G O L D E N S TA R
2 0 1 2 A n n u a l R e p o r t
2012 Annual Report
DELIVER | UNLOCK | SUSTAIN
Golden Star is a mid-tier gold mining company that produced 336,348 ounces of gold in
2012 and plans to produce approximately 320,000 to 350,000 ounces in 2013.
Our Bogoso/Prestea and Wassa mines, acquired in 1999 and 2002, respectively, were both purchased
during a low gold price environment, allowing the Company to acquire both properties at relatively at-
tractive prices. The properties consist of multiple pits, an underground mine in development and three
processing facilities able to process 4.5 million tonnes per year of non-refractory ore and 2.7 million
tonnes per year of refractory ore. The Company relocated its head office to Toronto in 2013.
The Company is the largest holder of mining properties on the prolific Ashanti Gold Belt in Ghana. Both
Bogoso/Prestea and Wassa/HBB are district-scale sized properties with excellent infrastructure in place.
Golden Star’s growth strategy is to explore and develop our mines in Ghana and explore other prospec-
tive projects in West Africa and Brazil. Additionally, the Company reviews potential acquisitions that are
accretive to shareholder value.
Shares of Golden Star are widely held by both retail and institutional shareholders and are traded on the
NYSE MKT stock exchange, Toronto Stock Exchange and Ghana Stock Exchange under the symbols GSS,
GSC and GSR, respectively.
.
TABLE OF CONTENTS
.
President and Chairman’s Message .....................................................................................................................................................................................1
Introduction to the Annual Report .................................................................................................................................................................................... 6
Business Overview ......................................................................................................................................................................................................................7
Description of Properties ......................................................................................................................................................................................................14
Operating Properties ............................................................................................................................................................................................................... 17
Market for Golden Star’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities ...............22
Selected Financial Data .........................................................................................................................................................................................................23
Management’s Discussion and Analysis of Financial Condition and Results of Operations ................................................................23
Quantitative and Qualitative Disclosures about Market Risk ..............................................................................................................................39
Report of Independent Registered Public Accounting Firm .............................................................................................................................. 40
Consolidated Financial Statements ..................................................................................................................................................................................41
Notes to the Consolidated Financial Statements ......................................................................................................................................................45
FORWARD-LOOKING STATEMENTS & CAUTIONARY NOTE
Forward-Looking Statements
This Annual Report contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended, and within the meaning of applicable Canadian securities law, with respect to our financial condition, results of
operations, business prospects, plans, objectives, goals, strategies, future events, capital expenditures, and exploration and development efforts. Although we
believe these statements are reasonable as of the date of this Annual 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 described under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012.
Cautionary Note to Readers Concerning Estimates of “Indicated Mineral Resources”
This Annual Report uses the terms “Indicated Mineral Resources”. The Company advises US readers that while this term is recognized and required by National
Instrument 43-101, the US Securities and Exchange Commission (“SEC”) does not recognize it. US readers are cautioned not to assume that any part or all of
the mineral deposits in this category will ever be converted into a higher category or into mineral reserves. Also, disclosure of contained ounces is permitted
under Canadian regulations; however the SEC generally requires mineral resource information to be reported as in-place tonnage and grade. The preliminary
economic assessment (PEA) referenced in this Annual Report is preliminary in nature, it includes Inferred Mineral Resources that are too speculative
geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, there is no assurance that the
PEA will be realized and mineral resources that are not mineral reserves do not have demonstrated economic viability.
PRESIDENT & CHAIRMAN’S MESSAGE
2012 WAS A DEFINING YEAR FOR GOLDEN STAR
will unlock value by shifting the majority of
Production at our two mines in Ghana met guid-
production to lower-cost, non-refractory ore,
ance at 336,000 ounces of gold produced and
with higher processing metallurgical recoveries.
cash operating costs of $1,033 per ounce on a
This overall goal has three areas of focus to
consolidated basis, below the 2012 guidance
ensure margin expansion, including:
of $1,040 to $1,100 per ounce. The Company
1) all-in cost reductions focusing on lower cash
has now achieved six consecutive quarters of
operating costs generated by non-refractory
positive cash flow from operations with a solid
ore and reduced G&A expenses both corpo-
balance sheet in place, and the successful
rately and at the mine level;
completion of operational improvement initia-
tives. This year marks the start of new leadership
2) deliver on the Wassa potential that contem-
plates one single large pit beneath the existing
for Golden Star with a strengthening of the
management team and the renewal of the
pits; and
board of directors. Sam Coetzer, who started in
3) increase reserves with the development of
2011 as Chief Operating Officer of Golden Star,
the Prestea Underground mine, a high grade,
became President and CEO on January 1, 2013.
high potential production mine within our non-
In addition, Jeff Swinoga joined the Company
refractory operations and increase reserves
as Executive Vice President and Chief Financial
with drilling at Wassa currently underway.
Officer. Chris Thompson stepped down as
Chairman of the Board and Tim Baker, previ-
ously Chief Operating Officer of Kinross Gold,
Operationally, 2012 was a successful year.
Highlights include:
joined the board as Executive Chairman at the
• A continued focus on safety improvements;
beginning of 2013.
With our newly established headquarters in
Toronto, Golden Star is now taking many steps
• Significantly improved cash flows provided
by operations with a 300% improvement year
over year, to $94.3 million;
to reposition the Company for future sustain-
• Increasing gold production sold by 12% over
able and profitable growth.
2011 to 331,278 ounces;
The priorities in 2013 are to deliver, unlock
and ultimately sustain value: the Company
• Improved plant availability and ore supply at
both Wassa and Bogoso;
2 0 1 2 A n n u a l R e p o r t | 1
• Successful re-start of the non-refractory plant
• complete the Pre-Feasibility Study and prelim-
at Bogoso;
inary mine plan by year end; and
• Advancement of development plans for the
• update the Wassa resource/reserves esti-
Dumasi, Mampon and Prestea South mines.
mates by the end of 2013.
The Company closed 2012 with cash and cash
The Wassa drilling program capital budget is
equivalents of approximately $79 million after
approximately $13 million for 2013.
refinancing and repayment of the previous $125
million convertible debenture.
GREAT PROGRESS WAS MADE
ON THE DEVELOPMENT FRONT
Turning to Prestea Underground, the May
2012 Prestea West Reef Preliminary Economic
Assessment targeted a mechanized mine devel-
opment plan which can deliver approximately
The expansion of Wassa moved forward with
1,200 tonnes per day at an average diluted
the commencement of drilling below the Wassa
mined grade of approximately 8 grams per
Main pits. We are pleased to have increased our
tonne, producing approximately 90,000 to
Proven and Probable Mineral Reserves by 85%,
100,000 ounces of gold per year at full produc-
relative to December 31, 2011, to 1.47 million
tion. Work has now commenced on the delivery
ounces of contained gold. With significant drill
of a feasibility study on the development of this
results announced in January this year, which
area into a high grade, low cost producer using
were not included in the year end Reserves
much of the existing infrastructure. The feasi-
estimate, and with an aggressive drill program
bility study for this is expected to be completed
ahead, we are expecting further increases mid-
by the 2nd Quarter of 2013.
year. Production from the five drills totaled
58,670 meters during 2012. A sixth drill was
added near the end of 2012.
While we await the Environmental Scoping
Report for the project, we are pleased to have
received the environmental and mining permits
The project timeline for Wassa is as follows:
for the Prestea Underground mine which
• Complete additional 100,000 meters of new
drilling by mid-year;
enables us to begin pre-development activi-
ties. Work has started on the rehabilitation of
existing stopes and remnant ore will be treated
at the Bogoso non-refractory plant, an essential
aspect to reducing overall cash operating costs.
2 | G o l d e n S t a r
OUR EMPLOYEES AND OUR COMMUNITIES
and leadership in industry institutions such
ARE INTEGRAL TO THE WAY WE DO BUSINESS
as the Ghana Chamber of Mines, Health and
With the new leadership team in place, the
Safety Forums and much more.
ongoing commitment to foster strong rela-
tions with the communities in and around our
operations has strengthened and is supported
by changes on the ground. Our efforts are
ongoing and in early 2013 we received a signed
resettlement agreement to move the commu-
nity of Dumasi to enable the development of
DELIVER, UNLOCK AND SUSTAIN VALUE
Under new leadership our technical services
department is developing clear, thoughtful plans
based on achieving the best return with manage-
able and achievable capital requirements.
the Dumasi pit. Also early in 2013, our Executive
Deliver: Our teams at the corporate and opera-
Vice President of Operations, Daniel Owiredu,
tions level are focused on delivering our plans
was recommended by the International Socrates
as presented to the board of directors, manage-
Committee of Europe Business Assembly
ment and all stakeholders. Urgency, quality
(E.B.A., Oxford, UK) for the international award
control and nimbleness are the cornerstones
‘United Europe’. This award expresses the
defining our modus operandi as we seek to
organization’s appreciation for successful and
create a “No Surprise” environment.
irreproachable work during 2012 as well as to
highlight Mr. Owiredu’s personal contribution
to the support of a positive image of national
companies at the international level.
Unlock: Golden Star’s future glows brightly with
an exciting pipeline of projects. We believe the
future of the Company has much upside in the
foreseeable future. Putting this into perspec-
We take great pride in our team at Golden
tive, over the last 13 years the Company has
Star. The leadership will continue to develop
produced and sold over 3.1 million ounces
motivated, capable and committed individuals
of gold and yet still has 4.3 million ounces in
to sustain the growth ahead, and we see the
proven and probable reserves with an addi-
results in our ability to operate safely, meet
tional 3 million ounces in the measured and
targets and bring costs down. In addition to
indicated resource category.
being successful operators, our employees
contribute to the development of society in
Ghana by ensuring minimal environmental
impact and maximum social contribution to
their local communities, as well as participation
2 0 1 2 A n n u a l R e p o r t | 3
Sustain: Golden Star has one of the largest
• Continue drilling at Wassa to follow up on the
land packages in Ghana on proven gold belts
2012 drilling results, update the 2012 reserves,
that have produced many millions of ounces of
and produce a prefeasibility study by the end
gold over the centuries. We are committed to
of the year;
unlocking this value through profound knowl-
• Commence construction of the new tailings
edge of the geology and ore emplacement,
storage facility at Wassa;
innovative thinking, and focused, thoughtful
exploration.
CLEAR FOCUS FOR 2013
With many gold producers under stress, the
investment community’s focus has also shifted:
• Permitting of Dumasi pit, approval of the Dumasi
resettlement action plan and commencement
of construction of the Dumasi resettlement
town site;
• Permitting and planning of the Mampon pit;
margin improvement, bottom line profitability
• Permitting and planning of the Prestea South
and spending based on conservative return
pits; and
on capital decisions are key to future growth.
• Achieve further reductions in operating costs
Golden Star’s operational improvements achieved
throughout the organization.
throughout 2012 concentrated on enhancements
of these same criteria and 2013 will be focused on
achieving operating cost improvements and prof-
itable operations.
Our 2013 main objectives include:
• Complete the Prestea Underground feasibility
study in the second quarter of 2013;
• Initiate Phase I underground operations at the
In 2013 our capital budget calls for spending
of approximately $141 million for sustaining
and development capital. The majority of the
development capital of $81 million is focused
on increasing ore throughput and establishing
a lower cost structure. Of the budgeted capital,
we have allocated $100 million towards non-
refractory operations.
Prestea Underground mine;
Expected sustaining capital expenditures amount
to $60 million and are covered by existing cash
balances and expected operating cash flow
for 2013.
4 | G o l d e n S t a r
EXCITED ABOUT OUR FUTURE
express our deep appreciation for his significant
We are very excited about the Company’s future
contribution to Golden Star over the years, both
and believe we have the knowledge and skill-
as CEO and as a director.
set to unlock even more value going forward.
We understand that we have to build a solid
base with our existing operations to ensure the
stability of the Company. We will continue to
evaluate opportunities where we can realize the
benefits of our expertise, and will act respon-
sibly to create value for our shareholders.
Our thanks go out to our employees, our
community stakeholders in Ghana and to you,
our shareholders, for your continuing support.
Our vision is underscored by the following slogan
from Ghana, in the Akan language, “Ye betumi
aye” (We can do it). Our vision is clear and easy
to understand and has resonated throughout
All of our plans are now risk rated and we have
the organization.
mitigation plans in place to offset any unforeseen
events. This change in approach has allowed the
operations to keep the focus on the important
things we need to do to achieve our vision.
Sam T. Coetzer
President and Chief Executive Officer
We wish to thank Chris Thompson for his
unwavering support and clear direction to both
the board and management during 2012. Chris,
who will remain on the board and continue to
Timothy C. Baker
share his wealth of knowledge and experience,
Chairman of the Board of Directors
has been instrumental in driving many of the
changes that have taken place over the last year.
We also wish to thank Tom Mair, President and
CEO for the past five years, for his firm leader-
ship and direction and wish him all success in his
future endeavors. Jim Askew has indicated that
he will not stand for re-election at the Annual
General and Special Meeting of the shareholders
and we would like to take this opportunity to
2 0 1 2 A n n u a l R e p o r t | 5
INTRODUCTION TO THE ANNUAL REPORT
REPORTING CURRENCY, FINANCIAL AND
OTHER INFORMATION
All amounts in this report are expressed in United States
(“U.S.”) dollars, unless otherwise indicated. Canadian
currency is denoted as “Cdn$.” Financial information is
presented in accordance with accounting principles
generally accepted in the United States (“U.S. GAAP”).
References to “Golden Star,” the “Company,” “we,” “our,”
and “us” mean Golden Star Resources Ltd., its predeces-
sors and consolidated subsidiaries, or any one or more of
them, as the context requires.
NON-GAAP FINANCIAL MEASURES
In this annual report, we use the terms “cash operating
cost per ounce” and “adjusted net income/(loss)” which
are considered Non-GAAP financial measures as defined
in SEC Regulation S-K Item 10 and applicable Canadian
securities law and should not be considered in isolation
or as a substitute for measures of performance prepared
in accordance with U.S. GAAP. See Management’s
Discussion and Analysis of Financial Condition and
Results of Operations for a definition of these measures
as used in this annual report.
STATEMENTS REGARDING
FORWARD-LOOKING INFORMATION
This annual report contains “forward-looking state-
ments”, within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of
the Securities Exchange Act of 1934, as amended, and
within the meaning of applicable Canadian securities
law, with respect to our financial condition, results of
operations, business prospects, plans, objectives, goals,
strategies, future events, capital expenditures, and
exploration and development efforts. Words such as
“anticipates,” “expects,” “intends,” “forecasts,” “plans,”
“believes,” “seeks,” “estimates,” “may,” “will,” and similar
expressions (including negative and grammatical varia-
tions) tend to identify forward-looking statements.
Although we believe that our plans, intentions and expec-
tations reflected in these forward-looking statements are
reasonable, we cannot be certain that these plans, inten-
tions 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 annual report.
These statements include comments regarding: antici-
pated attainment of gold production rates; cash
operating costs generally; gold sales; gold recovery
rates; ore processing; permitting; geological factoring,
the receipt and timing of environmental, community and
engineering studies; environmental permitting approvals;
anticipated changes in regulations governing mining and
exploration activities in Ghana; completion of a final
West Reef feasibility study; receipt of environmental
the Ghana
approvals
management plan
Environmental Protection Agency (“EPA”); changes in
from
the tax regime and mining laws in Ghana; exploration
and development efforts, activities and costs; explora-
including Wassa pit expansion drilling,
tion plans
resource conversion and geotechnical drilling at the
West Reef, Mampon resource conversion and infill
drilling, and Prestea South non-refractory ore confirma-
tion drilling; development plans at Dumasi, Mampon, the
West Reef section of the Prestea Underground, and
Prestea South; development plans for the Bogoso tail-
ings recovery project and the Wassa tailings project;
evaluation of a plant upgrade at Bogoso’s refractory
plant; ore grades; our anticipated investing, exploration
and development spending through the end of 2013 and
beyond; identification of acquisition and growth oppor-
tunities; retention of earnings from our operations; gold
production and cash operating cost estimates for 2013;
expected operational cash flow; our objectives for 2013;
expected debt payments during 2013 and beyond; and
sources of and adequacy of liquidity to meet capital and
other needs in 2013 and beyond.
The following, in addition to the factors described under
“Risk Factors” in Item 1A of our Annual Report on Form
10-K, for the year ended December 31, 2012 are among
the factors that could cause actual results to differ mate-
rially 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;
• failure of exploration efforts to expand Mineral
Reserves around our existing mines;
• unexpected changes
in business and economic
conditions;
• inaccuracies in Mineral Reserves and non-reserve
estimates;
• changes in interest and currency exchange rates;
• timing and amount of gold production;
• unanticipated variations in ore grade, tonnes mined
and crushed ore processed;
• unanticipated gold recovery or production problems;
• effects of illegal mining on our properties;
• changes in mining and processing costs, including
changes to costs of raw materials, power, supplies,
services and personnel;
• changes in metallurgy and processing;
• availability of skilled personnel, contractors, materials,
equipment, 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;
6 | G o l d e n S t a r
• changes
in regulatory
perceived climate trends;
frameworks based upon
• competitive factors, including competition for prop-
erty acquisitions;
• results of current and future exploration activities;
• possible litigation;
• results of pending and future feasibility studies;
• availability of capital on reasonable terms or at all;
• acquisitions and joint venture relationships;
• potential losses from future hedging activities; and
• political or economic instability, either globally or in
• additional risk due to
increased use of mining
the countries in which we operate;
contractors.
• changes in regulations or in the interpretation of regu-
lations by the regulatory authorities affecting our
operations, particularly in Ghana, where our principal
producing properties are located;
• local and community impacts and issues;
• timing of receipt and maintenance of government
approvals and permits;
• unanticipated transportation costs and shipping inci-
dents and losses;
• accidents,
hazards;
labor disputes and other operational
These factors are not intended to represent a complete
list of the general or specific factors that could affect us.
Many of these factors are beyond our ability to control or
predict. Although we believe the expectations reflected
in our forward-looking statements are based on reason-
able assumptions, such expectations may prove to be
materially incorrect due to known and unknown risks and
uncertainties. You should not unduly rely on any of our
forward-looking statements. These statements speak
only as of the date of this annual report. Except as
required by law, we undertake no obligation to update
any of these forward-looking statements to reflect future
events or developments.
• environmental costs and risks;
• changes in tax laws, such as those proposed in Ghana;
• unanticipated title issues;
BUSINESS OVERVIEW
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. Our
principal office is located at 150 King Street West, Suite
1200, Toronto, Ontario, M5H1J9 Canada and our regis-
tered and records offices are located at 333 Bay Street,
Bay Adelaide Centre, Box 20, Toronto, Ontario M5H 2T6.
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. GSBPL operates a
gold ore processing facility at Bogoso/Prestea with a
nominal capacity of up to 3.5 million tonnes of ore per
annum, which uses bio-oxidation technology to treat
refractory ores (“Bogoso refractory plant”). In addi-
tion, GSBPL has a carbon-in-leach (“CIL”) processing
facility located adjacent to the refractory plant, which
is suitable for treating oxide and other non-refractory
gold ores (“Bogoso non-refractory plant”) at a nominal
rate up to 1.5 million tonnes per annum. Bogoso/
Prestea produced and sold 172,379 ounces of gold in
2012, and 140,504 and 170,973 ounces of gold in 2011
and 2010, respectively.
• 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 (“Wassa
processing plant”) 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 (“HBB”) in southwest Ghana. Currently
our primary HBB ore source is the Father Brown pit
which is located on the Hwini Butre concession. Ore
from the HBB mines is sent to Wassa for processing.
The Hwini-Butre and Benso concessions are located
approximately 80 km and 50 km, respectively, south
of Wassa along the Company’s dedicated haul road.
Mining activities were completed at Benso during
2012. Wassa/HBB produced and sold 158,899 ounces
of gold in 2012 and 160,616 and 183,931 ounces of gold
in 2011 and 2010, respectively.
• Through GSBPL, we own the Prestea Underground,
which is located on the Prestea property and consists of
a currently inactive gold mine and associated support
facilities. GSBPL owns 90% of the mine, and we are
currently preparing a feasibility study to reopen the mine.
2 0 1 2 A n n u a l R e p o r t | 7
We also hold interests in several gold exploration proj-
ects in Ghana and elsewhere in West Africa, including
Niger and Côte d’Ivoire, and in South America we hold
and manage exploration properties in Brazil.
All our operations, with the exception of certain explora-
tion projects, transact business in U.S. dollars and keep
financial records in U.S. dollars. Our accounting records
are kept in accordance with U.S. 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 securi-
ties regulatory authorities in Canada and Ghana and with
the United States Securities and Exchange Commission.
GOLD SALES AND PRODUCTION
We produced 331,278 ounces of gold in 2012 and 301,120
ounces in 2011. Currently, all of our gold production is
shipped to a South African gold refinery which arranges
for the sale of our gold. 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, fluctuation in the relative
values of the U.S. dollar and foreign 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
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
To March 1, 2013
High
416
454
537
725
841
1,011
1,213
1,421
1,895
1,792
1,694
Low
320
375
411
525
608
713
810
1,058
1,319
1,540
1,577
Average
Average Price
Received by
Golden Star
363
410
445
603
695
872
972
1,225
1,572
1,670
1,650
364
410
446
607
713
870
978
1,219
1,565
1,662
NA
The following diagram depicts the organizational structure of Golden Star and its significant subsidiaries:
8 | G o l d e n S t a r
BUSINESS STRATEGY AND DEVELOPMENT
Our business and development strategy is focused
primarily on the exploration, development and operation
of gold properties in Ghana. We also pursue gold explo-
ration activities in South America and other countries in
West Africa.
We acquired the Bogoso property and began operating
its mines and CIL processing facility in 1999. In 2001, we
acquired the Prestea property located adjacent to the
Bogoso property. In early 2002 GSBPL acquired a 45%
interest in the Prestea Underground property, and since
then its interest increased to 90% as a result of subse-
quent exploration and maintenance expenditures
incurred on the property.
In late 2002, we acquired Wassa and constructed the
Wassa processing plant, which began commercial opera-
tion in April 2005. In July 2007, we completed construction
and development of the Bogoso refractory plant. In late
2005, we acquired the HBB properties consisting of the
Benso and Hwini-Butre properties. Benso began sending
ore to the Wassa processing plant in 2008, and in 2009,
following its development phase, Hwini-Butre began
sending ore to the Wassa processing plant.
GOLD SALES AND UNIT COSTS
Our current focus is to improve operating efficiencies at
both operations, to complete a feasibility study for the
Prestea Underground and to continue broader and
deeper drilling at the Wassa pits to evaluate the expan-
sion potential for the Wassa operation.
Our longer term objective is to continue the growth of
our mining 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 understanding 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 $24.4 million on
such activities during 2011 and approximately $21.0
million in 2012. We are conducting regional reconnais-
sance projects in Ghana, Cote d’Ivoire and Brazil, and
have drilled more advanced targets in Ghana and Niger.
See “Description of Properties” in this annual report for
the year ended December 31, 2012, for additional details
on our assets.
The following table shows historical and projected gold sales and cash operating costs.
Gold Sales and Cost Per Ounce
BOGOSO/PRESTEA
Gold Sales (thousands of ounces)
Cash Operating Cost ($/oz)
WASSA/HBB
Gold Sales (thousands of ounces)
Cash Operating Cost ($/oz)
CONSOLIDATED
Consolidated Total Sales (thousands of ounces)
Consolidated Cash Operating Cost ($/oz)
2010
2011
2012
2013 Projected
171.0
863
183.9
677
354.8
766
140.5
1,284
160.6
868
301.1
1,062
172.4
1,160
158.9
896
331.3
1,033
170 - 190
1,150 - 1,250
150 - 160
900 - 1,000
320 - 350
1,050 - 1,150
(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the definition of cash operating cost per ounce.
MINERAL RESERVES
Our Proven and Probable Mineral Reserves are estimated
in conformance with definitions set out in NI 43-101. We
have filed Technical Reports regarding the initial disclo-
sure of Mineral Reserves 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 opti-
mized 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 U.S. by the U.S. Securities and Exchange
Commission and set forth in SEC Industry Guide 7.
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.
2 0 1 2 A n n u a l R e p o r t | 9
The following table summarizes our estimated Proven and Probable Mineral Reserves as of December 31, 2012, and
December 31, 2011:
PROVEN AND PROBABLE MINERAL RESERVES
Property Mineral Reserve Category
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
As at December 31, 2012
As at December 31, 2011
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 (3)(4)
Wassa(2)
Proven Mineral Reserves
Non-refractory
Probable Mineral Reserves
Non-refractory
Total Wassa Proven & Probable (3)(4)
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 (3)(4)
1.3
7.9
9.2
4.8
21.2
26.0
6.2
29.0
35.2
0.8
31.0
31.8
2.1
7.8
10.0
35.9
21.2
57.1
38.0
29.0
67.1
1.82
2.52
2.42
2.35
2.58
2.54
2.23
2.57
2.51
0.89
1.45
1.44
1.47
2.52
2.30
1.57
2.58
1.95
1.57
2.57
2.00
0.08
0.64
0.72
0.36
1.76
2.12
0.44
2.39
2.84
0.02
1.45
1.47
0.10
0.64
0.74
1.82
1.76
3.57
1.92
2.39
4.31
1.3
8.3
9.6
6.9
24.2
31.1
8.2
32.6
40.8
0.6
17.4
18.1
1.9
8.3
10.3
24.3
24.2
48.5
26.3
32.6
58.8
1.64
2.72
2.57
2.31
2.60
2.54
2.21
2.63
2.55
1.27
1.38
1.38
1.52
2.72
2.49
1.65
2.60
2.12
1.64
2.63
2.19
0.07
0.73
0.80
0.51
2.02
2.54
0.58
2.75
3.34
0.03
0.77
0.80
0.10
0.73
0.82
1.29
2.02
3.31
1.38
2.75
4.14
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 Hwini-Butre.
(3) The stated Mineral Reserves have been prepared in accordance with NI 43-101 Standards of Disclosure for Mineral Projects and are classified in ac-
cordance 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 2012 and 2011 Mineral Reserves were prepared under the supervision of Dr. Martin Raffield, Senior Vice President of Technical Services for the
Company. Dr. Raffield is a “Qualified Person” as defined by NI 43-101.
(5) The Mineral Reserves at December 31, 2012, were estimated using a gold price of $1,450 per ounce, which is approximately equal to the three-year aver-
age gold price. At December 31, 2011, Mineral Reserves were estimated using a gold price of $1,250 per ounce.
