POISED FOR GROWTH
gsr.com
GOLDEN
STAR
AR
2013
COMPANY PROFILE
Golden Star is an established gold mining company that has
been in production in Ghana since 1999. The Company holds
a 90% interest in both the Bogoso and Wassa open-pit gold
mines in western Ghana that are 35 kilometers apart. Golden Star
also has a 90% interest in the nearby Prestea Underground
mine, which is currently undergoing permitting in anticipation
of being recommissioned.
As at December 2013, total Mineral Reserves in the Company were
3.9 million ounces and Measured and Indicated Mineral Resources
were 6.4 million ounces.
In 2013, Golden Star sold 331,000 ounces of gold and the Company
expects to produce 295,000 to 320,000 ounces of gold in 2014.
Golden Star is listed on the Toronto Stock Exchange (TSX: GSC),
the New York Stock Exchange MKT (NYSE MKT: GSS) and the
Ghanaian Stock Exchange (GSE: GSR). For further information
on the Company, please visit www.gsr.com
CONTENTS
HIGHLIGHTS | 01
YEAR AT A GLANCE | 02
DIRECTORS AND SENIOR MANAGEMENT | 16
MANAGEMENT DISCUSSION AND ANALYSIS | 21
CEO AND CHAIRMAN’S MESSAGE | 04
FINANCIAL STATEMENTS | 62
REVIEW OF OPERATIONS | 11
CONTACT DETAILS | 117
HIGHLIGHTS
331,000
ounces sold
$45M
operating cost savings
331,000 ounces of gold sold
in 2013 (2012: 331,000 ounces)
Sustainable operating cost
savings of $45 million achieved
+34%
+29%
Wassa
Mineral Reserves
increased by 34%
Wassa
Measured and Indicated Mineral
Resources increased by 29%
2013 Revenue of $467.8 million
(2012: $550.5 million)
Debt finance of $50 million
raised with Ecobank
Adjusted net loss attributable
to shareholders of $21.5 million
(2012: $42.1 million of income)
Feasibility Study on Prestea
underground mine completed
with successful conclusion
Tailings retreatment at Bogoso
commenced and ramped up to
produce 9,100 ounces
G&A reduced by 11%
02
YEAR AT A GLANCE
Summary of Consolidated
Financial Results
Years ended December 31
Wassa gold sold (oz)
Bogoso gold sold (oz)
TOTAL GOLD SOLD (oz)
Average realized price ($/oz)
Cash operating cost per ounce1 – combined ($/oz)
All-in sustaining costs1 – combined ($/oz)
2013
2012
185,807
144,999
330,806
1,414
1,049
1,326
158,899
172,379
331,278
1,662
1,044
1,318
Gold revenues ($’000)
467,796
550,540
Cost of sales excluding depreciation
and amortization ($’000)
Cash flow provided by operations ($’000)
Cash flow provided by operations per share ($)
Adjusted net income/(loss) attributable
to Golden Star Shareholders1 ($’000)
Adjusted net income/(loss) per share –
basic and diluted ($)
Capital expenditures ($’000)
377,140
59,143
0.23
(21,493)
(0.08)
102,867
373,543
123,094
0.48
42,143
0.16
117,299
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
04
Sam Coetzer
President and CEO
Tim Baker
Chairman
CEO and Chairman’s Message
OVERVIEW
This is now our second message to our shareholders and we are glad to report that during 2013 Golden Star
continued to strengthen its foundation and fulfill on its strategy of pursuing growth through the development
of low cost non-refractory ore sources. Over the year we positioned the Company to achieve this goal.
At the corporate level it was a year of change with the appointment of a new CEO and Chairman, several
changes to the senior management team and the head office move from Denver to Toronto.
Operationally it was a year of critical evaluation and decisive action as the decline in the gold price motivated
us to revise our operating plans.
Significant operational improvements were made during the year, with improved planning, more reliable
processing operations and the realization of synergies between our operating mines Wassa and Bogoso.
Operating costs were managed by limiting contractors and reducing expatriate workforce whilst shifting
operational responsibility to local management and working with suppliers to reduce input costs. As a result
sustainable operating cost savings of $45 million were achieved during the period.
At Wassa, the single large Main pit is now established, unlocking potential for lower cost mining. The productivity
gains from this achievement should stand us in good stead going forward. The push backs in the Bogoso
pits are nearing completion, which should allow for lower cost and higher grade mining in 2014 and 2015.
Finally the commissioning and ramp up of the tailings retreatment at Bogoso contributed 9,100 ounces
and is now set up to produce low cost ounces for the next five years.
The safety and health of our employees remain paramount in all our decisions and our firm belief is that
all employees should return home safely at the end of their work day. Despite this, to our great sadness, an
underground mine worker was fatally injured at Prestea underground mine in April 2013. Following a thorough
investigation into the incident, an action plan to improve the safety of our employees at this mine was
implemented with the aim of preventing a recurrence. During the year, Wassa operations achieved 11 million
hours lost time injury free and at year end had a lost time injury frequency rate (“LTIFR”) of 0.14 per million hours.
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013
11 MILLION
DURING THE YEAR, WASSA OPERATIONS
ACHIEVED 11 MILLION HOURS LOST TIME
INJURY FREE AND AT YEAR END HAD A
LTIFR OF 0.14 PER MILLION HOURS
LTIFR 0.14
05
This was a remarkable accomplishment and one which we congratulate the entire team at Wassa on.
Bogoso operations had a LTIFR at year end of 0.24 per million hours. As a result Golden Star’s combined LTIFR
was 0.38 per million hours at year end 2013. We continue to invest in the training of our employees to ensure
they are well equipped to deal with the safety challenges of running our mines efficiently. Shareholders are
encouraged to review our comprehensive corporate social responsibility report available on our website for
more information on our health, safety, environmental and community development initiatives.
By the end of the year 331,000 oz of gold were produced at a cash operating cost of $1,044 per ounce,
within the guidance provided to our shareholders.
Although we took impairment charges based on the lower gold price in 2013, we strongly believe the Company
is now better structured to manage the current gold price environment and to focus on producing from lower
cost non-refractory ore sources and in so doing prioritize operating margin over production.
WASSA
Gold sold by Wassa was 186,000 ounces in 2013, a 17% increase over 2012. With lower gold prices, revenue from
this mine was flat from the prior year though cash operating costs for 2013 declined 10% to $805 per ounce.
Overall it was a very solid year of operating performance.
During 2013, a 55,000 meter drill campaign was undertaken that focused on infilling the gaps in the prior
drilling as well as testing the higher grade plunge mineralization. Mineral Reserves and Indicated Mineral
Resources were increased 34% and 29% respectively and the results confirmed that the mineralized zone
continues to the south and remains open at depth. A Preliminary Economic Assessment (“PEA”) on the
viability of mining this deeper higher grade portion of the Wassa deposit via underground mining methods
is now being carried out. A subsequent drilling campaign has continued into 2014 to further define grades
and continuity, as well as determine the potential extent of the deposit.
Overall the development of the Wassa deposit is expected to provide a long term, high grade, low operating
cost ore source to the Company and is therefore central to the Company’s strategy.
The Company expects to have the PEA completed in the third quarter of 2014, and pending a positive
outcome, will then commence a feasibility study on an underground mine.
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
06
AT THE BEGINNING OF 2013, WE OUTLINED OUR
OBJECTIVES FOR THE YEAR. THE FOLLOWING IS
A REVIEW OF OUR PERFORMANCE RELATIVE TO
THESE OBJECTIVES :
OBJECTIVE All-in cost reductions focusing
on lower cash operating costs generated by
non-refractory ore and reduced G&A expenses
both corporately and at the mine level.
PERFORMANCE All-in sustaining costs were flat
year on year after $45 million in savings relative
to original operating plans were achieved. G&A
reductions were achieved at both the corporate
and mine site offices, contributing to an overall
reduction in G&A of 11%.
BOGOSO
Bogoso gold sales totalled 145,000 ounces for the full year of 2013, compared to 172,000 ounces in 2012.
Refractory gold sales decreased 11% due to a drop in tonnes and ore grade processed as well as gold
recovery. Refractory ore grade and tonnes processed were lower due to limited ore available during the
push backs at the Chujah and Bogoso North pits.
Non-refractory gold sales declined 34% to 25,000 ounces in 2013. In the second quarter of the year,
the Pampe open pit operation was suspended and subsequently tailings retreatment started to supply
ore feed to the non-refractory plant. For the remainder of the year, non-refractory ore was sourced from
tailings retreatment and small pockets of non-refractory ore in the Bogoso North and Chujah pits.
In 2013, tailings retreatment yielded 9,100 ounces of gold and it is expected that there will be sufficient
tailings material to continue mining at the current rate for at least another five years. Mining of low cost
tailings retreatment material at Bogoso forms part of our low cost strategy.
Cash operating costs per ounce at Bogoso were $1,361 for 2013, compared to $1,186 for the full year of 2012.
Push backs continued during 2013 and are expected to be substantially completed during the first quarter
of 2014. This will provide 18 months of low strip low cost production from the open pits at the Bogoso Mine
which will yield significant free cash flow.
A Feasibility Study for Prestea underground mine was completed and published in mid-2013. The Feasibility
Study demonstrates positive economics for the extraction of the West Reef high-grade deposit. Initial capital
expenditure is estimated to be $91 million. Prestea underground mine is a valuable asset to the Company
that has the potential to deliver low-cost, non-refractory ore over the medium-term. As such we continue
to evaluate the optimal development process for this project.
Permitting at Bogoso’s development projects, Dumasi, Mampon and Prestea South, were successfully
progressed in 2013. At Dumasi, a resettlement action plan was submitted to the local district assembly and
a draft environmental impact statement (EIS) is being submitted to the Ghana Environmental Protection
Agency (EPA). At Bogoso’s high grade satellite deposit, Mampon, a relocation action plan and EIS are
currently being drafted and project design work is ongoing. A public hearing in the community at Prestea
South was held during the third quarter of 2013. The community indicated their support for the development
of the Prestea South open pit mines. Submission of a final EIS of mining at Prestea South is imminent.
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013 OBJECTIVE Deliver on the Wassa potential
that contemplates one single large pit
beneath the existing pits.
OBJECTIVE Increase Mineral Reserves with the
development of the Prestea Underground mine
and increase reserves with drilling at Wassa.
07
PERFORMANCE The single large Wassa
Main pit was established in 2013 and
mining is currently ongoing in $1,000
per ounce pit shell. Productivity gains
are expected to continue into 2014.
PERFORMANCE The Prestea Underground Feasibility
Study was successful concluded and as a result this
deposit contributed 440,000 ounces to the year-end
Mineral Reserve statement. Wassa Mineral Reserves
increased 34% over the year despite a reduction in
gold price assumption used.
Whilst these projects remain economic at the current gold price, the capital required to develop them is
significant. Until such time as the gold price shows a sustained increase, we are of the view that other
development projects within the Company offer a better risk adjusted return on investment
FINANCIAL RESULTS
Revenues for the full year 2013 decreased to $468 million from $551 million in 2012; in line with the 15%
decline in realised gold prices.
Consolidated cash operating costs per ounce were flat year on year at $1,049 for 2013. Corporate general
and administrative expenditures decreased by 11% to $21.5 million for 2013, as onetime costs relating to the
relocation of the head office to Toronto were more than offset by overall cost savings.
In July 2013, Wassa closed a $50 million loan from Ecobank Ghana Limited, the proceeds of which are being
used to finance Wassa capital expenditures.
Primarily as a result of non-cash impairment charges totaling $356 million, a net loss attributable to Golden
Star shareholders of $266 million was incurred in 2013. The adjusted net loss attributable to shareholders
for 2013 was $22 million.
Consolidated cash balance was $66 million at year end.
WAY FORWARD
In 2014 and 2015, our ounces produced will decline but we anticipate a significant increase in operating
margins as we continue to prioritise profits over production.
During 2014, most of the Wassa ore supply will be mined from the Wassa Main pit, as production from the
Father Brown pit is expected to end in the second quarter of 2014. The Wassa Main pit has lower grades
than Father Brown pit and, as a result, Wassa gold production is expected to be lower in 2014 than in 2013.
Wassa’s cash operating cost per ounce will increase due to the lower grades from the Wassa Main pit
however capital costs will be reduced due to reduced stripping requirements.
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
08
At Bogoso, 2014 production is expected to increase once the push backs are completed in the first quarter
of 2014. In anticipation of this, capital equipment is in the process of being mobilised from Bogoso to Wassa
where the larger pit requires additional equipment. Dovetailing the two mine plans reduces our sustaining
capital expenditure and keeps our equipment lease level low.
Production over 2014 will fluctuate, with the second and fourth quarter delivering the most ounces. In total
we expect to produce between 295,000 and 320,000 ounces in 2014.
In the near term, the Company is focused on reducing its operating costs and managing its capital
expenditure. For 2014 we expect cash operating costs per ounce to be between $950 and $1,000 per ounce,
lower than the $1,049 cash operating cost achieved in 2013.
In addition to continued cost management, our primary objectives for 2014 are to quantify the economic
potential and development opportunity at Wassa as well as significantly progress in our efforts to bring
the Prestea Underground mine back into production.
Effective January 2014, Daniel Owiredu was promoted to be our Chief Operating Officer. Daniel’s leadership
and contribution to the management of Golden Star’s operations have been instrumental in the Company’s
transformation and this change will provide for more timely decisions being made at the Company’s
operations in Ghana.
In March 2014 Jeff Swinoga, our Chief Financial Officer resigned to pursue other opportunities. The Board
appointed André van Niekerk, our financial controller as the Company’s new CFO. André has more than
13 years of mining experience at both an operational and corporate level including eight years at Golden Star.
We thank Jeff for his service to the Company and congratulate André on his promotion.
GOVERNANCE
Our Board of directors has made extensive efforts over the year to bring the Company’s corporate
governance standards in line with best practise. Modifications to executive compensation and the
governance thereof have been made as well as changes to our Board composition.
Ian MacGregor, a director since April 2000 and Chairman from 2004 to 2010, resigned as a director
in February 2014. On behalf of both the Board and Management, we would like to thank Ian for his many
contributions over his years of service. We will miss his judgement and tireless commitment to the success
of this Company. Anu Dhir joined the Board effective March 1, 2014. Anu brings a unique combination
of business, operations and legal experience along with a successful history of developing and negotiating
business development deals, and we are very pleased to have her as part of our team.
The Board and management thank you for your continued confidence in Golden Star. We look forward
to a solid year in 2014 in which we can realize a return on our efforts and investment made in 2013.
Sam Coetzer
President and CEO
Tim Baker
Chairman
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013 ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES GOLDEN STAR RESOURCES | ANNUAL REPORT 2013 GHANA
11
Review Of Operations
WASSA GOLD MINE
The Wassa gold mine is located in the southwestern region of Ghana.
It has a single non-refractory processing plant consisting of a traditional Carbon-In-Leach system with
a capacity of 2.7 million tonnes per annum.
Wassa lies in the Birimian Province of the West African Precambrian Shield, within the southern portion
of the Ashanti Greenstone Belt along the eastern margin of this belt. The mineralization is hosted in
greenstone-hosted quartz-carbonate veins interlaced with sedimentary units. As at December 2013, Wassa
had Mineral Reserves of 2.0 million ounces at an average grade of 1.75 g/t Au. Measured and Indicated
Mineral Resources as at December 2013, inclusive of Proven and Probable Reserves, were 3.3 million ounces
at an average grade of 2.02 g/t Au.
In 2013, there were two operational pits providing ore for the Wassa processing plant – the Wassa Main pit
and the Father Brown pit. Mining at the Father Brown pit is scheduled to be completed at the end of the
first quarter 2014.
Wassa produced and sold 185,807 ounces during 2013 and is expected to produce 130,000 to 140,000
ounces in 2014.
During 2013, 152 drill holes totaling 55,000 meters were completed below the Wassa main pit. Drilling results
have confirmed that the mineralized zone continues to the south and remains open at depth.
A further drilling program at Wassa is currently underway. The program includes approximately 20,000
meters of infill drilling of the current ore body to further define grades and continuity, and step-out drilling
250 meters to the south of the currently defined ore body.
Using the latest Mineral Resource model, the Company has recently started a Preliminary Economic
Assessment (“PEA”) on the viability of mining the higher grade portions of the Wassa deposit via
underground mining methods. Should the PEA have a positive outcome, a feasibility study on underground
mining at Wassa will be undertaken.
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
12
WASSA MINERAL RESOURCES AND RESERVES AT DECEMBER 31, 2013
PROVEN
MINERAL RESERVE
PROBABLE
MINERAL RESERVE
PROVEN + PROBABLE
MINERAL RESERVE
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
WASSA MAIN
FATHER BROWN
—
—
—
—
STOCKPILES
438
0.68
—
—
10
33,721
1.72
1,863
33,721
694
4.31
59
0.54
96
1
694
497
1.72
4.31
0.67
1,863
96
11
TOTAL
438
0.68
10
34,473
1.77
1,960
34,911
1.75
1,970
MEASURED MINERAL
RESOURCES
INDICATED MINERAL
RESOURCES
MEASURED + INDICATED
MINERAL RESOURCES
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
WASSA MAIN
270
1.44
13
44,812
1.78
2,568
45,082
1.78
2,580
WASSA UNDERGROUND
FATHER BROWN
FATHER BROWN
UNDERGROUND
WASSA OTHER
—
—
—
—
—
—
—
—
—
—
—
—
2,446
692
1,000
2,115
3.67
3.86
6.47
2.40
289
2,446
86
692
208
1,000
163
2,115
3.67
3.86
6.47
2.40
289
86
208
163
TOTAL
270
1.44
13
51,066
2.02
3,314
51,336
2.02
3,327
WASSA MAIN
WASSA UNDERGROUND
FATHER BROWN
FATHER BROWN UNDERGROUND
WASSA OTHER
TOTAL
INFERRED MINERAL RESOURCES
tonnes (000)
grade (g/t Au)
ounces (000)
313
646
40
881
85
1,964
1.28
3.10
1.85
6.35
2.93
4.23
13
64
2
180
8
267
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013
GOLDEN STAR OPERATIONS
MINING LEASE
EXPLORATION LEASE
EXPLORATION JV
GOLD MINES / DEPOSITS
N
0
150 km
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
14
BOGOSO GOLD MINE
The Bogoso gold mine is located in the southwestern region of Ghana, approximately 35 kilometers west
of the Wassa mine. It has both a CIL and a BIOX plant with capacities of 1.5 mtpa and 2.7 mtpa, respectively.
Bogoso produced and sold 145,000 ounces of gold in 2013 and is expected to produce 165,000 to 180,000
ounces in 2014.
The Bogoso Mine and its development properties lie within the southern portion of the Ashanti Greenstone
Belt along the western margin of the belt. As at December 2013, Bogoso had Mineral Reserves of 2.0 million
ounces at an average grade of 3.2 g/t Au. Measured and Indicated Mineral Resources as at December 31,
2013, inclusive of Proven and Probable Reserves, were 3.0 million ounces at an average grade of 3.3 g/t Au.
There are currently two operational pits at Bogoso – the Bogoso North pit and the Chujah pit. The gold
deposits at these pits are sedimentary hosted shear zones with gold occurring as micrometre-size particles
within pyrite and arsenopyrite, making the deposits refractory in nature.
Through Bogoso, Golden Star owns the Prestea underground gold mine which is currently non-operational.
A Feasibility Study for Prestea underground mine was completed in 2013 that demonstrates positive
economics for the extraction of the West Reef steeply dipping, high-grade, narrow vein deposit. Prestea is
a lode gold deposit with free milling gold that occurs in quartz veins along faults.
Estimated cash operating costs at Prestea are $734 per ounce over the six year life of mine and initial capital
expenditure is estimated to be $91 million. The Company continues to evaluate the optimal development
process for this project.
Bogoso has a number of development projects, the most advanced of which are Dumasi, Mampon and Prestea
South. Dumasi is a large undeveloped ore body located 4 kilometers north of the Bogoso processing plants.
As at December 2013 it had a Proven and Probable Mineral Reserves of 682,000 ounces at an average grade
of 2.4 g/t Au. A community of some 2,500 people live in the town of Dumasi, with whom a resettlement
agreement was signed in February 2013 in anticipation of the construction of an open pit mine. The
high grade Mampon deposit is located approximately 35 kilometers north east of the Bogoso processing
plants and contains 191,000 ounces at an average gold grade of 5.2 g/t Au. Intentions are to develop and open
pit mine at Mampon and haul ore to the Bogoso processing plants. Prestea South represents several satellite
deposits approximately 20 kilometers from the Bogoso processing plants. As of December 31, 2013, the Prestea
South had total Proven and Probable Mineral Reserves of 260,000 ounces at an average grade of 2.6 g/t Au.
Notes to the proven and probable mineral reserve statement: (1) The stated mineral reserve for Bogoso includes the currently operational pits of Bogoso North and Chujah.
(2) The stated mineral reserves have been prepared in compliance with NI 43-101 and are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum’s
“CIM Definition Standards – For mineral resources and mineral reserves”. Mineral 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. (3) The stated mineral
reserves for Wassa have been prepared based on an updated resource model and the updated gold price assumptions noted below and, as such, may vary from the mineral
reserves set out in the Wassa Technical Report. The stated mineral reserves were prepared under the supervision of Dr. Martin Raffield, Senior Vice President Technical Services for
the Company. Dr. Raffield is a QP as defined by Canada’s NI 43-101. (4) The mineral reserves at December 31, 2013 were estimated using a gold price assumption of $1,300 per ounce.
(5) The slope angles of all pit designs are based on geo-technical 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 $1,300 per ounce, and historical and projected
operating costs at Bogoso and Wassa. 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 Ghanaian government royalty of 5% is included in the mineral reserves. (6) Numbers may not add due to rounding.
Notes to the measured and indicated mineral resources and the inferred mineral resources statement: (1) The mineral resources were estimated in compliance with the
requirements of NI 43-101. (2) The mineral resources for Wassa Other include Benso and Chichiwelli. (3) The mineral resources for Bogoso Other include Buesichem and Ablifa.
(4) The Wassa Underground mineral resource has been estimated below the $1,400 per ounce of gold pit shell using an economic gold grade cut-off of 2.6 g/t Au, which the
Company believes would be the lower cut-off for underground. (5) The Father Brown Underground mineral resource has been estimated below the $1,400 per ounce of gold pit
shell using an economic gold grade cut-off of 2.9 g/t Au, which the Company believes would be the lower cut-off for underground. (6) Prestea Underground mineral resource has
been estimated below the $1,400 per ounce of gold pit shell of Prestea South down to 3,800 m elevation using a gold cut-off at 4.74 g/t Au. (7) Mineral resources were estimated
using optimized pit shells at a gold price of $1,400 per ounce. 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. (8) The stated mineral resources for Wassa have been prepared based on an updated resource model and the updated
gold price assumptions noted above and, as such, may vary from the mineral resources set out in the Wassa Technical Report. The stated mineral resources were prepared under
the supervision of S. Mitchel Wasel, Vice President of Exploration for the Company. Mr. Wasel is a QP as defined by Canada’s NI 43-101. (9) Numbers may not add due to rounding.
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013
BOGOSO MINERAL RESOURCES AND RESERVES AT DECEMBER 31, 2013
15
PROVEN
MINERAL RESERVE
PROBABLE
MINERAL RESERVE
PROVEN + PROBABLE
MINERAL RESERVE
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
BOGOSO
DUMASI
MAMPON
2,930
3,116
2.65
2.39
—
—
PRESTEA SOUTH
969
2.74
PRESTEA UNDERGROUND —
—
STOCKPILES
106
1.79
250
239
—
85
—
6
1,731
5,826
1,133
2,170
1,434
2.59
2.36
5.24
2.52
9.61
144
4,662
443
8,941
191
176
1,133
3,139
443
1,434
—
—
—
106
2.63
2.37
5.24
2.59
9.61
1.79
394
682
191
261
443
6
TOTAL
7,122
2.54
581
12,294
3.53
1,397
19,415
3.17
1,977
MEASURED MINERAL
RESOURCES
INDICATED MINERAL
RESOURCES
MEASURED + INDICATED
MINERAL RESOURCES
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
tonnes
(000)
grade
(g/t Au)
ounces
(000)
BOGOSO
DUMASI
MAMPON
2,697
3,255
2.94
2.56
255
268
—
—
PRESTEA SOUTH
986
2.87
PRESTEA UNDERGROUND —
BOGOSO OTHER
—
—
—
1,856
9,868
1,553
3,318
2.95
2.41
4.79
2.62
1,356
14.50
176
764
239
279
632
4,553
13,123
1,553
4,304
2.94
2.45
4.79
2.67
1,356
14.50
3,835
2.64
325
3,835
2.64
431
1,032
239
370
632
325
—
91
—
—
TOTAL
6,938
2.75
614
21,786
3.45
2,415
28,724
3.28
3,029
BOGOSO
DUMASI
MAMPON
PRESTEA SOUTH
PRESTEA UNDERGROUND
BOGOSO OTHER
TOTAL
INFERRED MINERAL RESOURCES
tonnes (000)
grade (g/t Au)
ounces (000)
290
—
220
581
3,289
890
5,270
2.04
—
1.84
6.00
8.02
2.38
6.25
19
—
13
112
848
68
1,060
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
16
Directors and Senior Management
DIRECTORS
Tim Baker
Chairman
Tim Baker was appointed Chairman of the Board in January 2013. Tim most recently served as the Chief
Operating Officer and Executive Vice President of Kinross Gold Corporation from June 2006 to November
2010. Tim is a geologist with over 30 years of global project development and operational experience
including in Chile and Tanzania where he was Executive General Manager for Placer Dome. Prior to this,
Tim managed mining operations in the United States and Venezuela and held geological and production
roles in Kenya and Liberia. Tim is also a Director of Antofagasta PLC and Augusta Resource Corporation.
Tim holds a BSc in Geology from Edinburgh University.
Sam Coetzer
President and Chief Executive Officer
Sam Coetzer was appointed President and Chief Executive Officer in January 2013 and has been a Director
of Golden Star since December 2012. Sam joined Golden Star in March 2011 and served as Executive Vice
President and Chief Operating Officer until December 2012. Sam is a mining engineer with over 26 years
of international mining experience with Kinross, Xstrata, Xstrata Coal, and Placer Dome. Sam has extensive
African experience having worked as an Executive General Manager for South Africa and Tanzania for Placer
Dome. Prior to joining Golden Star Sam was the Senior Vice President of Red Back Integration at Kinross.
Anu Dhir
Director
Anu Dhir is the Managing Director of Miniqs Limited, a private group primarily interested in developing
resource projects. She is also a director of Atlatsa Resources, Frontier Rare Earths and of Energulf Resources.
Prior to founding Miniqs Limited, Anu was Vice President, Corporate Development and Company Secretary
at Katanga Mining Limited.
Anu holds a BA from the University of Toronto and a law degree (Juris Doctor) from Quinnipiac University,
Connecticut, United States.
