GOLDEN STAR RESOURCES LTD., 10-K filed on 3/5/2013
Annual Report
Document And Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Mar. 1, 2013
Jun. 30, 2012
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
GOLDEN STAR RESOURCES LTD 
 
 
Entity Central Index Key
0000903571 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 31, 2012 
 
 
Document Fiscal Year Focus
2012 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
259,105,970 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 190.6 
Consolidated Statements Of Operations (USD $)
In Thousands, except Share data in Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
REVENUE
 
 
 
Gold revenues
$ 550,540 
$ 471,007 
$ 432,693 
COST OF SALES [Abstract]
 
 
 
Mining operating expenses
368,404 
323,547 
284,944 
Royalties
27,561 
21,295 
13,059 
Mining related depreciation and amortization
98,837 
71,466 
100,649 
Accretion of asset retirement obligations
2,816 
3,845 
2,803 
Total cost of sales
497,618 
420,153 
401,455 
Mine operating margin
52,922 
50,854 
31,238 
Exploration expense
3,505 
5,137 
5,398 
General and administrative expense
23,674 
25,378 
17,065 
Derivative mark-to-market (gain) loss
162 
19,276 
850 
Loss / (gain) on fair value of convertible debentures
27,985 
(26,154)
3,208 
Property holding costs
9,862 
8,674 
5,299 
Foreign exchange loss
2,446 
2,749 
872 
Interest expense
10,163 
8,891 
9,207 
Interest and other income
(467)
(229)
(362)
Gain on sale of assets
(31,577)
(1,350)
(1,171)
Loss on extinguishment of debt
568 
Income/(loss) before income tax
6,601 
8,482 
(9,128)
Income tax expense
(16,816)
(10,984)
(5,477)
Net loss
(10,215)
(2,502)
(14,605)
Net income/(loss) attributable to noncontrolling interest
725 
427 
3,376 
Net loss attributable to Golden Star shareholders
$ (9,490)
$ (2,075)
$ (11,229)
Net (loss)/income per share attributable to Golden Star shareholders
 
 
 
Basic (US$ per share)
$ (0.04)
$ (0.01)
$ (0.04)
Diluted (US$ per share)
$ (0.04)
$ (0.01)
$ (0.04)
Weighted average shares outstanding (millions) (shares)
258.9 
258.6 
258.0 
Weighted average shares outstanding-diluted (millions) (shares)
258.9 
258.6 
258.0 
Consolidated Statement Of Comprehensive Income/Loss (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
OTHER COMPREHENSIVE LOSS [Abstract]
 
 
 
Net loss
$ (10,215)
$ (2,502)
$ (14,605)
Unrealized gain/(loss) on investments net of deferred taxes
(2,694)
19 
619 
Comprehensive loss
(12,909)
(2,483)
(13,986)
Comprehensive income/(loss) attributable to noncontrolling interest
(725)
(427)
(3,376)
Comprehensive loss attributable to Golden Star shareholders
$ (12,184)
$ (2,056)
$ (10,610)
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2012
Dec. 31, 2011
CURRENT ASSETS [Abstract]
 
 
Cash and cash equivalents
$ 78,884 
$ 103,644 
Accounts receivable
11,896 
10,077 
Inventories
90,212 
74,297 
Deferred tax assets
235 
Deposits
8,600 
6,474 
Available for sale investments
15,034 
1,416 
Prepaids and other
2,666 
2,048 
Total Current Assets
207,527 
197,956 
RESTRICTED CASH
2,028 
1,273 
PROPERTY, PLANT AND EQUIPMENT
260,986 
252,131 
MINING PROPERTIES
252,176 
270,157 
INTANGIBLE ASSETS
3,159 
5,266 
OTHER ASSETS
895 
Total Assets
725,876 
727,678 
CURRENT LIABILITIES [Abstract]
 
 
Accounts payable and accrued liabilities
101,760 
92,088 
Asset retirement obligations
9,943 
8,996 
Current tax liability
12,393 
197 
Current debt
6,968 
128,459 
Total Current Liabilities
131,064 
229,740 
LONG TERM DEBT
110,507 
10,759 
ASSET RETIREMENT OBLIGATIONS
24,170 
24,884 
DEFERRED TAX LIABILITY
28,650 
23,993 
Total Liabilities
294,391 
289,376 
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
 
 
First preferred shares, without par value, unlimited shares authorized. No shares issued and outstanding
Common shares, without par value, unlimited shares authorized. Shares issued and outstanding: 259,015,970 at December 31, 2012; 258,669,486 at December 31, 2011
694,652 
693,899 
CONTRIBUTED SURPLUS
25,154 
19,815 
ACCUMULATED OTHER COMPREHENSIVE INCOME
(716)
1,978 
DEFICIT
(285,602)
(276,112)
Total Golden Star Equity
433,488 
439,580 
NONCONTROLLING INTEREST
(2,003)
(1,278)
Total Equity
431,485 
438,302 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 725,876 
$ 727,678 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2012
Dec. 31, 2011
Statement of Financial Position [Abstract]
 