(6) The terms “non-refractory” and “refractory” refer to the metallurgical characteristics of the ore. We plan to process the refractory ore in our sulfide
bio-oxidation plant at Bogoso and to process the non-refractory ore in the Bogoso and Wassa non-refractory processing plants.
(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
$1,450 per ounce and historical and projected operating costs at Bogoso/Prestea, Wassa, Hwini-Butre and Benso. Metallurgical recoveries are based
on historical performance or estimated from test work and typically range from 60% to 95% for non-refractory ores and from 70% to 85% for refractory
ores. A government royalty of 5% of gold revenues is allowed as are other applicable royalties.
(8) Numbers may not add due to rounding.
1 0 | G o l d e n S t a r
STOCKPILED ORES
Stockpiled ores are included in the Mineral Reserves for
both Bogoso/Prestea and Wassa. Details of the Proven
and Probable stockpiles included in the Mineral Reserves at
year-end 2011 and 2010 are summarized in the table below.
PROVEN AND PROBABLE STOCKPILES INCLUDED IN MINERAL RESERVES
Property Mineral Reserve Category
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
Tonnes
(millions)
Gold Grade
(g/t)
Ounces
(millions)
As at December 31, 2012
As at December 31, 2011
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 & 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
0.2
0.5
0.7
—
—
—
0.2
0.5
0.7
0.8
1.5
2.3
1.0
0.5
1.5
1.5
—
1.5
2.5
0.5
3.0
2.18
1.18
1.93
—
—
—
2.18
1.18
1.93
0.79
0.56
0.64
1.09
1.81
1.32
0.56
—
0.56
0.78
1.81
0.94
0.02
0.03
0.04
—
—
—
0.02
0.03
0.04
0.02
0.03
0.05
0.03
0.03
0.06
0.03
—
0.03
0.06
0.03
0.09
0.2
0.5
0.6
—
—
—
0.2
0.5
0.6
0.5
1.5
2.0
0.7
0.5
1.2
1.5
—
1.5
2.2
0.5
2.7
2.24
2.19
2.21
—
—
—
2.24
2.19
2.21
1.30
0.56
0.75
1.53
2.19
1.79
0.56
—
0.56
0.86
2.19
1.09
0.01
0.03
0.04
—
—
—
0.01
0.03
0.04
0.02
0.03
0.05
0.03
0.03
0.07
0.03
—
0.03
0.06
0.03
0.09
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
for reporting Mineral Reserves. For
requirements
example, NI 43-101 has a minimum requirement that
Mineral Reserves be supported by a pre-feasibility study,
whereas SEC Industry Guide 7 requires support from a
detailed
that
economic extraction is justified.
that demonstrates
feasibility study
For the Mineral Reserves at December 31, 2011, and 2010,
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.
2 0 1 2 A n n u a l R e p o r t | 1 1
RECONCILIATION OF PROVEN AND PROBABLE MINERAL RESERVES-DECEMBER 31, 2011 TO DECEMBER 31, 2012
Tonnes
(millions)
Contained Ounces
(millions)
Tonnes
(% of Opening)
Ounces
(% of Opening)
Mineral Reserves at December 31, 2011 (5)
Gold Price Increase (1 and 6)
Exploration Changes (2 and 7)
Mining Depletion (3)
Engineering (4)
Mineral Reserves at December 31, 2012 (5)
58.8
3.5
23.6
(6.6)
(12.3)
67.1
4.14
0.75
1.03
(0.49)
(1.11)
4.31
100
6
40
(11)
(21)
114
100
18
25
(12)
(27)
104
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 $1,250 per ounce in 2011 to
$1,450 per ounce in 2012.
(2) Exploration changes include changes due to geological modeling, data interpretation and resource block modeling methodology as well as explora-
tion discovery of new mineralization.
(3) Mining depletion represents the 2011 Mineral Reserve within the volume mined in 2012 with adjustments to account for stockpile addition and deple-
tions during 2012 and therefore does not correspond with 2012 actual gold production.
(4) Engineering includes changes as a result of 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.
(6) Pit design changes that are primarily due to a higher gold price are included here.
(7) Pit design changes that are primarily due to exploration discoveries are included here.
NON-RESERVES-MEASURED AND INDICATED
MINERAL RESOURCES
Cautionary Note to U.S. Investors Concerning Estimates
of Measured and Indicated Mineral Resources
This section uses the terms “Measured Mineral Resources”
and “Indicated Mineral Resources.” We advise U.S. inves-
tors that while those terms are recognized and required
by Canadian regulations, the U.S. 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 annual report, do not include that
part of our Mineral Resources that have been converted
to Proven and Probable Mineral Reserves as shown
above, and have been estimated in compliance with
definitions set out in NI 43-101. Golden Star Resources
has filed Technical Reports regarding the initial disclo-
sure of Mineral Reserves and Mineral Resources for
Bogoso/Prestea, Wassa and the HBB properties as
required by NI 43-101 regulations.
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 $1,750 per ounce for December 31, 2012, and
$1,500 per ounce for December 31, 2011, 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 conditions
including increases in gold price.
The following table summarizes our estimated non-reserves-Measured and Indicated Mineral Resources as of
December 31, 2012, as compared to the totals for December 31, 2011:
Property
Bogoso/Prestea (1)
Prestea Underground
Wassa/HBB
Father Brown Underground (7)
Total 2012 (2)(3)(4)(5)(6)
Total 2011 (2)(3)(4)(5)
Measured
Indicated
Measured & Indicated
Tonnes
(millions)
2.9
—
—
—
2.9
5.1
Gold
Grade
(g/t)
1.90
—
—
—
1.90
1.81
Tonnes
(millions)
16.1
1.6
20.0
1.2
38.9
36.2
Gold
Grade
(g/t)
2.20
13.20
1.30
5.80
2.30
2.27
Tonnes
(millions)
19.0
1.6
20.0
1.2
41.9
41.2
Gold
Grade
(g/t)
2.13
13.20
1.30
5.80
2.26
2.21
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 NI 43-101. The Mineral Resources are equivalent to
Mineralized Material as defined by the SEC Industry Guide 7.
(3) The Mineral Resources for 2012 were estimated using optimized pit shells at a gold price of $1,750 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. In 2011, we used a gold price of $1,500 per ounce for the optimized pit shells. The Prestea Underground re-
source was estimated using a $1,750 per ounce gold price and operating cost estimates using a economic gold cut-off of 3.0 g/t.
1 2 | G o l d e n S t a r
(4) The Mineral Resources are not included in and are in addition to the Mineral Reserves described above.
(5) The Qualified Person reviewing and validating the estimation of the Mineral Resources is S. Mitchel Wasel, Golden Star Resources Vice President of
Exploration.
(6) Numbers may not add due to rounding.
(7) The Father Brown Underground Mineral Resource has been estimated below the $1,750 per ounce of gold pit shell using an economic gold grade cut-
off of 2.9 g/t, which the Company believes would be the lower cut-off grade for underground ore.
NON-RESERVES-INFERRED MINERAL RESOURCES
Cautionary Note to U.S. Investors Concerning Estimates
of Inferred Mineral Resources
This section uses the term “Inferred Mineral Resources.”
We advise U.S. investors that while this term is recog-
nized and required by NI 43-101, the U.S. Securities and
Exchange Commission does not recognize it. “Inferred
Mineral Resources” have a great amount of uncertainty
as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that
all or any part of 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. U.S. 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
compliance with definitions defined by 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.
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 $1,750
per ounce and $1,500 per ounce as of December 31,
2012, and December 31, 2011, respectively, and economic
parameters deemed realistic.
The following table summarizes estimated non-reserves
- Inferred Mineral Resources as of December 31, 2012, as
compared to the total for December 31, 2011:
Property
Bogoso/Prestea (1)
Prestea Underground
Wassa/HBB
Father Brown Underground (7)
Total 2012(2)(3)(4)(5)(6)
Total 2011
Tonnes
(millions)
Gold
Grade (g/t)
3.8
5.2
13.2
1.4
23.6
13.3
3.10
7.40
1.70
5.20
3.40
4.49
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 NI 43-101. Inferred Mineral Resources
are not recognized by the United States Securities and Exchange
Commission.
(3) The Inferred Mineral Resources were estimated using an optimized pit
shell at a gold price of $1,750 per ounce from which the Mineral
Reserves have been subtracted. Other than gold price, the same opti-
mized pit shell parameters and modifying factors used to determine
the Mineral Reserves were used to determine the Mineral Resources. In
2011 we used a gold price of $1,500 per ounce for the optimized shells.
The Prestea Underground resource was estimated using a $1,750 per
ounce gold price and operating cost estimates using an economic gold
cut-off of 3.0 g/t.
(4) The Inferred Mineral Resources are not included in and are in addition
to the Mineral Reserves described above.
(5) The Qualified Person reviewing and validating the estimation of the
Inferred Mineral Resources is S. Mitchel Wasel, Golden Star Resources
Vice President of Exploration.
(6) Numbers may not add due to rounding.
(7) The Father Brown Underground resource has been estimated below
the $1,750 per ounce gold pit shell using an economic gold grade cut-
off of 2.9 g/t, which the Company believes would be the lower cut-off
grade for underground ore.
EMPLOYEES
As of December 31, 2012, Golden Star, including our
majority-owned subsidiaries, had approximately 2,000
full time employees and approximately 360 contract
employees, for a total of 2,360, an 7% decrease from the
approximately 2,360
190 contract
employees at the end of 2011. The 2012 total includes 17
employees at our former principal office in Littleton,
Colorado and 8 exploration personnel in South America.
full time and
CUSTOMERS
Currently all of our gold production is shipped to a South
African gold refinery. The refinery arranges for sale of
the gold on the day it is shipped from the mine site and
we receive payment for gold sold two working days after
the gold leaves the mine site. The global gold market is
competitive with numerous banks and refineries willing
to buy gold on short notice. Therefore, we believe that
the loss of our current customer would not materially
delay or disrupt revenues.
COMPETITION
Our competitive position depends upon our ability to
successfully and economically explore, acquire, develop
and operate new and existing 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
in the acquisition, exploration,
mining companies
financing and development of new mineral properties.
There is significant competition for a 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, mining equipment, geologists, geophysicists
and other experienced technical personnel.
2 0 1 2 A n n u a l R e p o r t | 1 3
SEASONALITY
AVAILABLE INFORMATION
All of our operations are in tropical climates that experi-
ence annual rainy seasons. Ore output from our surface
mining operations can be reduced during wet periods.
Our mine plans anticipate periods of high rain fall each
year. Exploration activities are generally timed to avoid
the rainy periods to ease transportation logistics associ-
ated with wet roads and swollen rivers.
We make available, free of charge, on or through our
Internet website, our annual report on Form 10-K, quar-
terly reports on Form 10-Q, current reports on Form 8-K
and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 as soon as reasonably practicable
after we electronically file such material with, or furnish
it to, the SEC. Our Internet address is 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.
DESCRIPTION OF PROPERTIES
MAP OF OPERATIONS AND PROPERTIES
The map below show the locations of Bogoso, Prestea, Wassa, Pampe, the Hwini-Butre, Benso and Mampon in
Ghana, and various exploration properties in certain other areas of West Africa. These properties are described in
further detail below.
MINING IN GHANA
GHANAIAN OWNERSHIP AND SPECIAL RIGHTS
Ghana is situated on the west coast of Africa, approxi-
mately 600 km 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 23 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 rela-
tively flat. Ghana has a tropical climate with two rainy
seasons and two dry seasons each year. The natural
vegetation in the Western Region where Golden Star
Resources has its two operations is moist tropical forest,
now found only in forest reserves, with a majority of the
land converted to agricultural pursuits.
1 4 | G o l d e n S t a r
Rights to explore and develop a mine are administered
by the Minister of Lands and Natural Resources, through
the Minerals Commission, 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 (“2006 Mining Act”).
A company or individual can apply to the Minerals
Commission for a renewable exploration license granting
exclusive rights to explore for a particular mineral in a
selected area for an initial period not exceeding three
years. When exploration has successfully delineated 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 concession area, normally for a period
of 20 to 30 years or a lesser period that may be agreed
upon with the applicant.
The 2006 Mining 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 of
Ghana and also obtain its consent prior to acquiring a
controlling share.
Under the 2006 Mining 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 devel-
opment capital or operating expenses. GSBPL and
GSWL owe $691.1 million and $58.6 million, respectively,
to Golden Star or its subsidiaries as of December 31,
2012, for past advances and interest on these advances,
and these amounts would be repaid before payment of
any dividends to the government.
Under the 2006 Mining 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.
it could be
Though deemed a preference share,
redeemed without any consideration or for a consider-
ation determined by the mining company and payable to
the holder on behalf of the Government of Ghana.
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 sepa-
rate meeting of the holders of any class of shares;
• it could only be issued to, held by, or transferred to the
Government of Ghana 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 liquida-
tion 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 divi-
dends, profits or assets of the company or a return of
assets in a winding up or liquidation of the company;
and
• the holder of a special share may require the company
to redeem the special share at any time for no consid-
eration 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 purchase 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
Ghanaian law sets mineral royalties at a flat rate of 5% of
mineral revenues. We paid royalties of $27.6 million, $21.3
million and $13.1 million in 2012, 2011, and 2010, respectively.
GHANAIAN CORPORATE TAX
In 2012 the Government increased the corporate income
tax rate from 25% to 35% of taxable income for mining
companies. Additionally, the use of capital allowances
(tax depreciation) was changed in 2012 to be deductible
at a flat rate of 20% over a five year period instead of an
80% deduction in the year that the capital spending was
incurred and the majority of the remaining 20% deduct-
ible over the following two years.
During 2012, the Government enacted new tax regula-
tions that would disallow expenditures from one mining
area as a deduction from revenues in a separate mining
area belonging to the same company in determining the
company’s taxable
income for tax purposes. The
Government also announced in 2012, but has not yet
enacted, its intent to introduce a 10% windfall profit tax
on mining companies. The details of these two tax
changes have not been made publicly available, and we
are thus not able to determine the impact of these
proposed new taxes, if any, on our operations.
In 2011, the Government announced that it intends to
establish a tax stability renegotiation team which plans
to review the existing tax stability agreements of mining
companies operating in Ghana. While our mines do not
have tax stability agreements, it is not clear at this time if
2 0 1 2 A n n u a l R e p o r t | 1 5
the tax stability renegotiation team will review our Deeds
of Warranty which specify certain tax agreements for
our properties.
ENVIRONMENTAL AND OTHER LAWS AND
REGULATIONS
In the various jurisdictions where we operate, all phases
of our exploration, project development, and operations
are subject to environmental laws and regulations. These
laws and regulations may define, among other things, air
and water quality standards, waste management require-
ments, and closure and rehabilitation obligations. In
general, environmental legislation is evolving to require
more strict operating standards, more detailed socio-
economic and environmental impact assessments for
proposed projects, and a heightened degree of account-
ability for companies and their officers, directors, and
employees for corporate social responsibility, and health
and safety. Changes in environmental regulations, and
the way they are interpreted by the regulatory authori-
ties, could affect the way we operate, resulting in higher
environmental and social operating costs that may affect
the viability of our operations.
Environmental matters in Ghana, including those related
to mining, fall primarily under the oversight of the
Environmental Protection Agency (“EPA”), with some
responsibilities lying with the Minerals Commission. The
EPA has rules and guidelines that govern environmental
and socioeconomic impact assessments and statements,
environmental management plans, mine operations, the
quality of water discharges to the environment, environ-
mental auditing and review, and mine closure and
reclamation, among other matters to which our opera-
tions are subject. Additional provisions governing surface
land uses by our stakeholders are provided in the 2006
Mining Act with further requirements being defined in
the associated regulations that were published in 2012.
We note a continuing trend toward substantially
increasing environmental requirements and greater
corporate social responsibility expectations in Ghana.
This includes requirements for more permits, analysis,
data gathering, community hearings, and negotiations
than have been required typically in the past for both
routine operational needs and for new development
projects. The trend to longer lead times in obtaining
environmental permits has reached a point where we are
no longer able to accurately estimate permitting times
for our planning purposes. The increases in permitting
requirements could affect our environmental manage-
ment activities including, but not limited to, tailings
storage facilities, water management and rehabilitation
and closure planning and implementation at our mines.
Our mining, processing, development, and mineral
exploration activities are also subject to various laws
governing prospecting, development, production, taxes,
labor standards, occupational health and safety, land
claims of local people and other matters. New rules and
1 6 | G o l d e n S t a r
regulations may be enacted or existing rules and regula-
tions may be modified and applied in a manner that
could have an adverse effect on our financial position
and results of operations.
We use hazardous chemicals in our gold recovery activi-
ties, and thus generate 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 exploration, devel-
opment, 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 contributes to the sustainability of
the local economy. In order to meet our objectives, we:
• Educate our managers so that they are committed to
creating a culture that makes social and environmental
matters an integral part of short-term and long-term
operations and performance management systems;
• Work with our employees so they understand and
accept environmental and social policies and proce-
dures as a fundamental part of the business;
• Signed and publicly stated our support for the UN
Global Compact and completed our commitments
that are provided in our communications on progress;
• Establish, and continue to improve, operating stan-
dards and procedures that aim to meet or exceed
requirements in relevant laws and regulations, the
commitments made in our environmental impact state-
ments, environmental and socioeconomic management
plans, rehabilitation and closure plans, and any interna-
tional protocols to which we are a signatory;
• Incorporated environmental and human rights perfor-
mance requirements into all relevant contracts;
• Provide training to employees and contractors in envi-
ronmental matters;
• Regularly prepare, review, update, and implement
site-specific environmental management and rehabili-
tation and closure plans;
• Work to progressively rehabilitate disturbed areas in
conformance with the site-specific environmental
management and rehabilitation and closure plans;
• Consult local communities and regulators to provide
us with input on our environmental management poli-
cies and procedures;
• Regularly review our environmental performance;
• Complete our resettlement projects in accordance
with
Finance Corporation
Performance Standard 5 on land acquisition and invol-
untary resettlement; and
International
the
• Publicly report our social, health, safety, and environ-
mental performance.
Reclamation activities were ongoing at both Wassa/HBB
and Bogoso/Prestea during 2012 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 $6.2
million, $26.9 million, and $9.7 million in 2012, 2011, and
2010, respectively. The 2011 spending reflects backfilling
of the Plant North Pit. We believe all our operations in
Ghana are currently in substantial compliance with all
environmental requirements.
CORPORATE SOCIAL RESPONSIBILITY
In keeping with our health, safety and wellbeing, envi-
ronmental, and community relations and human rights
policies, we strive at all times to conduct 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 commu-
nities, and by reviewing broader stakeholder comments
and addressing stakeholder concerns in our developing
projects and ongoing operational activities. 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 initiatives such as our Golden Star Oil Palm Project
and by our support of community-driven improvement
projects
through our Golden Star Development
Foundation. During 2012, the Development Foundation
worked with our local Community Mine Consultation
Committees to fund and sponsor several community-
driven projects including public toilets, a community
centre, continuing scholarships for local students, and
supplying of medical advice in partnership with a
European aid organization (GIZ).
Our Oil Palm Project continued to advance during 2012
and now has 790 hectares of palm oil trees under culti-
vation with fruit production increasing such that our
small holder farmers on the Bogoso Plantation are now
receiving sufficient income to become independent.
GSR also supports a skills training program for stake-
holders aimed at local economic development. The
Golden Star Skills Training and Employability Program
(GSSTEP) provides practical training for local people in
construction and in high tech services such as cell phone
repair. We currently have about 140 graduates who are
now able to provide skilled services.
Initiative, and
In our efforts to promote transparency in governance,
we continue to work with the Extractive Industry
throughout 2012 we
Transparency
published our payments to the government of Ghana
(e.g. taxes, royalties, fees). We furthered our work in
human rights and against discrimination with a training
program within Golden Star.
Our commitment to the development of our stakeholder
communities demonstrates Golden Star’s dedication to
Ghana and to sharing the success of our operations with
our local communities. In 2012, we signed a series of
community agreements with our Bogoso stakeholder
communities covering, amongst other things, local
employment and community development projects. As
we continue to expand our community development
programs, we plan to 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. The mine site can be reached by paved
roads from Accra, Ghana’s capital city, via Tarkwa, a local
commercial center. Bogoso and Prestea are adjoining
mining concessions that together cover approximately
40 kilometers of strike along the southwest-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.
offices, an employee residential complex, a water supply
system, a stand-by 12 megawatt power plant, a medical
clinic, and a tailings storage facility. Electric power is
available locally from the Ghana power grid.
We acquired Bogoso and its non-refractory processing
plant in 1999. The Prestea property was acquired in 2001.
In July 2007, we completed construction and development
of the Bogoso refractory processing plant. Bogoso/Prestea
gold sales from both processing plants totaled 172,379
ounces in 2012 and 140,504 ounces in 2011. See the
“Operating Results for Bogoso/Prestea” below for addi-
tional details on historical production and operating costs.
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 the nominal 1.5 million tonne per
annum Bogoso non-refractory processing plant, the
nominal 3.5 million tonne per annum Bogoso refractory
processing plant, a fleet of haul trucks, loaders, drills and
mining support equipment.
In addition, there are
numerous ancillary support facilities including ware-
houses, maintenance shops, roadways, administrative
Ore for the Bogoso refractory processing plant is mined
at the Bogoso North and Chujah pits located a few kilo-
meters north of the the refractory processing plant. In
February 2012, the Bogoso non-refractory processing
plant began processing non-refractory ore from the the
Pampe mine located 18 kilometers west of the plant. In
conjunction, the Bogoso oxide plant was refurbished
during the last quarter of 2011 in anticipation of
processing Pampe oxide and other non-refractory ores
from the Bogoso area.
2 0 1 2 A n n u a l R e p o r t | 1 7
In addition to the currently active Bogoso/Prestea oper-
ations described above, Bogoso/Prestea assets include
the several development properties, including Dumasi,
Mampon, Prestea South and Prestea Underground. See
“DEVELOPMENT STAGE PROPERTIES
IN GHANA”
section below for a description of these properties.
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 referred to as
the Ashanti Trend, which hosts our Bogoso/Prestea
operations as well as the Obuasi and Konongo gold
deposits, among others. Parallel to the Ashanti Trend is
the Akropong Trend, which hosts our Pampe property as
well as the Ayanfuri deposit. The Akropong Trend is
approximately 15 kilometers west of the Ashanti Trend in
the Bogoso region.
MINERAL RESERVES AT BOGOSO/PRESTEA
At December 31, 2012, Bogoso/Prestea had Proven and
Probable Mineral Reserves, including at Dumasi, Prestea
South, Mampon and Pampe, of 35.2 million tonnes
grading 2.51 grams per tonne containing approximately
2.8 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 above for additional detial.
OPERATING RESULTS FOR BOGOSO/PRESTEA
The following table shows historical operating results at
Bogoso/Prestea:
Bogoso/Prestea
Operating Results
For the years ended December 31,
2012
2011
2010
Ore mined refractory (t)
2515,985
2,671,918
2,733,730
Ore mined
non-refractory (t)
Total ore mined (t)
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 refractory (oz)
Gold sales non-refractory (oz)
Total Gold sales (oz)
Total Cash cost ($/oz)
Royalties ($/oz)
Cash operating cost ($/oz)
805,212
42,220
115,417
3,321,197
2,714,138
2,849,147
24,937,369
25,242,631
17,839,043
2,463,861
2,396,935
2,776,160
2.42
71.2
873,259
2.37
59.9
134,266
38,113
172,379
1,243
83
1,160
2.57
69.8
—
—
—
2.81
65.7
146,252
2.91
43.5
140,504
170,973
—
—
140,504
170,973
1,357
73
1,284
899
36
863
EXPLORATION AT BOGOSO/PRESTEA
Exploration activities during 2012 at Bogoso/Prestea
were limited to Chujah pit footwall resource conversion
drilling, Opon East drill testing and Buesichem, Pampe
South and Riyadh non-refractory target drilling. The
2013 exploration focus will be on additional non-refrac-
tory or free milling targets such as Buesichem East and
Prestea South as well as definition drilling at Mampon.
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, as now constituted,
includes several open-pit mines, the nominal 3.0 million
tonne per annum CIL Wassa plant with its crushing and
grinding circuits, a fleet of mining equipment, a tailings
storage facility and ancillary facilities, including an
administration building, a warehouse, a maintenance
shop, an 8 megawatt stand-by power generating facility
and an employee residential complex. Electric power is
available locally from the Ghana power grid.
GSWL also owns and operates the Hwini-Butre and
Benso mines located 80 km and 50 km, respectively,
south of Wassa. In 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 Wassa
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.
Mining was completed at Benso in February 2012. Mining
is expected to continue at Hwini-Butre through mid-2014.
GEOLOGY AT WASSA
Wassa lies within the Eburnean Tectonic Province in the
West African Precambrian Shield. The Proterozoic rocks
that comprise most of the West African craton and host
the major gold mineralization 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 package
as Bogoso/Prestea. However, Wassa is situated on the
southeastern flank of the Ashanti Belt while Bogoso and
Prestea occur along the northwestern flank.
The volcano-sedimentary sequence hosting the Wassa
deposit has been affected by four deformational events
spanning across the Eoeburnean (age 2.1-2.2 billion
years) and Eburnean orogeny (age 2.1 billion years). The
associated gold mineralization which has developed
during the earlier Eoeburnean deformational event and
subsequently deformed during the Eburnean event has
resulted in a complex re-folded vein system at the Wassa
mine. During the Eoeburnean deformation, a series of
tight isoclinal folds and a strong fabric marked by chlo-
rites, ankerite, and gold-bearing elongated pyrite was
developed along with numerous quartz-ankerite veins.
The gold-bearing veins along with the early isoclinal
folds were re-folded along a large-scale synform during
1 8 | G o l d e n S t a r
the Eburnean event. The early isoclinal folds control the
distribution of high grade mineralization at depth which
have been intercepted by the deep drilling program and
will continue to be the main focus of the 2013 Wassa
exploration program.
GEOLOGY AT HWINI-BUTRE AND BENSO
The HBB properties lie within the south eastern portion
of the Ashanti Greenstone Belt. The eastern margin of
this belt comprises inter-bedded volcaniclastics while
the western margin features a band of highly metamor-
phosed volcanics. Deposition of the Tarkwaian sediments
was followed by a period of dilation and the intrusion of
mafic dikes and sills. Subsequent compression and
re-activation of faults led to intense folding and thrust
faulting with associated shears, and this was accompa-
nied by a regional metamorphic event. The area hosts a
range of intrusive lithologies and morphologies including
the porphyritic Dixcove granite complexes in the Takoradi
area. The age of the various intrusives ranges from 2.2
billion years to 2.1 billion years.
