversely affected.
The Government of Ghana has the right to increase its interest
in certain subsidiaries.
In accordance with the Minerals and Mining Act, 2006 (Act
703), the Government of Ghana has a 10% carried interest in
the mineral operations of Ghanaian mining companies. The car-
ried interest comes into existence at the time the government
issues a mining license. As such, the Government of Ghana cur-
rently has a 10% carried interest in our subsidiaries that own the
Bogoso/Prestea mine, the Wassa/HBB properties and the Prestea
Underground property.
Under Act 703, the Government has the right to acquire a spe-
cial share or “golden share” in such subsidiaries at any time for
no consideration or such consideration as the Government of
Ghana and such subsidiaries might agree, and a pre-emptive
right to purchase all gold and other minerals produced by such
subsidiaries. A “golden share” carries no voting rights and does
not participate in dividends, profits or assets. While the Gov-
ernment of Ghana has not sought to exercise any of these rights
at our properties, any such attempts to do so in the future could
adversely affect our financial results.
18 | Gold e n St ar
In addition, the Government of Ghana has recently announced it
is considering increases in mineral royalty rates. Golden Star has
paid a royalty rate of 3% of its revenues from Bogoso/Prestea and
Wassa/HBB for the last three years, and any increase in the royalty
rate would adversely affect our financial results.
We are subject to risks relating to exploration, development and
operations in foreign countries.
Our assets and operations are affected by various political and eco-
nomic uncertainties in the countries where we operate, including:
• war, civil unrest, terrorism, coups or other violent or unex-
pected changes in government;
• political instability and violence;
• expropriation and nationalization;
• renegotiation or nullification of existing concessions, licenses,
permits, and contracts;
• illegal mining;
• changes in taxation policies (such as the temporary national
stabilization levy imposed by the Government of Ghana in
July 2009, which require payments equal to 5% of “profits
before tax”);
• unilaterally imposed increases in royalty rates;
• restrictions on foreign exchange and repatriation; and
• changing political conditions, currency controls, and gov-
ernmental 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 has occurred on our properties, is difficult to
control, can disrupt our business and can expose us to liability.
We continue to experience illegal mining activity on our mining
and exploration properties. Most of this activity is on our
Prestea South and Hwini-Butre properties. While we are proac-
tively working with local, regional and national governmental
authorities to obtain protection of our property rights, any action
on the part of such authorities may not occur, may not fully ad-
dress our problems or may be delayed.
In addition to the impact on our mineral reserves and non-
reserves, the presence of illegal miners can lead to project delays
and disputes and delays 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 poten-
tially be held responsible. Illegal miners may work on other of our
properties from time to time, and they may in the future increase
their presence and have increased negative impacts such as those
described above on such other properties.
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 develop-
ment activities are subject to extensive Canadian, United States,
Ghanaian and other foreign, federal, state, provincial, territorial
and local laws and regulations governing exploration, develop-
ment, production, exports, taxes, labor standards, waste disposal,
protection of the environment, reclamation, historic and cultural
resource preservation, mine safety and occupational health, toxic
substances, reporting and other matters, as well as accounting stan-
dards. Compliance with these laws, regulations and standards or
the imposition of new such requirements could adversely affect
operating and development costs, the timing of operations and the
ability to operate and financial results.
Failure to maintain effective internal controls could have a ma-
terial adverse effect on our business and share price.
Annually we are required to test our internal control over finan-
cial reporting to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002, which requires annual management
and auditor assessments of the effectiveness of our internal con-
trol over financial reporting. Failure to maintain effective internal
controls could have a material adverse effect on our business and
share price.
Market Risks
The market price of our common shares has experienced volatil-
ity and could continue to do so in the future.
Our common shares are listed on the NYSE Amex, the Toronto
Stock Exchange and the Ghana Stock Exchange. Companies with
market capitalizations similar to ours have experienced substantial
volatility in the past, often based on factors unrelated to the finan-
cial performance or prospects of the companies involved. These
factors include macroeconomic developments in North America
and globally and market perceptions of the attractiveness of par-
ticular 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
could have an effect on the price of our common shares include
the following:
• the extent of analytical coverage available to investors con-
cerning our business could be limited if investment banks
with research capabilities do not continue to follow our
securities;
• the trading volume and general market interest in our secu-
rities could affect an investor’s ability to trade significant
numbers of common shares;
• the size of the public float in our common shares may limit
the ability of some institutions to invest in our securities; and
• a substantial decline in our stock price that persists for a sig-
nificant period of time could cause our securities to be delisted
from NYSE Amex, the Toronto Stock Exchange and/or the
Ghana Stock Exchange, further reducing market liquidity.
As a result of any of these factors, the market price of our com-
mon shares at any given point in time might not accurately reflect
our long-term value. The stock markets in general have recently
suffered major declines. Securities class action litigation often has
been brought against companies following periods of market price
volatility that affects the market price of particular securities with-
out regard to the performance of the company whose stock price is
affected. We could 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.
Investors could have difficulty or be unable to enforce certain
civil liabilities on us, certain of our directors and our experts.
Golden Star is a Canadian corporation. A majority of our assets
are located outside of Canada and the United States, and our head
office is located in the United States. It might not be possible for
investors to collect judgments obtained in Canadian courts predi-
cated on the civil liability provisions of Canadian or U.S. securi-
ties legislation. It could also be difficult for you to effect service
of process in connection with any action brought in the United
States upon our directors and officers. Execution by United States
courts of any judgment obtained against us, or any of the directors
or executive officers, in the United States courts would be limited
to our assets or the assets of such persons 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.
There are certain U.S. federal income tax risks associated with
ownership of Golden Star common shares.
Holders of our common shares or options to purchase our
common shares or convertible debentures, referred to as “eq-
uity securities”, who are U.S. taxpayers should consider that we
could be considered to be a “passive foreign investment company”
(“PFIC”) for U.S. federal income tax purposes. Although we be-
lieve that we were not a PFIC in 2009 and do not expect to
become a PFIC in the foreseeable future, the tests for determining
PFIC status depend upon a number of factors, some of which are
beyond our control, and can be subject to uncertainties, and we
cannot assure you that we will not be a PFIC. We undertake no
obligation to advise holders of our equity securities as to our PFIC
status for any year.
If we are a PFIC for any year, any person who holds our equity se-
curities who is a U.S. person for U.S. income tax purposes, referred
to as a U.S. holder and whose holding period for those equity secu-
rities includes any portion of a year in which we are a PFIC gener-
ally would be subject to a special adverse tax regime in respect of
“excess distributions.” Excess distributions include certain distribu-
tions received with respect to PFIC shares in a taxable year. Gain
recognized by a U.S. holder on a sale or other transfer of our equity
securities (including certain transfers that would otherwise be tax
free) also would be treated as an excess distributions. Such excess
distributions and gains would be allocated ratably to the U.S.
holder’s holding period. For these purposes, the holding period of
shares acquired either through an exercise of options or the conver-
sion of convertible debentures includes the holder’s holding period
in the option or convertible debt.
The portion of any excess distribution (including gains treated as
excess distributions) allocated to the current year would be includ-
ible as ordinary income in the current year. The portion of any
excess distribution allocated to prior years would be taxed at the
highest marginal rate applicable to ordinary income for each such
year (regardless of the taxpayer’s actual marginal rate for that year
and without reduction by any losses or loss carryforwards) and
would be subject to interest charges to reflect the value of the U.S.
income tax deferral.
Elections may be available to mitigate the adverse tax rules that
apply to PFICs (the so-called “QEF” and “mark-to-market” elec-
tions), but these elections may accelerate the recognition of
2009 Annual Re p or t | 19
Current global financial conditions may affect our ability to
obtain financing and may negatively affect our asset values and
results of operations.
Current global financial conditions have been characterized by
increased volatility and several financial institutions have either
gone into bankruptcy or have had to be rescued by govern-
mental authorities. Access to public financing has been negatively
impacted by both the rapid decline in value of sub-prime mort-
gages and the liquidity crisis affecting the asset-backed commercial
paper market. These factors may affect our ability to obtain equity
or debt financing in the future on favorable terms. Additionally,
these factors, as well as other related factors, may cause decreases
in asset values that are deemed to be other than temporary, which
may result in impairment losses. If such increased levels of volatility
and market turmoil continue, our operations could be adversely
impacted and the trading price of the common shares may be
adversely affected.
Item 1B. UNRESOLVED STAFF
COMMENTS
None
taxable income and may result in the recognition of ordinary in-
come. The QEF and mark-to-market elections are not available to
U.S. holders with respect to options to acquire our common shares
or convertible debentures. We have not decided whether we would
provide to U.S. holders of our common shares the annual informa-
tion that would be necessary to make the QEF election.
Additional special adverse rules also apply to investors who are
U.S. holders who own our common shares if we are a PFIC and
have a non-U.S. subsidiary that is also a PFIC. Special adverse rules
that impact certain estate planning goals could apply to our equity
securities if we are a PFIC.
The conversion feature of the convertible debentures could limit
increases in the trading price of our common shares.
The conversion price of the convertible debentures is $5.00 and
represented a 72% premium over the closing price of our common
shares on the NYSE Amex on February 23, 2010. In the event
our share price is greater than the conversion price, this conversion
feature may limit the increase in the price of our common shares,
since any increase in the stock price above the conversion price
will make it more likely that the convertible debentures will be
converted, thereby exerting a downward pressure on the market
price of the common shares.
The existence of outstanding rights to purchase or acquire com-
mon shares could impair our ability to raise capital.
As of February 23, 2010, there were options outstanding to pur-
chase up to 6,644,898 common shares at exercise prices ranging
from Cdn$1.02 to Cdn$9.07 per share. In addition, 1,477,579
additional common shares are available for issuance under our
stock option plans. Furthermore, 25.0 million common shares are
currently issuable upon conversion of the convertible debentures
(additional shares may be issuable in certain circumstances). Dur-
ing the life of the options, convertible debentures and other rights,
the holders are given an opportunity to profit from a rise in the
market price of 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 could be
adversely affected, and the existence of the rights could have an
adverse effect on the price of our common shares. The holders of
the options, convertible debentures and other rights can be ex-
pected to exercise or convert 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.
20 | Gold e n St ar
Item 2. DESCRIPTION OF PROPERTIES
MAPS OF OPERATIONS AND PROPERTIES
The maps below show the locations of Bogoso, Prestea, Wassa, Pampe, the HBB properties and Mampon in Ghana, and various
exploration properties in other areas of West Africa. These properties are described in further detail below.
2009 Annual Re p or t | 21
PROPERTY STATUS TABLE
The chart below summarizes information regarding our more significant properties, which are described in further detail below:
Property
Bogoso
(Ghana)
Bogoso
(Ghana)
Prestea
(Ghana)
Bogoso Mining
Lease 1
Bogoso Mining
Lease 2
Bogoso Prospect-
ing License
Prestea Mining
Surface Lease
Prestea
Underground
(Ghana)
Prestea Under-
ground Mining
Lease
Wassa
(Ghana)
Wassa Mining
Lease
Wassa
Regional
(Ghana)
Accra
Newtown
Adaase
Type of Interest
Government
granted mining
leases held by
a 90% owned
subsidiary
Prospecting
license
(PL)
Government
granted mining
lease held by
a 90% owned
subsidiary
Government
granted mining
lease held by a
81% beneficial
interest
Government
granted mining
lease held by
a 90% owned
subsidiary
Prospecting
license
Prospecting
license
Expiry Date
8/20/2017
Property size
50 km2
2009 Status
Active
Comments
Mining stage
8/15/2018
45 km2
3/10/2004
Renewal under
application
58.52 km2
Inactive
Exploration stage
6/28/2031
115.5 km2
Active
Mining and devel-
opment stage
7/6/2031
115.5 km2 lies
directly below
Prestea surface
lease
Active
Exploration stage
9/16/2022
52.89 km2
Active
Mining stage
5/6/2009
Renewal under
application
12/15/2009
Renewal under
application
15.68 km2
Active
Exploration stage
45.6 km2
Exploration stage
Ateiku-Twifo
Reconnaissance
license (RL)
1/5/2010
39.7 km2
Dwaben (Safric)
Reconnaissance
license
2/7/2007 Renewal
under application
24.05 km2
66 km2
Active
Exploration stage
Exploration stage
Development
stage
Dunkwa-Asikuma
Ghana)
Dunkwa-Mansiso
(Ghana)
Akropong
(Ghana)
Alkebulan
Joset
Moseaso
Prospecting
license
Prospecting
license
Prospecting
license
Prospecting
license
Prospecting
license
12/20/2008
Renewal under
application
9/3/2009
Renewal under
application
7/15/2006
Renewal under
application
11/15/2008
Renewal under
application
1/10/2010
Renewal under
application
56 km2
Active
Exploration stage
25.04 km2
Exploration stage
40.25 km2
Active
Exploration stage
43.2 km2
Active
Exploration stage
Kobra-Riyadh
East
Reconnaissance
license
PL
138 km2
Exploration stage
application under
processing
Pampe Mining
Lease
Mining lease
6/3/2012
50 km2
Mining lease
1/10/2012
40 km2
Active
Active
Various
221.07 km2
Active
3 Prospecting
licenses and joint
venture agree-
ments
Mining lease
9/26/2011
20.38 km2
Active
Mining and
Exploration stage
Mining and
Exploration stage
Exploration stage
Mining and
Exploration stage
Prospecting
license
11/18/2010
Renewal under
application
22.46 km2
Active
Exploration stage
Pampe
Hwini-Butre
(Ghana)
Manso
(Ghana)
Benso–Subriso
Block
(Ghana)
Benso-Amantin &
Chichiwelli
Blocks
(Ghana)
22 | Gold e n St ar
Property
Ghana
Regional
Côted’Ivoire
Regional
Abura
Adubrim
Afranse
Hotopo
Oseneso
Apowa
Amelekia
Abengourou
Agboville
Mano JV
(Sierra Leone)
Sonfon South
Burkina Faso
Goulagou
Rounga
Youba
Tougou
Bangodo
Kampouaga
Niger
Deba
Tialkam
Type of Interest
Reconnaissance
license – joint
venture
Reconnaissance
license
Prospecting
license – joint
venture
Expiry Date
9/18/2007
Conversion to PL
in advanced stage
12/3/2008
Renewal under
application
7/24/2009
Renewal under
application
Reconnaissance
licence - joint
venture
12/19/2008
Renewal under
application
Property size
129.05 km2
2009 Status
Active
Comments
Exploration stage
85.17 km2
77.46 km2
18.06 km2
Prospecting
license – joint
venture
Reconnaissance
license
66.21 km2
9/7/2008
Renewal under
application
Under application 99.9 km2
8/10/2010
810.05 km2
Active
Exploration stage
8/10/2010
998.03 km2
8/10/2010
999.7 km2
8/18/2010
153 km2
Active
Exploration stage
11/11/2011
185.25 km2
Active
11/13/2012
240 km2
10/17/2011
61.75 km2
8/21/2011
128 km2
Optioned to River-
stone Resources
Inc.
Optioned to River-
stone Resources
Inc.
Optioned to River-
stone Resources
Inc. Formerly part
of the optioned
Goulagou permit
Exploration stage
10/17/2011
249.77 km2
Exploration stage
10/17/2011
243.99 km2
Exploration stage
12/27/2010
550 km2
Active
12/27/2010
372 km2
JV with AMI
Resources Inc
who are earning
into properties
Exploration
license
Exploration
license
Exploration
license
Mano River
Resources Inc
Agreement allow
earning up to 90%
Agreement allow
earning up to 90%
Agreement allow
earning up to 90%
Exploration Permit
– 100% held by
GSE-BF (GSR
subsidiary)
Exploration Permit
– 100% held by
GSE-BF (GSR
subsidiary)
100 % held by
GSE-BF (GSR
Subsidiary)
Exploration Permit
– 100% held by
GSE-Niger (GSR
subsidiary)
Exploration Permit
– 100% held by
GSE-Niger (GSR
subsidiary)
MINING IN GHANA
Ghanaian Ownership and Special Rights
Ghana is situated on the west coast of Africa, approximately 600 kms north of the Equator on the Gulf of Guinea. Accra, the capital city
of Ghana, is located almost exactly on the Prime Meridian. The former British colony changed its name from the Gold Coast to Ghana
on achieving independence on March 6, 1957. Ghana is now a republic with a population of approximately 24 million people and a
democratically elected government. English remains the official and commercial language.
The total land area of the country is approximately 238,000 square kilometers and the topography is relatively flat. Ghana has a
tropical climate with two rainy seasons and two dry seasons each year particularly in the western region where Golden Star Re-
sources has its two operations.
2009 Annual Re p or t | 23
Rights to explore and develop a mine are administered by the Min-
ister of Lands and Natural Resources, through the Minerals Com-
mission, a governmental organization designed to promote and
regulate the development of Ghana’s mineral wealth in accordance
with the Minerals and Mining Act of 2006 (Act 703), which came
into effect in March 2006 (“The 2006 Act”).
A company or individual can apply to the Minerals Commission
for a renewable exploration license granting exclusive rights to ex-
plore for a particular mineral in a selected area for an initial period
not exceeding three years. When exploration has successfully de-
lineated a Mineral Reserve, an application may be made to the
Minerals Commission for conversion to a mining lease, granting a
company the right to produce a specific product from the conces-
sion area, normally for a period of 20 to 30 years or a lesser period
that may be agreed upon with the applicant.
The 2006 Act requires that any person who intends to acquire a
controlling share of the equity of any mining company that has
been granted a mining lease, must first give notice of its intent to
the Government and obtain its consent prior to acquiring a con-
trolling share.
Under the 2006 Act, the Government of Ghana holds a 10% free-
carried interest in all companies that hold mining leases. The 10%
free carried interest entitles the Government to a pro-rata share of
future dividends. The Government has no obligation to contribute
development capital or operating expenses. GSBPL and GSWL
owe $496 million and $155 million, respectively, to Golden Star
or its subsidiaries as of December 31, 2009 for past advances and
interest on these advances, and these amounts would be repaid
before payment of any dividends.
Under the 2006 Act, the Government of Ghana is empowered
to acquire a special or golden share in any mining company.
The special share would constitute a separate class of shares
with such rights as the Government and the mining company
might agree. Though deemed a preference share, it could be
redeemed without any consideration or for a consideration
determined by the Company and payable to the holder on
behalf of the Republic.
In the absence of such agreement, the special share would have the
following rights:
• it would carry no voting rights, but the holder would be
entitled to receive notice of and to attend and speak at any
general meeting of the members or any separate meeting of
the holders of any class of shares;
• it could only be issued to, held by, or transferred to the Gov-
ernment or a person acting on behalf of the Government;
• the written consent of the holder would be required 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;
• it would not confer a right to participate in the dividends,
profits or assets of the company or a return of assets in a wind-
ing up or liquidation of the company;
• the holder of a special share may require the company to re-
deem the special share at any time for no consideration or for
a consideration determined by the company
GSBPL and GSWL have not issued, nor to date been requested to
issue, a 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 mines in Ghana. The pur-
chase price would be agreed by the Government of Ghana and
the mining company, or the price established by any gold hedging
arrangement between the company 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 Government of Ghana
has agreed to take no preemptive action pursuant to its right to
purchase gold or other minerals so long as mining companies sell
gold in accordance with certain procedures approved by the Bank
of Ghana.
Ghanaian Royalty Requirements
The holder of a mining lease is required to pay quarterly a royalty
of not less than 3% and not more than 6% of gold revenues. The
Government of Ghana determines the royalty percentage each
year based on the ratio that our operating margin bears to the value
of gold produced from a mining lease in that year.
Based on the Mineral Royalty Regulation currently in force, the
royalty is 3% when the operating ratio is 30% or less, and increases
0.075% for each 1% increase in operating ratio until it reaches a
maximum of 6% at an operating ratio of 70%. In 2009, 2008 and
2007 the royalty rate for GSBPL was 3% of revenues and GSBPL
paid $5.4 million, $4.5 million and, $2.6 million, respectively. The
royalty payments from GSBPL have not exceeded 3%per annum
in any year. GSWL paid a 3% royalty of $7.3 million, $3.3 million
and $2.7 million in 2009, 2008 and 2007, respectively.
During 2009, the Government of Ghana announced its inten-
tion to increase mining royalty rates as part of a general review of
national revenue sources. It is unclear when and how this will be
implemented.
Ghanaian Environmental Regulations
Environmental matters in Ghana, including those related to min-
ing, fall under the oversight of the Environmental Protection
Agency (“EPA”), with some responsibilities lying with the Miner-
als Commission. The EPA has rules and guidelines that govern
environmental and socioeconomic impact statements, environ-
mental management plans, mine operations, the quality of water
discharges to the receiving environment, and mine closure and
reclamation, among others to which our operations are subject.
Additional provisions governing surface uses by our stakeholders
are provided in the 2006 Mining Act.
In 2005, pursuant to a reclamation bonding agreement between
the EPA and GSWL, we bonded $3.0 million to cover future
reclamation obligations at Wassa. To meet the bonding re-
quirements, we established a $2.85 million letter of credit and
deposited $0.15 million of cash with the EPA. Pursuant to a
further bonding agreement between the EPA and GSBPL, we
bonded $9.5 million in early 2006 to cover our future obliga-
tions at Bogoso/Prestea. To meet these requirements, we depos-
ited $0.9 million of cash with the EPA with the balance covered
by a letter of credit. In 2008, the bond was increased by $0.5
million to cover the Pampe mining site.
In 2008, the EPA required Bogoso/Prestea to resubmit their Envi-
ronmental Management Plan (“EMP”) with an updated estimate
24 | Gold e n St ar
of the reclamation and closure costs prepared by a third party con-
sultant. A consultant was commissioned to prepare the reclamation
and closure cost estimate and the EMP was submitted to the EPA
in February , 2009. The EPA requested payment of fees associated
with the issuance of the certificate, which was completed. Bogoso/
Prestea has completed all the legal requirements and is waiting for
the EPA to issue the environmental certificate.
In 2009, the EPA required Wassa to resubmit their EMP with
an updated estimate of the reclamation and closure costs pre-
pared by a third party consultant. A consultant was commis-
sioned to review the reclamation and closure cost estimate and
the EMP was submitted to the EPA in September 2009. A let-
ter from the EPA was subsequently received with comments
and Wassa was asked to incorporate the comments and submit
the required number of copies to the EPA. The document is
under revision for submission.
Reclamation activities were ongoing at both Wassa and Bogoso/
Prestea during 2009 to rehabilitate disturbed lands and
reduce some of the long-term liabilities including re-profiling
waste dumps, capping hard rock with oxide materials, topsoil
spreading and planting for both slope stabilization and long-
term rehabilitation. Our consolidated reclamation expenditures
totaled $2.0 million, $1.2 million and $0.9 million respec-
tively in 2009, 2008 and 2007. We believe all our operations
in Ghana are currently in substantial compliance with all
environmental requirements.
Environmental Laws and Regulations
All phases of our operations are subject to environmental laws and
regulations in the various jurisdictions where we operate. These
regulations may define, among other things, air and water qual-
ity standards, waste management requirements, and mine closure
and land rehabilitation obligations. In general, environmental
legislation is evolving to require stricter operating standards, more
detailed social and environmental assessments of proposed proj-
ects, and a heightened degree of responsibility for companies and
their officers, directors, and employees for social responsibility and
health and safety. However, changes in environmental regulations
could affect the way we operate, resulting in higher environmental
and social operating costs that may affect the viability of our opera-
tions. In the past year in particular, we have noted a trend toward
increasing environmental requirements.
We use hazardous chemicals in our gold recovery activities, so gen-
erating environmental contaminants that may adversely affect air
and water quality. To mitigate these effects, we have established
objectives to achieve regulatory requirements in all of our explora-
tion, development, operation, closure, and post-closure activities
so that our employees, the local environment and our stakeholder
communities are protected and that the post-closure land use con-
tributes to the sustainability of the local economy. In order to meet
our objectives, we have:
• educated our leaders and managers so that they are commit-
ted to creating a culture that makes social and environmental
matters an integral part of the short- and long-term opera-
tions and performance management systems;
• worked with our employees so that they understand and ac-
cept environmental and social policies and procedures as a
fundamental part of the business;
• signed and implemented the International Cyanide Manage-
ment Code (“the Code”) and attained substantive compli-
ance for both the Bogoso/Prestea and Wassa operations;
• signed and publicly stated our support for the UN Global
Compact and completed our communications on progress
(COP);
• established, and continue to improve operating standards and
procedures that aim to meet or exceed requirements in relevant
laws and regulations, the commitments made in our environ-
mental impact statements, environmental and socioeconomic
management plans, rehabilitation and closure plans and any
international protocols to which we are a signatory;
• incorporated environmental and human rights performance
requirements into all relevant contracts;
• provided training to employees and contractors in environ-
mental matters;
• regularly prepared, reviewed, updated and implemented site-
specific environmental management and rehabilitation and
closure plans;
• worked to progressively rehabilitate disturbed areas in confor-
mance with the site-specific environmental management and
rehabilitation and closure plans;
• consulted local communities and regulators to provide us
with input to our environmental management policies and
procedures;
• regularly reviewed our environmental performance; and
• publicly reported our social, health, safety, and environmen-
tal performance.
Governmental approvals and permits are currently required and
will likely continue to be required in the future in connection with
our operations and development activities. To the extent that such
approvals are required and not obtained, we could be limited or
prohibited from continuing our mining and processing operations
or from proceeding with planned exploration or the development
of mineral properties.
Our mining, processing, development and mineral exploration
activities are subject to various laws governing prospecting, devel-
opment, production, taxes, labor standards, occupational health
and safety, land claims of local people and other matters. New rules
and regulations may be enacted or existing rules and regulations
may be modified and applied in a manner that could have an adverse
effect on our financial position and results of operations.
CORPORATE SOCIAL RESPONSIBILITY
In keeping with our health and safety, environmental, community
relations and human rights policies, we strive at all times to con-
duct our business as a responsible corporate citizen. We believe our
ongoing success in Ghana depends on our continuing efforts to
build good relations with our local stakeholder communities and
by incorporating broader stakeholder comments and addressing
their concerns in our developing projects and ongoing operations.
We believe our success as an employer, as a neighbor and as an
important part of the local economy is furthered by contributing
to the diversification of the local economy with projects such as
our Oil Palm Project and by our support of community-driven
2009 Annual Re p or t | 25
complex described above, Bogoso/Prestea assets include the follow-
ing non-operating properties:
Mampon — The Mampon deposit is located approximately 35
kilometers north of the Bogoso processing plant. Mampon is
an undeveloped gold deposit with, as of December 31, 2009,
an estimated 1.2 million tonnes of Probable Mineral Reserves
at an average gold grade of 5.24 g/t, which we plan to mine by
open pit mining methods. It is expected that Mampon ore will
be hauled by truck to the Bogoso processing plants when min-
ing is initiated here.
Pampe — The Pampe deposit is located approximately 19 kilo-
meters west of the Bogoso processing plants. As at December
31, 2009 we have estimated a Probable Mineral Reserve of 1.5
million tonnes at an average gold grade of 3.53 g/t. Pampe was
mined during 2007 and 2008 but has been placed on a care and
maintenance since then. We expect to resume mining at Pampe
once mining is initiated at Prestea South so that Pampe oxide
ore will be blended with the Prestea South oxide ore.
Prestea South — This property, located 20 km south of the
Bogoso/Prestea processing plants, is discussed in more detail
below under the DEVELOPMENT PROPERTIES Section .
Prestea Underground — This property is discussed in more detail
below under the EXPLORATION STAGE PROPERTIES IN
GHANA Section .
Geology at Bogoso/Prestea
Bogoso/Prestea lies within the Eburnean Tectonic Province in the
West African Precambrian Shield along the Ashanti Trend located
immediately south of the town of Bogoso. The area is dominated
by a major northeast-southwest trending structural fault zone re-
ferred 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 kilometers west of the
Ashanti Trend in the Bogoso region, and gradually converges
with it at Obuasi forming the basis for the Obuasi mine, which is
owned and operated by AngloGold Ashanti Limited.
Mineral Reserves at Bogoso/Prestea
At December 31, 2009, Bogoso/Prestea had Proven and
Probable Mineral Reserves, including the Probable Mineral
Reserves at Prestea South, Mampon and Pampe, of 31.2 mil-
lion tonnes grading 2.74 g/t containing approximately 2.75
million ounces of gold before any reduction for recovery losses
and the Government of Ghana’s 10% minority interest. See
the Proven and Probable Mineral Reserves table and the
Non-Reserves – Measured and Indicated Mineral Resource
table in Item 1 of this Form 10-K.
improvement projects through our Development Foundation.
During 2009, the Development Foundation worked with our
local Community Mine Consultation Committees to fund and
sponsor several community–driven projects including a medical
clinic, continuing scholarships for local students, nurses quarters,
a clinic refurbishment, supplying of medical equipment in part-
nership with Project C.U.R.E., school buildings and community
electrification projects.
Our Oil Palm Project continued to advance during 2009 and now
has over 700 hectares under cultivation. Our second set of planta-
tion plots were handed over resulting in a total of 132 families now
each having 4 hectares of oil palm plantation.
In our efforts to promote transparency in governance, we continue
to work with the Extractive Industry Transparency Initiative and
throughout 2009 we published our payments to government (e.g.
taxes, royalties, fees). We furthered our work in human rights and
against child and forced labor with an extensive training program
within GSR and expressed our support of human rights in letter
outlining our commitment and training material that were sent to
the to our major suppliers.
Our commitment to the development of our stakeholder com-
munities demonstrates Golden Star’s dedication to Ghana and
to sharing the success of our operations with our local com-
munities. As we continue to expand the Oil Palm Project, we
will integrate more local people and communities into our
economic development and outreach programs, so assisting the
Western Region of Ghana to achieve its full potential within
the broader Ghana development.
OPERATING PROPERTIES
The Bogoso/Prestea Gold Mine
Bogoso/Prestea consists of a gold mining and processing
operation located along the Ashanti Trend in western Ghana,
approximately 35 kilometers northwest of the town of Tarkwa.
It can be reached by paved roads from Tarkwa, a local com-
mercial center, and from Accra, the capital of Ghana. Bogoso
and Prestea are adjoining mining concessions that together
cover approximately 40 kilometers of strike along the south-
west trending Ashanti gold district. Mining areas at Bogoso and
Prestea are linked to the Bogoso processing plants by paved and
gravel haul-roads located on our properties.