Robert Doyle
Director
Robert Doyle has more than 30 years of mining experience in international resource exploration,
development, fundraising, and production. Most recently, Rob was Founder, and Chief Executive Officer
of Medoro Resources Ltd., now known as Gran Colombia Gold Corp. Prior to this, Rob served as Executive
Vice President and Chief Financial Officer of Pacific Stratus Energy, Chief Financial Officer of Coalcorp
Mining, and Chief Financial Officer of Bolivar Gold Corp. Currently, Rob serves as a Director and Chairman
of the audit committee of Mandalay Resources, Director and member of the audit committee of Detour
Gold Corporation and Director of NXA Inc.
Rob is a Chartered Accountant and a Chartered Director.
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013
17
Tony Jensen
Director
Tony Jensen has over 25 years of mining industry experience and is President and Chief Executive Officer for
Royal Gold Inc. Prior to joining Royal Gold, Tony was the Mine General Manager of the Cortez Joint Venture
and spent 18 years with Placer Dome. Tony has extensive experience in operations in the United States and
Chile where he occupied several senior management positions. Tony is a member of the National Mining
Association Board and Finance Committee, the Industrial Advisory Board of the South Dakota School
of Mines and Technology, and the Advisory Council for the University of Colorado Business School’s Center
for Commodities.
Tony holds a B.Sc. degree in Mining Engineering from South Dakota School of Mines and also holds
a Certificate in Finance from Golden Gate University in San Francisco.
Craig Nelsen
Director
Craig Nelsen is a geologist with over 30 years of experience in the mining business. He is Founder, CEO
and Director of Avanti Mining Inc. Formerly, Craig was Executive Vice President Exploration of Gold Fields
Limited; Founder, Chief Executive Officer and Chairman of the former Metallica Resources Inc., now New Gold;
and has also held a variety of strategic positions at Lac Minerals Ltd.
Craig holds a M.S. degree in geology from the University of New Mexico and a B.A. in geology from the
University of Montana.
Chris Thompson
Director
Chris Thompson has 40 years of experience in international mining. Formerly, Chris served as Chairman
and Chief Executive Officer of Gold Fields Limited; Chairman of the World Gold Council; and Founder,
President and Chief Executive Officer of Castle Group Inc. Chris has served as Director on over 25 public gold
mining companies including Ram Power Corp.; Teck Resources Limited; Jacobs Engineering Group Inc; and
Geosynfuels Inc., a privately held energy company. Chris is a member of the advisory board of Pala Investments.
Bill Yeates
Director
Bill Yeates is a founding and current audit partner with Hein & Associates LLP. Bill was previously
Hein’s National Director of Auditing and Accounting and has over 35 years of experience working with
public companies specializing in extractive industries. Formerly, Bill served on the Financial Accounting
Standards Advisory Council; a member of the Professional Practice Executive Committee of the Center
for Audit Quality; a member of the Executive Committee of the Center for Public Company Audit Firms of
the American Institute of CPAs; a member of the SEC Practice Section Executive Committee and of the SEC
Regulations Committee of the AICPA.
Bill is a Chartered Professional Accountant; he also holds an MBA in accounting and a B.Sc. in finance and
marketing from the University of Colorado.
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
18
SENIOR MANAGEMENT
Jeff Swinoga
Executive Vice President and Chief Financial Officer
Jeff Swinoga was appointed Executive Vice President and Chief Financial Officer of Golden Star in January 2013.
Jeff is a Chartered Accountant and is a member of the Institute of Chartered Accountants of Ontario with
over 19 years of experience in the resource, mining and finance industries. He has a wealth of experience in debt
and equity financing transactions. Prior to joining Golden Star, Jeff served as Vice President, Finance and
Chief Financial Officer of North American Palladium; Senior Vice President, Finance and Chief Financial
Officer of MagIndustries Corp.; Vice President, Finance and Chief Financial Officer of HudBay Minerals;
and was Director, Treasury Finance of Barrick Gold Corporation.
Jeff holds a MBA from the University of Toronto and an Honours Economics degree from the University
of Western Ontario.
Daniel Owiredu
Executive Vice President and Chief Operating Officer
Daniel Owiredu was appointed Executive Vice President Operations and Chief Operating Officer in January
2013. Daniel joined Golden Star in September 2006 and served as Vice President, Ghana Operations until
his appointment as Senior Vice President, Ghana Operations in May 2012. Daniel has more than 20 years of
experience in the mining sector in Ghana and West Africa. Most recently, Daniel was Deputy Chief Operating
Officer for AngloGold Ashanti following the amalgamation of AngloGold and Ashanti Goldfields. His prior
experience includes successfully managing the construction and operation of the Bibiani mine for Ashanti.
He also managed the Siguiri mine in Guinea and the Obuasi mine in Ghana for Ashanti.
Bruce Higson-Smith
Senior Vice President, Corporate Strategy
Bruce joined Golden Star in September 2003 and served as Vice President, Corporate Development until
his appointment as Senior Vice President, Corporate Strategy in January 2012. Bruce is a mining engineer
with over 30 years of experience in mining and underground mining operations in Africa. Prior to joining
Golden Star, Bruce worked with Castle Group and Resource Capital Funds, where he was responsible for
reviewing projects, conducting due diligence, negotiating and structuring mining transactions.
Bruce has a B.Sc. in mining engineering and an ARSM from Imperial College. He also holds an MBA in Finance.
GOLDEN STAR RESOURCES | ANNUAL REPORT 2013 19
Martin Raffield
Senior Vice President, Technical Services
Martin Raffield was appointed Senior Vice President, Technical Services August 2011. Prior to this, he worked
from June 2007 as Principal Consultant and Practice Leader for SRK Consulting in Denver. Martin started
his career in 1992 in South Africa working in geotechnical engineering at a number of deep level gold
mines for Johannesburg Consolidated Investments. In 2000, he relocated to Canada with Placer Dome
and held the positions of Chief Engineer and Mine Superintendent at their Campbell Mine. Martin moved
to Breakwater Resources, Myra Falls Operation in 2006 and held the position of Manager of Mining until
moving to SRK in 2007.
Martin has a Ph.D. in geotechnical engineering from the University of Wales and is a Professional Engineer
registered in Ontario, Canada.
Mark Thorpe
Senior Vice President, Corporate Social Responsibility and Environmental Affairs
Mark Thorpe was appointed Senior Vice President, Corporate Social Responsibility and Environmental
Affairs in January 2013. Mark joined Golden Star in 2006 and spent his first three years in Ghana working
with the operational teams in the areas of health, safety, environment and community. Mark is a corporate
responsibility professional with 30 years of international mining experience. Mark serves on the World
Gold Council’s Steering Committee on Responsible Gold, represents Golden Star on the Industry Advisory
Group to the International Cyanide Management Institute, is an honorary faculty at McGill University,
and is the Chair of the Canadian Mining Innovation Council’s Environmental Stewardship Committee.
Mark has a Ph.D. in mine reclamation from the University of Saskatchewan.
André van Niekerk
Vice President and Controller
André van Niekerk joined Golden Star in 2006. He spent close to five years in Ghana as the head of finance
and business operations, after which he was transferred back to the corporate headquarters to take
the role of Controller. Whilst based in Ghana, André was Vice Chairman of the Ghana Chamber of Mines
Energy Committee and a member of the Chamber of Mines Finance Committee. Prior to joining Golden
Star, André spent six years with KPMG serving clients in the mining and oil and gas industries. His education
includes a B.S. in accounting sciences, and he is a CPA.
ANNUAL REPORT 2013 | GOLDEN STAR RESOURCES
20
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
21
The following discussion and analysis provides information that management believes is relevant to an
assessment and understanding of the consolidated financial condition and results of operations of Golden
Star Resources Ltd. and its subsidiaries (“Golden Star” or “the Company” or “we” or “our”). This
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should
be read in conjunction with our audited consolidated financial statements for the years ended December
31, 2013 and 2012 which are prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”). This MD&A includes
information available to February 19, 2014. All amounts shown are in thousands of dollars unless noted
otherwise. All currency amounts are stated in U.S. dollars unless noted otherwise. Information presented in
this MD&A is prepared in accordance with IFRS unless otherwise noted.
Overview of Golden Star
Golden Star is an established gold mining company with operating mines in Ghana, and exploration
properties in other parts of West Africa and Brazil. Golden Star holds a 90% equity interest in Golden Star
(Wassa) Limited (“Wassa”) and Golden Star (Bogoso/Prestea) Limited (“Bogoso”), which, respectively own
the Wassa and the Bogoso open-pit gold mines and processing plants in Ghana. In addition, Golden Star
has a 90% interest in the currently inactive underground mine in Prestea, Ghana (“Prestea Underground”).
Our operations produced and sold 330,806 ounces of gold in 2013, and we expect to produce and sell
approximately 295,000 to 320,000 ounces of gold in 2014. Our objective is to continue the growth of our
mining business through the appropriate development of our projects. In the near term, we are focused on
reducing our operating costs and prudently managing our capital expenditures.
We are a reporting issuer or the equivalent in all provinces of Canada, in Ghana and in the United States,
and file disclosure documents with securities regulatory authorities in Canada, Ghana and with the United
States Securities and Exchange Commission.
ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
Effective as of the second quarter of 2013 the Company became a “foreign private issuer” under U.S.
securities laws and as a result the Company converted from accounting principles generally accepted in
the United States (“US GAAP”) and now prepares its financial statements in accordance with IFRS as issued
by the IASB. The comparative financial information for 2012 in this MD&A has also been restated to conform
to IFRS. See Changes in Accounting Policies below for further information on the impact of this change. This
MD&A should be read in conjunction with Note 27 “First Time Adoption of IFRS” in the Company’s audited
consolidated financial statements for the year ended December 31, 2013.
22
Table of Contents
Overview of Golden Star
2013 Highlights
Outlook for 2014
Corporate Developments
Development Projects Update
Consolidated Results of Operations
Wassa Operations
Bogoso Operations
Summarized Quarterly Financial Results
Selected Annual Information
Liquidity and Financial Condition
Liquidity Outlook
Table of Contractual Obligations
Related Party Transactions
Off-Balance Sheet Arrangements
Non-Gaap Financial Measures
Outstanding Share Data
Critical Accounting Policies And Estimates
Financial Instruments
Quantitative and Qualitative Disclosures About Market Risk
Cautionary Note Regarding Forward-Looking Information
Controls and Procedures
Risk Factors and Additional Information
21
23
25
26
31
33
37
40
43
44
44
45
45
46
46
46
51
51
55
56
57
59
61
2013 Highlights
23
SUMMARY OF OPERATING AND FINANCIAL RESULTS
OPERATING SUMMARY
Wassa gold sold
Bogoso gold sold
TOTAL GOLD SOLD
Average realized gold price
Cash operating cost per ounce–Wassa1
Cash operating cost per ounce–Bogoso1
Cash operating cost per ounce1
All-in sustaining cost per ounce1
FINANCIAL SUMMARY
Revenues
Net income/(loss) attributable to
Golden Star shareholders
Adjusted net income/(loss) attributable
to Golden Star shareholders2
Net cash (used in)/provided by operations
Cash provided by operations before
working capital changes3
Net income/(loss) per share attributable to
Golden Star shareholders–basic and diluted
Adjusted net income/(loss)
per share attributable to Golden Star
shareholders–basic2
Cash flow (used in)/provided by
operations per basic and diluted share
Cash provided by operations before
working capital changes per share3
For the three months
ended December 31,
2013
44,337
31,093
2012
40,366
47,178
For the years
ended December 31,
2013
2012
185,807
144,999
158,899
172,379
75,430
87,544
330,806
331,278
1,273
881
1,391
1,091
1,373
1,710
940
1,230
1,097
1,392
1,414
805
1,361
1,049
1,326
1,662
890
1,186
1,044
1,318
oz
oz
oz
$/oz
$/oz
$/oz
$/oz
$/oz
$’000
96,034
149,710
467,796
550,540
$’000
(148,576)
14,334
(265,892)
7,186
$’000
$’000
$’000
(6,466)
(2,463)
10,227
43,936
(21,493)
59,143
42,143
123,094
2,805
19,559
30,225
117,030
$/share
(0.57)
0.06
(1.03)
0.03
$/share
(0.02)
$/share
(0.01)
$/share
0.01
0.04
0.17
0.08
(0.08)
0.23
0.12
0.16
0.48
0.45
1 See “Non-GAAP Financial Measures” below for a reconciliation of cash operating cost per ounce and all-in sustaining cost per ounce to
cost of sales before depreciation and amortization.
2 See “Non-GAAP Financial Measures” below for a reconciliation of adjusted net income/(loss) attributable to Golden Star shareholders
and adjusted net (loss)/income per share attributable to Golden Star shareholders to net (loss)/income attributable to Golden Star
shareholders and net (loss)/income per share attributable to Golden Star shareholders.
3 See “Non-GAAP Financial Measures” below for an explanation of the calculation of cash provided by operations before working capital
changes and cash provided by operations before working capital changes per share.
24
Gold sold during the full year 2013 totaled 330,806 ounces, compared to gold sales during 2012 of
331,278 ounces. Gold sales at our Wassa operations increased 17% year over year, as a result of improved
plant throughput and grades processed. Gold sales at our Bogoso operations declined by 16% as a result of
lower refractory plant throughput and lower grades processed as planned due to the push back at the
Chujah pit and lower non-refractory grades and recovery due to the start-up of the low cost tailings reclaim
project during 2013. Gold sold during the fourth quarter 2013 totaled 75,430 ounces, compared to 87,544
ounces sold in the fourth quarter of 2012.
Revenues for the full year 2013 decreased to $467.8 million compared to $550.5 million in 2012, primarily
due to the decline in gold prices during 2013. The average realized gold price decreased 15% from $1,662
per ounce in 2012 to $1,414 per ounce in 2013. Gold ounces sold during 2013 were approximately the same as
ounces sold during 2012. Revenues were $96.0 million in the fourth quarter of 2013, compared to $149.7
million in the fourth quarter of 2012.
Consolidated cash operating cost per ounce totaled $1,049 per ounce for the full year 2013, compared
to cash operating cost per ounce of $1,044 per ounce for the full year 2012. Wassa’s cash operating cost
per ounce totaled $805 per ounce, 10% lower than in 2012, mainly as a result of higher gold sales in 2013.
Bogoso’s cash operating cost per ounce increased to $1,361 per ounce for 2013, up from $1,186 per ounce in
2012, mainly due to the lower gold production at Bogoso during 2013. Consolidated cash operating cost per
ounce for the fourth quarter of 2013 totaled $1,091 per ounce compared to $1,097 per ounce in the fourth
quarter of 2012.
Corporate general and administrative expenditures decreased by 11% to $21.5 million for the full year
2013, down from $24.1 million incurred during 2012. Even though the Company incurred $1.9 million of
relocation expenses in 2013 to move the corporate office to Toronto, Ontario, the savings as a result of the
relocation totaled $1.7 million in 2013.
Primarily as a result of non-cash impairment charges totaling $355.6 million, we incurred a net loss
attributable to Golden Star shareholders of $265.9 million in 2013, compared to net income attributable
to Golden Star shareholders of $7.2 million in 2012. We recorded an impairment charge of $355.6 million to
write down the Bogoso and Wassa’s carrying values and the True Gold Mining Inc. (“TGM”) shares
compared to a $7.0 million impairment charge in 2012. As a result of the lower realized gold price in 2013, the
mine operating margin reduced to $30.7 million in 2013, down from $87.6 million in 2012. This was partially
offset by the $52.0 million non-cash mark to market gain of the 5% Convertible Debentures recorded in 2013
compared to a $28.0 million mark to market loss recorded in 2012. Net loss attributable to Golden Star
shareholders for the fourth quarter of 2013 totaled $148.6 million (includes an impairment charge of $159.7
million), compared to a net income attributable to Golden Star shareholders of $14.3 million for the same
prior year period.
Cash provided by operations before working capital changes totaled $30.2 million for the full year 2013
and $117.0 million for the full year 2012. For the fourth quarter 2013, cash generated by operations before
working capital changes was $2.8 million compared to $19.6 million in the same period in 2012, primarily as
a result of the decrease in the gold price during 2013.
Capital expenditures at Wassa and Bogoso for the full year 2013 totaled $102.9 million compared to
$117.3 million incurred in 2012. For the fourth quarter of 2013, capital expenditures totaled $22.5 million,
compared to $39.3 million incurred in the same period in 2012. Capital expenditures were significantly
reduced in the second half of 2013 as a result of the spending reduction measures implemented throughout
the Company.
Liquidity — Consolidated cash balance was $65.6 million at December 31, 2013 compared with $78.9 million
at December 31, 2012. Working capital decreased to $11.2 million at December 31, 2013, down from $69.2
million at December 31, 2012.
25
Outlook for 2014
The Company’s long-term objective is to continue the growth of its mining business through the
appropriate development of its projects. In the near term, the Company is focused on reducing its
operating costs and managing its capital expenditure. Development spending will be focused on projects
that are expected to provide a sufficient risk-adjusted return on investment in the near to medium term.
PRODUCTION AND COST GUIDANCE FOR 2014
Wassa
Bogoso
CONSOLIDATED
Gold production
thousands of ounces
Cash operating costs
$ per ounce
Capital spending
$ millions
130–140
165–180
295–320
900–950
1,000–1,050
950–1,000
19
31
50
Production
During 2014, we expect most of the Wassa ore supply to be mined from the Wassa Main pit, as production
from the Father Brown pit is expected to cease in the second quarter of 2014. The Wassa Main pit has lower
grades than the Father Brown pit and, as a result, Wassa gold production is expected to be lower in 2014
than in 2013. At Bogoso, we expect 2014 production to significantly increase at the Chujah pit once we
complete the pushback, which should be substantially complete at the end of the first quarter of 2014. We
expect the strip ratio at Bogoso to decrease to 2:1 during the second half of 2014. Mining at the Bogoso
North pit will continue in 2014 and is expected to be depleted in the fourth quarter of 2014.
26
Cash operating costs
We expect Wassa’s cash operating cost per ounce to increase due to the lower grades from the Wassa Main
pit resulting in lower gold production during 2014. The Bogoso cash operating cost per ounce is expected to
be above the 2014 annual average during the first half of 2014 due to lower ore supply while we complete
the Chujah pushback. We expect Bogoso’s cash operating costs per ounce to reduce in the latter part of
2014 as ore supply, plant throughput and gold production increases.
For the purposes of developing estimated cash operating costs for 2014, we have assumed the prices of
electricity and fuel will be similar to the annual average prices paid by the Company for electricity and fuel
in 2013. We are also in the process of finalizing negotiations to approve a reduction in the workforce at
Bogoso and Wassa during 2014.
Capital expenditures
Capital expenditures will be limited to sustaining capital requirements and key development projects. We
plan to continue with the permitting process of the Mampon, Dumasi, Prestea Underground and Prestea
South properties during 2014 with limited capital spending, however we expect to increase spending on
these projects if gold prices move higher.
We expect to spend approximately $6 million on development at Wassa, primarily on additional drilling at
the Wassa Main pit. Of the approximately $23 million budgeted development capital expenditures at
Bogoso, approximately $12 million will be attributable to Prestea Underground and we expect to spend
$7 million to complete the push back at Chujah. Sustaining capital expenditures at Wassa and Bogoso for
2014 is expected to total approximately $13 million and $8 million, respectively.
Corporate Developments
GOLD PRICES
Spot gold prices fell from $1,694 per ounce at the beginning of 2013 to $1,202 per ounce near the end of the
year. We realized an average gold price of $1,414 per ounce for our gold sales during 2013, 15% lower than
the average realized price of $1,662 per ounce for 2012. The spot gold price as at February 19, 2014 was $1,321
per ounce.
MINERAL RESERVES AND MINERAL RESOURCES
Proven and Probable Mineral Reserves(1) (2)
Proven and Probable Mineral Reserves declined to 3.9 million ounces as of December 31, 2013 down 8% from
4.3 million ounces at December 31, 2012, largely as a result of mining depletion and the lower gold price
assumptions used, partially offset by additional ounces from exploration at Wassa Main and Prestea
Underground. Mineral Reserves were estimated on a gold price assumption of $1,300 per ounce compared
to $1,450 per ounce in the December 31, 2012 estimate.
27
During 2013, the Company’s development strategy focused on drilling at Wassa, where the Company
increased Proven and Probable Mineral Reserves by 34% to 2.0 million ounces. The Proven and Probable
Mineral Reserve grade at Wassa increased by 22% to 1.75 grams of gold per tonne (“g/t Au”), the bulk of this
increased grade is as a result of the inclusion of higher grade ore at depth in the Wassa Main deposit.
At Bogoso, Proven and Probable Mineral Reserves totaled 2.0 million ounces at December 31, 2013
compared to 2.8 million ounces at the end of 2012. Mineral Reserve ounces in Bogoso’s open pits reduced by
46% as a result of the lower gold price assumption used, however grades increased by 6% to 2.65 g/t Au at
December 31, 2013. A Mineral Reserve estimate for Prestea Underground has been included for the first time
subsequent to the completion of a positive feasibility study in June of 2013.
(1) Proven and Probable Mineral Reserves are calculated as at December 31, 2013 in accordance with National Instrument 43-101 as required
by Canadian securities regulatory authorities. For a breakdown of Mineral Reserves and Resources by category and additional
information relating to Mineral Reserves and Resources and related key assumptions and parameters, see our Mineral Reserve and
Resource Statement in our news release “Golden Star Announces Mineral Reserves and Resources Estimates as at December 31, 2013”, filed
on and dated February 10, 2014 on www.sedar.com.
(2) The scientific and technical information in this MD&A has reviewed and approved by Dr. Martin Raffield, Senior Vice-President of Technical
Services, a Qualified Person under National Instrument 43-101 and an employee of the Company.
28
Measured and Indicated Mineral Resources(3) (inclusive of Proven and Probable Mineral Reserves)
Measured and Indicated Mineral Resource totaled 6.4 million ounces at the end of 2013 compared to
7.3 million at the end of 2012. Wassa’s total Measured and Indicated Mineral Resource increased by 29%
from December 31, 2012 to 3.3 million ounces at the end 2013, largely due to a 37% increase in the Mineral
Resource within the Wassa Main pit design and the inclusion of 289,000 ounces of Mineral Resource from
the Wassa Underground deposit below the Wassa Main pit. This was partially offset by a 37% decline in
Measured and Indicated Mineral Resource at Father Brown and Father Brown Underground as a result of
mining depletion and the reduction in the gold price assumption. Measured and Indicated Mineral
Resources have been estimated based on a gold price assumption of $1,400 per ounce at December 31,
2013, compared to $1,750 per ounce used for the December 31, 2012 estimate.
Bogoso’s Measured and Indicated Mineral Resource declined by 35% to 3.0 million ounces at December 31,
2013 primarily due to the lower gold price assumption used and due to depletion in the Chujah and Bogoso
North pits.
(3) Measured and Indicated Mineral Resources are estimated as at December 31, 2013 in accordance with National Instrument 43-101 as
required by Canadian securities regulatory authorities. For a breakdown of Mineral Reserves and Mineral Resources by category and
additional information relating to Proven and Probable Mineral Reserves and Measured and Indicated Mineral Resources and related key
assumptions and parameters, see our Mineral Reserve and Resource Statement in our news release “Golden Star Announces Mineral
Reserves and Resources Estimates as at December 31, 2013”, filed and dated February 10, 2014 on www.sedar.com.
IMPAIRMENT CHARGES
The Company recorded impairment charges totaling $355.6 million in 2013, comprising of $245.8 million for
Bogoso, $106.9 million for Wassa and $2.9 million related to available for sale investments. In June 2013, after
reviewing and updating the Bogoso and Wassa mine plans in light of the lower gold price environment, the
Company recorded impairment charges totaling $195.9 million. Upon completion of the fourth quarter 2013
budgeting and life of mine planning process including a reassessment of the carrying value of our cash
generating units (“CGUs”), the Company recorded additional non-cash impairment charges totaling of
$159.7 million, related to the Bogoso CGU as a result of the shorter expected refractory mine life at Bogoso
and a lower gold price assumption.
INCREASE IN RECLAMATION PROVISION
The total reclamation provision increased to $86.3 million at December 31, 2013, compared with $63.3
million at December 31, 2012 primarily related to the Bogoso operations for which the reclamation provision
increased by $21.5 million to $67.8 million at December 31, 2013. During 2013, the Company incurred $3.3
million of reclamation expenditures at Bogoso compared to $3.2 million incurred during 2012. However
during 2013 the estimated future reclamation expenditure for Bogoso increased by $24.4 million compared
to $1.8 million during 2012. The $24.4 million increase in 2013, is related to the anticipated shorter refractory
operation’s mine life and higher than expected backfilling costs. Previously it was expected that the Bogoso
refractory operation would use the water stored in the Buesichem process water storage facility for its
operations. However, as a result of the anticipated shorter mine life, this water will require treatment before
it is discharged to the receiving environment resulting in an increase of approximately $15.5 million
(undiscounted) to the rehabilitation provision. In addition we increased our estimate of the expected
backfilling cost of the Buesichem pit by approximately $10.3 million (undiscounted).
The Wassa reclamation provision increased by $1.5 million to $18.5 million at December 31, 2013. During the
year Wassa spent $2.3 million on reclamation work primarily focused at the previously mined Benso
concession and on-going reclamation maintenance. The $3.7 million increase in the estimated cash flows
of the Wassa rehabilitation provision is primarily due to the waste generated from the Wassa Main and
Father Brown pits and the increase in the size of the corresponding waste dumps. This was partially offset
by a decrease in the reclamation provision related to the Benso concession as reclamation work nears
completion.
29
OPERATING COSTS AND CAPITAL SPENDING REDUCTIONS
During the second quarter, the Company completed a comprehensive review of its operating and capital
expenditures in an effort to reduce overall expenditures by 10% or $45 million from the original operating
plan and maximize near term cash flow in the lower gold price environment. These operating cost
reduction initiatives were achieved during the third and fourth quarters of 2013.
Mine operating expenses were reduced through reducing the number of contractors, re-negotiations of
certain supplier contracts, and supplier discounts. Other operating improvements were initiated including
transport and delivery efficiencies, and improved purchasing procedures. Maintenance cost savings and
fuel cost reductions continue to be achieved through the recent purchase of two new excavators and four
new drills.
Capital expenditures at Wassa and Bogoso for 2013 totaled $74.4 million (excluding $28.5 million
betterment stripping previously expensed under US GAAP), compared with an initial capital budget of
$141.0 million. Sustaining capital expenditure totaled $39.5 million for the year, $20.5 million less than our
initial sustaining capital budget of $60.0 million. Development capital expenditures totaled $34.7 million for
2013 (excluding $28.5 million of betterment stripping previously expensed under US GAAP), which is $46.3
million less than the $81.0 million that was projected at the beginning of the year.
30
RESTART OF TAILINGS RECLAIM FACILITY AND SUSPENSION OF MINING AT PAMPE
In the third quarter of 2013, we commenced pumping reclaimed tailings to Bogoso’s non-refractory plant on
a full time basis to replace the non-refractory ore feed from the suspended Pampe pit. This facility pumps
tailings from a decommissioned Bogoso tailings storage facility directly into the Bogoso non-refractory
plant.
We processed 0.9 million tonnes of tailings at an average grade of 0.96 g/t during 2013, at a gold recovery
rate of 42.5% which yielded 9,149 ounces for the year. Although it is uncertain how much of the tailings we
will be able to process, we expect that there will be sufficient tailings reclaim material available for at least
another five years. Gold grade and gold recovery will be variable, however we expect it to be similar to the
average gold grades and gold recoveries experienced to date. The tailings reclaim material is expected to
be upgraded to Mineral Resource and Reserve during 2014.