The southern area of the Ashanti belt is host to numerous
gold occurrences which are believed to be related to late
stages in the regional metamorphism and the commence-
ment of the structural re-activation events. The majority
of gold deposits occur as narrow discontinuous quartz
veins generally, but not exclusively, hosted by metavol-
canic sequences.
MINERAL RESERVES AT WASSA/HBB
As at December 31, 2012, Wassa and Hwini-Butre had
Proven and Probable Mineral Reserves of 31.8 million
tonnes with an average grade of 1.44 grams per tonne
containing approximately 1.47 million ounces of gold.
See the “Proven and Probable Mineral Reserves” table
above for additional detail.
OPERATING RESULTS FOR WASSA/HBB
The following table displays historical operating results
at Wassa/HBB.
Wassa/HBB
Operating Results
For the years ended December 31,
2012
2011
2010
Ore mined (t)
2,583,072
2,540,965
2,561,088
Waste mined (t)
Ore and heap leach
materials processed (t)
Grade processed (g/t)
Recovery (%)
Gold sales (oz)
15,933,486
15,353,762
19,172,059
2,507,172
2,579,430
2,648,232
2.09
94.6
2.04
94.3
2.29
94.7
158,899
160,616
183,931
Total cash cost ($/oz)
Royalties ($/oz)
Cash operating cost ($/oz)
979
83
896
937
69
868
714
37
677
EXPLORATION AT WASSA/HBB
Golden Star’s main exploration focus for 2012 was delin-
eation drilling on the Wassa deposit. Exploration for the
first half of 2012 utilized our own drilling fleet consisting
of two multi-purpose drill rigs. The initial drilling results
were encouraging, which prompted management to add
an additional three contractor drill rigs in August and
one more rig in December, bringing the total to six rigs at
the end of 2012. The 2012 drilling production at Wassa
was 175 drill holes totaling 58,670 meters. Interim mineral
resource models were completed to enable year-end
Mineral Resource and Mineral Reserve updates which
included in this report. The resource model included only
drilling results up to the end of August 2012. We expect
to update the reserve and resource estimates in the
second half of 2013 to incorporate additional drill results
from September 1, 2012 onwards. The 2013 drilling
programs for Wassa will continue to target the higher
grade zones beneath Wassa’s existing pits to further
delineate the continuity of these zones. See “Development
Projects” in Management’s Discussion and Analysis
below for additional information on drilling at Wassa
during 2012 and our drilling plans for 2013.
Exploration activities on the HBB concessions during
2012 focused on drilling beneath the Father Brown and
Adoikrom pits, as well as drilling at Pretsea and Esuaso.
The 2012 drilling at Father Brown and Adoikrom
completed 34 holes totaling 10,408 meters. This drilling
continued to intersect the Father Brown and Adoikrom
structures at depth which are characterized by westerly
dipping quartz veins hosted within sheared diorite and
granodiorite intrusives of the Mpohor complex. The
company plans to continue testing these zones in 2014
pending the outcome of a scoping study for an under-
ground mining operation which should be completed in
2013. The drilling program will continue through 2013,
further testing the Manso and Esuaso targets.
DEVELOPMENT PROPERTIES
PRESTEA UNDERGROUND
The Prestea Underground is an underground gold mine
located approximately 15 kilometers south of the Bogoso
processing plants. GSBPL holds the mining lease to this
property which provides GSBPL with a 90% ownership
with the Government of Ghana holding the remaining
10% interest.
Access to the mine site is via a paved road from Bogoso.
The property consists of two access shafts with hoisting
capabilities and extensive underground workings and
support facilities. The Prestea Underground was mined
from the 1870’s until 2002 when mining ceased following
an extended period of low gold prices in the late 1990s
and early 2000s. The Prestea Underground has produced
approximately nine million ounces of gold, the second
highest 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 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. The Prestea Underground deposits are
located along the same Ashanti Trend structure as are
our Bogoso deposits a few kilometers to the northeast
and our Prestea South deposits a few kilometers to the
2 0 1 2 A n n u a l R e p o r t | 1 9
southwest, with most of the gold mineralization found in
a tabular fault zone which dips steeply to the northwest.
A Preliminary Economic Assessment (“PEA”) study was
completed in early 2012 that assessed the economic
viability of an underground mining operation on a
portion of this property, known as the West Reef. Based
on the results of PEA, we are now working on a feasibility
study scheduled for completion in the second quarter of
2013. See the “Development Projects” section of
“Management’s Discussion and Analysis” report below
for additional discussion of this property.
We have budgeted spending of approximately $26
million in 2013 on development projects and equipment
for the underground operations.
GEOLOGY OF PRESTEA UNDERGROUND
The Prestea concession lies on the western margin of the
Ashanti greenstone belt, which is located in the West-
is composed
African craton. The greenstone belt
primarily of paleoproterozoic metavolcanic and
metasedimentary rocks that are divided into the Birimian
Supergroup and the Tarkwa Group. Both units are
intruded by abundant granitoids and host numerous
hydrothermal gold deposits such as those found in the
Obuasi and Prestea mines and paleo-placer deposits
such as those found in Tarkwa and Teberebie mines.
The Prestea deposit can be classified as an orogenic
mesothermal gold deposit where two main types of gold
mineralization have been identified. The most common
type of mineralization is fault-fill quartz veins along fault
zones and second order structures, while the second
type of mineralization is associated with brecciated
zones hosted in iron-rich volcanic lenses.
DUMASI
Dumasi is Bogoso’s largest undeveloped ore body
located approximately 4 kilometers north of the Bogoso
processing plants containing Mineral Reserves of 15.3
million tonnes grading 2.19 gram per tonne for 1.08
million ounces of in-situ gold and 0.8 million ounces of
recoverable gold. We expect to commence mining the
pit in early 2015, and that it will be the major source of
ore feed to the Bogoso refractory processing plant for
several years and will also send significant amounts of
non-refractory ore to the Bogoso non-refractory
processing plant as well. Planned expenditures in 2013
are approximately $15 million.
MAMPON
The Mampon deposit is located approximately 35 kilo-
meters north east of the Bogoso non-refractory
processing plant containing 1.6 million tonnes of Probable
Mineral Reserves at an average gold grade of 4.56 gram
per tonne or 0.23 million ounces in situ. This project will
employ open pit mining methods and the ore will be
hauled by truck to the Bogoso processing plants once
mining commences. The permitting process in now
underway. We plan to commence construction of a 35
kilometer haul road to Mampon in 2013 and to initiate
mining by late 2014. The initial ore will be non-refractory
but as mining proceeds deeper into the pit, refractory ore
will mined as well. We expect to spend approximately $11
million on Mampon development activities during 2013.
PRESTEA SOUTH PROPERTIES
The Prestea South project is located on the Ashanti
Trend, southwest of the town of Prestea and approxi-
mately 20 kilometers southwest of
the Bogoso
processing plants. Gold mineralization is associated with
the same Ashanti Trend fault structure that continues 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 under-
the near-surface non-refractory
ground methods,
mineral resources have not been extensively mined, and
there are also refractory mineral resources accessible by
open pit mining. Our past exploration efforts have identi-
fied several deposits along this trend which can be mined
by surface mining methods.
We have received mining permits for this area and have
applied for environmental permits. We expect to initiate
development at Prestea South, including its 10 kilometer
haul road extension, once the environmental permits are
received. The Prestea South non-refractory ore will be
transported to Bogoso and processed through the
Bogoso non-refractory plant. The Prestea South refrac-
tory ore will be processed through the Bogoso refractory
plant. We now expect to initiate mining at the Prestea
South pits by early 2014 and our 2013 development
expenditures are expected to be approximately $3.7
million. As of December 31, 2012, the Prestea South
properties had total Proven and Probable Mineral
Reserves of 4.6 million tonnes grading 2.47 grams per
tonne containing approximately 0.36 million ounces.
BOGOSO TAILINGS RECOVERY PROJECT
Construction is essentially complete at our hydraulic tail-
ings recovery system at Bogoso which is designed to
feed tailings from a decommissioned Bogoso tailings
storage facility directly into the Bogoso non-refractory
plant’s CIL circuit. All environmental permits needed for
start-up have been received. While the grade of the tail-
ings material is lower than that of the ores typically
treated in the Bogoso oxide plant in the past, operating
costs are expected to be low since reclaimed tailings
have low mining costs and can be fed directly into the
existing CIL circuit, thereby resulting in lower overall
processing costs. It is expected that this material will be
a supplemental feed to non-refractory ores mined from
Pampe and other non-refractory ore sources.
2 0 | G o l d e n S t a r
EXPLORATION PROPERTIES
SIERRA LEONE
AKROPONG TREND PROPERTIES
The Akropong properties are located along a fault struc-
ture which roughly parallels the Ashanti Trend and is
located approximately 20 kilometers to the west of our
Bogoso refractory plant. Exploration work at Pampe and
Afranse were limited in 2012. The Pampe Mineral
Resource model was updated in 2012 utilizing results
from the drilling undertaken in 2011. We have had chal-
lenges with the community allowing access for further
exploration on several of our properties along this trend,
but discussions are underway to address their concerns.
DUNKWA PROPERTIES
The Dunkwa Properties, are located along the Ashanti
trend, northeast of our Bogoso mining lease, and consist
of two prospecting licenses, Mansiso and Asikuma, the
latter hosting our Mampon deposit. The 2012 exploration
programs on the Dunkwa properties were limited to a
rotary air blast drilling program testing a geophysical
conductor located east of the Opon deposit on the
Mansiso prospecting license. The initial results were
however not encouraging. Late in 2012 we initiated
community consultations to resume exploration work on
the Mampon deposit where waste dump sterilization,
resource conversion and in-fill drilling programs have
been budgeted for early 2013. In anticipation of the mining
lease, the environmental impact assessment study which
was initiated during 2011, continued through 2012.
OTHER EXPLORATION STAGE PROPERTIES IN AFRICA
COTE D’IVOIRE
Exploration work in Cote d’Ivoire this year involved a
deep auger drilling program, designed to test the gold-
in-soil anomalies over the Amelekia Permit, with results
the sub-surface gold anomalies. The
confirming
Amelekia, Abengourou and Agboville Licenses were
renewed in 2012, for a period of two years. In addition to
these three licenses in Cote d’Ivoire, we submitted seven
new applications in 2012 along mineralized trends
throughout the country. In 2013, we plan to drill the deep
soil anomalies at Amelika either on our own or through a
joint venture with other exploration companies oper-
ating in Cote d’Ivoire.
BURKINA FASO
In October 2007, we granted True Gold Mining Inc.
(“TGM”), formerly Riverstone Resources Inc., an option
to purchase our Goulagou and Rounga concessions in
Burkina Faso. Exploration programs in 2010 and 2011
were managed and implemented by TGM and mainly
consisted of infill reverse circulation drilling. In December
2011, TGM informed us that they intended to exercise
their purchase option for these two properties and the
sale was completed in February 2012 upon receipt of
$6.6 million of cash and 21.7 million TGM common shares.
The Sonfon project was a gold exploration property
owned by a joint venture between Golden Star and
Aureus Mining, with Golden Star as the majority owner
and project manager. The project’s license expired on
August 8, 2011, and the license was granted by the
government at that time to an unknown company.
DEBA AND TIALKAM PROJECTS, NIGER
Our interest in the Deba and Tialkam gold properties in
Niger were optioned to AMI Resources Inc. (“AMI”) in
2009. AMI actively explored these properties in 2011 and
2012, spending more than $1 million. On October 16,
2012, an Earn-in Option Agreement was signed between
AMI and Middle Island Resources (“MDI”). MDI is now
the operator and is required to spend $2.0 million over 3
years to earn 70% of AMI’s Niger properties.
EXPLORATION STAGE PROPERTIES IN SOUTH AMERICA
SARAMACCA PROPERTY
The Saramacca property, located in Suriname, was sold
to Newmont Mining Corporation (“Newmont”)
in
December 2012. In 2009, we entered into an agreement
to sell our Saramacca gold exploration project in
Suriname to Newmont Mining Corporation. In December
2012, all requirements for the sale and transfer were met,
and ownership and control of the Saramacca project was
turned over to Newmont Mining Corporation for total
consideration of $9.0 million cash. We received $8.0
million of cash in December 2012 and a final payment of
$1.0 million in early 2013. A $9.2 million gain was recog-
nized on this transaction in the fourth quarter of 2012.
BRAZIL
In Mato Gross state in northern Brazil, we are partners
with Votorantim Minerals in the Iriri Joint Venture, a
green fields project encompassing regional, wide spaced
soil and stream sediment sampling. During 2012,
sampling programs included both stream sediment and
soil geochemistry sampling. This joint venture requires
us to spend $5 million to earn 50% of the precious metal
rights on this land package over a three-year period
ending September 2013. As of December 31, 2012 we had
spent $2.8 million. Additional ownership can be acquired
if a project advances to the feasibility stage and we
complete a feasibility study. The 2012 exploration
program on the Iriri Joint Venture included both stream
sediment and soil geochemistry sampling. The joint
venture properties were reduced to 1,679 square kilo-
meter after shedding areas tested in 2012 which returned
no anomalous stream sample results. In Minas Gerais
State, Kinross Gold Corporation continues to explore our
Sao Bartolomeau concessions and has confirmed its
intent to continue with additional exploration efforts in
2013 as required to earn into the property.
2 0 1 2 A n n u a l R e p o r t | 2 1
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 MKT under the symbol “GSS” and on the Ghana
Stock Exchange under the symbol “GSR”. As of March 1,
2013, 259,105,970 common shares were outstanding and
we had 874 registered shareholders. On March 1, 2013,
the closing price per share for our common shares as
reported by the TSX was Cdn$1.60 and as reported by
the NYSE MKT exchange was $1.55.
The following table sets forth, for the periods indicated, the high and low market closing prices per share of our
common shares as reported by the TSX and the NYSE MKT.
2012
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2011
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Toronto Stock Exchange
NYSE MKT
Cdn$
High
2.22
1.94
1.97
2.10
Cdn$
Low
$
High
1.61
0.92
1.12
1.61
2.20
1.97
2.04
2.09
Toronto Stock Exchange
NYSE MKT
Cdn$
High
4.35
3.06
2.84
2.41
Cdn$
Low
$
High
2.69
2.12
1.81
1.55
4.69
3.25
2.91
2.21
$
Low
1.62
0.90
1.06
1.52
$
Low
2.85
2.20
1.86
1.59
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
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, 2007, through 2012, together
with the total shareholder return of the S&P/TSX Composite
Index, and the Amex Gold Bug Index for the same period.
The graph and table assumes an initial investment of
Cdn$100 at December 31, 2007, in Golden Star common
shares and a hypothetical Cdn$100 investment in the
business. Future dividend decisions will consider then
current business results, cash requirements and our
financial condition.
two associated indices at the same time. The lines show
the change in the value of the initial Cdn$100 investment
at the end of each of the next five years, allowing an
investor to compare Golden Star’s share performed to
the performance of the two indices. 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.
2 2 | G o l d e n S t a r
Golden Star Resources Ltd.
Dollar Value
Annualized Return Since Base Year
Return Over Previous Year
S&P /TSX Composite Index
Dollar Value
Annualized Return Since Base Year
Return Over Previous Year
Amex Gold Bugs Index
Dollar Value
Annualized Return Since Base Year
Return Over Previous Year
2007
2008
2009
2010
2011
2012
$ 100
$ 100
$ 100
$ 39
(61)%
(61)%
$ 65
(35)%
(35)%
$ 92
(8)%
(8)%
$ 105
2%
167 %
$ 85
(8)%
31%
$ 111
5%
22%
$ 146
14 %
40 %
$ 97
(1)%
14%
$ 141
12%
27%
$ 52
(15 )%
(64 )%
$ 86
(4)%
(11)%
$ 121
5%
(14)%
$ 59
(10 )%
13%
$ 90
(2)%
4%
$ 109
2%
(10)%
SELECTED FINANCIAL DATA
The selected financial data set forth below are derived from our audited consolidated financial statements for the
years ended December 31, 2012, 2011, 2010, 2009 and 2008, and should be read in conjunction with those financial
statements and the notes thereto. The consolidated financial statements have been prepared in accordance with U.S.
GAAP. Reference should also be made to “Management’s Discussion and Analysis of Financial Condition and Results
of Operations.”
SUMMARY OF FINANCIAL CONDITION
(Amounts in thousands except per share data)
Working capital
Current assets
Total assets
Current liabilities
Long-term liabilities
Shareholder’s equity
Revenues
Net income/(loss)
As at December 31
2012
2011
2010
2009
2008
$ 76,463
$ (33,200)
$ 139,410
$ 145,206
$ 1,651
207,527
725,876
131,064
163,327
431,485
196,540
727,678
229,740
59,636
438,302
262,494
753,226
123,084
193,023
437,119
220,142
722,708
74,936
201,891
443,357
91,973
663,344
90,322
193,871
379,151
For the years ended December 31
2012
2011
2010
2009
2008
$ 550,540
$ 471,007
$ 432,693
$ 400,739
$ 257,355
(10,215)
(2,502)
(14,605)
(8,903)
(69,204)
Net income/(loss) per share - basic
$ (0.04)
$ (0.01)
$ (0.04)
$ (0.05)
$ (0.31)
No dividends were paid during these five years.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is designed to provide informa-
tion that we believe necessary for an understanding of
our financial condition, changes in financial condition
and results of our operations. The following discussion
and analysis should be read in conjunction with the
accompanying audited consolidated financial state-
ments and related notes. The financial statements have
been prepared in accordance with United States gener-
ally accepted accounting principles (“U.S. GAAP”). This
Management’s Discussion and Analysis of Financial
Condition and Results of Operations includes informa-
tion available to March 4, 2013.
2 0 1 2 A n n u a l R e p o r t | 2 3
NON-GAAP FINANCIAL MEASURES
In this annual report, we use the terms “cash operating
costs”, “cash operating cost per ounce” and “cash gener-
ated before working capital changes”.
“Cost of sales” as found in our statements of operations,
includes all mine-site operating costs, including the costs
of mining, ore processing, maintenance, work-in-process
inventory changes, mine-site overhead as well as produc-
tion taxes, royalties, mine site depreciation, depletion,
amortization, asset retirement obligation accretion and
by-product credits, but excludes exploration costs,
property holding costs, corporate office general and
administrative expenses, foreign currency gains and
losses, impairment charges, corporate business devel-
opment costs, gains and losses on asset sales, interest
expense, gains and losses on derivatives, gains and
losses on investments and income tax expense/benefit.
“Cash operating cost per ounce” for a period is equal to
“Cost of sales” for the period less mining related depre-
ciation, depletion and amortization costs, royalties,
production taxes, accretion of asset retirement obliga-
tion costs, costs that meet the definition of a stripping
activity asset under International Financial Reporting
Standards (“IFRS”) and operations-related
foreign
currency gains and losses for the period, divided by the
number of ounces of gold sold during the period.
Cost of sales – GAAP
Less royalties
Less betterment stripping costs
Less operations-related foreign exchange losses
Less mining related depreciation and amortization
Less accretion of asset retirement obligations
Cash operating cost
Ounces sold
Cash operating cost per ounce
Cost of sales – GAAP
Less royalties
Less betterment stripping costs
Less operations-related foreign exchange losses
Less mining related depreciation and amortization
Less accretion of asset retirement obligations
Cash operating cost
Ounces sold
Cash operating cost per ounce
Cost of sales – GAAP
Less royalties
Less betterment stripping costs
Less operations-related foreign exchange losses
Less mining related depreciation and amortization
Less accretion of asset retirement obligations
Cash operating cost
Ounces sold
Cash operating cost per ounce
$ 221,324
(13,221)
—
846
(65,329)
(1,293)
$ 142,327
158,899
$ 896
$ 192,976
(11,016)
—
860
(42,239)
(1,159)
$ 139,422
160,616
$ 868
For the year ended December 31, 2012
Wassa/HBB
Bogoso/Prestea
$ 199,932
$ 342,259
172,379
$ 1,160
331,278
$ 1,033
For the year ended December 31, 2011
Wassa/HBB
Bogoso/Prestea
$ 276,294
(14,340)
(28,016)
1,025
(33,508)
(1,523)
$ 227,177
(10,279)
(5,173)
544
(29,226)
(2,686)
Combined
$ 497,618
(27,561)
(28,016)
1,871
(98,837)
(2,816)
Combined
$ 420,153
(21,295)
(5,173)
1,404
(71,465)
(3,845)
$ 180,357
$ 319,779
140,504
$ 1,284
301,120
$ 1,062
For the year ended December 31, 2010
Wassa/HBB
Bogoso/Prestea
$ 204,031
$ 197,424
(6,865)
(8,505)
125
(63,363)
(950)
(6,194)
(4,558)
(43)
(37,284)
(1,853)
$ 124,473
$ 147,492
183,931
$ 677
170,973
$ 863
Combined
$ 401,455
(13,059)
(13,063)
82
(100,647)
(2,803)
$ 271,965
354,904
$ 766
We use cash operating cost per ounce as a key operating
indicator. We monitor this measure monthly, comparing
each month’s values to prior periods’ values to detect
trends that may indicate increases or decreases in oper-
ating efficiencies. We provide this measure to our
investors to allow them to also monitor operational effi-
ciencies of our mines. We calculate this measure for both
individual operating units and on a consolidated basis.
Since cash operating costs do not incorporate revenues,
changes in working capital and non-operating cash
2 4 | G o l d e n S t a r
costs, they are not necessarily 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, ore 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 similar to the measures of other gold
mining companies, but may not be comparable to simi-
larly titled measures in every instance.
“Cash generated before working capital changes” is
calculated by subtracting the “Changes in working
capital” from “Net cash provided by operating activities”
as found in our statements of cash flows. We calculate
this non-GAAP measure to assist users of the data to
better understand the cash generating results of our
mining operations.
All these measures 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.
TRENDS AND EVENTS
FOR THE YEAR ENDED DECEMBER 31, 2012
MANAGEMENT CHANGES AND
HEAD OFFICE RELOCATION PLANS
It was announced on December 13, 2012, that Golden
Star Resources plans to relocate its corporate headquar-
ters from Denver Colorado, United States to Toronto
Ontario, Canada by the middle of 2013. Several manage-
ment changes were also announced in conjunction with
the office relocation including the following: Tom Mair,
CEO, elected to remain in Denver and resign from his
officer position and Board seat effective December 31,
2012; Sam Coetzer, formerly Chief Operating Officer for
Golden Star, was appointed as President and CEO effec-
tive January 1, 2013. Additionally, Mr. Coetzer was named
to the Company’s Board of Directors effective December
14, 2012. Chris Thompson elected to remain as a Board
member but relinquished his chairman role effective
December 31, 2012. Tim Baker, formerly chief operating
officer of Kinross Gold Corporation, joined the Board as
Executive Chairman effective January 1, 2013. Mr. Baker,
who grew up in Kenya, has extensive experience in oper-
ating mines and projects around the world, including
Chile, Africa and the Dominican Republic for Placer
Dome and Kinross Gold. Jeff Swinoga was appointed as
Executive Vice President and Chief Financial Officer
effective January 7, 2013. Mr. Swinoga has extensive
mining industry experience as a CFO with Hudbay
Minerals and North American Palladium. Roger Palmer,
previously the CFO, became Vice President and Treasurer
on January 7, 2013. Golden Star’s new Toronto headquar-
ters are located at 150 King Street West, Toronto, Canada.
SALE OF PROPERTIES
SARAMACCA
In 2009, we entered into an agreement to sell our
Saramacca gold exploration project in Suriname to
Newmont Mining Corporation. In December 2012, all
requirements for the transfer were met and ownership
and control of the Saramacca project was turned over to
Newmont Mining Corporation for total consideration of
$9.0 million cash. We received $8.0 million cash in
December 2012 and a final payment of $1.0 million in
early 2013. A $9.2 million gain was recognized on this
transaction in the fourth quarter.
BURKINA FASO EXPLORATION PROPERTIES
In December 2011, True Gold Mining Inc. (“TGM”),
formerly Riverstone Resources Inc., notified us, per terms
of a 2007 exploration earn-in agreement, of their intent
to exercise their purchase option for our Goulagou and
Rounga exploration properties in Burkina Faso. The sale
of these exploration projects was completed in February
2012 upon our receipt of $6.6 million of cash and 21.7
million TGM common shares valued at $15.8 million on
the day of the sale. On the day of the sale, we also held
4.0 million TGM shares from earlier transactions with
TGM. The underlying properties’ carrying value had been
written down to zero in prior periods, resulting in the
recognition of a net gain of $22.4 million on the comple-
tion of this disposition in the Statement of Operations.
Since the sale of this property in February 2012, we have
sold 1.2 million of our TGM shares leaving a balance of
24.5 million shares at December 31, 2012. The price of
TGM’s shares has dropped from $0.73 per share at the
February 2012 acquisition date to $0.61 per share at
December 31, 2012. As a result of the share sales and
change in TGM share price, we recorded an unrealized
loss of $2.7 million in the Statement of Comprehensive
Income/loss as of December 31, 2012, and the fair market
value of the remaining shares was $15.0 million.
CONVERTIBLE DEBENTURES AND CREDIT FACILITIES
CONVERTIBLE DEBENTURES
On May 31, 2012, we issued $77.5 million of 5% Convertible
Senior Unsecured Debentures due June 1, 2017 (the “5%
Convertible Debentures”) in exchange for an aggregate
of $74.5 million of the principal amount outstanding of
our 4% Convertible Senior Unsecured Debentures due
November 30, 2012 (the “4% Convertible Debentures”),
by way of privately negotiated transactions with certain
holders of the 4% Convertible Debentures. We incurred a
$0.6 million loss on the extinguishment of the 4%
Convertible Debentures in the second quarter. As a
result, an aggregate of approximately $50.5 million prin-
cipal amount of 4% Convertible Debentures remained
2 0 1 2 A n n u a l R e p o r t | 2 5
outstanding as of May 31, 2012. In September 2012, we
redeemed an additional $6.1 million of our 4% Convertible
Debentures by way of a privately negotiated transaction,
and on November 30, 2012 the $44.4 million of remaining
principal amount of the 4% Convertible Debentures was
redeemed in cash. See Note 13 to the accompanying
financial statements for details of these transactions.