There are two ore processing facilities at Bogoso/Prestea, and
open pit mining methods are employed. Ore is hauled by truck
from the pits to the processing plants. Equipment and facilities
include a nominal 1.5 million tonne per annum oxide ore pro-
cessing plant, a nominal 3.5 million tonne per annum sulfide
ore processing plant, a fleet of haul trucks, loaders, drills and
mining support equipment. In addition, there are numerous
ancillary support facilities including warehouses, maintenance
shops, roadways, administrative offices, an employee residential
complex, power and water supply systems, a medical clinic, and
a tailings disposal facility.
We acquired Bogoso in 1999 and Prestea in 2001. Bogoso/
Prestea gold sales totaled 120,216 ounces in 2007, 170,499 in
2008 and 186,054 in 2009. See the “Operating Results for Bo-
goso/Prestea” Section below for additional details on historical
production and operating costs. In addition to the Bogoso/Prestea
26 | Gold e n St ar
Operating Results for Bogoso/Prestea
The following tables show historical operating results:
BOGOSO/PRESTEA
OPERATING RESULTS
Ore mined refractory (t)
Ore mined
non-refractory
2009
2,940,822
2008
2,604,639
2007
1,427,958
—
140,036
928,621
Total ore mined (t)
2,940,822
2,744,675
2,356,579
Waste mined (t)
Refractory ore
processed (t)
Refractory ore grade
(g/t)
Gold recovery –
refractory ore (%)
Non-refractory ore
processed (t)
Non-refractory ore
grade (g/t)
Gold recovery –
non-refractory ore (%)
Gold sales (oz)
Total cash cost
($/oz)
Royalties ($/oz)
Cash operating cost
($/oz)
14,929,249 19,464,979 18,515,851
2,887,400
2,736,379
1,640,318
2.78
70.7
—
—
0.0
2.82
66.5
2.44
52.1
359,669
1,429,309
2.38
66.0
2.04
73.3
186,054
170,499
120,216
735
30
705
863
26
837
788
22
766
(1) Gold sales are shown on a 100% basis, which represents our current
beneficial interest in gold production and revenues. Once all capital
has been repaid, the Government of Ghana would receive 10% of the
dividends from the subsidiary owning Bogoso/Prestea.
(2) The Bogoso/Prestea sulfide processing plant was placed in service in
July 2007.
Exploration at Bogoso/Prestea
During 2009, Bogoso/Prestea area exploration activities focused
on drilling VTEM geophysical targets and testing extensions of
gold mineralization in proximity to the operating pits. The VTEM
targets were ranked based on favorable geology and structure co-
inciding with zones of high conductivity. During 2009 we tested
the two top ranked VTEM targets, which were near Chujah and
Buesichem, and based on the 2009 results, plan follow-up drilling
on the Buesichem target in 2010. We also plan to drill test other
Bogoso/Prestea VTEM targets over the next few years.
Bogoso/Prestea Outlook for 2010
During 2010 we expect that the Bogoso sulfide plant will con-
tinue to process refractory sulfide ores from the pits at Bogoso/
Prestea. The Bogoso oxide plant may process sulfide ores, if need-
ed, to maintain optimum sulfide concentrate feed to the Bogoso
sulfide biox reactors. We expect Bogoso/Prestea will produce ap-
proximately 200,000 ounces of gold in 2010 from sulfide ores at
an average cash operating cost of approximately $650 per ounce.
The Wassa Gold Mine
Overview of the Wassa Gold Mine
We own and operate the Wassa gold mine located approximately
35 kilometers east of Bogoso/Prestea in southwest Ghana. The
property was acquired in 2001 from a former owner who had op-
erated Wassa as a heap leach gold mine. The property, as now con-
stituted, includes a series of open-pits, a nominal 3.0 million tonne
per annum CIL processing plant with its crushing and grinding
circuits, a fleet of mining equipment, ancillary facilities including
an administration building, a warehouse, a maintenance shop, a
stand-by power generating facility and an employee residential
complex. We completed construction of the CIL processing plant
in early 2005, and the plant was placed in commercial service on
April 1, 2005.
Wassa also owns and operates the Hwini-Butre and Benso mines
located 80 and 50 km, respectively, south of Wassa. In the third
quarter of 2008, following completion of a 50 km haul road, we
started mining at Benso and began hauling its ore to Wassa for
processing. In May 2009, following completion of a 30 km road
extension, the Hwini-Butre mine began trucking ore to the Was-
sa processing plant. The Benso and Hwini-Butre mines include
multiple open pits at both locations as well as mining equipment,
equipment repair shops, warehouses and other ancillary support
equipment and buildings.
Geology at Wassa
Wassa lies within the Eburnean Tectonic Province in the West Afri-
can Precambrian Shield. The Proterozoic rocks that comprise most
of the West African craton and host the major gold mineraliza-
tion in Ghana are subdivided into meta-sedimentary and volcanic
rocks of the Birimian and Tarkwaian sequences. Wassa is hosted
within the same Birimian volcano-sedimentary greenstone pack-
age as Bogoso/Prestea. However, Wassa is situated on the south-
eastern flank of the Ashanti Belt while Bogoso and Prestea occur
along the northwestern flank.
Mineral Reserves at Wassa
As at December 31, 2009 Wassa, including the HBB proper-
ties, had Proven and Probable Mineral Reserves of 17.1 million
tonnes with an average grade of 1.79 g/t containing approxi-
mately 0.99 million ounces of gold before recovery losses and
any reduction for the Government of Ghana’s 10% minority
interest. See the Proven and Probable Mineral Reserves table and
the Non-Reserves – Measured and Indicated Mineral Resource
table in Item 1 of this Form 10-K.
Operating Results for Wassa
The following table displays historical operating results at Wassa.
WASSA/HBB
OPERATING RESULTS
Ore mined (t)
2009
2,222,511
2008
2,885,985
2007
3,091,292
Waste mined (t)
16,708,312
7,416,516
8,125,132
Ore a processed (t)
2,652,939
3,187,230
3,752,376
Grade processed (g/t)
Recovery (%)
Gold sales (oz)
Total cash cost
($/oz)
Royalties ($/oz)
Cash operating cost
($/oz)
Exploration at Wassa
2.76
95.3%
1.33
93.6%
1.17
92.0%
223,848
125,427
126,062
479
33
447
580
26
554
444
21
465
Wassa’s 2009 exploration activities focused on expanding
reserves in the Wassa main pit and the development of new
deeper ore zones at the SAK pits during 2009 which resulted
in a decision to deepen the SAK 1 pit in 2010 to access the
new-found reserves. Later in 2009, drilling proceeded to test
2009 Annual Re p or t | 27
various targets around the Benso mining operations and near
the Hwini Butre mine operations.
Wassa Outlook for 2010
Wassa/HBB is expected to produce approximately 200,000
ounces in 2010 at an average cash operating cost of approximately
$520 per ounce.
DEVELOPMENT PROPERTIES
Prestea South Properties
The Prestea South project is located on the Ashanti Trend, south-
west of the town of Prestea and approximately 20 kilometers
southeast of the Bogoso processing plants. Gold mineralization is
associated with the same Ashanti Trend fault structure that con-
tinues to the north through our Bogoso and Prestea properties.
While various Sections of the mineral resources at Prestea South
were mined by prior owners using underground methods, the
surface oxide mineral resources have not been extensively mined,
and there are sulfide mineral resources accessible by open pit
mining. Our exploration efforts in recent years have identified
several deposits along this trend which can be mined by surface
mining methods.
We received mining permits for this area in 2008 and subsequently
applied for environmental permits. We expect to initiate develop-
ment at Prestea South, including its 20 kilometer haul road, once
the environmental permits are received. The Prestea South oxide
ore will be transported to Bogoso and processed through the Bo-
goso oxide plant. The Prestea South sulfide ore will be processed
through the Bogoso sulfide plant.
As of December 31, 2009, the Prestea South properties had total
Proven and Probable Mineral Reserves of 4.6 million tonnes grad-
ing 2.58 g/t containing approximately 0.38 million ounces before
any reduction for the Government of Ghana’s 10% minority inter-
est. Prestea South Mineral Reserve estimates have been adjusted to
reflect our estimate of the ore illegally removed.
EXPLORATION STAGE PROPERTIES IN GHANA
Prestea Underground
The Prestea Underground is an inactive underground gold mine
located to the south of Bogoso and adjacent to the town of Prestea.
The property consists of two useable access shafts and extensive
underground workings and support facilities. Access to the mine
site is via a paved road from Tarkwa and Accra maintained by the
Government of Ghana.
From the 1870’s to 2002 when mining ceased following an extended
period of low gold prices, the Prestea Underground operations pro-
duced approximately nine million ounces of gold, the second high-
est production of any mine in Ghana. The underground workings
are extensive, reaching depths of approximately 1,450 meters and
extending along a strike length of approximately nine kilometers.
Underground workings can currently be accessed via two surface
shafts, one near the town of Prestea (Central Shaft) and a second
approximately four kilometers to the southwest at Bondaye.
GSBPL now holds a 90% ownership in the Prestea Underground
with the Government of Ghana holding a 10% ownership in Pre-
stea Underground as well as its 10% holding in GSBPL, resulting
in an 81% beneficial ownership by Golden Star.
28 | Gold e n St ar
Exploration activities at the Prestea Underground in 2009 were
limited to desktop review of additional drilling targets. We con-
tinue to dewater the Prestea Underground, and we are refurbishing
the Central Shaft and assessing services on 12, 17 and 24 level.
Geology of Prestea Underground
The Prestea Underground deposits are located along the same
Ashanti Trend structure as are our Bogoso deposits a few kilome-
ters to the north and our Prestea South deposits a few kilometers to
the south with most of the gold mineralization found in a narrow
tabular fault zone which dips steeply to the northwest.
Akropong Trend Properties
The Akropong properties are located along a fault structure which
roughly parallels the Ashanti Trend and is located approximately
20 kilometers to the west of our Bogoso processing plant. Our
2009 exploration programs tested several targets along this trend
with further rotary air blast drilling being planned for 2010. If this
exploration is successful we would look at trucking this material
to our Bogoso processing plant as we had been doing with ore
from Pampe, located on the southern end of these properties. We
also intend to test the down dip high grade portions of the Pampe
deposit, below the current open pit designs, in 2010. These targets
would be amenable to underground mining methods should we
intersect grades and thicknesses of economic viability.
Dunkwa Properties
The Dunkwa Properties, which are located directly north of our
Bogoso Mining lease, consist of two prospecting licenses, Mansiso
and Asikuma, the latter hosting our Mampon ore deposit.
The Mansiso and Asikuma concessions were both flown as part of
the 2008 VTEM airborne geophysical survey. The chargeability
response from this survey has enhanced the understanding of the
major structures running through the property and several new
targets have been identified, some of which were explored in 2009.
We continue to follow up on targets generated by this geophysi-
cal survey and have plans to drill the Opon East anomaly which
we identified in 2009. Deeper exploration drilling to test the high
grade down plunge extension of the Mampon deposit has also
been budgeted for 2010.
OTHER EXPLORATION STAGE
PROPERTIES IN AFRICA
African Aura Mining (Mano River) Joint Venture, Sierra Leone
There was minimal activity at the Sonfon project during 2009.
Field activities were restarted in late 2009 and will carry over into
2010 when we plan to conduct additional geophysical surveys
and drilling programs. Drilling targets will follow up on any
geophysical anomalies delineated from the survey as well as on
significant results intersected during the initial diamond drilling
campaign in 2008.
During 2009 our cumulative life-to-date exploration expendi-
tures at Sonfon reached $2 million which, per terms of the joint
venture agreement, earned Golden star a 51% interest in the
Sonfon property.
Cote d’Ivoire
French Guiana
Activities in French Guiana remained on a care and maintenance
basis during 2009 waiting on the French Governments finaliza-
tion of the “new Mining Scheme”. All of our concession renewals
and applications have remained in a state of suspension as the new
legislation is yet to be approved.
In November 2009, we entered into a settlement agreement in
respect of the outstanding litigation regarding the Paul Isnard
properties in French Guiana, pursuant to which the rights to those
properties are to be transferred to us, subject to receiving the re-
quired governmental approvals. Also in November 2009, we en-
tered into an agreement to sell our rights, title and interest in the
Bon Espoir, Iracoubo Sud and Paul Isnard properties in French
Guiana for approximately $2.1 million.
Brazil
Several potential joint venture earn-in opportunities were iden-
tified and new concessions were staked during 2009. We have
farmed out several of our concessions in Minas Gerais and we are
seeking partners for other projects in this area. Golden Star is focus-
ing its 2010 exploration efforts in Northern Mato Grosso and we
will also continue to evaluate prospective ground as well as farm-in
or acquisition opportunities in other locations in Brazil as well.
Item 3. LEGAL PROCEEDINGS
We are engaged in routine litigation incidental to our business
none of which is deemed to be material. No material legal pro-
ceedings, involving us or 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 2009.
The 2009 exploration programs focused on our Amélekia and
Abengourou concessions located in the southeastern portion of
Cote d’Ivoire adjacent to the Ghanaian border along northeast
trending structures located to the west of the Sefwi greenstone belt
in Ghana. Late in 2009 we initiated an infill soil sampling program
over the two previously defined soil anomalies on the Amelekia
concession. This program will carry over into 2010, and once com-
pleted, we plan to follow up on any gold in soil anomalies with first
pass rotary air blast drilling.
Burkina Faso
We hold a 90% beneficial interest in the Goulagou and adjoining
Rounga gold properties, with a local Burkina Faso partner owning
a 10% interest. The Government of Burkina Faso will receive a
statutory 10% carried interest upon the granting of a mining lease.
The two properties are located approximately 100 kilometers west
of Ouagadougou, the capital city of Burkina Faso, and 20 kilome-
ters north of the city of Ouahigouya. Drilling programs carried out
by the prior owner and its predecessors identified several areas of
gold mineralization including two parallel zones on the Goulagou
property – the Goulagou I and II deposits.
In October 2007, we granted Riverstone Resources Inc. (“Riv-
erstone”) an option to purchase the Goulagou and Rounga
concessions. Exploration programs in 2009 were managed and
implemented by Riverstone and mainly consisted of infill reverse
circulation drilling on the Goulagou concession. We expect that
Riverstone will continue its exploration efforts during 2010.
In addition to the Goulagou and Rounga concessions, Golden
Star Burkina Faso also holds three other licenses which preliminary
reconnaissance exploration work was carried out on in late 2009.
Results from this first pass prospection will determine how we pro-
ceed with these properties in 2010.
Deba and Tialkam Projects, Niger
Our interest in the Deba and Tialkam gold properties in Niger
were optioned to AMI Resources in 2009, which is earning into
the property.
EXPLORATION STAGE PROPERTIES
IN SOUTH AMERICA
Saramacca Property
The Saramacca property, located in Suriname, consists of three
concessions totaling 536 square kilometers. The area is underlain
by lower Proterozoic greenstone rocks of the Paramaka and Armi-
na formations which also host IamGold’s Gross Rosebel Mine and
Newmont’s Nassau gold project. During 2009, Newmont earned
a 51% interest in the Saramacca project by spending $6 million
on exploration expenditures and has taken over management of
the programs. In November 2009, we entered into an agreement
to sell our interest in the Saramacca joint venture to Newmont for
approximately $8.0 million. Proceeds of the sale have been put
in escrow pending the receipt of required governmental approvals
and certain additional customary conditions.
2009 Annual Re p or t | 29
PART II
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
Our common shares trade on the Toronto Stock Exchange (“TSX”) under the trading symbol “GSC”, on the NYSE Amex (formerly
known as the American Stock Exchange) under the symbol “GSS” and on the Ghana Stock Exchange under the symbol “GSR”.
As of February 23, 2010, 257,407,061 common shares were outstanding and we had 982 registered shareholders. On February 23,
2010, the closing price per share for our common shares as reported by the TSX was Cdn$3.04 and as reported by the NYSE Amex
exchange was $2.91.
The following table sets forth, for the periods indicated, the high and low market closing prices per share of our common shares as re-
ported by the TSX and the NYSE Amex.
2009
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2008
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Toronto Stock Exchange
NYSE AMEX
Cdn$ High
2.32
Cdn$ Low
1.21
2.53
3.81
4.59
1.50
2.12
3.19
$ High
1.82
2.33
3.56
4.39
$ Low
1.01
1.20
1.83
2.96
Toronto Stock Exchange
NYSE AMEX
Cdn$ High
4.16
Cdn$ Low
2.74
3.85
2.67
1.75
3.28
1.25
0.56
$ High
4.31
3.80
2.67
1.57
$ Low
3.29
2.64
1.18
0.46
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.
Performance Graph and Table
The following graph and table illustrates the cumulative total shareholder return on the common shares for the fiscal years ended December
31, 2004 through 2009, together with the total shareholder return of the S&P/TSX Composite Index, and the Amex Gold Bugs Index for
the same period. The graph and table assumes an initial investment of Cdn$100 at December 31, 2004 and is based on the trading prices of
the common shares for the periods indicated. Because we did not pay dividends on our common shares during the measurement period, the
calculation of the cumulative total shareholder return on the common shares does not include dividends.
30 | Gold e n St ar
Golden Star Resources Ltd.
Dollar Value
2004
2005
2006
2007
2008
2009
$ 100.00
$
63.77
$
71.23
$
64.70
$
25.38
$
67.67
Annualized Return Since Base Year
(36.2)%
(15.6)%
(13.5)%
(29.0)%
(7.5)%
Return Over Previous Year
S&P /TSX Composite Index
Dollar Value
Annualized Return Since Base Year
Return Over Previous Year
Amex Gold Bugs Index (1)
Dollar Value
Annualized Return Since Base Year
Return Over Previous Year
(36.2)%
11.7%
(9.2)%
(60.8)%
166.6%
$ 100.00
$ 118.08
$ 135.17
$ 122.84
$
98.91
$ 110.48
18.1%
16.3%
7.1%
(0.3)%
2.0%
18.1%
14.5%
(9.1)%
(19.5)%
11.7%
$ 100.00
$ 124.55
$ 152.09
$ 156.10
$ 142.91
$ 173.64
24.6%
23.3%
16.0%
9.3%
24.6%
22.1%
2.6%
(8.4)%
11.7%
21.5%
(1) Prior to 2007, we utilized the Canadian Gold Index. This index is no longer published. For 2007 and afterward, we utilized the Amex Gold Bugs Index,
which is comparable to the Canadian Gold Index.
RECENT SALES OF UNREGISTERED SECURITIES
No sales of unregistered securities occurred during 2009.
CERTAIN CANADIAN FEDERAL
INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal in-
come tax considerations that apply to the holding and disposition
of our common shares. This summary only applies to a holder who
is for Canadian income tax purposes not resident in Canada, is res-
ident in the United States of America under the provisions of the
Canada-United States Income Tax Convention (1980) (the “Treaty”)
and holds our common shares as capital property.
This summary is based on the current provisions of the Income
Tax Act (Canada) and the regulations there under (the “Tax Act”)
and all amendments to the Tax Act publicly proposed by the Gov-
ernment of Canada to the date hereof. This summary is also based
on the current provisions of the Treaty and our understanding of
the current publicly available administrative and assessing practices
published in writing by the Canada Revenue Agency.
It is assumed that each proposed 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. This
summary does not otherwise take into account any change in
law or administrative practice, whether by judicial, governmental,
legislative or administrative action, nor does it take into account
provincial, territorial or foreign income tax consequences, which
may vary from the Canadian federal income tax considerations
described herein.
A particular US resident person may not be entitled to benefits
under the Treaty if the “limitations of benefits” provisions of the
Treaty apply to the particular US resident person. The limitation of
benefits provisions under the Treaty are complex and US residents
are advised to consult their own tax advisors in this regard.
Under the Treaty members of a limited liability corporation cre-
ated under the limited liability company legislation in the U.S.
and treated as a partnership or disregarded entity under US tax law
(“LLC”) (and holders of interests in similarly fiscally transparent
US entities) may be entitled to benefits under the Treaty in certain
circumstances provided that the members of the LLC are taxed in
the United States on any income, profits or gains earned through
the LLC in the same way they would be if they had earned it di-
rectly. Note, the recently concluded Fifth Protocol to the Treaty
will affect those shareholders that hold their shares through an LLC
or other fiscally transparent or “hybrid” entity. If you utilize such
entities to hold your common shares, then you consult your tax
advisors about the impact of the Fifth Protocol on your holdings.
Special rules, which are not discussed in this summary, may apply
if you are an insurer carrying on business in Canada and elsewhere,
or a financial institution as defined by Section 142.2 of the Tax
Act. If you are in any doubt as to your tax position, you should
consult with your tax advisor.
This summary is of a general nature only and it is not intended to
be, nor should it be construed to be, legal or tax advice to any hold-
er of the common shares and no representation with respect to Ca-
nadian federal income tax consequences to any holder of common
shares is made herein. ACCORDINGLY, SHAREHOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISERS AS
TO THE INCOME AND OTHER TAX CONSEQUENCES
ARISING IN THEIR PARTICULAR CIRCUMSTANCES.
Taxation of Dividends
Dividends paid or credited (or deemed to be paid or credited) by
us to a holder of one or more common shares will be subject to
Canadian non-resident withholding tax at the rate of 25% on the
gross amount of the dividend. Under the Treaty, the rate of with-
holding tax is reduced to 15% if the holder is the beneficial owner
of the dividends or 5% if the holder is a company that owns at least
10% of the company’s voting stock and beneficially owns the divi-
dend. Dividends paid to religious, scientific, charitable and similar
tax exempt organizations and pension organizations that are resi-
dent and exempt from tax in the U.S. and that have complied with
the administrative procedures specified in the Treaty are exempt
from this Canadian withholding tax.
Taxation of Capital Gains
Gains realized by a holder on a sale, disposition or deemed disposi-
tion of our common shares will not be subject to tax under the
Tax Act unless the common shares constitute “taxable Canadian
property” within the meaning of the Tax Act at the time of the sale,
disposition or deemed disposition (including a deemed disposi-
tion upon death of a holder). Our common shares are not “taxable
2009 Annual Re p or t | 31
apply to PFICs (the so-called “QEF” and “mark-to-market” elec-
tions), but these elections may accelerate the recognition of taxable
income and may result in the recognition of ordinary income. We
have not decided whether we would provide to U.S. Holders of
our common shares annual information that would be necessary to
make the QEF election. The QEF and mark-to-market elections
are not available to U.S. Holders with respect to options to acquire
our common shares or with respect to convertible debentures.
Additional special adverse rules also apply to investors who are
U.S. Holders who own our common shares if we are a PFIC and
have a non-U.S. subsidiary that is also a PFIC. Special adverse rules
that could impact estate planning goals could apply to our Equity
Securities if we are a PFIC.
Item 6. SELECTED FINANCIAL DATA
The selected financial data set forth below are derived from our
audited consolidated financial statements for the years ended De-
cember 31, 2009, 2008, 2007, 2006 and 2005, and should be read
in conjunction with those financial statements and the notes there-
to. The consolidated financial statements have been prepared in ac-
cordance with Canadian GAAP. Selected financial data derived in
accordance with US GAAP has also been provided and should be
read in conjunction with Note 26 to the financial statements. Ref-
erence should also be made to “Item 7, Management’s Discussion
and Analysis of Financial Condition and Results of Operations.”
Canadian property” provided that they are listed on a designated
stock exchange (which includes the TSX), and that neither you ,
nor one or more persons with whom the you did not deal at arm’s
length, alone or together, at any time in the five years immediately
preceding the disposition, owned 25% or more of the issued shares
of any class or series of our capital stock. Even if our common
shares are taxable Canadian property to you, under the Treaty you
will generally be exempt from paying Canadian income tax on any
gain provided that you are a resident of the United States for the
purposes of the Treaty (and are otherwise eligible for the benefits
of the Treaty), and further provided that the value of our com-
mon share is not derived principally from real property situated
in Canada.
Currently, our common shares do not derive their value princi-
pally from real property situated in Canada and therefore capital
gains realized from the disposition of our common shares would
be exempt from tax by virtue of the provisions of the Tax Treaty;
however, the determination as to whether Canadian tax would be
applicable on a sale, disposition or deemed disposition of common
shares must be made at the time of that sale, disposition or deemed
disposition.
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS
Holders of our common shares, or options to purchase our com-
mon shares, or convertible debentures (collectively, “Equity Secu-
rities”) who are U.S. taxpayers should consider that we could be
considered to be a “passive foreign investment company” (“PFIC”)
for U.S. federal income tax purposes. Although we believe that we
were not a PFIC for 2009, and do not expect to become a PFIC in
2010, the tests for determining PFIC status depend upon a num-
ber of factors, some of which are beyond our control, and can be
subject to uncertainties, and we cannot assure you that we will not
be a PFIC. We do not undertake any obligation to advise holders
of our Equity Securities as to our PFIC status for any year. If we
are a PFIC for any year, any holder of our Equity Securities who is
a U.S. person for U.S. income tax purposes (a “U.S. Holder”) and
whose holding period for those Equity Securities includes any por-
tion of a year in which we are a PFIC generally would be subject
to a special adverse tax regime in respect of “excess distributions.”
Excess distributions include certain distributions received with re-
spect to PFIC shares in a taxable year. Gain recognized by a U.S.
Holder on a sale or certain other transfer of our Equity Securities
(including certain transfers that would otherwise be tax free) also
would be treated as excess distributions. Such excess distributions
(including gains treated as excess distributions) would be allocated
ratably to the U.S. Holder’s holding period. For these purposes, the
holding period of common shares acquired through either an exer-
cise of options or a conversion of debentures includes the holder’s
holding period in those options, or convertible debentures. The
allocation to the current year or to prior years in which we were not
a PFIC would be includible as ordinary income in the current year.
Allocations to prior years in which we were a PFIC would be taxed
at the highest marginal rate applicable to ordinary income for each
such year (regardless of the holder’s actual marginal tax rate for the
taxable year, and without reduction for any losses or carryforwards)
and would be subject to interest charges to reflect the value of the
U.S. income tax deferral.
Elections may be available to mitigate the adverse tax rules that
32 | Gold e n St ar
Summary of Financial Condition
(Amounts in thousands except per share data)
Canadian GAAP
Working capital
Current assets
Total assets
Current liabilities
Long-term liabilities
Shareholder’s equity
Canadian GAAP
Revenues
Net income/(loss)
Net income/(loss) per share – basic
US GAAP
Working capital
Current assets
Total assets
Current liabilities
Long-term liabilities
Shareholder’s equity
US GAAP
Revenues
Net income/(loss)
Net income/(loss) per share – basic
2009
$ 144,560 $
As of December 31,
2007
71,589 $
2008
1,651 $
2006
28,258 $
219,496
753,879
74,936
158,623
520,320
91,973
694,299
90,322
175,810
428,167
145,826
789,876
74,237
166,989
542,500
90,534
659,988
62,276
131,974
458,314
2005
91,974
132,789
560,333
40,815
124,919
387,970
For the
Year Ended
Dec 31 2009
$ 400,739 $ 257,355 $ 175,614 $ 126,612 $
For the
Year Ended
Dec 31 2007
For the
Year Ended
Dec 31 2006
For the
Year Ended
Dec 31 2008
For the
Year Ended
Dec 31 2005
93,841
16,519
(119,303)
0.070
(0.506)
(35,290)
(0.154)
65,173
0.314
(17,801)
(0.124)
2009
$ 145,206 $
2008
1,651 $
2007
2006
71,407 $
21,383 $
As of December 31,
220,142
722,708
74,936
201,891
443,357
91,973
663,344
90,322
193,871
379,151
146,599
728,977
75,192
202,870
449,278
90,534
606,095
69,151
129,624
404,418
2005
91,794
132,789
522,443
40,815
135,832
343,832
For the
For the
For the
Year Ended
Year Ended
Year Ended
Dec 31 2009
Dec 31 2005
Dec 31 2007
$ 400,739 $ 257,355 $ 175,614 $ 128,690 $ 102,237
For the
Year Ended
Dec 31 2008
For the
Year Ended
Dec 31 2006
(8,903)
(0.048)
(69,204)
(0.313)
(41,749)
(0.182)
57,875
0.279
(24,470)
(0.170)
Note: 2005 US GAAP figures have been restated to reflect the correction of the accounting treatment of warrants issued in currencies other than US$.
2009 Annual Re p or t | 33
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 audited consolidated financial statements
and related notes. The financial statements have been prepared in accordance with Canadian GAAP. For a reconciliation to accounting
principles generally accepted in the United States (“US GAAP”), see Note 26 to the consolidated financial statements. This Manage-
ment’s Discussion and Analysis of Financial Condition and Results of Operations includes information available to February 24, 2010.
OVERVIEW OF GOLDEN STAR
We are a Canadian federally–incorporated, international gold mining and exploration company producing gold in Ghana, West Africa.
We also conduct gold exploration in other countries in West Africa and in South America. 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 principal office is located
at 10901 West Toller Drive, Suite 300, Littleton, Colorado 80127, and our registered and records offices are located at 66 Wellington
St. W, Suite 4200, P.O. Box 20, Toronto Dominion Bank Tower—Toronto Dominion Centre, Toronto, Ontario M5K 1N6.
We own controlling interests in several gold properties in southwest Ghana:
• Through a 90% owned subsidiary, Golden Star (Bogoso/Prestea) Limited (“GSBPL”), we own and operate the Bogoso/Prestea
gold mining and processing operations (“Bogoso/Prestea”) located near the town of Bogoso, Ghana. We have a nominal 3.5 mil-
lion tonnes per year processing facility at Bogoso/Prestea that uses bio-oxidation technology to treat refractory sulfide ore (“sulfide
plant”). In addition, Bogoso/Prestea has a carbon-in-leach processing facility next to the sulfide plant which is suitable for treating
oxide ores (“oxide plant”). Bogoso/Prestea produced and sold 170,499 ounces of gold in 2008 and 186,054 ounces in 2009.
• Through another 90% owned subsidiary, Golden Star (Wassa) Limited (“GSWL”), we own and operate the Wassa open-pit gold
mine and carbon-in-leach processing plant (“Wassa”), located approximately 35 km east of Bogoso/Prestea. The design capacity of
the carbon-in-leach processing plant at Wassa is nominally 3.0 million tonnes per annum but varies depending on the ratio of hard
to soft ore. GSWL also owns the Hwini-Butre and Benso concessions (the “HBB properties”) in southwest Ghana. The Benso mine
began shipping ore to Wassa late in 2008, and the Hwini-Butre mine began shipping ore to Wassa in May 2009. The Hwini-Butre
and Benso concessions are located approximately 80 and 50 km, respectively, by road south of Wassa. Wassa/HBB produced and
sold 125,427 ounces of gold in 2008 and 223,848 ounces in 2009.