ECOBANK LOAN
On July 30, 2013, Wassa closed a $50 million secured Medium Term Loan Facility (“Ecobank Loan”) with
Ecobank Ghana Limited (“Ecobank”), a pan-African full service bank, which acted as sole lender and
arranger to Wassa. The proceeds are being used to finance Wassa capital expenditures. The Ecobank Loan
has a term of 60 months from the date of initial drawing and is secured by Wassa’s existing plant,
machinery and equipment. The interest rate is three month LIBOR plus 9% per annum, payable monthly in
arrears. Payment of interest and principal commences on April 30, 2014. Wassa drew down $30.0 million
under this facility during 2013, and $20.0 million remains available for drawdown.
The table below shows the use of the proceeds received under the Ecobank Loan:
Ecobank Loan proceeds received during 2013
Used for capital expenditures during 2013
$’MILLIONS
30.0
29.2
0.8
Sale of True Gold Mining shares
On July 29, 2013, the Company completed the sale of its investment in TGM. The Company sold 24,521,101
shares of TGM for net proceeds of $7.2 million resulting in a gain of $1.3 million in 2013.
Development Projects Update
31
WASSA
Wassa Drilling Program
During 2013, 152 drill holes totaling 54,524 meters were completed below the Wassa Main pit. The drilling
was predominantly targeted at infilling gaps in the prior drilling as well as testing the higher grade plunge
mineralization to the south. Drilling results have confirmed that the mineralized zone continues to the south
and remains open at depth.
In November 2013, the Company announced an increased Indicated Mineral Resource at Wassa of 46.4
million tonnes at an average grade of 1.75 g/t Au for 2.6 million ounces. The new resource was constrained
by a $1,400 per ounce gold price assumption and included drilling up to the end of June 2013. An additional
14 holes totaling 7,275 meters have been completed since the last model update and will be used with the
results of future drilling to update the resource models during 2014.
The current drilling program at Wassa is focused on approximately 20,000 meters of infill drilling of the
current resource to further define grades and continuity and step-out drilling 250 meters to the south of the
currently defined ore body. This drilling program forms the bulk of Wassa’s $6 million development capital
budget for 2014.
Utilizing the latest resource model, the Company has recently commenced a Preliminary Economic
Assessment (“PEA”) on the viability of mining the higher grade portions of the Wassa deposit using
underground mining methods. The Company expects to have the PEA completed in the third quarter of
2014, and subject to a positive outcome from this study and 2014 exploration drilling, expects to commence
a feasibility study.
BOGOSO
Chujah Pit
During 2012, we started a push back of the Chujah pitwall to improve our access to ore and reduce our
mining operating costs. The Chujah push back continued during 2013 and we expect that it will be
substantially complete by the end the first quarter of 2014. We capitalized $4.9 million and $28.5 million,
respectively, as betterment stripping during the three months and year ended December 31, 2013 as a result
of this push back. We expect betterment stripping to total approximately $7 million during 2014.
Dumasi
During the first quarter of 2013, a negotiated resettlement agreement was signed that provides for
resettlement of the community of Dumasi to a new town site located a few kilometers north of the existing
Dumasi community. In conjunction with signing of the resettlement agreement, ground clearing, site
preparation and the construction of building supplies started at the new Dumasi town site in anticipation of
the construction of the new community. We incurred $7.9 million of development costs during 2013 mainly
related to land clearing and land preparation for construction. The resettlement action plan (“RAP”) for
Dumasi was submitted to the Prestea Huni Valley District Assembly in December 2013 for their review and
approval. We are continuing the preparation of the draft environmental impact statement (“EIS”) for
submission to the Ghana Environmental Protection Agency (“EPA”). We intend to limit our capital
expenditure at Dumasi in 2014 unless gold prices improve, at which time we could allocate additional
capital to accelerate the project.
32
Mampon
The permitting process is underway and continued in the fourth quarter of 2013 with the completion of the
data collection for the draft RAP for the community living at Mampon. The RAP and the EIS are currently
being drafted and design work in this regard is ongoing. We intend to limit expenditure at Mampon during
2014, unless and until gold prices improve.
Prestea South
A public hearing in the Prestea community was held during the third quarter of 2013. The community was
supportive of the development of the Prestea South open pit mines. We have received the comments on the
draft EIS from the EPA; additional modeling and data collection is underway. We are in the process of
addressing the EPA comments and plan to submit a revised EIS for final approval. We expect to spend
approximately $1.2 million in capital expenditure during 2014, however, we may increase this amount if gold
prices improve.
Prestea Underground
A feasibility study for Prestea Underground was completed during the second quarter of 2013 and was
published on SEDAR in July 2013. The feasibility study demonstrates positive economics for the extraction of
the West Reef steeply dipping, high-grade, narrow vein deposit at Prestea Underground using mechanized
cut-and-fill mining with footwall ramp access.
The feasibility study indicates that after the three year development period, ore from the Prestea
Underground mine would be treated at the Bogoso non-refractory plant. Estimated cash operating costs
are $734 per ounce over the six year life of mine. Initial capital expenditure is estimated to be $90.6 million
and total capital expenditure over the life of the project is expected to be $150.1 million.
During 2013, we incurred capital expenditures totaling $7.3 million including $0.9 million on geotechnical
drilling. We expect to incur an additional $12.2 million of capital expenditures on Prestea Underground
during 2014.
A RAP for the communities living in the Prestea area is currently under review by the Prestea Huni Valley
District Assembly. This RAP addresses the resettlement required for the development of the Prestea
Underground and the Prestea South project. Following revisions to the project, the EIS for the Prestea
Underground will be updated to address these changes. Once the updates are completed, the draft EIS will
be submitted to the EPA for their review. There may also be a requirement for a public hearing on the
Prestea Underground.
Consolidated Results of Operations
33
For the three months
ended December 31,
For the years
ended December 31,
2013
2012
2013
2012
SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
Wassa gold sold
Bogoso gold sold
TOTAL GOLD SOLD
Average realized price
Cash operating cost per ounce1–combined
oz
oz
oz
$/oz
$/oz
44,337
31,093
75,430
1,273
1,091
40,366
47,178
87,544
1,710
1,097
185,807
144,999
158,899
172,379
330,806
331,278
1,414
1,049
1,662
1,044
Gold revenues
$’000
96,034
149,710
467,796
550,540
Cost of sales excluding depreciation
and amortization
Depreciation and amortization
MINE OPERATING MARGIN
General and administrative
(Gain)/loss on fair value of
convertible debenture
Impairment charges
Income tax expense/(recovery)
Net income/(loss) attributable to
Golden Star shareholders
$’000
$’000
$’000
$’000
$’000
$’000
$’000
88,549
9,673
103,492
26,175
(2,188)
20,043
5,097
7,723
377,140
59,966
30,690
21,515
(1,624)
(4,107)
(51,967)
159,704
—
355,624
(1,518)
(2,759)
(12,331)
$’000
(148,576)
14,334
(265,892)
Net income/(loss) per share–basic and diluted
$
(0.57)
0.06
(1.03)
373,543
89,353
87,644
24,106
27,985
6,972
17,756
7,186
0.03
Cash flow provided by operations
$’000
Cash flow provided by operations per share
$
(2,463)
(0.01)
43,936
0.17
59,143
0.23
123,094
0.48
Capital expenditures
$’000
22,513
39,349
102,867
117,299
1 See “Non-GAAP Financial Measures” below for a reconciliation of cash operating cost per ounce to cost of sales excluding depreciation
and amortization.
34
YEAR ENDED DECEMBER 31, 2013 COMPARED TO YEAR ENDED DECEMBER 31, 2012
Gold revenues
Gold revenues totaled $467.8 million for the year ended December 31, 2013, down from $550.5 million in 2012,
due to a decline in realized gold prices. The average realized gold price fell to $1,414 per ounce, down 15%
from an average realized gold price of $1,662 per ounce in 2012, while gold sales of 330,806 ounces in 2013
were essentially the same as the 2012 gold sales of 331,278 ounces.
Cost of sales excluding depreciation and amortization
Cost of sales excluding depreciation and amortization for the full year 2013 totaled $377.1 million, up
$3.6 million from $373.5 million incurred during 2012. Mine operating expenses totaled $339.0 million, down
$18.1 million from $357.1 million incurred in 2012. During 2012 we added ore tonnes to our metals inventory
resulting in a $11.1 million decrease in cost of sales, however we drew down stockpiles in 2013 resulting in a
net decrease in our metals inventory, increasing cost of sales by $14.8 million for the year ended December
31, 2013.
Depreciation and amortization
Depreciation and amortization expense for the full year 2013 decreased to $60.0 million, down from
$89.4 million in 2012. The net book value of our mining property and property plant and equipment
decreased as a result of the impairment charges recorded during the second quarter of 2013, and resulted
in a decrease in depreciation and amortization expense in 2013. An additional impairment charge was
recorded in the fourth quarter of 2013 related to the Bogoso operations, and we expect such impairment to
further reduce depreciation and amortization expense in 2014.
General and administrative expenses
In the second quarter of 2013 we relocated our corporate headquarters from Denver, Colorado to Toronto,
Ontario. The relocation costs incurred as a result of the move were more than offset by cost saving
measures implemented at the new corporate headquarters which included staff reductions. As a result,
overall general and administrative costs for 2013 decreased 11% to $21.5 million, down from $24.1 million for
the year ended December 31, 2012.
(Gain)/loss on fair value of convertible debentures
For the full year 2013, we recorded a non-cash fair value gain of $52.0 million on the 5% Convertible
Debentures. This was calculated based on the discounted cash flows of the debt component and a Black-
Scholes valuation of the conversion feature. The fair value of the conversion feature decreased during 2013
as a result of a decrease in the price of our common shares during the year, contributing to the 2013 gain. In
addition, the fair value of the debt component also decreased due to higher yield requirements in the
market. In comparison, a $28.0 million non-cash fair value loss on the 5% Convertible Debentures was
recorded in 2012.
Impairment charges
During 2013, the Company recorded impairment charges totaling $355.6 million, compared to $7.0 million
recorded in 2012. The 2013 impairment charges comprised of $245.8 million for Bogoso, $106.9 million for
Wassa, and $2.9 million for the TGM shares. The Bogoso impairment charge included $146.3 million related
to mine property; $98.3 million related to property, plant and equipment; and $1.2 million related to
intangible assets. At Wassa, $87.5 million of the impairment charge related to mine property and $19.4
million related to property, plant and equipment. The resulting non-cash charges were due to the impact of
the lower gold prices over the life of the mines, resulting in the impairment of the Bogoso refractory and
non-refractory operation and shortening the mine life at Wassa. The impairment charge of $2.9 million
related to the drop in fair value of the TGM shares compared to the $7.0 million impairment charge
recorded in 2012.
Income tax expense/(recovery)
Income tax recovery for the year ended December 31, 2013 totaled $12.3 million, as compared to an income
tax expense of $17.8 million for the year ended December 31, 2012. This was the result of a $32.9 million
deferred tax recovery recorded in 2013, primarily related to the impairment charges recorded on the Wassa
long term assets. The recovery was partially offset by Wassa current tax expense of $20.6 million for the
year ended December 31, 2013. For the year ended December 31, 2012, current tax expense and deferred tax
expense for Wassa totaled $12.4 million and $5.4 million respectively.
35
Net (loss)/income attributable to Golden Star shareholders
Results for the year ended December 31, 2013 include a net loss attributable to Golden Star shareholders of
$265.9 million or $1.03 per share, compared with net income of $7.2 million or $0.03 per share for 2012. The
major factors contributing to the 2013 net loss were lower mine operating margin and non-cash impairment
charges totaling $355.6 million recorded primarily to write down Bogoso’s and Wassa’s carrying values,
which were partially offset by the $52.0 million mark to market non cash gain on the 5% Convertible
Debentures.
Capital expenditures
Capital expenditures in 2013 totaled $102.9 million compared to $117.3 million in 2012. During 2013 the major
capital expenditures at Wassa included $12.4 million on further drilling around and below the Wassa Main
pit, $3.1 million on Wassa processing plant upgrades, $4.0 million related to the tailing storage facility and
$3.0 million on Father Brown development. Capital expenditures at Bogoso during 2013 included $28.5
million on Chujah betterment stripping, $7.3 million related to Prestea Underground, $7.9 million on Dumasi
development, $11.5 million on new mining equipment and $6.0 million on processing plant upgrades.
THREE MONTHS ENDED DECEMBER 31, 2013 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2012
Gold revenues
Gold revenues totaled $96.0 million during the fourth quarter 2013, down from $149.7 million in the same
prior year period. Our mines sold 75,430 ounces in the fourth quarter of 2013, down 13.8% from the 87,544
ounces sold in the same quarter of 2012. In addition the average realized gold price fell to $1,273 per ounce,
down 25.6% from $1,710 per ounce in the fourth quarter of 2012.
Cost of sales excluding depreciation and amortization
Fourth quarter 2013 cost of sales excluding depreciation and amortization totaled $88.5 million, down
$14.9 million from $103.5 million for the same period of 2012. Fourth quarter 2013 mine operating expenses
were reduced by $12.7 million to $84.8 million, down from $97.5 million incurred during the fourth quarter of
2012. This reduction is the result of cost saving measures implemented in the second half of 2013.
Depreciation and amortization
Depreciation and amortization decreased to $9.7 million for the quarter, down from $26.2 million for the
fourth quarter of 2012. The net book value of our mining property and property plant and equipment
decreased as a result of the impairment charges recorded during the second quarter of 2013, and in turn
our depreciation and amortization expense for the fourth quarter of 2013 decreased. An additional
impairment was recorded in the fourth quarter of 2013 related to the Bogoso operations, which is expected
to further reduce depreciation and amortization expense in 2014.
General and administrative expenses
Fourth quarter 2013 general and administrative costs totaled $5.1 million, a 34% decrease from the
$7.7 million incurred in the fourth quarter of 2012, mainly as a result of severance expense recorded during
the fourth quarter of 2012.
36
(Gain)/loss on fair value of convertible debenture
During the fourth quarter 2013, we recorded a $1.6 million non-cash fair value gain on the 5% Convertible
Debentures, compared to a $4.1 million fair value gain in the fourth quarter of 2012 as a result of the
quarterly change to the discount rate used.
Impairment charges
Upon completion of our fourth quarter 2013 quarterly assessment of the carrying value of our CGUs, the
Company recorded non-cash impairment charges at Bogoso totaling $159.7 million, compared to no
impairments recorded in same prior year period. The impairment charge at Bogoso included charges of
$97.0 million related to mine property; $61.9 million related to property, plant and equipment and
$0.8 million related to intangible assets. The non-cash charge was due to the impact of the lower than
expected gold prices which reduced development spending and resulted in a shorter mine life at Bogoso’s
refractory operations.
Income tax expense/(recovery)
Income tax recovery for the fourth quarter 2013 totaled $1.5 million, compared to a $2.8 million tax recovery
during the same prior year period, mainly as a result of higher net income at Wassa in the fourth quarter of
2013 as compared to the fourth quarter of 2012.
Net (loss)/income attributable to Golden Star shareholders
The net loss attributable to Golden Star shareholders for the fourth quarter of 2013 totaled $148.6 million or
$0.57 per share, compared with net income of $14.3 million or $0.06 per share in the same period of 2012.
The increase in the fourth quarter 2013 net loss was primarily due to lower revenues and a non-cash
impairment charge recorded related to the Bogoso operation, partially offset by the mark to market gain
on the 5% Convertible Debentures.
Capital expenditures
Capital expenditures for the fourth quarter 2013 totaled $22.5 million compared to $39.3 million in the same
prior year period. Capital spending was curtailed in the second half of 2013 in response to the decline in
gold prices resulting in a 43% decline in capital spending in the fourth quarter of 2013 as compared to the
fourth quarter of 2012.
Wassa Operations
37
Through a 90% owned subsidiary Golden Star (Wassa) Limited we own and operate the Wassa and Father
Brown open pit mines, located approximately 35 kilometers east of the town of Bogoso, Ghana. Wassa has
a single non-refractory processing plant consisting of a carbon-in-leach (“CIL”) system (“Wassa processing
plant”) with a capacity of 2.7 million tonnes per annum. The Father Brown mine is located approximately 80
kilometers south of Wassa along the Company’s access road. Ore from the Father Brown and Wassa mines
is sent to the Wassa processing plant for processing. Wassa produced and sold 185,807 ounces during 2013,
and we expect to produce 130,000 to 140,000 ounces in 2014.
WASSA FINANCIAL RESULTS
Revenue
Mine operating expenses
Royalties
Operating costs from/(to) metals inventory
Net realizable value adjustment
COST OF SALES EXCLUDING DEPRECIATION
AND AMORTIZATION
Depreciation and amortization
MINE OPERATING MARGIN
Capital expenditures
WASSA OPERATING RESULTS
Ore mined
Waste mined
Ore processed
Grade processed
Recovery
Gold sales
Cash operating cost per ounce1
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
t
t
t
g/t
%
oz
$/oz
For the three months
ended December 31,
For the years
ended December 31,
2013
2012
2013
2012
56,530
39,168
2,829
(98)
—
41,899
5,442
9,189
8,634
69,024
263,072
263,921
39,332
3,456
(1,382)
—
41,406
20,449
7,169
17,190
145,484
13,171
4,146
265
149,171
13,220
(7,687)
—
163,066
154,704
40,883
59,123
33,570
67,945
41,272
49,299
557,869
525,306
2,053,259
2,583,072
3,667,459
3,626,728
13,258,797
15,933,486
711,348
582,527
2,695,284
2,507,172
2.02
93.2
44,337
881
2.30
94.9
2.29
94.5
2.09
94.6
40,366
185,807
158,899
940
805
890
1 See “Non-GAAP Financial Measures” below for a reconciliation of cash operating cost per ounce to cost of sales excluding depreciation
and amortization.
38
YEAR ENDED DECEMBER 31, 2013 COMPARED TO YEAR ENDED DECEMBER 31, 2012
Production
Gold production and sales totaled 185,807 ounces for the full year 2013, a 17% increase over the 158,899
ounces sold during the full year 2012. The increase in gold production was due to a 10% increase in ore
grade processed in 2013, as a result of the higher grade ore processed from the Father Brown pit and an 8%
increase in plant throughput as a result of plant improvements.
Gold revenues
Gold revenues totaled $263.1 million for the full year of 2013, compared to $263.9 million for the full year of
2012. The decrease was due to the decline in the average realized gold price, from $1,661 per ounce for the
year ended December 31, 2012 to $1,416 per ounce for the year ended December 31, 2013. The lower realized
gold price was partially offset by the 17% increase in gold production.
Cost of sales excluding depreciation and amortization
Cost of sales excluding depreciation and amortization for Wassa totaled $163.1 million in 2013, $8.4 million
higher than the $154.7 million incurred during 2012. The higher cost of sales is mainly related to the
$4.1 million draw down of ore stockpiles in 2013 compared with a $7.7 million inventory build-up in 2012. Mine
operating expenses totaled $145.5 million, or $3.7 million lower than 2012, mainly due to the less material
mined during 2013.
Depreciation and amortization
As a result of the non-cash impairment charges recorded in the second quarter of 2013 (see Impairment
Charges above), the net book value of Wassa’s mining property and property, plant and equipment was
reduced. Accordingly, depreciation and amortization for the full year of 2013 decreased to $40.9 million,
down from $67.9 million incurred during 2012.
Cash operating cost per ounce
Wassa’s cash operating cost per ounce for the full year of 2013 totaled $805 per ounce, down 10% from $890
per ounce in the same prior year period. Wassa’s cash operating costs totaled $149.6 million for the full year
of 2013, compared to $141.5 million incurred during 2012. The higher total cash operating costs were more
than offset by the increase in the volume of gold sold.
Capital expenditures
The full year 2013 capital expenditures totaled $33.6 million compared with $49.3 million incurred during the
full year 2012. Sustaining capital expenditures totaled $17.7 million during 2013 compared to $11.4 million
incurred during 2012. Development capital expenditures totaled $15.9 million in 2013 and $37.9 million in 2012.
Capital expenditures for the full year 2013 included $12.4 million on development drilling, mostly at the
Wassa main pit, $3.0 million on Father Brown development costs, $4.5 million for the tailings storage facility
and $3.1 million on Wassa processing plant upgrades.
THREE MONTHS ENDED DECEMBER 31, 2013 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2012
Production
Fourth quarter 2013 gold sales totaled 44,337 ounces, 10% higher than gold sold during the fourth quarter of
2012. The higher gold production was primarily due to a 6% increase in ore tonnes processed in fourth
quarter of 2013 as compared to the same period last year. The recent improvements to the Wassa
processing plant, including CIL agitator upgrades and genset start-up synchronization, have resulted in an
increase in ore tonnes processed as compared to a year earlier. The higher throughput more than offset the
slightly lower grade processed during the fourth quarter 2013.
39
Gold revenues
Due to the lower realized gold price, Wassa’s fourth quarter 2013 revenues of $56.5 million were down $12.5
million from $69.0 million for the same quarter of 2012. Gold revenues from the higher quantity of gold sold
were offset by a decrease in the average realized gold price, down 26% from $1,710 per ounce for the fourth
quarter of 2012 to $1,273 per ounce for the fourth quarter of 2013.
Cost of sales excluding depreciation and amortization
Wassa’s cost of sales excluding depreciation and amortization totaled $41.9 million in the fourth quarter of
2013, compared to $41.4 million incurred in the fourth quarter of 2012. Mine operating expenses totaling
$39.2 million were essentially the same as the fourth quarter of 2012, however as a result of operating
efficiencies during the fourth quarter of 2013 Wassa mined 2% more material and processed 22% more ore
in the fourth quarter of 2013.
Depreciation and amortization
As a result of the non-cash impairment charges recorded in the second quarter of 2013 (see Impairment
Charges above), the net book value of Wassa’s mining property and property, plant and equipment was
reduced. Accordingly, depreciation and amortization decreased to $5.4 million for the fourth quarter 2013,
down from $20.4 million for the same period in 2012.
Cash operating cost per ounce
Wassa’s cash operating cost per ounce for the fourth quarter 2013 totaled $881 per ounce, down 6% from
$940 per ounce in the same prior year period. Wassa’s cash operating costs totaled $39.1 million for the
fourth quarter of 2013, compared to $38.0 million incurred during the fourth quarter of 2012, the slightly
higher total cash operating costs were more than offset by the increase in the ounces of gold sold.
Capital expenditures
Fourth quarter 2013 capital expenditures totaled $8.6 million down 50% from $17.2 million from the same
prior year period, due to the deferral of capital expenditure during 2013, (see “Operating costs and capital
spending reductions” above). Sustaining capital expenditures totaled $5.9 million in the fourth quarter of
2013, compared to $2.9 million incurred during the fourth quarter of 2012. Development capital expenditures
totaled $2.7 million in the fourth quarter of 2013 and $14.3 million in the fourth quarter of 2012.
40
Bogoso Operations
Through a 90% owned subsidiary, Golden Star (Bogoso/Prestea) Limited, we own and operate the Bogoso
gold mining and processing operations located near the town of Bogoso, Ghana. Bogoso operates a gold
ore processing facility with a capacity of 2.7 million tonnes of ore per annum, which uses bio-oxidation
technology to treat refractory ore (“Bogoso refractory plant”). In addition, Bogoso has a CIL processing
facility located adjacent to the Bogoso refractory plant, which is suitable for treating non-refractory gold
ores (“Bogoso non-refractory plant”) at a rate up to 1.5 million tonnes per annum. Bogoso produced and
sold 144,999 ounces of gold in 2013 and we expect to produce 165,000 to 180,000 ounces in 2014.
Through Bogoso, we own the Prestea Underground mine, which is located on the Prestea property and
consists of a currently inactive underground gold mine and associated support facilities. We published a
feasibility study for Prestea Underground on SEDAR in July 2013.
BOGOSO FINANCIAL RESULTS
Revenue
Mine operating expenses
Royalties
Operating costs from/(to) metals inventory
Net realizable value adjustment
COST OF SALES EXCLUDING DEPRECIATION
AND AMORTIZATION
Depreciation and amortization
MINE OPERATING MARGIN
Capital expenditures
BOGOSO OPERATING RESULTS
Ore mined refractory
Ore mined non-refractory
TOTAL ORE MINED
Waste mined
Refractory ore processed
Refractory ore grade
Gold recovery–refractory ore
Non-refractory ore processed
Non-refractory ore grade
Gold recovery–non-refractory ore
Gold sold refractory
Gold sold non-refractory
Gold sales
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
t
t
t
t
t
g/t
%
t
g/t
%
oz
oz
oz
Cash operating cost per ounce1
$/oz
For the three months
ended December 31,
For the years
ended December 31,
2013
2012
2013
2012
39,504
80,686
204,724
286,619
45,649
1,977
(2,396)
1,420
58,213
4,036
(163)
—
193,490
207,892
10,243
3,799
6,542
14,340
(3,450)
57
46,650
62,086
214,074
218,839
4,231
(11,377)
13,879
5,726
12,874
21,975
19,083
(28,433)
69,079
21,408
46,372
67,357
539,882
548,303
1,755,039
2,515,985
545
246,471
391,289
805,212
540,427
794,774
2,146,328
3,321,197
5,063,279
7,189,964
23,409,092
24,937,369
563,204
595,599
2,352,314
2,463,861
1.59
60.6
2.52
70.5
2.24
68.7
2.42
71.2
475,835
267,806
1,190,954
873,259
1.07
46.1
23,972
7,121
31,093
1,391
2.21
58.3
35,600
11,578
47,178
1,230
1.39
48.1
119,856
25,143
144,999
1,361
2.37
59.9
134,266
38,113
172,379
1,186
1 See “Non-GAAP Financial Measures” below for a reconciliation of cash operating cost per ounce to cost of sales excluding depreciation
and amortization.
YEAR ENDED DECEMBER 31, 2013 COMPARED TO YEAR ENDED DECEMBER 31, 2012
Production
Bogoso gold sales totaled 144,999 ounces for the full year of 2013 compared to 172,379 ounces for the full
year of 2012. Refractory gold sales decreased to 119,856 ounces in 2013, down 11% from the 134,266 ounces
sold in 2012 due to a drop in ore grade processed, gold recovery and less refractory ore tonnes processed.
Refractory ore grade processed during 2013 was 7% lower than in 2012, due to the lower grade ore available
during the push backs at the Chujah and Bogoso North pits in 2013, while in 2012 Bogoso had better access
to higher grade ores. As a result of the lower grade, gold recovery in the refractory processing plant
dropped to 68.7% for the full year of 2013. Refractory ore processed during 2013 was 5% lower than the same
period in 2012, due to the lack of available ore.
41
Non-refractory gold sales dropped to 25,143 ounces in 2013, down 34% from the 38,113 ounces sold in 2012,
as a result of the lower grade non-refractory material processed and lower gold recovery in 2013 as
compared to 2012. During 2012, the non-refractory ore feed was primarily sourced from the Pampe open pit
mining operation, however at the end of the second quarter 2013 we suspended the Pampe operation due
to pit-wall instability and the lower gold prices. However, early in the third quarter of 2013 the tailings
reclaim project was ramped up and the Pampe ore was replaced with lower grade tailings reclaim
material.