Both the 4% Convertible Debentures and 5% Convertible
Debentures are accounted for at fair value and marked
to market each reporting period, and the corresponding
gain/loss on fair value is recorded in the Statement of
Operations. We recorded a loss of $28.0 million related
to the 4% Convertible Debentures and 5% Convertible
Debentures as of December, 2012. The loss is mainly
related to the increase in the fair value of the conversion
feature of the 5% Convertible Debentures. The fair value
of the conversion feature is calculated using a Black-
Scholes model, our share price rises, so does the value of
the conversion feature of the 5% Convertible Debentures.
EXPIRY OF REVOLVING CREDIT FACILITY
Our $31.5 million revolving credit facility expired on April
1, 2012, with no outstanding balance.
GOLD PRICES
Gold prices have generally trended upward during the
last twelve years from a low of $252 per ounce in 2001 to
a high of $1,895 per ounce in September 2011 and prices
have tracked between $1,550 per ounce and $1,775 per
ounce during 2012. Gold prices can fluctuate widely due
to several factors such as changes in demand for phys-
ical gold, forward selling by gold mining companies,
government actions, changes in the value of the U.S.
dollar and global mine production rates. We realized an
average of $1,662 per ounce for our gold shipments
during 2012 and $1,564 per ounce for our gold shipments
during 2011.
RESTART OF THE BOGOSO
NON-REFRACTORY PLANT
Ore processing was restarted at our Bogoso non-refrac-
tory plant in the first quarter of 2012 following completion
of the plant renovation project in late 2011. Feed for the
restarted plant came initially from non-refractory ore
stockpiles at Bogoso, but by March 2012, the plant began
receiving non-refractory ore from our Pampe mine,
where mining was restarted in the third quarter of 2011.
During 2013, we expect most of the feed for the Bogoso
non-refractory plant to come from Pampe, with minor
amounts of supplemental non-refractory ores from the
Bogoso non-refractory pits. The Bogoso non-refractory
plant produced and sold 38,113 ounces of gold in 2012
and nil ounces in 2011. See Bogoso’s Results of Operations
below for additional detail.
INCREASES IN MINING COSTS
While gold prices have trended upward in recent years,
the mining
industry has also experienced steady
increases in mine operating costs including the costs of
fuel, electric power, labor, explosives, mining equipment,
equipment maintenance parts and chemicals consumed
in the processing plants. In addition, many governments
around the world have increased mineral royalties, fees
and income tax rates in recent years.
Mining is an energy intensive industry using large quanti-
ties of electricity and fuel in the mining, transport,
crushing, grinding and processing of ores, and as a result,
a mine’s cost structure is sensitive to changes in fuel and
electric power costs. Increases in crude oil prices from
$45 per barrel in early 2009, to in excess of $100 per
barrel in 2012 have thus contributed to higher mining
costs worldwide in recent years. Increasing fuel costs
have also resulted in higher electric power costs in many
areas including Ghana. The resource mining boom of
recent years has constrained the availability of skilled
mining personnel, which in turn has put upward pressure
on labor costs. It has also contributed to increases in
mining equipment costs and longer lead times for new
orders for large equipment. Despite the higher costs, our
mining and processing costs per tonne have remained
relatively flat since early 2011 reflecting our efforts to
control operating costs.
INCREASES IN TAXATION AND REGULATIONS
INCREASES IN TAXATION
In the first quarter of 2012, the Government of Ghana
enacted three changes to tax rules which apply to mining
companies operating in Ghana and further announced
its intent to implement two additional changes.
Changes enacted in 2012:
1. Rate Increase: A 10% increase in income tax rates from
25% in 2011 to 35% in 2012 resulted in an increase in our
deferred tax liability of approximately $9.6 million as our
deferred future income tax liabilities as of December 31,
2011 were raised to reflect the future impact of the new
higher rate.
2. Tax Depreciation Limits: Prior to 2012, a mining
company could add 80% of the cost of its annual quali-
fied capital spending to a tax asset pool known as
“Capital Allowances”, which were immediately available,
on an unlimited basis, to reduce taxable income. Once
taxable income was reduced to zero in a given year, the
remaining balance of the Capital Allowance pool was
available for use in subsequent years. Under the new
rule, only 20% of a new year’s capital spending can be
added to the Capital Allowance pool, and one fourth of
the remaining 80% is added to the pool in each of the
subsequent four years. This new rule delays the avail-
ability of Capital Allowances and could result in a smaller
amount of available Capital Allowance in a given year
which could result in a higher taxable income and accel-
erated cash taxes.
3. Ring Fencing: The Government’s new rules disallow
the use of expenditures in one mining area as a deduc-
tion from revenues in a separate mining area leased by
the same company in determining the company’s taxable
income. While no details have been released for the
application of this new rule, the Company expects this to
2 6 | G o l d e n S t a r
have an immaterial impact on the calculation of tax
expense in 2013.
Additional changes announced but not yet enacted:
4. Windfall Profit Tax: The Government of Ghana has
stated its intention to implement a 10% windfall profit tax
on mining companies. The Government held hearings on
this new development during the second and third quar-
ters of 2012, but has not yet finalized this new tax.
5. Stability Agreement Renegotiations: The Government has
established a tax stability renegotiation team that is
reviewing the existing tax stability agreements of mining
companies operating in Ghana. While our subsidiaries do not
have tax stability agreements, it is not clear if the tax stability
renegotiation team will also review our Deeds of Warranty
which specify certain tax agreements for our properties.
Since its inception, GSWL has not paid income tax in
Ghana because Ghana tax law allowed a deduction for
the cost of past capital investments (Capital Allowances)
when GSWL calculated its taxable income. During 2012,
GSWL’s Capital Allowance pool was largely depleted and
the tax law changes effective in 2012 placed new restric-
tions on use of Capital Allowances to offset taxable
income. As a result, Wassa incurred taxable income in
2012 for the first time, and it is expected that GSWL will
pay approximately $12 million of taxes to the Government
of Ghana in 2013 related to GSWL’s 2012 taxable income.
We expect Wassa will continue to generate taxable
income going forward and more specifically, it is
expected that GSWL will make provisional tax payments
on its 2013 income.
RECENT CHANGES IN GHANA MINING LAWS
The Ghana Minerals Commission has announced changes
in the regulations governing mining and exploration
activities and mining operations in Ghana including,
among other things, health, safety and environmental
standards of mining, incentives for local procurement of
mining supplies and equipment, revised rules on employ-
ment of expatriate workers, compensation for land used
RESULTS OF OPERATIONS - 2012 COMPARED TO 2011
CONSOLIDATED RESULTS
Summary Of Consolidated Financial Results
Bogoso/Prestea gold sold (oz)
Wassa/HBB gold sold (oz)
Total gold sold (oz)
Average realized price ($/oz)
Cash operating cost - combined ($/oz)
Gold revenues ($ in thousands)
Cash flow provided by operations ($ in thousands)
Cash flow provided by operations per share ($)
Net loss attributable to Golden Star ($ in thousands)
Net loss per share – basic ($)
in mining, mine inspections, mine and exploration
permitting, use of explosives, mine closure and rehabili-
tation, stakeholder concerns, employees training, tailings
storage facilities and working conditions. The Ghana
Chamber of Mines is currently engaged in discussions
designed to clarify the goals, intent and application of
the new regulations as they will be implemented. Pending
the outcome of the discussions, we are not in the posi-
tion to evaluate their impact on Golden Star.
RESERVES AND DEVELOPMENT ACTIVITIES
Increase In Wassa/HBB Reserves
Golden Star’s main exploration focus for 2012 was delin-
eation drilling on the Wassa Main deposit. Exploration
during the first half of 2012 utilized our own drilling fleet,
consisting of two multi-purpose drill rigs. The initial
drilling results were encouraging, which prompted
management to add three additional contractor drill rigs
in August and one more rig in December, bringing the
total to six rigs at the end of 2012. The 2012 drilling
production at Wassa was 175 drill holes totaling 58,670
meters. Interim Resource models were completed to
enable year-end Resource and Reserve updates, which
are included in this report. As a result the Company
increased Proven and Probable Mineral Reserves by 85%
to 1.47 million ounces of contained gold, relative to
December 31, 2011.
Prestea Underground - West Reef
In May 2012 we completed a preliminary economic
assessment (“PEA”) of the West Reef area of the Prestea
Underground mine located near our Bogoso mining
operation in Ghana. Based on the results of this study, we
are now preparing a full feasibility study to better define
the economic potential of this underground gold prop-
erty. We expect the feasibility study to be completed
during the second quarter of 2013. See “Prestea
Underground” in the “Development Projects” discussion
in this annual report for additional details of the PEA.
2012
172,379
158,899
331,278
1,662
1,033
550,540
94,290
0.36
(9,490)
(0.04)
2011
140,504
160,616
301,120
1,564
1,062
471,007
23,643
0.09
(2,075)
(0.01)
2010
170,973
183,931
354,904
1,219
766
432,693
96,616
0.37
(11,229)
(0.04)
2 0 1 2 A n n u a l R e p o r t | 2 7
Gold revenues increased $79.5 million, totaling $550.5
million in 2012 as compared to $471.0 million in 2011.
The revenue improvement was a result of more gold
ounces sold and higher gold prices than in the previous
year. The higher gold sales were due to the re-start of
ore processing at Bogoso’s non-refractory processing
plant in early 2012, which contributed an incremental
38,113 ounces to 2012’s total sales as compared to nil in
2011. See “Bogoso Results of Operations” section below
for additional details of the non-refractory plant.
Realized gold prices averaged $1,662 per ounce during
2012, up 6% from $1,564 per ounce in 2011.
Consolidated 2012 cost of sales totaled $497.6 million,
up 18% from $420.2 million in 2011. The major factor in
our cost increase was the start-up of Bogoso’s non-
refractory plant early in 2012. In addition, we saw higher
prices for various key operating inputs during the year
including fuel, cyanide, lime, grinding media and drilling
costs. Higher cash operating costs also reflect an
increase in waste mining activities at Wassa/HBB in 2012
as compared to 2011. During 2012, $16.7 million of oper-
ating costs were capitalized to ore stockpile inventories
at Bogoso/Prestea and Wassa/HBB as both mines built
ore stockpiles to facilitate more optimal ore blending
capabilities and to provide a continuous ore supply
during the rainy seasons in Ghana when mining activities
are often impeded by wet conditions in the pits.
Depreciation charges in 2012 were up $27.4 million from
2011 due to the impact of a change in production mix on
the units-of-production amortization costs in 2012 and
more ounces sold at Bogoso/Prestea and the 5% royalty
due to the Government of Ghana increased due to the
higher revenues as compared to 2011.
Exploration expenses were lower than a year earlier
reflecting generally lower exploration budgets during 2012.
The major factor contributing to the reduction in corporate
general and administrative expenses was $4.2 million of
corporate advisory consulting expense in 2011 that was not
repeated in 2012. The lower consulting expense was
partially offset by $2.6 million of severance expenses (see
“Management Changes in the Trends and Events” section
above). Property holding costs were up in 2012 from 2011,
reflecting activity related to the preparation of the PEA for
the Prestea Underground earlier in 2012 and preparation of
a feasibility study, which is now underway.
Derivative losses were nil in 2012. Most of the the deriva-
tive losses in 2011 were related to gold price forward
contracts, all of which expired by December 31, 2011, and
we did not hold gold price forward contracts during 2012.
We issued $77.5 million of 5% Convertible Debentures in
May 2012. The 5% Convertible Debentures are convertible
into common shares at a conversion rate of 606.0606
common shares per $1,000 principal amount (equal to an
initial conversion price of $1.65 per share), or approxi-
mately 25% above the closing share price on the day prior
to the date the 5% Convertible Debentures were issued.
Subsequent to the issuance date, the price of our common
shares increased, reaching $1.84 per share by December
31, 2012. The 5% Convertible Debentures were marked to
market at December 31, 2012, increasing the fair value of
the liability. As a result we recorded a non-cash loss of
$28.0 million. This compares to a $26.2 million fair value
gain adjustment for our 4% Convertible Debentures as of
December 31, 2011, the gain was primarily driven by falling
share prices during 2011 which resulted in a lower value of
the option feature and a lower liability.
The $31.6 million gain on sale of investments is related to
the sale of two of our exploration properties during 2012.
The first was a sale of our exploration properties in
Burkina Faso where we recognized a $22.4 million gain
and the second was related to the sale of Saramacca, our
exploration properties in Suriname where we recognized
a gain of $9.2 million. See the Trends and Events section
above for more detail on these sales.
The increase in income taxes over 2011’s level was caused
by higher Ghanaian taxable income at GSWL in 2012 and
by an increase in Ghanaian income tax rates early in 2012,
which caused a $9.6 million increase in GSWL’s tax liability.
Consolidated 2012 financial results include a net loss
attributable to Golden Star of $9.5 million or $0.04 per
share as compared to a net loss attributable to Golden
Star of $2.1 million or $0.01 per share in 2011. Our mine
operating margin of $52.9 million increased $2.0 million
from $50.9 million in 2011. In addition, we achieved a
reduction in several non-operating expenses as compared
to 2011 including lower exploration expense, lower corpo-
rate general and administrative expense costs and lower
derivative losses. But these cost reductions were more
than offset by a non-cash loss in fair value of our 5%
income tax
Convertible Debentures and by higher
expense, resulting in the larger loss year over year.
2 8 | G o l d e n S t a r
BOGOSO/PRESTEA OPERATIONS 2011 COMPARED TO 2011
Bogoso/Prestea Operating Results
Ore mined refractory (t)
Ore mined non-refractory (t)
Total ore mined (t)
Waste mined (t)
Refractory ore processed (t)
Refractory ore grade (g/t)
Gold recovery - refractory ore (%)
Non-refractory ore processed (t)
Non-refractory ore grade (g/t)
Gold recovery - non-refractory ore (%)
Gold sold refractory (oz)
Gold sold non-refractory (oz)
Gold sales (oz)
Total cash cost ($/oz)
Royalties ($/oz)
Cash operating cost ($/oz)
Our Bogoso/Prestea operation mined the Chujah and
Bogoso North pits throughout 2012 yielding 2.5 million
tonnes of refractory ore, essentially the same as in 2011.
All of the refractory ore was sent to the Bogoso refrac-
tory processing plant. Bogoso/Prestea restarted the
non-refractory processing plant in early 2012 and opened
the non-refractory Pampe pit in late 2011 which supplied
a majority of the ore feed to the non-refractory plant
during 2012. The non-refractory plant processed 837,259
tonnes of ore in 2012 which yielded 38,113 ounces in 2012
as compared to nil in 2011.
Bogoso/Prestea’s revenues totaled $286.6 million during
2012, up $64.1 million from $222.5 million in 2011. The
increase in revenues was related to the 38,113 ounces
from the non-refractory plant during 2012. In addition,
Bogoso/Prestea’s realized gold price averaged $1,663
per ounce in 2012, 5% higher than the realized $1,584 per
ounce in 2011.
Bogoso’s cash operating cost totaled $199.9 million in
2012, up from $180.4 million in 2011. While the refractory
operation cut back on its waste mining in 2012, the
tonnes mined at the non-refractory operation essentially
offset this, resulting in total tonnes mined at Bogoso/
Prestea similar to what were mined in 2011. As a result,
total mining costs were similar to 2011 before the non-
refractory mining operations was initiated. However,
start-up of the non-refractory plant in 2012 resulted in an
increase
in processing costs at Bogoso and this
accounted for most of the increase in Bogoso/Prestea’s
total operating costs as compared to 2011.
Approximately $1.8 million of pre-stripping costs at the
new Pampe pit were capitalized in 2012 and a total of
$9.1 million of Bogoso/Prestea’s mining and processing
costs were capitalized into in-process and ore stockpile
inventories during 2012. The inventory increase included
filling the non-refractory plant when it was started up in
the first quarter of 2012 and the refractory operation
added ore to its stockpiles to provide adequate ore feed
to the refractory plant during the wet seasons and to
allow for better ore blending.
2012
2,515,985
805,212
3,321,197
24,937,369
2,463,861
2.42
71.2
873,259
2.37
59.9
134,266
38,113
172,379
1,243
33
1,160
2011
2,671,918
42,220
2,714,138
25,242,631
2,396,935
2.57
69.8
—
—
—
140,504
—
140,504
1,357
73
1,284
2010
2,733,730
115,417
2,849,147
17,839,043
2,776,160
2.81
65.7
146,252
2.91
43.5
170,973
—
170,973
899
36
863
Refractory Operations - Tonnes processed at Bogoso’s
refractory plant were up 3% from 2011, and gold recovery
was higher but lower feed grades resulted in a drop in
ounces produced as compared to 2011. The refractory
plant sold 134,266 ounces for the year, down 6% from
140,504 ounces in 2011. An increase in tonnes processed in
2012 reflects improvements achieved during 2012 in plant
availability and utilization and better ore availability.
The drop in refractory ore grade reflects natural vari-
ability in the ore deposits being mined. Increasing
amounts of fresh refractory ore, as mining progressed
deeper into the Bogoso refractory pits, improved gold
recovery rates to 71.2% in 2012, up from 69.8% in 2011.
Non-Refractory Operations - During 2012, the non-
refractory plant processed 873,259 tonnes following its
February 2012 re-start. Gold recovery averaged 59.9% in
2012 but fluctuated during the year from a low of 54.1% in
the first quarter to a high of 71.8% in the third quarter as
different types of ore became available. Fourth quarter
recovery was down at 58.5%. A gravity circuit was added
to the non-refractory plant in the third quarter of 2012
which contributed to the increase in gold recovery.
The grade of the non-refractory ore also fluctuated during
the year depending on ore types mined. The plant head
grade was 2.66 grams per tonne in the first quarter of
2012, 2.71 grams per tonne in the second quarter, 2.04
grams per tonne in the third quarter and 2.21 grams per
tonne in the fourth quarter. Waste slips on the upper
benches of the Pampe pit early in 2012 temporarily delayed
access to higher grade ores zones causing the drop in
grades during the third and fourth quarters of 2012.
In summary, Bogoso/Prestea’s higher operating costs in
2012 were the result of the non-refractory plant’s start-
up phase early in 2012 and the costs of removing the slip
material at Pampe, partially offset by capitalization of
costs to stockpile and in-process inventory.
2 0 1 2 A n n u a l R e p o r t | 2 9
During 2012, Bogoso/Prestea finished construction and
start-up of portions of a water treatment plant required
to process plant waste water prior to its discharge to a
local stream. Water is currently stored in an abandoned
pit a few kilometers from the Bogoso processing plants,
when the treatment plant is completed, the stored water
stored will be returned to Bogoso for treatment along
with Bogoso’s
then current discharge amounts.
Engineering studies are underway evaluating various
design changes that could reduce water treatment costs.
As discussed below in the “Development Projects”
section, Bogoso/Prestea has planned a major capital
development program in 2013 and 2014 which is expected
to bring several new projects into production over the
next three years. These plans include development of the
Dumasi deposit, the Prestea Underground’s West Reef,
Mampon and Prestea South. These new development
projects will require higher amounts of capital spending
than in recent years, but they are also expected to
increase gold output and lower future cost per ounce.
See “Liquidity Outlook” below for more details on capital
investment spending at Bogoso/Prestea in 2013. In addi-
tion to higher capital spending in 2013, we are planning
major pit wall push backs at Bogoso/Prestea’s Chujah
and Bogoso North pits during 2013. While these push
backs will increase stripping rates and mining costs in
2013, the push backs are designed to provide a more reli-
able supply of refractory ore to Bogoso’s refractory plant
in subsequent years beginning in 2014.
Improvements were made in our relationship with the
communities that surround our operations during 2012.
To this end we negotiated and signed a series of commu-
nity agreements with our Bogoso
stakeholder
communities during the year, covering amongst other
things, local employment and community development
projects. We also expect to further expand our commu-
nity development programs and to integrate more local
people and communities into our economic develop-
ment and outreach programs, to assist the Western
Region of Ghana to achieve its full potential.
WASSA/HBB OPERATIONS 2012 COMPARED TO 2011
Wassa/HBB Operating Results
Ore mined (t)
Waste mined (t)
Ore and heap leach materials processed (t)
Grade processed (g/t)
Recovery (%)
Gold sales (oz)
Total cash cost ($/oz)
Royalties ($/oz)
Cash operating cost ($/oz)
2012
2,583,072
15,933,486
2,507,172
2.09
94.6
158,899
979
83
896
2011
2,540,965
15,353,762
2,579,430
2.04
94.3
160,616
937
69
868
2010
2,561,088
19,172,059
2,648,232
2.29
94.7
183,931
714
37
677
During 2012, Wassa mined and processed ore from the
Wassa pits near the Wassa processing plants and from
the Benso and Father Brown pits at Hwini Butre. Mining
operations were completed at Benso in February 2012
and mining rates were subsequently increased at Father
Brown and at Wassa to compensate for the Benso pit
closure. The Father Brown pit at Hwini-Butre came online
in late 2011 and its higher gold grades contributed to the
increase in Wassa plant feed grade during 2012 as
compared to 2011. During 2012, Hwini-Butre provided
approximately 28% of the Wassa plant ore tonnes at an
average grade of approximately 4.57 grams per tonne. It
is expected that Father Brown pit will provide approxi-
mately 43% of the Wassa plant ore feed in 2013 at an
expected grade of 2.9 grams per tonne.
As previously reported, the drilling program to test areas
below the Wassa pits was accelerated in the second half
of 2012 by bringing in four additional drills to supplement
the two drills that have been working at the Wassa pits
since early in 2012. See “Development Projects” section
below for additional detail on this drilling program.
Land acquisition for a new Wassa tailings storage facility
was completed during 2012 and construction of the new
facility is now underway and is expected to be completed
by mid-2013. The new tailings project, along with the
drilling discussed above, are expected to be the major
capital projects at Wassa during 2013. Arrangements are
also underway to allow an expansion of the Father Brown
pit at Hwini-Butre over the next year and potential longer
term expansion plans are being evaluated.
Wassa sold 158,899 ounces of gold during 2012, approxi-
mately 1% lower than the 160,616 ounces sold in 2011.
Gold revenues totaled $263.9 million in 2012, up from
$248.5 million in 2011. Wassa realized an average gold
price of $1,661 per ounce during 2012, up 7% from $1,547
per ounce a year earlier.
Wassa’s consolidated 2012 cash operating costs were
comparable to 2011, up less than 1% from $139.4 million
from 2011. The increase in costs was related to an
increase in the number of tonnes mined in 2012.
Since its inception, GSWL has not paid income tax in
Ghana because Ghana tax law allowed a deduction for
the cost of past capital investments when GSWL calcu-
lated its taxable income. During 2012, GSWL’s Capital
Allowance pool was largely depleted and in addition, tax
law changes effective in 2012 placed new restrictions on
use of Capital Allowances to offset taxable income. As a
3 0 | G o l d e n S t a r
result, Wassa incurred taxable income in 2012 for the first
time, and it is expected that GSWL will pay approximately
$12.4 million of taxes to the Government of Ghana in 2013
related to GSWL’s 2012 taxable income. We also expect
Wassa will continue to generate taxable income going
forward and more specifically, it is expected that GSWL
will make provisional tax payments on its 2013 income.
RESULTS OF OPERATIONS -
2011 COMPARED TO 2010
CONSOLIDATED RESULTS
Consolidated 2011 financial results included a net loss
attributable to Golden Star of $2.1 million or 0.01 per
share which was improved over a net loss attributable to
Golden Star of $11.2 million or $0.04 per share in 2010.
While the number of ounces sold was down from 2010’s
level and operating costs were higher, rising gold prices
during 2011 yielded an increase in revenues that exceeded
the impact of lower ounces and higher operating costs.
Realized gold prices averaged $1,564 per ounce during
2011, up 28% from $1,219 per ounce in 2010. Lower ore
grades and less tonnes of ore processed at both Bogoso
and at Wassa contributed to the 2011 loss, as did higher
cash operating costs at both operations.
Consolidated 2011 cash operating costs totaled $319.8
million, up 18% from $272.0 million in 2010. The increase
in cash operating costs reflects significant increases in
prices of many of our key operating inputs including the
prices paid for electric power, labor, cyanide, fuel, and
other reagents used in processing plants. Higher cash
operating costs also reflect an increase in waste mining
activities in 2011 as compared to 2010. See Bogoso’s
operational discussion below for more details on cost
increases. Depreciation charges in 2011 were down $29.1
million from 2010 due to lower ounces sold at Bogoso
and at Wassa, and due to the decrease in depreciation
and amortization expense per ounce from the increase in
gold reserves at the end of 2010.
Gold hedging activities during 2011 resulted in a loss of
$19.5 million, up from a $1.1 million loss in 2010. Most of
these losses were related to forward gold price contracts
which lost value during the year as gold prices rose.
Offsetting the gold derivative losses in 2011 was a $26.2
million gain on fair value of the option feature in our 4%
Convertible Debentures. The gain was in response to
lower prices of our common shares which resulted in a
lower value of the option feature. In comparison, we
recorded a $3.2 million loss on the fair value of the
conversion feature of our 4% Convertible Debentures in
2010 in response to rising prices for our common shares.
See Note 4 of the attached financial statements for addi-
tional disclosure on fair value adjustments to our 4%
Convertible Debentures.
Interest expense totaled $8.9 million in 2011, down
marginally from $9.2 million in 2010, reflecting lower
balances on our equipment financing loans during 2011
as loan balances were paid down. Corporate general and
administrative costs totaled $25.4 million in 2011, up
from $17.1 million in 2010. Most of the increase was
related to one-time corporate advisory and consulting
fees totaling $4.2 million, increases in non-cash stock
compensation expense, addition of a technical services
group and higher option and personnel costs. The
consulting expense was related to an independent review
performed at our mine sites to improve production
processes and to lower operating costs. This project was
competed in 2011. The increase in income tax expense
from 2010 reflects higher income in Ghana at Wassa.
BOGOSO/PRESTEA OPERATIONS –
2011 COMPARED TO 2010
Bogoso/Prestea’s revenues totaled $222.5 million in
2011, up from $206.5 million in the same period of 2010.
While the number of ounces sold was lower than in 2010,
increases in realized gold prices during 2011 more than
offset the impact of lower ounces. Bogoso’s realized
gold price averaged $1,584 per ounce during 2011, up
from $1,207 per ounce a year earlier. Bogoso sold
140,504 ounces in 2011, down from 170,973 ounces in
2010. Decreases in tonnes processed and lower plant
feed grade were the major factors contributing to the
drop in ounces sold.