 
First preferred shares, no par value
   
   
First preferred shares, shares issued
First preferred shares, shares outstanding
Common shares, no par value
   
   
Common shares, shares issued
259,015,970 
258,669,486 
Common shares, shares outstanding
259,015,970 
258,669,486 
Statement of Changes in Shareholders' Equity (USD $)
In Thousands, unless otherwise specified
Total
Common Stock
Contributed Surplus
Accumulated Other Comprehensive Income (Loss)
Retained Earnings
Noncontrolling Interest
Warrant
Contributed Surplus
Employee Stock Option
Contributed Surplus
Balance at Dec. 31, 2009
$ 445,880 
$ 690,056 
 
$ 1,340 
$ (262,808)
$ 2,525 
$ 5,138 
$ 9,629 
Bakance (shares) at Dec. 31, 2009
 
257,362,560 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Shares issued under options
2,355 
3,537 
 
 
 
 
 
(1,182)
Shares issued under options (shares)
 
1,148,675 
 
 
 
 
 
 
Options granted net of forfeitures
2,975 
 
 
 
 
 
 
2,975 
Unrealized gain on available for sale securities
619 
 
 
619 
 
 
 
 
Net Income (Loss) Attributable to Parent
(11,229)
 
 
 
 
 
 
 
Net income/(loss)
(14,605)
 
 
 
(11,229)
(3,376)
 
 
Issue costs
(106)
(106)
 
 
 
 
 
 
Balance at Dec. 31, 2010
437,118 
693,487 
   
1,959 
(274,037)
(851)
5,138 
11,422 
Balance (shares) at Dec. 31, 2010
 
258,511,235 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Shares issued under options
282 
412 
 
 
 
 
 
(130)
Shares issued under options (shares)
 
158,251 
 
 
 
 
 
 
Options granted net of forfeitures
3,336 
 
 
 
 
 
 
3,336 
Common shares issued
49 
 
 
 
 
 
 
49 
Unrealized gain on available for sale securities
19 
 
 
19 
 
 
 
 
Net Income (Loss) Attributable to Parent
(2,075)
 
 
 
 
 
 
 
Net income/(loss)
(2,502)
 
 
 
(2,075)
(427)
 
 
Balance at Dec. 31, 2011
438,302 
693,899 
   
1,978 
(276,112)
(1,278)
5,138 
14,677 
Balance (shares) at Dec. 31, 2011
 
258,669,486 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
 
 
Shares issued under options
(929)
446 
 
 
 
 
 
(1,375)
Shares issued under options (shares)
 
181,475 
 
 
 
 
 
 
Bonus shares issued
307 
307 
 
Bonus shares issued (shares)
 
165,009 
 
 
 
 
 
 
Options granted net of forfeitures
6,111 
 
 
 
 
 
 
6,111 
Common shares issued
603 
 
 
 
 
 
 
603 
Unrealized gain on available for sale securities
(2,694)
 
 
(2,694)
 
 
 
 
Net Income (Loss) Attributable to Parent
(9,490)
 
 
 
(9,490)
 
 
 
Net income/(loss)
(10,215)
 
 
 
(10,215)
(725)
 
 
Balance at Dec. 31, 2012
$ 431,485 
$ 694,652 
 
$ (716)
$ (285,602)
$ (2,003)
$ 5,138 
$ 20,016 
Balance (shares) at Dec. 31, 2012
 
259,015,970 
 
 
 
 
 
 
Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
OPERATING ACTIVITIES:
 
 
 
Net loss
$ (10,215)
$ (2,502)
$ (14,605)
Reconciliation of net loss to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization
98,926 
71,466 
98,775 
Amortization of loan acquisition cost
895 
1,563 
1,228 
Loss on extinguishment of debt
568 
Gain on sale of assets
(31,577)
(1,350)
(1,172)
Non-cash employee compensation
6,111 
3,385 
2,975 
Deferred income tax expense
16,816 
8,315 
3,374 
Fair value of derivatives loss
162 
(177)
(215)
Fair value loss/(gain) on convertible debt
27,985 
(26,154)
3,208 
Accretion of asset retirement obligations
2,816 
3,845 
2,803 
Reclamation expenditures
(6,203)
(26,895)
(9,705)
Changes in working capital
(11,994)
(7,853)
9,950 
Net cash provided by operating activities
94,290 
23,643 
96,616 
INVESTING ACTIVITIES:
 
 
 