We also hold interests in several gold exploration projects in Ghana and elsewhere in West Africa including Sierra Leone, Burkina Faso,
Niger and Côte d’Ivoire, and hold exploration properties in South America.
All of our operations, with the exception of certain exploration projects, transact business in US dollars and keep financial records in US
dollars. Our accounting records are kept in accordance with Canadian GAAP. Our fiscal year ends December 31. We are a reporting
issuer or the equivalent in all provinces of Canada, in Ghana and in the United States and file disclosure documents with securities regula-
tory authorities in Canada and Ghana and with the United States Securities and Exchange Commission.
NON-GAAP FINANCIAL MEASURES
In this Form 10-K, we use the terms “total cash cost per ounce” and “cash operating cost per ounce.”
“Cost of sales” as found in our statement of operations includes all mine-site operating costs, including the costs of mining, processing,
maintenance, work-in-process inventory changes including inventory write-offs and adjustments, mine-site overhead as well as produc-
tion taxes, royalties, mine site depreciation, depletion, amortization, asset retirement obligation accretion and by-product credits, but
does not include exploration costs, property holding costs, corporate office general and administrative expenses, impairment charges,
corporate business development costs, gains and losses on asset sales, capital gains and losses on foreign currency conversions, interest
expense, gains and losses on derivatives, gains and losses on investments and income tax expense/benefit.
“Total cash cost per ounce” for a period is equal to “Cost of sales” for the period less mining related depreciation and amortization costs,
accretion of asset retirement obligation costs and operations-related foreign currency gains and losses for the period, divided by the num-
ber of ounces of gold sold during the period.
“Cash operating cost per ounce” for a period is equal to “Total cash costs” for the period less royalties and production taxes, divided by
the number of ounces of gold sold during the period.
34 | Gold e n St ar
The following table shows the derivation of these measures:
Mining operations costs
Royalties
Costs (to)/from metals inventory
Mining related depreciation and amortization
Accretion of asset retirement obligations
Cost of sales—GAAP
Less operations-related foreign exchange gains
Less inventory write-offs
Less mining related depreciation and amortization
Less accretion of asset retirement obligations
Total cash cost
Less royalties and production taxes
Cash Operating Costs
Ounces sold
Total cash cost per ounce
Cash operating cost per ounce
Mining operations costs
Royalties
Costs (to)/from metals inventory
Mining related depreciation and amortization
Accretion of asset retirement obligations
Cost of sales—GAAP
Less operations-related foreign exchange gains
Less inventory write-offs
Less mining related depreciation and amortization
Less accretion of asset retirement obligations
Total cash cost
Less royalties and production taxes
Cash Operating Costs
Ounces sold
Total cash cost per ounce
Cash operating cost per ounce
For the year ended December 31, 2009
$
Wassa
98,858
7,306
1,417
71,291
818
Bogoso/Prestea
$
131,947
Combined
230,805
$
5,457
1,606
42,983
1,347
12,763
3,023
114,274
2,165
$
179,690
$
183,340
$
363,030
$
$
$
$
$
(281)
—
(71,291)
(818)
107,300
(7,306)
99,994
223,848
479
447
(1,418)
(890)
(42,983)
(1,347)
136,702
(5,456)
131,246
186,054
735
705
$
$
$
$
(1,699)
(890)
(114,274)
(2,165)
244,002
(12,762)
231,240
409,902
595
564
$
$
$
$
For the year ended December 31, 2008
Wassa
71,271
3,262
(1,153)
29,111
385
Bogoso/Prestea
$
149,040
Combined
220,311
$
4,465
10,823
31,333
393
7,727
9,670
60,444
778
$
102,876
$
196,054
$
298,930
(610)
—
(29,111)
(385)
72,770
(3,261)
69,509
125,427
580
554
$
$
$
$
(776)
(16,436)
(31,333)
(393)
147,116
(4,433)
142,683
170,499
863
837
$
$
$
$
(1,386)
(16,436)
(60,444)
(778)
219,886
(7,694)
212,192
295,926
743
717
$
$
$
$
We use total cash cost per ounce and cash operating cost per ounce as key operating indicators. We monitor these measures monthly,
comparing each month’s values to prior period’s values to detect trends that may indicate increases or decreases in operating efficiencies.
These measures are also compared against budget to alert management to trends that may cause actual results to deviate from planned
operational results. We provide these measures to our investors to allow them to also monitor operational efficiencies of our mines. We
calculate these measures for both individual operating units and on a consolidated basis.
Total cash cost per ounce and cash operating cost per ounce should be considered as non-GAAP financial measures as defined in SEC
Regulation S-K Item 10 and in applicable Canadian securities laws and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. There are material limitations associated with the use of such non-GAAP
measures. Since these measures do not incorporate revenues, changes in working capital and non-operating cash costs, they are not neces-
sarily indicative of operating profit or cash flow from operations as determined under GAAP. Changes in numerous factors including, but
not limited to, mining rates, milling rates, gold grade, gold recovery, costs of labor, consumables and mine site general and administrative
activities can cause these measures to increase or decrease. We believe that these measures are the same as, or similar to, the measures of
other gold mining companies, but may not be comparable to similarly titled measures in every instance.
BUSINESS STRATEGY AND DEVELOPMENT
Our business and development strategy has been focused primarily on the acquisition of producing and development-stage gold prop-
erties in Ghana and on the exploration, development and operation of these properties. We have also pursued exploration activities in
South America and in other countries in West Africa.
2009 Annual Re p or t | 35
We acquired Bogoso in 1999 and have operated a nominal 1.5
million tonne per annum carbon-in-leach (“CIL”) processing
plant most of the time since then to process oxide and other non-
refractory ores (“Bogoso oxide plant”). In 2001, we acquired the
Prestea property located adjacent to our Bogoso property and
mined surface deposits at Prestea from late 2001 to late 2006.
In late 2002, we acquired Wassa, and constructed a new nomi-
nal 3.0 million tonne per annum CIL processing plant at Wassa,
which began commercial operation in April 2005. In July 2007,
we completed construction and development of a new nominal
3.5 million tonnes per annum processing facility at Bogoso/Prestea
that uses bio-oxidation technology to treat refractory sulfide ore
(“Bogoso sulfide plant”).
In late 2005, we acquired the HBB properties consisting of the
Benso and Hwini-Butre properties. Benso development activities
started in late 2007, and in the third quarter of 2008, we began
trucking ore from the Benso mine to the Wassa plant for process-
ing. Hwini-Butre development was initiated in the fourth quarter
of 2008, and in May 2009 the Hwini-Butre mine began shipping
ore to the Wassa plant for processing.
Our overall objective is to grow our business to become a mid-tier
gold producer. We continue to evaluate potential acquisition and
merger opportunities that could further increase our annual gold
production. However, we presently have no agreement or under-
standing with respect to any specific potential transaction.
In addition to our gold mining and development activities, we ac-
tively explore for gold in West Africa and South America, investing
approximately $15.8 million on such activities during 2008 and
approximately $9.0 million during 2009. We are conducting re-
gional reconnaissance projects in Ghana, Cote d’Ivoire and Sierra
Leone and have drilled more advanced targets in Ghana, Niger
and Burkina Faso. We are also evaluating gold properties in Brazil.
See Item 2 – “Description of Properties” for additional details on
our assets.
SIGNIFICANT TRENDS
AND EVENTS DURING 2009
Gold Prices
Gold prices have generally trended upward during the last eight
years, from a low of $260 per ounce in 2001 to a high of $1,213
per ounce in late 2009. Realized gold prices for our shipments
averaged $978 per ounce during 2009 compared with $870 per
ounce during 2008.
Hwini-Butre Development
Development work, which started at the Hwini-Butre mine in the
fourth quarter of 2008, was mostly completed by April 2009, and
this new operation has continuously sent ore to the Wassa plant
since start-up in May 2009.
Benso Royalty Purchase
During the second quarter of 2009, we purchased, from an un-
related party, a 1.5% net smelter royalty payable on gold produc-
tion from our Benso mine for $3.6 million. The royalty agreement
provided us with the option to buy the royalty at any time prior
to 18 months after gold production was initiated, regardless of the
ownership at that date, for a specified price of Cdn$4.0 million.
Higher Gold Output and Lower Cost Per Ounce at Wassa
and Bogoso
The Benso and Hwini-Butre mines, which commenced mining
operations late in 2008 and May 2009 respectively, provided 60%
of the ore processed at Wassa during 2009. The higher grade ores
from Benso and Hwini-Butre have resulted in a marked increase in
Wassa’s gold sales and revenues compared with 2008. Wassa’s 2009
sales totaled 223,848 ounces, up from 125,427 ounces in 2008.
The improved grade and resulting increase in ounces, along with
lower power costs, reduced Wassa’s 2009 average cash operating
costs per ounce to $447, down from an average of $554 in 2008.
Bogoso’s 2009 gold sales increased to 186,054 ounces, up from
170,499 ounces in 2008, on higher tonnes processed and better
gold recoveries. In addition to the improved gold sales, Bogoso’s
average cash operating costs fell to $705 per ounce, down from
$837 per ounce in 2008. See the Results of Operations discussions
below for additional details.
International Financial Reporting Standards
Golden Star has, since its inception, reported to security regula-
tors in both Canada and the US using Canadian GAAP finan-
cial statements with a reconciliation to US GAAP. However, a
change in SEC position in late 2009 will require that after 2010,
Canadian companies such as Golden Star, that do not qualify
as private foreign issuers, must file their financial statements in
the US using US GAAP. We plan to continue using Canadian
GAAP for US and Canadian filings in 2010 and will adopt US
GAAP on January 1, 2011 for all subsequent US and Canadian
filings. Canada has announced that it will continue to accept US
GAAP financial statements.
Revolving Credit Facility
On May 1, 2009, we finalized an agreement for a revolving credit
facility (the “Facility”) with Standard Chartered Bank. The Facility
provides for a fully committed revolving credit line of $30 million,
of which $15 million became immediately available at signing and
an additional $15 million became available on July 30, 2009. As
of December 31, there was $5.0 million drawn and outstanding
on this new facility.
The Facility carries a term of three years from signing and bears
interest at the higher of LIBOR or the applicable lenders’ cost of
funds rate (which is capped at 1.25%per annum above LIBOR),
plus a margin of 5%per annum. The Facility is secured by a pledge
of shares in our significant subsidiaries and also provides for nega-
tive pledges on all other presently unsecured assets. Proceeds of
the Facility will be used for working capital and general corporate
purposes. The Facility is described in more detail in our Form 8-K
filed May 5, 2009.
New Ghanaian National Stabilization Levy
At the end of July 2009, the Ghanaian government introduced
a temporary levy (scheduled to end on December 31, 2010) on
certain Ghanaian industries, including mining, brewing, banking,
communications and insurance. The law requires that companies
subject to the levy, which includes all of our Ghanaian subsidiaries,
will pay an amount equal to 5% of “profits before tax”, as disclosed
on the statements of operations prepared in accordance with Gha-
naian GAAP. No adjustments are allowed to the taxable income as
defined above. We incurred a total of $1.7 million of tax expense
for this new tax during 2009.
36 | Gold e n St ar
Paul Isnard Project
The disputed title of the Paul Isnard property in French Guiana
was resolved during the fourth quarter of 2009 allowing the trans-
fer to Golden Star of 100 percent of the common shares of the
French company that holds the exploration rights to Paul Isnard.
All legal activity related to the disputed title have been dropped by
both sides.
Sale of South American Assets
On November 30, 2009, we entered into an agreement to sell our
interest in the Saramacca joint venture, which holds the Saramacca
properties in Suriname, to its joint venture partner for approxi-
mately $8.0 million. Completion of the transaction is pending the
receipt of required governmental approvals and certain additional
customary conditions.
On November 18, 2009, we entered into a settlement agreement
in respect of the outstanding litigation regarding the Paul Isnard
properties in French Guiana, pursuant to which the rights to this
property is to be transferred to us, subject to receiving the required
governmental approvals. On November 19, 2009, we entered into
an agreement to sell all of our rights, title and interest in the Bon
Espoir, Iracoubo Sud and Paul Isnard properties in French Guiana
for approximately $2.1 million, subject to government approval.
Equity Offering
On December 17, 2009, we closed an equity offering of 20 mil-
lion common shares at a price of $3.75 per share resulting in $75.0
million in gross proceeds, or approximately $71.0 million in net
proceeds after fees and offering expenses.
RESULTS OF OPERATIONS –
2009 COMPARED TO 2008
Consolidated Results
Our consolidated net income totaled $16.5 million or $0.070
per share for 2009 as compared to a net loss of $119.3 million
or $0.506 per share, in 2008. The significant earnings improve-
ment, as compared to 2008, was largely related to a $79.3 million
improvement in mine operating margins which was the result of
a 38.5%, or 113,975 ounce, increase in gold sales and a $108 per
ounce increase in average realized gold price. An $8.3 million in-
crease in tax benefits and $65.3 million reduction in impairment
losses also contributed to the earnings improvement from 2008. A
$64.1 million increase in cost of sales partially offset the improve-
ments in gold sales, and gold price.
Bogoso’s gold sales improved by 9%, or 15,555 ounces mostly due
to improved gold recoveries, and higher grade ores during 2009
from Wassa’s new Hwini-Butre and Benso mines (“HBB proper-
ties”) yielded a 78%, or 98,421 ounce, increase in Wassa’s gold
sales. These higher ounces combined with the gold price improve-
ments resulted in a 56% increase in gold revenues over 2008 levels.
Bogoso’s cost of sales declined from 2008 levels, but the extra costs
associated with the new HBB mining operations, resulted in in-
creases in Wassa’s cost of sales, resulting in our overall increase in
cost of sales. See additional discussion in the “Wassa Operations
2009 compared to 2008” Section below.
Transfer of the HBB mining leases to Wassa in 2009 and improved
operational performance at Wassa, which allowed release of de-
ferred tax asset valuation allowances, provided the tax benefit.
SUMMARY OF FINANCIAL
RESULTS
Gold sales (oz)
2009
409,902
2008
295,927
2007
246,278
Average realized price ($/oz)
978
870
713
Revenues ($ in thousands)
400,739
257,355
175,614
Cash flow provided by
operations ($ in thousands)
104,615
30,043
6,670
Net income/(loss)
($ in thousands)
Net income/(loss)
per share – basic ($)
16,519
(119,303)
(35,290)
0.070
(0.506)
(0.154)
Our 2009 general and administrative expense was down $1.1 mil-
lion reflecting lower legal and tax audit costs than in 2008 and the
cost cutting programs implemented in early 2009. Property hold-
ing costs are mostly the costs incurred in care and maintenance
activities at the Prestea Underground which was deemed impaired
and written off at the end of 2008. Higher derivative costs reflect
the increased use of gold price derivatives during 2009 as com-
pared to 2008. Most of the increase in interest expense was related
to scheduled increases in accretion of the convertible debentures
equity component.
Bogoso/Prestea Operations 2009 compared to 2008
Bogoso/Prestea gold shipments increased to 186,054 ounces in
2009 at an average price of $978 per ounce, up from 170,499
ounces in 2008 at an average price of $873 per ounce. The in-
crease in gold recovery to 70.7% in 2009 from 66.5% in 2008
was the major factor in the gold sales improvement. While the
Bogoso oxide plant processed refractory ore at various times
during 2009, there was no non-refractory ore processed at Bo-
goso during the year. Oxide ore mining remained on stand-by
at Pampe awaiting receipt of permits for Prestea South. Once
Prestea South permits are issued, we expect to mine oxide ore
from both Pampe and Prestea South in amounts sufficient to run
the Bogoso oxide mill at capacity.
BOGOSO/PRESTEA
OPERATING RESULTS
Ore mined refractory (t)
2009
2,940,822
2008
2,604,639
2007
1,427,958
Ore mined non-refractory
—
140,036
928,621
Total ore mined (t)
2,940,822
2,744,675
2,356,579
Waste mined (t)
Refractory ore
processed (t)
Refractory ore grade (g/t)
Gold recovery – refrac-
tory ore (%)
Non-refractory ore pro-
cessed (t)
Non-refractory ore grade
(g/t)
Gold recovery – non-
refractory ore (%)
Gold sales (oz)
Total cash cost
($/oz)
Royalties ($/oz)
Cash operating cost
($/oz)
14,929,249 19,464,979 18,515,851
2,887,400
2,736,379
1,640,318
2.78
70.7
—
—
—
2.82
66.5
2.44
52.1
359,669
1,429,309
2.38
66.0
2.04
73.3
186,054
170,499
120,216
735
30
705
863
26
837
788
22
766
2009 Annual Re p or t | 37
Bogoso/Prestea operations resulted in a $1.5 million operating
margin loss, an improvement from its $47.2 million operating
margin loss in 2008. Cash operating costs fell from $142.7 million
in 2008 to $131.2 million in 2009 on lower fuel, power and con-
sumable costs. Lower cash operating costs coupled with increases
in gold output resulted in an improvement in unit costs to $705
per ounce, down from $837 per ounce in 2008. Bogoso expects to
continue its efforts to increase recovery and plant throughput dur-
ing 2010 while continuing to manage its cost structure. The major
capital expenditures in 2010 will be related to development of the
Dumasi pit to prepare it for mining in 2012.
As explained in “Item 1 Business” above, Bogoso added 0.39 mil-
lion ounces of new Proven and Probable Reserves during 2009,
bringing the 2009 year end reserves to 31.2 million tonnes at an
average grade of 2.74 g/t, or 2.75 million ounces before recovery
losses.
The Prestea Underground mine remained on a care and mainte-
nance basis during 2009, and dewatering continued as we evalu-
ated various plans that could allow underground mining to restart.
Wassa/HBB Operations 2009 compared to 2008
Wassa mining operations underwent significant changes during
2009 due to the impact of its two new mining operations at Benso
and Hwini-Butre located 50 and 80 kilometers south of Wassa,
respectively. Both of these ore bodies are much higher grade than
the pits located adjacent to the Wassa plant site which have fur-
nished ore to the Wassa plant since 2005. As a result of the new
ores from Benso and Hwini-Butre during 2009, Wassa saw higher
ore grades, increased gold sales, better gold recoveries and lower
costs per ounce.
With the new HBB ores, Wassa’s plant feed grade averaged 2.76
grams per tonne during 2009 as compared to 1.33 grams per
tonne in 2008. Total tonnes processed during 2009 were 16.8%
lower than in 2008, but gold recovery increased to 95.3%, up
from 93.6% in 2008. Tonnes processed were lower as Wassa cut
back on processing low-grade heap leach material to maximize ore
residence time in the plant to achieve higher recovery from the
higher grade HBB ores.
WASSA/HBB
OPERATING RESULTS(1)
Ore mined (t)
2009
2,222,511
2008
2,885,985
2007
3,091,292
Waste mined (t)
16,708,312
7,416,516
8,125,132
Ore a processed (t)
2,652,939
3,187,230
3,752,376
Grade processed (g/t)
Recovery (%)
Gold sales (oz)
Total cash cost
($/oz)
Royalties ($/oz)
Cash operating cost
($/oz)
2.76
95.3
1.33
93.6
1.17
92.0
223,848
125,427
126,062
479
32
447
580
26
554
464
21
443
Benso ore began arriving at the Wassa processing plant in late 2008
and Hwini-Butre ore began arriving May 2009. While these higher
grade ores resulted in improved gold sales, they also increased the
operating costs as the HBB ores have higher stripping ratios and
longer haul routes. Cash operating costs rose to $100.0 million in
2009, up from $69.5 million in 2008, but cash operating cost per
ounce dropped from 2008 levels on the increase in the number of
38 | Gold e n St ar
ounces sold, from $554 per ounce in 2008 to $447 per ounce in
2009. In response to the grade and recovery improvements, Wassa
generated $39.2 million of operating margin in 2009, up from a
$4.9 million operating margin in 2008.
A $42.2 million increase in depreciation and amortization over
the 2008 level, was related to the impact of the increase in ounces
produced and to the HBB purchase and development costs which
we began amortizing as Benso and Hwini-Butre came into pro-
duction. Wassa/HBB’s average realized gold price rose to $978 per
ounce in 2009, up from $866 per ounce in 2008
RESULTS OF OPERATIONS – 2008
COMPARED TO 2007
Consolidated Results
Our consolidated net loss totaled $119.3 million or $0.506 per
share for 2008 as compared to a net loss of $35.3 million or
$0.154 per share in 2007. Impairment losses, negative operating
margins and an inventory adjustment were the major factors con-
tributing to the increase in net loss as compared to prior years.
Impairment write-offs totaled $68.4 million and included write-
offs of the Prestea Underground, the Goulagou exploration project
in Burkina Faso, a portion of the Prestea South project at Bogoso
and the Niger exploration projects. Our mine operating margin
was a negative $41.6 million, which included a $16.4 million net
realizable value adjustment which added $16.4 million to mine
operating costs. Increases in cash operating costs, most notably
electric power costs and lower gold prices in the fourth quarter,
were the major factors contributing to the impairments and inven-
tory adjustment. The results of a pre-feasibility study of the Prestea
Underground, completed in mid-2008, further contributed to the
Prestea Underground impairment.
While gold sales were 49,649 ounces above the 2007 level, and
our average realized gold price was up $157 per ounce, increases
in operating costs more than offset the improved revenues yield-
ing a mine operating margin loss approximately $28.0 million
larger than the 2007 operating margin loss. The increase in rev-
enues versus 2007 was related mostly to higher gold prices and
to a full year of output at the Bogoso sulfide plant in 2008 as
compared to a half year in 2007 following its July 2007 plant
in-service date.
Operating costs were significantly higher in 2008 as compared to
2007. Recognition of a full year’s operating costs at the Bogoso
sulfide plant in 2008 versus only six months of costs in 2007
was responsible for much of the operating cost increase. At the
same time, several of our key operating inputs at both mines ex-
perienced significant cost increases in 2008. Electric power costs
increased from $0.06 per kilowatt hour in early 2007 to approxi-
mately $0.10 per kilowatt hour in late 2007 and to approximately
$0.178 per kilowatt hour after June 30, 2008. Similarly, fuel costs
trended up during most of 2008 reaching a high of $1.37 per liter
by October . Our fuel costs averaged $1.21 per liter in 2008, up
from $0.92 per liter in 2007. Several other key inputs saw similar
significant increases during 2008 including labor costs.
General and administrative costs increased by $1.4 million to
$15.2 million in 2008. The increase is primarily attributable
to the cost of professional fees and severance costs related to
management changes.
Interest expense totaled $14.6 million during 2008, up from $6.0
million in 2007. Two factors contributed to the increase. First was
the fact that most of the interest expense in the first half of 2007
was capitalized as a cost of the Bogoso sulfide plant prior to its July
1, 2007 in-service date. Secondly during 2007 most of the interest
expense was related to $50.0 million of convertible notes which
were repaid in November 2007 and replaced with $125.0 million
of convertible debentures. A $7.1 million loss on debt restructur-
ing was incurred in November 2007 upon the redemption of the
$50 million of convertible notes.
In response to lower gold prices near the end of 2008, several cost
cutting measures were implemented company-wide including re-
ductions in the consumption rate of various key reagents and other
Items including labor force reductions. At the same time commod-
ity prices began falling, lowering costs for fuel and various chemical
reagents. As a result of our cost reduction programs and declining
consumable prices, fourth quarter cash costs fell below levels expe-
rienced earlier in 2008.
Bogoso/Prestea Operations 2008 compared to 2007
Bogoso/Prestea gold shipments increased to 170,499 ounces in
2008 at an average price of $873 per ounce, up from 120,216
ounces in 2007 at an average price of $720 per ounce. The large
increase in 2008 Bogoso/Prestea gold shipments reflects the fact
that the 2008 shipments include a full year of sulfide plant output
while the 2007 amount was for only six months of 2007 following
the sulfide plant’s July 1, 2007 in-service date.
The increase in gold output at Bogoso/Prestea also reflects im-
proved operating availability at the sulfide plant following reme-
diation of several mechanical problems encountered in late 2007
and the first half of 2008, including replacement of most of the
bio-oxidation tank agitators and agitator gearboxes. A more stable
operation has now resulted in a pattern of increasing tonnes pro-
cessed and an improvement in gold recoveries during 2008, as evi-
denced by sulfide plant gold shipments of 31,415 ounces in the
first quarter of 2008, 35,248 ounces in the second quarter, 45,585
ounces in the third quarter and 40,192 in the fourth quarter. Gold
recovery averaged 66.5% in 2008, up from 52.1% in 2007.
In the first half of 2008 the Bogoso oxide plant demonstrated its
flexibility by processing several ore types at various times including
oxide ores, siliceous ores, refractory transition ores and refractory
leachable transition ores. However, the Bogoso oxide plant was
idled in August 2008 due to unavailability of oxide ore.
Bogoso/Prestea operations resulted in a $47.2 million operat-
ing margin loss; up from a $23.9 million operating margin loss
in 2007. Bogoso/Prestea’s cash operating costs rose to $837 per
ounce in 2008, up from $767 per ounce a year earlier. Increases in
operating costs including labor, fuel, power and other consumables
are responsible for the higher unit costs.
Combined operating costs of the oxide and the sulfide operations
totaled $159.9 million in 2008, as compared to $92.1 million in
2007. The major factors contributing to the cost increase included
a full year of operation at the sulfide plant in 2008 versus a half
year in 2007 and a $16.4 million adjustment to the transition ore
stockpile at Bogoso. Power, fuel, other consumables and labor costs
were also up in the year. Electric power costs increased from $0.06
per kilowatt hour in early 2007 to approximately $0.10 per kilo-
watt hour in late 2007 and to approximately $0.178 per kilowatt
hour after June 30, 2008. Similarly, fuel costs trended up during
most of 2008 reaching a high of $1.37 per liter by October. Our
fuel costs averaged $1.21 per liter in 2008, up from an average of
$0.92 per liter in 2007.
The transition stockpile contained partially oxidized ore mined
from shallow depths in the sulfide pits. Partial oxidation results
in low gold recovery. When test batches of this ore were processed
through both plants in 2008, it was found that gold recoveries
were lower than anticipated. In addition, lower gold prices in the
fourth quarter of 2008 and higher operating costs resulted in the
need to adjust the stockpile’s carrying value down to its net re-
coverable value resulting in $16.4 million of inventory costs being
moved into cost of sales.
The Prestea Underground mine was deemed impaired at the end
of 2008, and a $44.6 million write-off was recognized in the state-
ment of operations. Completion of a pre-feasibility study in mid-
2008 on the Prestea Underground indicated that the economics
of the project were marginal. Increases in electric power costs later
in 2008 and the on-going costs of maintaining the inactive under-
ground mine further contributed to the impairment determina-
tion. Portions of the Prestea South project near the town of Prestea
were also deemed impaired because the estimated cost of relocating
homes and town site infrastructure negated the economic benefit
of the reserves.
Wassa Operations 2008 compared to 2007
Wassa generated $4.9 million of operating margin in 2008 versus a
$9.6 million operating margin in 2007. While ore grades and gold
prices were higher in 2008 than a year earlier, increases in operating
costs during 2008 more than offset the price and grade benefit.
Wassa’s cash operating costs totaled $69.5 million in 2008, up
from $55.9 million in 2007. The cost increases reflect material
increases in the costs of power, fuel, other consumables and labor.
Wassa also saw an increase in costs once the new Benso ore began
arriving at Wassa in the fourth quarter, due primarily to haulage
costs from Benso to Wassa. Cash operating costs averaged $554
per ounce in 2008, up from $444 per ounce in 2007.
Wassa’s average realized gold price rose to $866 per ounce in
2008, up from $706 per ounce in 2007, and the average ore
grade increased from 1.17 g/t in 2007 to 1.33 g/t in 2008. The
grade improvement was related to receipt of 291,000 tonnes of
Benso ore in the fourth quarter of 2008 at an average grade of
4.14 grams per tonne.
Plant throughput was adversely impacted in September and
October 2008 by ball mill repairs which reduced throughput
to approximately half of usual capacity for eight weeks. In addi-
tion plant throughput dropped in the fourth quarter when the
Benso ore began arriving. Shallow ore from the new Benso pit is
wetter and contains more clay than ore from the Wassa pits and
required a slower feed rate.
DEVELOPMENT PROJECTS 2009
Prestea South Properties
We received mining permits for Prestea South in 2008 and sub-
sequently applied for environmental permits. We expect to initi-
ate development at Prestea South, including its 20 kilometer haul
road, once the environmental permits are received. The Prestea
South oxide ore will be transported to Bogoso and processed
2009 Annual Re p or t | 39
through the Bogoso oxide plant. The Prestea South sulfide ore will
be processed through the Bogoso sulfide plant.
including road construction, mine development, buildings and
equipment.
EXPLORATION PROJECTS
During 2009, Golden Star spent $9.0 million on exploration
activities compared to $15.8 million in 2008. The 2009 explora-
tion effort concentrated on resource delineation drilling at Wassa,
Hwini-Butre and at Benso and initial VTEM geophysical target
testing at Bogoso and Prestea. Other Ghana exploration included
drilling at several targets on the Western Ashanti belt, and ground
geophysical surveys at the Wassa and Benso mining leases.
Our Burkina Faso properties were drilled by a joint venture partner
during 2009 as part of an option agreement expenditure require-
ment. In Cote D’Ivoire in-fill soil sampling programs were con-
tinued over the previously defined stream sediment anomalies at
Amelekia. The Sierra Leone and Niger projects were on care and
maintenance for most of 2009. Our joint venture with Newmont
on the Saramacca Project in Suriname continued in 2009 with
Newmont completing their 51% earn-in on the project and they
have now taken over as project manager. Our French Guiana ex-
ploration efforts were limited in 2009 as we awaited finalization of
the new mining legislation by the French Government. The first
half of 2009 was quiet in Brazil with evaluations ramping up in the
second half and further applications for ground being submitted in
Mato Grosso.
2010 Exploration Plans
We expect to spend approximately $18 million on exploration
activities in 2010, focusing on resource definition drilling in and
around our mining leases in Ghana, testing deeper potential un-
derground targets below higher grade portions of the current open
pits, drilling of VTEM targets along strike at Bogoso/Prestea and
follow up exploration of targets delineated by past efforts at Hwini-
Butre, Benso, Akropong and Wassa Complex concessions. We are
also looking at completing a detailed regional airborne geophysical
survey over the eastern side of the Ashanti belt from Chichiwelli
in the North to Manso in the south. Targets generated from this
airborne geophysical and ground IP surveys we are conducting will
be followed up in the later part of 2010.
In addition, early stage reconnaissance and follow up activities will
be aggressively advanced by our Brazilian exploration subsidiary.