The decrease in grade as compared to 2010 reflects a
change in ore source. In 2010, Bogoso’s main feed source
was the higher-grade Buesichem pit, but mining was
completed at the Buesichem pit in the third quarter of
2010 and subsequently Bogoso moved its mining fleet to
other pits at Bogoso where ore grades have been lower
than at Buesichem. The drop in tonnes processed, as
compared to 2010, reflects lower availability of ore in
recent quarters as we pursued an accelerated waste
stripping program at the Chujah pit to allow a more
steady supply of ore in subsequent periods.
Bogoso’s cash operating costs totaled $180.4 million
during 2011, up from $147.5 million in 2010. The largest
item contributing to Bogoso’s increase in cash operating
costs was a 7.4 million tonne increase in waste tonnes
mined which resulted in higher equipment rental costs,
additional equipment maintenance costs and additional
equipment operating costs. Increases in the price of
electric power, fuel, cyanide and labor, as compared to
2010, also contributed to higher operating costs as did
higher maintenance expense than a year earlier. More
specifically, in late 2011, the actual price we paid for mine
truck tires was up 27% from a year earlier. Similarly, the
price we paid for electricity was 23% higher, our fuel
price was up 41%, explosives were up 7% and the cost of
cyanide was up 16%.
A decrease in the number of ounces sold and higher cash
operating costs resulted in a $1,284 per ounce cash
operating cost in 2011, up from $863 per ounce during
2010. Bogoso’s royalty costs were higher than a year
earlier due to higher revenues and an increase in the
government of Ghana’s royalty rate from 3% in 2010 to
5% in 2011. The drop in ounces sold contributed to lower
units-of-production amortization expense, as did an
increase in gold reserves at the end of 2010.
Cost analysis and cost control planning was a major
2 0 1 2 A n n u a l R e p o r t | 3 1
focus at all operational sites during 2011, and implemen-
tation of the new cost control programs are expected in
early 2012. As part of the cost control efforts, we carried
out an extensive mine planning exercise in late 2011 to
determine the the optimum sequencing of the future
Bogoso/Prestea pits to provide a steady, long term flow
of refractory and non-refractory ores to the Bogoso
refractory and non-refractory processing plants.
Mining of non-refractory ore was initiated at the Pampe
pit west of Bogoso late in the third quarter of 2011 and
the Bogoso non-refractory plant was brought on-line in
the first quarter of 2012.
During 2011, the Prestea Underground mine remained on
a care and maintenance basis. In late 2011, our new
Technical Services Group began a Pre-feasibility study
to evaluate economic potential of developing the Prestea
Underground mine using mechanized mining methods.
WASSA/HBB OPERATIONS -
2011 COMPARED TO 2010
Wassa sold 160,616 ounces during 2011, down from
183,931ounces in 2010. A drop in ore grade to 2.04g/t
from 2.29g/t in 2010 was the major factor contributing
to the reduction in ounces sold. Ore grades fell as mining
proceeded into lower grade areas of the Wassa and HBB
ore bodies during 2011. Higher realized gold prices offset
the impact of lower ounces sold to yield revenues of
$248.5 million, up from $226.2 million in 2010. Wassa’s
realized gold price averaged $1,547 per ounce during
2011, up from $1,230 per ounce a year earlier.
Cash operating costs totaled $139.4 million in 2011, up
from $124.5 million in 2010. Increases in the price of elec-
tric power, fuel, cyanide,
labor and maintenance
contributed to higher operating costs. See the Bogoso
discussion of costs, immediately above, for additional
details on increases in the price of key items consumed in
our operations. The drop in ounces sold as compared to
2010, coupled with higher cash operating costs, resulted
in an increase in cash operating cost per ounce to $868,
as compared to $677 per ounce in 2010.
Mining operations were completed at Benso in February
2012. The new Father Brown pit at Hwini-Butre came on line
in the fourth quarter of 2011, replacing ore from other Hwini-
Butre pits that were closed upon completion of mining.
several zones of gold mineralization below the existing
pits, which contributed to an 85% increase in Proven and
Probable Reserves, and additional drilling is planned in
2013 to better define the size and potential of this new
resource. A description of each of our development proj-
ects follows.
BOGOSO/PRESTEA PROJECTS:
DUMASI - Dumasi is Bogoso’s largest undeveloped ore
body located approximately 4 kilometers north of the
Bogoso processing plants, containing Proven and
Probable Mineral Reserves of 15.3 million tonnes grading
2.2 gram per tonne for 0.8 million ounces of recoverable
gold. This pit is expected to come on-line in early 2015, it
is expected to be the major source of ore feed to the
Bogoso refractory processing plant for several years and
is anticipated to send significant amounts of non-refrac-
tory ore to the Bogoso non-refractory processing plant
as well. Ore grades at Dumasi are expected to be lower
than at the Chujah and Bogoso North pits that have
supplied most of the refractory ore at Bogoso in recent
years, but its stripping ratio should be lower. Dumasi
development will require a resettlement of a community
located near the planned pit, which we estimate will
require spending of approximately $15 million during
2013. To advance the development of the project, we
signed a negotiated resettlement agreement with the
community that
is acceptable to all stakeholders.
Construction of the new resettlement town site is
expected to begin in 2013 and we currently expect to
initiate mining at Dumasi in 2015.
MAMPON - The Mampon deposit is located approxi-
mately 35 kilometers north east of the Bogoso processing
plants containing 1.6 million tonnes of Probable Mineral
Reserves at an average gold grade of 4.56 grams per
tonne. This project will employ open pit mining methods
and the ore will be hauled by truck to the Bogoso
processing plants once mining commences. The permit-
ting process in now underway. We plan to commence
construction of a 35 kilometer haul road to Mampon in
2013 and to initiate mining by 2014. The initial ore will be
non-refractory but as mining proceeds deeper into the
pit, refractory ore will be mined as well. We expect to
spend approximately $11 million on Mampon develop-
ment activities during 2013.
DEVELOPMENT PROJECTS
PRESTEA UNDERGOUND
Progress was made at both Bogoso/Prestea and at
Wassa/HBB during 2012 to advance the development of
several projects located on the existing Bogoso/Prestea
and Wassa/HBB leases. Each of these projects has the
potential to increase gold output and/or to lower costs
per ounce. At Bogoso/Prestea, design, permitting and
engineering proceeded on the Dumasi, Mampon, Prestea
South and Prestea Underground projects. At Wassa,
development plans are underway for an expansion of the
Father Brown pit at Hwini-Butre to access additional
higher grade ore and a longer-term pit expansion is
being evaluated. Drilling at Wassa during 2012 identified
During the first quarter of 2012, a preliminary economic
assessment (“PEA”) study was finalized for the West Reef
section of the Prestea Underground property south of
Bogoso. The PEA targets a mechanized mine develop-
ment plan which would deliver approximately 1,200
tonnes per day at an average diluted mined grade of
approximately 8 grams per tonne, producing approxi-
mately 90,000 ounces of gold per year at full production.
Economic analysis from the PEA indicates a capital cost
of approximately $115 million for completion of the refur-
bishment of the Central Shaft and existing haulage drives
to the West Reef area, upgrading of pumps, compressors
and ventilation, development of a decline and raise-bored
shaft to 30 Level and initial stope development.
3 2 | G o l d e n S t a r
Test work indicates that the mineralization is non-refrac-
tory with a significant portion of the gold expected to be
recovered from the gravity circuit at the Bogoso non-
refractory processing plant for total gold production of
approximately 437,000 ounces over the life of the project.
The PEA assumes access to the West Reef via a decline
from surface, with simultaneous decline development
from 24 Level (900 meters below surface). The decline
would be used for passage of people, materials and
equipment into the West Reef area. The PEA incorpo-
rates an ore hoisting shaft that would be raise-bored
from West Reef to surface.
The PEA was filed on SEDAR in Canada and was furnished
to the US Securities and Exchange Commission in early
May 2012. The Mineral Resources reported in the PEA are
compliant with Canada’s National Instrument 43-101. The
Board of Directors has authorized management to
proceed with a West Reef feasibility study, which is
expected to be completed in the second quarter of 2013.
The environmental permitting will proceed in parallel
with the feasibility study. This project has been regis-
tered with the Ghana Environmental Protection Agency,
and the consultant to complete the environmental
impact assessment work has been selected.
In the second quarter of 2012, the Board of Directors
approved $1.8 million for additional drilling on the West
Reef and $4.0 million for mining equipment, permitting
and shaft rehabilitation during the second half of 2012.
Geo-technical drilling of the reef commenced in August
2012 and is continuing into 2013. We expect to spend
$26 million on underground development and capital
equipment during 2013.
Permitting for the Prestea Underground is underway. We
submitted an Environmental Scoping Report for the
project and have been advised to proceed with the envi-
impact assessment. The environmental
ronmental
baseline collection is underway and the environmental
impact statement will be completed for submission to
the EPA for the approval. In the interim, environmental
and mining permits have been received which allows
pre-development activities to proceed. These activities
include refurbishment and up-grading of underground
equipment and facilities to improve the structural integ-
rity of the shafts, upgrading of the mine ventilation
system, recommissioning of ore and waste handling
infrastructure in preparation for West Reef mining and
clean up of ore from old development and stoping areas
that have short term production potential.
BOGOSO TAILINGS RECOVERY PROJECT
Construction of the Bogoso hydraulic tailings recovery
system, designed to feed tailings from a decommis-
sioned Bogoso tailings storage facility directly into the
is now
Bogoso non-refractory processing plant,
complete and environmental permits needed for start-
up have been received. We plan to initiate a test run of
this new operation in early 2013 and expect to feed the
old tailings to the non-refractory plant as a supplemental
feed to the primary non-refractory ore sources. While
the grade of the tailings material is lower than that of the
ores typically treated in the Bogoso non-refractory plant
in the past, operating costs are expected to be low since
reclaimed tailings can be fed directly into the existing
CIL circuit after a minimal amount of processing through
the ball mill.
PRESTEA SOUTH PROPERTIES
The Prestea South project is located on the Ashanti
Trend, southwest of the town of Prestea and approxi-
the Bogoso
mately 20 kilometers southwest of
processing plants. Gold mineralization is associated with
the same Ashanti Trend fault structure that continues 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 under-
ground methods,
the near-surface non-refractory
mineral resources have not been extensively mined, and
there are also refractory mineral resources accessible by
open pit mining. Our past exploration efforts have identi-
fied several deposits along this trend which can be mined
by surface mining methods.
We have received mining permits for this area and have
applied for environmental permits. We expect to initiate
development at Prestea South, including its 10 kilometer
haul road extension, once the environmental permits are
received. The Prestea South non-refractory ore will be
transported to Bogoso and processed through the
Bogoso non-refractory plant. The Prestea South refrac-
tory ore will be processed through the Bogoso refractory
plant. We plan to spend approximately $4 million on
development activities during 2013. Mining is expeted to
begin here in early 2014.
As of December 31, 2012, the Prestea South properties
had total Proven and Probable Mineral Reserves of 4.6
million tonnes grading 2.47 grams per tonne containing
approximately 0.36 million ounces.
WASSA/HBB:
WASSA DRILLING PROGRAM - As previously reported,
the drilling program testing areas below the Wassa pits
was accelerated in the third and fourth quarters of 2012
by bringing in three additional drills to supplement the
two drills that have been working at the Wassa pits since
early in 2012. Production from the five drills totaled
58,670 meters during 2012. A sixth drill was added near
the end of 2012. The 2012 drilling was designed to delin-
eate the extent and geologic controls of the higher grade
zones of mineralization. Drilling continues to intercept
zones of gold mineralized material at various depths
below the existing Wassa pits and the drill data is being
analyzed to better understand the geology and its
impact on the mineralization. See “Operating Properties”
section above for a description of the geology associ-
ated with this drilling program.
Drilling results up to the end of August 2012 were used to
update an interim resource model estimate and this was
the basis for the expanded December 31, 2102 resource
and reserve estimates contained in this document. Most
2 0 1 2 A n n u a l R e p o r t | 3 3
of the 670,000 ounce increase in Proven and Probable
Reserves at Wassa during 2012 was related directly to
the new drilling below the Wassa pits, and the grade of
the new reserves below the existing Wassa pits is higher
than the grades mined at Wassa in recent years.
We expect to continue drilling beneath the Wassa pits
throughout 2013 and plan to complete an updated
resource model in the second half of 2013 which will
incorporate drilling completed since August 2012. We
expect that the additional drilling completed after
August 2012 and the additional planned drilling in 2013,
will result in a further increase in Wassa’s resources.
EXPLORATION PROJECTS
Exploration expense and capitalized drilling expendi-
tures totaled approximately $21 million during 2012. The
main focus of exploration in 2012 was the drill testing of
the Wassa resource expansion beneath the existing
Wassa pits. The 2012 Wassa program focused on step-
out drilling which tested the extent of the previously
intersected mineralization along strike on 25 meter drill
fences and down and up dip extensions of the mineral-
ization on 50 to 100 meter spacing.
Our other exploration efforts in 2012 included drilling the
Father Brown and the Adoikrom underground targets
beneath the existing open pits, drilling at Pretsea and
Esuaso at HBB and drilling the Opon East geophysical
target. Exploration efforts were also restarted on the
West Reef at the Prestea Underground where we
purchased and commissioned our own underground drill
rig in the second half of 2012. The underground drilling
was focused on infilling the existing drilling to collect
information for geotechnical and metallurgical studies
for the ongoing feasibility study.
In Niger our properties are being earned into by Middle
Island Resources, which have taken over the Joint
Venture from AMI Resources. Exploration activity was
limited to deep auger drilling on our Amelika property in
Cote D’Ivoire during 2012, however all three of our
licenses were renewed for two years and we have also
submitted seven additional applications which are
pending approval. The Sonfon property in Sierra Leone
remains in a state of limbo as we continue our efforts to
re-instate the exploration license.
In South America, 2012 exploration efforts concentrated
on the Iriri joint venture in northern Mato Grosso state in
Brazil, where we have the ability to earn a 50% owner-
ship position in a 1,679 square kilometer land package.
The Iriri joint venture is a green fields project encom-
passing regional, wide spaced soil and stream sediment
sampling. During 2012, sampling programs included
both stream sediment and soil geochemistry sampling.
In Suriname, we completed the sale of our remaining
49% interest in the Saramacca project in Suriname to
Newmont Mining Corporation for approximately $9.0
million and the exploration license was transferred to
Newmont in December 2012.
2013 EXPLORATION PLANS
We have budgeted approximately $20 million for explo-
ration activities in 2013 most of which will be concentrated
on 1.) continue Wassa pit expansion drilling, 2.) resource
conversion and geotechnical drilling at the West Reef
section of the Prestea Underground, 3.) Mampon
resource conversion and infill drilling and 4.) Prestea
South non-refractory ore confirmation drilling.
The majority of 2013’s exploration expenditures will be at
Wassa where we plan to spend an additional $13 million
on expansion drilling programs. The 2013 drilling
programs for Wassa Main will continue to target the
higher grade zones beneath the B Shoot, Starter pit and
242 pit to further delineate the continuity of these zones.
Infill holes will be planned based on results, infilling
where additional information is needed to build better
confidence in mineralization continuity and geometry or
higher grades.
Prestea Underground exploration during 2013 will
concentrate on completing the remaining geotechnical/
metallurgical sample drilling on 24 level and a single drill
rig will then be used to define and delineate additional
resources along the West Reef projected strike and dip.
The 2013 surface exploration drilling at Bogoso/Prestea
will target non-refractory material for the non-refractory
plant, and will include Mampon and Aboronye infill and
resource conversion, Buesichem East non-refractory drill
off and Prestea South non-refractory confirmation
programs. The 2013 exploration activities at HBB will be
limited to further drilling of the Manso and Esuaso targets.
West African exploration activities outside of Ghana will
be limited in 2013 to allow focus on the expansion of our
current assets in Ghana. Limited exploration in Cote
d’Ivoire will involve drill testing of the Amelika deep
auger anomalies either by Golden Star or by a joint
venture partner.
Brazil exploration for 2013 will be limited to project eval-
uation and monitoring of our joint venture properties
with Kinross in Minas Gerais State. We are awaiting final
results for the Iriri joint venture and depending on these
results, will decide whether to pull out of the joint venture
or follow up on any anomalies should they materialize. In
Suriname, we will assist Newmont to complete the
transfer of the Saramacca properties and then will close
the Paramaribo office.
LIQUIDITY AND CAPITAL RESOURCES
We held $78.9 million in cash and cash equivalents as of
December 31, 2012, down from $103.6 million at the end
of 2011. The major factor contributing to the reduction
was the redemption of outstanding debt during 2012.
During 2012 we redeemed $125 million of our 4%
Convertible Debentures using $50.5 million of cash and
the issuance of $77.5 million of new 5% Convertible
Debentures.
3 4 | G o l d e n S t a r
Before working capital changes, our operations provided
$106.3 million of operating cash flow, up from $31.5
million in 2011. The increase was related primarily to
increases in revenues from more ounces produced and
sold at higher gold prices in 2012. Lower reclamation
spending also contributed to the improvement in 2012
operating cash flow. We substantially completed back-
filling the Plant North pit at Bogoso in 2011 at a cost of
$23.5 million, which accounted for most of 2011 reclama-
tion spending. As a result, reclamation spending dropped
from $26.9 million in 2011 to $6.2 million in 2012.
Working capital changes during 2012 used a net $12.0
million as compared to $7.9 million in 2011. Increases in
ore stockpile inventories contributed $12.2 million to the
increase in 2012 including $9.1 million to increase
Bogoso/Prestea’s ore stockpile inventories. The inven-
tory increase included filling the non-refractory plant
upon start-up as well as larger non-refractory stockpiles
to support operations at the non-refractory plant.
Refractory ore stockpiles were increased at Bogoso to
provide a contingency for the wet seasons and to allow
for better ore blending. Wassa also added to its ore
stockpiles during 2012 to create a stand-by surge pile to
be available during wet weather. The increase in deposits
in 2012 reflects down payments on capital equipment
purchases and payments for long-lead time purchases.
In summary, net cash provided by operating activities
was $94.3 million in 2012 as compared to $23.6 million in
2011, an increase of $70.7 million.
A net of $69.1 million was used in investing activities
during 2012, including for $43.4 million on mining prop-
erty development drilling and mine development
projects and $45.1 million for the acquisition of new
equipment and facilities at the mine sites.
Major capital spending items at Bogoso during 2012
included $11.2 million for new mobile mining equipment,
$4.0 million for improvements to the plants, $4.5 million
for tailings facilities, $4.2 million for on-going construction
of a water treatment plant, $4.4 million for development
drilling, $1.8 million for pre-stripping at Pampe, $4.5 million
for Prestea Underground upgrades, $3.9 million for mine
development and other items of $0.7 million.
During 2012, Wassa’s major capital projects included
$14.1 million of development drilling, mostly at the Wassa
pits, $18.1 million for resettlement of a community to
allow development of a new tailings disposal facility,
$4.7 million for new mobile equipment, $2.3 million for
an upgrade to the current tailings storage facility and
development of a new tailings storage facility now
underway, $5.1 million in plant upgrades, $2.1 million of
other capital equipment and $2.9 million on other
projects.
The sale of our Burkina Faso assets generated $6.6
million of cash in February 2012, and an additional $0.7
million of cash was realized during the balance of the
year upon sale of a portion of the shares received as
payment for the sale of the Burkina Faso properties. We
also received $8.0 million of cash in December 2012 from
the sale of an exploration project in Suriname.
In summary total cash used in investing activities was
$69.1 million in 2012 as compared to $97.6 million used in
2011, a decrease of $28.5 million.
Scheduled debt repayments on our equipment financing
facility and capital leases used $8.3 million of cash in 2012,
and new borrowings on our equipment financing facility
provided $8.5 million of cash. The new borrowings covered
the purchase of five new haul trucks, a loader and two new
drills. An additional $50.5 million was used to redeem our
outstanding 4% Convertible Debentures during 2012. This
resulted in $50.0 million being used in financing activities
in 2012 compared to $0.5 million million being used in 2011,
an increase of $49.5 million.
In summary, operating cash flow before working capital
changes provided $106.3 million of cash in 2012 of which
$12.0 million was used for working capital, $83.0 million
was used for capital investing purposes, a net $50.3
million was used to pay down debt, $15.6 million was
received on sale of assets, and $1.3 million was used for
other purposes resulting in a net cash reduction of $24.8
million for the year. During 2012, all of our cash was held
as cash or was invested in funds that held only U.S. trea-
sury notes and bonds.
Since its inception, GSWL has not paid income tax in
Ghana because Ghana tax law allowed a deduction for
the cost of past capital investments when GSWL calcu-
lated its taxable income. During 2012, GSWL’s Capital
Allowance pool was largely depleted and in addition tax
law changes effective in 2012 placed new restrictions on
use of Capital Allowances to offset taxable income. As a
result, Wassa incurred taxable income in 2012 for the first
time and it is expected that GSWL will pay approximately
$12.4 million of taxes to the Government of Ghana in
2013 related to GSWL’s 2012 taxable income. We expect
Wassa will continue to generate taxable income going
forward and more specifically, it is expected that GSWL
will make provisional tax payments on its 2013 income
LIQUIDITY OUTLOOK
Based on current expectations, capital needs for 2013
and 2014 will be higher than in recent years as we pursue
a series of organic growth projects (see “Development
Project” section above) at our existing properties that
are expected to increase gold output and lower future
costs per ounce. Also during 2013, we will do major pit
wall push backs at the Chujah and Bogoso North pits
which will raise Bogoso/Prestea’s operating cost in 2013.
While these push backs will raise stripping rates in 2013,
they will provide a more steady supply of refractory ore
to Bogoso’s refractory plant in subsequent years begin-
ning in 2014. In addition to the new mine development
project, Bogoso/Prestea is evaluating a major plant
2 0 1 2 A n n u a l R e p o r t | 3 5
upgrade at Bogoso’s refractory plant designed to
increase throughput and improve recoveries and Wassa
will proceed with construction of a new tailings disposal
facility during 2013. More specifically the expected
capital costs of our mines are as follows:
• complete construction of the new tailings storage
facility at Wassa;
• permitting of Dumasi pit, approval of the Dumasi
resettlement action plan and commencement of
construction of the Dumasi resettlement town site;
Expected Capital Spending ($millions)
2013
• permitting and planning of the Mampon pit;
Bogoso/Prestea
Dumasi development
Mampon and Prestea South Development
Prestea Underground
Water treatment plant
Mining equipment
Plant upgrades
Other
Sub-total
Wassa/HBB
Tailings storage facility
Wassa drilling program
HBB Development costs
Wassa Plant upgrades
Other
Sub-total
Total Capital Spending
$
$
15
15
26
5
10
12
9
92
15
13
7
9
5
$
$
49
141
As of December 31, 2012, we had $18.2 million of out-
standing loans on our $35 million equipment financing
facility leaving a borrowing capacity of $16.8 million. Our
revolving credit facility expired on April 1, 2012, as sched-
uled in the terms of the original loan agreement.
We expect that our capital projects will be funded by
operating cash flow, the equipment financing facility and
cash on hand at December 31, 2012 as well additional
financing. If these cash sources are not sufficient, certain
capital projects could be delayed, alternatively we may
need to pursue additional debt or equity financing and
there is no assurance that such financing will be available
at all or on terms acceptable to us. Under our current
shelf registration statement, we may issue, from time to
time, any combination of common shares, preferred
shares, warrants, rights or convertible debt securities in
one or more offerings. We have not issued any securities
under this registration statement to date and have no
immediate plans to do so; however, we may issue addi-
tional debt or equity securities at any time.
LOOKING AHEAD
• permitting and planning of the Prestea South pits; and
• achieve
further
throughout the organization.
reductions
in operating costs
We are estimating Bogoso/Prestea 2013 production of
170,000 to 190,000 ounces at an average cash operating
cost of $1,150 to $1,250 per ounce. We expect Wassa to
produce approximately 150,000 to 160,000 ounces
during 2013 at an average cash operating cost of $900 to
$1,000 per ounce, with combined production of approxi-
mately 320,000 to 350,000 ounces at an average cash
operating cost of $1,050 to $1,150 per ounce.
ELECTION TO BECOME FOREIGN PRIVATE ISSUER
We currently file, as a domestic issuer, periodic reports
with the SEC as required under the Exchange Act of
1934, as amended. We intend to streamline our adminis-
trative functions and become a “foreign private issuer”
under the U.S. securities laws by relocating our head-
quarters from the U.S. to Canada prior to June 28, 2013
(the “Measurement Date”). Assuming we qualify as a
foreign private issuer as of the Measurement Date, we
plan to begin reporting as a foreign private issuer in the
U.S. for all periodic reports filed after June 30, 2013.
We currently file our financial statements with both U.S.
and Canadian securities regulators in accordance with
U.S. GAAP, as permitted under current regulations. We
are reviewing the transition from U.S. GAAP to
International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board
(“IASB”) and for our financial statement reporting
requirements following our change in status to a foreign
private issuer.
We are currently developing our IFRS change-over plan.
Towards this end we have retained qualified professional
personnel to oversee and affect the conversion process.
It is expected that the plan will take into consideration,
among other things:
• Changes in financial statement preparation and note
Our main objectives for the next twelve months include:
disclosures;
complete the Prestea Underground feasibility study;
• Information
technology
and
data
system
• initiation of underground operations at the Prestea
Underground mine;
• continue exploration drilling at the Wassa mining lease
to follow up on the 2012 drilling results and an update
of 2012 reserves;
requirements;
• Disclosure controls and procedures, including investor
relations and external communication plans related to
the conversion to IFRS;
• Maintenance of effective internal controls through
IFRS transition and design and implementation of new
IFRS control measures;
• Financial reporting expertise requirements, including
training of personnel; and
3 6 | G o l d e n S t a r
• Impacts on other business activities that may be influ-
IFRS measures, such as performance
enced by
measures and debt covenants.
As more fully disclosed in the “Risk Factors” in Item 1A of
our Annual report on Form 10-K, numerous factors could
cause our estimates and expectations to be wrong or
could lead to changes in our plans. Under any of these
circumstances the estimates described above could
change materially.
ENVIRONMENTAL LAWS AND REGULATIONS
See “Description of Properties” – “Mining in Ghana” for a
description of environmental laws and regulations and
for a discussion of our social and economic development
activities in Ghana.
RELATED PARTY TRANSACTIONS
We obtained legal services from a legal firm to which
one of our board members is Of Counsel. The total value
of all services purchased from this law firm during 2012
and 2011 was $0.7 million and $0.6 million, respectively.