Gold revenues
Gold revenues for 2013 totaled $204.7 million, down $81.9 million from $286.6 million in 2012. The realized
gold price was down 15%, averaging $1,412 per ounce in 2013, compared with $1,663 per ounce in 2012 and
gold sold totaled 144,999 ounces in 2013, down 16% ounces from 172,379 ounces in the same period of 2012.
Cost of sales excluding depreciation and amortization
Bogoso’s cost of sales excluding depreciation and amortization totaled $214.1 million for 2013, down from
$218.8 million for 2012. Mine operating expenses totaled $193.5 million, 7% lower than the $207.9 million
incurred during 2012 mainly as a result of a $7.7 million reduction in contractors expense, a $3.5 million
decrease in raw materials and consumables and a $3.4 million decrease in electricity costs. These savings
were partially offset by a $1.3 million increase in salaries and benefits. In addition, a net realizable
adjustment of $6.5 million increased the 2013 cost of sales excluding depreciation and amortization,
compared to a net realizable adjustment of $0.1 million in the same period in 2012.
Depreciation and amortization
Depreciation and amortization expense decreased to $19.1 million for 2013, compared to $21.4 million for
2012, mainly as a result of lower gold production during 2013 as compared to 2012. In addition, as a result of
the non-cash impairment charges recorded in the second quarter of 2013 (see Impairment Charges above),
the net book value of Bogoso’s mining property and property, plant and equipment was reduced and
accordingly Bogoso’s depreciation and amortization expense was lower for 2013 than for 2012.
Cash operating cost per ounce
Cash operating cost per ounce totaled $1,361 per ounce for the full year of 2013, compared to $1,186 per
ounce for the full year of 2012. Cash operating costs for 2013 totaled $197.3 million, down from $204.4 million
incurred during 2012, however the lower gold sales during 2013 resulted in higher cash operating cost per
ounce for 2013 as compared to 2012.
Capital expenditures
Capital expenditures for 2013 totaled $69.1 million compared to $67.4 million incurred during 2012.
Sustaining capital expenditures totaled $21.7 million in 2013 compared to $26.1 million incurred during 2012.
42
Development capital expenditures increased to $47.4 million in 2013 up from $40.3 million in 2012 mainly due
to an increase in betterment stripping cost capitalized during 2013.
Capital expenditures for the full year of 2013 included $7.9 million on the Dumasi resettlement project,
development expenditures at Mampon and Prestea South of $3.6 million, $7.3 million on Prestea
Underground, $1.5 million for completion of construction of a water treatment plant, mining equipment of
$11.5 million and $28.5 million of capitalized betterment stripping at the Chujah pit.
THREE MONTHS ENDED DECEMBER 31, 2013 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2012
Production
Bogoso’s gold sales decreased to 31,093 ounces in the fourth quarter of 2013, down 34% from 47,178 ounces
in the fourth quarter of 2012. Refractory gold sales totaled 23,972 ounces during the fourth quarter of 2013,
compared to 35,600 ounces sold during the same prior year period. Bogoso processed 563,204 refractory
ore tonnes in the fourth quarter of 2013, down 5% from the 595,599 refractory ore tonnes processed during
the same prior year period, in addition to the lower refractory ore grade and gold recovery resulted in the
lower gold refractory ounces sold. The lower refractory ore grade is primarily due to the lower grade mined
as expected during the Chujah pit push back.
Non-refractory gold sales decreased to 7,121 ounces in the fourth quarter of 2013, down from 11,578 ounces
sold during the same prior year period as a result of the lower grade and gold recovery of the tailings
reclaim material processed in the fourth quarter of 2013 as compared to the ore from the Pampe pit that
was processed in the fourth quarter of 2012. At Bogoso, the tailings reclaim project was started on a full
time basis during the third quarter 2013, Bogoso processed 475,835 tonnes of tailings material through the
Bogoso non-refractory processing plant in the fourth quarter of 2013.
Gold revenues
Bogoso’s fourth quarter 2013 revenues totaled $39.5 million, down $41.2 million from $80.7 million in 2012.
The realized gold price averaged $1,271 per ounce in the fourth quarter of 2013, down $439 per ounce from
$1,710 per ounce a year earlier. Gold production and sales decreased to 31,093 ounces in the fourth quarter
of 2013, down from 47,178 ounces in the fourth quarter of 2012.
Cost of sales excluding depreciation and amortization
Bogoso’s cost of sales excluding depreciation and amortization totaled $46.7 million, a 25% decrease from
the $62.1 million incurred in the fourth quarter of 2012. Mine operating expenses totaled $45.6 million in the
fourth quarter of 2013, $12.6 million lower than the $58.2 million incurred in the same period of 2012, as a
result of less mining and processing costs incurred. Fourth quarter 2013 contractor costs were $8 million
lower than in the same prior year period, mainly due to the suspension of mining at Pampe in 2013, and raw
materials and consumables including electricity were $7.6 million lower in 2013. Royalty expense decreased
to $2.0 million in the fourth quarter of 2013 from $4.0 million due to the lower gold revenues.
A process water treatment plant was commissioned in the first quarter of 2013, and we incurred $2.8 million
in water treatment costs in the fourth quarter of 2013 that were not incurred in fourth quarter of 2012.
Depreciation and amortization
Depreciation and amortization expense decreased to $4.2 million for the fourth quarter of 2013, compared
to $5.7 million for the same prior year period, mainly as a result of lower gold production during the fourth
quarter 2013 as compared to the fourth quarter of 2012 and the lower net book value as a result of the non-
cash impairment charge recorded (see Impairment Charges above).
43
Cash operating cost per ounce
Cash operating cost per ounce totaled $1,391 per ounce in the fourth quarter of 2013 compared to $1,230 per
ounce in the fourth quarter of 2012. Cash operating costs for the fourth quarter of 2013 totaled $43.3 million,
down 25% from $58.1 million in 2012, however gold sales were lower in the fourth quarter of 2013 as
compared to the fourth quarter of 2012, resulting in higher cash operating cost per ounce for the fourth
quarter of 2013.
Capital expenditures
Fourth quarter 2013 capital expenditures totaled $13.9 million, down 37% from $22.0 million from the same
prior year period, due to the deferral of capital expenditure during 2013, (see “Operating costs and capital
spending reductions” above). Sustaining capital expenditures totaled $3.9 million in the fourth quarter of
2013 compared to $7.6 million incurred during the fourth quarter of 2012. Development capital expenditures
totaled $10.0 million in the fourth quarter of 2013 and $14.4 million in the fourth quarter of 2012.
Summarized Quarterly Financial Results
(STATED IN THOUSANDS OF U.S.
DOLLARS EXCEPT PER SHARE DATA)
DECEMBER 31, SEPTEMBER 30,
2013
2013
Three Months Ended,
JUNE 30,
2013
MARCH 31, DECEMBER 31, SEPTEMBER 30,
2013
2012
2012
JUNE 30,
2012
MARCH 31,
2012
Revenues
96,034
118,159
120,693
132,910
149,710
133,497
136,313
131,020
Cost of sales excluding
depreciation and amortization
88,549
91,294
101,178
96,119
103,492
85,639
89,542
94,870
Impairment charges
159,704
—
195,920
—
—
—
Net (loss)/income
(165,304)
4,539
(145,671)
7,922
14,338
(19,273)
6,972
1,366
—
13,271
Net (loss)/income attributable
to shareholders of Golden Star
(148,576)
3,507
(128,828)
8,005
14,334
(20,058)
37
12,873
Net (loss)/income per share
attributable to shareholders
of Golden Star:–Basic and diluted
(0.57)
0.01
(0.50)
0.03
0.06
(0.08)
—
0.05
44
Selected Annual Information
(STATED IN THOUSANDS OF U.S. DOLLARS
EXCEPT PER SHARE DATA)
As of
DECEMBER 31, 2013
DECEMBER 31, 2012
DECEMBER 31, 2011*
Cash and cash equivalents
Working capital(1)
Total assets
Long-term financial liabilities
Equity
65,551
11,201
325,743
83,387
26,702
78,884
69,217
656,295
110,507
328,176
103,644
(31,784)
727,678
10,759
438,302
For the years ended
DECEMBER 31, 2013
DECEMBER 31, 2012
DECEMBER 31, 2011*
Revenue
Net (loss)/income attributable to Golden Star
Net (loss)/income per share attributable
to Golden Star shareholders—basic and diluted
467,796
(265,892)
550,540
7,186
471,007
(2,075)
(1.03)
0.03
(0.01)
* Financial results prior to 2012 are reported in accordance with US GAAP.
(1) Working Capital is calculated as Current Assets minus Current Liabilities as disclosed on the Consolidated Balance Sheet.
Liquidity and Financial Condition
We held $65.6 million in cash and cash equivalents as of December 31, 2013, down from $78.9 million at
December 31, 2012. All of our cash is held as cash or is invested in funds that hold only U.S. treasury notes
and bonds. During the year ended December 31, 2013, operations provided $59.1 million of cash, cash used
for investing totaled $101.4 million and financing activities provided $28.9 million.
Before working capital changes, operations provided $30.2 million of operating cash flow during 2013,
compared with the $117.0 million provided in 2012. The decrease was primarily related to lower revenues as
a result of the lower realized gold price during 2013.
Working capital changes added net $28.9 million during the year ended December 31, 2013, compared to
$6.1 million in 2012. Accounts receivable decreased by $3.7 million mainly due to value added tax receivables
collected during 2013, compared to an increase of $0.9 million for the same period in 2012. The decrease in
inventories is related to the decrease in ore stockpiles during 2013, resulting in a $11.2 million increase in
cash. Prepaids and other decreased by $3.9 million during 2013 compared to a $4.5 million increase in 2012,
with the 2013 decrease relating to the decrease in the number of down payments on long-lead time
purchases. Accounts payable and accrued liabilities increased by $13.0 million in 2013, compared to a $5.0
million increase in 2012, primarily due to the increase in accounts payable and accrued liabilities at the
Bogoso operation. In summary, net cash provided by operating activities totaled $59.1 million for 2013, as
compared to $123.1 million during 2012.
Working capital decreased from $69.2 million at December 31, 2012 to $11.2 million at December 31, 2013 due
to cash used for investing activities, the increase in accounts payable and accrued liabilities at Bogoso, the
increase in current portion of our long term debt and a decrease in inventories at Bogoso and Wassa.
A net of $101.4 million was used in investing activities during in 2013, including $69.7 million on mining
property development and $32.9 million for the acquisition of new equipment and facilities at the mine
sites. Investing activities used a net of $97.9 million during 2012. Of the $101.4 million used in investing
activities in 2013, only $18.1 million was used in investing activities during the fourth quarter of 2013 due to
the Company’s capital expenditure reduction measures implemented during the year.
45
Financing activities provided $28.9 million in 2013 compared to $50.0 million used in financing activities for
2012. During 2013, we received net proceeds of $28.9 million under the Ecobank Loan; in addition we
financed $7.7 million of new mobile equipment purchases through capital leases and the Company’s
equipment financing facility. This was offset by scheduled debt repayments of $7.9 million. During 2012, net
cash used in financing activities was $50.0 million, which consisted of $50.5 million to redeem the 4%
Convertible Debentures, $8.3 million in scheduled debt repayments and $8.5 million of new borrowings
under the equipment financing facility.
Wassa incurred taxable income in 2012 for the first time and we paid approximately $12.9 million of 2012
taxes during 2013. Wassa generated taxable income resulting in current tax expense totaling $20.6 million
in 2013, of which $10.6 million was paid during 2013.
Liquidity Outlook
As of December 31, 2013, we had $65.6 million in cash, $20.0 million available for draw down under the
Ecobank Loan and another $21.6 million available under the Company’s equipment financing facilities.
The Company’s liquidity is leveraged to future gold prices, so if gold prices continue to decline, the
Company’s cash flow may also decline. However, the effect of lower gold prices may be somewhat
mitigated by reducing operating and capital expenditures to the extent possible. Based on our current
guidance for 2014, a $10 per ounce decline in gold prices for 2014 would result in an approximately $3 million
decline in the expected cash balance at the end of 2014.
We expect to continue to fund operations and capital projects through operating cash flow, the equipment
financing facility, the Ecobank Loan and cash on hand. If these sources are not sufficient, the Company
could delay planned capital projects or curtail operational spending. While we may also pursue additional
financing, there can be no assurance that additional financing will be available at all or on terms
acceptable to the Company.
Table of Contractual Obligations
Payment due (in thousands) by period
(STATED IN THOUSANDS
OF U.S. DOLLARS)
LESS THAN
1 YEAR
1 TO 3 YEARS
3 TO 5 YEARS
Debt1
Interest on long term debt
Purchase obligations
Rehabilitation provisions2
TOTAL
92,092
7,721
3,059
8,369
30,252
11,103
12,302
—
22,160
56,838
—
3,165
—
24,584
119,841
MORE THAN
5 YEARS
22,376
—
—
40,992
40,992
TOTAL
125,571
23,188
3,059
96,105
247,923
1
Includes $77.5 million of 5% Convertible Debentures maturing in June 2017 as well as the $30.0 million draw down from the Ecobank Loan.
Golden Star has the right to repay the $77.5 million principal amount of the 5% Convertible Debentures in cash or in common shares at the
due date under certain circumstances. The presentation shown above assumes payment is made in cash and also assumes no
conversions of the 5% Convertible Debentures into common shares by the holders prior to the maturity date.
2 Rehabilitation provisions indicates the expected undiscounted cash flows for each period.
46
Related Party Transactions
There were no material related party transactions in 2013 and 2012 other than compensation of key
management personnel which is presented in the table below. Key management personnel is defined as
members of the Board of Directors and certain senior officers.
For the years ended December 31,
(STATED IN THOUSANDS OF U.S. DOLLARS)
Salaries, wages, and other benefits
Severances and bonuses
Share-based compensation
Off-Balance Arrangements
2013
2012
2,020
2,125
1,606
5,751
2,392
1,804
2,704
6,900
The Company has no off-balance sheet arrangements other than the operating leases listed in “Table of
Contractual Obligations” above.
Non-Gaap Financial Measures
In this MD&A, we use the terms “cash operating cost per ounce”, “all-in sustaining costs”, “cash generated
from operations before working capital changes”, “adjusted net income/(loss) attributable to Golden Star
shareholders” and “adjusted net income/(loss) per share attributable to Golden Star shareholders”.
“Cost of sales excluding depreciation and amortization” 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 production taxes, royalties, 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 development 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 excluding depreciation and
amortization” for the period less royalties and production taxes, minus the cash component of metals
inventory net realizable value adjustments divided by the number of ounces of gold sold during the period.
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 operating efficiencies. We provide this measure to our investors to allow them to also monitor
operational efficiencies 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 costs, they are not necessarily indicative of operating profit or cash flow from
operations as determined under IFRS. 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 similarly titled
measures in every instance.
“All-in sustaining costs” commences with cash operating costs and then adds sustaining capital
expenditures, corporate general and administrative costs, mine site exploratory drilling and greenfield
evaluation costs and environmental rehabilitation costs. This measure seeks to represent the total costs of
producing gold from current operations, and therefore it does not include capital expenditures attributable
to projects or mine expansions, exploration and evaluation costs attributable to growth projects, income
tax payments, interest costs or dividend payments. Consequently, this measure is not representative of all
of the Company’s cash expenditures. In addition, our calculation of all-in sustaining costs does not include
depreciation expense as it does not reflect the impact of expenditures incurred in prior periods. Therefore,
it is not indicative of the Company’s overall profitability.
47
We believe that “all-in sustaining costs” will better meet the needs of analysts, investors and other
stakeholders of the Company in understanding the costs associated with producing gold, understanding
the economics of gold mining, assessing our operating performance and also our ability to generate free
cash flow from current operations and to generate free cash flow on an overall Company basis. Due to the
capital intensive nature of the industry and the long useful lives over which these items are depreciated,
there can be a disconnect between net earnings calculated in accordance with IFRS and the amount of free
cash flow that is being generated by a mine. In the current market environment for gold mining equities,
many investors and analysts are more focused on the ability of gold mining companies to generate free
cash flow from current operations, and consequently we believe these measures are useful non-IFRS
operating metrics (“non-GAAP measures”) and supplement our IFRS disclosures. These measures are not
representative of all of our cash expenditures as they do not include income tax payments or interest costs.
“All-in sustaining costs” are intended to provide additional information only and do not have standardized
definitions under IFRS and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. These measures are not necessarily indicative of operating
profit or cash flow from operations as determined under IFRS. The table below reconciles these non-GAAP
measures to the most directly comparable IFRS measures and previous periods have been recalculated to
conform to our current definition.
48
The table below reconciles consolidated cost of sales excluding depreciation and amortization to cash
operating cost per ounce and all-in sustaining costs per ounce:
For the three months
ended December 31,
For the years
ended December 31,
(STATED IN THOUSANDS OF U.S. DOLLARS)
2013
2012
2013
2012
COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
Royalties
Metals inventory net realizable value adjustment
88,549
(4,806)
(1,420)
103,492
(7,492)
—
377,140
(23,414)
(6,807)
373,543
(27,560)
(57)
CASH OPERATING COSTS
82,323
96,000
346,919
345,926
Royalties
Metals inventory net realizable value adjustment
Accretion of rehabilitation provision
General and administrative costs
Sustaining capital expenditures
4,806
1,420
148
5,097
9,777
7,492
23,414
27,560
—
158
7,723
10,458
6,807
592
21,515
39,334
57
593
24,106
38,400
ALL-IN SUSTAINING COSTS
103,571
121,831
438,581
436,642
Ounces sold
75,430
87,544
330,806
331,278
COST PER OUNCE MEASURES ($/OZ):
Cash operating cost per ounce
All-in sustaining cost per ounce
1,091
1,373
1,097
1,392
1,049
1,326
1,044
1,318
The tables below reconciles cost of sales excluding depreciation and amortization to cash operating costs
per ounce for each of our operating mines (stated in thousands of U.S dollar except cash operating cost
per ounce):
For the three months ended December 31, 2013
WASSA
BOGOSO
COMBINED
COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
Royalties
Metals inventory net realizable value adjustment
CASH OPERATING COSTS
Ounces sold
Cash operating cost per ounce
41,899
(2,829)
—
46,650
(1,977)
(1,420)
88,549
(4,806)
(1,420)
39,070
43,253
82,323
44,337
31,093
881
1,391
75,430
1,091
For the three months ended December 31, 2012
WASSA
BOGOSO
COMBINED
49
COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
Royalties
Metals inventory net realizable value adjustment
CASH OPERATING COSTS
Ounces sold
Cash operating cost per ounce
41,406
(3,456)
—
62,086
(4,036)
—
103,492
(7,492)
—
37,950
58,050
96,000
40,366
47,178
940
1,230
87,544
1,097
For the year ended December 31, 2013
WASSA
BOGOSO
COMBINED
COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
Royalties
Metals inventory net realizable value adjustment
CASH OPERATING COSTS
Ounces sold
Cash operating cost per ounce
163,066
(13,171)
(265)
214,074
(10,243)
(6,542)
377,140
(23,414)
(6,807)
149,630
197,289
346,919
185,807
144,999
330,806
805
1,361
1,049
For the year ended December 31, 2012
WASSA
BOGOSO
COMBINED
COST OF SALES EXCLUDING DEPRECIATION AND AMORTIZATION
Royalties
Metals inventory net realizable value adjustment
CASH OPERATING COSTS
Ounces sold
154,704
(13,220)
—
218,839
(14,340)
(57)
373,543
(27,560)
(57)
141,484
204,442
345,926
158,899
172,379
331,278
Cash operating cost per ounce
890
1,186
1,044
“Cash generated from operations 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 use cash operating cost per ounce and cash provided from operations before working capital changes
as key operating indicators. We monitor these measures monthly, comparing each month’s values to prior
periods’ values to detect trends that may indicate increases or decreases in operating efficiencies. These
measures are also compared against budget to alert management of trends that may cause actual results
to deviate from planned operational results. We provide these measures to our investors to allow them to
also monitor operational efficiencies of our mines. We calculate these measures for both individual
operating units and on a consolidated basis.
Cash operating cost per ounce and cash provided from operations before working capital changes should
be considered as non-GAAP financial measures as defined in the Canadian securities laws and should not
be considered in isolation or as a substitute for measures of performance prepared in accordance with
IFRS. There are material limitations associated with the use of such non-GAAP measures. Since these
50
measures do not incorporate revenues, changes in working capital and non-operating cash costs, they are
not necessarily indicative of operating profit or cash flow from operations as determined under IFRS.
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 similarly titled measures in every instance.
ADJUSTED NET INCOME/(LOSS) ATTRIBUTABLE TO GOLDEN STAR SHAREHOLDERS
The table below shows the reconciliation of net income/(loss) attributable to Golden Star shareholders to
adjusted net income/(loss) attributable to Golden Star shareholders and adjusted net income/(loss) per
share attributable to Golden Star shareholders:
(STATED IN THOUSANDS OF U.S. DOLLARS
EXCEPT PER SHARE DATA)
For the three months
ended December 31,
For the years
ended December 31,
2013
2012
2013
2012
Net income/(loss) attributable to Golden Star shareholders
(148,576)
14,334
(265,892)
7,186
ADD BACK:
Loss/(gain) on fair value of convertible debenture
Impairment charges
Tax recovery related to impairment charges
(1,624)
(4,107)
(51,967)
159,704
—
—
—
355,624
(26,328)
27,985
6,972
—
9,504
10,227
11,437
42,143
Adjustments attributable to non-controlling interest
(15,970)
—
(32,930)
—
ADJUSTED NET INCOME/(LOSS) ATTRIBUTABLE
TO GOLDEN STAR SHAREHOLDERS
ADJUSTED NET INCOME/(LOSS) PER SHARE
ATTRIBUTABLE TO GOLDEN STAR SHAREHOLDERS
Basic
Weighted average shares outstanding (millions)
(6,466)
10,227
(21,493)
42,143
(0.02)
259.1
0.04
258.9
(0.08)
259.1
0.16
258.9
In order to indicate to stakeholders the Company’s earnings excluding the non-cash (gain)/loss on the fair
value of debentures and non-cash impairment charges, the Company calculates “adjusted net income/
(loss) attributable to Golden Star shareholders” and “adjusted net income/(loss) per share attributable to
Golden Star shareholders” to supplement the consolidated financial statements.
Adjusted net income/(loss) attributable to Golden Star shareholders and adjusted net income/(loss) per
share attributable to Golden Star shareholders should be considered as non-GAAP financial measures as
defined in the Canadian securities laws and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. There are material limitations associated
with the use of such non-GAAP measures. Since these measures do not incorporate all non-cash expense
and income items, changes in working capital and non-operating cash costs, they are not necessarily
indicative of operating profit or cash flow from operations as determined under IFRS. Changes in numerous
factors including, but not limited to, our share price, risk free interest rates, gold prices, 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 similarly titled measures in
every instance.
Outstanding Share Data
51
As of February 19, 2014, there were 259,105,970 common shares of the Company issued and outstanding,
12,848,778 stock options outstanding, 1,740,557 deferred share units outstanding, 3,027,332 share
appreciation rights outstanding and 5% Convertible Debentures which are convertible into 46,963,636
common shares. The share appreciation rights are all cash settled instruments.
Critical Accounting Policies and Estimates
Preparation of our annual audited consolidated financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that can affect reported amounts of assets,
liabilities, revenues and expenses and the accompanying disclosures. Estimates and assumptions are
continuously evaluated and are based on management’s historical experience and on other assumptions
we believe to be reasonable under the circumstances. However, uncertainty about these judgments,
estimates and assumptions could result in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods.
MINERAL RESERVES
Determining mineral reserves and mineral resources is a complex process involving numerous variables
and is based on a professional evaluation using accepted international standards for the assessment of
mineral reserves. Estimation is a subjective process, and the accuracy of such estimates is a function of the
quantity and quality of available data, the assumptions made and judgments used in engineering and
geological interpretation. Mineral reserve estimation may vary as a result of changes in the price of gold,
production costs, and with additional knowledge of the mineral deposits and mining conditions.
Differences between management’s assumptions including economic assumptions such as metal prices and
market conditions could have a material effect in the future on the Company’s results and financial position,
particularly a change in the rate of depreciation, depletion and amortization of the related mining assets.
BETTERMENT STRIPPING COSTS
Significant judgment is required to distinguish between development stripping and production stripping.
Development stripping relates to the creation of a stripping activity asset and production stripping relates
to extraction of inventory for gold production purposes. Once the Company has identified its stripping for
each surface mining operation, it identifies the separate components for the mineral bodies in each of its
mining operations. An identifiable component is a specific volume of the mineral body that is made
accessible by the stripping activity. Significant judgment is required to identify these components and to
determine the expected volumes (waste and ore) to be stripped in each component.
Judgment is also required to identify a suitable production measure to be used to allocate production
stripping costs between inventory and any stripping activity asset for each component. The Company
considers that the ratio of the expected volume of ore to be mined for a specific component of the mineral
body to be the most suitable production measure.
UNITS OF PRODUCTION DEPRECIATION
The mineral properties and a large portion of the property, plant and equipment is depreciated using the
units of production method over the expected operating life of the mine based on estimated recoverable
ounces of gold, which are the prime determinants of the life of a mine. Estimated recoverable ounces of
gold include proven and probable reserves and non-reserve material when sufficient objective evidence
exists that it is probable the non-reserve material will be produced. Changes in the estimated mineral
52
reserves will result in changes to the depreciation charges over the remaining life of the operation. A
decrease in the mineral reserves would increase depreciation expense and this could have a material
impact on the operating results. The amortization base is updated on an annual basis based on the new
mineral estimates.
CARRYING VALUE OF ASSETS AND IMPAIRMENT CHARGES
The Company undertakes a review of each asset or CGU at each reporting period to determine whether
any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the
recoverable amount of the asset or CGU is made, which is considered to be the higher of the fair value less
cost to sell and value in use. An impairment loss is recognized when the carrying value of the asset or CGU
is higher than the recoverable amount. In undertaking this review, management of the Company is required
to make significant estimates of, amongst other things, discount rates, future production and sale volumes,
metal prices, mineral reserves and mineral resource quantities, future operating and capital costs and
reclamation costs to the end of the mine’s life. These estimates are subject to various risks and
uncertainties, which may ultimately have an effect on the expected recoverability of the carrying values of
the asset or CGU. In determining a CGU, management has examined the smallest identifiable group of
assets that generates cash inflows that are largely independent of cash inflows from other assets or group
of assets.
REHABILITATION PROVISIONS
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 estimated
future cash costs of such liabilities are based primarily upon environmental and regulatory requirements of
the various jurisdictions in which we operate. The liability represents management’s best estimates of cash
required to settle the liability, inflation, assumptions of risks associated with future cash flows and the
applicable risk-free interest rates for discounting the future cash outflow. The liability is assessed at each
reporting date.
FAIR VALUE OF CONVERTIBLE DEBENTURES
The debt component of the 5% Convertible Debentures is valued based on discounted cash flows and the
conversion feature is valued using a Black-Scholes model. The inputs to these models are taken from
observable markets where possible, but if this is not feasible, a degree of judgment is required in
establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and
volatility. Changes in assumptions about these factors could affect the reported fair value of financial
instruments.