LIQUIDITY AND CAPITAL RESOURCES
During 2009 our cash and cash equivalents increased by $120.5
million to a December 31, 2009 closing balance of $154.1 mil-
lion, up from $33.6 million at the end of 2008. The increase in
cash was a function of improvements in cash from operations and
$71.0 million of new equity funding in December 2009. Cash
flow from operations improved to $104.6 million for the year, up
from $30.0 million in 2008 and was sufficient to meet all of our
operational, investing and debt needs. As explained above, im-
proved gold prices and increases in gold output were responsible
for the improvement in operating cash flows.
Our capital projects used $47 million during the year with $27
million spent on mine development projects, $12 million on pur-
chases of capital equipment and $8 million on drilling and explo-
ration. Of the $47 million total, the largest Item was the Hwini-
Butre development project where spending totaled $28 million,
40 | Gold e n St ar
On May 1, 2009, we finalized an agreement for a revolving credit
facility (the “Facility”) with Standard Chartered Bank. The Facility
provides for a fully committed revolving credit line of $30 million.
The credit line drops to $27 million at the end of 2010 and to $21
million at the end of 2011. The Facility carries a term of three years
from signing and bears interest at the higher of LIBOR or the ap-
plicable lenders’ cost of funds rate (capped at 1.25% per annum
above LIBOR), plus a margin of 5% per annum. The Facility is
secured by a pledge of shares in our significant subsidiaries and
also provides for negative pledges on all other presently unsecured
assets. We borrowed a total of $21 million on the new revolving
facility during 2009 and repaid $16 million leaving an outstanding
balance of $5.0 million at year-end.
On December 17, 2009, we closed an equity offering of 20
million common shares at a price of $3.75 per share resulting
in $75.0 million in gross proceeds, or approximately $71.0 mil-
lion in net proceeds after fees and offering expenses.
We used $28.9 million for debt repayments during 2009, of
which $0.6 million was for the final installment payment of our
Ghanaian bank loan, $12.3 million was paid on equipment
financing loans and $16.0 million was repaid on amounts
borrowed earlier in 2009 on the new revolving credit facility.
Our $35 million equipment financing facility had an outstand-
ing balance of $21.0 million at December 31, 2009 with available
credit of $14.0 million.
Share option exercises contributed $2.5 million of cash during
2009, up from $0.9 during 2008. During 2009 all of our cash was
held as cash or was invested in a fund that held only US treasury
notes and bonds.
LIQUIDITY OUTLOOK
During 2008 and 2009, world financial markets suffered a series of
significant difficulties including financial institution failures, a decrease
in liquidity, a decrease in world-wide economic activity and unprece-
dented volatility in the cost of operating consumables and commodity
prices including gold. While these trends have had deleterious effects
on a wide group of industries, during 2009, gold mining enterprises
have enjoyed certain benefits from the financial and economic
disruptions. These benefits have included lower costs of certain parts,
materials and supplies, better availability of skilled employees, better
availability of capital equipment, generally higher gold prices, and
improved access to debt and equity capital versus 2008.
Gold prices declined sharply to a low of $713 per ounce near the
end of 2008, but, have trended upward since then reaching a high
of $1,213 per ounce in December 2009. The improved gold prices
along with higher gold output were the major contributing factors
in the $74.6 million improvement in our cash flows from opera-
tions during 2009, as compared to 2008. In response to the lower
gold prices late in 2008, we implemented cost reduction programs
throughout the company which have also contributed to the
improved cash flow situation.
Our new revolving line of credit, and additional equity funding
late in the year, along with a $14.0 million unused balance on our
equipment financing facility, have resulted in an improved liquid-
ity outlook for 2010 as compared to 2008 and early 2009.
Based on the trends and resources described above and projected
future cash flows from our mining operations, we expect that op-
erational cash flows during 2010, along with the $154.1 million
of cash and cash equivalents on hand at December 31, 2009, the
revolver and the equipment financing facility, will be sufficient to
cover capital and operating needs during 2010.
Our expected 2010 capital budget is approximately $70 million,
up from actual capital spending of $47 million spent in 2009. The
largest individual capital budget project is $14 million for prelimi-
nary development of future pits at Bogoso. Other 2010 projects
will total approximately $16 million for deferred exploration and
mine site drilling, $27 million on mine development and $27 mil-
lion of sustaining capital at Bogoso and Wassa.
During 2010, we are scheduled to make payments of principal
and interest of approximately $10.8 million on the equipment fi-
nancing facility, interest payments of $5.0 million on convertible
debentures and payments of principal and interest of $5.1 million
on the revolving facility.
LOOKING AHEAD
Our objectives for 2010 include:
• finalize permitting the Prestea South ore bodies to provide
oxide ore for the Bogoso oxide processing plant;
• continue reserve and resource definition drilling at Bogoso/
Prestea and Wassa/HBB; and
• examine options at the Prestea Underground.
We are estimating 2010 Bogoso/Prestea gold production of 200,000
ounces at an average cash operating cost of $650 per ounce. We
expect Wassa to also produce approximately 200,000 ounces dur-
ing 2010 at an average cash operating cost of $520 per ounce, with
combined total production of approximately 400,000 ounces at an
average cash operating cost of approximately $585 per ounce.
As more fully disclosed in the Risk Factors in Item 1A of this Form
10-K, numerous factors could cause our estimates and expecta-
tions to be wrong or could lead to changes in our plans. Under
any of these circumstances, the estimates described above could
change materially.
RELATED PARTY TRANSACTIONS
During 2009, we obtained legal services from a legal firm to which
our Chairman is of counsel. The total value of all services pur-
chased from this law firm during 2009 and 2008 was $0.6 million
and $0.7 million, respectively. Our Chairman did not personally
perform any legal services for us during 2009 or 2008, nor did he
benefit directly or indirectly from payments for the services per-
formed by the firm.
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. Our accounting
policies under Cdn GAAP are described in Note 3 of our consoli-
dated financial statements.
Preparation of our consolidated financial statements requires the
use of estimates and assumptions that can affect reported amounts
of assets, liabilities, revenues and expenses. Accounting policies
relating to asset impairments, depreciation and amortization of
mining property, plant and equipment, tax assets, determination
of fair values of financial instruments and site reclamation/clo-
sure accruals are subject to estimates and assumptions regarding
reserves, gold recoveries, future gold prices, future operating and
reclamation costs and future mining activities.
Decisions to write off, or not to write off, all or a portion of our
investment in various properties, especially exploration properties
subject to impairment analysis, are based on our judgment as to
the actual value of the properties and are therefore subjective in
most cases. Certain exploration properties have been found to be
impaired in the past and were written off in prior years. We con-
tinue to retain title to certain properties after impairment write-
offs as future events and discoveries may ultimately prove that they
have value.
Listed below are the accounting policies and estimates that
we believe are critical to our financial statements based on the
degree of uncertainty regarding the estimates or assumptions
involved and the magnitude of the asset, liability, revenue or
expense being reported.
• Ore stockpiles: Stockpiles represent coarse ore that has been
extracted from the mine and is available for further processing.
Stockpiles are measured by physical surveying or by estimat-
ing the number of tonnes of ore added and removed from the
stockpile during a period. The number of contained ounces
is based on sample assay data and the estimated gold recov-
ery percentage is based on the expected processing method.
Stockpile values are based on mining costs incurred up to the
point of stockpiling the ore, including a share of direct over-
head and applicable depreciation, depletion and amortization
relating to mining operations. Costs are added to a stockpile
based on current mining costs and are removed at the average
mining cost per tonne for material processed. Stockpiles are
reduced as material is removed and fed to the mill. A 10%
adjustment of the stockpile value, based on stockpile levels
at the end of 2009, would change the carrying value of the
stockpile inventory by approximately $0.4 million.
• Impairment Charges: We periodically review and evaluate
our long-lived assets for impairment when events or changes
in circumstances indicate the related carrying amounts may
not be recoverable from continued operation of the asset.
An asset impairment is considered to exist if the sum of all
estimated future cash flows, on an undiscounted basis, are
less than the carrying value of the long-lived asset. The de-
termination of expected future cash flows requires numerous
estimates about the future, including gold prices, operating
costs, gold recovery, reclamation spending, ore reserves and
capital expenditures.
• Mining property amortization: Mining properties and cer-
tain property plant and equipment Items recorded in our
financial records are amortized using a units-of-production
method over Proven and Probable Mineral Reserves. Re-
serve estimates, which serve as the denominator in units of
production amortization calculations, involve the exercise of
subjective judgment and are based on numerous assumptions
2009 Annual Re p or t | 41
about future operating costs, future gold prices, continuity of
mineralization, future gold recovery rates, spatial configura-
tion of gold deposits, and other factors that may prove to be
incorrect. A 10% adjustment in estimated total December
31, 2009 reserves at Wassa and at Bogoso/Prestea could re-
sult in an approximately $6 to $8 million annual change in
amortization expense.
In June 2009, CICA Handbook Section 3862, Financial Instru-
ments – Disclosures (“Section 3862”), was amended to require
disclosures about the inputs to fair value measurements,
including their classification within a hierarchy that priori-
tizes the inputs to fair value measurement. The three levels of the
fair value hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical
assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for
the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.
The Company adopted this amended standard in 2009 and
required disclosures are included in note 4.
Future Guidance
In January 2009, the CICA issued Handbook Section 1582,
“Business Combinations” (“Section 1582”), Section 1582 requires
that all assets and liabilities of an acquired business will be recorded
at fair value at acquisition. Obligations for contingent consider-
ations and contingencies will also be recorded at fair value at the
acquisition date. The standard also states that acquisition–related
costs will be expensed as incurred and that restructuring charges
will be expensed in the periods after the acquisition date. Section
1582 applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual re-
porting period on or after January 1, 2011.
In January 2009, the CICA issued Handbook Section 1601,
“Consolidations” (“Section 1601”), and Section 1602, “Non-
controlling Interests” (“Section 1602”). Section 1601 establishes
standards for the preparation of consolidated financial statements.
Section 1602 establishes standards for accounting for a non-con-
trolling interest in a subsidiary in consolidated financial statements
subsequent to a business combination. These standards apply to
interim and annual consolidated financial statements relating to
fiscal years beginning on or after January 1, 2011.
OFF BALANCE SHEET ARRANGEMENTS
We have no off balance sheet arrangements.
• Tax Assets: Recognition of future tax assets requires an analy-
sis of future taxable income expectations to evaluate the
probability of sufficient future taxable income to utilize the
accrued tax benefits. Determination of expected future tax-
able income requires numerous estimates of future variable
including but not limited to, gold prices, operating costs,
gold recovery, ore reserves, gold production, ore grades, ad-
ministrative costs, tax rates, and potential changes in tax laws.
• Asset retirement obligation and reclamation expenditures: Ac-
counting for reclamation obligations requires management to
make estimates at each mining operation of reclamation and
closure costs to be incurred in the future as required to com-
plete the reclamation and environmental remediation work
mandated by existing laws, regulations and customs. Actual
costs incurred in future periods could differ from amounts es-
timated. Additionally, future changes to environmental laws
and regulations could increase the extent of reclamation and
remediation work required. Based upon our current situa-
tion, we estimate that a 10% increases in total future reclama-
tion and closure cash costs would result in an approximately
$5 million increase in our asset retirement obligations.
RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 2009, we adopted the following accounting
standards updates issued by the Canadian Institute of Chartered
Accountants (“CICA”).
The Canadian Accounting Standards Board (“AcSB”) issued Ca-
nadian Institute of Chartered Accountants: Handbook (“CICA”)
Section 3064, “Goodwill and Intangible Assets” which replaces
CICA 3062 and establishes standards for the recognition, mea-
surement and disclosure of goodwill and intangible assets. CICA
3064 expands on the criteria for recognition of intangible assets
that can be recognized and applies to internally-generated intan-
gible assets as well as to purchased intangible assets. Section 3064
dictates that certain expenditures not meeting the recognition cri-
teria of an intangible asset are expensed as incurred. Emerging is-
sues committee decision (“EIC”)27 (Revenues and Expenditures
in the pre-operation period) is no longer applicable for entities that
have adopted CICA 3064. Section 3064 became effective January
1, 2009 and required that we retrospectively adjust our financial
statements to reflect the impact of the changes to the accounting
for intangible assets. In response to this new standard, the accom-
panying December 31, 2009 financial statements and comparative
period financials include the impact of the reclassification of cer-
tain 2005 plant start-up period costs to expense, such costs having
been initially capitalized as Mining Property assets. Depreciation
expense was decreased by $0.5 million, $0.8 million and $1.1 mil-
lion in 2009, 2008 and 2007, respectively.
42 | Gold e n St ar
TABLE OF CONTRACTUAL OBLIGATIONS
Debt (1)
Interest on long term debt
Operating lease obligations
Capital lease obligations
Asset retirement obligations (2)
Total
$
$
Total
151.0
12.4
1.2
0.3
52.3
Payment due (in millions) by period
Less than
1 Year
14.5
1 to 3
years
136.5
$
$
6.4
0.3
0.3
8.3
6.0
0.6
—
18.0
$
217.2
$
29.8
$
161.1
$
3 to 5
years
—
More than
5 Years
—
$
—
0.3
—
3.8
4.1
$
—
—
—
22.2
22.2
(1) Includes $125.0 million of convertible debentures maturing in September 2012. Golden Star has the right to repay the $125.0 million in cash or in
common shares at the due date under certain circumstances. The presentation shown above assumes payment is made in cash and also assumes no con-
versions of the debt to common shares by the holders prior to the maturity date.
(2) Asset retirement obligations include estimates about future reclamation costs, mining schedules, timing of the performance of reclamation work and
the quantity of ore reserves, an analysis of which determines the ultimate closure date and impacts the discounted amounts of future asset retirement
liabilities. The discounted value of these projected cash flows is recorded as “Asset retirement obligations” on the balance sheet of $32.0 million as of
December 31, 2009. The amounts shown above are undiscounted to show full expected cash requirements.
OUTSTANDING SHARE DATA
This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes information available to Febru-
ary 24, 2010. As of February 23, 2010 we had outstanding 257,407,061 common shares, options to acquire 6,644,898 common shares,
and convertible debentures which are currently convertible into 25,000,000 common shares.
Item 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Our exposure to market risk includes, but is not limited to, the fol-
lowing risks: changes in interest rates on our investment portfolio
and debt, changes in foreign currency exchange rates, commodity
price fluctuations and equity price risk.
Interest Rate Risk
Our excess cash is typically invested in high quality short-term
debt instruments. The interest rates received on such investments
fluctuate with changes in economic conditions. As a result, our
investment income may fall short of expectations during periods
of lower interest rates. We estimate that, given the cash balances
expected during 2010, a 1% change in interest rates would not
materially impact our annual income. All of our debt is fixed rate
and therefore does not subject us to interest rate risk. We do not
utilize interest rate sensitive derivatives to mitigate interest rate risk.
We have not entered into any agreements to hedge against un-
favorable changes in interest rates, but may in the future actively
manage our exposure to interest rate risk.
Foreign Currency Exchange Rate Risk
While our major operating units transact most of their busi-
ness in US dollars, certain purchases of labor, operating sup-
plies and capital assets are denominated in Euros, British
pounds, Australian dollars, South African rand and Ghanaian
cedi. As a result, currency exchange fluctuations have in the
past and may continue in the future to impact the costs of
goods and services purchased in currencies other than the US
dollar. The appreciation of non-US dollar currencies against
the US dollar increases the costs of goods and services pur-
chased in non-US dollar terms, which can adversely impact
our net income and cash flows. Conversely, a depreciation of
non-US dollar currencies against the US dollar usually decreases
the costs of goods and services purchased in US dollar terms.
During 2009, strengthening of the US dollar resulted in $3.0
million of currency gains mostly related to purchases of oper-
ating and capital Items in Ghana where the Ghana Cedi has
weakened against the US dollar.
In general, the value of cash and cash equivalent investments de-
nominated in foreign currencies fluctuates with changes in currency
exchange rates. Appreciation of non-US dollar currencies results in
a foreign currency gain on such investments and a decrease in non-
US dollar currencies results in a loss. We held minimal balances
in foreign currency accounts during 2009 and thus there were no
material gains or losses from this source.
At December 31, 2009, we held no foreign currency purchase
agreements and do not anticipate using foreign currency purchase
agreements on a regular basis.
Commodity Price Risk
Gold is our primary product and, as a result, changes in the price
of gold could significantly affect our results of operations and cash
flows. To reduce gold price volatility we have at various times en-
tered in to gold price derivatives. At the end of 2009, we did not
hold any gold price derivatives and thus we were not subject to
gold price risk as of December 31, 2009. See note 13 in the accom-
panying financial statements for a description of the instruments
held during 2009.
Equity Price Risk
We have in the past, and may in the future, seek to acquire ad-
ditional funding by the sale of common shares. Movements in the
price of our common shares have been volatile in the past and may
be volatile in the future. As a result, there is a risk that we may not
be able to sell new common shares at an acceptable price should
the need for new equity funding arise.
2009 Annual Re p or t | 43
design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we consider
necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted account-
ing principles. A company’s internal control over financial report-
ing includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors
of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projec-
tions of any evaluation of effectiveness to future periods are sub-
ject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as at December
31, 2009 based on criteria established in Internal Control — Inte-
grated Framework issued by the COSO.
/s/ PricewaterhouseCoopers LLP
Vancouver, British Columbia
Chartered Accountants
February 24, 2010
Item 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
To the Shareholders of Golden Star Resources Ltd.
We have completed integrated audits of Golden Star Resources
Ltd.’s 2009, 2008 and 2007 consolidated financial statements and
of its internal control over financial reporting as at December 31,
2009. Our opinions, based on our audits, are presented below.
Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of
Golden Star Resources Ltd. as at December 31, 2009 and Decem-
ber 31, 2008, and the related consolidated statements of opera-
tions and comprehensive income (loss), changes in shareholders’
equity and cash flows for each of the years in the three year period
ended December 31, 2009. These financial statements are the re-
sponsibility of the Company’s management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits of the Company’s financial statements in
accordance with Canadian generally accepted auditing standards
and the standards of the Public Company Accounting Oversight
Board (United States). 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 of
financial statements includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
A financial statement audit also includes assessing the accounting
principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
the Company as at December 31, 2009 and December 31, 2008,
and the results of its operations and its cash flows for each of the
years in the three year period ended December 31, 2009 in ac-
cordance with Canadian generally accepted accounting principles.
Internal Control over Financial Reporting
We have also audited Golden Star Resources Ltd.’s internal control
over financial reporting as at December 31, 2009, based on crite-
ria established in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsi-
ble for maintaining effective internal control over financial report-
ing and for its assessment of the effectiveness of internal control
over financial reporting, included in Item 9A of the Annual Report
on Form 10-K. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our
audit.
We conducted our audit of internal control over financial report-
ing in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial
reporting was maintained in all material respects. An audit of in-
ternal control over financial reporting includes obtaining an un-
derstanding of internal control over financial reporting, assessing
the risk that a material weakness exists, testing and evaluating the
44 | Gold e n St ar
Item 1. FINANCIAL STATEMENTS
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of US dollars except shares issued and outstanding)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable
Inventories (Note 6)
Deposits (Note 7)
Prepaids and other
Total Current Assets
RESTRICTED CASH (Note 17)
DEFERRED EXPLORATION AND DEVELOPMENT COSTS (Note 9)
PROPERTY, PLANT AND EQUIPMENT (Note 10)
INTANGIBLE ASSET (Note 12)
MINING PROPERTIES (Note 11)
OTHER ASSETS
Total Assets
LIABILITIES
CURRENT LIABILITIES
Accounts payable
Accrued liabilities
Fair value of derivatives (Note 13)
Asset retirement obligations (Note 14)
Current Tax Liability
Current debt (Note 15)
Total Current Liabilities
LONG TERM DEBT (Note 15)
ASSET RETIREMENT OBLIGATIONS (Note 14)
FUTURE TAX LIABILITY (Note 16)
Total Liabilities
MINORITY INTEREST
COMMITMENTS AND CONTINGENCIES (Note 17)
SHAREHOLDERS’ EQUITY
SHARE CAPITAL
First preferred shares, without par value, unlimited shares authorized. No shares
issued and outstanding
Common shares, without par value, unlimited shares authorized. Shares issued and
outstanding: 257,362,561 at December 31, 2009, 235,945,311 at December 31, 2008
CONTRIBUTED SURPLUS
EQUITY COMPONENT OF CONVERTIBLE DEBENTURES
ACCUMULATED OTHER COMPREHENSIVE INCOME
DEFICIT
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
The accompanying notes are an integral part of the consolidated financial statements
As of
December 31, 2009
As of
December 31, 2008
restated (note 3)
$
154,088
$
7,021
52,198
4,774
1,415
219,496
3,804
12,949
231,855
9,480
276,114
181
33,558
4,306
49,134
3,875
1,100
91,973
4,249
13,713
271,528
—
312,029
807
$
753,879
$
694,299
$
$
28,234
34,178
—
1,938
616
9,970
74,936
114,595
30,031
13,997
233,559
—
—
—
690,423
15,759
34,542
24
(220,428)
520,320
$
753,879
$
43,355
30,879
1,690
1,620
—
12,778
90,322
112,649
30,036
33,125
266,132
—
—
—
615,463
15,197
34,542
(88)
(236,947)
428,167
694,299
2009 Annual Re p or t | 45
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(Stated in thousands of US dollars except for share and per share data)
REVENUE
Gold revenues
Cost of sales (Note 19)
Mine operating margin/(loss)
OTHER EXPENSES, (GAINS) AND LOSSES
Exploration expense
General and administrative expense
Abandonment and impairment
Derivative mark-to-market losses (Note 13)
Property holding costs
Loss on retirement of debt
Foreign exchange (gain)/loss
Interest expense
Interest and other income
Loss on sale of assets
Gain on sale of investments
Loss before minority interest
Minority interest
Net loss before income tax
Income tax (expense)/benefit (Note 16)
Net income/(loss)
OTHER COMPREHENSIVE INCOME/(LOSS)
Unrealized (gain)/loss on available-for-sale investments
Comprehensive income/(loss)
Net income/(loss) per common share—basic (Note 21)
Net income/(loss) per common share—diluted (Note 21)
Weighted average shares outstanding (millions)
Weighted average number of diluted shares (millions)
The accompanying notes are an integral part of the consolidated financial statements
For the years ended December 31,
2009
2008
2007
restated (note 3)
restated (note 3)
$
400,739
$
257,355
$
175,614
363,030
37,709
834
14,156
3,079
3,538
4,196
—
(2,995)
15,647
(197)
304
—
(853)
—
(853)
17,372
298,930
(41,575)
1,954
15,221
68,380
980
—
—
(2,587)
14,591
(805)
575
(5,402)
(134,482)
6,150
(128,332)
9,029
188,822
(13,208)
1,953
13,869
3,499
232
—
7,067
112
6,040
(2,173)
—
(12,449)
(31,358)
1,274
(30,084)
(5,206)
$
16,519
$
(119,303)
$
(35,290)
$
$
$
113
16,632
0.070
0.069
237.2
238.4
$
$
$
(3,280)
(122,583)
(0.506)
(0.506)
235.7
235.7
$
$
$
3,192
(32,098)
(0.154)
(0.154)
229.1
229.1
46 | Gold e n St ar
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Stated in thousands of US dollars)
Number of
Common
Shares
Share Capital
Warrants
Options
Contributed Surplus
Equity
Component
of Convertible
Debentures
Accumulated
Other
Comprehensive
Income/(Loss)
Total
Shareholders’
Equity
Retained
Deficit
(restated note 3)
207,891,358 $
524,619 $
5,151 $
4,889 $
2,857 $
— $
(79,201) $
458,315
—
—
—
—
(13)
—
—
—
—
—
—
—
3,274
(71)
—
—
—
—
—
—
—
—
—
—
—
—
—
35,852
—
—
—
—
(2,857)
(1,232)
—
—
—
—
3,192
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,274
2,284
3,192
(5,240)
241
86,940
175
—
35,852
—
—
(2,857)
(1,232)
(3,153)
(35,290)
(3,153)
(35,290)
—
—
—
—
—
—
—
—
(121)
2,088
—
—
—
—
—
—
—
—
—
—
—
—
(78)
—
—
—
(5,402)
2,122
—
—
—
—
—
—
—
—
—
—
—
902
2,088
(5,402)
2,122
5,674
(337)
(78)
(119,303)
(119,303)
233,703,681 $
609,103 $
5,138 $
8,092 $
34,620 $
3,192 $
(117,644) $
542,501
360,000
1,023
—
—
1,548,857
2,355
Warrants exercised
62,783
Common shares issued
24,150,000
Stock bonus (Note 22)
50,683
Balance at
December 31, 2006
Options granted net of
forfeitures
Shares issued under
options
Change in fair value of
available for sale
securities
Issue costs
Issuance of new con-
vertible debt
Retirement of convertible
debt
Equity related loan fees
on new convertible debt
Loss on retirement of
convertible debt-equity
portion
Net loss
Balance at
December 31, 2007
Shares issued under
options
Options granted net of
forfeitures
Realized gain on avail-
able for sale securities
Unrealized loss on avail-
able for sale securities
Issue costs
Payment of loan fees
Net loss
Balance at
December 31, 2008
Shares issued under
options
Options granted net of
forfeitures
Unrealized gain on avail-
able for sale securities
Issue costs
Net income
Balance at
December 31, 2009
Common shares issued
1,881,630
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(5,240)
254
86,940
175
—
—
—
—
—
—
—
—
5,674
(337)
—
—
—
—
75,000
(4,048)
—
235,945,311 $
615,463 $
5,138 $
10,059 $
34,542 $
(88) $
(236,947) $
428,167
1,417,250
4,008
—
—
—
—
—
—
(1,470)
2,032
—
—
—
—
—
—
—
—
—
—
—
—
112
—
—
—
—
—
—
—
—
16,519
2,538
2,032
112
75,000
(4,048)
16,519
Common shares issued
20,000,000
257,362,561 $
690,423 $
5,138 $
10,621 $
34,542 $
24 $
(220,428) $
520,320
The accompanying notes are an integral part of these financial statements
2009 Annual Re p or t | 47
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of US dollars)
OPERATING ACTIVITIES:
Net income/(loss)
Reconciliation of net income/(loss) to net cash provided by operating activities:
For the years ended December 31,
2009
2008
restated(note3)
2007
restated(note3)
$
16,519
$
(119,303)
$
(35,290)
Depreciation, depletion and amortization
Amortization of loan acquisition cost
Abandonment and impairment
Gain on sale of equity investments
Loss on retirement of debt
Loss on sale of assets
Non-cash employee compensation
Future income tax expense/(benefit)
Reclamation expenditures
Fair value of derivatives
Accretion of convertible debt
Accretion of asset retirement obligations
Minority interests
Changes in non-cash working capital:
Accounts receivable
Inventories
Deposits
Accounts payable and accrued liabilities
Other
Net cash provided by operating activities
INVESTING ACTIVITIES:
Expenditures on deferred exploration and development
Expenditures on mining properties
Expenditures on property, plant and equipment
Proceeds from sale of equity investment
Proceeds from the sale of assets
Change in payable on capital expenditures
Change in deposits on mine equipment and material
Other
Net cash used in investing activities
FINANCING ACTIVITIES:
Issuance of share capital, net of issue costs
Principal payments on debt
Proceeds from equipment financing facility and revolving debt facility
Retirement of convertible notes
Issuance of convertible debentures, net of issuance costs
Other
Net cash provided by/(used in) financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents end of period
(See Note 23 for supplemental cash flow information)
48 | Gold e n St ar
113,977
1,201
3,079
—
—
304
2,033
(19,127)
(1,985)
(1,838)
6,624
2,165
—
122,952
(2,702)
(4,327)
(845)
(10,848)
385
104,615
(3,460)
(32,839)
(12,468)
—
2
(962)
(54)
445
60,583
732
68,379
(5,402)
—
575
2,088
(9,029)
(1,163)
2,076
6,198
778
(6,150)
362
4,060
3,229
—
24,618
(2,226)
30,043
(6,937)
(42,830)
(24,660)
7,104
1,351
(5,235)
2,881
(2,740)
35,064
449
3,499
(12,449)
7,067
—
3,449
5,206
(872)
(561)
1,606
1,062
(1,274)
6,956
(1,168)
(11,645)
—
12,169
358
6,670
(6,397)
(36,877)
(71,593)
13,124
—
(1,846)
2,960
(401)
(49,336)
(71,066)
(101,030)
73,489
(28,856)
22,837
—
—
(2,219)
65,251
120,530
33,558
$
154,088
$
6,238
(17,816)
11,456
—
—
(1,051)
(1,173)
(42,196)
75,754
33,558
$
84,225
(13,480)
13,463
(61,760)
120,558
—
143,006
48,646
27,108
75,754
GOLDEN STAR RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in tables are in thousands of US Dollars unless noted otherwise)
1. NATURE OF OPERATIONS
We own and operate the Bogoso/Prestea gold mining and pro-
cessing operation (“Bogoso/Prestea”) located near the town of
Bogoso, Ghana. We also own and operate the Wassa gold mine
(“Wassa”), located approximately 35 kilometers east of Bo-
goso/Prestea. Wassa mines ore from pits near the Wassa plant
and also processes ore mined at our Hwini-Butre and Benso
(“HBB”) mines located south of Wassa. We hold interests in
several gold exploration projects in Ghana and elsewhere in
West Africa including Sierra Leone, Burkina Faso, Niger and
Côte d’Ivoire, and hold and manage exploration properties in
Suriname, Brazil and French Guiana in South America.
2. BASIS OF PRESENTATION
Our consolidated financial statements are prepared and re-
ported in United States (“US”) dollars and in accordance
with generally accepted accounting principles in Canada
(“Cdn GAAP”) which differ in some respects from GAAP in
the United States (“US GAAP”). These differences in GAAP
are quantified and explained in Note 26. These consolidated
financial statements were prepared in conformity with annual
reporting standards and as such contain all of the information
required for annual financial statements. Our consolidated fi-
nancial statements have been prepared on a going concern ba-
sis, which contemplates the realization of assets and discharge
of all liabilities in the normal course of business.
These consolidated financial statements include the accounts
of the Company and its majority owned subsidiaries, whether
owned directly or indirectly. All inter-company balances and
transactions have been eliminated. Subsidiaries are defined as
entities in which the company holds a controlling interest, is the
general partner or where it is subject to the majority of expected
losses or gains. Our fiscal year-end is December 31. Certain com-
parative figures have been reclassified to conform to the presen-
tation adopted for the current period and to reflect retroactive
restatements of certain balance required upon the adoption of
new guidance in the current year.
3. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Use of estimates
Preparation of our consolidated financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that can affect reported amounts of assets, liabilities, future
income tax liabilities, and expenses. The more significant
areas requiring the use of estimates include asset impairments,
stock based compensation, depreciation and amortization of
assets, and site reclamation and closure accruals. Account-
ing for these areas is subject to estimates and assumptions
regarding, among other things, ore reserves, gold recoveries,
future gold prices, future operating costs, asset usage rates,
and future mining activities. Management bases its estimates
on historical experience and on other assumptions we believe
to be reasonable under the circumstances. However, actual
results may differ from our estimates.
Cash and cash equivalents
Cash includes cash deposits, in any currency, residing in checking
accounts, money market funds and sweep accounts. Cash equiva-
lents consist of highly liquid investments purchased with maturi-
ties of three months or less. Investments with maturities greater
than three months and up to one year are classified as short-term
investments, while those with maturities in excess of one year are
classified as long-term investments. Cash equivalents and short-
term investments are stated at cost, which typically approximates
market value.
Inventories
Inventory classifications include “stockpiled ore,” “in-process
inventory,” “finished goods inventory” and “materials and sup-
plies.” All of our inventories, except materials and supplies, are
recorded at the lower of weighted average cost or market. The
stated value of all production inventories include direct produc-
tion costs and attributable overhead and depreciation incurred
to bring the materials to it current point in the processing cycle,
except for our materials and supplies inventories. General and
administrative costs for corporate offices are not included in
any inventories.
Stockpiled ore represents coarse ore that has been extracted
from the mine and is awaiting processing. Stockpiled ore
is measured by estimating the number of tonnes (via truck
counts or by physical surveys) added to, or removed from the
stockpile, the number of contained ounces (based on assay
data) and estimated gold recovery percentage. Stockpiled ore
value is based on the costs incurred (including depreciation
and amortization) in bringing the ore to the stockpile. Costs
are added to the stockpiled ore based on current mining costs
per tonne and are removed at the average cost per tonne of
ore in the stockpile.
In-process inventory represents material that is currently being
treated in the processing plants to extract the contained gold and
to transform it into a saleable product. The amount of gold in the
in-process inventory is determined by assay and by measure of the
quantities of the various gold-bearing materials in the recovery pro-
cess. The in-process gold is valued at the average of the beginning
inventory and the cost of material fed into the processing stream
plus in-process conversion costs including applicable mine-site
overhead, depreciation and amortization related to the processing
facilities.
Finished goods inventory is composed of saleable gold in the form
of doré bars that have been poured but not yet shipped from the
mine site. The bars are valued at the lower of total cost or net re-
alizable value. Included in the total costs are the direct costs of the
mining and processing operations as well as direct mine-site over-
head, amortization and depreciation.
2009 Annual Re p or t | 49
Materials and supplies inventories consist mostly of equipment
parts, fuel and lubricants and reagents consumed in the mining
and ore processing activities. Materials and supplies are valued at
the lower of average cost or replacement cost.
Ore reserve quantities used in units-of-production
amortization
Gold ounces contained in stockpiled ore are excluded from total
reserves when determining units-of-production amortization of
mining property, asset retirement assets and other assets.
Exploration costs and deferred exploration properties
Exploration costs not directly related to an identifiable mineral
deposit are expensed as incurred.
Exploration costs related to specific, identifiable mineral deposits,
including the cost of acquisition, exploration and development,
are capitalized as Deferred Exploration. Management periodi-
cally reviews, on a property-by-property basis, the carrying value
of such properties including the costs of acquisition, exploration
and development incurred to date. A decision to abandon, reduce
or expand a specific project is based upon many factors including
general and specific assessments of contained or potential mineral-
ized materials, potential reserves, anticipated future mineral prices,
the anticipated costs of additional exploration and, if warranted,
costs of potential future development and operations, and the ex-
piration terms and ongoing expenses of maintaining leased min-
eral properties. 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 deter-
mine if future exploration is warranted and if their carrying values
are appropriate.
If a Deferred Exploration property is abandoned or it is determined
that its carrying value cannot be supported by future production
cash flows or sale, the related costs are charged against operations in
the year of impairment. Subsequent costs, if any, incurred for that
property are expensed as incurred.
The accumulated costs of Deferred Exploration properties are
reclassified as Mine Property when proven and probable mineral
reserves are established and such costs are subsequently depleted
on a units-of-production basis once mining commences.
Impairment of long-lived assets
We review and evaluate our long-lived assets for impairment at
least annually and also when events or changes in circumstances
indicate the related carrying amounts may not be recoverable. An
asset impairment is considered to exist if an asset’s recoverable value
is less than it carrying value as recorded on our Consolidated Bal-
ance Sheet. In most cases an asset’s recoverable value is assumed to
be equal to the sum of the asset’s expected future cash flows on an
undiscounted basis. If the sum of the undiscounted future cash
flows does not exceed the asset’s carrying value, an impairment loss
is measured and recorded based on discounted estimated future
cash flows from the asset. Future cash flows are based on estimated
quantities of gold and other recoverable metals, expected price of
gold and other commodity (considering current and historical
prices, price trends and related factors), production levels and cash
costs of production, capital and reclamation costs, all based on de-
tailed engineering life-of-mine plans.
In estimating future cash flows, assets are grouped at the lowest
levels for which there are identifiable cash flows that are largely
independent of future cash flows from other asset groups. With the
exception of other mine-related exploration potential and explora-
tion potential in areas outside of the immediate mine-site, all assets
at a particular operation are considered together for purposes of
estimating future cash flows. In the case of mineral interests associ-
ated with other mine-related exploration potential and exploration
potential in areas outside of the immediate mine-site, cash flows
and fair values are individually evaluated based primarily on recent
exploration results.
Numerous factors including, but not limited to, such things as
unexpected grade changes, gold recovery problems, shortages of
equipment and consumables, equipment failures, and collapse of
pit walls, could impact our ability to achieve forecasted production
schedules from proven and probable reserves. Additionally, com-
modity prices, capital expenditure requirements and reclamation
costs could differ from the assumptions used in the cash flow mod-
els used to assess impairment. The ability to achieve the estimated
quantities of recoverable minerals from exploration stage mineral
interests involves further risks in addition to those factors appli-
cable to mineral interests where proven and probable reserves have
been identified, due to the lower level of confidence that the identi-
fied mineralized material can ultimately be mined economically.
Material changes to any of these factors or assumptions discussed
above could result in future impairment charges to operations.
Property, plant, equipment and mine development
Property, plant and equipment assets, including, machinery,
processing equipment, mining equipment, mine site facilities,
vehicles and expenditures that extend the life of such assets are
recorded at cost, including acquisition and installation costs.
The costs of self-constructed assets, including mine develop-
ment assets, include direct construction costs and allocated
interest during the construction phase. Indirect overhead costs
are not included in the cost of self-constructed assets. Depre-
ciation for mobile equipment and other assets having estimat-
ed lives shorter than the estimated life of the ore reserves, 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 their estimated useful lives.
Mineral property acquisition, exploration and development costs,
buildings, processing plants and other long-lived assets which have
an estimated life equal to or greater than the estimated life of the
ore reserves, are amortized over the life of the reserves of the asso-
ciated mining property using a units-of-production amortization
method. 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 eco-
nomically transferred to another project or sold.
Asset retirement obligations
In accordance with the requirements of the CICA Handbook
Section 3110, “Asset Retirement Obligations,” environmental
reclamation and closure liabilities are recognized at the time of
environmental disturbance in amounts equal to the discounted
value of expected future reclamation and closure costs. The
discounted cost of future reclamation and closure activities is
capitalized as mine property and amortized over the life of the
property. The estimated future cash costs of such liabilities are
50 | Gold e n St ar
based primarily upon environmental and regulatory require-
ments of the various jurisdictions in which we operate. Cash
expenditures for environmental remediation and closure are
charged as incurred against the accrual.
Foreign currencies and foreign currency translation
Our functional currency is the US dollar.
The carrying value of monetary assets and liabilities are translated
at the rate of exchange prevailing at the balance sheet date. Non-
monetary assets and 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 period. Translation gains or losses are in-
cluded in net earnings for the period.
Canadian currency in these financial statements is denoted as
“Cdn$,” European Common Market currency is denoted as
“Euro” or “€,” and Ghanaian currency is denoted as “Ghana Cedi”
or “Ghana Cedis.”
Income taxes
Income taxes comprise the provision for (or recovery of) taxes
actually paid or payable and for future taxes. Future income
taxes are computed using the asset and liability method where-
by future income tax assets and liabilities are recognized for the
expected future tax consequences attributable to temporary dif-
ferences between the tax basis of assets and liabilities and their
reported amounts in the financial statements. Future income
tax assets and liabilities are computed using income tax rates in
effect when the temporary differences are expected to reverse.
The effect on the future tax assets and liabilities of a change in
tax rates is recognized in the period of substantive enactment.
The provision for or the recovery of future taxes is based on the
changes in future tax assets and liabilities during the period.
In estimating future income tax assets, a valuation allowance
is provided to reduce the future tax assets to amounts that are
more likely than not to be realized.
Net income per share
Basic income per share of common stock is calculated by dividing
income available to common shareholders by the weighted aver-
age number of common shares outstanding during the period. In
periods with earnings, the calculation of diluted net income per
common share uses the treasury stock method to compute the
dilutive effects of stock options, and other dilutive instruments.
In periods of loss, diluted net income per share is equal to basic
income per share.
Revenue recognition
Revenue from the sale of metal is recognized when title and the risk
of ownership pass to the buyer. All of our gold is sent to a South
African gold refiner who locates and arranges for the sale to a third
party on the day of shipment from the mine site. The sales price is
based on the London P.M. fix on the day of shipment. Title and
risk of ownership pass to the buyer on the day doré is shipped from
the mine sites.
Stock based compensation
Under the company’s common share option programs (see note
20), common share options may be granted to executives, em-
ployees, consultants and non-employee directors. Compensation
expense for such grants is recorded in the Consolidated Statements
of Operations as general and administrative expense, with a cor-
responding increase recorded in the Contributed Surplus account
in the Consolidated Balance Sheets.
The expense is based on the fair values of the option at the time of
grant and is recognized over the estimated vesting periods of the
respective options. Consideration paid to the company on exercise
of options is credited to share capital.
Deferred mining costs
In accordance with EIC 160 “Stripping Costs Incurred in the Pro-
duction Phase of Mining Operation”, expenditures for waste strip-
ping (i.e., the costs of removing overburden and waste material to
access mineral deposits) that can be shown to be a betterment of
the mineral property are capitalized and subsequently amortized
on a units-of-production basis over the mineral reserves that di-
rectly benefit from the specific waste striping activity. Waste strip-
ping costs incurred during the production phase of a mine which
do not qualify as a betterment, are considered variable production
costs and are included as a component of inventory produced dur-
ing the period in which stripping costs are incurred. The balance
in our betterment stripping account was nil at the beginning of
2009 and totaled $4.2 million at December 31, 2009. There was
no amortization of such costs in 2009 because none of the reserves
accessed by the stripping were mined in the year.
Leases
Leases that transfer substantially all the benefits and risks of owner-
ship to the company are recorded as capital leases and classified
as property, plant and equipment with a corresponding amount
recorded with current and long-term debt. All other leases are clas-
sified as operating leases under which leasing costs are expensed in
the period incurred.
Financial instruments
Our financial instruments include cash, cash equivalents, restricted
cash, available for sale investments, accounts receivable, derivative
contracts, accounts payable, accrued liabilities and current and long
term debt. Each financial asset and financial liability instrument is
initially measured at fair value, adjusted for any associated transaction
costs. In subsequent periods, the estimated fair values of financial in-
struments are determined based on our assessment of available mar-
ket information and appropriate valuation methodologies including
reviews of current interest rates, related market values and current
pricing of financial instruments with comparable terms; however,
these estimates may not necessarily be indicative of the amounts that
could be realized or settled in a current market transaction.
The carrying value of the Convertible Senior Unsecured Deben-
tures is split between the debt and equity components of the
instrument. The debt component of the instrument is accreted to
its maturity value through charges to income over the term of the
notes based on the effective yield method.
Financing costs associated with the issuance of debt are deferred,
amortized over the term of the related debt using the effective yield
method and presented as a reduction of the related debt.
Financial assets, financial liabilities and derivative financial instru-
ments are classified into one of five categories: held-to-maturity,
available-for-sale, loans and receivables, other financial liabilities
and held-for-trading.
2009 Annual Re p or t | 51
All financial instruments classified as available-for-sale or
held-for-trading, and derivative financial instruments are sub-
sequently measured at fair value. Changes in the fair value of
financial instruments designated as held-for-trading and recog-
nized derivative financial instruments are charged or credited
to the statement of operations for the relevant period, while
changes in the fair value of financial instruments designated
as available-for-sale, excluding impairments, are charged or
credited to other comprehensive income until the instrument
is realized. All other financial assets and liabilities are accounted
for at cost or at amortized cost depending upon the nature of
the instrument. After their initial fair value measurement, they
are measured at amortized cost using the effective interest rate
method.
Following is a summary of the categories the Company has elected
to apply to each of its significant financial instruments
Financial Instrument
Cash and cash equivalents
Deposits
Restricted cash
Category
Loans and receivables
Loans and receivables
Loans and receivables
Marketable equity securities
Available-for-sale
Accounts receivable
Loans and receivables
Convertible senior unsecured
debentures
Accounts payable and accrued
liabilities
Debt facilities
Derivatives
Other financial liabilities
Other financial liabilities
Other financial liabilities
Held-for-trading
Comprehensive income
Components of comprehensive income/loss consist of unrealized
gains (losses) on available-for-sale securities and net income. Un-
realized gains or losses on securities are net of any reclassification
adjustments for realized gains or losses included in net income.
Derivatives
At various times we utilize foreign exchange and commodity price
derivatives to manage exposure to fluctuations in foreign currency
exchange rates and gold prices, respectively. We do not employ de-
rivative financial instruments for trading purposes or for specula-
tive purposes. Our derivative instruments are recorded on the bal-
ance sheet at fair value with changes in fair value recognized in the
statement of operations at the end of each period in an account
titled “Derivative mark-to-market gain/(loss)”.
Changes in accounting policies during 2009
Effective January 1, 2009, we adopted the following accounting
standards updates issued by the Canadian Institute of Chartered
Accountants (“CICA”).
The Canadian Accounting Standards Board (“AcSB”) issued
CICA Section 3064, “Goodwill and Intangible Assets” which
replaces CICA 3062 and establishes standards for the recogni-
tion, measurement and disclosure of goodwill and intangible
assets. CICA 3064 expands on the criteria for recognition of in-
tangible assets that can be recognized and applies to internally-
generated intangible assets as well as to purchased intangible as-
sets. Section 3064 dictates that certain expenditures not meet-
ing the recognition criteria of an intangible asset are expensed
as incurred. Emerging issues committee decision (“EIC”)27
(Revenues and Expenditures in the pre-operation period) is no
longer applicable for entities that have adopted CICA 3064.
Section 3064 became effective January 1, 2009 and required
that we retrospectively adjust our financial statements to reflect
the impact of the changes to the accounting for intangible as-
sets. In response to this new standard, the accompanying De-
cember 31, 2009 financial statements and comparative period
financials include the impact of the reclassification of certain
2005 plant start-up period costs to expense, such costs having
been initially capitalized as Mining Property assets. Deprecia-
tion expense was decreased by $0.5 million, $0.8 million and
$1.1 million in 2009, 2008 and 2007, respectively.
In June 2009, CICA Handbook Section 3862, Financial Instru-
ments – Disclosures (“Section 3862”), was amended to require
disclosures about the inputs to fair value measurements, includ-
ing their classification within a hierarchy that prioritizes the in-
puts to fair value measurement. The three levels of the fair value
hierarchy are:
Level 1 – Unadjusted quoted prices in active markets for identical
assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for
the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.
The Company adopted this amended standard in 2009 and re-
quired disclosures are included in note 4.
Effective March 27, 2009, we adopted Emerging Issues Commit-
tee (“EIC”) Abstract 174, “Mining Exploration Costs”. This stan-
dard provides guidance on the capitalization of exploration costs
related to mining properties, in particular, and on impairment of
long-lived assets. The adoption of this standard did not have a ma-
terial impact on our consolidated financial statements.
Effective January 1, 2009, we adopted EIC Abstract 173, “Credit
Risk and the Fair Value of Financial Assets and Financial Liabili-
ties”. This standard requires companies to take into account their
own credit risk and the credit risk of the counterparty in determin-
ing the fair value of financial assets and financial liabilities, includ-
ing derivative instruments. The adoption of this standard did not
have a material impact on our consolidated financial statements.
Future Guidance
In January 2009, the CICA issued Handbook Section 1582,
“Business Combinations” (“Section 1582”), Section 1582 requires
that all assets and liabilities of an acquired business will be recorded
at fair value at acquisition. Obligations for contingent consider-
ations and contingencies will also be recorded at fair value at the
acquisition date. The standard also states that acquisition–related
costs will be expensed as incurred and that restructuring charges
will be expensed in the periods after the acquisition date. Section
1582 applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual re-
porting period on or after January 1, 2011.
In January 2009, the CICA issued Handbook Section 1601,
“Consolidations” (“Section 1601”), and Section 1602, “Non-
controlling Interests” (“Section 1602”). Section 1601 establishes
standards for the preparation of consolidated financial state-
ments. Section 1602 establishes standards for accounting for a
52 | Gold e n St ar
non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards apply
to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011.
International Financial Reporting Standards
Golden Star has, since its inception, reported to security regulators in both Canada and the US using Canadian GAAP financial state-
ments with a reconciliation to US GAAP. However, a change in SEC position in late 2009 will require that after 2010, Canadian com-
panies such as Golden Star, that do not qualify as private foreign issuers, must file their financial statements in the US using US GAAP.
We plan to continue using Canadian GAAP for US and Canadian filings in 2010 and will adopt US GAAP on January 1, 2011 for all
subsequent US and Canadian filings. Canada has announced that it will continue to accept US GAAP financial statements.
4. FINANCIAL INSTRUMENTS
Financial Assets
The carrying amounts and fair values of our financial assets are as follows:
Assets
Cash and cash equivalents 1
Deposits 1
Restricted cash 1
Accounts receivable 1
Derivative Instrument- Riverstone
Warrants 1
Available for sale investments 1
Total financial assets
Financial Liabilities
Category
Loans and receivables
Loans and receivables
Loans and receivables
Loans and receivables
Held-for-trading
Available-for-sale
As of December 31, 2009
Carrying
Value
$ 154,088
Estimated
Fair Value
$ 154,088
As of December 31, 2008
Carrying
Value
$ 33,558
Estimated
Fair Value
$ 33,558
4,774
3,804
7,021
158
181
4,774
3,804
7,021
158
181
3,875
4,249
4,306
11
29
3,875
4,249
4,306
11
29
$ 170,026
$ 170,026
$ 46,028
$ 46,028
The carrying amounts and fair values of financial liabilities are as follows:
Liabilities
Accounts payable and accrued
liabilities 1
Derivative instruments – Gold
Forward Contracts 4
Convertible senior unsecured
debentures 2,3
Revolving credit facility 2
Debt facility 1
Equipment financing loans 2
Total financial liabilities
Category
As of December 31, 2009
Carrying
Value
Estimated
Fair Value
As of December 31, 2008
Carrying
Value
Estimated
Fair Value
Other financial liabilities
$ 62,412
$ 62,412
$ 74,234
$ 74,234
Held for trading
—
—
1,690
1,690
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
104,617
101,024
108,436
93,738
5,053
—
21,028
2,543
—
20,998
—
625
—
625
33,757
31,063
$ 193,110
$ 186,977
$ 218,742
$ 201,350
1 Carrying amount is a reasonable approximation of fair value.
2 The fair values of the debt portion of the convertible senior unsecured debentures, the equipment financing loans, and the revolving credit facility are deter-
mined by discounting the stream of future payments of interest and principal at the estimated prevailing market rates of comparable debt instruments.
3 The carrying value of the convertible senior unsecured debentures is being accreted to maturity value through charges to income over their term based on
the effective yield method. Financing costs allocated to the issuance of debt are deferred, amortized over the term of the related debt using the effective
yield method and presented as a reduction of the related debt.
4 The fair value represents quoted market prices in an active market.
During 2009, CICA Handbook Section 3862, Financial Instruments – Disclosures (“Section 3862”), was amended to require disclo-
sures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value
measurement. The three levels of the fair value hierarchy are:
• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
• Level 3 – Inputs that are not based on observable market data.
2009 Annual Re p or t | 53
The following table illustrates the classification of the Company’s financial instruments within the fair value hierarchy as at
December 31, 20091 :
Available for sale investments
Warrants
Financial assets at fair value as at December 31, 2009
Level 1
181
—
181
Level 2
—
158
158
Level 3
—
—
—
Total
181
158
339
No financial liabilities are measured at fair value on the balance sheet as at December 31, 2009.
1 Comparative information has not been presented in the table because this information is not required in the year of adoption. For periods subsequent
to the year of adoption, comparative information would be necessary.
5. FINANCIAL INSTRUMENT RISK EXPOSURE AND RISK MANAGEMENT
The Company is exposed in varying degrees to a variety of financial instrument risks. The type of risk exposure and the way in which such
exposure is managed is provided as follows:
Liquidity risk
Liquidity risk is the risk that we will encounter difficulty in meeting obligations associated with financial liabilities that are settled by deliv-
ering cash or another financial asset. We manage the liquidity risk inherent in these financial obligations by preparing quarterly forecasts
and annual long-term budgets which forecast cash needs and expected cash availability to meet future obligations. Typically these obliga-
tions are met by cash flows from operations. Scheduling of spending plans and acquisitions of financial resources may also be employed,
as needed and as available, to meeting the cash demands of our obligations.
Our ability to repay or refinance our future obligations depends on a number of factors, some of which may be beyond our control. Fac-
tors that influence our ability to meet these obligations include general global economic conditions, credit and capital market conditions,
and the price of gold.
The following table provides a maturity analysis of our financial liabilities as of December 31, 2009:
Liabilities
Equipment financing loans
principal
interest
Bank facility
principal
interest
Convertible debentures
principal
Interest
Total
2010
2011
2012
2013
2014
Maturity
$ 9,500
$ 5,603
$ 3,592
$ 1,975
$
—
2010 to 2013
1,326
703
279
5,000
53
—
5,000
—
—
—
—
—
125,000
5,000
5,000
64
—
—
—
—
$ 20,879
$ 11,306
$ 133,871
$ 2,039
$
—
—
—
8/31/2012
—
11/30/2012
—
—
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obliga-
tion. Our credit risk is primarily associated with liquid financial assets. We limit exposure to credit risk on liquid financial assets through
maintaining our cash, cash equivalents, restricted cash and deposits with high-credit quality financial institutions. At the end of 2009 all
of our excess cash was invested in funds that hold only US treasury bills.
Market Risk
The significant market risk exposures include foreign exchange risk, interest rate risk and commodity price risk. These are discussed
further below.
Currency Risk
Currency risk is risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange
rates. While our major operating units transact most of their business in US dollars, many purchases of labor, operating supplies and
capital assets are denominated in Euros, British pounds, Australian dollars, South African Rand and Ghanaian Cedis. Since gold is sold
throughout the world based principally on the US dollar price, but portions of our costs are in non-dollar terms, currency exchange
fluctuations may affect the costs and margins at our operations. The appreciation of non–US dollar currencies against the US dollar
increases production costs and the cost of capital assets in US dollar terms at mines located outside the US, which can adversely impact
our net income and cash flows. Conversely, a depreciation of non–US dollar currencies usually decreases production costs and capital
asset purchases in US dollar terms.
54 | Gold e n St ar
The value of cash and cash equivalent investments denominated
in foreign currencies also fluctuates with changes in currency ex-
change rates. Appreciation of non–US dollar currencies results in a
foreign currency gain on such investments and a decrease in non–
US dollar currencies results in a loss.
at various times entered in to gold price derivatives. At the end of
2009, we did not hold any gold price derivatives and thus we were
not subject to gold price risk as of December 31, 2009. See note 13
in the accompanying financial statements for a description of the
instruments held during 2009.
In the past we have entered into forward purchase contracts for
South African Rand, Euros and other currencies to hedge expected
purchase prices of capital assets. We maintain certain operating
cash accounts in non–US dollar currencies. As of December 31,
2009 we had no currency related derivatives and $4.3 million of
cash in foreign currencies bank accounts.
Interest rate risk – Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. From time to time we invest
excess cash in high credit quality, short term instruments. 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.
With respect to financial liabilities, the senior convertible unse-
cured debentures and the outstanding loans under the equipment
financing facility are not subject to interest rate risk since they bear
interest at a fixed rate and are not subject to fluctuations in interest
rate. Our revolving credit facility has a variable interest rate of the
higher of the applicable lender’s cost of funds (capped at 1.25%
per annum above Libor) and LIBOR plus a margin of 5%. As of
December 31, 2009 we had $5.0 million outstanding on this $30
million facility. We have not entered into any agreements to hedge
against unfavorable changes in interest rates, but may in the future
actively manage our exposure to interest rate risk. A 1% change in
interest rates would not have a material impact on our net loss or
comprehensive loss.
Commodity price risk – Gold is our primary product and, as a result,
changes in the price of gold could significantly affect our results of
operations and cash flows. To reduce gold price volatility we have
8. AVAILABLE-FOR-SALE INVESTMENTS
6. INVENTORIES
As of December 31,
Stockpiled ore
In–process
Materials and supplies
$
2009
4,335
8,501
39,362
$
Total
$
52,198
$
2008
6,497
10,626
32,011
49,134
There were approximately 26,000 and 45,000 recoverable ounces
of gold in ore stockpile inventories at December 31, 2009 and
2008, respectively. Stockpile inventories are short-term surge piles
expected to be processed in the next 12 months or less. During
2008 we recorded a total of $25.7 million of net realizable value
adjustment write-downs. Of the $25.7 million total, $16.4 mil-
lion was related to approximately 700,000 tonnes of transition ore
stockpiles. The decision to write down the transition ore stockpile
value was based on information obtained during processing test
runs of the various transition ore stockpiles during 2008, and also
on the gold price at December 31, 2008. During 2009, $1.0 mil-
lion was recorded as inventory write downs, $0.1 million in net
realizable value adjustment write downs on the stockpile inven-
tories, and $0.9 million of obsolete inventory write downs on the
materials and supplies inventory.
7. DEPOSITS
Represents cash advances and payments for equipment and ma-
terials purchases by our mines which are not yet delivered on-site.
Mineral IRL
Fair Value
Shares
EURO Resources
Fair Value
Shares
Riverstone
Total
Fair Value
Shares
Investments
Year Ended December 31, 2009
Balance at
December 31, 2008
$ —
Acquisitions
Dispositions
Realized gain on
sale
OCI – unrealized
gain / (loss)
Balance at
December 31, 2009
—
—
—
—
—
—
—
—
—
$ —
—
—
—
—
—
—
—
—
—
$
29
40
—
—
112
300,000
400,000
$
—
—
—
29
40
—
—
112
$ —
—
$ —
—
$
181
700,000
$
181
2009 Annual Re p or t | 55
Balance at
December 31, 2007
Acquisitions
Dispositions
Realized gain on
sale
OCI 1 – unrealized
gain / (loss)
Balance at
December 31, 2008
Mineral IRL
Fair Value
Shares
EURO Resources
Fair Value
Shares
Riverstone
Fair Value
Shares
Total
Investments
Year Ended December 31, 2008
$ 3,084
5,012,800
$ 2,037
1,483,967
$ —
—
$ 5,121
—
—
—
—
118
300,000
118
(1,626)
(5,012,800)
(304)
(1,483,967)
(3,405)
—
(1,997)
1,947
—
264
—
—
—
—
—
(1,930)
—
(5,402)
(89)
—
2,122
$ —
—
$ —
—
$
29
300,000
$
29
9. DEFERRED EXPLORATION AND DEVELOPMENT COSTS
Consolidated property expenditures on our exploration projects for the year ended December 31, 2009 were as follows:
AFRICAN PROJECTS
Ghana
Sonfon—Sierra Leone
Other Africa
SOUTH AMERICAN PROJECTS
Saramacca—Suriname1
Paul Isnard – French Guiana2
Deferred
Exploration&
Costs as of
12/31/2008
$
4,437
2,674
1,295
781
4,526
Capitalized
Exploration
Expenditures
Transfer
to Mining
Properties
Impairments
(see Note 25)
Deferred
Exploration &
Development Costs
as of 12/31/2009
$
2,643
$
(1,145)
$
171
13
370
263
—
—
—
—
$
—
—
(290)
—
(2,789)
5,935
2,845
1,018
1,151
2,000
Total
$ 13,713
$
3,460
$
(1,145)
$
(3,079)
$ 12,949
1
2
In November 2009, we entered into an agreement to sell our interest in the Saramacca joint venture to Newmont for approximately $8.0 million.
Proceeds of the sale have been put in escrow pending the receipt of required governmental approvals and certain additional customary conditions.
In November 2009, we entered into a settlement agreement in respect of the outstanding litigation regarding the Paul Isnard properties in French
Guiana, pursuant to which the rights to those properties are to be transferred to us, subject to receiving the required governmental approvals. Also in
November 2009, we entered into an agreement to sell our rights, title and interest in the Bon Espoir, Iracoubo Sud and Paul Isnard properties in French
Guiana for approximately $2.1 million. The sale will be recognized upon receiving the required governmental approvals.
Consolidated property expenditures on our exploration projects for the year ended December 31, 2008 were as follows:
AFRICAN PROJECTS
Other—Ghana
Prestea Underground1
Sonfon—Sierra Leone
Afema—Ivory Coast
Goulagou—Burkina Faso
Other Africa
SOUTH AMERICAN PROJECTS
Saramacca—Suriname
Paul Isnard—French Guiana
Deferred
Exploration&
Development
Costs as of
12/31/2007
Capitalized
Exploration
Expenditures
Transfer
from Mining
Properties
Impairments
(see Note 25)
$ 1,519
$ 2,918
$
—
$
—
$
—
—
44,551
(44,551)
1,486
1,539
19,273
1,518
781
3,087
1,188
—
26
1,366
—
1,439
—
—
—
—
—
—
—
(1,539)
(18,886)
(1,589)
Deferred
Exploration &
Development
Costs as of
12/31/2008
$ 4,437
—
2,674
—
—
Other
—
—
—
—
(413)
—
1,295
—
—
—
—
781
4,526
Total
$ 29,203
$ 6,937
$ 44,551
$ (66,565)
$
(413)
$ 13,713
1 During 2008, the assets related to the Prestea Underground were reclassified as deferred exploration and development costs following updated feasibility
study results which indicated these amounts no longer met the definition of mining property, plant and equipment.