Our board member did not personally perform any legal
services for us during the period nor did he benefit
directly or indirectly from payments for the services
performed by the firm.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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 and plant and equipment, stock based compen-
sation, tax assets, determination of fair values of financial
instruments and site reclamation/closure 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 the purchase costs of exploration properties and
development costs of development properties are based
on our judgment as to the actual value of such properties
and are therefore subjective in most cases. Certain
exploration and development properties have been
found to be impaired in the past and were written off in
prior years. We continue to retain title to certain explora-
tion 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 esti-
mates 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 surveys
or by estimating the number of tonnes of ore added and
removed from the stockpile during a period. The number
of recoverable ounces of gold in stockpiles is based on
assay data and the gold recovery rate expected when
the ore is processed. Stockpile values include mining and
mine maintenance costs incurred in bringing the ore to
the stockpile, and also a share of direct overhead 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 cost per tonne of the total stockpile.
Stockpiles are reduced as material is removed and fed to
the processing plant. A 10% adjustment to the volume of
the stockpiles, based on recent stockpile tonnages,
would change the carrying value of the stockpile inven-
tory by approximately $3.0 million.
Impairment charges: We periodically review and eval-
uate our long-lived assets for impairment when events or
changes in circumstances indicate the related carrying
amounts may not be recoverable from continued opera-
tion 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 determination of expected
future cash flows requires numerous estimates about the
future, including gold prices, operating costs, produc-
tion levels, gold recovery rates, ore reserves, amounts of
recoverable gold and capital expenditures. We model
our future cash flows using our life of mine plan, we
consider various gold price scenarios including current
gold prices and consensus gold price forecasts. We also
consider various cost and gold recovery rate assump-
tions, including current and expected future costs
structures and recovery rates. Based on our assessment
at December 31, 2012, we don’t believe that our long
lived assets are impaired.
Amortization: Capital expenditures for mining proper-
ties, mine development and certain property plant and
equipment items, are amortized using a units-of-produc-
tion method over Proven and Probable Mineral Reserve
ounces of gold. Capital expenditures that benefit an
entire mining property, such as the cost of building an
administrative facility, are amortized over all ounces
contained on the property. Capital expenditures that
benefit only a specific asset such as the pre-production
stripping costs of a pit, are amortized over only the
ounces located in the associated pit. Reserve estimates,
which serve as the denominator in units of production
amortization calculations, involve the exercise of subjec-
tive judgment and are based on numerous assumptions
about future operating costs, future gold prices, conti-
nuity of mineralization, future gold recovery rates, spatial
configuration of gold deposits, and other factors that
may prove to be incorrect. A 10% change in estimated
total reserves at Wassa and at Bogoso/Prestea could
result in an approximately $7.0 million change in annual
amortization expense.
2 0 1 2 A n n u a l R e p o r t | 3 7
Tax assets: Recognition of deferred tax assets requires
an analysis of future taxable income expectations to
evaluate the probability of sufficient future taxable
income to utilize the accrued tax benefits. Determination
of expected future taxable income requires numerous
estimates of future variables including but not limited to
gold prices, operating costs, gold recovery, ore reserves,
gold production, ore grades, administrative costs, tax
rates, and potential changes in tax laws.
Asset retirement obligation and reclamation expendi-
tures: Accounting for future reclamation obligations
requires management to make estimates at each mine
site of future reclamation and closure costs. In many
cases, a majority of such costs are incurred at the end of
a mine’s life which can be several years in the future.
Such estimates are subject to changes in mining plans,
reclamation requirements, inflation rates and tech-
nology. As a result, future reclamation and closure costs
are difficult to estimate. Our estimates of future reclama-
tion and closing costs are reviewed frequently and are
adjusted as needed to reflect new information about the
timing and expected future costs of our environmental
disturbances. Based upon our current situation, we esti-
mate that a 10% increase in total future reclamation and
closure cash costs would result in an approximately $4.0
million increase in our asset retirement obligations.
ACCOUNTING DEVELOPMENTS
Presentation of Comprehensive Income: In June 2011, the
FASB issued Accounting Standards Update No. 2011-05,
Comprehensive
Income (Topic 220)-Presentation of
Comprehensive Income (ASU 2011-05), to require an
TABLE OF CONTRACTUAL OBLIGATIONS
entity to present the total of comprehensive income, the
components of net income, and the components of other
comprehensive income either in a single continuous state-
ment of comprehensive income or in two separate but
consecutive statements. ASU 2011-05 eliminates the
option to present the components of other comprehen-
sive income as part of the statement of equity. ASU
2011-05 was effective for us in the first quarter of fiscal
2012 and was applied retrospectively. Our presentation of
comprehensive income complies with this new guidance.
Amendments to Achieve Common Fair Value Measure-
ment and Disclosure Requirements: In May 2011, the FASB
issued Accounting Standards Update No. 2011-04,
Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and International
Financial Reporting Standards (Topic 820)-Fair Value
Measurement (ASU 2011-04), to provide a consistent defi-
nition of fair value and ensure that the fair value
measurement and disclosure requirements are similar
between U.S. GAAP and International Financial Reporting
Standards. ASU 2011-04 changes certain fair value
measurement principles and enhances the disclosure
requirements particularly for level 3 fair value measure-
ments. ASU 2011-04 was effective for us in 2012 and was
applied prospectively. The fair value measurement princi-
ples used before the adoption of this standard is consistent
with the standard and the disclosures made in the financial
statements comply with this new guidance.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
Debt (1)
Interest on long term debt
Operating lease obligations
Purchase obligations
Capital lease obligations
Asset retirement obligations (2)
Total
Payment due (in thousands) by period
Total
Less than 1 Year
1 to 3 years
3 to 5 years More than 5 Years
$ 95,690
19,495
936
19,584
—
73,376
$ 6,968
4,878
936
19,584
—
9,943
$ 209,081
$ 42,309
$ 8,530
8,676
—
—
—
13,349
$ 30,555
$ 80,192
5,941
—
—
—
8,783
$ 94,916
$ —
—
—
—
—
41,301
$ 41,301
(1)
Includes $77.5 million of 5% Convertible Debentures maturing in November 2017. Golden Star has the right to repay the $77.5 million in cash or in com-
mon 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 at $34.1 million as of
December 31, 2012. 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 informa-
tion available to March 1, 2013. As of March 1, 2013, we
had outstanding 259,105,970 common shares, options to
acquire 12,645,222 common shares, and 5% Convertible
Debentures which are convertible into 46,963,636
common shares.
3 8 | G o l d e n S t a r
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
million change in our sales revenues and operating cash
flows, respectively. To reduce gold price volatility, we
have at various times entered into gold price derivatives.
During 2012, we did not hold any gold price derivatives
and thus, there were no financial instruments subject to
gold price risk at those dates.
LIQUIDITY RISK
Liquidity risk is the risk that we will encounter difficulty
in meeting obligations associated with financial liabilities
that are settled by delivering 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 obli-
gations. Typically these obligations are met by cash
flows from operations and from cash on hand. Scheduling
of capital spending and acquisitions of financial resources
may also be employed, as needed and as available, to
meet 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. Factors that influence our ability to
meet these obligations include general global economic
conditions, credit and capital market conditions, results
of operations and the price of gold.
CREDIT RISK
Credit risk is the risk that one party to a financial instru-
ment will cause a financial loss for the other party by
failing to discharge an obligation. Our credit risk is
primarily associated with liquid financial assets and deriv-
atives. We limit exposure to credit risk on liquid financial
assets by holding our cash, cash equivalents, restricted
cash and deposits at highly-rated financial institutions.
During 2012, all of our excess cash was invested in funds
that hold only U.S. treasury bills. Risks associated with
gold trade receivables is considered minimal as we sell
gold to a credit-worthy buyer who settles promptly within
two days of receipt of gold bullion.
Our exposure to market risk includes, but is not limited
to, the following risks: changes in interest rates on our
debt, changes in foreign currency exchange rates and
commodity price fluctuations.
INTEREST RATE RISK
Interest rate risk is the risk that the future cash flows of a
financial instrument will fluctuate because of changes in
market interest rates. Our 5% Convertible Debentures
and the outstanding loans under our equipment financing
facility bear interest at a fixed rate and are not subject to
changes in interest payments. We therefore have not
entered into any agreements to hedge against unfavor-
able changes in interest rates, but may in the future
actively manage our exposure to interest rate risk.
FOREIGN CURRENCY EXCHANGE RATE RISK
Currency risk is risk that the fair value of future cash
flows will fluctuate because of changes in foreign
currency exchange rates. In addition, the value of cash
and cash equivalents and other financial assets and
liabilities denominated in foreign currencies can fluc-
tuate with changes in currency exchange rates.
Since our revenues are denominated in U.S. dollars and
our operating units transact much of their business in
U.S. dollars, we are typically not subject to significant
impacts from currency fluctuations. Even thus, certain
purchases of labor, operating supplies and capital assets
are denominated in Ghana cedis, euros, British pounds,
Australian dollars and South African rand. To accommo-
date these purchases, we maintain operating cash
accounts in non-US dollar currencies and appreciation of
these non-US dollar currencies against the U.S. dollar
results in a foreign currency gain and a decrease in
non-U.S. dollar currencies results in a loss. In the past, we
have entered into forward purchase contracts for South
African rand, euros and other currencies to hedge
expected purchase costs of capital assets. During 2012
and 2011, we had no currency related derivatives. At
December 31, 2012, and December 31, 2011, we held $5.9
million and $16.3 million, respectively, of foreign currency.
COMMODITY PRICE RISK
Gold is our primary product and, as a result, changes in
the price of gold can significantly affect our results of
operations and cash flows. Based on our expected gold
production in 2013, a $10 per ounce change in gold price
would result in approximately a $3.4 million and $2.6
2 0 1 2 A n n u a l R e p o r t | 3 9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of Golden Star Resources Ltd.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of opera-
tions and comprehensive income (loss), changes in shareholders’ equity and cash flows present fairly, in all material
respects, the financial position of Golden Star Resources Ltd. and its subsidiaries at December 31, 2012 and December
31, 2011, and the results of operations and cash flows for each of the three years in the period ended December 31,
2012 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December
31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for
these financial statements, for maintaining effective internal control over financial reporting 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 opinions on these financial statements, and on the Company’s internal control
over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
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 accounting principles. A company’s internal control over financial reporting 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 trans-
actions 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 accor-
dance 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, projections of any evaluation of effectiveness to future periods are subject 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.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants
Vancouver, British Columbia
March 4, 2013
4 0 | G o l d e n S t a r
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME/LOSS
(Stated in thousands of U.S. dollars except share and per share data)
Revenue
COST OF SALES
Mining operating expenses
Royalties
Mining related depreciation and amortization
Accretion of asset retirement obligations
Total cost of sales
For the years ended December 31,
Notes
2012
2011
2010
$ 550,540
$ 471,007
$ 432,693
368,404
27,561
98,837
2,816
497,618
323,547
21,295
71,466
3,845
420,153
284,944
13,059
100,649
2,803
401,455
Mine operating margin
52,922
50,854
31,238
OTHER EXPENSES/(INCOME)
Exploration expense
General and administrative expense
Property holding costs
Foreign exchange loss
Derivative mark-to-market loss
Loss/(gain) on fair value of convertible debentures
Gain on sale of assets
Loss on extinguishment of debt
Interest expense
Interest and other income
Income/(loss) before income tax
Income tax expense
Net loss
Net loss attributable to noncontrolling interest
3,505
23,674
9,862
2,446
162
27,985
(31,577)
568
10,163
(467)
6,601
5,137
25,378
8,674
2,749
19,276
(26,154)
(1,350)
—
8,891
(229)
8,482
(16,816)
$ (10,215)
(725)
(10,984)
$ (2,502)
(427)
5
4
14
13
15
Net loss attributable to Golden Star shareholders
$ (9,490)
$ (2,075)
5,398
17,065
5,299
872
850
3,208
(1,171)
—
9,207
(362)
(9,128)
(5,477)
$ (14,605)
(3,376)
$ (11,229)
Net loss per share attributable to Golden Star shareholders
Basic and diluted
18
$ (0.04)
$ (0.01)
$ (0.04)
Weighted average shares outstanding (millions)
258.9
258.6
258.0
OTHER COMPREHENSIVE LOSS
Net loss
$ (10,215)
$ (2,502)
$ (14,605)
Unrealized (loss)/gain on investments net of deferred taxes
8
(2,694)
19
619
Comprehensive loss
$ (12,909)
$ (2,483)
$ (13,986)
Comprehensive loss attributable to noncontrolling interest
(725)
(427)
(3,376)
Comprehensive loss attributable to Golden Star shareholders
$ (12,184)
$ (2,056)
$ (10,610)
The accompanying notes are an integral part of the consolidated financial statements.
2 0 1 2 A n n u a l R e p o r t | 4 1
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of U.S. dollars except shares issued and outstanding)
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable
Inventories
Deferred tax assets
Deposits
Available for sale investments
Prepaids and other
Total Current Assets
Restricted Cash
Property, Plant And Equipment
Mining Properties
Intangible Assets
Other Assets
Total Assets
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities
Asset retirement obligations
Current tax liability
Current debt
Total Current Liabilities
Long Term Debt
Asset Retirement Obligations
Deferred Tax Liability)
Total Liabilities
Commitments And Contingencies
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 outstand-
ing: 259,015,970 at December 31, 2012; 258,669,486 at December 31, 2011
Contributed Surplus
Accumulated Other Comprehensive (Deficit)/Income
Deficit
Total Golden Star Equity
Noncontrolling Interest
Total Equity
Total Liabilities And Shareholders’ Equity
As of
December 31
2012
As of
December 31
2011
Notes
$ 78,884
$ 103,644
7
6
15
8
16
9
10
11
12
15
13
13
12
15
16
11,896
90,212
235
8,600
15,034
2,666
207,527
2,028
260,986
252,176
3,159
—
10,077
74,297
—
6,474
1,416
2,048
197,956
1,273
252,131
270,157
5,266
895
$ 725,876
$ 727,678
$ 101,760
$ 92,088
9,943
12,393
6,968
131,064
110,507
24,170
28,650
294,391
—
8,996
197
128,459
229,740
10,759
24,884
23,993
289,376
—
—
—
694,652
693,899
25,154
(716)
(285,602)
433,488
(2,003)
438,302
19,815
1,978
(276,112)
439,580
(1,278)
438,302
$ 725,876
$ 727,678
The accompanying notes are an integral part of the consolidated financial statements.
4 2 | G o l d e n S t a r
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Stated in thousands of U.S. dollars)
Number of
Common Shares Share Capital
Warrants
Options
Contributed Surplus
Accumulated
Other
Comprehensive
Income/(Loss)
Retained
Deficit
Non
Controlling
Interest
Total
Shareholders’
Equity
Balance at December 31, 2009
257,362,561
$ 690,056
$ 5,138
$ 9,629
$ 1,340
$ (262,808)
$ 2,525
$ 445,880
Shares issued under options
1,148,675
3,537
Options granted net of forfeitures
Unrealized gain on available for
sale investments
Issue costs
Net loss
—
—
—
—
—
—
(106)
—
—
—
—
—
—
(1,182)
2,975
—
—
—
—
—
619
—
—
—
—
—
—
—
—
—
—
(11,229)
(3,376)
2,355
2,975
619
(106)
(14,605)
Balance at December 31, 2010
258,511,236
$ 693,487
$ 5,138
$ 11,422
$ 1,959 $ (274,037)
$ (851)
$ 437,118
Shares issued under options
158,251
412
Options granted net of forfeitures
Common shares issued
Unrealized gain on available for
sale investments
Net loss
—
—
—
—
—
—
—
—
—
—
—
—
—
(130)
3,336
49
—
—
—
—
—
19
—
—
—
—
—
—
—
—
—
282
3,336
49
19
(2,075)
(427)
(2,502)
Balance at December 31, 2011
258,669,487
$ 693,899
$ 5,138
$ 14,677
$ 1,978 $ (276,112)
$ (1,278)
$ 438,302
Shares issued under options
and DSU's
Bonus shares issued
Options granted net of forfeitures
Deferred share units granted
Unrealized loss on available for
sale investments
Net loss
181,475
165,009
—
—
—
—
446
307
—
—
—
—
—
—
—
—
—
—
(1,375)
—
6,111
603
—
—
—
—
—
—
(2,694)
—
—
—
—
—
—
—
—
—
—
(929)
307
6,111
603
(2,694)
—
(9,490)
(725)
(10,215)
Balance at December 31, 2012
259,015,970
$ 694,652
$ 5,138
$ 20,016
$ (716) $ (285,602)
$ (2,003)
$ 431,485
There were no treasury shares held as of December 31, 2012.
The accompanying notes are an integral part of these financial statements
2 0 1 2 A n n u a l R e p o r t | 4 3
GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of U.S. dollars)
OPERATING ACTIVITIES:
Net loss
Reconciliation of net loss to net cash provided by operating activities:
For the years ended December 31
Notes
2012
2011
2010
$ (10,215)
$ (2,502)
$ (14,605)
Depreciation, depletion and amortization
Amortization of loan acquisition cost
Loss on extinguishment of debt
Gain on sale of assets
Non-cash employee compensation
Deferred income tax expense
Derivative mark-to-market loss
Fair value loss/(gain) on convertible debt
Accretion of asset retirement obligations
Reclamation expenditures
Changes in working capital
Net cash provided by operating activities
Investing Activities:
Expenditures on mining properties
Expenditures on property, plant and equipment
Change in accounts payable and deposits on mine equipment and material
Proceeds from sale of investments
Other
Net cash used in investing activities
Financing Activities:
Principal payments on debt
Proceeds from debt agreements and equipment financing
Issuance of share capital, net of issuance costs
Other
Net cash used in financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
14
21
98,926
895
568
(31,577)
6,111
16,816
162
27,985
2,816
(6,203)
(11,994)
94,290
(43,382)
(45,113)
4,559
15,616
(734)
(69,054)
(58,806)
8,510
300
—
(49,996)
(24,760)
103,644
71,466
1,563
—
(1,350)
3,385
8,315
(177)
(26,154)
3,845
(26,895)
(7,853)
23,643
(50,027)
(51,353)
1,907
—
1,916
(97,557)
(10,397)
9,875
282
(220)
(460)
(74,374)
178,018
98,775
1,228
—
(1,172)
2,975
3,374
(215)
3,208
2,803
(9,704)
9,950
96,616
(34,342)
(30,849)
901
—
2,740
(61,550)
(38,049)
25,674
2,248
(1,010)
(11,137)
23,929
154,089
$ 78,884
$ 103,644
$ 178,018
(See Note 21 for supplemental cash flow information)
The accompanying notes are an integral part of the consolidated financial statements
4 4 | G o l d e n S t a r
GOLDEN STAR RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in table are in thousands of U.S. dollars unless noted otherwise)
1. NATURE OF OPERATIONS
differ from our estimates.
Through our 90% owned subsidiary Golden Star (Bogoso/
Prestea) Ltd (“GSBPL”) we own and operate the Bogoso/
Prestea gold mining and processing operation (“Bogoso/
Prestea”) located near the town of Bogoso, Ghana.
Through our 90% owned subsidiary Golden Star (Wassa)
Ltd (“GSWL”) we also own and operate the Wassa gold
mine (“Wassa”), located approximately 35 kilometers east
of Bogoso/Prestea. Wassa mines ore from pits near the
Wassa plant and also processes ore mined at our Hwini-
Butre (“HBB”) property located south of Wassa. We hold
interests in several gold exploration projects in Ghana and
other parts of West Africa, and in South America we hold
and manage exploration properties in Brazil.
2. BASIS OF PRESENTATION
Golden Star Resources Ltd (“Golden Star” or “Company”)
is a Canadian federally-incorporated, international gold
in
mining and exploration company headquartered
Toronto Ontario, Canada. All financial
information
presented in these consolidated financial statements is
reported in accordance with U.S. GAAP.
These consolidated financial statements
include the
accounts of the Company and its 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 control-
ling interest, is the general partner or where it is subject to
the majority of expected losses or gains.
Our consolidated financial statements have been prepared
on a going concern basis, which contemplates the realiza-
tion of assets and discharge of all liabilities in the normal
course of business. With the exception of a few explora-
tion offices, the functional currency,
including the
Ghanaian operations, is the U.S. dollar.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
Preparation of our consolidated financial statements in
conformity with U.S. GAAP requires management to make
estimates and assumptions that can affect reported
amounts of assets, liabilities, deferred tax liabilities, and
expenses. The more significant areas requiring the use of
estimates include asset impairments, valuation of convert-
ible debentures, stock based compensation, depreciation
and amortization of assets, and site reclamation and
closure accruals. Accounting for these areas is subject to
estimates and assumptions regarding, among other things,
ore reserves, mining rates, gold recoveries, future gold
prices, future operating costs, asset usage rates, future
mining activities and future costs of reclamation activities.
Management bases its estimates on historical experience
and on other assumptions we believe to be reasonable
under the circumstances. However, actual results may
CASH AND CASH EQUIVALENTS
Cash includes cash deposits in any currency residing in
checking accounts, money market funds and sweep
accounts. Cash equivalents consist of highly liquid invest-
ments purchased with maturities of three months or less.
Investments with maturities greater than three months
and up to one year are classified as short-term invest-
ments, 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 typi-
cally approximates market value.
INVENTORIES
include
Inventory classifications
“stockpiled ore,”
“in-process inventory,” “finished goods inventory” and
“materials and supplies.” 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 production costs
and attributable overhead and depreciation incurred to
bring the materials to their current point in the processing
cycle. 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 stored for future 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 deter-
mined by assay and by measure of the quantities of the
various gold-bearing materials in the recovery process.
The in-process gold is valued at the average of the begin-
ning inventory and the cost of material fed into the
processing stream plus
in-process conversion costs
including applicable mine-site overheads, depreciation
and amortization related to the processing facilities.
Finished goods inventory is 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 cost or net
realizable value. Included in the costs are the direct costs of
the mining and processing operations as well as direct mine-
site overheads, amortization and depreciation.
2 0 1 2 A n n u a l R e p o r t | 4 5
Material and supply inventories consist mostly of equip-
ment parts and consumables required in the mining and
ore processing activities.
and allocated interest during the construction phase.
Indirect overhead costs are not included in the cost of
self-constructed assets.
All inventories are valued at the lower of average cost or
net realizable value.
PROPERTY ACQUISITION, EXPLORATION AND
DEVELOPMENT COSTS
The initial acquisition costs of exploration and mining
properties are capitalized. Subsequent exploration and
development costs are expensed as incurred until such
time as a feasibility study has been completed which
establishes, in compliance with SEC Industry Standard
Guide 7, that proven and probable reserves exist on the
property. After proven and probable reserves have been
established, subsequent exploration and development
costs are capitalized until such time as a property is
placed in-service. Following a property’s in-service date,
accumulated capitalized acquisition, exploration and
development costs are reclassified as Mining Property
assets and are subject to amortization on a units-of-
production basis when metal production begins.
PROPERTY, PLANT AND EQUIPMENT
in
Property, plant and equipment assets,
including
machinery, processing equipment, mining equipment,
mine site facilities, buildings, 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 include direct construction costs,
direct overhead and allocated
interest during the
construction phase. Indirect overhead costs are not
the cost of self-constructed assets.
included
Depreciation for mobile equipment and other assets
having estimated lives shorter than the estimated life of
the ore reserves is calculated using the straight-line
method at rates which depreciate the cost of the assets,
less their anticipated residual values, if any, over their
estimated useful lives. Mobile mining equipment is amor-
tized over a five year life. Assets, such as processing
plants, power generators and buildings, which have an
estimated life equal to or greater than the estimated life
of the ore reserves, are amortized over the life of the
proven and probable reserves of the associated mining
property using a units-of-production amortization
method. The net book value of property, plant and equip-
ment assets is charged against income if the mine site is
abandoned and it is determined that the assets cannot be
economically transferred to another project or sold.
MINING PROPERTIES
Mining property assets, including property acquisition
costs, tailings storage facilities, mine-site development
and drilling costs where proven and probable reserves
have been established, pre-production waste stripping,
condemnation drilling, roads, feasibility studies and
wells are recorded at cost. The costs of self-constructed
assets include direct construction costs, direct overhead
Mining property assets typically have an estimated life
equal to or greater than the estimated life of an ore
reserves and are amortized over the life of the proven
and probable reserves to which they relate, using a units-
of-production amortization method. At open pit mines
the costs of removing overburden from an ore body in
order to expose ore during its initial development period
are capitalized.
IMPAIRMENT OF LONG-LIVED ASSETS
We review and evaluate our long-lived assets for impair-
ment at least annually and also when events or changes
in circumstances indicate the related carrying amounts
may not be recoverable. An asset impairment is consid-
ered to exist if an asset’s recoverable value is less than its
carrying value as recorded on our Consolidated Balance
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 (considering current and
historical prices, price trends and related factors),
production levels and cash costs of production, capital
and reclamation costs, all based on detailed 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. All assets at a particular operation
are considered together for purposes of estimating
future cash flows. The carrying amounts of purchase
costs of exploration and development projects not yet in
service are also evaluated periodically for impairment.
Numerous factors including, but not limited to, unex-
pected 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, commodity prices,
capital expenditure requirements and reclamation costs
could differ from the assumptions used in the cash flow
models 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 applicable to mineral inter-
ests where proven and probable reserves have been
identified, due to the lower level of confidence that the
identified mineralized material can ultimately be mined
economically.
Material changes to any of these factors or assumptions
discussed above could result in future asset impairments.
4 6 | G o l d e n S t a r
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 capi-
talized and amortized over the life of the property. The
estimated future cash costs of such liabilities are based
primarily upon environmental and regulatory require-
ments of the various jurisdictions in which we operate.
The liability is reduced with cash expenditures for envi-
ronmental remediation incurred.
PROPERTY HOLDING COST
Property holding costs are costs incurred to retain and
maintain properties which have been written off but
ownership is retained. Such cost are expensed in the
period incurred.
FOREIGN CURRENCIES AND FOREIGN CURRENCY
TRANSLATION
Our functional currency is the U.S. 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 included 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 deferred taxes.
Deferred income taxes are computed using the asset and
liability method whereby deferred income tax assets and
liabilities are recognized for the expected future tax
consequences attributable to temporary differences
between the tax basis of assets and liabilities and their
reported amounts in the financial statements. Deferred
income tax assets and liabilities are computed using
enacted income tax rates in effect when the temporary
differences are expected to reverse. The effect on the
deferred tax assets and liabilities of a change in tax rates
is recognized in the period of enactment. The provision
for or the recovery of deferred taxes is based on the
changes in deferred tax assets and liabilities during the
period. In estimating deferred tax assets, a valuation
allowance is provided to reduce the deferred tax assets
to amounts that are more likely than not to be realized.