INCOME TAXES
We deal with uncertainties and judgments in the application of complex tax regulations in the various
jurisdictions where our properties are located. The amount of taxes paid is 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 best estimate of additional taxes payable. We
adjust these reserves in light of changing facts and circumstances, however, due to the complexity of some
of these uncertainties, 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 deferred tax asset is recognized if we have assessed that it is more likely than not that the benefits will be
realized in future periods. This assessment is based on our estimates of the future taxable earnings
generated by our operations.
53
Changes in Accounting Policies
INTERNATIONAL FINANCIAL REPORTING STANDARDS
In conjunction with the recent relocation of the Company’s corporate headquarters from Denver, Colorado
to Toronto, Ontario, the Company reported its financial results in accordance with IFRS for the first time in
its June 30, 2013 condensed interim consolidated financial statements, with an effective transition date of
January 1, 2012, including IFRS 1 First-Time Adoption of International Financial Reporting Standards, and IAS
34, Interim Financial Reporting. The adoption of IFRS did not have a material impact on the Company’s
operations and business decisions. The change however did have a significant impact on the manner in
which the Company discloses certain information on its balance sheet and statement of operations as
described below.
The Company’s IFRS accounting policies are disclosed in Note 3 “Summary of Accounting Policies” to the
annual audited consolidated financial statements for the year ended December 31, 2013. A reconciliation
between the Company’s financial statements as previously reported under US GAAP and current reporting
under IFRS is contained in Note 27 “First Time Adoption of IFRS” of the annual audited consolidated
financial statements for the year ended December 31, 2013. The following is an overview of the impacts to
the Company’s financial results due to the transition to IFRS:
Deemed cost adjustments of Bogoso mining assets – Upon adoption of IFRS, the carrying value of the
Bogoso mining properties and mine equipment accounts were adjusted to their fair value amounts
(deemed cost) as of January 1, 2012, thereby reducing the basis in these assets by $148.5 million. As a result,
the recorded value of our mining assets was $137.0 million lower as of December 31, 2012 than they would
have been under US GAAP.
Stripping costs during the production phase (Betterment stripping) – US GAAP requires that the costs of
removing overburden (“stripping”) be treated as a current period operating cost whereas IFRS provides for
deferral of the portion of stripping costs that provide improved access to future ore mined and such costs
are deferred as an asset until such time as the ore benefiting from the stripping activity is mined. As a result,
upon adoption of IFRS, stripping costs expensed for US GAAP were reclassified as a mineral property asset.
As of December 31, 2012, the balance in this account was $28.1 million higher than it would have been under
US GAAP. This amount reduced the mine operating costs and was shown as an investing cash flow under
IFRS.
Exploration and evaluation assets – We have elected under IFRS to capitalize the exploration and
development costs of new projects. Under US GAAP, exploration and development costs are capitalized
only upon completion of a feasibility study which establishes a mineral reserve. As a result, past exploration
and development costs expensed for US GAAP of $16.7 million were reclassified as a long term asset on the
Company’s opening IFRS balance sheet. As of December 31, 2012 this new account had a balance of $10.9
million that would have been nil under US GAAP.
Gain on sale of assets – Prior to 2012, the Company had invested in exploration projects that were
subsequently disposed of or sold to an unrelated party in 2012. Since these properties had not progressed
to the point where a feasibility study could be completed, under US GAAP all historical costs associated
with the properties were expensed as incurred. As a result, upon sale or disposition of the properties their
54
basis was nil. Upon adoption of IFRS the past costs of this property were reclassified as exploration and
evaluation assets and upon the sale or disposition, this new basis was deducted from any sales proceeds
resulting in a $5.7 million lower gain on the sale or disposal of the asset under IFRS.
Standards, Interpretations and Amendments Not Yet Effective
IFRIC 21 Accounting for levies imposed by government clarifies that the obligating event that gives rise to a
liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.
This standard is effective for annual periods beginning on or after January 1, 2014. The Company is currently
assessing the impact of this interpretation.
IAS 32 Financial instruments: presentation was amended to address inconsistencies in current practice
when applying the offsetting criteria in IAS 32. Under this amendment, the meaning of “currently has a
legally enforceable right of set-off” was clarified as well as providing clarification that some gross
settlement systems may be considered equivalent to net settlement. This amendment is effective for annual
periods beginning on or after January 1, 2014 and is not expected to have a significant impact on the
Company.
IFRS 9 Financial instruments, addresses classification and measurement of financial assets. It replaces the
multiple category and measurement models in IAS 39, Financial instruments - Recognition and
Measurement, for debt instruments with a new mixed measurement model having only two categories:
amortized cost and fair value through profit and loss. IFRS 9 also replaces the models for measuring equity
instruments. Such instruments are either recognized at fair value through profit or loss or at fair value
through other comprehensive income. Where equity instruments are measured at fair value through other
comprehensive income, dividends are recognized in the statement of earnings to the extent that they do
not clearly represent a return of investment; however, other gains and losses (including impairments)
associated with such instruments remain in accumulated comprehensive income indefinitely.
Requirements for financial liabilities were added to IFRS 9 in October 2010 and they largely carried forward
existing requirements in IAS 39 except that fair value changes due to credit risk for liabilities designated at
fair value through profit and loss are generally recorded in other comprehensive income. This standard is
effective for annual periods beginning on or after January 1, 2015. The Company is still assessing the impact
of this standard.
The IASB has amended IAS 36 to remove the requirement to disclose recoverable amount when a CGU
contains goodwill or indefinite lived intangible assets but there has been no impairment. The amendment
requires additional disclosure of the recoverable amount of an asset or CGU when an impairment loss has
been recognized or reversed; and detailed disclosure of how the fair value less costs of disposal has been
measured when an impairment loss has been recognized or reversed.
Financial Instruments
55
(STATED IN THOUSANDS OF U.S. DOLLARS)
FAIR VALUE AT
DECEMBER 31, 2013
BASIS OF MEASUREMENT
ASSOCIATED RISKS
Cash and cash equivalents
65,551
Carrying value
Accounts receivable
8,200
Carrying value
Trade and other payables
61,188
Amortized cost
5% Convertible Debentures
Ecobank Loan
Equipment financing facility
Finance leases
47,308
28,853
13,368
4,713
Fair value through
profit and loss
Amortized cost
Amortized cost
Amortized cost
Interest/Credit/
Foreign exchange
Foreign exchange/
Credit
Foreign exchange/
Interest
Interest
Interest
Interest
Interest
Carrying value – Cash and cash equivalents and accounts receivables mature in the short term and
approximate their fair values.
Amortized costs – Trade and other payables, the Ecobank Loan, equipment financing facility and the
finance leases approximate their carrying values as the interest rates are comparable to current market
rates.
Fair value through profit or loss – The debt component of the 5% Convertible Debentures is valued based
on discounted cash flows and the conversion feature is valued using a Black-Scholes model. The risk free
interest rate used in the fair value computation is the interest rate on US treasury rate with maturity similar
to the remaining life of the convertible debenture. The discount rate used is determined by adding our risk
premium to the risk free interest rate. Volatility is calculated based on the weekly volatility of our share price
observable on the New York Stock Exchange (“the NYSE MKT”) for a historical period equal to the remaining
life of the 5% Convertible Debentures. Investors trading in these instruments would normally cap the
volatility used in the Black-Scholes model. To be consistent, we cap the weekly volatility in our calculation at
40%. For the three months ended December 31, 2013 a revaluation gain of $1.6 million was recorded while a
a revaluation gain of $52.0 million was included in earnings for the year ended December 31, 2013.
56 Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk includes, but is not limited to, the following risks: changes in interest rates on
our debt, changes in foreign currency exchange rates, commodity price fluctuations, liquidity risk and
credit risk.
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. The Ecobank Loan bears interest based on the three month LIBOR plus 9%. Based on our current
$30.0 million outstanding balance, a hundred basis points change in the three month LIBOR rate will result
in $0.3 million per annum change in interest expense. We have not entered into any agreements to hedge
against unfavorable changes in interest rates, but may in the future actively manage our exposure to
interest rate risk.
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 fluctuate 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. However,
certain purchases of labor, operating supplies and capital assets are denominated in Canadian dollars,
Ghana cedis, euros, British pounds, Australian dollars and South African rand. To accommodate 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 2013, we had no currency related derivatives. At December 31, 2013, and December 31, 2012, we held
$5.1 million and $5.9 million, respectively, of US dollar equivalents in 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. A $10 per ounce change in gold price would result in approximately a $3.3
million and $2.5 million change in our 2013 revenues and operating cash flows respectively. To reduce gold
price volatility, we have at various times entered into gold price derivatives. During 2013 and 2012, we did
not hold any gold price derivatives and thus, there were no financial instruments subject to gold price risk.
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 obligations. 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.
57
CREDIT RISK
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation. Our credit risk is primarily associated with liquid financial assets and
derivatives. 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 2013, all of our excess cash was
invested in funds that hold only U.S. treasury bills and bonds. We mitigate the credit risks of our derivatives
by entering into derivative contracts with only high quality counter parties. 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.
Cautionary Note Regarding Forward-Looking Information
This report contains “forward looking information” within the meaning of applicable Canadian securities
laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation
Reform Act of 1995, concerning the business, operations and financial performance and condition of
Golden Star. Forward-looking information and statements include, but are not limited to, information or
statements with respect to the estimation of Mineral Reserves and Mineral Resources, the timing of such
estimates, the timing and amount of estimated future production, expected cash operating costs, strip
ratios, costs of production, capital expenditures, costs and timing of the development of new deposits and
sources of funding for such development, success of exploration activities, the timing for completing the
pushback at the Chujah pit, the timing for completing a PEA for Wassa and for commencing a feasibility
study for Wassa, the timing for upgrading the tailings reclaim material to a Mineral Resource or Mineral
Reserve, permitting time lines, currency exchange rate fluctuations, requirements for additional capital,
depreciation and amortization, government regulation of mining operations and environmental risks.
Generally, forward-looking information and statements can be identified by the use of forward-looking
terminology such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates”, “believes” or variations of such words and phrases (including negative or
grammatical variations) or statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will be taken”, “occur” or “be achieved” or the negative connotation thereof.
Forward-looking information and statements are made based upon certain assumptions and other
important factors that, if untrue, could cause the actual results, performances or achievements of Golden
Star to be materially different from future results, performances or achievements expressed or implied by
such statements. Such statements and information are based on numerous assumptions regarding present
and future business strategies and the environment in which Golden Star will operate in the future,
including the price of gold, anticipated costs and ability to achieve goals. Certain important factors that
could cause actual results, performances or achievements to differ materially from those set forth in the
forward-looking information and statements include, among others, gold price volatility, discrepancies
between actual and estimated production, Mineral Reserves and Mineral Resources and metallurgical
recoveries, mining operational and development risks, litigation risks, regulatory restrictions (including
environmental regulatory restrictions and liability), activities by governmental authorities (including
changes in taxation), currency fluctuations, the speculative nature of gold exploration, the global
economic climate, dilution, share price volatility, the availability of capital on reasonable terms or at all,
58
local and community impacts and issues, results of pending or future feasibility studies, competition, loss of
key employees, additional funding requirements and defective title to mineral claims or property. Although
Golden Star has attempted to identify important factors that could cause actual actions, events or results
to differ materially from those described in forward-looking information and statements, there may be
other factors that cause actions, events or results not to be as anticipated, estimated or intended.
Forward-looking information and statements are subject to known and unknown risks, uncertainties and
other important factors that may cause the actual results, performance or achievements of Golden Star to
be materially different from those expressed or implied by such forward-looking information and
statements, including but not limited to: risks related to international operations, including economical and
political instability in foreign jurisdictions in which Golden Star operates; risks related to current global
financial conditions; risks related to joint venture operations; actual results of current exploration activities;
environmental risks; future prices of gold; possible variations in mineral reserves, grade or recovery rates;
mine development and operating risks; accidents, labor disputes and other risks of the mining industry;
delays in obtaining governmental approvals or financing or in the completion of development or
construction activities; risks related to indebtedness and the service of such indebtedness, as well as those
factors discussed in the section entitled “Quantitative and Qualitative Disclosures about Market Risk”.
Although Golden Star has attempted to identify important factors that could cause actual results to differ
materially from those contained in forward-looking information and statements, there may be other
factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate, as actual results and future events could differ materially from
those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-
looking information and statements. Forward-looking information and statements are made as of the date
hereof and accordingly are subject to change after such date. Except as otherwise indicated by Golden
Star, these statements do not reflect the potential impact of any non-recurring or other special items or of
any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions
that may be announced or that may occur after the date hereof. Forward-looking information and
statements are provided for the purpose of providing information about management’s current
expectations and plans and allowing investors and others to get a better understanding of our operating
environment. Golden Star does not undertake to update any forward-looking information and statements
that are included in this MD&A, except in accordance with applicable securities laws.
CAUTIONARY NOTE REGARDING MINERAL RESERVES AND MINERAL RESOURCES
Scientific and technical information contained in this MD&A was reviewed and approved by Dr. Martin
Raffield, Senior Vice- President, Technical Services for Golden Star, and a “qualified person” as defined by
National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”). All mineral reserves
and mineral resources have been calculated in accordance with the standards of the Canadian Institute of
Mining, Metallurgy and Petroleum (“CIM”) and NI 43-101. All mineral resources are reported exclusive of
mineral reserves. Mineral resources which are not mineral reserves have not demonstrated economic
viability. Information on data verification performed on the mineral properties mentioned in this MD&A that
are considered to be material mineral properties to the Company are contained in Golden Star’s Annual
Report for the year ended December 31, 2012 and the current technical report for those properties, including
the technical report dated May 1, 2013 titled “NI 43 101 Technical Report for the Prestea West Reef Feasibility
Study, Ghana effective Date 1st May 2013”, all available at www.sedar.com. Golden Star’s Annual Report for
the year ended December 31, 2012 will be superseded by the Company’s annual information form for the
year ended December 31, 2013, which will contain disclosure regarding the Company’s material mineral
properties and will be made available on SEDAR.
59
CAUTIONARY NOTE TO U.S. INVESTORS
This MD&A has been prepared in accordance with the requirements of the securities laws in effect in
Canada, which differ materially from the requirements of United States securities laws applicable to U.S.
companies.The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are
Canadian mining terms as defined in accordance with NI 43-101 and CIM. These definitions differ from the
definitions in SEC Industry Guide 7 under the United States Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Under SEC Industry Guide 7 standards, mineralization may not be classified as a
“reserve” unless the determination has been made that the mineralization could be economically and
legally produced or extracted at the time the reserve determination is made. Among other things, all
necessary permits would be required to be in hand or issuance imminent in order to classify mineralized
material as reserves under the SEC standards. Under SEC Industry Guide 7 standards, a “final” or
“bankable” feasibility study is required to report reserves, the three-year historical average price is used in
any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report
must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and
“inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms
are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and
registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be converted into reserves. “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 an inferred mineral resource will ever be upgraded to
a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of
feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or
any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of
“contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC
normally only permits issuers to report mineralization that does not constitute “reserves” by SEC Industry
Guide 7 standards as in place tonnage and grade without reference to unit measures.
For the above reasons, information contained in this MD&A and the documents incorporated by reference
herein containing descriptions of our mineral deposits may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure requirements under the United States
federal securities laws and the rules and regulations thereunder.
You are urged to consider closely the disclosure on the mining industry technical terms in “Glossary of
Terms” in our Annual Report for the fiscal year ended December 31, 2012, available on SEDAR at www.sedar.
com. Golden Star’s Annual Report for the year ended December 31, 2012 will be superseded by the
Company’s annual information form for the year ended December 31, 2013, which will contain similar
information and will be made available on SEDAR.
Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
The Company’s management, with the participation of its President and Chief Executive Officer and
Executive Vice President and Chief Financial Officer, has evaluated the effectiveness of the Company’s
disclosure controls and procedures. Based upon the results of that evaluation, the Company’s President
and Chief Executive Officer and Executive Vice President and Chief Financial Officer have concluded that, as
of the end of the period covered by this MD&A, the Company’s disclosure controls and procedures were
60
effective to provide reasonable assurance that the information required to be disclosed by the Company in
reports it files is recorded, processed, summarized and reported, wsithin the appropriate time periods and
is accumulated and communicated to management, including the President and Chief Executive Officer
and Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management, with the participation of its President and Chief Executive Officer and
Executive Vice President and Chief Financial Officer, is responsible for establishing and maintaining
adequate internal control over financial reporting. Under the supervision of the President and Chief
Executive Officer and Executive Vice President and Chief Financial Officer, the 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
IFRS. The Company’s internal control over financial reporting includes policies and procedures that:
• pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the
transactions and dispositions of assets of the Company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with IFRS and that the Company’s receipts and expenditures are
made only in accordance with authorizations of management and the Company’s directors; and
• 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 Company’s consolidated
financial statements.
The Company’s management, including the President and Chief Executive Officer and Executive Vice
President and Chief Financial Officer, believes that any disclosure controls and procedures or internal
control over financial reporting, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, they cannot
provide absolute assurance that all control issues and instances of fraud, if any, within the Company have
been prevented or detected. These inherent limitations include the realities that judgments in decision-
making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or
by unauthorized override of the control. The design of any control system also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the
inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and
not be detected.
The Company’s management, under the supervision of the President and Chief Executive Officer and the
Executive Vice President and Chief Financial Officer, assessed the effectiveness of the Company’s internal
control over financial reporting as at December 31, 2013. In making this assessment, it used the criteria set
forth in the Internal Control-integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) of 1992. Based on our assessment, management has concluded that, as
at December 31, 2013, the Company’s internal control over financial reporting is effective based on those
criteria.
The Company’s internal control over financial reporting as at December 31, 2013 has been audited by PwC
LLP, Independent Registered Chartered Accountants who also audited the Company’s Consolidated
Financial Statements for the year ended December 31, 2013. PwC LLP as stated in their report that
immediately precedes the Company’s audited consolidated financial statements for the year ended
December 31, 2013, expressed an unqualified opinion on the effectiveness of the Company’s internal control
over financial reporting.
61
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There has been no change in the Company’s design of internal controls and procedures over financial
reporting that has materially affected, or is reasonable likely to materially affect, the Company’s internal
control over financial reporting during the period covered by this MD&A.
Risk Factors and Additional Information
The risk factors for the year ended December 31, 2013, are substantially the same as those disclosed and
discussed in our Annual Report on Form 10-K for the year ended December 31, 2012. Additional risk factors, if
applicable, will be included in our annual information form for the year ended December 31, 2013, which will
be filed on SEDAR at www.sedar.com.
Additional information regarding Golden Star, including the Company’s Annual Report on Form 10-K for the
year ended December 31, 2012, which will be superseded by our annual information form for the year ended
December 31, 2013 is or will be, as the case may be, available under the Company’s profile on SEDAR at
www.sedar.com.
62
Consolidated Financial Statements
For the Year Ended December 31, 2013
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Golden Star Resources Ltd. (the “Company”) and
all information in this financial report are the responsibility of management. The consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards and,
where appropriate, include management’s best estimates and judgments.
Management maintains a system of internal control designed to provide reasonable assurance that assets
are safeguarded from loss or unauthorized use, and that financial information is timely and reliable.
However, any system of internal control over financial reporting, no matter how well designed and
implemented, has inherent limitations and may not prevent or detect all misstatements.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial
reporting and is ultimately responsible for reviewing and approving the consolidated financial statements.
The Board carries out this responsibility principally through its Audit Committee. The Board of Directors
appoints the Audit Committee, and all of its members are independent directors. The Audit Committee
meets periodically with management and the auditors to review internal controls, audit results, accounting
principles and related matters. The Board of Directors approves the consolidated financial statements on
recommendation from the Audit Committee.
PricewaterhouseCoopers LLP, an independent firm of Chartered Professional Accountants, was appointed
by the shareholders at the last annual meeting to examine the consolidated financial statements and
provide an independent professional opinion. PricewaterhouseCoopers LLP has full and free access to the
Audit Committee.
Samuel T. Coetzer
President and Chief Executive Officer
Jeffrey A. Swinoga
Executive Vice President and Chief Financial Officer
Toronto, Canada
February 19, 2014
Independent Auditor’s Report
To the Shareholders of Golden Star Resources Ltd.:
63
We have completed an integrated audit of Golden Star Resources Ltd.’s (the Company) 2013 consolidated
financial statements and its internal control over financial reporting as at December 31, 2013 and an audit of
its 2012 consolidated financial statements. Our opinions, based on our audits, are presented below.
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
We have audited the accompanying consolidated financial statements of the Company, which comprise
the consolidated balance sheets as at December 31, 2013, December 31, 2012 and January 1, 2012 and the
consolidated statements of operations, comprehensive income (loss), cash flows, and changes in
shareholders’ equity for the years ended December 31, 2013 and 2012, and the related notes, which comprise
a summary of significant accounting policies and other explanatory information.
MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB) and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement. Canadian generally accepted auditing
standards also require that we comply with ethical requirements.
An audit involves performing procedures to obtain audit evidence, on a test basis, about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the company’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting principles and policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a
basis for our audit opinion on the consolidated financial statements.
64
OPINION
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2013, December 31, 2012 and January 1, 2012 and its financial
performance and its cash flows for the years ended December 31, 2013 and 2012 in accordance with IFRS as
issued by the IASB.
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
We have also audited the Company’s internal control over financial reporting as at December 31, 2013,
based on criteria established in Internal Control–Integrated Framework (1992), issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).
MANAGEMENT’S RESPONSIBILITY FOR INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Annual Report on Internal Control over Financial Reporting.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We conducted our audit of internal control over financial reporting in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects.
An audit of internal control over financial reporting includes obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control, based on the assessed risk, and performing such
other procedures as we consider necessary in the circumstances.
We believe that our audit provides a reasonable basis for our audit opinion on the Company’s internal
control over financial reporting.
DEFINITION OF INTERNAL CONTROL OVER FINANCIAL REPORTING
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 transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s
assets that could have a material effect on the financial statements.
65
INHERENT LIMITATIONS
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.
OPINION
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as at December 31, 2013, based on criteria established in Internal Control–Integrated Framework
(1992) issued by COSO.
February 19, 2014
Chartered Professional Accountants, Licensed Public Accountants
66
Table of Contents
FINANCIAL STATEMENTS
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income/(Loss)
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Changes In Shareholders’ Equity
NOTES TO THE FINANCIAL STATEMENTS
1. Nature of Operations
2. Basis of Presentation
3. Summary of Accounting Policies
4. Critical Accounting Judgements, Estimates and Assumptions
5. Financial Instruments
6. Inventories
7. Available For Sale Investments
8. Property, Plant and Equipment and Mining Properties
9. Exploration and Evaluation Assets
10. Income Taxes
11. Accounts Payable and Accrued Liabilities
12. Rehabilitation Provisions
13. Debt
14. Commitments and Contingencies
15. Share-Based Compensation
16. (Loss)/Earnings Per Common Share
17. Cost of Sales Excluding Deprecation and Amortzation
18. Finance Expense, Net
19. Other Expense/(Income)
20. Related Party Transactions
21. Impairment Charges
22. Principal Subsidiaries
23. Operations By Segment and Geographic Area
24. Supplementary Cash Flow Information
25. Financial Risk Management
26. Capital Risk Management
27. First-Time Adoption Of Ifrs
67
68
69
70
71
72
72
73
80
83
85
85
86
87
87
90
90
91
93
94
98
98
99
99
99
100
102
103
104
104
106
107
Golden Star Resources Ltd.
Consolidated Statements of Operations
(Stated in thousands of U.S. dollars except shares and per share data)
67
years ended December 31,
REVENUE
Cost of sales excluding
depreciation and amortization
Depreciation and amortization
MINE OPERATING MARGIN
OTHER EXPENSES/(INCOME)
Exploration expense
General and administrative
Property holding costs
Finance expense, net
Other income
(Gain)/loss on fair value of 4% and 5% Convertible Debentures
Derivative mark-to-market loss
Impairment charges
(LOSS)/INCOME BEFORE TAX
Income tax (recovery)/expense
NET (LOSS)/INCOME
Net (loss)/income attributable to non-controlling interest
NET (LOSS)/INCOME ATTRIBUTABLE TO GOLDEN STAR SHAREHOLDERS
NOTES
2013
2012
(NOTE 27)
467,796
550,540
17
377,140
59,966
30,690
1,667
21,515
7,018
9,841
(2,163)
(51,967)
—
355,624
(310,845)
(12,331)
(298,514)
(32,622)
(265,892)
18
19
21
10
373,543
89,353
87,644
2,788
24,106
9,862
13,125
(24,814)
27,985
162
6,972
27,458
17,756
9,702
2,516
7,186
NET (LOSS)/INCOME PER SHARE ATTRIBUTABLE TO GOLDEN STAR SHAREHOLDERS
Basic and diluted
16
Weighted average shares outstanding (millions)
(1.03)
259.1
0.03
258.9
The accompanying notes are an integral part of the consolidated financial statements.
68 Golden Star Resources Ltd.
Consolidated Statements of Comprehensive Income/(Loss)
(Stated in thousands of U.S. dollars)
For the years ended December 31,
NOTES
2013
2012
OTHER COMPREHENSIVE INCOME/(LOSS)
NET (LOSS)/INCOME
Unrealized gain/(loss) on investments, net of taxes
Transferred to net income/(loss), net of taxes
COMPREHENSIVE (LOSS)/INCOME
Comprehensive (loss)/income attributable to non-controlling interest
(NOTE 27)
9,702
(2,694)
6,972
13,980
2,516
(298,514)
(7,626)
1,370
(304,770)
(32,622)
COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE
TO GOLDEN STAR SHAREHOLDERS
(272,148)
11,464
The accompanying notes are an integral part of the consolidated financial statements.
Golden Star Resources Ltd.
Consolidated Balance Sheets
(Stated in thousands of U.S. dollars)
As of
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable
Inventories
Available for sale investments
Prepaids and other
TOTAL CURRENT ASSETS
RESTRICTED CASH
PROPERTY, PLANT AND EQUIPMENT
MINING PROPERTIES
EXPLORATION AND EVALUATION ASSETS
INTANGIBLE ASSETS
OTHER ASSETS
DEFERRED TAX ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities
Current portion of rehabilitation provisions
Current tax liability
Current portion of long term debt
TOTAL CURRENT LIABILITIES
LONG TERM DEBT
REHABILITATION PROVISIONS
DEFERRED TAX LIABILITY
TOTAL LIABILITIES
69
NOTES
DECEMBER 31,
2013
DECEMBER 31,
2012
JANUARY 1,
2012
(NOTE 27)
(NOTE 27)
6
7
8
8
9
10
11
12
13
13
12
10
65,551
8,200
67,725
—
6,852
148,328
2,029
83,850
81,343
9,747
446
—
—
325,743
108,983
7,783
9,506
10,855
137,127
83,387
78,527
—
299,041
—
694,906
29,346
—
(652,544)
71,708
(45,006)
26,702
325,743
78,884
11,896
82,979
15,034
11,266
200,059
2,028
191,773
249,827
10,862
1,511
—
235
656,295
101,760
9,721
12,393
6,968
130,842
110,507
53,598
33,172
328,119
—
694,652
26,304
6,256
(386,652)
340,560
(12,384)
328,176
656,295
103,644
10,077
74,140
1,416
8,522
197,799
1,273
178,531
232,075
16,730
2,759
895
—
630,062
92,088
8,996
197
128,459
229,740
10,759
54,315
27,575
322,389
—
693,899
20,534
1,978
(393,838)
322,573
(14,900)
307,673
630,062
14
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.