56 | Gold e n St ar
10. PROPERTY, PLANT AND EQUIPMENT
As of December 31, 2009
As of December 31, 2008
Property,
Plant and
Equipment
at Cost
64,527 $
Accumulated
Depreciation
(36,434)
$
Property,
Plant and
Equipment
Net Book
Value
Property,
Plant and
Equipment
at Cost
63,209 $
Accumulated
Depreciation
(29,956)
Property,
Plant and
Equipment
Net Book
Value
33,253
$
$
28,093 $
189,426
83,468
1,118
(35,797)
(33,792)
(661)
153,629
198,989
49,676
74,488
457
3,489
(15,498)
(22,720)
(473)
183,491
51,768
3,016
$ 338,539 $ (106,684)
$ 231,855 $ 340,175 $
(68,647)
$ 271,528
Mining
Properties at
Cost
As of December 31, 2009
Accumulated
Amortization
And
Impairments
(35,894)
$
Mining
Properties,
Net Book
Value
Mining
Properties at
Cost
As of December 31, 2008
Accumulated
Amortization
And
Impairments
(34,071)
$
$
61,421 $
57,314
15,914
(14,959)
—
25,527 $
42,355
15,914
61,528 $
53,452
15,666
281,662
(103,811)
177,851
252,713
17,844
(3,377)
14,467
16,680
Mining
Properties,
Net Book
Value
27,457
48,092
15,666
207,511
13,303
(5,360)
—
(45,202)
(3,377)
$ 434,155 $ (158,041)
$ 276,114 $ 400,039 $
(88,010)
$ 312,029
Bogoso/Prestea
Bogoso sulfide plant
Wassa/HBB
Corporate & other
Total
11. MINING PROPERTIES
Bogoso/Prestea
Bogoso Sulfide
Mampon
Wassa / HBB
Other
Total
In 2009 we capitalized certain betterment stripping costs totaling
$4.2 million. These costs are included in the mining property bal-
ance for Wassa shown above. These costs will be amortized in years
2010 through 2012 on a units-of-production basis over the ounces
accessed by the deferred betterment stripping.
12. INTANGIBLE ASSET
We, along with three other gold mining companies operating in
Ghana, organized a consortium that purchased and constructed
a nominal 80 megawatt power station in Ghana. Construction
was completed in 2008, and the plant has since generated power,
adding its output to the Ghana national grid. Our share of the
acquisition and construction costs totaled $12.4 million. At June
30, 2009, the four owners transferred ownership and operation-
al responsibility of the plant to the Ghana power authority. In
response, at the end of the second quarter of 2009, our 25% own-
ership share in the power plant, with a net book value of $10.5
million, was transferred from fixed assets to intangible assets in our
balance sheet.
This intangible asset represents our right to receive from the Ghana
national grid, an amount of the electric power equal to one fourth
of the plant’s power output over and above any rationing limit
that might be imposed in the future by the Ghana national power
authority. The intangible asset is being amortized over five years
from the transfer date.
13. DERIVATIVES
The derivative mark-to-market losses recorded in the Statement of
Operations is comprised of the following amounts:
For the years ended December 31,
2007
2009
2008
Riverstone Resources, Inc.
– warrants
$
(139)
$
285 $
—
Forward currency
agreements
EURO Resources S.A.
shares
Gold forward price
contracts
—
124
(124)
—
(31)
3,677
602
Derivative loss
$ 3,538 $
980 $
Realized (gain)/loss
$ 3,677 $
(995)
$
Unrealized (gain)/loss
(139)
1,975
Derivative loss
$ 3,538 $
980 $
248
108
232
108
124
232
Riverstone Resources Inc. – Warrants
In the first quarter of 2008, we received 2 million warrants from
Riverstone Resources Inc. (“Riverstone”) as partial payment for the
right to earn an ownership interest in our exploration projects in
Burkina Faso. These warrants are exercisable through January of
2012 at prices between Cdn $0.40 and Cdn $0.45, depending on
the timing of exercise.
Gold Price Derivatives
In response to a significant increase in gold price volatility during
late 2008 and 2009, we entered into a series of short-term (less
than 90 days) gold pricing hedging contracts. The net result of
the 2009 contracts was a realized derivative loss of $3.7 million
for the year. As of December 31, 2009, all of the forward contracts
entered into in 2009 had expired and at the end of 2009 we had
no outstanding gold price hedging instruments.
In the third and fourth quarters of 2008, we entered into a series of
gold forward price contracts. The contracts covered 67,500 ounces
2009 Annual Re p or t | 57
at an average price of $832 per ounce. All of these positions expired
at or before December 31, 2008 yielding a $1.1 million net gain
for the year. Late in 2008, we entered into additional forward pric-
ing contracts for 45,000 ounces of gold at an average price of $825
per ounce all of which matured during the first quarter of 2009. At
December 31, 2008, the fair value of these contracts was estimated
to be $1.7 million resulting in an unrealized loss of $1.7 million.
During the first three quarters of 2009 the realized net result of
these agreements was a loss of $2.8 million. These contracts had
unrealized gains of $0.5 million as of the end of the second quarter
of 2009 and resulted in a recognized net loss on gold forward price
contracts of $0.9 million in the third quarter of 2009. As of Sep-
tember 30, and December 30, 2009 we held no unmatured gold
forward pricing contracts.
14. ASSET RETIREMENT OBLIGATIONS
At the end of each period, Asset Retirement Obligations (“ARO”)
are equal to the present value of all estimated future costs required
to remediate any environmental disturbances that exist as of the
end of the period, using discount rates applicable at the time of
initial recognition of each component of the liability. Included in
this liability are the costs of closure, reclamation, demolition and
stabilization of the mines, processing plants, infrastructure, tail-
ings ponds, waste dumps and ongoing post-closure environmental
monitoring costs. While the majority of these costs will be incurred
near the end of the mines’ lives, it is expected that certain on-going
reclamation costs will be incurred prior to mine closure. These
costs are recorded against the asset retirement obligation liability as
incurred. At December 31, 2009, the total, undiscounted amount
of the estimated future cash needs is estimated to be $52.3 million,
down slightly from $54.4 million at the end of 2008. The liabili-
ties recognized in 2009 was discounted using the company’s credit
adjusted risk free rate of 10%. Amounts recorded in prior years
were discounted at rates ranging from 8% to 10%. The schedule of
payments to settle the ARO liability will occur over the life of the
operating assets, which currently runs through 2022.
The changes in the carrying amount of the ARO during 2009 and
2008 are follows:
Balance at January 1
Accretion expense
Additions and change in
estimates
Cost of reclamation work
performed
For the years ended December 31,
2008
$ 18,919
2009
$ 31,656
2,165
778
133
13,122
(1,985)
(1,163)
Balance at December 31
$ 31,969
$ 31,656
Current portion
Long term portion
$ 1,938
$ 1,620
$ 30,031
$ 30,036
Our previous reclamation and closure cost estimate for Bogoso was
updated in 2008 by an independent consulting firm. Our expected
cash outlays for reclamation projects over the next five years are as
follows: 2010 – $8.3 million, 2011 – $6.7 million, 2012 – $2.8
million, 2013 – $8.5 million, 2014 – $1.7 million and after five
years – $24.3 million.
15. DEBT
Current debt:
Debt facility
Equipment financing
Total current debt
Long term debt:
As of December 31,
2009
2008
$
—
$
626
9,970
12,152
9,970
12,778
Revolving credit facility
2,543
—
Equipment financing loans
11,028
18,911
Convertible debentures
101,024
93,738
Total long term debt
$ 114,595
$ 112,649
Debt Facility
In the first quarter of 2009, the final $0.6 million installment pay-
ment was made on a $15.0 million debt facility provided by two
Ghana-based banks in 2006. The facility provided for no addi-
tional credit after the final payment and is now closed. Proceeds of
this $15 million loan were used for the construction of the Bogoso
sulfide expansion project.
Equipment Financing Credit Facility
GSBPL and GSWL maintain an equipment financing facility
with Caterpillar Financial Services Corporation, with Golden Star
as the guarantor of all amounts borrowed. The facility provides
credit for new and used mining equipment and is secured by the
mobile equipment. Amounts drawn under this facility are repay-
able over five years for new equipment and over two years for used
equipment. The interest rate for each draw-down is fixed at the
date of the draw-down using the Federal Reserve Bank 2-year or
5-year swap rate or London Interbank Offered Rate (“LIBOR”)
plus 2.38%. During the third quarter of 2009, the facility limit
was reduced from $40 million to $35 million. At December 31,
2009, approximately $14.0 million was available to draw down.
The average interest rate on the outstanding loans was approxi-
mately 7.8% at December 31, 2009. Each outstanding equipment
loan is secured by the title of the specific equipment purchased
with the loan until the loan has been repaid in full.
Convertible Debentures
On November 8, 2007 we completed the sale of $125 million
aggregate principal amount of 4.0% Convertible Senior Unse-
cured Debentures due November 30, 2012 (the “Debentures”).
Interest on the Debentures is payable semi-annually in arrears on
May 31 and November 30 of each year, beginning May 31, 2008.
Each Debenture is, subject to certain limitations, convertible into
common shares at a conversion rate of 200 shares per $1,000 prin-
cipal amount of debentures (equal to an initial conversion price
of $5.00 per share) subject to adjustment under certain circum-
stances. The Debentures are not redeemable at our option.
On maturity, we may, at our option, satisfy our repayment obliga-
tion by paying the principal amount of the Debentures in cash or,
subject to certain limitations, by issuing that number of our com-
mon shares obtained by dividing the principal amount of the De-
bentures outstanding by 95% of the weighted average trading price
of our common shares on the NYSE Amex stock exchange for the
20 consecutive trading days ending five trading days preceding the
maturity date (the “Market Price”). Upon the occurrence of certain
58 | Gold e n St ar
change in control transactions, the holders of the debentures may
require us to purchase the Debentures for cash at a price equal to
101% of the principal amount plus accrued and unpaid interest. If
10% or more of the fair market value of any such change in control
consideration consists of cash, the holders may convert their De-
bentures and receive a number of additional common shares, which
number is determined as set forth in the Indenture.
The Debentures are direct senior unsecured indebtedness of Golden
Star Resources Ltd., ranking equally and ratably with all our other
senior unsecured indebtedness, and senior to all our subordinated
indebtedness. None of our subsidiaries have guaranteed the De-
bentures, and the Debentures do not limit the amount of debt that
we or our subsidiaries may incur.
The Debentures were accounted for in accordance with EIC 164,
“Convertible and other Debt Instruments with Embedded De-
rivatives”. Under this statement, the fair value of the Conversion
feature is recorded as equity. The issuance date fair value of the
Company’s obligation to make principal and interest payments
was estimated at $89.1 million and was recorded as convertible
senior unsecured debentures. The issuance date fair value of the
holder’s conversion option was estimated at $35.9 million and was
recorded as the “equity component of convertible debentures”.
Fees totaling $4.7 million relating to the issuance of these deben-
tures were allocated pro-rata between deferred financing fees of
$3.4 million and equity of $1.3 million. Periodic accretion of the
liability portion of the loan has brought the December 31, 2009
balance to $101.0 million.
Revolving Credit Facility
On May 1, 2009, we entered into a $30.0 million revolving credit
facility (the “Facility”) pursuant to an agreement (the “Facility
Agreement”) between Standard Chartered Bank, Golden Star Re-
sources and our subsidiaries which own the Bogoso/Prestea, Wassa
and HBB properties. The term of the Facility Agreement extends
through September 30, 2012. The amount available under the Fa-
cility will be reduced by $3.0 million on December 31, 2010 and
by an additional $6.0 million on December 31, 2011. The Facility
bears interest at the higher of LIBOR or the applicable lenders’
cost of funds rate (which is capped at 1.25% per annum above
LIBOR), plus a margin of 5% per annum. The interest rate as of
December 31, 2009 was 5.26%. Covenants require that we meet
certain financial ratios at the end of each quarter, including that in
excess of 95% of our assets are retained within a group of subsidiar-
ies known as Obligors and whose common shares are pledged as
collateral for amounts drawn under the revolver facility. We were
in compliance with all covenants at December 31, 2009.
16. INCOME TAXES
We recognize future tax assets and liabilities based on the differ-
ence between the financial reporting and tax basis of assets and
liabilities using the substantively 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.
Our future tax assets and liabilities at December 31, 2009 and
2008 include the following components:
Future tax assets:
Offering costs
As of December 31,
2009
2008
$ 1,567
$ 1,096
Non-capital loss carryovers
172,199
149,401
Capital loss carryovers
Mine property costs
Reclamation costs
Derivatives
Unrealized loss
Other
Valuation allowance
Future tax assets
Future tax liabilities:
Mine property costs
Other
Future tax liabilities
449
9,882
6,160
16
(7)
—
9,900
6,082
645
26
3,571
1,361
(99,994)
(98,020)
93,843
70,491
107,483
103,259
357
357
107,840
103,616
Net future tax assets/(liabili-
ties)
$ (13,997)
$ (33,125)
The composition of our valuation allowance by tax jurisdiction is
summarized as follows:
Canada
U.S.
Ghana
Burkina Faso
As of December 31,
2008
$ 28,094
$ 38,237
2009
587
233
60,646
69,234
524
459
Total valuation allowance
$ 99,994
$ 98,020
The income taxes (recovery)/expense includes the following
components:
Current
Canada
Foreign
Future
Canada
Foreign
Total
For the years ended December 31,
2009
2008
2007
$
— $
— $
1,755
—
—
—
—
—
—
(19,127)
(9,029)
5,206
$ (17,372) $
(9,029) $
5,206
2009 Annual Re p or t | 59
A reconciliation of expected income tax on net income before minority interest at statutory rates with the actual expenses (recovery) for
income taxes is as follows:
For the years ended December 31,
Net income /(loss) before minority interest
Statutory tax rate
Tax expense/(benefit) at statutory rate
Foreign tax rates
Change in tax rates
Non-taxable portion of capital (gains)/losses
Expired loss carryovers
Ghana investment allowance
Non-deductible stock option compensation
Non-deductible expenses
Loss carryover not previously recognized
Ghana property basis not previously recognized
Non-deductible Ghana property basis
Change in future tax assets due to exchange rates
Change in valuation allowance
National Tax Levy
Income tax expense /(recovery)
During 2009, we recognized $4 million of share offering costs.
Shareholders’ equity has been credited in the amounts of $1.2 mil-
lion for the tax benefits of these deductions. In addition, in 2008
we recognized $3.3 million of unrealized loss on marketable equity
securities. Other comprehensive income has been credited for the
$1 million tax benefit of these future tax deductions. A $1.2 mil-
lion valuation allowance has been provided in shareholders’ equity
for the net tax impact of the share offering costs. In addition, a $1
million valuation allowance has been provided in other compre-
hensive income for the net tax impact of the unrealized loss
At December 31, 2009 we had tax pool and loss carryovers expir-
ing as follows:
2009
2010
2011
2012
2013
2014
2015
2026
2027
2028
2029
Indefinite
Total
$
Canada
$
—
—
—
—
—
2,731
9,154
15,110
21,087
13,874
25,172
3,098
Ghana
—
—
—
41,694
46,294
—
—
—
—
—
—
497,494
$
90,226
$
585,482
60 | Gold e n St ar
2009
(832)
$
29.0%
$
(241)
(6,951)
476
—
—
(63)
554
1,924
(2,849)
(7,601)
—
(4,018)
(359)
1,756
2008
$ (135,250)
29.5%
$ (39,898)
2007
$ (32,473)
32.5%
$ (10,560)
(6,401)
3,317
(392)
99
(1,288)
616
1,803
399
—
—
(8,377)
—
(2,202)
136
(3,638)
1,065
324
158
—
788
5,792
26,924
—
(4,578)
32,090
—
$ (17,372)
$
(9,029)
$ 5,206
17. COMMITMENTS AND CONTINGENCIES
Our commitments and contingencies include the following Items:
Environmental Bonding in Ghana
In 2005, pursuant to a reclamation bonding agreement between
the Ghana Environmental Protection Agency (“EPA”) and
GSWL, we bonded $3.0 million to cover future reclamation ob-
ligations at Wassa. To meet the bonding requirements, we estab-
lished a $2.85 million letter of credit and deposited $0.15 million
of cash with the EPA. Pursuant to a further bonding agreement
between the EPA and GSBPL, we bonded $9.5 million in early
2006 to cover our future obligations at Bogoso/Prestea. To meet
these requirements, we deposited $0.9 million of cash with the
EPA with the balance covered by a letter of credit. In 2008 the
GSBPL letter of credit was increased by $0.5 million to cover the
Pampe mining areas. The cash deposits are recorded as Restricted
Cash in our balance sheet.
In 2008, the EPA required Bogoso/Prestea to resubmit their En-
vironmental Management Plan (“EMP”) with an updated es-
timate of the reclamation and closure costs prepared by a third
party consultant. A consultant was commissioned to prepare the
reclamation and closure cost estimate and the EMP was submit-
ted to the EPA in February , 2009. The EPA requested payment
of the fees associated with the issuance of the certificate, which
was completed. Bogoso/Prestea has completed all the legal re-
quirements and is waiting for the EPP to issue the environmental
certificate.
Royalties
• Dunkwa Properties: As part of the acquisition of the Dunk-
wa properties in August 2003, we agreed to pay the seller a
net smelter return royalty on future gold production from
the Mansiso and Asikuma properties. As per the acquisition
agreement, there will be no royalty due on the first 200,000
ounces produced from Mampon which is located on the
Asikuma property. The amount of the royalty is based on a
sliding scale which ranges from 2% of net smelter return at
gold prices at or below $300 per ounce and progressively in-
creases to 3.5% for gold prices in excess of $400 per ounce.
• Government of Ghana: Under the laws of Ghana, a holder of
a mining lease is required to pay an annual royalty of not less
than 3% and not more than 6% of the total revenues earned
from the lease area. The specific amount paid is determined
by a mine’s margin as defined by the royalty regulations. The
royalty is payable on a quarterly basis. During 2009 and in all
prior years we have paid a 3% annual royalty on gold produc-
tion from Bogoso/Prestea and Wassa. During 2009 the Ghana
Minerals Commission announced that it is considering pos-
sible changes to its mineral royalty regulations. Since the
Minerals Commission review has not been finalized, it is not
yet possible to predict changes, if any, in the royalty structure.
• Benso: Benso is subject to a $1.00 per ounce gold production
royalty.
• Pampe: Portions of the Pampe deposit are subject to a 7.5%
net smelter return royalty.
• Prestea Underground – Areas of the Prestea Underground be-
low a point 150 meters below sea level are subject to a 2.5%
net profits interest on future income. Ownership of the 2.5%
net profit interest is currently held by the bankruptcy trustee
overseeing liquidation of our former joint venture partner
in the Prestea Underground. While we believe that the joint
venture agreement provides for the 2.5% net profit interest,
confirmation of this position has not been received from the
bankruptcy trustee.
Hwini-Butre – As part of the agreement for the purchase of the
HBB properties, Golden Star agreed to pay B.D. Goldfields Ltd
$1.0 million if at least one million ounces of gold are produced
and recovered in the first five years of production from the area
covered by the Hwini-Butre prospecting license. Gold production
was initiated at Hwini-Butre in early 2009. It is not possible at
this time to know if future exploration work will increase Hwini-
Butre’s reserves to 1.0 million ounces.
Obuom – In October 2007, we entered into agreement with
AMI Resources Inc. (“AMI”), which gives AMI the right to earn
our 54% ownership position in the Obuom property in Ghana.
Should AMI eventually obtain full rights to our position on the
property and develop a gold mining operation at Obuom, we
would receive from AMI a 2% net smelter return royalty on 54%
of the property’s gold production.
Goulagou and Rounga – In October 2007, we entered into an
option agreement with Riverstone Resources Inc. (“Riverstone”)
whereby Riverstone has the right to acquire our 90% interest in
the Goulagou and Rounga properties in Burkina Faso. To exercise
the option, Riverstone is required to spend Cdn$4 million on ex-
ploration programs on the Goulagou and Rounga properties over
a four-year period, and may then purchase our interest for $18.6
million in cash or Riverstone common shares. We are entitled to
receive up to 2 million shares of Riverstone over the term of the
option, of which 1.3 million shares have been received as of Febru-
ary 24, 2010. In addition we received 2 million common share
purchase warrants of Riverstone during 2008. The Riverstone
purchase warrants have remaining exercise prices that range from
Cdn$0.40 to Cdn$0.45.
Litigation
EURO Resources S.A. Action – In September 2008, we issued
a statement of claim in Ontario against EURO Ressources S.A.
(“EURO”) and its subsidiary Société de Travaux Publics et de
Mines Aurifères en Guyane S.A.R.L. (“SOTRAPMAG”). The
statement of claim sought to have EURO transfer the Paul Is-
nard Permis Exclusif de Recherches (“PER”) and the shares of
SOTRAPMAG (which holds eight mineral concessions in the
Paul Isnard area of French Guiana (together with the PER, the
“Paul Isnard Properties”) to us in compliance with EURO’s obliga-
tions under certain agreements between the parties, as well as mon-
etary damages. In September 2008, EURO commenced litigation
in British Columbia concerning our ownership of mineral rights
at the Paul Isnard gold property in French Guiana. EURO asked
the courts to “confirm our repudiation” of an option agreement on
Paul Isnard, and EURO sought unspecified damages.
In December 2008, a Canadian gold mining entity acquired a
controlling interest in EURO and we subsequently pursued discus-
sions with the new owner regarding settlement of the litigation and
the ultimate transfer of the Paul Isnard properties to us as agreed
in 2004 earn-in option agreement. On November 18, 2009, we
entered into a settlement agreement with EURO in respect of the
outstanding litigation, pursuant to which the Company is to be
transferred the rights to those properties subject to receiving re-
quired governmental approvals. (See note 9 for information about
sale of this property.)
B.D. Goldfields Action – On August 29, 2008 B.D. Goldfields,
Ltd., a Ghanaian registered company, and a shareholder of B.D.
Goldfields, Ltd. filed suit in the United States District Court
of the District of Colorado (the “Court”) against Golden Star
Resources Ltd. and our subsidiary St. Jude Resources Ltd. The
plaintiffs challenged the validity of the various concession con-
tracts and settlements related to the Hwini-Butre gold property in
Ghana. The Company filed a motion to dismiss with the Court
on November 6, 2008. The Court granted the Company’s motion
to dismiss and issued its Order of Dismissal on May 8, 2009, with
judgment entered in favor of us on May 12, 2009. The Order of
Dismissal and Judgment (the “Judgment”) dismissed with preju-
dice all claims against Golden Star and St. Jude Resources Ltd. for
lack of jurisdiction.
After entry of the Judgment, the plaintiffs filed a post-judgment
motion to alter the Judgment. We opposed the post-judgment
motion and on September 28, 2009, the Court denied the mo-
tion. Accordingly, the Judgment is final.
Meanwhile, on June 12, 2009, the plaintiffs also appealed the
Judgment to the United States Court of Appeals for the Tenth Cir-
cuit (the “Appeals Court”). On June 26, 2009, we filed a motion
to dismiss the appeal for lack of jurisdiction. On July 10, 2009, the
Appeals Court dismissed the appeal. Accordingly, the case now has
been closed at the trial and appellate levels.
Ghana Crop Damage Action – On October 22, 2008, a Gha-
naian court awarded plaintiffs a settlement of approximately $1.9
million in damages against GSBPL in a legal action filed against
GSBPL in 2000 related to a 1991 crop damage claim. The plain-
tiffs claimed that emissions from a now defunct processing plant at
Bogoso, which was operating in 1991, injured the plaintiffs cocoa
trees and reduced their cocoa output. We have appealed the judg-
ment to the Ghana Supreme Court and have obtained a stay of
2009 Annual Re p or t | 61
execution of the judgment. As ordered by lower courts we have
already deposited $0.6 million of cash with the court to partially
settle the claim. Thus, we believe that if our appeal is not successful,
the settlement cost would be less than $0.5 million. We intend to
vigorously pursue any and all appropriate remedies in this regard.
expected cash and debt positions over several years and which
are updated as necessary depending on various factors, including
successful capital deployment and general industry conditions.
The annual and updated budgets are approved by the Board of
Directors.
Bogoso Power Plant – In early 2008 Genser Power Ghana Limited
(“Genser”) initiated construction of a nominal 20 megawatt stand-
by power plant at Bogoso known as the Genser power plant. This
plant is planned for use in periods of power outages or shortages in
Ghana. As collateral for a letter of credit issued in connection with
the project, we restricted $3.6 million of cash in March of 2008 as
required by the bank providing the letter of credit.
The initial amount of the letter of credit was $2.0 million, but
increased each month after initiation of construction and reached
a maximum of approximately $7.0 million in the fourth quarter of
2008. The letter of credit has progressively decreased since reaching
the $7.0 million maximum, and it will continue to decrease until it
reaches nil at the end of the 30 months following the initiation of
construction. At any point in the first 30 months we can terminate
the contract by making a payment to Genser equal to the remain-
ing balance on the letter of credit. If such payment is made, Genser
will return the letter of credit and the title to the power plant will
be transferred to us. If the contract is terminated after 30 months,
title to the plant will transfer to us for no consideration.
Once the power plant is completed, we have agreed to purchase
electric power from the Genser plant as needed and make pay-
ments in accordance with the following formulas: in months where
our average monthly demand is equal to or less than 10 megawatts,
we will pay Genser $295,200 per month plus the cost of fuel re-
gardless of the amount of power used. In months where our aver-
age monthly demand exceeds 10 megawatts, we will pay Genser
$0.030/kilowatt hour for amounts in excess of 10 megawatts plus
fuel costs. The plant met its commissioning test in February 2010
and has been placed in service in February 2010.
18. CAPITAL DISCLOSURES
The Company’s objectives when managing capital are to safeguard
the Company’s access to sufficient funding as needed to con-
tinue its acquisition and development of mineral properties and
to maintain a flexible capital structure which optimizes the costs
of capital at an acceptable level of risk. These objectives have not
changed materially since the end of 2008.
In the management of capital, the Company includes the compo-
nents of shareholders’ equity and debt,. The Company manages
the capital structure and makes adjustments in light of changes in
economic conditions and the risk characteristics of the underlying
assets. To maintain or adjust the capital structure, the Company
may issue new shares, issue new debt, acquire or dispose of assets or
adjust the amount of investments. Other than the revolver facility
opened in 2009, we have no restrictions or covenants on our capi-
tal structure as of the end of 2009. Revolver covenants require that
we meet certain financial ratios at the end of each quarter, includ-
ing that in excess of 95% of our assets are retained within a group
of subsidiaries known as Obligors and whose common shares are
pledged as collateral for amounts drawn under the revolver facility.
We were in compliance with all covenants at December 31, 2009.
In order to facilitate the management of its capital requirements,
the Company prepares annual expenditure budgets which project
62 | Gold e n St ar
In order to maximize cash available for development efforts, the
Company does not pay dividends. The Company’s cash invest-
ment policy is to invest its cash in highly liquid short-term interest-
bearing investments with maturities of three months or less when
acquired, selected with regards to the expected timing of expendi-
tures from continuing operations.
19. COST OF SALES
Mining operations
costs
Change in inventories
(costs from / (to)
metals inventory)
Mining related
depreciation and
amortization
Accretion of asset
retirement obligations
2009
2008
2007
$ 243,568 $ 228,037 $ 158,310
3,023
9,670
(5,003)
114,274 60,445 34,453
2,165
778
1,062
Total cost of sales
$ 363,030 $ 298,930 $ 188,822
20. STOCK BASED COMPENSATION
Stock Options – We have one stock option plan, the Second
Amended and Restated 1997 Stock Option Plan (the “Plan”), and
options are granted under this plan from time to time at the discre-
tion 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 Plan, we may grant options to employees,
consultants and directors of the Company or its subsidiaries for
up to 15,000,000 shares of common stock of which 1,593,746
are available for grant at December 31, 2009. Options take the
form of non-qualified stock options, and the exercise price of each
option is not less than the fair market value of our stock on the
date of grant. Options typically 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.
In addition to options issued under the Plan, 2,533,176 options
were issued to various employees of St. Jude in exchange for St.
Jude options in late 2005 of which 216,000 were unexercised as
of December 31, 2008. All 216,000 of the remaining unexercised
options held by St. Jude employees at the end of 2008 were exer-
cised during 2009. Comparative figures shown below include the
options issued to St. Jude employees.
Non-cash employee compensation expense recognized in the state-
ments of operations with respect to the Plan are as follows:
Total stock
compensation expense
during the period
$ 2,033 $ 2,088 $ 3,274
2009
2008
2007
We granted 1,760,000, 1,964,000 and 1,875,023 options during
2009, 2008 and 2007, respectively. We do not receive a tax deduc-
tion for the issuance of options. As a result we did not recognize
any income tax benefit related to the stock compensation expense
during 2009, 2008 and 2007.
The fair value of options granted during 2009, 2008 and 2007
were estimated at the grant dates using the Black-Scholes option-
pricing model based on the assumptions noted in the following
table:
Expected
volatility
Risk–free
interest rate
2009
68.39% to
74.25%
1.88% to
2.94%
2008
47.52% to
67.78%
2.11% to
3.32%
2007
47.39 to
67.13%
3.85 to
4.58%
Expected lives
4 to 7 years
4 to 7 years
4 to 7 years
Dividend yield
0%
0%
0%
Expected volatilities are based on the mean reversion tendency of
the volatility of Golden Star’s shares and its peer group. Golden Star
uses historical data to estimate share option exercise and employee
departure behavior used in the Black–Scholes model; groups of
employees that have dissimilar historical behavior are considered
separately for valuation purposes. The expected term of the options
granted represents the period of time that the options granted are
expected to be outstanding; the range given above results from cer-
tain groups of employees Exhibiting different post–vesting behav-
iors. The risk–free rate for periods within the contractual term of
the option is based on the Canadian Chartered Bank administered
interest rates in effect at the time of the grant.