Expenditures on mining properties
(43,382)
(50,027)
(34,342)
Expenditures on property, plant and equipment
(45,113)
(51,353)
(30,849)
Change in accounts payable and deposits on mine equipment and material
4,559 
1,907 
901 
Proceeds from sale of investments
15,616 
Other
(734)
1,916 
2,740 
Net cash used in investing activities
(69,054)
(97,557)
(61,550)
FINANCING ACTIVITIES:
 
 
 
Principal payments on debt
(58,806)
(10,397)
(38,049)
Proceeds from debt agreements and equipment financing
8,510 
9,875 
25,674 
Issuance of share capital, net of issuance costs
300 
282 
2,248 
Other
(220)
(1,010)
Net cash used in financing activities
(49,996)
(460)
(11,137)
Increase/(decrease) in cash and cash equivalents
(24,760)
(74,374)
23,929 
Cash and cash equivalents, beginning of period
103,644 
178,018 
154,089 
Cash and cash equivalents, end of period
$ 78,884 
$ 103,644 
$ 178,018 
Nature Of Operations
Nature Of Operations
NATURE OF OPERATIONS
Through our 90% owned subsidiary Golden Star (Bogoso/Prestea) Ltd (“GSBPL”) we own and operate the Bogoso/Prestea gold mining and processing operation (“Bogoso/Prestea”) located near the town of Bogoso, Ghana. Through our 90% owned subsidiary Golden Star (Wassa) Ltd (“GSWL”) we also own and operate the Wassa gold mine (“Wassa”), located approximately 35 kilometers east of Bogoso/Prestea. Wassa mines ore from pits near the Wassa plant and also processes ore mined at our Hwini-Butre (“HBB”) property located south of Wassa. We hold interests in several gold exploration projects in Ghana and other parts of West Africa, and in South America we hold and manage exploration properties in Brazil.
Basis Of Presentation
Basis of Presentation
BASIS OF PRESENTATION
Golden Star Resources Ltd (“Golden Star” or “Company”) is a Canadian federally-incorporated, international gold mining and exploration company headquartered in Toronto Ontario, Canada. All financial information presented in these consolidated financial statements is reported in accordance with U.S. GAAP.
These consolidated financial statements include the accounts of the Company and its subsidiaries, whether owned directly or indirectly. All inter-company balances and transactions have been eliminated. Subsidiaries are defined as entities in which the Company holds a controlling interest, is the general partner or where it is subject to the majority of expected losses or gains.
Our consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and discharge of all liabilities in the normal course of business. With the exception of a few exploration offices, the functional currency, including the Ghanaian operations, is the U.S. dollar.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
Preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that can affect reported amounts of assets, liabilities, deferred tax liabilities, and expenses. The more significant areas requiring the use of estimates include asset impairments, valuation of convertible debentures, stock based compensation, depreciation and amortization of assets, and site reclamation and closure accruals. Accounting for these areas is subject to estimates and assumptions regarding, among other things, ore reserves, mining rates, gold recoveries, future gold prices, future operating costs, asset usage rates, future mining activities and future costs of reclamation activities. Management bases its estimates on historical experience and on other assumptions we believe to be reasonable under the circumstances. However, actual results may differ from our estimates.
 CASH AND CASH EQUIVALENTS
Cash includes cash deposits in any currency residing in checking accounts, money market funds and sweep accounts. Cash equivalents consist of 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 cost, which typically approximates market value.
INVENTORIES
Inventory classifications include “stockpiled ore,” “in-process inventory,” “finished goods inventory” and “materials and supplies.” All of our inventories, except materials and supplies, are recorded at the lower of weighted average cost or market. The stated value of all production inventories include direct production costs and attributable overhead and depreciation incurred to bring the materials to their current point in the processing cycle. General and administrative costs for corporate offices are not included in any inventories.
Stockpiled ore represents coarse ore that has been extracted from the mine and is stored for future processing. Stockpiled ore is measured by estimating the number of tonnes (via truck counts or by physical surveys) added to, or removed from the stockpile, the number of contained ounces (based on assay data) and estimated gold recovery percentage. Stockpiled ore value is based on the costs incurred (including depreciation and amortization) in bringing the ore to the stockpile. Costs are added to the stockpiled ore based on current mining costs per tonne and are removed at the average cost per tonne of ore in the stockpile.
In-process inventory represents material that is currently being treated in the processing plants to extract the contained gold and to transform it into a saleable product. The amount of gold in the in-process inventory is 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. The bars are valued at the lower of cost or net realizable value. Included in the costs are the direct costs of the mining and processing operations as well as direct mine-site overheads, amortization and depreciation.
Material and supply inventories consist mostly of equipment parts and consumables required in the mining and ore processing activities.
All inventories are valued at the lower of average cost or net realizable value.
PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT COSTS