CONTRIBUTED SURPLUS
ACCUMULATED OTHER COMPREHENSIVE INCOME
DEFICIT
TOTAL GOLDEN STAR EQUITY
NON-CONTROLLING INTEREST
Total Equity
22
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
The accompanying notes are an integral part of the consolidated financial statements.
Signed on behalf of the Board,
Timothy C. Baker, Director
William L. Yeates, Director
70 Golden Star Resources Ltd.
Consolidated Statements of Cash Flows
(Stated in thousands of U.S. dollars)
For the years ended December 31,
NOTES
2013
2012
OPERATING ACTIVITIES
Net (loss)/income
Reconciliation of net income/(loss) to net cash provided by operating activities:
Depreciation and amortization
Amortization of loan acquisition costs
(Gain)/loss on sale of assets
Write-off of unsuccessful exploration costs
Impairment charges
Loss on extinguishment of debt
Share-based compensation
Deferred income tax (recovery)/expense
Fair value of derivatives loss
Fair value loss/(gain) on convertible debentures
Accretion of rehabilitation provisions
Reclamation expenditures
15
10
5
Changes in working capital
24
(NOTE 27)
(298,514)
9,702
60,008
—
(1,271)
1,333
355,624
—
3,013
(32,936)
—
(51,967)
592
(5,657)
28,918
89,442
895
(24,991)
—
6,972
568
6,542
5,363
162
27,985
593
(6,203)
6,064
NET CASH PROVIDED BY OPERATING ACTIVITIES
59,143
123,094
INVESTING ACTIVITIES
Additions to mining properties
Additions to property, plant and equipment
Additions to exploration and evaluation assets
Change in accounts payable and deposits on mine equipment and material
Cash used for equity investments
Increase in restricted cash
Proceeds from sale of assets
(69,725)
(32,924)
(218)
(5,695)
—
—
7,200
(76,013)
(40,569)
(717)
5,518
(938)
(755)
15,616
NET CASH USED IN INVESTING ACTIVITIES
(101,362)
(97,858)
FINANCING ACTIVITIES
Principal payments on debt
Proceeds from debt agreements and equipment financing
Exercise of options
(7,876)
36,610
152
(58,806)
8,510
300
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
28,886
(49,996)
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of period
CASH AND CASH EQUIVALENTS, END OF PERIOD
(13,333)
78,884
(24,760)
103,644
65,551
78,884
See Note 24 for supplemental cash flow information.
The accompanying notes are an integral part of the consolidated financial statements.
71
Golden Star Resources Ltd.
Consolidated Statements of Changes in Shareholders’ Equity
(Stated in thousands of U.S. dollars except shares data)
NUMBER OF
COMMON
SHARES CAPITAL
ACCUMULATED
OTHER
SHARE CONTRIBUTED COMPREHENSIVE
INCOME/(LOSS)
SURPLUS
NON-
TOTAL
CONTROLLING SHAREHOLDERS’
EQUITY
INTEREST
DEFICIT
Balance at January 1, 2012
(Note 27)
258,669,487
693,899
Shares issued under options/DSU’s
181,474
Bonus shares issued
165,009
Options granted net of forfeitures
DSU’s granted
Unrealized loss on investments
Transferred to net income,
net of taxes
Net income
Balance at December 31, 2012
(Note 27)
445
308
—
—
—
—
—
—
—
—
—
—
20,534
(1,375)
—
6,542
603
—
—
—
1,978
(393,838)
(14,900)
307,673
—
—
—
—
(2,694)
6,972
—
—
—
—
—
—
—
—
—
—
—
—
—
7,186
2,516
(930)
308
6,542
603
(2,694)
6,972
9,702
259,015,970
694,652
26,304
6,256
(386,652)
(12,384)
328,176
Shares issued under options
90,000
254
Options granted net of forfeitures
DSU’s granted
Unrealized loss on investments
Transferred to net loss, net of taxes
Net loss
(298,514)
—
—
—
—
—
—
—
—
—
—
(102)
2,444
700
—
—
—
—
—
—
(7,626)
1,370
—
—
—
—
—
—
—
—
—
—
152
2,444
700
(7,626)
1,370
— (265,892)
(32,622)
Balance at December 31, 2013
259,105,970
694,906
29,346
— (652,544)
(45,006)
26,702
There were no treasury shares held as of December 31, 2013, December 31, 2012 or January 1, 2012.
The accompanying notes are an integral part of the consolidated financial statements
72 Golden Star Resources Ltd.
Notes to the Consolidated Financial Statements
for the Year Ended December 31, 2013
(All currency amounts are in thousands of U.S. dollars unless noted otherwise)
1. Nature of Operations
Golden Star Resources Ltd. (“Golden Star” or “the Company” or “we” or “our”) is a Canadian federally-
incorporated, international gold mining and exploration company headquartered in Toronto, Canada. The
Company’s shares are listed on the Toronto Stock Exchange (“the TSX”) under the symbol GSC, the New
York Stock Exchange (“the NYSE MKT”) under the symbol GSS and the Ghana stock exchange under the
symbol GSR. The Company’s registered office is located at 150 King Street West, Sun Life Financial Tower,
Suite 1200, Toronto, Ontario, M5H 1J9, Canada.
Through a 90% owned subsidiary, Golden Star (Wassa) Limited, we own and operate the Wassa open-pit
gold mine, the Father Brown open-pit gold mine and a carbon-in-leach (“CIL”) processing plant (collectively,
“Wassa”), located approximately 35 kilometers from the town of Bogoso, Ghana. Through our 90% owned
subsidiary Golden Star (Bogoso/Prestea) Limited, we own and operate the Bogoso gold mining and
processing operation (“Bogoso”) located near the town of Bogoso, Ghana. Golden Star also has a 90%
interest in the Prestea Underground mine in Ghana. 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
STATEMENT OF COMPLIANCE
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) outlined
in Part 1 of the CPA Canada Handbook—Accounting. These are the Company’s first annual consolidated
financial statements prepared in accordance with IFRS and IFRS 1, First-time Adoption of International
Financial Reporting Standards has been applied. The disclosure of the transition from accounting principles
generally accepted in the United States of America (“US GAAP”) to IFRS and the effect on the reported
financial position, financial performance and cash flows of the Company is provided in Note 27.
The policies applied in these consolidated financial statements has been applied consistently to all
periods presented and are based on IFRS issued and effective for the year ended December 31, 2013. These
consolidated financial statements were approved by the Board of Directors of the Company on
February 19, 2014.
BASIS OF PRESENTATION
These consolidated financial statements include the accounts of the Company and its subsidiaries, whether
owned directly or indirectly. The financial statements of the subsidiaries are prepared for the same period
as the parent company using consistent accounting policies. All inter-company balances and transactions
have been eliminated. Subsidiaries are entities controlled by the Company. Non-controlling interests in the
net assets of consolidated subsidiaries are a separate component of the Company’s equity.
These consolidated financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and discharge of all liabilities in the normal course of business. The
functional currency of all consolidated subsidiaries is the U.S. dollar. All values are rounded to the nearest
thousand, unless otherwise stated.
73
The consolidated financial statements have been prepared on a historical cost basis, except for derivative
financial instruments, financial instruments at fair value through profit or loss and available-for-sale
securities, which are measured at fair value.
3. Summary of Accounting Policies
CASH AND CASH EQUIVALENTS
Cash includes cash deposits in any currency residing in chequing and sweep accounts. Cash equivalents
consist of money market funds and other highly liquid investments 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 investments, while those with maturities in excess of one year are classified as long-term
investments. Cash equivalents and short-term investments are stated at amortized cost, which typically
approximates market value.
INVENTORIES
Inventory classifications include “stockpiled ore,” “in-process inventory,” “finished goods inventory” and
“materials and supplies”. 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 determined 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 beginning 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. Included in the costs are the direct costs of the mining and processing
operations as well as direct mine-site overheads, amortization and depreciation.
Material and supply inventories consist mostly of equipment parts and other consumables required in the
mining and ore processing activities.
All inventories are valued at the lower of average cost or net realizable value.
74
EXPLORATION AND EVALUATION ASSETS
The initial acquisition costs of exploration and mining properties are capitalized.
Exploration and evaluation costs relating to mineral interests are charged to earnings in the year which
they are incurred. When it is determined that a mining property has the reserve potential to be economical,
subsequent exploration expenditures are capitalized. Determination as to reserve potential is based on the
results of studies, which indicate whether production from a property is economically feasible. These
expenditures include such costs as materials used, surveying costs, drilling costs, consulting fees, payments
made to contractors and depreciation on plant and equipment. Costs not directly attributable to
exploration and evaluation activities, including general administrative overhead costs, are expensed in the
period in which they occur.
The Company assesses exploration and evaluation costs for impairment when facts and circumstances
suggest that the carrying amount of an asset may exceed its recoverable amount.
When a project is deemed to no longer have commercially viable prospects to the Company, exploration
and evaluation costs in respect of that project are deemed to be impaired and the exploration and
evaluation expenditure costs, in excess of estimated recoveries, are written off.
Once the technical feasibility and commercial viability of extracting the mineral resource has been
determined, the property is considered to be a mine under development and is classified as mining
properties. Exploration and evaluation costs are also tested for impairment before the assets are
transferred to mining properties.
After proven and probable reserves have been established, subsequent exploration and development costs
are capitalized until such time as a property is in commercial production. Once commercial production is
reached, accumulated capitalized acquisition, exploration and development costs become subject to
amortization on a units-of-production basis when metal production begins.
PROPERTY, PLANT AND EQUIPMENT
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 initially
recorded at cost including acquisition and installation costs. Property, plant and equipment are
subsequently measured at cost, less accumulated depreciation and accumulated impairment losses.
The costs of self-constructed assets include direct construction costs and direct overhead during the
construction phase. Indirect overhead costs are not included in the cost of self-constructed assets.
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 amortized 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, less their anticipated residual values, if any. The net book value of
property, plant and equipment 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.
The residual values, useful lives and method of depreciation/amortization of property, plant and equipment
are reviewed at each reporting period end, and adjusted prospectively if appropriate.
Gains and losses on the disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount, and are recognized net in the
consolidated statement of operations.
75
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 and allocated interest during
the construction phase. Indirect overhead costs are not included in the cost of self-constructed assets.
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.
BETTERMENT STRIPPING (WASTE REMOVAL) COSTS
As part of its operations, the Company incurs stripping (waste removal) costs both during the development
phase and production phase of its operations. Stripping costs incurred as part of development stage
mining activities incurred by the Company are capitalized as part of mining properties.
Stripping costs incurred during the production stage are incurred in order to produce inventory or to
improve access to the ore to be mined in the future. Where the costs are incurred to produce inventory, the
production stripping costs are accounted for as a cost of producing those inventories. Where the costs are
incurred to improve access to the ore to be mined in the future, the costs are recognized as a stripping
activity asset (a non-current asset) if improved access to the ore body is probable, the component of the
ore body can be accurately identified and the costs associated with improving the access can be reliably
measured. If these criteria are not met the cost is expensed to the consolidated statement of operations as
incurred.
The betterment stripping asset is subsequently depreciated using the units-of-production amortization
method over the life of the identified component of the ore body that became more accessible as a result of
the betterment stripping activity.
INTANGIBLE ASSETS
Externally acquired intangible assets are initially recognized at cost and subsequently amortized on a
straight-line basis over their useful economic lives. Intangible assets are recognized on business
combinations if they are separable from the acquired entity or give rise to other contractual/legal rights.
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.
BORROWING COSTS
Borrowing costs attributable to the acquisition, construction or production of a qualifying asset that
necessarily takes a substantial period of time to get ready for its intended use are capitalized until such time
as the assets are substantially ready for their intended use. Other borrowing costs are recognized as an
expense in the period in which they are incurred.
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IMPAIRMENT OF LONG-LIVED ASSETS
The Company assesses at each reporting period whether there is an indication that an asset or group of
assets may be impaired. When impairment indicators exist, the Company estimates the recoverable
amount of the asset and compares it against the asset’s carrying amount. The recoverable amount is the
higher of its fair value less cost of disposal (“FVLCD”) and the asset’s value in use (“VIU”). If the carrying
amount exceeds the recoverable amount, an impairment loss is recorded in the consolidated statement of
operations.
In assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset not already reflected in the estimates of future cash flows. The cash flows are based on best
estimates of expected future cash flows from the continued use of the asset and its eventual disposal.
FVLCD is best evidenced if obtained from an active market or binding sale agreement. Where neither exists,
the fair value is based on the best estimates available to reflect the amount that could be received from an
arm’s length transaction.
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 engineered life-of-mine
plans.
Numerous factors including, but not limited to, unexpected grade changes, gold recovery variances,
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 interests 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.
If an impairment loss reverses in a subsequent period, the carrying amount (post reversal) of the related
asset is increased to the revised estimate of recoverable amount to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognized for the asset previously. Reversals of impairment losses are recognized in the statement of
operations in the period the reversals occur.
Material changes to any of the factors or assumptions discussed above could result in future asset
impairments.
REHABILITATION PROVISIONS
The Company records a liability and corresponding asset for the present value of the estimated costs of
legal and constructive obligations for future site reclamation and closure where the liability is probable and
a reasonable estimate can be made of the obligation. The estimated present value of the obligation is
reassessed on a periodic basis or when new material information becomes available. Increases or
decreases to the obligation usually arise due to changes in legal or regulatory requirements, the extent of
environmental remediation required, methods of reclamation, cost estimates, inflation rates, or discount
rates. Changes to the provision for reclamation and remediation obligations related to operating mines,
which are not the result of current production of inventory, are recorded with an offsetting change to the
related asset. The present value is determined based on current market assessments of the time value of
money using discount rates based on the risk-free rate maturing approximating the timing of expected
expenditures to be incurred, and adjusted for country related risks. The periodic unwinding of the discount
is recognized in the consolidated statement of operations as a finance expense.
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PROPERTY HOLDING COST
Property holding costs are costs incurred to retain and maintain properties. Such costs are expensed in the
period incurred.
FOREIGN CURRENCY TRANSACTIONS
The individual financial statements of the subsidiaries are presented in the currency of the primary
economic environment in which the entity operates. The Company’s presentation currency of its
consolidated financial statements is the U.S. dollar, as is the functional currency of its operations.
Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at period
end exchange rates. Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are translated into U.S. dollars at the exchange rate at the date that the fair value
was determined. Income and expense items are translated at the exchange rate in effect on the date of the
transaction. Exchange gains and losses resulting from the translation of these amounts are included in net
earnings, except those arising on the translation of available-for-sale investments that are recorded in
other comprehensive income. Non-monetary assets and liabilities denominated in foreign currencies that
are measured at historical cost are translated at the exchange rate in effect at the transaction date.
INCOME TAXES
Income taxes comprise the provision for (or recovery of) taxes actually paid or payable (current taxes) and
for deferred taxes.
Current taxes are based on taxable earnings in the year. Current tax is calculated using tax rates and laws
that were enacted or substantively enacted at the balance sheet date in the respective jurisdictions.
Current income tax assets and current income tax liabilities are only offset if a legally enforceable right
exists to offset the amounts and the Company intends to settle on a net basis or to realize the asset and
settle the liability simultaneously.
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
or substantially 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
substantial enactment. The provision for or the recovery of deferred taxes is based on the changes in
deferred tax assets and liabilities during the period.
The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and
recognized to the extent that it is probable that taxable earnings will be available against which deductible
temporary differences can be utilized.
NET INCOME/(LOSS) PER SHARE
Basic income/(loss) per share of common stock is calculated by dividing income available to Golden Star’s
common shareholders by the weighted average number of common shares issued and outstanding during
the period. In periods with earnings, the calculation of diluted net income per common share uses the
78
treasury stock method to compute the dilutive effects of stock options and warrants, and other potentially
dilutive instruments. 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 the significant risks and rewards of ownership have
passed to the purchaser. This occurs when the amount of revenue can be measured reliably, the metal has
been delivered, title has passed to the buyer and it is probable that the economic benefits associated with
the transaction will flow to the entity. 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. Title and risk of ownership pass
to the buyer on the day doré is shipped from the mine sites.
SHARE-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, 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, measured by reference to the fair value determined using
a Black-Scholes valuation model, and is recognized over the vesting periods of the respective options on a
graded basis. 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
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 DSUs. Upon exercise the Company’s compensation committee may, at its
discretion, issue cash, shares of a combination thereof.
The Company’s Share Appreciation Rights (“SARs”) plan allows SARs to be issued to executives and
directors. These awards are settled in cash on the exercise date equal to the Company’s stock price less the
strike price. 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 equipment with a corresponding amount recorded with
current and long-term debt. All other leases are classified as operating leases under which leasing costs are
expensed in the period incurred.
FINANCIAL INSTRUMENTS
The Company recognizes all financial assets initially at fair value and classifies them into one of the
following three categories: fair value through profit or loss (“FVTPL”), available-for-sale (“AFS”) or loans and
receivables, as appropriate. The Company has not classified any of its financial assets as held to maturity.
The Company recognizes all financial liabilities initially at fair value and classifies them as either FVTPL or
loans and borrowings, as appropriate. The Company has not classified any of its derivatives as designated
as hedging instruments in an effective hedge.
Investments
Equity security investments are accounted for as AFS investments, with changes in the fair value of available
for sale investments are charged or credited to other comprehensive income until the investment is realized.
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The Company assesses at the end of each reporting period whether there is objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or group of financial assets is
impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that such loss
event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the
difference between its carrying amount and the present value of the estimated future cash flows
discounted at the original effective interest rate. An impairment loss in respect of an AFS financial asset is
calculated by reference to its fair value. In the case of equity securities classified as AFS, a significant or
prolonged decline in the fair value of the security below its cost is also evidence that the assets are
impaired. If any such evidence exists for AFS financial assets, the cumulative loss – measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on that financial
asset that was previously recognized in profit or loss – is removed from equity and recognized in the
statement of operations.
All impairment losses are recognized in profit or loss. Impairment losses recognized for equity securities are
not reversed.
Convertible debentures
The Company’s convertible debentures are considered financial instruments at FVTPL. The convertible
debentures contain embedded derivatives that significantly modify the cash flows that otherwise would be
required by the contract. The convertible debentures are recorded at fair value determined based on
unadjusted quoted prices in active markets when available, otherwise by valuing the embedded derivative
conversion feature and the debt component 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 debentures were recognized in the statement of operations as incurred and not
deferred.
Derivatives
At various times the Company utilizes foreign exchange and commodity price derivatives to manage
exposure to fluctuations in foreign currency exchange rates and gold prices, respectively. The Company
does not employ derivative financial 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 recorded
in the consolidated statement of operations.
OTHER COMPREHENSIVE INCOME/(LOSS)
Other comprehensive income/(loss) (“OCI”) consists of unrealized gains/(losses) on AFS investments.
Unrealized gains or losses on securities are net of any reclassification adjustments for realized gains or
losses included in net income/(loss) or impairments to the investment which are considered permanent.
80
STANDARDS, INTERPRETATIONS AND AMENDMENTS NOT YET EFFECTIVE
IFRIC 21 Accounting for levies imposed by government clarifies that the obligating event that gives rise to a
liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.
This standard is effective for annual periods beginning on or after January 1, 2014. The Company is currently
assessing the impact of this interpretation.
IAS 32 Financial instruments: presentation was amended to address inconsistencies in current practice
when applying the offsetting criteria in IAS 32. Under this amendment, the meaning of “currently has a
legally enforceable right of set-off” was clarified as well as providing clarification that some gross
settlement systems may be considered equivalent to net settlement. This amendment is effective for annual
periods beginning on or after January 1, 2014 and is not expected to have a significant impact on the
Company.
IFRS 9 Financial instruments, addresses classification and measurement of financial assets. It replaces the
multiple category and measurement models in IAS 39, Financial instruments–Recognition and
Measurement, for debt instruments with a new mixed measurement model having only two categories:
amortized cost and fair value through profit and loss. IFRS 9 also replaces the models for measuring equity
instruments. Such instruments are either recognized at fair value through profit or loss or at fair value
through other comprehensive income. Where equity instruments are measured at fair value through other
comprehensive income, dividends are recognized in the statement of earnings to the extent that they do
not clearly represent a return of investment; however, other gains and losses (including impairments)
associated with such instruments remain in accumulated comprehensive income indefinitely.
Requirements for financial liabilities were added to IFRS 9 in October 2010 and they largely carried forward
existing requirements in IAS 39 except that fair value changes due to credit risk for liabilities designated at
fair value through profit and loss are generally recorded in other comprehensive income. This standard is
effective for annual periods beginning on or after January 1, 2015. The Company is still assessing the impact
of this standard.
The IASB has amended IAS 36 to remove the requirement to disclose recoverable amount when a cash
generating unit (“CGU”) contains goodwill or indefinite lived intangible assets but there has been no
impairment. The amendment requires additional disclosure of the recoverable amount of an asset or CGU
when an impairment loss has been recognized or reversed; and detailed disclosure of how the fair value
less costs of disposal has been measured when an impairment loss has been recognized or reversed.
4. Critical Accounting Judgements, Estimates and Assumptions
Preparation of our consolidated financial statements in conformity with IFRS requires management to
make judgments, estimates and assumptions that can affect reported amounts of assets, liabilities,
revenues and expenses and the accompanying disclosures. Estimates and assumptions are continuously
evaluated and are based on management’s historical experience and on other assumptions we believe to
be reasonable under the circumstances. However, uncertainty about these judgments, estimates and
assumptions could result in outcomes that require a material adjustment to the carrying amount of assets
or liabilities affected in future periods.
MINERAL RESERVES
Determining mineral reserves and resources is a complex process involving numerous variables and is
based on a professional evaluation using accepted international standards for the assessment of mineral
reserves. Estimation is a subjective process, and the accuracy of such estimates is a function of the quantity
and quality of available data, the assumptions made and judgments used in engineering and geological
interpretation. Mineral reserve estimation may vary as a result of changes in the price of gold, production
costs, and with additional knowledge of the ore deposits and mining conditions.
81
Differences between management’s assumptions including economic assumptions such as metal prices
and market conditions could have a material effect in the future on the Company’s results and financial
position, particularly a change in the rate of depreciation and amortization of the related mining assets.
BETTERMENT STRIPPING COSTS
Significant judgment is required to distinguish between development stripping, production stripping which
relates to extraction of inventory and production stripping which relates to the creation of a betterment
stripping and stripping activity asset. Once the Company has identified its stripping for each surface mining
operation, it identifies the separate components for the ore bodies in each of its mining operations. An
identifiable component is a specific volume of the ore body that is made more accessible by the stripping
activity. Significant judgment is required to identify these components and to determine the expected
volumes (waste and ore) to be stripped in each component.
Judgment is also required to identify a suitable production measure to be used to allocate production
stripping costs between inventory and betterment stripping for each component. The Company considers
the ratio of the expected volume of ore to be mined for a specific component of the ore body to be the most
suitable production measure.
UNITS OF PRODUCTION DEPRECIATION
The mineral properties and a large portion of the property, plant and equipment is depreciated/amortized
using the units of production method over the expected operating life of the mine based on estimated
recoverable ounces of gold, which are the prime determinants of the life of a mine. Estimated recoverable
ounces of gold include proven and probable reserves and non-reserve material when sufficient objective
evidence exists that it is probable the non-reserve material will be produced. Changes in the estimated
mineral reserves will result in changes to the depreciation charges over the remaining life of the operation.
A decrease in the mineral reserves would increase depreciation and amortization expense and this could
have a material impact on the operating results. The amortization base is updated on an annual basis
based on the new mineral estimates.
CARRYING VALUE OF ASSETS AND IMPAIRMENT CHARGES
The Company undertakes a review of each asset and CGU at each reporting period to determine whether
any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the
recoverable amount of the asset or CGU is made, which is considered to be the higher of its FVLCD and VIU.
An impairment loss is recognized when the carrying value of the asset or CGU is higher than the
recoverable amount. In undertaking this review, management of the Company is required to make
significant estimates of, amongst other things, discount rates, future production and sale volumes, metal
prices, reserves and resource quantities, future operating and capital costs and reclamation costs to the
end of the mine’s life. These estimates are subject to various risks and uncertainties, which may ultimately
have an effect on the expected recoverability of the carrying values of the asset or CGU. In determining a
CGU, management has examined the smallest identifiable group of assets that generates cash inflows that
are largely independent of cash inflows from other assets or group of assets.
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REHABILITATION PROVISIONS
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 estimated
future cash costs of such liabilities are based primarily upon environmental and regulatory requirements of
the various jurisdictions in which we operate as well as any other constructive obligations that exist. The
liability represents management’s best estimates of cash required to settle the liability, inflation,
assumptions of risks associated with future cash flows and the applicable risk-free interest rates for
discounting the future cash outflow. The liability is reassessed and remeasured at each reporting date.
FAIR VALUE OF CONVERTIBLE DEBENTURES
The debt component of the 5% Convertible Debentures is valued based on discounted cash flows and the
conversion feature is valued using a Black-Scholes model. The inputs to these models are taken from
observable markets where possible, but if this is not feasible, a degree of judgment is required in
establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and
volatility. Changes in assumptions about these factors could affect the reported fair value of financial
instruments.
INCOME TAXES
We deal with uncertainties and judgments in the application of complex tax regulations in the various
jurisdictions where our properties are located. The amount of taxes paid is 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 best estimate of additional taxes payable. We
adjust these reserves in light of changing facts and circumstances, however, due to the complexity of some
of these uncertainties, 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 deferred tax asset is recognized to the extent that it is probable that taxable earnings will be available
against which deductible temporary differences can be utilized.
5. Financial Instruments
83
The following tables illustrate the classification of the Company’s recurring fair value measurements for
financial instruments within the fair value hierarchy and their carrying values and fair values as at
December 31, 2013, December 31, 2012 and January 1, 2012:
LEVEL
DECEMBER 31, 2013
DECEMBER 31, 2012
JANUARY 1, 2012
Carrying value Fair value
Carrying value
Fair value
Carrying value Fair value
FINANCIAL ASSETS
Available for sale investments
FINANCIAL LIABILITIES
FAIR VALUE THROUGH PROFIT OR LOSS
5% Convertible Debentures
4% Convertible Debentures
1
3
1
—
—
15,034
15,034
1,416
1,416
47,308
47,308
99,275
99,275
—
—
—
—
—
—
121,199
121,199
There were no non-recurring fair value measurements of financial instruments as at December 31, 2013.
The three levels of the fair value hierarchy are:
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 — Inputs other than quoted prices that are observable for the asset or liability either directly or
indirectly; and
Level 3 — Inputs that are not based on observable market data.
The Company’s policy is to recognize transfers into and transfers out of the fair value hierarchy levels as of
the date of the event or change in circumstances that caused the transfer. During the year ended
December 31, 2013, there were no transfers between Level 1 and Level 2 fair value measurements, and no
transfers into or out of Level 3 fair value measurements.