A summary of option activity under the Plan as of December 31, 2009 and changes during the year then ended is presented below:
Outstanding as of December 31, 2008
Granted
Exercised
Forfeited, cancelled and expired
Outstanding as of December 31, 2009
Exercisable at December 31, 2009
Outstanding as of December 31, 2007
Granted
Exercised
Forfeited, cancelled and expired
Outstanding as of December 31, 2008
Exercisable at December 31, 2008
Weighted–Average
Exercise price
(Cdn$)
Weighted–Average
Remaining
Contractual
Term (Years)
3.23
1.96
1.94
3.06
3.19
3.46
5.9
9.3
2.8
—
7.0
6.3
Weighted–Average
Exercise price
(Cdn$)
Weighted–Average
Remaining
Contractual
Term (Years)
3.46
2.83
2.50
4.56
3.23
3.23
6.3
9.4
—
—
5.9
3.2
Options
(000’)
7,478
1,760
(1,417)
(538)
7,283
5,158
Options
(000’)
6,624
1,964
(360)
(750)
7,478
5,552
Aggregate
intrinsic value
Cdn($000)
3,154
—
(1,662)
—
4,221
383
Aggregate
intrinsic value
Cdn($000)
3,775
—
(594)
—
3,154
2,602
A summary of option activity under the Plan as of December 31, 2008 and changes during the year then ended is presented below:
The number of options outstanding by strike price as of December 31, 2009 and 2008 is shown in the following tables:
Range of exercise prices (Cdn$)
1.00 to 2.50
2.51 to 4.00
4.01 to 7.00
7.01 to 10.00
Number
outstanding at
December 31,
2009 (000)
2,285
Options outstanding
Weighted–average
remaining
contractual life
(years)
7.5
Weighted-average
exercise price
(Cdn$)
1.54
Options exercisable
Number
exercisable at
December 31,
(000)
1,138
Weighted-average
exercise price
(Cdn$)
1.39
3,365
1,633
—
7,283
7.1
6.0
—
7.0
3.43
4.98
—
3.19
2,587
1,433
—
5,158
3.46
5.11
—
3.46
2009 Annual Re p or t | 63
Range of exercise prices (Cdn$)
1.00 to 2.50
2.51 to 4.00
4.01 to 7.00
7.01 to 10.00
Number
outstanding at
December 31, 2008
(000)
2,234
Options outstanding
Weighted–average
remaining
contractual life
(years)
4.1
Weighted-average
exercise price
(Cdn$)
1.41
Options exercisable
Number
exercisable at
December 31,
(000)
1,902
Weighted-average
exercise price
(Cdn$)
1.37
3,505
1,707
32
7,478
7.6
4.8
5.0
5.9
3.47
5.02
9.07
3.23
2,211
1,407
32
5,552
3.48
5.23
9.07
3.23
The weighted–average grant date fair value of share options grant-
ed during the years ended December 31, 2009, 2008 and 2007
was Cdn$1.21, Cdn$3.31 and Cdn$2.20, respectively. The intrin-
sic value of options exercised during the years ended December 31,
2009, 2008 and 2007 was Cdn$1.7 million, Cdn$0.6 million and
Cdn$4.5 million, respectively.
A summary of the status of non–vested options at December 31,
2009 and 2008 and changes during the years ended December 31,
2009 and 2008, is presented below:
authorities. The Bonus Plan, as amended, provides for the issu-
ance of 900,000 common shares of bonus stock, of which 545,845
common shares had been issued as of December 31, 2009. During
the years ended December 31, 2009, 2008 and 2007 we issued nil,
nil and 50,683 common shares, respectively, to employees under
the Bonus Plan. The cost of the share grants was $0.2 million in
2007.
21. EARNINGS PER COMMON SHARE
The following table provides a reconciliation between basic and
diluted earnings per common share:
Non-vested at January 1, 2009
Granted
Vested
Forfeited, cancelled and expired
Non-vested at December 31,
2009
Non-vested at January 1, 2008
Granted
Vested
Forfeited, cancelled and expired
Non-vested at
December 31, 2008
Number of
options
(‘000)
1,926
1,760
(1,386)
(175)
2,125
Number of
options
(‘000)
1,203
1,964
(1,027)
(214)
1,926
Weighted
average
grant date
fair value
(Cdn$)
1.92
1.21
1.76
1.22
1.49
Net income/(loss)
Weighted average number
of common shares
(millions)
Dilutive securities:
Options
Convertible
debentures
Weighted
average
grant date
fair value
(Cdn$)
2.17
Weighted average number
of diluted shares
Basic earnings/(loss)
per share
Diluted earnings/(loss)
per share
1.62
1.65
1.91
1.92
2009
2008
$ 16,519 $ (119,303)
2007
$ (35,290)
237.2
235.7
229.1
1.2
—
—
—
—
—
238.4
235.7
229.1
$
0.070 $
(0.506)
$
(0.154)
$
0.069 $
(0.506)
$
(0.154)
As of December 31, 2009, there was a total unrecognized compen-
sation cost of Cdn$2.1 million related to share-based compensa-
tion granted under the Plan. That cost is expected to be recognized
over a weighted-average period of 0.9 years. The total fair values of
shares vested during the years ended December 31, 2009, 2008
and 2007 were Cdn$2.4 million, Cdn$1.5 million and Cdn$4.0
million, respectively.
Stock Bonus Plan—In December 1992, we established an Em-
ployees’ 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 might determine, within the limitations of
the Bonus Plan and subject to the rules of applicable regulatory
64 | Gold e n St ar
22. OPERATIONS BY SEGMENT AND GEOGRAPHIC AREA
The following segment and geographic data includes revenues based on product shipment origin and long-lived assets based on
physical location.
As of and for the year ended December 31,
2009
Revenues
Net income/(loss)
Income tax (expense) benefit
Capital Expenditures
Total assets
2008
Revenues
Net income/(loss)
Income tax (expense) benefit
Capital Expenditures
Total assets
2007
Revenues
Net income/(loss)
Income tax (expense) benefit
Capital Expenditures
Total assets
Bogoso/
Prestea
Africa
Wassa/
HBB
Other
South
America
Corporate
Total
$ 181,820 $ 218,919 $
— $
— $
— $ 400,739
(3,883)
55,490
(728)
(3,629)
(30,731)
—
17,372
11,077
36,739
—
291
—
638
—
22
16,519
17,372
48,767
347,974
272,019
9,208
9,412
115,266
753,879
$ 148,765 $ 108,590 $
— $
— $
— $ 257,355
(89,358)
6,732
(15,822)
(1,047)
(19,781)
(119,303)
—
1,267
13,544
54,194
7,762
5,130
—
—
9,029
1,439
120
74,427
371,134
289,749
11,087
12,112
10,217
694,299
$
86,602 $
89,012 $
— $
— $
— $ 175,614
(31,710)
(5,206)
9,785
(2,970)
(516)
(9,879)
(35,290)
—
—
—
—
(5,206)
90,697
19,009
2,303
2,831
27
114,867
436,250
108,831
173,228
10,769
60,800
789,878
2009 Annual Re p or t | 65
23. SUPPLEMENTAL CASH FLOW INFORMATION
2008
In 2009 $1.1 million was paid for income taxes. There was no
cash paid for income taxes during 2008 and 2007. Cash paid for
interest was $7.6 million in 2009, $7.9 million in 2008 and $7.2
million in 2007.
24. RELATED PARTIES
During 2009, we obtained legal services from a firm where our
Chairman is of counsel. The cost of services incurred from this
firm during 2009 and 2008 was $0.6 million and $0.7 million,
respectively. Our Chairman did not personally provide any legal
services to the Company during 2009 or 2008 nor did he benefit
directly or indirectly from payments for the services performed by
the firm.
25. ASSET IMPAIRMENTS
Asset
Prestea Underground
exploration property
Prestea South—develop-
ment property
Niger—exploration
properties
Burkina Faso—explora-
tion properties
Ivory Coast—exploration
property
Sierra Leone—explora-
tion property
Abandonment of mine
equipment
French Guiana—explora-
tion properties
Other
Total
2009
2009
2008
2007
$
— $ 44,550 $
—
1,815
—
1,589
— 18,886
—
1,539
—
—
—
—
—
—
—
1,855
—
—
1,644
2,789
290
—
—
—
—
$ 3,079 $ 68,379 $ 3,499
French Guiana – In late 2009, agreement was reached to sell our
French Guiana exploration properties. In response to the pend-
ing sales agreement, at December 31, 2009, the carrying value of
the French Guiana exploration properties was written down to the
agreed sales price.
Other – Represents the carrying costs of various inactive explora-
tion properties.
Prestea Underground – Since acquiring the underground mine,
Bogoso/Prestea has incurred $44.6 million in drilling, mainte-
nance, shaft refurbishment, dewatering and engineering study
costs. A pre-feasibility study prepared in 2008 indicated that
substantial amounts of capital would be required to reopen the
mine and the resulting operating cash flows would not materially
increase cash flows from Bogoso/Prestea’s existing surface min-
ing operations. The pre-feasibility did not include the additional
costs of ongoing dewatering and maintenance costs of the under-
ground mine outside of the active mining areas. Furthermore, the
pre-feasibility study did not anticipate the sharp increases in mine
operating costs during 2008 due to higher power, fuel, reagents
and labor costs.
Based on the pre-feasibility study results, the increases in operating
costs since the study was completed in 2008, especially in the cost
of electric power, and due to the high costs of maintaining access to
the underground workings, Bogoso/Prestea temporarily stopped
its development activities at this project in late 2008. As a result,
the carrying value of the property was fully written down as of
December 31, 2008 and an impairment charge of $44.6 million
recorded in the consolidated statements of operations.
Prestea South – Portions of the Prestea South properties near the
town of Prestea were deemed impaired because the cost of relo-
cating homes and town site infrastructure negated the economic
benefit of the reserves. The development costs to date of $1.8
million have also been written off and an impairment charge re-
corded in the consolidated statements of operations.
Niger Exploration Projects – Approximately $2.6 million has been
spent on exploration work at the Deba and Tialkam gold projects
in Niger since acquiring them from St. Jude in 2005. We plan to
continue to hold these properties on care and maintenance basis
and evaluate various alternatives for them. In response to our deci-
sion to scale back near-term exploration activities, they have been
written down by $1.6 million.
Burkina Faso Exploration Projects – The Goulagou/Rounga proj-
ect was acquired in 2005, and a total of $18.2 million in purchase
cost was allocated to these projects at that time. Since then we have
spent an additional $1.1 million on exploration at these two prop-
erties and the limited work to date has not resulted in a material
increase in the gold resources.
A reevaluation of the economics of the project at the end of 2008,
indicate that there is currently insufficient resources to proceed
with development of the project at this time. Based on our anal-
ysis, the project has been written off and an impairment charge
recorded in the consolidated statements of operations.
Ivory Coast Exploration Projects – We spent approximately $1.5
million on exploration efforts at the Afema project in the Ivory
Coast in the past four years. Exploration results failed to identify
resources that warranted further work and the project was im-
paired and written off in 2008.
2007 – Impairment charges in 2007 represent the write-off of ex-
ploration projects in Sierra Leone and disposal of equipment at
one of our mines.
66 | Gold e n St ar
26. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN 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) Consolidated Balance Sheets under U.S. GAAP
As of December 31,
2009
2008
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable
Inventories (Note d4)
Deposits
Other current assets
Total current assets
Restricted cash
Available-for-sale and long term investments
Deferred exploration and development costs (Note d1)
Property, plant and equipment (Note d2)
Intangible asset
Mining properties (Notes d2)
Future tax asset (Note d5)
Other assets (Note d3)
Total assets
LIABILITIES
Current liabilities
Long term debt (Note d7)
Asset retirement obligations
Future tax liability (Note d5)
Total liabilities
Commitments and contingencies
SHAREHOLDERS’ EQUITY
Share capital (Note d8)
Contributed surplus (Note d7)
Accumulated comprehensive income and other
Deficit
Total Golden Star Resources’ equity
Noncontrolling interest
Total Equity
$
154,088
$
$
$
7,021
52,844
4,774
1,415
220,142
3,804
181
—
231,141
9,480
255,503
—
2,457
722,708
74,936
160,172
30,031
11,688
276,827
690,056
14,767
1,340
(262,806)
443,357
2,524
445,881
$
$
Total liabilities and shareholders’ equity
$
722,708
$
33,558
4,306
49,134
3,875
1,100
91,973
4,249
29
—
270,814
—
291,823
—
4,456
663,344
90,322
131,876
30,036
31,959
284,193
615,097
14,205
1,228
(251,379)
379,151
—
379,151
663,344
2009 Annual Re p or t | 67
(b) Consolidated Statements of Operations under US GAAP
Net income/(loss) under Cdn GAAP
Deferred exploration expenditures expensed under US GAAP (Note
d1 and d2)
Write-off of deferred exploration properties (Note d1)
Debt retirement expense
Derivative gain on non-US$ warrants (Note d6)
Reverse depreciation on assets already written off for US GAAP
Fair value adjustment on debentures (Note d7)
Debt Accretion Reversal
Expense betterment spending (Note d4)
Other
Net income/(loss) under US GAAP before income tax
Income tax (expense)/recovery, as adjusted (Note d5)
Net income/(loss) under US GAAP
Net income/(loss) adjustments to noncontrolling interest
Net loss attributable to Golden Star Resources
Basic and diluted net loss per share under US GAAP
Consolidated Statement of Comprehensive Loss under US
GAAP
Net loss under US GAAP
Other comprehensive income – on marketable securities
Comprehensive loss under US GAAP
Comprehensive income/(loss) attributable to noncontrolling interest
Comprehensive loss attributable to Golden Star Resources
(c) Consolidated Statements of Cash Flows under US GAAP
Cash provided by (used in):
Operating activities (Note d9)
Investing activities (Note d9)
Financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalent beginning of period
Cash and cash equivalents end of period
For the years ended December 31,
2009
$
16,519
2008
restated (note3)
(119,303)
$
2007
restated (note3)
(35,290)
$
(3,457)
3,076
—
—
3,813
(31,181)
3,610
(3,571)
1,145
(10,046)
1,143
(8,903)
(2,524)
(11,427)
(0.048)
(8,903)
113
(8,790)
(2,524)
(11,314)
$
$
$
$
$
$
$
$
(13,279)
43,420
—
954
488
11,438
6,197
—
1,229
(68,856)
(348)
(69,204)
(4,513)
(73,717)
(0.313)
(69,204)
(4,737)
(73,941)
(4,513)
(78,454)
$
$
$
$
$
$
$
$
(11,661)
1,973
(4,918)
1,929
2,947
598
1,165
—
(6)
(43,263)
1,514
(41,749)
(10)
(41,759)
(0.182)
(41,749)
(1,070)
(42,819)
(10)
(42,829)
$
$
$
$
$
$
$
$
For the years ended December 31,
2009
2008
2007
$
96,940
$
16,764
$
(4,991)
(41,661)
65,251
120,530
33,558
(57,787)
(1,173)
(42,196)
75,754
$
154,088
$
33,558
$
(89,369)
143,006
48,646
27,108
75,754
(d) Notes:
(1) Under US GAAP, exploration, acquisition (except for prop-
erty purchase costs), and general and administrative costs
related to exploration projects are charged to expense as
incurred. Under Cdn GAAP, exploration, acquisition and
direct general and administrative costs related to explora-
tion 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. If
found impaired, the asset’s cost basis is reduced in accor-
dance with Cdn GAAP provisions. Amounts written off in
the current year under Cdn GAAP, which have previously
been expensed under US GAAP, result in an adjustment
when reconciling net income for the year.
(2) Under US GAAP, the initial purchase cost of mining prop-
erties is capitalized. Pre-acquisition costs and subsequent
development costs incurred, until a final feasibility study
is completed, are expensed in the period incurred. Under
Cdn GAAP, the purchase costs of new mining properties
as well as all development costs incurred after acquisition
are capitalized and subsequently reviewed each period
for impairment. If found impaired, the asset’s cost basis
is reduced in accordance with Cdn GAAP provisions.
Amounts written off in the current year under Cdn GAAP
which have previously been expensed under US GAAP
result in an adjustment when reconciling net income for
the year.
(3) Under US GAAP loan fees are capitalized as an asset and
amortized over the life of loan. This amortized amount is
netted against the loan liability for Cdn GAAP.
68 | Gold e n St ar
(4) Under Cdn GAAP, expenditures for betterment stripping
costs (i.e., the costs of removing overburden and waste ma-
terial to access mineral deposits) that can be shown to be
a betterment of the mineral property are capitalized and
subsequently amortized on a units-of-production basis
over the mineral reserves that directly benefit from the
specific waste striping activity. US GAAP has no provi-
sion of betterment stripping costs and as such, amounts
capitalized during 2009 for Cdn GAAP are reversed and
expensed for US GAAP. This adjustment also increased the
operating costs used for the valuation of metals inventory
for US GAAP, resulting in a higher value for metals inven-
tory under US GAAP.
(5) While tax accounting rules are essentially the same under
both US and Cdn GAAP, tax account differences can arise
from differing treatment of various assets and liabilities.
For example, most exploration expenditures and certain
mine development cost are capitalized under Cdn GAAP
and expensed under US GAAP, as explained in notes 1 and
2 above. An analysis of these differences indicates that there
are larger potential tax benefits under US GAAP than un-
der Cdn GAAP in the GSBPL and GSWL tax jurisdiction.
On January 1, 2007, we adopted the provisions of FIN 48
(as codified in ASC topic 740 “Income Taxes”) (“ASC 740”)
for US GAAP purposes. ASC 740 prescribes a recognition
threshold and measurement attribute for the financial state-
ment recognition and measurement of a tax position taken
or expected to be taken in a tax return. ASC 740 requires
that we recognize in our consolidated financial statements,
only those tax positions that are “more-likely-than-not” of
being sustained as of the adoption date, based on the techni-
cal merits of the position. As a result of the implementation
of ASC 740, we performed a comprehensive review of our
material tax positions in accordance with recognition and
measurement standards established by ASC 740. Based on
this review the provisions of ASC 740 had no effect on our
financial position, cash flows or results of operations at either
December 31, 2008 or December 31, 2009.
We and our subsidiaries are subject to the following mate-
rial taxing jurisdictions: Ghana, Canada and Burkina Faso.
The tax years that remain open to examination by the
Ghana Internal Revenue Service are years 2008 through
2009. The tax years that remain open to examination by
Revenue Canada are years 2003 through 2009. All tax
years remain open to examination in Burkina Faso. Our
policy is to recognize interest and penalties related to un-
certain tax benefits in general and administrative expense.
In the current year the company has accrued immaterial
penalties related to ongoing CRA Audits in Canada.
(6) Under US GAAP, the fair value of warrants denominated
in currencies other than the company’s functional currency
are treated as a derivative liability. The derivative liability
of such warrants is marked to market at the end of each
period and the change in fair value is recorded in the state-
ment of operations. Under Cdn GAAP the issue-date fair
values of all warrants is treated as a component of share-
holders’ equity and are recorded as contributed surplus and
are not subsequently marked to their fair value.
(7) Under Cdn GAAP, the fair value of the conversion fea-
ture of convertible debt is classified as equity and the
balance is classified as a liability. The liability portion
is accreted each period in amounts which will increase
the liability to its full face amount of the convert-
ible instrument as of the maturity date. Accretion is
recorded as interest expense. For US GAAP purposes,
the entire amount of convertible debt is classified as a
liability and recorded at fair value at the end of each
period, with the change in fair value recorded in the
statement of operations in accordance with FAS 155
(as codified in ASC topic 820 “Fair Value Measure-
ments and Disclosures”).
(8) Numerous transactions since the Company’s organiza-
tion in 1992 have contributed to the difference in share
capital versus the Cdn GAAP balance, including: (i)
under US GAAP, compensation expense was recorded
for the difference between quoted market prices and the
strike price of options granted to employees and direc-
tors under stock option plans while under Cdn GAAP,
recognition of compensation expense was not required;
(ii)in May 1992 our accumulated deficit was eliminated
through an amalgamation (defined as a quasi-reorgani-
zation under US GAAP)—under US GAAP the cu-
mulative deficit was greater than the deficit under Cdn
GAAP due to the past write-offs of certain deferred ex-
ploration costs; and (iii)gains recognized in Cdn GAAP
upon issuances of subsidiaries’ shares are not allowed
under US GAAP.
(9) Under US GAAP, exploration expenditures and better-
ment stripping costs are treated as operating cash flows.
Cdn GAAP treats certain exploration expenditures as in-
vesting cash flows (see note 1). This creates differences in
the statement of cash flows.
(10)
Impact of recently issued Accounting Standards
Recently Adopted Standards
In September 2006, the Financial Accounting Standards Board
(“FASB”) issued a statement requiring fair value measurements,
which defines fair value, establishes a framework for measuring fair
value in accordance with generally accepted accounting principles,
and expands disclosures about fair value measurements. This new
guidance was effective for us on January 1, 2008 for all financial
assets and liabilities and for nonfinancial assets and liabilities rec-
ognized or disclosed at fair value in our Consolidated Financial
Statements on a recurring basis (at least annually). For all other
nonfinancial assets and liabilities, this statement was effective for
us on January 1, 2009. Also on April 9, 2009, FASB issued further
guidance on determining fair value when the volume and level of
activity for an asset or liability have significantly decreased and also
guidance on identifying transactions that are not orderly. Adoption
of this new guidance did not have a material impact.
In December 2007, FASB issued new standards for Non-controlling
Interests in Consolidated Financial Statements”. This standard
establishes accounting and reporting standards for the non-
controlling interest in a subsidiary and for the deconsolidation of
a subsidiary. It clarifies that a non-controlling interest in a sub-
sidiary (minority interest) is an ownership interest in the consoli-
dated entity that should be reported as equity in the Consolidated
2009 Annual Re p or t | 69
Financial Statements and separate from the parent company’s
equity. Among other requirements, this statement requires con-
solidated net income to be reported at amounts that include the
amounts attributable to both the parent and the non-controlling
interest. It also requires disclosure, on the face of the Consolidated
Statement of Operations, of the amounts of consolidated net
income attributable to the parent and to the non-controlling inter-
est. This standard became effective for us on January 1, 2009. The
consolidated net loss attributable to Golden Star Resources would
have been $8.903 if the new standard had not been applied.
In March 2008, the FASB issued new standards which requires
companies with derivative instruments to disclose information
that should enable financial statement users to understand how
and why a company uses derivative instruments, how derivative
instruments and related hedged Items are accounted for and how
derivative instruments and related hedged Items affect a company’s
financial position, financial performance and cash flows. We ad-
opted these new standards in the first quarter of fiscal 2009. Since
the new standards only required additional disclosure (see Note
13), the adoption did not impact our consolidated financial posi-
tion, results of operations or cash flows.
In April 2008, the FASB issued new standards which provided
guidance on how to determine the useful life of intangible assets
by amending the factors an entity should consider in developing
renewal or extension assumptions used in determining the use-
ful life of recognized intangible assets. This new guidance applies
prospectively to intangible assets that are acquired individually or
with a group of other assets in business combinations and asset
acquisitions. These standards are effective for financial statements
issued for fiscal years beginning after December 15, 2008 and was
effective for us beginning in the first quarter of 2009. There was no
impact to our current consolidated financial statements.
In May 2008, FASB issued guidance for convertible debt instru-
ments that, by their stated terms, may be settled in cash (or other
assets) upon conversion, including partial cash settlement, un-
less the embedded conversion option is required to be separately
accounted for as a derivative. The company elected to report its
convertible debt at fair value and thus this new pronouncement
does not have an impact on the company’s financials.
In September 2008, the FASB issued additional guidance which
requires additional disclosures by sellers of credit derivatives,
including credit derivatives embedded in hybrid instruments. This
new guidance also amends previous guidance related to account-
ing for guarantees to require additional disclosure about the cur-
rent status of the payment/performance risk of a guarantee. These
new provisions are effective for reporting periods ending after
November 15, 2008. These provisions further clarify the effective
date of new disclosure requirements regarding derivative instru-
ments and hedging activities. We adopted these disclosure require-
ments in the first quarter of 2009. Since the new guidance only
required additional disclosures, the adoption did not impact our
consolidated financial position, results of operations or cash flows.
In April 2009, the FASB issued new standards for the rec-
ognition and measurement of other-than-temporary impair-
ments for debt securities which replaced the pre-existing “in-
tent and ability” indicator. These new standards specify that
if the fair value of a debt security is less than its amortized
cost basis, an other-than-temporary impairment is triggered
in circumstances where (1) an entity has an intent to sell the
security, (2) it is more likely than not that the entity will be
required to sell the security before recovery of its amortized
cost basis, or (3) the entity does not expect to recover the
entire amortized cost basis of the security (that is, a credit
loss exists). Other-than-temporary impairments are separated
into amounts representing credit losses which are recognized
in earnings and amounts related to all other factors which are
recognized in other comprehensive income (loss). We adopt-
ed these standards in the third quarter of fiscal 2009 and they
did not have a material effect on our consolidated financial
position, results of operations or cash flows.
In May 2009, the FASB issued new standards for subsequent events,
which establishes general standards of accounting for and disclosure
of events that occur after the balance sheet date but before financial
statements are issued or are available to be issued. The new standards
are effective for interim and annual reporting periods ending after
June 15, 2009. We adopted the new standards during the third
quarter of fiscal 2009 and, as the pronouncement only requires
additional disclosures, the adoption did not have an impact on our
consolidated financial position, results of operations or cash flows.
We have evaluated subsequent events through February 24, 2010,
the date that these financial statements were issued.
In June 2009, the FASB issued the FASB Accounting Standards
Codification (the “Codification”) for financial statements issued
for interim and annual periods ending after September 15, 2009,
which was effective for us beginning in the fourth quarter of fiscal
2009. The Codification became the single authoritative source for
GAAP. Accordingly, previous references to GAAP accounting stan-
dards are no longer used in our disclosures, including these Notes
to the Consolidated Financial Statements. The codification in not
expected to affect our consolidated financial position, cash flows,
or results of operations.
In June 2009, the FASB issued accounting guidance regard-
ing the accounting for transfers of financial assets that is
designed to improve the relevance, representational faithful-
ness, and comparability of the information that a reporting
entity provides in its financial statements about a transfer of
financial assets; the effects of a transfer on its financial posi-
tion, financial performance, and cash flows; and a transferor’s
continuing involvement, if any, in transferred financial assets.
The guidance enhances the information provided to financial
statement users to provide greater transparency about transfers
of financial assets and a transferor’s continuing involvement, if
any, with transferred financial assets. The guidance requires en-
hanced disclosures about the risks that a transferor continues to
be exposed to because of its continuing involvement in trans-
ferred financial assets. This guidance is effective for an entity’s
first annual reporting period after November 15, 2009 and is
not eligible for early adoption. This codification is not expected
to materially affect our consolidated financial position, cash
flows, or results of operations.
In August 2009, the FASB issued changes to fair value account-
ing for liabilities. These changes clarify existing guidance that in
circumstances in which a quoted price in an active market for the
identical liability is not available, an entity is required to measure
fair value using either a valuation technique that uses a quoted price
of either a similar liability or a quoted price of an identical or simi-
lar liability when traded as an asset, or another valuation technique
70 | Gold e n St ar
that is consistent with the principles of fair value measurements,
such as an income approach (e.g., present value technique). This
guidance also states that both a quoted price in an active market for
the identical liability and a quoted price for the identical liability
when traded as an asset in an active market when no adjustments
to the quoted price of the asset are required are Level 1 fair value
measurements. These changes became effective for the company
on October 1, 2009. The adoption of this new guidance did not
have an impact on our Financial Statements.
Recently Issued Standards
In June 2009, the FASB issued amended standards for determin-
ing whether to consolidate a variable interest entity. These new
standards amend the evaluation criteria to identify the primary
beneficiary of a variable interest entity and requires ongoing
reassessment of whether an enterprise is the primary beneficiary
of the variable interest entity. The provisions of the new standards
are effective for annual reporting periods beginning after Novem-
ber 15, 2009 and interim periods within those fiscal years. These
standards will be effective for us beginning in the first quarter of
fiscal 2010. The adoption of the new standards will not have an
impact on our consolidated financial position, results of opera-
tions and cash flows.
In October 2009, FASB issued new revenue recognition stan-
dards for arrangements with multiple deliverables, where certain
of those deliverables are non-software related. The new standards
permit entities to initially use management’s best estimate of selling
price to value individual deliverables when those deliverables do
not have VSOE of fair value or when third-party evidence is not
available. Additionally, these new standards modify the manner in
which the transaction consideration is allocated across the sepa-
rately identified deliverables by no longer permitting the residual
method of allocating arrangement consideration. These new stan-
dards are effective for annual periods ending after June 15, 2010
and are effective for us beginning in the first quarter of fiscal 2011,
however early adoption is permitted. We are currently evaluating
the impact of adopting these new standards on our consolidated
financial position, results of operations and cash flows.
In January 2010, the FASB issued Accounting Standards Update
No. 2010-06, “Fair Value Measurements Disclosures,” which amends
Subtopic 820-10 of the FASB Accounting Standards Codifica-
tion to require new disclosures for fair value measurements and
provides clarification for existing disclosures requirements. More
specifically, this update will require (a) an entity to disclose sepa-
rately the amounts of significant transfers in and out of Levels 1
and 2 fair value measurements and to describe the reasons for the
transfers; and (b)information about purchases, sales, issuances and
settlements to be presented separately (i.e. present the activity on a
gross basis rather than net) in the reconciliation for fair value mea-
surements using significant unobservable inputs (Level 3 inputs).
This update clarifies existing disclosure requirements for the level
of disaggregation used for classes of assets and liabilities measured
at fair value and requires disclosures about the valuation techniques
and inputs used to measure fair value for both recurring and non-
recurring fair value measurements using Level 2 and Level 3 in-
puts. The Company does not anticipate that the adoption of this
statement will materially expand its consolidated financial state-
ment footnote disclosures. The following is the disclosures:
The three levels of the fair value hierarchy are:
• Level 1 – Unadjusted quoted prices in active markets for
identical assets or liabilities;
• Level 2 – Inputs other than quoted prices that are observable
for the asset or liability either directly or indirectly; and
• Level 3 – Inputs that are not based on observable market data.
The following table illustrates the classification of the Company’s financial instruments within the fair value hierarchy as at December
31, 20091 :
Available for sale investments
Warrants
Convertible senior unsecured debentures 1
Available for sale investments
Warrants
Financial assets at fair value as at December 31, 2009
Level 1
Level 2
Level 3
$
$
181
—
181
$
$
—
158
158
$
$
—
—
—
$
$
Financial liabilities at fair value as at December 31, 2009
Total
181
158
339
Level 1
Level 2
$
—
—
—
—
Level 3
$ 144,651
Total
$ 144,651
144,651
144,651
Financial assets at fair value as at December 31, 2008
Level 1
Level 3
Level 2
29
—
29
$
$
—
11
11
$
$
—
—
—
$
$
Financial liabilities at fair value as at December 31, 2008
Level 1
Level 2
Level 3
Total
29
11
40
Total
1,690
$
$
$
Gold Forward Contracts
Convertible senior unsecured debentures 1
$
1,690
$
—
1,690
—
—
—
$
—
$
113,416
113,416
113,416
115,106
1 The convertible senior unsecured debenture is recorded at fair market value for US GAAP purposes only in note 26. These debentures are valued based
on discounted cash flows for the debt portion and based on a black scholes model for the equity portion. Inputs used to determine these values were;
discount rate 8.87%, Risk Free interest rate of 1.92%, volatility of 87.5%, and a remaining life of 2.9 years.