We deal with uncertainties and judgments in the applica-
tion of complex tax regulations
in the multiple
jurisdictions where our properties are located. The
amount of taxes paid are dependent upon many factors,
including negotiations with taxing authorities in the
various jurisdictions and resolution of disputes arising
from our international tax audits. We recognize potential
liabilities and record tax liabilities for anticipated tax
audit issues in our various tax jurisdictions based on our
assessment of additional taxes due. We adjust these
reserves in light of changing facts and circumstances,
however, due to the complexity of some of these uncer-
tainties, the ultimate resolution may result in payment
that is materially different from our estimates of our tax
liabilities. If our estimate of tax liability proves to be less
than the ultimate assessment, an additional charge to
expense would result. If the estimate of tax liabilities
proves to be greater that the ultimate assessment, a tax
benefit is recognized.
A tax benefit from an uncertain tax position may only be
recognized if it is more-likely-than-not that the position
will be sustained upon examination by the tax authority
based on the technical merits of the position. The tax
benefit of an uncertain tax position that meets the more-
likely-than-not recognition threshold is measured as the
largest amount that is greater than 50% likely to be real-
ized upon settlement with the tax authority. To the extent
a full benefit is not expected to be realized, an income
tax liability is established. Any change in judgment
related to the expected resolution of uncertain tax posi-
tions are recognized in the year of such a change.
Accrued interest and penalties related to unrecognized
tax benefits are recorded in income tax expense in the
current year.
MINING TAX
Ghana imposed a levy on mining companies during
2009, 2010 and 2011, equal to 5% of pre-tax income as
reported in our financial accounting records. This tax
was considered a current mine operating tax and was
expensed as incurred.
NET INCOME/(LOSS) PER SHARE
Basic income/(loss) per share of common stock is calcu-
lated by dividing income available to Golden Star’s
common shareholders by the weighted average 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 warrants and the if-converted method to calculate
the dilutive effect of the convertible debentures. In
periods of loss, diluted net loss per share is equal to
basic income per share.
REVENUE RECOGNITION
Revenue from the sale of metal is recognized when there
is persuasive evidence that an arrangement exists, the
price is determinable, the metal has been delivered, title
and risk of ownership has passed to the buyer and collec-
tion is reasonably assured. All of our gold is transported
to a South African gold refiner who locates a buyer and
arranges for sale of our gold on the same day that the
gold is shipped from the mine site. The sales price is
based on the London P.M. fix on the day of shipment.
2 0 1 2 A n n u a l R e p o r t | 47
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 Third Amended and Restated 1997
Stock Option Plan, common share options may be granted
to executives, employees, consultants and non-employee
directors. Compensation expense for such grants is
recorded in the Consolidated Statements of Operations as
a component of general and administrative expense, with
a corresponding 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 vesting periods of
the respective options. Consideration paid to the company
on exercise of options is credited to share capital.
Under the Company’s Deferred Share Unit (“DSU”) plan,
DSUs may be granted to executive officers and directors.
Compensation expense for such grants is recorded in the
Consolidated Statements of Operations as a component of
general and administrative expense, with a corresponding
increase recorded in the Contributed Surplus account in
the Consolidated Balance Sheets. The expense is based on
the fair values at the time of grant and is recognized over
the vesting periods of the respective DSU. Upon exercise
the Company’s compensation committee may, at its
discretion, issue cash, shares of a combination thereof.
The Company’s Share Appreciation Rights (“SAR”) plan
allows SARs to be issued to executives and directors. SARs
vests after a period of three years. These awards are settled
in cash equal to the Company’s stock price less the strike
price on the grant date. Since these awards are settled in
cash, the Company marks-to-market the associated expense
for each award at the end of each reporting period. The
Company accounts for these as liability awards and marks-
to-market the fair value of the award until final settlement.
LEASES
Leases that transfer substantially all of the benefits and
risks of ownership to the Company are recorded as
capital leases and classified as property, plant and equip-
ment with a corresponding amount recorded with
current and long-term debt. All other leases are classi-
fied as operating leases under which leasing costs are
expensed in the period incurred.
FINANCIAL INSTRUMENTS
Investments
Equity security investments are accounted for as avail-
able for sale securities, changes in the fair value of
available for sale investments are charged or credited to
other comprehensive income until the instrument is
realized.
The Company periodically evaluates whether declines in
fair values of its investments below the Company’s
carrying value are other-than-temporary in accordance
with guidance for the meaning of other-than-temporary
impairment and its application to certain investments.
The Company also monitors its investments for events or
changes in circumstances that have occurred that may
have a significant adverse effect on the fair value of the
investment and evaluates qualitative and quantitative
factors regarding the severity and duration of the unreal-
ized loss and the Company’s ability to hold the investment
until a forecasted recovery occurs to determine if the
decline in value of an investment is other-than-tempo-
rary. Declines in fair value below the Company’s carrying
value deemed to be other-than-temporary are charged
to the statement of operations.
CONVERTIBLE DEBENTURES
The Convertible debentures are recorded at fair value
determined based on unadjusted quoted prices in active
markets when available, otherwise by valuing the conver-
sion feature and the debt separately. The conversion
feature is valued using a Black-Scholes model and the
value of the debt is determined based on the present
value of the future cash flows. Changes in fair value are
recorded in the Consolidated Statement of Operations.
Upfront costs and fees related to the convertible deben-
tures were recognized in the statement of operations as
incurred and not deferred.
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 derivative finan-
cial instruments for trading purposes or for speculative
purposes. Our derivative instruments are recorded on
the balance 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)”.
OTHER COMPREHENSIVE INCOME/(LOSS) (“OCI”)
Components of comprehensive income/(loss) consist of
unrealized gains/(losses) on available-for-sale invest-
ments and net income. Unrealized gains or losses on
securities are net of any reclassification adjustments for
realized gains or losses included in net income.
RECENTLY ISSUED STANDARDS
Presentation of Comprehensive Income: In June 2011,
the FASB issued Accounting Standards Update No.
2011-05, Comprehensive Income (Topic 220) - Present-
ation of Comprehensive Income (ASU 2011-05), to
require an entity to present the total of comprehensive
income, the components of net income, and the compo-
nents of other comprehensive income either in a single
continuous statement of comprehensive income or in
two separate but consecutive statements. ASU 2011-05
eliminates the option to present the components of
other comprehensive income as part of the statement of
equity. ASU 2011-05 is effective for us in the first quarter
of fiscal 2012 and should be applied retrospectively. Our
presentation of comprehensive income already complies
with this new guidance.
4 8 | G o l d e n S t a r
Amendments to Achieve Common Fair Value Measure-
ment and Disclosure Requirements: In May 2011, the
FASB issued Accounting Standards Update No. 2011-04,
Amendments to Achieve Common Fair Value Measure-
ment and Disclosure Requirements in U.S. GAAP and
International Financial Reporting Standards (Topic 820)-
Fair Value Measurement (ASU 2011-04), to provide a
consistent definition of fair value and ensure that the fair
value measurement and disclosure requirements are
similar between U.S. GAAP and International Financial
Reporting Standards. ASU 2011-04 changes certain fair
value measurement principles and enhances the disclo-
sure requirements particularly for level 3 fair value
measurements. ASU 2011-04 is effective for us in 2012
and should be applied prospectively. The fair value
measurement principles used before the adoption of this
standard is consistent with the standard and the disclo-
sures made in the financial statements comply with this
Available for sale investments
new guidance.
4. FINANCIAL INSTRUMENTS
The following tables illustrate the classification of the
Company’s financial instruments within the fair value
hierarchy as of December 31, 2012. 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 observ-
able for the asset or liability either directly or
indirectly; and
Level 3 - Inputs that are not based on observable market
data.
Financial assets measured at fair value as at December 31, 2012
Level 1
Level 2
Level 3
Total
$ 15,034
$ 15,034
$ —
$ —
$ —
$ —
$ 15,034
$ 15,034
Available for sale investments in Level 1 are based on the
quoted market price for the equity investment. It is
possible that some of these investments could be sold in
large blocks at a future date via a negotiated agreement
and such agreements may include a discount from the
quoted price.
5% Convertible Debentures
The 5% convertible senior unsecured debentures (“5%
Convertible Debentures”) are recorded at fair value. The
debt component of the 5% Convertible Debentures are
valued based on discounted cash flows and the equity
component are valued using a Black-Scholes model. Inputs
used to determine these values were: discount rate of 8.6%,
risk free interest rate of 0.73%, volatility of 40% and a
remaining life of 4.42 years. The 5% Convertible Debentures
$99.6 million fair value includes $0.3 million of accrued
interest as of December 31, 2012. See Note 13, Debt for
further discussion on the 4% and 5% Convertible Debentures.
The risk free interest rate used in the fair value computa-
tion is the interest rate on US treasury rate with a maturity
that is similar to the remaining life of the convertible
Financial assets measured at fair value as at December 31, 2012
Level 1
Level 2
Level 3
Total
$ —
$ —
$ —
$ —
$ 99,604
$ 99,604
$ 99,604
$ 99,604
debenture. The discount rate used is determined by adding
our risk premium (7.87%) on the date of the issuance of the
convertible debenture to the risk free interest rate. A 10%
increase in the risk premium results in a 2% decrease in the
fair value of the convertible debenture. Volatility is calcu-
lated based on the weekly volatility of our share price
observable on the NYSE MKT for a historical period equal
to the remaining life of the convertible debenture. Investors
trading in these instruments would normally cap the vola-
tility used in the Black-Scholes model, to be consistent we
cap the weekly volatility used at 40%. If the volatility
assumption is decreased by 10% the fair value of the
convertible debenture will decrease by 2%.
Balance at December 31, 2011
5% Convertible Debentures transferred into Level 3
Unrealized loss included in loss on fair value of Convertible Debentures in Statement of Operations
Balance at December 31, 2012
Fair value measurements using
significant unobservable inputs
Level 3
$ —
74,003
25,601
$ 99,604
It is our policy to transfer fair value measurements if
there is an indication that quoted market prices will not
be available to value the convertible debentures. As a
result the 5% Convertible Debentures was transferred
from Level 1 to Level 3 on July 1, 2012 because of a lack of
observable market data, resulting from a decrease in
market activity of these 5% Convertible Debentures.
During the year ended December 31, 2012, an unrealized
loss of $28.0 million (2011: gain of $26.2 million) was
recorded in the Statement of Operations relating to the
change in fair value of the 5% Convertible Debentures.
2 0 1 2 A n n u a l R e p o r t | 4 9
Available for sale investments
Warrants
4% Convertible Debentures
Financial assets measured at fair value as at December 31, 2011
Level 1
$ 1,416
—
$ 1,416
Level 2
Level 3
Total
$ —
$ —
$ 1,416
555
$ 555
—
555
$ —
$ 1,971
Financial liabilities measured at fair value as at December 31, 2011
Level 1
Level 2
Level 3
Total
$ 121,625
$ 121,625
$ —
$ —
$ —
$ —
$ 121,625
$ 121,625
5. DERIVATIVE GAINS AND LOSSES
The derivative mark-to-market losses/(gains) recorded
in the Statement of Operations are comprised of the
following amounts:
$1,200 per ounce and a cap of $1,503 per ounce. We did
not enter into any additional put and call contracts
during 2012, as a result there were no outstanding gold
price contracts as of December 31, 2012.
For the years ended December 31,
6. INVENTORIES
2012
2011
2010
True Gold Mining Inc. - warrants
Gold price derivatives
$ 162
—
$ (177)
19,453
$ (216)
1,066
Derivative loss
$ 162
$ 19,276
$ 850
Our inventories at December 31, 2012 and December 31,
2011 include the following components:
Realized loss
Unrealized gain
Derivative loss
For the years ended December 31,
2012
2011
2010
$ 162
—
$ 19,453
(177)
$ 1,066
(216)
$ 162
$ 19,276
$ 850
Stockpiled ore
In-process
Materials and supplies
Finished goods
Total
As at December 31
2012
2011
$ 33,130
$ 16,773
7,571
43,548
5,963
8,912
48,612
—
$ 90,212
$ 74,297
TRUE GOLD MINING INC. - WARRANTS
In 2008, we received 2.0 million warrants from True
Gold Mining Inc. (“TGM”), formerly Riverstone Resources
Inc., as partial payment for the right to earn an owner-
ship interest in our exploration projects in Burkina Faso.
These warrants were exercisable through January 2012
at Cdn$0.45, and in January 2012, the TGM warrants
were exercised, see Note 8.
GOLD PRICE DERIVATIVES
In January 2011, we entered into a series of put and call
contracts covering 76,800 ounces of future gold produc-
tion between February and December 2011. The
contracts were spread evenly in each week over this
period and structured as cashless collars with a floor of
$1,200 per ounce and a cap of $1,457 per ounce. In early
February 2011, we entered into a second set of put and
call contracts covering 75,200 ounces of future gold
production between February and December 2011. The
contracts were spread evenly in each week during this
period and structured as cashless collars with a floor of
Included in the value of the stockpile ore and in-process
inventories above were approximately 45,000 and
36,000 recoverable ounces of gold at December 31,
2012, and December 31, 2011, respectively. Stockpile
inventories are short-term surge piles expected to be
processed within the next 12 months. Finished goods at
December 31, 2012 consisted of 5,070 ounces of unsold
gold doré. A total of $0.5 million and $1.4 million of
material and supply inventories were written off in 2012
and 2011 respectively, due to obsolescence and counts
and an additional $0.1 million and $1.7 million of net real-
izable value adjustments in 2012 and 2011 respectively.
The net realizable value adjustments in 2012 are related
to in-process inventory in the non-refractory plant.
7. ACCOUNTS RECEIVABLE
Accounts receivable at December 31, 2012 and December
31, 2011 includes the following components:
Value added tax refunds
Other
Total
As at December 31,
2012
$ 9,766
2,130
$ 11,896
2011
$ 8,051
2,026
$ 10,077
5 0 | G o l d e n S t a r
8. AVAILABLE FOR SALE INVESTMENTS
The following table presents changes in available for sale investments for 2012 and 2011:
Balance at beginning of year
Acquisitions
Dispositions
OCI - unrealized (loss)/gain
Balance at end of year
As at December 31, 2012
As at December 31, 2011
TGM
TGM
Fair Value
Shares
Fair Value
Shares
$ 1,416
17,117
(805)
(2,694)
2,000,000
23,676,301
(1,155,200)
—
$ 928
469
—
19
1,300,000
700,000
—
—
$ 15,034
24,521,101
$ 1,416
2,000,000
During the first quarter of 2012, we acquired True Gold
Mining Inc. (“TGM”) shares. The acquisition was accom-
plished through two transactions. The first was an
exercise of the two million warrants on January 9, 2012,
at an exercise price of Cdn$0.45 for cash consideration
of Cdn$0.9 million, the fair value of the shares acquired
was $1.3 million. The second transaction was the sale of
the Company’s Burkina Faso subsidiary to TGM on
February 2, 2012. The sale generated $6.6 million of cash
plus 21.7 million TGM shares. We recognized the shares
at their fair value of $15.8 million on February 2, 2012,
when the sale was finalized.
Available for sale investments are recorded at fair value
on the balance sheet date, changes in the fair value of
available for sale investments are charged or credited to
other comprehensive income. Available for sale invest-
ments consists solely of our investment in TGM. It is
possible that some of these shares could be sold in large
blocks at a future date via a negotiated agreement and
such agreements may include a discount from the
quoted price.
The quoted market price of TGM’s common share has
decreased since the February 2, 2012 acquisition, such
that for the period ended December 31, 2012, we recog-
nized through Comprehensive Income a loss of $2.7
million related to our share holdings. TGM’s share price
has experienced a high degree of volatility over the last
twelve months, and is sensitive to fluctuations in the gold
price. If the gold prices continues to follow its long term
upward trend TGM shares could recover from the
unrealized losses.
9. PROPERTY, PLANT AND EQUIPMENT
The following table shows the categories of property, plant and equipment at December 31, 2012 and December 31, 2011:
Bogoso/Prestea
Bogoso refractory plant
Wassa/HBB
Corporate & other
Total
As at December 31, 2012
As at December 31, 2011
Cost
Accumulated
Depreciation
Net Book
Value
Cost
Accumulated
Depreciation
Net Book
Value
$ 189,247
$ (112,838)
$ 76,409
$ 179,216
$ (109,519)
$ 69,697
196,066
120,766
1,363
(67,230)
(65,463)
(925)
128,836
55,303
438
186,607
106,631
1,378
(58,873)
(52,430)
(879)
127,734
54,201
499
$ 507,442
$ (246,456)
$ 260,986
$ 473,832
$ (221,701)
$ 252,131
There was no interest capitalized in new additions to property, plant and equipment in the periods shown above.
10. MINING PROPERTIES
The following table provides a breakdown of mining properties at December 31, 2012 and December 31, 2011:
Bogoso/Prestea
Bogoso refractory plant
Mampon
Wassa/HBB
Other
Total
As at December 31, 2012
As at December 31, 2011
Cost
Accumulated
Amortization
Net Book
Value
Cost
Accumulated
Amortization
$ 128,713
$ (64,972)
$ 63,741
$ 119,700
$ (60,186)
70,865
16,095
352,241
32,182
(40,662)
—
(234,847)
(7,439)
30,203
16,095
117,394
24,743
70,090
16,095
314,801
27,312
(34,839)
—
(180,486)
(2,330)
Net Book
Value
$ 59,514
35,251
16,095
134,315
24,982
$ 600,096
$ (347,920)
$ 252,176
$ 547,998
$ (277,841)
$ 270,157
There was no interest capitalized in new additions to mining properties in the periods shown above.
2 0 1 2 A n n u a l R e p o r t | 5 1
11. INTANGIBLE ASSET
12. ASSET RETIREMENT OBLIGATIONS
The intangible asset represents a right to receive, from
the Ghana national grid, an amount of electric power
equal to one fourth of a particular 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 ending
in 2014. As of December 31, 2012, the carrying value of
the intangible asset was $3.2 million, with a gross asset
value of $12.4 million and accumulated amortization of
$9.3 million. We amortized $2.1 million during 2012 and
expect the same for 2013 with the remaining amount
amortized in 2014.
At December 31, 2012 and December 31, 2011, the total
undiscounted amount of the estimated future cash needs
was estimated to be $73.4 million and $72.8 million,
respectively. Discount rates used to value the ARO range
between 8% and 10%. The schedule of payments required
to settle the December 31, 2011 ARO liability extends
through 2029.
The changes in the carrying amount of the ARO during
the years ended December 31, 2012, and December 31,
2011, are as follows:
Beginning balance
Accretion expense
Additions and change in estimates
Cost of reclamation work performed
For the years ended December 31
2012
2011
$ 33,880
$ 44,952
2,816
3,620
(6,203
3,845
11,977
(26,894)
Balance at December 31
$ 34,113
$ 33,880
Current portion
Long term portion
$ 9,943
$ 24,170
$ 8,996
$ 24,884
13. DEBT
The following table lists the current and long term portion of each of our debt instruments at December 31, 2012 and
December 31, 2011:
Current debt:
Equipment financing credit facility
Capital lease
4% Convertible debentures
Total current debt
Long term debt:
Equipment financing credit facility
5% Convertible debentures
Total long term debt
For the years ended December 31
2012
2011
$ 6,968
—
—
$ 6,968
$ 11,232
99,275
$ 110,507
$ 7,036
224
121,199
$ 128,459
$ 10,759
—
$ 10,759
Schedule of payments on outstanding debt as of December 31, 2012:
Debt
Equipment financing loans
principal
interest
5% Convertible Debentures
principal
interest
Total
2013
6,968
1,003
—
3,875
$ 11,846
2014
4,732
604
—
3,875
$ 9,211
2015
3,798
322
—
3,875
$ 7,995
2016
2017
Maturity
$ 2,208
120
—
3,875
$ 6,203
$ 494
2012 to 2017
9
77,490
June 1, 2017
1,937
$ 79,930
EQUIPMENT FINANCING CREDIT FACILITY
GSBPL and GSWL maintain a $35.0 million 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 reviewed and renewed
annually in May. Amounts drawn under this facility are
repayable 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%. At
December 31, 2012, approximately $16.8 million was
available to draw down, compared to $22.2 million at
December 31, 2011. The average interest rate on the
outstanding loans was approximately 6.6% at December
5 2 | G o l d e n S t a r
31, 2012, down marginally from 6.8% at December 31,
2011. 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
During 2012, we had two series of convertible deben-
tures outstanding. The first series, consisting of 4%
Convertible Senior Unsecured Debentures (the “4%
Convertible Debentures”) in the amount of $125.0 million
at December 31, 2011, were redeemed during 2012. The
second series, consisting of the 5% Convertible Senior
Unsecured Debentures due June 1, 2017, (the “5%
Convertible Debentures”) in the amount of $77.5 million,
are currently outstanding.
Both the 4% and 5% Convertible Debentures are
accounted for at fair value and marked to market each
reporting period and the corresponding gain/loss on fair
value is recorded in the Statement of Operations.
5% Convertible Debentures
The 5% Convertible Debentures were issued on May 31,
2012, in the amount of $77.5 million, in exchange for
$74.5 million of the principal outstanding under our 4%
Convertible Debentures in privately negotiated transac-
tions with certain holders of the 4% Convertible
Debentures exempt from the registration requirements
of the U.S. Securities Act of 1933, as amended. The 5%
Convertible Debentures are governed by the terms of an
indenture dated May 31, 2012, by and between the
Company and The Bank of New York Mellon Corporation,
as Indenture Trustee.
Interest on the 5% Convertible Debentures is payable
semi-annually in arrears on May 31 and November 30 of
each year, beginning November 30, 2012, and continuing
until maturity on June 1, 2017. The 5% Convertible
Debentures are, subject to certain limitations, convert-
ible into common shares at a conversion rate of 606.0606
common shares per $1,000 principal amount of the 5%
Convertible Debentures (equal to an initial conversion
price of $1.65 per share), or approximately 25% above
the closing price of the Company’s common shares on
the NYSE MKT on May 17, 2012, the last full trading day
prior to entry into the purchase agreement. The 5%
Convertible Debentures are not redeemable at our
option, except in the event of certain change in control
transactions where 90% or more of the outstanding 5%
Convertible Debentures have accepted a mandatory
offer from us to purchase them.
On maturity, we may, at our option, satisfy our repay-
ment obligation by paying the principal amount of the
5% Convertible Debentures in cash or, subject to certain
limitations, by issuing that number of our common shares
obtained by dividing the principal amount of the 5%
Convertible Debentures outstanding by 95% of the
weighted average trading price of our common shares
on the NYSE MKT for the 20 consecutive trading days
ending five trading days preceding the maturity date
(the “Current Market Price”). If we elect to repay the
principal amount of the 5% Convertible Debentures at
maturity by issuing common shares, and we are limited
under the terms of the indenture from issuing a number
of common shares sufficient to fully repay the 5%
Convertible Debentures outstanding at maturity, we are
required to pay the balance owing in cash, based on the
difference between the principal amount of the 5%
Convertible Debentures outstanding and the value of the
common shares (based on the Current Market Price)
delivered in repayment of the 5% Convertible Debentures.
The 5% Convertible Debentures are senior unsecured
indebtedness of the Company, ranking pari-passu with
all other senior unsecured indebtedness, and senior to all
subordinated indebtedness of the Company. None of our
the 5% Convertible
subsidiaries has guaranteed
Debentures, and there are no additional debt restrictions
on the Company.
The 5% Convertible Debentures were initially recorded at
the fair value of $74.2 million on their May 31, 2012, issue
date, and a loss of $0.6 million on the extinguishment of
the 4% Convertible Debentures was incurred. The fair
value of the 4% Convertible Debentures exchanged for
5% Convertible Debentures was $73.6 million at the time
of the extinguishment.
Financing charges of $2.1 million related to the 5%
Convertible Debentures are included in interest expense
in the Statement of Operations for the year ending
December 31, 2012.
4% Convertible Debentures
The 4% Convertible Debentures were issued in November
2007 in the amount of $125.0 million. The 4% Convertible
Debentures were, subject to certain limitations, convert-
ible into common shares at a conversion rate of 200
shares per $1,000 principal amount (equal to a conver-
sion price of $5.00 per share) subject to adjustment
under certain circumstances. The 4% Convertible
Debentures were not redeemable at our option.
The 4% Convertible Debentures were direct senior unse-
cured indebtedness of Golden Star Resources Ltd.,
ranked pari-passu with all our other senior unsecured
indebtedness, and senior to all our subordinated indebt-
edness. None of our subsidiaries guaranteed the 4%
Convertible Debentures, and there were no additional
debt restrictions on the Company.
On May 31, 2012, we exchanged $74.5 million of the 4%
Convertible Debentures with private holders for $77.5
million of 5% Convertible Debentures. See details of this
transaction in the “5% Convertible Debentures” section
above. Subsequently, on September 14, 2012, we redeemed
$6.1 million of the remaining 4% Convertible Debentures
by way of a privately negotiated transaction. The remaining
$44.4 million outstanding 4% Convertible Debentures,
plus accumulated interest, were settled in cash on
November 30, 2012, leaving the 4% Convertible Debentures
completely settled with zero due at December 31, 2012.
2 0 1 2 A n n u a l R e p o r t | 5 3
REVOLVING CREDIT FACILITY
GAIN ON SALE OF OTHER ASSETS
Our $31.5 million revolving credit facility expired on April
1, 2012, with no outstanding balance.
CAPITAL LEASE
In February 2010, GSBPL accepted delivery of a nominal
20 megawatt power plant. Upon acceptance, a $4.9
million liability was recognized which, at the time, was
equal to the present value of future lease payments. The
life of the lease was two years from the plant’s February
2010 in-service date. We were required to pay the owner/
operator a minimum of $0.3 million per month on the
lease, of which $0.23 million was allocated to principal
and interest on the recognized liability and the remainder
of the monthly payments were charged as operating
costs. In February 2012, we made the final lease payment
and assumed ownership of the power plant.
14. GAIN ON SALE OF ASSETS
The gain on sale assets includes the following components:
Gain on sale of Burkina Faso
exploration properties
Gain on sale of Saramacca
For the years ended December 31,
2012
2011
2010
$ 22,361
$ —
$ —
9,175
41
—
1,350
—
1,171
Gain on sale of assets
$ 31,577
$ 1,350
$ 1,171
GAIN ON SALE OF BURKINA FASO EXPLORATION
PROPERTIES
In December 2011, TGM notified us, per terms of a 2007
exploration earn-in agreement, of their intent to exercise
their purchase option for our Goulagou and Rounga
exploration properties in Burkina Faso. The sale of these
exploration projects was completed in February 2012
upon our receipt of $6.6 million of cash and 21.7 million
TGM common shares valued at $15.8 million on the day
of the sale. On the day of the sale, we also held 4.0 million
TGM shares from earlier transactions with TGM. The
underlying properties’ carrying value had been written
down to zero in prior periods, resulting in the recognition
of a net gain of $22.4 million on the completion of this
disposition.