The Company’s finance department is responsible for performing the valuation of financial instruments,
including Level 3 fair values. The valuation processes and results are reviewed and approved by the
Executive Vice President and Chief Financial Officer at least once every quarter, in line with the Company’s
quarterly reporting dates. Valuation results are discussed with the Audit Committee as part of its quarterly
review of the Company’s consolidated financial statements.
The valuation techniques that are used to measure fair value are as follows:
AVAILABLE FOR SALE INVESTMENTS
The fair value of available for sale investments is determined based on a market approach reflecting the
closing price of each particular security at the balance sheet date. The closing price is a quoted market
price obtained from the exchange for the principal active market for the security.
5% CONVERTIBLE DEBENTURES
The debt component of the 5% Convertible Debentures is valued based on discounted cash flows and the
conversion feature is valued using a Black-Scholes model. The risk free interest rate used in the fair value
computation is the interest rate on US treasury bills with maturity similar to the remaining life of the 5%
Convertible Debentures. The discount rate used is determined by adding our risk premium to the risk free
interest rate. Volatility is calculated 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 Debentures. Investors trading in
these instruments would normally cap the volatility used in the Black-Scholes model. To be consistent, the
84
Company has set a weekly volatility in the calculation at 40%. Inputs used to determine the fair value on
December 31, 2013 and December 31, 2012 were as follows:
For the years ended December 31,
5% CONVERTIBLE DEBENTURES
Risk free interest rate
Risk premium
Volatility
Remaining life (years)
2013
2012
1.3%
21.0%
40.0%
3.4
0.7%
7.9%
40.0%
4.4
The following table presents the changes in the Level 3 investments for the year ended December 31, 2013:
BALANCE, JANUARY 1, 2013
Gain in the period included through earnings
BALANCE, DECEMBER 31, 2013
FAIR VALUE
99,275
51,967
47,308
If the risk premium increases by 5%, the fair value of the 5% Convertible Debentures and the related gain in
the consolidated statement of operations would increase by $6.7 million. In general, an increase in risk
premium would increase the gain on fair value of the 5% Convertible Debentures.
4% CONVERTIBLE DEBENTURES
The fair value of the 4% Convertible Debentures is determined based on a market approach reflecting the
closing price of the debentures at the balance sheet date. The closing price is a quoted market price
obtained from the exchange for the principal active market for the security.
The carrying values of certain financial instruments maturing in the short-term approximate their fair
values. These financial instruments include cash and cash equivalents, accounts receivable, which are
classified as loans and receivables, and accounts payable, the equipment financing credit facility and the
current portion of long term debt which are classified as amortized cost.
Fair value considerations under Level 3 criteria were also used in the Company’s evaluation of impairment
charges (see Note 21 – Impairment charges).
6. Inventories
Inventories include the following components:
85
As of
Stockpiled ore
In-process
Materials and supplies
Finished goods
TOTAL
DECEMBER 31,
2013
DECEMBER 31,
2012
JANUARY 1,
2012
10,389
9,926
47,410
—
27,297
6,693
43,548
5,441
16,648
8,880
48,612
—
67,725
82,979
74,140
The cost of inventories expensed for the years ended December 31, 2013 and 2012 was $353.7 million and
$346.0 million respectively.
A total of $1.6 million and $0.5 million of material and supply inventories were written off in 2013 and 2012
respectively, due to obsolescence and an additional $10.8 million and $0.2 million of net realizable value
adjustments in 2013 and 2012 respectively.
7. Available for Sale Investments
The following table presents changes in available for sale investments:
For the years ended December 31,
BALANCE AT BEGINNING OF PERIOD
Acquisitions
Dispositions
Unrealized (loss)/gain through OCI
Gain recognized in profit and loss
Impairment charges
BALANCE AT END OF PERIOD
2013
2012
FAIR VALUE
SHARES
FAIR VALUE
SHARES
15,034
—
(7,169)
(6,256)
1,338
(2,947)
—
24,521,101
—
(24,521,101)
—
—
—
—
1,416
17,117
(805)
4,278
—
(6,972)
2,000,000
23,676,301
(1,155,200)
—
—
—
15,034
24,521,101
During the year ended December 31, 2013, the Company completed the sale of its 24,521,101 shares of True
Gold Mining Inc. (“TGM”) for net proceeds of $7.2 million. A gain on disposal of $1.3 million was recognized in
the year ended December 31, 2013.
86
8. Property, Plant and Equipment and Mining Properties
The following table shows the breakdown of the cost, accumulated depreciation and net book value of
property plant and equipment and mining properties:
PROPERTY, PLANT
AND EQUIPMENT
MINING
PROPERTIES
TOTAL
COST
AS OF JANUARY 1, 2012
Additions
Change in rehabilitation provision estimate
Disposals and other
AS OF DECEMBER 31, 2012
Additions
Change in rehabilitation provision estimate
Disposals and other
AS OF DECEMBER 31, 2013
ACCUMULATED DEPRECIATION
AS OF JANUARY 1, 2012
Depreciation and amortization
Disposals and other
AS OF DECEMBER 31, 2012
Depreciation and amortization
Disposals and other
Impairment charges (Note 21)
AS OF DECEMBER 31, 2013
CARRYING AMOUNT
AS OF JANUARY 1, 2012
AS OF DECEMBER 31, 2012
AS OF DECEMBER 31, 2013
400,232
40,569
—
(6,914)
532,302
932,534
76,013
5,618
—
116,582
5,618
(6,914)
433,887
613,933
1,047,820
33,870
—
(946)
69,725
28,056
—
103,595
28,056
(946)
466,811
711,714
1,178,525
221,701
26,581
(6,168)
300,227
521,928
63,879
—
90,460
(6,168)
242,114
364,106
606,220
24,124
(840)
117,563
382,961
31,151
—
235,114
55,275
(840)
352,677
630,371
1,013,332
178,531
191,773
232,075
410,606
249,827
441,600
83,850
81,343
165,193
As at December 31, 2013, equipment under finance leases had net carrying amounts of $4.9 million. The
total minimum lease payments are disclosed in Note 13–Debt.
There was no interest capitalized to property, plant and equipment and mining properties in the periods
shown above.
As at December 31, 2013, there was $8.1 million (December 31, 2012–$36.4 million; January 1, 2012–$34.3
million) of construction in progress in property, plant and equipment for which depreciation has not been
taken. As at December 31, 2013, there was $37.1 million (December 31, 2012–$58.5 million; January 1, 2012–$19.4
million) of construction in progress in mining properties for which depreciation has not been taken.
9. Exploration and Evaluation Assets
87
The following table presents changes in exploration and evaluation assets:
COST
AS OF JANUARY 1, 2012
Exploration and evaluation costs
Sale of exploration property
Write-off of unsuccessful exploration costs
AS OF DECEMBER 31, 2012
Exploration expenditures incurred
Write-off of unsuccessful exploration costs
AS OF DECEMBER 31, 2013
10. Income Taxes
EXPLORATION AND
EVALUATION ASSETS
16,730
717
(1,423)
(5,162)
10,862
218
(1,333)
9,747
We recognize deferred tax assets and liabilities based on the difference between the financial reporting and
tax basis of assets and liabilities using the tax rates enacted or substantively enacted when the temporary
differences are expected to reverse.
Our net deferred tax liabilities at December 31, 2013, December 31, 2012 and January 1, 2012 include the
following components:
As of
DEFERRED TAX ASSETS
Non-capital loss carryovers
Reclamation costs
Other
DEFERRED TAX LIABILITIES
Mine property costs
Other
NET DEFERRED TAX LIABILITIES
The movement in the net deferred tax liabilities were as follows:
Balance at the beginning of the year
Recognized in net earnings
BALANCE AT THE END OF THE YEAR
DECEMBER 31,
2013
DECEMBER 31,
2012
JANUARY 1,
2012
227
—
4
227
4
—
53,413
5,963
238
92,547
4
32,937
2013
32,937
(32,937)
—
46,139
3,542
1,094
77,149
1,201
27,575
2012
27,575
5,362
32,937
88
The composition of our unrecognized deferred tax assets by tax jurisdiction is summarized as follows:
As of
DEDUCTIBLE TEMPORARY DIFFERENCES
Canada
U.S.
Ghana
TAX LOSSES
Canada
U.S.
Ghana
TOTAL UNRECOGNIZED DEFERRED TAX ASSETS
Canada
U.S.
Ghana
DECEMBER 31,
2013
DECEMBER 31,
2012
JANUARY 1,
2012
8,060
9,296
8,110
—
73,583
15
24,134
273
13,491
81,643
33,445
21,874
17,321
33,536
38,144
180
194,607
—
(45)
136,005
107,851
212,108
169,541
145,950
25,381
42,832
46,254
180
268,190
15
160,139
$ 228
121,342
293,751
202,986
167,824
The income taxes expense/(recovery) includes the following components:
For the years ended December 31,
CURRENT TAX EXPENSE
Current tax on net earnings
Adjustments in respect to prior years
DEFERRED TAX (RECOVERY)/EXPENSE
Originating and reversal of temporary differences in the current year
Adjustments in respect to prior years
Change in tax rates
2013
2012
20,123
483
20,606
(32,831)
(106)
—
12,393
—
12,393
40,722
—
(35,359)
(32,937)
5,363
INCOME TAX EXPENSE/(RECOVERY)
(12,331)
17,756
A reconciliation of expected income tax on net (loss)/income before minority interest at statutory rates with
the actual income tax expenses/(recovery) is as follows:
89
For the years ended December 31,
Net (loss)/income before tax
Statutory tax rate
TAX (BENEFIT)/EXPENSE AT STATUTORY RATE
Foreign tax rates
Change in tax rates
Non-taxable portion of capital gain
Expired loss carryovers
Other
Ghana investment allowance
Non-deductible expenses
Loss carryover not previously recognized
Non-deductible convertible debenture conversion feature
Ghana property basis not previously recognized
Change in future tax assets due to exchange rates
Change in unrecognized deferred tax assets
INCOME TAX EXPENSE /(RECOVERY)
2013
(310,844)
26.5%
(82,374)
(36,479)
(1,119)
1,110
12,268
1,520
—
1,005
18,574
(13,771)
(3,665)
1,081
89,519
(12,331)
At December 31, 2013, the Company had a tax pool and loss carryovers expiring as follows:
2016
2017
2029
2030
2031
2032
2033
Indefinite
TOTAL
The Ghana tax pool is further limited to taxable income generated at Bogoso.
CANADA
—
—
—
—
31,356
17,527
4,437
24,085
77,405
2012
27,458
25.0%
6,865
(1,584)
(35,359)
—
6,144
799
300
1,681
627
6,096
(3,523)
(445)
36,155
17,756
GHANA
31,234
54,337
—
—
—
—
—
471,234
556,805
90
11. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities include the following components:
As of
Trade and other payables
Accrued liabilities
Payroll related liabilities
TOTAL
DECEMBER 31,
2013
DECEMBER 31,
2012
JANUARY 1,
2012
61,188
41,352
6,443
36,314
60,215
5,231
108,983
101,760
40,708
47,913
3,467
92,088
12. Rehabilitation Provisions
At December 31, 2013, the total undiscounted amount of the estimated future cash needs was estimated to
be $96.1 million. A discount rate of 2% was used to value the rehabilitation provisions. The changes in the
carrying amount of the rehabilitation provisions are as follows:
For the years ended December 31,
BEGINNING BALANCE
Accretion of rehabilitation provisions
Changes in estimates
Cost of reclamation work performed
BALANCE AT THE END OF THE PERIOD
Current portion
Long term portion
TOTAL
2013
2012
63,319
592
28,056
(5,657)
86,310
7,783
78,527
86,310
63,311
593
5,618
(6,203)
63,319
9,721
53,598
63,319
For the year ended December 31, 2013, the Company has recorded a change of estimates of $28.1 million on
its rehabilitation provisions of the mine sites. The impact of the changes of estimates were an increase of
$3.7 million and $24.4 million to the reclamation provisions for Wassa and Bogoso, respectively. The $3.7
million increase in the estimated cash flows of the Wassa rehabilitation provision is primarily due to the
waste from of Wassa Main pit and the Father Brown pit and the increase in the size of the corresponding
waste dumps. This was offset by a decrease in the reclamation provision related to the Benso concession as
reclamation work nears completion. The $24.4 million increase in 2013, is related to the shorter refractory
operations’ mine life and higher than expected backfilling costs. Previously, it was expected that the Bogoso
refractory operation would use the water stored in the Buesichem process water storage facility for its
operations. However, as a result of the shorter mine life this water will require treatment before it is
discharged to the receiving environment resulting in an increase of approximately $15.5 million
(undiscounted) to the rehabilitation provision. In addition, we increased our estimate of the expected
backfilling cost of the Buesichem pit by approximately $10.3 million (undiscounted).
13. Debt
91
The following table displays the components of our current and long term debt instruments:
As of
DECEMBER 31,
2013
DECEMBER 31,
2012
JANUARY 1,
2012
CURRENT DEBT:
Equipment financing credit facility
Ecobank Loan net of loan fees
Finance leases
4% Convertible Debentures at fair value
5,218
4,752
885
—
6,968
—
—
—
TOTAL CURRENT DEBT
10,855
6,968
7,036
—
224
121,199
128,459
LONG TERM DEBT:
Equipment financing credit facility
Ecobank Loan net of loan fees
Finance leases
5% Convertible Debentures at fair value (see Note 5)
TOTAL LONG TERM DEBT
8,150
24,101
3,828
47,308
83,387
11,232
10,759
—
—
99,275
110,507
—
—
—
10,759
EQUIPMENT FINANCING CREDIT FACILITY
Bogoso and Wassa 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
financing for new and used mining equipment. 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 US Federal Reserve Bank 2-year or 5-year swap rate or London
Interbank Offered Rate (“LIBOR”) plus 2.38%. 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.
ECOBANK LOAN
During the year, the Company’s subsidiary Wassa closed a $50 million secured Medium Term Loan Facility
with Ecobank Ghana Limited (“Ecobank Loan”) and had subsequently drawn down $30 million of the
facility. The loan has a term of 60 months from the date of initial drawing and is secured by, among other
things, Wassa’s existing plant, machinery and equipment. The interest rate is three month LIBOR plus 9%
per annum, payable monthly in arrears. Principal amounts are payable quarterly in arrears. Interest and
principal payments commence six months following the first drawdown.
FINANCE LEASES
During the year ended December 31, 2013, the Company financed mining equipment at Wassa and Bogoso
through equipment financing leases. These finance leases are payable in equal instalments over a period of
60 months and have implicit interest rates of 6.9%. Each outstanding finance lease is secured by the title of
the specific equipment purchased with the lease until the lease has been repaid in full.
92
CONVERTIBLE DEBENTURES
The 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.
The 5% Convertible Debentures were issued on May 31, 2012, in the amount of $77.5 million, in exchange for
$74.5 million of our 4% convertible senior unsecured debentures (the “4% Convertible Debentures”) in
privately negotiated transactions 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, 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, convertible 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 repayment 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 direct senior unsecured indebtedness of the Company, ranking equally
and ratably with all other senior unsecured indebtedness, and senior to all subordinated indebtedness of
the Company. None of our subsidiaries has guaranteed the 5% Convertible Debentures, and the 5%
Convertible Debentures do not limit the amount of debt that the Company or our subsidiaries may incur.
Schedule of payments on outstanding debt as of December 31, 2013:
93
2014
2015
2016
2017
2018
MATURITY
EQUIPMENT FINANCING LOANS
Principal
Interest
ECOBANK LOAN
Principal
Interest
FINANCE LEASES
Principal
Interest
5% CONVERTIBLE DEBENTURES
Principal
Interest
TOTAL
5,218
731
5,000
2,812
885
303
—
3,875
4,317
417
6,667
2,090
948
239
—
3,875
2,761
180
6,667
1,454
1,016
172
—
3,875
931
34
6,667
834
1,088
100
77,490
1,937
141
2013–2018
4
4,999
232
776
24
—
—
2018
2018
June 1, 2017
18,824
18,553
16,125
89,081
6,176
14. 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 and Wassa mining operations. To meet
this requirement the Company has environmental bonds totaling $9.6 million and $8.1 million for Wassa
and Bogoso respectively with a commercial bank in Ghana. These bonds are guaranteed by Golden Star
Resources Ltd. The Company also held cash deposits of $1.0 million and $1.0 million for each operation,
which are recorded as restricted cash on the consolidated balance sheets.
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 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
94
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. As at December
31, 2013, 388,228 ounces had been recovered and produced.
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 position on the property and develop a gold mining operation at Obuom, we would receive from AMI
a 2% net smelter return royalty on 54% of the property’s gold production.
OPERATING LEASES AND CAPITAL COMMITMENTS
The Company is a party to certain contracts relating to operating leases, office rent and capital
commitments. Future minimum payments under these agreements as at December 31, 2013 are as follows:
Less than 1 year
Between 1 and 5 years
More than 5 years
TOTAL
3,335
109
—
3,444
15. Share-Based Compensation
Non-cash employee compensation expenses 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,
SHARE-BASED COMPENSATION
2013
3,013
2012
6,542
SHARE 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 stipulated in a stock option agreement between Golden Star and the optionee. Under the Plan,
we may grant options to employees, consultants and directors of the Company or its subsidiaries for up to
25,000,000 shares, of which 4,427,607 are available for grant as of December 31, 2013. 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.
95
The fair value of option grants is estimated at the grant dates using the Black-Scholes option-pricing
model. Fair values of options granted during the years ended December 31, 2013 and 2012 were based on
the weighted average assumptions noted in the following table:
For the years ended December 31,
Expected volatility
Risk-free interest rate
Expected lives
Dividend yield
2013
2012
59.77%
0.44%
4.47 years
0%
63.82%
0.46%
5.12 years
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 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.
The weighted average fair value per option granted during the year ended December 31, 2013 was $0.76
(year ended December 31, 2012–$1.00). As at December 31, 2013, there was $0.8 million of share-based
compensation expense (December 31, 2012–$1.1 million) relating to the Company’s share options to be
recorded in future periods.
96
A summary of option activity under the Plan during the periods ended December 31, 2013 and December 31,
2012 are as follows:
OUTSTANDING AS OF JANUARY 1, 2012
Granted
Exercised
Forfeited
Expired
OPTIONS
(‘000)
8,539
5,164
(203)
(1,162)
(1)
OUTSTANDING AS OF DECEMBER 31, 2012
12,337
Granted
Exercised
Forfeited
Expired
OUTSTANDING AS OF DECEMBER 31, 2013
Exercisable as of December 31, 2012
Exercisable as of December 31, 2013
2,814
(90)
(1,799)
(414)
12,848
7,920
9,046
WEIGHTED
AVERAGE
EXERCISE
PRICE (CDN$)
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
TERM (YEARS)
3.18
1.94
1.45
2.74
1.16
2.74
1.66
1.70
2.90
4.11
2.45
3.04
2.70
7.0
6.4
3.5
6.0
—
6.2
5.4
5.2
4.9
—
5.5
5.7
5.4
The number of options outstanding by strike price as of December 31, 2013 is shown in the following table:
RANGE OF EXERCISE
PRICE (CDN$)
0.50 to 1.50
1.51 to 2.50
2.51 to 3.50
3.51 to 7.00
OPTIONS OUTSTANDING
OPTIONS EXERCISABLE
Number
outstanding at
December 31,
2012
Weighted-
average
remaining
contractual life
Weighted-
average
exercise price
Number
outstanding at
December 31,
2013
(‘000)
717
7,257
2,754
2,120
12,848
(years)
(Cdn$)
6.5
5.6
5.9
4.0
5.5
1.13
1.86
2.99
4.20
2.45
(‘000)
429
4,017
2,480
2,120
9,046
Weighted
average
exercise price
(Cdn$)
1.17
1.88
3.00
4.20
2.70
STOCK BONUS PLAN
In December 1992, the Company 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. There was no issuance in 2013.
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 shareholders. The 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 compensation 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.
97
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 compensation, 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.
For the year ended December 31, 2013, DSUs that were granted vested immediately and a compensation
expense of $0.7 million was recognized for these grants (year ended December 31, 2012–$0.6 million). As of
December 31, 2013, there was no unrecognized compensation expense related to DSUs granted under the
Company’s DSU Plan.
A summary of DSU activity during the years ended December 31, 2013 and 2012:
For the years ended December 31,
Number of DSUs, beginning of period
Grants
Exercises
NUMBER OF DSUs , END OF PERIOD
2013
388,059
993,534
2012
22,147
394,922
—
(29,010)
1,381,593
388,059
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
subsequently forfeited leaving 1,079,407 outstanding at December 31, 2012.
As of December 31, 2013, there was approximately $1.9 million (December 31, 2012–$0.8 million) of total
unrecognized compensation cost related to unvested SARs. For the year ended December 31, 2013, the
Company recognized a recovery of $0.1 million of compensation expense related to these cash based
awards (year ended December 31, 2012–$0.3 million expensed).
A summary of the SARs activity during the years ended December 31, 2013 and 2012:
For the years ended December 31,
Number of SARs, beginning of period (‘000)
Grants
Forfeited
NUMBER OF SARS, END OF PERIOD (‘000)
2013
1,079
2,090
(142)
3,027
2012
—
1,543
(464)
1,079
98
16. (Loss) / Earnings Per Common Share
The following table provides reconciliation between basic and diluted earnings per common share:
For the years ended December 31,
Net (loss)/income attributable to Golden Star shareholders
Weighted average number of shares (millions)
DILUTIVE SECURITIES:
Options
Deferred stock units
Convertible Debentures
2013
(265,892)
259.1
—
—
—
2012
7,186
258.9
0.1
0.2
—
WEIGHTED AVERAGE NUMBER OF DILUTED SHARES (MILLIONS)
259.1
259.2
(LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO GOLDEN STAR SHAREHOLDERS:
BASIC AND DILUTED
(1.03)
0.03
17. Cost Of Sales Excluding Depreciation And Amortization
Cost of sales excluding depreciation and amortization include the following components:
For the years ended December 31,
Contractors
Electricity
Fuel
Raw materials and consumables
Salaries and benefits
Transportation costs
General and administrative
Other
Betterment stripping costs capitalized
Mine operating expenses
Operating costs from/(to) metal inventory
Royalties
2013
102,951
46,748
31,028
108,285
53,209
4,078
9,357
11,829
(28,511)
338,974
14,752
23,414
2012
113,290
49,198
32,994
112,835
50,728
3,753
10,034
14,129
(29,898)
357,063
(11,080)
27,560
377,140
373,543
18. Finance Expense, Net
Finance income and expense include the following components:
99
For the years ended December 31,
Interest income
Interest expense
Net foreign exchange losses
Accretion of rehabilitation provision
19. Other Expense/(Income)
Other income and expense includes the following components:
For the years ended December 31,
Gain on sale of assets
Loss on extinguishment of debt
Other income
2013
(36)
5,633
3,652
592
9,841
2013
(1,314)
—
(849)
2012
(78)
10,164
2,446
593
13,125
2012
(24,992)
568
(390)
(2,163)
(24,814)
20. Related Party Transactions
There were no other material related party transactions for the years ended December 31, 2013 and 2012
other than the item disclosed below:
KEY MANAGEMENT PERSONNEL
Key management personnel is defined as members of the Board of Directors and certain senior officers.
Compensation of key management personnel are as follows:
For the years ended December 31,
Salaries, wages, and other benefits
Severances and bonus
Share-based compensation
2013
2,020
2,125
1,606
5,751
2012
2,392
1,804
2,704
6,900
100
21. Impairment Charges
The following table shows the breakdown of the impairment charges for the years ended December 31, 2013
and 2012, respectively:
For the years ended December 31,
Bogoso
Wassa
Property plant and equipment, mining properties and intangible assets
Available for sale investments
2013
2012
245,760
106,917
352,677
2,947
355,624
—
—
—
6,972
6,972
PROPERTY, PLANT AND EQUIPMENT AND MINE PROPERTY
As at December 31, 2013, the carrying value of the net assets of the Company exceeded its market
capitalization, which is an indicator of a potential impairment. In addition, gold prices declined significantly
during the year and have subsequently remained at these lower levels. As a result, the Company assessed
the recoverable amounts of both the Bogoso and Wassa CGUs.
The recoverable amounts of the CGUs are determined based on the expected future after-tax cash flows
based on the latest feasibility studies and on the life-of-mine after-tax cash flow projections. The estimated
cash flows incorporates management’s best estimates of future metal prices, production based on current
estimates of recoverable reserves and resources, exploration potential, future operating costs, future
capital expenditures, and long-term foreign exchange rates. The gold prices used in determining the FVLCD
were based on consensus analyst pricing. Projected cash flows are discounted using a weighted average
cost of capital for each CGU which includes estimates for risk-free interest rates, market return on equity,
share volatility, debt-to-equity ratios and risks specific to the CGUs. Management’s estimate of the FVLCD is
classified as Level 3 in the fair value hierarchy.
The FVLCD were assessed using the gold price ranges and discount rates as presented in the table below:
As of
Gold prices per ounce
Discount rates
DECEMBER 31,
2013
$1,250 to $1,300
8.25% to 9.25%
JUNE 30,
2013
$1,270 to $1,525
8.00% to 9.25%
The impairment assessment indicated that the carrying values of the Wassa and Bogoso CGU exceeded
their respective FVLCD, as a result the Company recorded impairment charges totaling $352.7 million
($329.3 million, net of tax). Also see Note 8–Property, plant and equipment and mining properties.
Bogoso
Impairment charges recorded during 2013 totaled $245.8 million, primarily due to the overall decline in gold
prices during the year which shortened Bogoso’s mine life, resulting in Bogoso’s carrying value exceeding
the FVLCD. The 2013 impairment charges at Bogoso comprised of $98.3 million related to property, plant,
equipment, $146.3 million related to mine property and $1.2 million related to intangible assets.
Wassa
The 2013 impairment charge of $106.9 million comprised of $19.4 million related to property plant and
equipment, and $87.5 million related to mine property. This was due to Wassa’s carrying value exceeding
the discounted cash flows projected by its re-optimized life of mine plan.
101
Sensitivities
The projected cash flows are significantly affected by changes in assumptions including gold prices, future
capital expenditures, production cost estimates and discount rates.
For the impairment charge recorded in the year ended December 31, 2013, a 1% change in discount rate
used would change the impairment charge of Bogoso and Wassa by $19 million and $2 million respectively.
A 5% change to the gold price assumption used would change the impairment charge of Bogoso and
Wassa by $98 million and $25 million respectively.
AVAILABLE FOR SALE INVESTMENTS
The impairment charge of $2.9 million and $7.0 million for the year ended December 31, 2013 and 2012
respectively, relate to the significant drop in the quoted market price of the TGM shares.
102
22. Principal Subsidiaries
The consolidated financial statements include the accounts of the Company and all of its subsidiaries at
December 31, 2013. The principal operating subsidiaries are Wassa and Bogoso, for which the Company has
90% ownership interest in each.
Set out below is summarized financial information for each subsidiary that has non-controlling interests
that are material to the group. The amounts disclosed for each subsidiary are based on those included in
the consolidated financial statements before inter-company eliminations.