2009 Annual Re p or t | 71
The following table reconciles the Company’s level 3 fair value measurements from December 31, 2008 to December 31, 2009:
Balance of December 31, 2008
(Gain) loss included in net income
Balance at December 31, 2009
27. QUARTERLY FINANCIAL DATA (UNAUDITED)
Fair value measurements using Level 3 inputs
Convertible senior
unsecured debentures
$ 113,416
31,235
$ 144,651
Total
$ 113,416
31,235
$ 144,651
($ millions, except per share data)
Revenues
Dec. 31
Mar. 31
$ 117.4 $ 103.8 $ 91.9 $ 87.6 $ 69.7 $ 64.1 $ 70.4 $ 53.2
Mar. 31
Dec. 31
2009 Quarters ended
Jun. 30
Sept. 30
2008 Quarters ended
Jun. 30
Sept. 30
Net income/(loss)
19.5
(2.3)
0.4
(1.1)
(86.9)
(22.4)
(6.9)
(3.9)
Net earnings/(loss) per share
Basic
Diluted
$ 0.083 $ (0.010)
$ 0.002 $ (0.005)
$ (0.368)
$ (0.095)
$ (0.095)
$ (0.017)
$ 0.082 $ (0.010)
$ 0.002 $ (0.005)
$ (0.368)
$ (0.095)
$ (0.029)
$ (0.017)
Item 9. CHANGES IN AND
DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements with PricewaterhouseCoopers
LLP, our auditors, regarding any matter of accounting principles or
practices or financial statement disclosure.
Item 9A. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures:
As of December 31, 2009, an evaluation was carried out under the
supervision and with the participation of the Company’s manage-
ment, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of Gold-
en Star’s disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934). Based on the evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that as of December 31,
2009, disclosure controls and procedures were effective.
Management’s Report on Consolidated Financial Statements
Management has concluded that the consolidated financial state-
ments present fairly, in all material respects, the financial position
of the Company as of December 31, 2009 and 2008 and the
results of its operations and its cash flows for each of the three
years in the periods ended December 31, 2009 in accordance with
Canadian generally accepted accounting principles. The con-
solidated financial statements have been audited by Pricewater-
houseCoopers LLP as stated in their report which expressed an
unqualified opinion thereon.
Management’s Annual Report on Internal Control Over
Financial Reporting
Management of Golden Star is responsible for establishing and
maintaining adequate internal control over financial reporting
as defined in Rule 13a-15(f) of the Exchange Act. Golden Star’s
internal control over financial reporting is a process designed
under the supervision of Golden Star’s Chief Executive Officer and
Chief Financial Officer to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of the
Company’s financial statements for external reporting purposes
in accordance with Canadian GAAP. As of December 31, 2009,
management conducted an assessment of the effectiveness of the
Company’s internal control over financial reporting based on the
criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on its assessment using
those criteria, management concluded that Golden Star main-
tained effective internal control over financial reporting as of De-
cember 31, 2009. The effectiveness of Golden Star’s internal con-
trol over financial reporting at December 31, 2009 has been audit-
ed by PricewaterhouseCoopers LLP, as stated in their report, which
appears herein.
Changes in Internal Control Over Financial Reporting
There was no change in Golden Star’s internal control over finan-
cial reporting identified in connection with the evaluation required
by paragraph (d) of Rule 13a-15 under the Exchange Act that
occurred during the Company’s last fiscal quarter of 2009 that
has materially affected or is reasonably likely to materially affect
Golden Star’s internal control over financial reporting.
Item 9B. OTHER INFORMATION
None.
72 | Gold e n St ar
PART III
ITEMS 10, 11, 12, 13 AND 14
In accordance with General Instruction G(3), the information
required by Part III is hereby incorporated by reference from our
proxy circular to be filed pursuant to Regulation 14A not later
than 120 days after the end of the fiscal year covered by this report.
PART IV
ITEM 15. ExHIBITS, FINANCIAL
STATEMENT SCHEDULES
1. 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, 2009 and
2008
• Consolidated Statements of Operations for the years ended
December 31, 2009, 2008 and 2007
• Consolidated Statements of Changes in Shareholders’ Equity
for the years ended December 31, 2009, 2008 and 2007
• Consolidated Statements of Cash Flows for the years ended
December 31, 2009, 2008 and 2007
• Notes to the 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.
3. EXHIBITS
3(i)
Incorporating Documents of the Company, including:
Articles of Arrangement dated May 14, 1992, with Plan
of Arrangement attached, with Certificate of Amend-
ment with respect thereto dated May 15, 1992; Certifi-
cate of Amendment dated May 15, 1992, with Articles of
Amendment; Certificate of Amendment dated March 26,
1993, with Articles of Amendment; Articles of Arrange-
ment dated March 7, 1995, with Plan of Arrangement
attached, with Certificate of Amendment with respect
thereto dated March 14, 1995; Certificate of Amend-
ment 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); Articles of Amendment dated May 6, 2005
(incorporated by reference to Exhibit 3(i) of the Compa-
ny’s Form 10-K for the year ended December 31, 2006)
3(ii) 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 By-
law 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); Amendment No. 1 to Bylaw
Number One, effective March 9, 2006 (incorporated by
reference to Exhibit 3(ii) of the Company’s Registration
Statement on Form S-3 (File No. 333-148296) filed on
December 21, 2007)
4.1
4.2
4.3
4.4
4.5
Form of Specimen Certificate for Common Shares (incor-
porated by reference to Exhibit 4.1 to the Company’s Reg-
istration Statement on Form S-3/A (File No. 333-91666)
filed on July 15, 2002)
Amended and Restated Shareholder’s Rights Plan dated as
of May 9, 2007 between the Company and CIBC Mellon
Trust Company, as rights agent (incorporated by reference
to Exhibit 10.2 to the Company’s Form 10-Q for the quar-
ter ended June 30, 2007)
Indenture dated November 8, 2007 between the Com-
pany and The Bank of New York for the Company’s 4.0%
Convertible Senior Unsecured Debentures due November
30, 2012 (incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K filed November 13, 2007)
Form of Canadian Global Debenture dated November 8,
2007 for the Company’s 4.0% Convertible (incorporated
by reference to Exhibit 4.3 to the Company’s Form 8-K
filed November 13, 2007)
Form of US Global Debenture dated November 8, 2007
for the Company’s 4.0% Convertible Senior Unsecured
Debentures (incorporated by reference to Exhibit 4.3 to
the Company’s Form 8-K filed November 13, 2007)
4.6 Registration Rights Agreement dated November 8, 2007
between the Company and BMO Nesbitt Burns Inc.
for the Company’s 4.0% Convertible Senior Unsecured
Debentures (incorporated by reference to Exhibit 4.4 to
the Company’s Form 8-K filed November 13, 2007)
10.1 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)
10.2 Second Amended and Restated 1997 Stock Option Plan,
effective as of April 8, 2004 (incorporated by reference to
Exhibit 10.2 of the Company’s Form 10-K, for the year
ended December 31, 2008)
10.3 Form of Stock Option Agreement (Employee) (incorpo-
rated by reference to Exhibit 10.3 to the Company’s Form
10-K, for the year ended December 31, 2007)
10.4 Form of Stock Option Agreement (Director) (incorpo-
rated by reference to Exhibit 10.4 to the Company’s Form
10-K for the year ended December 31, 2007)
10.5 Form of Indemnification Agreement between the Compa-
ny and its officers and directors (incorporated by reference
2009 Annual Re p or t | 73
to Exhibit 10.3 of the Company’s Form 8-K filed on Janu-
ary 23, 2003)
10.6 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)
10.7 Amended and Restated Employment Agreement dated
effective April 1, 2008 between Golden Star Management
Services Company and Mr. Thomas G. Mair (incorpo-
rated by reference to Exhibit 10.1 to the Company’s Form
10-Q for the quarter ended September 30, 2008)
10.8 Employment Agreement dated as of August 20, 2008 by
and between Golden Star Management Services Company
and John A. Labate (incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K filed August 26, 2008)
10.9 Amended and Restated Employment Agreement dated
effective April 1, 2008 between Golden Star Management
Services Company and Bruce Higson-Smith (incorporat-
ed by reference to Exhibit 10.2 to the Company’s Form
10-Q for the quarter ended September 30, 2008)
10.10 Amended and Restated Employment Agreement dated
effective April 1, 2008 between Golden Star Management
Services Company and Roger Palmer (incorporated by ref-
erence to Exhibit 10.1 to the Company’s Form 8-K filed
October 10, 2008)
10.11 Amended and Restated Employment Agreement dated
effective April 1, 2008 between Golden Star Resources
Ltd. and Mitch Wasel (incorporated by reference to Ex-
hibit 10.2 to the Company’s Form 8-K filed October 10,
2008)
10.12 Employment Agreement dated as of April 2, 2008 by and
between Golden Star Management Services Company
and D. Scott Barr (incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K filed April 7, 2008)
10.13 Agreements between the Company and its outside direc-
tors granting them options to purchase Guyanor Class “B”
common shares, dated August 16, 2001 (incorporated by
reference to Exhibit 10.9 to the Company’s Form 10-K for
the year ended December 31, 2002)
10.14 Mining lease, dated August 16, 1988, between the Gov-
ernment of the Republic of Ghana and Canadian Bogosu
Resources Limited, relating to the Bogoso property (incor-
porated by reference to Exhibit 10.14 to the Company’s
Form 10-K for the year ended December 31, 2006)
10.15 Mining lease, dated August 21, 1987, between the Gov-
ernment of the Republic of Ghana and Canadian Bogosu
Resources Limited, relating to the Bogoso property (incor-
porated by reference to Exhibit 10.15 to the Company’s
Form 10-K for the year ended December 31, 2006)
10.16 Mining lease, dated June 29, 2001, between the Govern-
ment 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)
10.17 Mining lease, dated September 17, 1992 between the Gov-
ernment of the Republic of Ghana and Satellite Goldfields
Limited, with letter dated April 25, 2002 from the Minis-
try of Mines consenting to assignment to Wexford Gold-
fields Ltd., relating to the Wassa property (incorporated by
reference to Exhibit 10.26 to the Company’s Form 10-K
for the year ended December 31, 2004)
10.18 Mining lease dated June 29, 2001, between the Govern-
ment of the Republic of Ghana and Prestea Gold Resources,
relating to the Prestea Underground property (incorporated
by reference to Exhibit 10.27 to the Company’s Form
10-K for the year ended December 31, 2004)
10.19 Mining lease, dated January 11, 2008, between the Gov-
ernment of the Republic of Ghana and First Canadian
Goldfields Limited relating to the Hwini Butre property
(incorporated by reference to Exhibit 10.20 to the Com-
pany’s Form 10-K for the year ended December 31, 2008)
10.20 Mining lease, dated September 27, 2007, between the
Government of the Republic of Ghana and First Canadian
Goldfields Limited relating to the Benso property (incor-
porated by reference to Exhibit 10.21 to the Company’s
Form 10-K for the year ended December 31, 2009)
10.21 Joint Operating Agreement, dated January 31, 2002, between
Bogoso Gold Limited and Prestea Gold Resources Limited
(incorporated by reference to Exhibit 10.25 to the Company’s
Form 10-K for the year ended December 31, 2002)
10.22 Memorandum of Agreement, dated March 14, 2002, among
Prestea Gold Resources, Bogoso Gold Limited and others
(incorporated by reference to Exhibit 10.26 to the Company’s
Form 10-K for the year ended December 31, 2002)
10.23 License Agreement, dated June 28, 2004 between Biomin
Technologies S.A. and Bogoso Gold Limited (incorporat-
ed by reference to Exhibit 10.24 to the Company’s Form
10-K for the year ended December 31, 2005)
10.24 EPCM Services Agreement, dated April 16, 2006, between
Bogoso Gold Limited, GRD Minproc (Pty) Limited and
GRD Minproc Limited (incorporated by reference to Ex-
hibit 10.1 to the Company’s Form 10-Q for the quarter
ended June 30, 2006)
10.25 Medium Term Loan Agreement, dated October 11, 2006
between Ghana Limited, Cal Bank Ghana Limited and
the Company (incorporated by reference to Exhibit 10.3
to the Company’s Form 10-Q for the quarter ended Sep-
tember 30, 2006)
10.26 Management Services Agreement dated July 1, 2007
between the Company and Golden Star Management
Services Company (incorporated by reference to Exhibit
10.30 to the Company’s Form 10-K for the year ended
December 31, 2007)
10.27 Letter Agreement dated October 10, 2007 between the
Company and Riverstone Resources Inc. for the purchase
and sale of the Goulagou/Rounga Properties and Yantenga
Holdings (incorporated by reference to Exhibit 10.4 to the
Company’s Form 10-Q for the quarter ended September
30, 2007)
74 | Gold e n St ar
10.28 Facility Agreement, dated May 1, 2009, between the Com-
pany and Standard Chartered Bank as Arranger, Original
Lender, Agent, Security Trustee and Account Bank; with
St. Jude Resources Ltd., First Canadian Goldfields Limit-
ed, Fairstar Ghana Limited, Golden Star (Bogoso/Prestea)
Limited and Golden Star (Wassa) Limited as guarantors
(incorporated by reference to Exhibit 10.1 to the Com-
pany’s Form 8-K filed on May 5, 2009)
14
Code of Ethics for Directors, Senior Executive and Finan-
cial Officers and Other Executive Officers (incorporated
by reference to Exhibit 14 to the Company’s Form 10-K
for the year ended December 31, 2006)
21
Subsidiaries of the Company (incorporated by reference
to Exhibit 21 to the Company’s Form 10-K for the year
ended December 31, 2007)
23
Consent of PricewaterhouseCoopers LLP
31.1 Certification of Principal Executive Officer, as adopted pur-
suant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Financial Officer, as adopted pur-
suant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer pursuant to 18
U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
32.2 Certification of Principal Financial Officer pursuant to
18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act
of 2002)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Golden Star Resources Ltd.
Registrant
By:
Date:
/s/ Thomas G. Mair
Thomas G. Mair
President and CEO
February 24, 2010
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:
Name:
Title:
Date:
By:
Name:
Title:
Date:
/s/ Ian MacGregor
Ian MacGregor
Director
February 24, 2010
/s/ James E. Askew
James E. Askew
Director
February 24, 2010
/s/ Thomas G. Mair
By:
Name: Thomas G. Mair
Title:
President and Chief Executive Officer
(principal executive officer and director)
February 24, 2010
Date:
By:
Name:
Title:
Date:
By:
Name:
Title:
Date:
/s/ Robert E. Doyle
Robert E. Doyle
Director
February 24, 2010
/s/ John A. Labate
John A. Labate
Senior Vice President and Chief Financial Officer
(principal financial and accounting officer)
February 24, 2010
By:
Name:
Title:
Date:
By:
Name:
Title:
Date:
By:
Name:
Title:
Date:
By:
Name:
Title:
Date:
/s/ David K. Fagin
David K. Fagin
Director
February 24, 2010
/s/ Lars-Eric Johansson
Lars-Eric Johansson
Director
February 24, 2010
/s/ Michael Martineau
Michael Martineau
Director
February 24, 2010
/s/ Christopher M.T. Thompson
Christopher M.T. Thompson
Director
February 24, 2010
2009 Annual Re p or t | 75
EXHIBIT INDEX
3(i)
Incorporating Documents of the Company, including:
Articles of Arrangement dated May 14, 1992, with Plan
of Arrangement attached, with Certificate of Amend-
ment with respect thereto dated May 15, 1992; Certifi-
cate of Amendment dated May 15, 1992, with Articles of
Amendment; Certificate of Amendment dated March 26,
1993, with Articles of Amendment; Articles of Arrange-
ment dated March 7, 1995, with Plan of Arrangement
attached, with Certificate of Amendment with respect
thereto dated March 14, 1995; Certificate of Amend-
ment 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); Articles of Amendment dated May 6, 2005 (in-
corporated by reference to Exhibit 3(i) of the Company’s
Form 10-K for the year ended December 31, 2006)
3(ii) 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 By-
law 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); Amendment No. 1 to Bylaw
Number One, effective March 9, 2006 (incorporated by
reference to Exhibit 3(ii) of the Company’s Registration
Statement on Form S-3 (File No. 333-148296) filed on
December 21, 2007)
4.1
4.2
4.3
4.4
4.5
Form of Specimen Certificate for Common Shares (incor-
porated by reference to Exhibit 4.1 to the Company’s Reg-
istration Statement on Form S-3/A (File No. 333-91666)
filed on July 15, 2002)
Amended and Restated Shareholder’s Rights Plan dated as
of May 9, 2007 between the Company and CIBC Mellon
Trust Company, as rights agent (incorporated by reference
to Exhibit 10.2 to the Company’s Form 10-Q for the quar-
ter ended June 30, 2007)
Indenture dated November 8, 2007 between the Com-
pany and The Bank of New York for the Company’s 4.0%
Convertible Senior Unsecured Debentures due November
30, 2012 (incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K filed November 13, 2007)
Form of Canadian Global Debenture dated November 8,
2007 for the Company’s 4.0% Convertible (incorporated
by reference to Exhibit 4.3 to the Company’s Form 8-K
filed November 13, 2007)
Form of US Global Debenture dated November 8, 2007
for the Company’s 4.0% Convertible Senior Unsecured
Debentures (incorporated by reference to Exhibit 4.3 to
the Company’s Form 8-K filed November 13, 2007)
4.6 Registration Rights Agreement dated November 8, 2007
between the Company and BMO Nesbitt Burns Inc. for
the Company’s 4.0% Convertible Senior Unsecured De-
bentures (incorporated by reference to Exhibit 4.4 to the
Company’s Form 8-K filed November 13, 2007)
76 | Gold e n St ar
10.1 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)
10.2 Second Amended and Restated 1997 Stock Option Plan,
effective as of April 8, 2004 (incorporated by reference to
Exhibit 10.2 of the Company’s Form 10-K, for the year
ended December 31, 2008)
10.3 Form of Stock Option Agreement (Employee) (incorpo-
rated by reference to Exhibit 10.3 to the Company’s Form
10-K, for the year ended December 31, 2007)
10.4 Form of Stock Option Agreement (Director) (incorpo-
rated by reference to Exhibit 10.4 to the Company’s Form
10-K for the year ended December 31, 2007)
10.5 Form of Indemnification Agreement between the Com-
pany and its officers and directors (incorporated by refer-
ence to Exhibit 10.3 of the Company’s Form 8-K filed on
January 23, 2003)
10.6 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 Decem-
ber 31, 2000)
10.7 Amended and Restated Employment Agreement dated
effective April 1, 2008 between Golden Star Management
Services Company and Mr. Thomas G. Mair (incorpo-
rated by reference to Exhibit 10.1 to the Company’s Form
10-Q for the quarter ended September 30, 2008)
10.8 Employment Agreement dated as of August 20, 2008 by
and between Golden Star Management Services Company
and John A. Labate (incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K filed August 26, 2008)
10.9 Amended and Restated Employment Agreement dated
effective April 1, 2008 between Golden Star Management
Services Company and Bruce Higson-Smith (incorporat-
ed by reference to Exhibit 10.2 to the Company’s Form
10-Q for the quarter ended September 30, 2008)
10.10 Amended and Restated Employment Agreement dated effec-
tive April 1, 2008 between Golden Star Management Services
Company and Roger Palmer (incorporated by reference to Ex-
hibit 10.1 to the Company’s Form 8-K filed October 10, 2008)
10.11 Amended and Restated Employment Agreement dated
effective April 1, 2008 between Golden Star Resources
Ltd. and Mitch Wasel (incorporated by reference to Ex-
hibit 10.2 to the Company’s Form 8-K filed October 10,
2008)
10.12 Employment Agreement dated as of April 2, 2008 by and
between Golden Star Management Services Company
and D. Scott Barr (incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K filed April 7, 2008)
10.13 Agreements between the Company and its outside direc-
tors granting them options to purchase Guyanor Class “B”
common shares, dated August 16, 2001 (incorporated by
reference to Exhibit 10.9 to the Company’s Form 10-K for
the year ended December 31, 2002)
10.14 Mining lease, dated August 16, 1988, between the Gov-
ernment of the Republic of Ghana and Canadian Bogosu
Resources Limited, relating to the Bogoso property (incor-
porated by reference to Exhibit 10.14 to the Company’s
Form 10-K for the year ended December 31, 2006)
10.25 Medium Term Loan Agreement, dated October 11, 2006
between Ghana Limited, Cal Bank Ghana Limited and
the Company (incorporated by reference to Exhibit 10.3
to the Company’s Form 10-Q for the quarter ended Sep-
tember 30, 2006)
10.15 Mining lease, dated August 21, 1987, between the Gov-
ernment of the Republic of Ghana and Canadian Bogosu
Resources Limited, relating to the Bogoso property (incor-
porated by reference to Exhibit 10.15 to the Company’s
Form 10-K for the year ended December 31, 2006)
10.26 Management Services Agreement dated July 1, 2007
between the Company and Golden Star Management
Services Company (incorporated by reference to Exhibit
10.30 to the Company’s Form 10-K for the year ended
December 31, 2007)
10.27 Letter Agreement dated October 10, 2007 between the
Company and Riverstone Resources Inc. for the purchase
and sale of the Goulagou/Rounga Properties and Yantenga
Holdings (incorporated by reference to Exhibit 10.4 to the
Company’s Form 10-Q for the quarter ended September
30, 2007)
10.28 Facility Agreement, dated May 1, 2009, between the Com-
pany and Standard Chartered Bank as Arranger, Original
Lender, Agent, Security Trustee and Account Bank; with
St. Jude Resources Ltd., First Canadian Goldfields Limit-
ed, Fairstar Ghana Limited, Golden Star (Bogoso/Prestea)
Limited and Golden Star (Wassa) Limited as guarantors
(incorporated by reference to Exhibit 10.1 to the Com-
pany’s Form 8-K filed on May 5, 2009)
14
21
Code of Ethics for Directors, Senior Executive and Finan-
cial Officers and Other Executive Officers (incorporated
by reference to Exhibit 14 to the Company’s Form 10-K
for the year ended December 31, 2006)
Subsidiaries of the Company (incorporated by reference
to Exhibit 21 to the Company’s Form 10-K for the year
ended December 31, 2007)
23
Consent of PricewaterhouseCoopers LLP
31.1 Certification of Principal Executive Officer, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
31.2 Certification of Principal Financial Officer, as adopted pur-
suant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer pursuant to
18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act
of 2002)
32.2 Certification of Principal Financial Officer pursuant to
18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act
of 2002)
10.16 Mining lease, dated June 29, 2001, between the Govern-
ment 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)
10.17 Mining lease, dated September 17, 1992 between the Gov-
ernment of the Republic of Ghana and Satellite Goldfields
Limited, with letter dated April 25, 2002 from the Minis-
try of Mines consenting to assignment to Wexford Gold-
fields Ltd., relating to the Wassa property (incorporated by
reference to Exhibit 10.26 to the Company’s Form 10-K
for the year ended December 31, 2004)
10.18 Mining lease dated June 29, 2001, between the Govern-
ment of the Republic of Ghana and Prestea Gold Resourc-
es, relating to the Prestea Underground property (incor-
porated by reference to Exhibit 10.27 to the Company’s
Form 10-K for the year ended December 31, 2004)
10.19 Mining lease, dated January 11, 2008, between the Gov-
ernment of the Republic of Ghana and First Canadian
Goldfields Limited relating to the Hwini Butre property
(incorporated by reference to Exhibit 10.20 to the Com-
pany’s Form 10-K for the year ended December 31, 2008)
10.20 Mining lease, dated September 27, 2007, between the
Government of the Republic of Ghana and First Canadian
Goldfields Limited relating to the Benso property (incor-
porated by reference to Exhibit 10.21 to the Company’s
Form 10-K for the year ended December 31, 2009)
10.21 Joint Operating Agreement, dated January 31, 2002, be-
tween Bogoso Gold Limited and Prestea Gold Resources
Limited (incorporated by reference to Exhibit 10.25 to the
Company’s Form 10-K for the year ended December 31,
2002)
10.22 Memorandum of Agreement, dated March 14, 2002,
among Prestea Gold Resources, Bogoso Gold Limited and
others (incorporated by reference to Exhibit 10.26 to the
Company’s Form 10-K for the year ended December 31,
2002)
10.23 License Agreement, dated June 28, 2004 between Biomin
Technologies S.A. and Bogoso Gold Limited (incorporat-
ed by reference to Exhibit 10.24 to the Company’s Form
10-K for the year ended December 31, 2005)
10.24 EPCM Services Agreement, dated April 16, 2006, between
Bogoso Gold Limited, GRD Minproc (Pty) Limited and
GRD Minproc Limited (incorporated by reference to Ex-
hibit 10.1 to the Company’s Form 10-Q for the quarter
ended June 30, 2006)
2009 Annual Re p or t | 77
EXHIBIT 31.1
CERTIFICATION
I, Thomas G. Mair, certify that:
1. I have reviewed this report on Form 10-K of Golden Star Resources Ltd.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
/s/ Thomas G. Mair
Thomas G. Mair
President and Chief Executive Officer
February 24, 2010
78 | Gold e n St ar
EXHIBIT 31.2
CERTIFICATION
I, John A. Labate, certify that:
1. I have reviewed this report on Form 10-K of Golden Star Resources Ltd.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
/s/ John A. Labate
John A. Labate
Senior Vice President and Chief Financial Officer
February 24, 2010
2009 Annual Re p or t | 79
EXHIBIT 32.1
Certification of Principal Executive Officer
Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
I, Thomas G. Mair, President and Chief Executive Officer of Golden Star Resources Ltd., certify, to the best of my knowledge, based
upon a review of the Annual Report on Form 10-K for the period ended December 31, 2009 of Golden Star Resources Ltd. that:
(1) The Annual Report on Form 10-K fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained and incorporated by reference in the Annual Report on Form 10-K fairly presents, in all material respects,
the financial condition and results of operations of Golden Star Resources Ltd.
/s/ Thomas G. Mair
Thomas G. Mair
President and Chief Executive Officer
February 24, 2010
EXHIBIT 32.2
Certification of Principal Financial Officer
Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
I, John A. Labate, Senior Vice President and Chief Financial Officer of Golden Star Resources Ltd., certify, to the best of my knowledge,
based upon a review of the Annual Report on Form 10-K for the period ended December 31, 2009 of Golden Star Resources Ltd. that:
(1) The Annual Report on Form 10-K fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained and incorporated by reference in the Annual Report on Form 10-k fairly presents, in all material respects,
the financial condition and results of operations of Golden Star Resources Ltd.
/s/ John A. Labate
John A. Labate
Senior Vice President and Chief Financial Officer
February 24, 2010
80 | Gold e n St ar
Directors & M anagement
Directors
Ian MacGregor 1, 2, 3, 4
Chairman of the Board of Directors
James Askew 2, 4*
Robert Doyle
David Fagin 1, 3*
M anagement
Lars-Eric Johansson 1*
Tom Mair
Dr. Michael Martineau 2*, 3
Christopher M.T. Thompson
1 audit committee
2 compensation committee
3 nominating and corporate
governance committee
4
*
sustainability committee
committee chairman
Tom Mair
President and Chief Executive Officer
Michael Mracek
General Manager, Wassa
Nigel Tamlyn
General Manager, Bogoso/Prestea
D. Scott Barr
Executive Vice President and
Chief Operating Officer
Bruce Higson-Smith
Vice President Corporate Development
John Labate
Senior Vice President and
Chief Financial Officer
Daniel Owiredu
Vice President Operations, Ghana
Mark Thorpe
Vice President Sustainability
Roger Palmer
Vice President Finance and Controller
S. Mitchel Wasel
Vice President Exploration
Karl Smith
Vice President Technical Services
Corpor ate Infor m ation
Corpor ate Headquarters
Ghana Office
Investor R elations Contacts
Golden Star Resources Ltd.
10901 W. Toller Drive, Suite 300
Littleton, CO 80127 U.S.A.
Telephone:
Toll-free:
Fax:
(303) 830-9000
(800) 553-8436
(303) 830-9094
Golden Star Resources Ltd.
Level 2, No. 1 Milne Close
Airport Residential Area
P.O. Box 16075
KIA, Accra, Ghana
Bruce Higson-Smith,
Vice President Corporate Development
Anne Hite, Investor Relations Manager
Email:
Toll-free:
Website:
info@gsr.com
(800) 553-8436
www.gsr.com
Stock Exchange Listings
Auditors
Ghana Stock Exchange
Common stock: GSR
PricewaterhouseCoopers
Vancouver, British Columbia, Canada
NYSE Amex
Common stock: GSS
Toronto Stock Exchange
Common stock: GSC
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Registr ar and Tr ansfer Agent
Questions regarding the change of stock ownership, consolidation of accounts, lost
certificates, change of address and other such matters should be directed to:
GCB Share Registry
Ghana Commercial Bank
Thorpe Road/High Street
P.O. Box 134
Accra, Ghana
Telephone: +233 21 668712
+233 21 668656
+233 21 668712
Fax:
CIBC Mellon Trust Company
Attention: Shareholder Services
P.O. Box 1900
Vancouver, British Columbia
Canada V6C 3K9
Online inquiry:
www.cibcmellon.com/investorinquiry
Online access to shareholder data:
http://www.cibcmellon.com/
AnswerLineRegistration
E-mail: inquiries@cibcmellon.com
Toll-free: (800) 387-0825
(Canada and U.S.—collect elsewhere)
(416) 643-5500
(8:30 a.m. to 6:30 p.m. ET,
Monday through Friday)
Annual Report On For m 10-K
The Company’s 2009 Annual Report on
Form 10-K is contained herein. Exhibits
to the Form 10-K will be available upon
payment of the reproduction costs.
Requests should be addressed to
Corporate Headquarters.
Annual Meeting
The Annual General Meeting of
Shareholders will be held on Thursday,
May 6, 2010 at 2:00 p.m. at the Ivey
ING Leadership Centre, 130 King
Street West, Toronto, Ontario, Canada.
(800) 553-8436
www.gsr.com
NYSE Amex: GSS
Toronto Stock Exchange: GSC
Ghana Stock Exchange: GSR