GAIN ON SALE OF SARAMACCA
In 2009, we entered into an agreement to sell our
Saramacca gold exploration project in Suriname to
Newmont Mining Corporation. In December 2012, all
requirements for the sale and transfer were met and
ownership and control of the Saramacca project was
turned over to Newmont Mining Corporation for total
consideration of $9.0 million cash. We received $8.0
million of cash in December 2012 and a final payment of
$1.0 million in early 2013. A net gain of $9.2 million was
recognized on this transaction.
The gain on sale of other assets includes the sale of
mining equipment, exploration properties and available
for sale investments.
15. INCOME TAXES
We recognize deferred tax assets and liabilities based on
the difference between the financial reporting and tax basis
of assets and liabilities using the enacted tax rates expected
to be in effect when the taxes are paid or recovered. We
provide a valuation allowance against deferred tax assets
for which we do not consider realization of such assets to
meet the required “more likely than not” standard.
Our deferred tax assets and liabilities at December 31,
2012, and 2011 include the following components:
Deferred tax assets:
Offering costs
Non-capital loss carryovers
Capital loss carryovers
Mine property costs
Reclamation costs
Unrealized loss on available for
sale investments
Other
Valuation allowance
Future tax assets
Deferred tax liabilities:
Mine property costs
Derivatives
Other
Deferred tax liabilities
Net deferred tax liabilities
As at December 31,
2012
2011
$ 120
222,213
$ 595
191,182
741
7,118
9,765
508
9,609
907
7,154
6,638
(173)
5,061
(163,890)
86,184
(131,208)
80,156
114,595
102,948
4
—
114,599
$ 28,415
1,094
107
104,149
$ 23,993
The composition of our valuation allowance by tax jurisdiction is
summarized as follows:
Canada
U.S.
Ghana
Burkina Faso
As at December 31,
2012
2011
$ 42,832
$ 46,254
15
121,043
—
228
84,067
659
Total valuation allowance
$ 163,890
$ 131,208
income taxes expense
The
components:
includes the following
For the years ended December 31,
2012
2011
2010
$ —
$ —
12,393
2,669
$ —
1,487
Current
Canada
Foreign
Deferred tax expense:
Canada
Foreign
—
4,423
—
8,315
—
3,990
Total expense
$ 16,816
$ 10,984
$ 5,477
5 4 | G o l d e n S t a r
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:
Net income /(loss) before tax
Statutory tax rate
Tax expense/(benefit) at statutory rate
Foreign tax rates
Change in tax rates
Expired loss carryovers
Ghana investment allowance
Non-deductible stock option compensation
Non-deductible expenses
Nondeductible convertible debenture
Loss carryover not previously recognized
Ghana property basis not previously recognized
Change in future tax assets due to exchange rates
Change in valuation allowance
National Tax Levy
Other
For the years ended December 31,
2012
$ 6,601
25.0 %
1,650
(6,193)
(22,145)
6,144
300
1,303
270
6,096
627
(3,523)
(445)
31,932
—
800
2011
$ 8,482
26.5 %
$ 2,248
(7,340)
3,395
—
(513)
884
376
—
(1,189)
(1,385)
738
10,881
2,669
220
2010
$ (9,128)
28.5 %
$ (2,601)
(7,548)
659
—
(761)
848
543
—
2,321
912
(1,864)
10,907
1,488
573
Income tax expense /(recovery)
$ 16,816
$ 10,984
$ 5,477
in other comprehensive
During 2012, we recognized $2.7 million unrealized loss on
investments
income. Other
comprehensive income was credited in the amount of
$0.7 million for the tax benefit of the loss, with an offset-
ting $0.7 million valuation allowance recorded in other
comprehensive income.
At December 31, 2012, we had tax pool and loss carry-
overs expiring as follows:
2013
2014
2015
2016
2026
2027
2028
2029
2030
2031
Indefinite
Total
Canada
Ghana
$ —
$ 46,294
—
3,831
—
15,800
16,096
14,468
22,248
20,421
38,314
5,930
$ 137,108
—
—
31,233
—
—
—
—
—
—
459,423
$ 536,950
The Ghana tax pool is further limited to taxable income
generated at Bogoso.
16. COMMITMENTS AND CONTINGENCIES
Our commitments and contingencies include the
following items:
ENVIRONMENTAL BONDING IN GHANA
The Ghana Environmental Protection Agency (“EPA”)
requires environmental compliance bonds that provide
assurance for environmental remediation at our Bogoso/
Prestea and Wassa mining operations. In July 2011, we
increased a letter of credit for Wassa/HBB’s environmental
bonding from $2.85 million to $7.8 million. This brought
the total bonded amount, including $0.15 million of cash,
from $3.0 million to $7.95 million. In early 2012, the Ghana
Environmental Protection Agency raised Wassa/HBB’s
reclamation bonding requirement to approximately $10.6
million, reflecting increases in on-going mining distur-
bances. In July 2012, we increased our cash deposit by
$0.9 million and our existing letter of credit by $1.7 million
to meet the $2.65 million bonding increase.
We have also bonded $9.0 million to cover rehabilitation
and closure obligations at Bogoso/Prestea. These
bonding requirements have been met by an $8.1 million
letter of credit from a commercial bank and a $0.9 million
cash deposit held by the same bank on behalf of the
EPA. The cash deposits are recorded as Restricted Cash
on our Consolidated Balance Sheets.
Prior to April 1, 2012, our reclamation bonds were provided
by the same bank that provided our revolving credit
facility. The credit facility expired on April 1, 2012, and the
bonds expired on April 30, 2012. The environmental
bonds were replaced with new bonds provided by a
Ghanaian bank on May 1, 2012, on terms similar to the
prior bonds. The Ghanaian bank provided an $8.1 million
bond to GSBPL and a $9.6 million bond to GSWL. The
new bonds are guaranteed by Golden Star Resources Ltd.
GOVERNMENT OF GHANA’S RIGHTS TO INCREASE ITS
PARTICIPATION
Under Act 703, the Government of Ghana has the right
to acquire a special share in our Ghanaian 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 special
share carries no voting rights and does not participate in
dividends, profits or assets. If the Government of Ghana
acquires a special share, it may require us to redeem the
2 0 1 2 A n n u a l R e p o r t | 5 5
special share at any time for no consideration or for
consideration determined by us. To date, the Government
of Ghana has not sought to exercise any of these rights
at our properties.
ROYALTIES
Government of Ghana
The Ghana Government receives a royalty equal to 5% of
mineral revenues.
Dunkwa Properties
As part of the acquisition of the Dunkwa properties in
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
increases to 3.5% for gold prices in excess of $400 per
ounce. Since this property is currently undeveloped, we
are not required to pay a royalty on this property.
Hwini-Butre
As part of the agreement for the purchase of the Hwini-
Butre properties, Golden Star agreed to pay B.D.
Goldfields Ltd, Hwini-Butre’s former owner, an additional
$1.0 million in cash 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 May 2009. It is not possible at this time to
know if future exploration work will increase Hwini-
Butre’s reserves sufficiently to yield production of one
million ounces prior to May 2014, and as such, no amounts
have been accrued in the financial statements.
EXPLORATION AGREEMENTS
Obuom
In October 2007, we entered into an 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 posi-
tion 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.
17. STOCK BASED COMPENSATION
Non-cash employee compensation expense recognized
in general and administrative expense in the Statements
of Operations with respect to our non-cash employee
compensation plans are as follows:
For the years ended December 31
2012
2011
2010
Total stock compensation
expense
$ 6,111
$ 3,385
$ 2,975
STOCK OPTIONS
We have one stock option plan, the Third Amended and
Restated 1997 Stock Option Plan (the “Plan”) approved
by shareholders in May 2010, under which options are
granted at the discretion of the Board of Directors.
Options granted are non-assignable and are exercisable
for a period of ten years or such other period as is stipu-
lated 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 25,000,000 shares, of which
5,029,646 are available for grant as of December 31,
2012. The exercise price of each option is not less than
the closing price of our shares on the Toronto Stock
Exchange on the day prior to 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.
We granted 5,164,000 and 2,288,000 options in 2012
and 2011 respectively. We do not receive a tax deduction
for the issuance of options. As a result, we do not recog-
nize any income tax benefit related to the stock
compensation expense.
The fair value of our option grants are estimated at the
grant dates using the Black-Scholes option-pricing model.
Fair values of options granted in 2012 and 2011 were based
on the assumptions noted in the following table:
For the years ended December 31
2012
2011
2010
Expected volatility
Risk-free
interest rate
Expected lives
Dividend yield
57.11% to
87.50%
0.36% to
1.91%
66.06% to
70.29%
0.90% to
2.26%
68.67% to
77.37%
1.18% to
2.58% .
3 to 8 years
6 to 9 years
6 to 9 years
0%
0%
0%
Expected volatilities are based on the mean reversion
tendency of the volatility of Golden Star’s shares. Golden
Star uses historical data to estimate share option exercise
and employee departure behavior and this data is used in
determining input data for 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
5 6 | G o l d e n S t a r
from certain groups of employees exhibiting different
post-vesting behaviors. 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 during the year ended ended December 31, 2012:
Outstanding as of December 31, 2011
Granted
Exercised
Forfeited, canceled and expired
Outstanding as of December 31, 2012
Exercisable as of December 31, 2012
Weighted-
Average
Exercise price
(Cdn$)
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
intrinsic value
Cdn($000)
3.18
1.94
1.45
2.74
2.74
3.04
7.0
6.4
3.5
6.0
6.2
5.7
95
—
125
—
541
356
Options
(000)
8,539
5,164
(203)
(1,163)
12,337
7,920
A summary of option activity under the Plan during the year ended ended December 31, 2011:
Outstanding as of December 31, 2010
Granted
Exercised
Forfeited, canceled and expired
Outstanding as of December 31, 2011
Exercisable as of December 31, 2011
Weighted-
Average
Exercise price
(Cdn$)
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
intrinsic value
Cdn($000)
3.35
2.67
1.78
3.67
3.18
3.30
7.0
9.3
4.6
6.8
7.0
6.2
9,001
—
—
—
95
95
Options
(000)
6,724
2,288
(159)
(314)
8,539
6,233
A summary of option activity under the Plan during the year ended ended December 31, 2010:
Outstanding as of December 31, 2009
Granted
Exercised
Forfeited, canceled and expired
Outstanding as of December 31, 2010
Exercisable at December 31, 2010
Weighted-
Average
Exercise price
(Cdn$)
Weighted-
Average
Remaining
Contractual
Term (Years)
Aggregate
intrinsic value
Cdn($000)
3.19
3.77
2.11
4.27
3.35
3.48
7.0
9.3
5.4
—
7.0
6.3
4,221
—
2,423
—
9,001
5,770
Options
(000)
7,283
1,599
(1,149)
(1,009)
6,724
4,622
The number of options outstanding by strike price as of December 31, 2012 is shown in the following table:
Options exercisable
Options outstanding
Range of exercise prices (Cdn$)
0 to 2.50
2.51 to 4.00
4.01 to 7.00
Number
outstanding at
December 31, 2012
(000)
Weighted-
average remaining
contractual life
(years)
Weighted-average
exercise price
(Cdn$)
Number
exercisable at
December 31, 2012
(000)
Weighted-average
exercise price
(Cdn$)
5,984
5,187
1,166
12,337
6.6
6.2
3.7
6.2
1.88
3.23
4.99
2.74
2,641
4,158
1,121
7,920
1.80
3.30
5.00
3.04
The number of options outstanding by strike price as of December 31, 2011 is shown in the following table:
Options exercisable
Options outstanding
Range of exercise prices (Cdn$)
0 to 2.50
2.51 to 4.00
4.01 to 7.00
Number
outstanding at
December 31, 2011
(000)
Weighted-
average remaining
contractual life
(years)
Weighted-average
exercise price
(Cdn$)
Number
exercisable at
December 31, 2011
(000)
Weighted-average
exercise price
(Cdn$)
1,619
5,688
1,232
8,539
7.2
7.3
4.8
6.9
1.66
3.22
5.00
3.18
1,215
3,901
1,117
6,233
1.64
3.32
5.02
3.29
2 0 1 2 A n n u a l R e p o r t | 5 7
The number of options outstanding by strike price as of December 31, 2010 is shown in the following table:
Range of exercise prices (Cdn$)
0 to 2.50
2.51 to 4.00
4.01 to 7.00
Options outstanding
Options exercisable
Number
outstanding at
December 31, 2010
(000)
Weighted-
average remaining
contractual life
(years)
Weighted-average
exercise price
(Cdn$)
Number
exercisable at
December 31, 2010
(000)
Weighted-average
exercise price
(Cdn$)
1,472
3,965
1,287
6,724
7.5
7.2
6.0
7.0
1.61
3.43
4.98
3.35
804
2,845
973
4,622
1.53
3.44
5.10
3.48
The weighted-average grant date fair value of share
options granted during the years ended December 31,
2012, 2011 and 2010 was Cdn$1.20, Cdn$1.78 and
Cdn$2.54, respectively. The intrinsic value of options
exercised during the years ended December 31, 2012,
2011 and 2010 was Cdn$0.1 million, Cdn$0.3 million and
Cdn$2.4 million, respectively.
A summary of the status of non-vested options at
December 31, 2012, 2011 and 2010 and the changes
during the years ended December 31, 2012, 2011 and
2010 is presented below:
Number of
options (000)
Weighted
average grant
date fair value
(Cdn$)
Non-vested at January 1, 2012
Granted
Vested
Forfeited, canceled and expired
Non-vested at December 31, 2012
2,307
5,164
(2,658)
(396)
4,417
1.91
1.21
1.43
1.65
1.40
Number of
options (000)
Weighted
average grant
date fair value
(Cdn$)
Non-vested at January 1, 2011
Granted
Vested
Forfeited, canceled and expired
Non-vested at December 31, 2011
2,102
2,288
(1,988)
(95)
2,307
1.9
1.78
1.81
2.14
1.91
Number of
options (000)
Weighted
average grant
date fair value
(Cdn$)
Non-vested at January 1, 2010
Granted
Vested
Forfeited, canceled and expired
Non-vested at December 31, 2010
2,125
1,599
(1,491)
(131)
2,102
1.49
2.54
1.94
1.73
1.90
As of December 31, 2012, there was a total unrecognized
compensation cost of Cdn$3.6 million related to stock
options granted under the Plan. That cost is expected to be
recognized over a weighted-average period of 2.0 years.
The total fair values of shares vested during the years ended
December 31, 2012, 2011 and 2010 were Cdn$3.7 million,
Cdn$3.6 million and Cdn$2.9 million, respectively.
STOCK BONUS PLAN
In December 1992, we established an Employees’ Stock
Bonus Plan (the “Bonus Plan”) for any full-time or part-
time employee (whether or not a director) of the
Company or any of our subsidiaries who has rendered
meritorious services which contributed to the success of
the Company or any of its subsidiaries. The Bonus Plan
provides that a specifically designated committee of the
Board of Directors may grant bonus common shares on
terms that it might determine, within the limitations of
the Bonus Plan and subject to the rules of applicable
regulatory authorities. The Bonus Plan, as amended,
provides for the issuance of 900,000 common shares of
bonus stock, of which 710,854 common shares have
been issued as of December 31, 2012. In the first quarter
of 2012, 165,009 shares were issued in 2012 under the
Stock Bonus Plan at a value of $0.3 million. No shares
were issued in 2011.
DEFERRED SHARE UNITS
On March 9, 2011 the Board adopted a Deferred Share
Unit Plan (“DSU Plan”) which was subsequently approved
by shareholders at the May 2011 annual meeting of share-
holders. Our DSU Plan provides for the issuance of
Deferred Share Units (“DSUs”), each representing the
right to receive one share of Golden Star common shares
upon redemption. DSUs may be redeemed only upon
termination of the holder’s services to the Company, and
may be subject to vesting provisions. DSU awards are
granted at the sole discretion of the Company’s compen-
sation committee. The DSU Plan allows directors, at their
option, to receive all or any portion of their director
retainer by accepting DSUs in lieu of cash.
The compensation committee may also award DSUs to
executive officers and/or directors in lieu of cash as a
component of their long term performance compensa-
tion, the amount of such awards being in proportion to
the officer’s or director’s achievement of pre-determined
performance goals. As with DSU awards for directors’
retainers, DSUs received as performance compensation
are redeemable only upon termination of the holder’s
services to the Company. The Company may, at its
option, provide cash in lieu of common shares upon a
holder’s redemption, the cash value being established by
the share price on the DSU original award date, less all
applicable tax withholding.
These units were immediately vested and a compensa-
tion expense of $0.6 million and $49.5 thousand was
recognized for these grants during 2012 and 2011,
5 8 | G o l d e n S t a r
respectively. As of December 31, 2012, there was zero
unrecognized compensation expense related to DSUs
granted under the Company’s DSU plan.
As of December 31, 2011
Grants
Exercises
As of December 31, 2012
As of December 31, 2010
Grants
Exercises
As of December 31, 2011
Number of
Deferred
Share Units
Amount
(US$'000)
22,147
394,922
(29,010)
388,059
$ 49
592
(39)
$ 602
Number of
Deferred
Share Units
Amount
(US$’000)
—
22,147
—
22,147
$ —
49
—
$ 49
SHARE APPRECIATION RIGHTS
On February 13, 2012, the Company adopted a Share
Appreciation Rights Plan, and granted 1,543,043 share
appreciation rights (SARs) that vest after a period of
three years. Of these granted, 463,636 were subse-
leaving 1,079,407 outstanding at
quently forfeited
December 31, 2012. The SARs will be settled in cash in an
amount equal to the Company’s stock price less the
strike price on the award date. Since SARs are settled in
cash, the Company marks-to-market the associated
expense for each award at the end of each reporting
period. The Company accounts for these as liability
awards and marks-to-market the fair value of the award
until final settlement.
As of December 31, 2012, there was approximately $0.8
million of total unrecognized compensation cost related to
unvested SARs. The Company recognized approximately
$0.3 million of compensation expense related to these
cash based awards for the year ended December 31, 2012.
18. EARNINGS PER COMMON SHARE
The following table provides reconciliation between basic and diluted earnings per common share:
Net loss attributable to Golden Star shareholders
Weighted average number of shares (millions)
Dilutive securities:
Options
Deferred stock units
Convertible debentures
Weighted average number of diluted shares (millions)
Net loss per share attributable to Golden Star shareholders:
Basic
Diluted
For the years ended December 31
2012
$ (9,490)
258.9
—
—
258.9
2011
$ (2,075)
2010
$ (11,229)
258.6
—
—
258.6
258.0
—
—
258.0
$ (0.04)
$ (0.04)
$ (0.01)
$ (0.01)
$ (0.04)
$ (0.04)
Options to purchase 12.3 million and 8.5 million common
shares were outstanding at December 31, 2012, and 2011,
respectively, but were not included in the computation
of diluted weighted average common shares because
their effect would not be dilutive. Deferred Stock Units
totaling 0.4 million and zero common shares were
outstanding at December 31, 2012 and 2011, respectively,
but were not included in the computation of diluted
weighted average common shares because their effect
would not be dilutive. In addition, we had 47.0 million
and 25.0 million common shares potentially outstanding
at December 31, 2012 and 2011, respectively, related to
the convertible debentures that were not dilutive.
2 0 1 2 A n n u a l R e p o r t | 5 9
19. OPERATIONS BY SEGMENT AND GEOGRAPHIC AREA
As at and for years ended December 31
2012
Revenues
Net income/(loss) attributable to Golden Star
Depreciation
Income tax expense
Capital expenditure
Long-lived Assets
Total assets
2011
Revenues
Net income/(loss) attributable to Golden Star
Depreciation
Income tax expense
Capital expenditure
Long-lived Assets
Total assets
2010
Revenues
Net income/(loss) attributable to Golden Star
Depreciation
Income tax expense
Capital expenditure
Long-lived Assets
Total assets
20. RELATED PARTIES
Bogoso/
Prestea
Africa
Wassa/
HBB
$ 286,619
$ 263,921
2,113
33,506
—
39,216
343,027
435,745
18,441
65,328
(16,816)
49,248
171,197
230,096
$ 222,542
$ 248,465
(11,959)
29,353
—
59,410
339,671
415,168
32,781
42,240
(10,984)
41,898
187,015
256,113
$ 206,448
$ 226,245
694
36,511
—
36,035
300,377
360,555
16,880
62,160
(5,477)
26,856
185,045
240,662
Other
South
America
Corporate
Total
$ —
(2,857)
24
—
28
741
3,491
$ —
(1,065)
—
—
1
736
1,616
$ —
(3,001)
—
—
2,211
772
5,848
150
56,394
$ —
(542)
1
—
—
—
$ —
(2,299)
—
—
2
1
855
$ —
6,463
3
—
—
3
$ —
$ 550,540
(26,645)
67
—
3
67
(9,490)
98,926
(16,816)
88,495
515,032
725,876
$ —
$ 471,007
(19,533)
103
—
71
131
53,926
(2,075)
71,698
(10,984)
101,380
527,554
727,678
$ —
$ 432,693
(32,265)
101
—
89
163
(11,229)
98,775
(5,477)
65,191
486,360
753,226
(251)
146,412
During 2012, we obtained legal services from a firm to which one of our board members is of counsel. The cost of
services from this firm during 2012 and 2011 was $0.7 million and $0.6 million, respectively. Our board member did
not personally provide any legal services to the Company during these periods nor did he benefit directly or indi-
rectly from payments for the services performed by the firm.
21. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for taxes was $0.2 million, $3.6 million and $1.0 million in 2012, 2011 and 2010, respectively . Cash paid for
interest was $8.8 million, $6.5 million and $7.1 million in 2012, 2011 and 2010, respectively.
Changes in working capital:
Decrease/(increase) in accounts receivable
Decrease in inventories
(Increase)/decrease in deposits and prepayments
Increase in accounts payable and accrued liabilities
Other
Total changes in working capital
For the years ended December 31
2012
$ (870)
(11,682)
(4,256)
5,016
(202)
2011
$ 1,839
(9,030)
(1,250)
2,335
(1,747)
2010
$ (4,022)
(14,351)
235
27,607
481
$ (11,994)
$ (7,853)
$ 9,950
22. QUARTERLY FINANCIAL DATA (UNAUDITED)
($ millions, except per share data)
Dec. 31
Sept. 30
Jun. 30
Mar. 31
Dec. 31
Sept. 30
Jun. 30
Mar. 31
Revenues
Net income/(loss)
$ 149.7
$ 133.5
$ 136.3
$ 131.0
$ 118.8
$ 125.9
$ 109.8
$ 116.5
9.1
(30.2)
2.5
9.1
7.2
(10.2)
(5.0)
5.9
2012 Quarters ended
2011 Quarters ended
Net earnings/(loss) per share
Basic
Diluted
$ 0.04
$ 0.03
$ (0.12)
$ (0.12)
$ 0.01
$ 0.01
$ 0.04
$ 0.04
$ 0.03
$ 0.03
$ (0.04)
$ (0.04)
$ (0.02)
$ (0.02)
$ 0.02
$ 0.02
6 0 | G o l d e n S t a r
DIRECTORS & MANAGEMENT
Directors
Timothy C. Baker
Executive Chairman of the
Board of Directors
James Askew
Samuel T. Coetzer
Robert Doyle 1, 3, 4
ManageMent
Samuel T. Coetzer
President and Chief Executive Officer
Daniel Owiredu
Executive Vice President -
Operations
Bruce Higson-Smith
Senior Vice President ,
Corporate Strategy
Ian MacGregor 1, 3*
Tony A. Jensen 4*
Craig J. Nelsen 2*, 4
Christopher M. T. Thompson 2, 3
William Yeates 1*, 2z
1
audit committee
2 compensation committee
3 nominating and corporate
governance committee
4 sustainability committee
* committee chairman
Jeffrey A. Swinoga
Executive Vice President and
Chief Financial Officer
Neale Laffin
Managing Director,
(Bogoso/Wassa) Operations
Martin Raffield
Senior Vice President,
Technical Services
Mark Thorpe
Vice President, Sustainability
S. Mitchel Wasel
Vice President, Exploration
CORPORATE INFORMATION
corporate HeaDquarters
gHana office
Golden Star Resources Ltd.
150 King Street West
Sun Life Financial Tower, Suite 1200
Toronto, ON M5H 1J9, Canada
Golden Star Resources Ltd.
Plot No. 16
Nortey Ababio Roman Ridge
Accra, Ghana
Telephone: (416) 583-3800
(800) 553-8436
Toll-free:
stock excHange Listings
NYSE Mkt Stock Exchange
Common stock: GSS
Toronto Stock Exchange
Common stock: GSC
registrar anD transfer agent
Ghana Stock Exchange
Common stock: GSR
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:
Canadian Stock Transfer Company
Attention: Shareholder Services
P.O. Box 1900
Vancouver, British Columbia
Canada V6C 3K9
Online inquiry:
www.canstockta.com/investorinquiry
Online access to shareholder data:
http://www.canstockta.com/
AnswerLineRegistration
E-mail: inquiries@canstockta.com
Toll-free: (800) 387-0825
(Canada and U.S.—collect elsewhere)
(416) 682-3860
(8:30 a.m. to 6:30 p.m. ET,
Monday through Friday)
investor reLations contacts
The Capital Lab
Belinda Labatte
Email:
Phone:
Website: www.gsr.com
investor@gsr.com
(647) 436-2152
auDitors
PricewaterhouseCoopers LLP
Vancouver, British Columbia, Canada
annuaL report on forM 10-k
The Company’s 2012 Annual Report
Form 10-K may be obtained without
charge. Requests should be addressed
to Corporate
Headquarters.
annuaL Meeting
Thursday May 9, 2013 at
2:00 p.m. ET at
Fasken Martineau DuMoulin, LLP
Escarpment/Huron Boardroom, 333
Bay Street, Suite 2400
Bay Adelaide Centre
Toronto, Ontario, Canada, M5H 2T6.
2 0 1 2 A n n u a l R e p o r t | 6 1
(800) 553-8436
www.gsr.com
NYSE Amex: GSS
Toronto Stock Exchange: GSC
Ghana Stock Exchange: GSR
6 2 | G o l d e n S t a r