SUMMARIZED STATEMENT OF FINANCIAL POSITION
For the years ended December 31,
WASSA
2013
2012
2013
Non-controlling interest percentage
Current assets
Current liabilities
Non-current assets
Non-current liabilities
Net assets
10 %
100,711
73,147
27,564
72,123
49,080
23,043
50,607
BOGOSO
2012
10 %
82,791
748,863
10 %
65,102
84,559
10 %
58,594
850,879
(19,457)
(792,285)
(666,072)
168,935
66,843
102,092
82,635
96,716
76,240
20,476
251,038
54,142
196,896
(771,809)
(469,176)
ACCUMULATED NON-CONTROLLING INTERESTS (12,912)
(15,271)
57,918
27,655
SUMMARIZED INCOME STATEMENT
For the years ended December 31,
WASSA
2013
2012
2013
Revenue
Net loss
263,072
(23,592)
263,921
(27,804)
204,724
(302,633)
BOGOSO
2012
286,619
(35,992)
COMPREHENSIVE LOSS
(23,592)
(27,804)
(302,633)
(35,992)
SUMMARIZED CASH FLOWS
For the years ended December 31,
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
2013
18,146
(33,570)
29,272
WASSA
2012
50,329
(49,299)
(15,385)
2013
7,251
(69,079)
48,778
BOGOSO
2012
39,965
(67,357)
25,652
23. Operations by Segment and Geographic Area
103
The Company has reportable segments as identified by the individual mining operations. Segments are
operations reviewed by the executive management. Each segment is identified based on quantitative and
qualitative factors.
For the years ended December 31,
2013
Revenue
Mine operating expenses
Operating costs from metal inventory
Royalties
Cost of sales excluding depreciation
and amortization
Depreciation and amortization
Mine operating margin
Impairment charges
Income tax recovery
Net loss attributable to
non-controlling interest
Net (loss)/income attributable
to Golden Star
Capital expenditures
2012
Revenue
Mine operating expenses
Operating costs to metal inventory
Royalties
Cost of sales excluding depreciation
and amortization
Depreciation and amortization
Mine operating margin
Impairment charges
Income tax expense
Net income/(loss) attributable
to non-controlling interest
Net income/(loss) attributable
to Golden Star
Capital expenditures
December 31, 2013
Total assets
December 31, 2012
Total assets
Wassa
263,072
145,484
4,411
13,171
163,066
40,883
59,123
106,917
(12,331)
Africa
Bogoso
204,724
193,490
10,341
10,243
214,074
19,083
(28,433)
245,760
—
(2,359)
(30,263)
Other
S. America
Corporate
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
467,796
338,974
14,752
23,414
377,140
59,966
30,690
2,947
355,624
—
—
(12,331)
(32,622)
(247,443)
(4,630)
2,655
27,815
(265,892)
69,079
218
(44,289)
33,570
263,921
149,171
(7,687)
13,220
154,704
67,945
41,272
—
17,756
286,619
207,892
(3,393)
14,340
218,839
21,408
46,372
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
102,867
—
—
—
—
—
—
—
550,540
357,063
(11,080)
27,560
373,543
89,353
87,644
6,972
6,972
—
—
17,756
2,516
2,639
(123)
16,327
49,299
Wassa
33,399
67,357
(7,950)
640
(542)
(34,048)
7,186
—
3
117,299
Africa
Bogoso
Other
S. America
Corporate
Total
138,653
155,709
753
245,996
349,616
4,289
—
—
30,628
325,743
56,394
656,295
104
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 sites 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 revenue.
24. Supplemental Cash Flow Information
During the year ended December 31, 2013, $23.5 million was paid for income taxes (year ended December 31,
2012 – $0.2 million). The Company paid $6.3 million for interest during the year ended December 31, 2013
(year ended December 31, 2012 – $8.8 million).
Changes in working capital for the years ended December 31, 2013 and 2012 are as follows:
For the years ended December 31,
Decrease/(increase) in accounts receivable
Decrease/(increase) in inventories
(Increase)/decrease in prepaids and other
Increase in accounts payable and accrued liabilities
(Decrease)/increase in current tax liability
TOTAL CHANGES IN WORKING CAPITAL
25. Financial Risk Management
2013
3,695
11,238
3,867
13,006
(2,888)
28,918
2012
(869)
(6,017)
(4,459)
5,016
12,393
6,064
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. The Ecobank Loan bears interest based on the three month LIBOR plus 9%. Based on our current
$30.0 million outstanding balance, a hundred basis points change in the three month LIBOR rate will result
in $0.3 million per annum change in interest expense. We have not entered into any agreements to hedge
against unfavorable changes in interest rates, but may in the future actively manage our exposure to
interest rate risk.
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 fluctuate 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 accommodate 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 2013 and 2012, we had no
currency related derivatives. At December 31, 2013, and December 31, 2012, we held $5.1 million and $5.9
million, respectively, of foreign currency.
105
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 gold production in the year, a $10 per ounce change in gold
price would result in approximately a $3.3 million and $2.5 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 hedges. During 2013, we did not hold any gold price hedges 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 obligations. 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, mineral reserves and
resources and the price of gold.
The following table shows our contractual obligations as at December 31, 2013:
< 1 YEAR
1 TO 3 YEARS
3 TO 5 YEARS
> 5 YEARS
TOTAL
Debt
Interest on long term debt
Purchase obligations
Rehabilitation provisions
Total
11,103
7,721
3,059
8,369
30,252
22,376
12,302
—
22,160
56,838
92,092
3,165
—
24,584
119,841
—
—
—
40,992
40,992
125,571
23,188
3,059
96,105
247,923
106
As at December 31, 2013, the Company has current assets of $148.3 million compared to current liabilities of
$137.1 million. We expect to meet our short-term financing needs by the $20 million unused credit from the
Ecobank loan, operating cash flow and future debt or equity issuances as required. These alternatives
should provide us with the flexibility to fund any potential cash flow shortfall. While we may also pursue
additional financing, there can be no assurance that additional financing will be available at all or on terms
acceptable to the Company.
CREDIT RISK
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation. Our credit risk is primarily associated with liquid financial assets and
derivatives. 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 2013, 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.
26. Capital Risk Management
The Company manages its capital to ensure that it will be able to continue as a going concern while
maximizing the return to stakeholders through the optimization of the debt and equity balance.
In the management of capital, the Company includes the components of equity, long-term debt, net of
cash and cash equivalents, and investments.
As of
Equity
Long-term debt
Cash and cash equivalents
Available for sale investment
DECEMBER 31,
2013
DECEMBER 31,
2012
JANUARY 1,
2012
26,702
83,387
328,176
110,507
110,089
438,683
65,551
—
78,884
15,034
307,673
10,759
318,432
103,644
1,416
175,640
532,601
423,492
The Company manages the capital structure and makes adjustments to it in light of changes in economic
conditions and the risk characteristics of the underlying assets. In doing so, the Company may issue new
shares, restructure or issue new debt and acquire or dispose of assets.
In order to facilitate the management of its capital requirements, the Company prepares annual budgets
that are updated as necessary depending on various factors, including successful capital deployment and
general industry conditions. The Company’s treasury policy specifies that cash is to be held in banks with a
rating of A or higher by Moody’s or Standard & Poor’s. In addition, the Company’s investment policy allows
investment of surplus funds in permitted investments consisting of US treasury bills, notes and bonds,
government sponsored agency debt obligations, corporate debt or municipal securities with credit rating
of at least AA. All investments must have a maximum term to maturity of one year.
27. First-Time Adoption of IFRS
107
The Company’s annual consolidated financial statements for the year-ended December 31, 2013 are its first
annual financial statements prepared in accordance with IFRS. IFRS 1, First Time Adoption of International
Financial Reporting Standards (“IFRS 1”), requires that comparative financial information be provided. As a
result, the first date at which the Company has applied IFRS was January 1, 2012 (the “Transition Date”). IFRS
1 also requires first-time adopters to retrospectively apply all effective IFRS standards as of the reporting
date, which for the Company is December 31, 2013. However, it also provides for certain optional
exemptions and certain mandatory exceptions for first time IFRS adoption. Prior to transition to IFRS, the
Company prepared its consolidated financial statements in accordance with US GAAP.
In preparing the Company’s opening IFRS consolidated balance sheet as of January 1, 2012, the Company
has adjusted amounts reported previously in its consolidated financial statements prepared in accordance
with US GAAP.
OPTIONAL EXEMPTIONS
The IFRS 1 applicable exemptions and exceptions applied in the conversion from US GAAP to IFRS are as
follows:
Business combinations
The Company elected not to retrospectively apply IFRS 3 Business Combinations to any business
combinations that may have occurred prior to its Transition Date and such business combinations have not
been restated.
Deemed costs
As permitted by IFRS 1, in its opening balance sheet under IFRS as of January 1, 2012, the Company applied
the fair value as deemed cost exemption to mineral reserves, as well as certain buildings and major
machinery and equipment associated with the Bogoso mine site.
Share-based compensation
The Company elected not to retrospectively apply IFRS 2 Share Based Payments (“IFRS 2”) to equity
instruments that were granted and had vested before January 1, 2009. As a result of applying this
exemption, the Company will apply the provisions of IFRS 2 only to all outstanding equity instruments that
are unvested as at January 1, 2009.
Compound financial instruments
The Company elected not to retrospectively separate the liability and equity components of compound
instruments for which the liability component is no longer outstanding at the date of transition to IFRS.
Borrowing costs
The Company elected to apply the transitional provisions of IAS 23 Borrowing Costs which permits
prospective capitalization of borrowing costs on qualifying assets from the date of transition to IFRS.
Cumulative translation differences
The Company elected, under IFRS 1, to reset to zero historical cumulative translation differences for all
foreign operations at the date of transition to IFRS. Future gains or losses on subsequent disposal of any
foreign operations will exclude translation differences arising prior to the date of transition to IFRS.
108
MANDATORY EXCEPTIONS
Derecognition of Financial Assets and Liabilities
The Company has applied the derecognition requirements in IAS 39 Financial Instruments: Recognition and
Measurement (“IAS 39”) prospectively from the date of transition to IFRS. As a result any non-derivative
financial assets or non-derivative financial liabilities derecognized prior to the date of transition to IFRS in
accordance with US GAAP have not been reviewed for compliance with IAS 39.
Estimates
The estimates previously made by the Company under US GAAP were not revised for the application of IFRS
except where necessary to reflect any difference in accounting policy or where there was objective evidence
that those estimates were in error. As a result the Company has not used hindsight to revise its estimates.
Certain Aspects of Accounting for Non-Controlling Interests
The Company has applied the requirements of IAS 27 Consolidated and Separate Financial Statements
prospectively from the date of transition to IFRS for total comprehensive income is attributed to the owners
of the parent and to the non-controlling interests even if this results in the non-controlling interests having a
deficit balance, accounting for changes in the parent’s ownership interest in a subsidiary that do not result
in a loss of control and accounting for a loss of control over a subsidiary.
RECONCILIATION FROM US GAAP TO IFRS
IFRS 1 requires an entity to reconcile equity, comprehensive income and cash flows for prior periods. The
changes made to the balance sheet and statements of comprehensive income as shown below have
resulted in reclassifications of various amounts on the statements of cash flows.
Reconciliation of Consolidated Balance Sheet
as at January 1, 2012
109
US GAAP AS OF
JANUARY 1, 2012
NOTES
ADJUSTMENTS
IFRS AS OF
JANUARY 1, 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable
Inventories
Available for sale investments
Prepaids and other
Total Current Assets
RESTRICTED CASH
PROPERTY, PLANT AND EQUIPMENT
MINING PROPERTIES
EXPLORATION AND EVALUATION ASSETS
INTANGIBLE ASSETS
OTHER ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities
Current portion of rehabilitation provisions
Current tax liability
Current portion of long-term debt
Total Current Liabilities
LONG TERM DEBT
REHABILITATION PROVISIONS
DEFERRED TAX LIABILITY
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
103,644
10,077
74,297
1,416
8,522
197,956
1,273
252,131
270,157
—
5,266
895
727,678
92,088
8,996
197
128,459
229,740
10,759
24,884
23,993
289,376
SHARE CAPITAL
First preferred shares, without par value, unlimited
shares authorized. No shares issued and outstanding
Common shares, without par value,
unlimited shares authorized
CONTRIBUTED SURPLUS
ACCUMULATED OTHER
COMPREHENSIVE INCOME
—
693,899
19,815
1,978
DEFICIT
Total Golden Star Equity
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY
(276,112)
439,580
(1,278)
438,302
727,678
(a)
(j)
(b)(c)(j)
(d)
(j)
(c)
(f)
(g)
(h)
—
—
(157)
—
—
(157)
—
(73,600)
(38,082)
16,730
(2,507)
—
(97,616)
—
—
—
—
—
—
29,431
3,582
33,013
—
—
719
—
(117,726)
(117,007)
(13,622)
(130,629)
103,644
10,077
74,140
1,416
8,522
197,799
1,273
178,531
232,075
16,730
2,759
895
630,062
92,088
8,996
197
128,459
229,740
10,759
54,315
27,575
322,389
—
693,899
20,534
1,978
(393,838)
322,573
(14,900)
307,673
(97,616)
630,062
110
Reconciliation of Consolidated Balance Sheet
as at December 31, 2012
US GAAP AS OF
DECEMBER 31, 2012
NOTES
ADJUSTMENTS
IFRS AS OF
DECEMBER 1, 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable
Inventories
Available for sale investments
Prepaids and other
Total Current Assets
RESTRICTED CASH
PROPERTY, PLANT AND EQUIPMENT
MINING PROPERTIES
EXPLORATION AND EVALUATION ASSETS
INTANGIBLE ASSETS
DEFERRED TAX ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities
Current portion of rehabilitation provisions
Current tax liability
Current portion of long term debt
Total Current Liabilities
LONG TERM DEBT
REHABILITATION PROVISIONS
DEFERRED TAX LIABILITY
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
78,884
11,896
90,212
15,034
11,266
207,292
2,028
260,986
252,176
—
3,159
235
725,876
101,760
9,943
12,393
6,968
131,064
110,507
24,170
28,650
294,391
SHARE CAPITAL
First preferred shares, without par value, unlimited
shares authorized, No shares issued and outstanding
Common shares, without par value, unlimited shares
authorized, No shares issued and outstanding
CONTRIBUTED SURPLUS
ACCUMULATED OTHER COMPREHENSIVE INCOME
—
694,652
25,154
(716)
DEFICIT
Total Golden Star Equity
NON-CONTROLLING INTEREST
TOTAL EQUITY
TOTAL LIABILITIES
AND SHAREHOLDERS’ EQUITY
(285,602)
433,488
(2,003)
431,485
725,876
(a)
(j)
(b)(c)(j)
(d)
(j)
(c)
(c)
(f)
(g)
(e)
(h)
—
—
(7,233)
—
—
(7,233)
—
(69,213)
(2,349)
10,862
(1,648)
—
(69,581)
—
(222)
—
—
(222)
—
29,428
4,522
33,728
—
—
1,150
6,972
(101,050)
(92,928)
(10,381)
(103,309)
78,884
11,896
82,979
15,034
11,266
200,059
2,028
191,773
249,827
10,862
1,511
235
656,295
101,760
9,721
12,393
6,968
130,842
110,507
53,598
33,172
328,119
—
694,652
26,304
6,256
(386,652)
340,560
(12,384)
328,176
(69,581)
656,295
Reconciliation of the Consolidated Statements of Operations and
Comprehensive Income/(Loss) for the Year Ended December 31, 2012
111
US GAAP AS OF
DECEMBER 31, 2012
NOTES
ADJUSTMENTS
IFRS AS OF
DECEMBER 1, 2012
REVENUE
Cost of sales excluding
depreciation and amortization
Depreciation and amortization
Mine operating margin
OTHER EXPENSES/(INCOME)
Exploration expense
General and administrative
Property holding costs
Finance expense, net
Other income
Loss on fair value of convertible debentures
Impairment charges
Derivative mark-to-market losses
Income/(loss) before income tax
Income tax expense
NET INCOME/(LOSS)
Net income/(loss) attributable
to non-controlling interest
Net income/(loss) attributable
to Golden Star shareholders
NET INCOME/(LOSS) ATTRIBUTABLE
TO GOLDEN STAR SHAREHOLDERS
550,540
398,781
98,837
52,922
3,505
23,674
9,862
13,100
(31,967)
27,985
—
162
6,601
16,816
(10,215)
(a)(b)(c)(i)
(j)
(d)
(g)
—
(i)
(d)
—
(e)
—
(f)
(725)
(h)
(9,490)
Basic and diluted
Weighted average shares outstanding (millions)
(0.04)
258.9
OTHER COMPREHENSIVE INCOME/(LOSS)
Net income/(loss)
Unrealized gain/(loss) on investments net of taxes
Transferred to net income/(loss), net of taxes
Comprehensive income/(loss)
Comprehensive income/(loss) attributable
to non-controlling interest
(10,215)
(2,694)
—
(12,909)
(725)
COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE
TO GOLDEN STAR SHAREHOLDERS
(12,184)
(e)
—
(25,238)
(9,484)
34,722
(717)
432
9,862
25
7,153
27,985
6,972
162
20,857
940
19,917
3,241
16,676
0.03
258.9
19,917
—
6,972
26,889
3,241
550,540
373,543
89,353
87,644
2,788
24,106
13,125
(24,814)
6,972
27,458
17,756
9,702
2,516
7,186
9,702
(2,694)
6,972
13,980
2,516
23,648
11,464
112
Reconciliation of the Consolidated Statements of Cash Flows
for the Year Ended December 31, 2012
US GAAP AS OF
DECEMBER 31, 2012
NOTES
ADJUSTMENTS
IFRS AS OF
DECEMBER 1, 2012
Cash Flows from Operations
Cash Flows from Investing
Cash Flows from Financing
CHANGE IN CASH
94,290
(69,054)
(49,996)
(24,760)
(b)(d)
(b)(d)
28,804
(28,804)
—
—
123,094
(97,858)
(49,996)
(24,760)
NOTES TO IFRS FINANCIAL STATEMENTS:
(a) In-Process inventory–Costs that qualify as betterment stripping are capitalized as Mining Properties
under IFRS, but were included within inventory and expensed for US GAAP. As a result, the amount of
waste mining costs expensed and included within in-process metal inventory is higher under US GAAP
than under IFRS.
(b) Betterment Stripping–Under IFRS, expenditures for stripping costs (i.e., the costs of removing
overburden and waste material to access mineral deposits) are capitalized and subsequently amortized
on a units-of-production basis over the mineral reserves that directly benefit from the specific waste
stripping activity if it is probable that future economic benefits will flow to the Company, the component
of the mineral body for which access is improved and the costs of the improved access can be reliably
measured. US GAAP has no provision for capitalization of betterment stripping costs. Thus in periods
where betterment stripping occurs, operating costs are higher under US GAAP since all waste costs are
expensed. The amounts of capitalized betterment stripping are shown in the table immediately below
and are included in the Mining Properties totals shown in the IFRS consolidated balance sheets as well
as in the cash flow from investing section of the consolidated statement of cash flows.
Costs of betterment stripping capitalized under IFRS:
Balance as of January 1, 2012
Additions in the year ended December 31, 2012
BALANCE AS OF DECEMBER 31, 2012
WASSA BOGOSO
TOTAL
—
—
—
28,087
28,087
—
28,087
28,087
It is expected that Bogoso’s betterment stripping costs are to be amortized between 2013 and 2015.
(c) The Company’s forecasted amounts of future environmental, reclamation and closure costs are the
same under US GAAP and IFRS. However, differences exist in determining the discount rate to be applied
to the future costs. Under US GAAP, estimated liabilities for future reclamation and closure costs of each
period’s new environmental disturbances are discounted at the prevailing discount rates in effect during
the period, based on the Company’s credit-adjusted risk free rate, of the new disturbance. Once the
discount rate is applied, they are not revised in subsequent periods. This in effect creates layers of
liability for new disturbances incurred in each time period. Under IFRS, at the end of each period, all
estimated future cash costs for existing disturbances are discounted using the current risk free rate at
the end of each period.
113
(d) Under US GAAP, mineral property acquisition costs are capitalized. Pre-acquisition costs and
subsequent exploration, mine development and direct general and administrative costs are expensed
as incurred until such time as a feasibility study shows that the mineral property is economically viable.
Following completion of a viable feasibility study all subsequent exploration, development and direct
general and administrative costs are capitalized. For IFRS purposes, when it is determined that a mining
property has the potential to be economical, subsequent exploration expenditures are capitalized. In
each subsequent period, under IFRS, the exploration, engineering, development, financial and market
information for each exploration project is reviewed by management to determine if such capitalized
exploration and evaluation assets are impaired. If found impaired, the exploration asset’s cost basis is
reduced in accordance with IFRS provisions. Amounts written off in the current year under IFRS, which
have previously been expensed under US GAAP, result in an adjustment when reconciling net income for
the year.
EXPLORATION &
EVALUATION ASSETS
AS OF JANUARY 1,
2012
CAPITALIZED TRANSFER TO
EXPLORATION
EXPENDITURES
MINING IMPAIRMENT
CHARGES
PROPERTIES
OTHER
EXPLORATION &
EVALUATION
ASSETS AS OF
DECEMBER 31,
2012
10,619
3,942
1,018
1,151
16,730
105
341
—
271
717
—
—
—
—
—
(879)
(4,283)
—
—
—
—
9,845
—
1,018
— (1,423)
(1)
(5,162) (1,423)
10,862
AFRICAN PROJECTS
Ghana
Sonfon–Sierra Leone
Other Africa
SOUTH AMERICAN PROJECTS
Saramacca–Suriname
TOTAL
(e)
Impairments of equity instruments — Under US GAAP impairment is recognized if the decline in equity
instruments is considered other than temporary. Under IFRS an impairment loss is recognized if there is
a significant or prolonged decline in the fair value of an investment in an equity instrument below its
cost. During the second quarter of 2012 there was a significant decline in the fair value of the the equity
instruments held in TGM. An impairment loss of $7.0 million was recognized in net income for the year
ended December 31, 2012.
(f)
Income tax — The application of US GAAP and IFRS tax accounting is the same for the Company. The
differences in the income tax liability and expenses arise from the changes in reported pre-tax income
or loss under the different GAAPs as well as the differing treatment of various assets and liabilities.
(g) Shareholders’ equity — Differences in contributed surplus reflect differences in stock option expense
recognition. Under US GAAP, the expense for a grant is recognized evenly over the vesting period of the
grant. Under IFRS we expense each tranche of a grant evenly over that tranche’s vesting period. The
impact to share-based compensation for the year ended December 31, 2012 was an increase of $0.4
million.
(h) Non-controlling interest — The application of non-controlling interest accounting is the same under US
GAAP and IFRS. The difference in the recognized equity account and related expense arise from the
changes in reported income or loss under the different GAAPs.
114
(i) Accretion of rehabilitation provisions — Under US GAAP the accretion of the rehabilitation provisions
was recorded as part of cost of sales. Under IFRS the accretion is included in finance expense. This
reclassification has resulted in an increase in finance expense and a reduction in cost of sales of $0.03
million in the year ended December 31, 2012.
(j) As permitted by IFRS 1, in its opening balance sheet under IFRS as of January 1, 2012, the Company
applied the fair value as deemed cost exemption to mineral reserves, as well as certain major
machinery and equipment related to the Bogoso mine site. The fair value report prepared on these
items as of January 1, 2012 determined a fair value of $215.9 million which resulted in a decrease of $148.5
million as compared to the carrying amount of such assets under US GAAP, which was recognized
against retained earnings in the opening balance sheet under IFRS.
115
CAUTIONARY STATEMENT
SAFE HARBOR: Some statements contained in this presentation are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws.
Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and
uncertainties that could cause actual results to differ materially. Such statements include comments
regarding: our production expectations for 2014 and 2015 including our production guidance;
sustainability of cost cutting initiatives; grade, recovery rates and timelines for production from our
tailings retreatment facility and the impact of such production on the Company’s performance; the timing
for the completion of push backs; trends on cash and all-in sustaining costs; predictions regarding cash
operating costs per ounce; improved access to ore in 2014; duration of mining at Father Brown pit;
duration of mining, strip ratios and cash flow resulting from push backs; ability to generate cash; moving
equipment from Bogoso to Wassa; the life of mine at Bogoso and Prestea; pumping capacity at the
Bogoso tailings facility; drilling; timing for completion of a preliminary economic assessment and
commencement of a feasibility study at Wassa underground; timing to commercial production at Wassa
underground; plans to pursue a low cost production strategy focused on non-refractory ore sources;
updated mineral reserve and mineral resource estimates at Wassa; capital expenditures;
recommissioning Prestea underground; increases in operating margins; operational efficiencies;
development at Mampon; submitting environmental impact statements for Dumasi and Prestea South;
improvements to cash flows resulting from operations at Wassa underground; and our 2014 and 2015
outlook and objectives for the remainder of 2014 and 2015 and our medium term objectives. Factors that
could cause actual results to differ materially include timing of and unexpected events at the Bogoso CIL
and refractory processing plants and/or at the Wassa processing plant; variations in ore grade, tonnes
mined, crushed or milled; variations in relative amounts of refractory, non-refractory and transition ores;
delay or failure to receive Board or government approvals and permits; the availability and cost of
electrical power; timing and availability of external financing on acceptable terms; technical, permitting,
mining or processing issues; changes in U.S. and Canadian securities markets; and fluctuations in gold
price and input costs and general economic conditions. There can be no assurance that future
developments affecting the Company will be those anticipated by management. Please refer to the
discussion of these and other factors in our annual information form for the year ended December 31, 2013,
which is filed on SEDAR at www.sedar.com. The forecasts contained in this presentation constitute
management’s current estimates, as of the date of this presentation, with respect to the matters covered
thereby. We expect that these estimates will change as new information is received and that actual results
will vary from these estimates, possibly by material amounts. While we may elect to update these
estimates at any time, we do not undertake to update any estimate at any particular time or in response
to any particular event. Investors and others should not assume that any forecasts in this presentation
represent management’s estimate as of any date other than the date of this presentation.
CORPORATE AND REGISTERED OFFICE
Golden Star Resources Ltd.
150 King Street West
Sun Life Financial Tower, Suite 1200
Toronto, Ontario
Canada M5H 1J9
T +1 416 583 3800
REGIONAL OFFICE
Plot No. 16 House No. A
Nortey Ababio Street
Roman Ridge, Accra
Ghana
P.O. Box 16075, KIA
Accra, Ghana
gsr.com
STOCK EXCHANGE LISTINGS
Toronto Stock Exchange Symbol: GSC
NYSE MKT Stock Exchange Symbol: GSS
Ghana Stock Exchange Symbol: GSR
GHANA COMMERCIAL BANK SHARE REGISTRY
Ghana Commercial Bank
Thorpe Road/High Street
P.O. Box 134
Accra, Ghana
T +233 21 66 8712/ 8656
AUDITORS
PricewaterhouseCoopers LLP
REGISTRAR AND TRANSFER AGENT
Questions regarding the change of stock
ownership, consolidation of accounts,
lost certificates, change of address and
other such matters should be directed to:
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
www.canstockta.com/AnswerLineRegistration
inquiries@canstockta.com
TF +1 800 387 0825 (Canada and U.S. only)
T +1 416 682 3860