The initial acquisition costs of exploration and mining properties are capitalized. Subsequent exploration and development costs are expensed as incurred until such time as a feasibility study has been completed which establishes, in compliance with SEC Industry Standard Guide 7, that proven and probable reserves exist on the property. After proven and probable reserves have been established, subsequent exploration and development costs are capitalized until such time as a property is placed in-service. Following a property's in-service date, accumulated capitalized acquisition, exploration and development costs are reclassified as Mining Property assets and are subject to amortization on a units-of-production basis when metal production begins.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment assets, including machinery, processing equipment, mining equipment, mine site facilities, buildings, vehicles and expenditures that extend the life of such assets, are recorded at cost including acquisition and installation costs. The costs of self-constructed assets include direct construction costs, direct overhead and allocated interest during the construction phase. Indirect overhead costs are not 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. 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.
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.
IMPAIRMENT OF LONG-LIVED ASSETS
We review and evaluate our long-lived assets for impairment at least annually and also when events or changes in circumstances indicate the related carrying amounts may not be recoverable. An asset impairment is considered to exist if an asset's recoverable value is less than its carrying value as recorded on our Consolidated Balance Sheet. In most cases, an asset's recoverable value is assumed to be equal to the sum of the asset's expected future cash flows on an undiscounted basis. If the sum of the undiscounted future cash flows does not exceed the asset's carrying value, an impairment loss is measured and recorded based on discounted estimated future cash flows from the asset. Future cash flows are based on estimated quantities of gold and other recoverable metals, expected price of gold (considering current and historical prices, price trends and related factors), production levels and cash costs of production, capital and reclamation costs, all based on detailed engineering life-of-mine plans.
In estimating future cash flows, assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. All assets at a particular operation are considered together for purposes of estimating future cash flows. The carrying amounts of purchase costs of exploration and development projects not yet in service are also evaluated periodically for impairment.
Numerous factors including, but not limited to, unexpected grade changes, gold recovery problems, shortages of equipment and consumables, equipment failures, and collapse of pit walls could impact our ability to achieve forecasted production schedules from proven and probable reserves. Additionally, 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.
Material changes to any of these factors or assumptions discussed above could result in future asset impairments.
ASSET RETIREMENT OBLIGATIONS
Environmental reclamation and closure liabilities are recognized at the time of environmental disturbance, in amounts equal to the discounted value of expected future reclamation and closure costs. The discounted cost of future reclamation and closure activities is capitalized and amortized over the life of the property. 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 is reduced with cash expenditures for environmental remediation incurred.
PROPERTY HOLDING COST
Property holding costs are costs incurred to retain and maintain properties which have been written off but ownership is retained. Such cost are expensed in the period incurred.
FOREIGN CURRENCIES AND FOREIGN CURRENCY TRANSLATION
Our functional currency is the U.S. dollar.
The carrying value of monetary assets and liabilities are translated at the rate of exchange prevailing at the balance sheet date. Non-monetary assets and liabilities are translated at the rates of exchange prevailing when the assets were acquired or the liabilities assumed. Revenue and expense items are translated at the average rate of exchange during the period. Translation gains or losses are included in net earnings for the period.
Canadian currency in these financial statements is denoted as “Cdn$,” European Common Market currency is denoted as “Euro” or “€,” and Ghanaian currency is denoted as “Ghana Cedi” or “Ghana Cedis.”
INCOME TAXES
Income taxes comprise the provision for (or recovery of) taxes actually paid or payable and for deferred taxes. Deferred income taxes are computed using the asset and liability method whereby deferred income tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred income tax assets and liabilities are computed using enacted income tax rates in effect when the temporary differences are expected to reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in the period of enactment. The provision for or the recovery of deferred taxes is based on the changes in deferred tax assets and liabilities during the period. In estimating deferred tax assets, a valuation allowance is provided to reduce the deferred tax assets to amounts that are more likely than not to be realized.
We deal with uncertainties and judgments in the application of complex tax regulations in the multiple jurisdictions where our properties are located. The amount of taxes paid are dependent upon many factors, including negotiations with taxing authorities in the various jurisdictions and resolution of disputes arising from our international tax audits. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in our various tax jurisdictions based on our assessment of additional taxes due. We adjust these reserves in light of changing facts and circumstances, however, due to the complexity of some of these 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 tax benefit from an uncertain tax position may only be recognized if it is more-likely-than-not that the position will be sustained upon examination by the tax authority based on the technical merits of the position. The tax benefit of an uncertain tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount that is greater than 50% likely to be realized upon settlement with the tax authority. To the extent a full benefit is not expected to be realized, an income tax liability is established. Any change in judgment related to the expected resolution of uncertain tax positions are recognized in the year of such a change. Accrued interest and penalties related to unrecognized tax benefits are recorded in income tax expense in the current year.
MINING TAX
Ghana imposed a levy on mining companies during 2009, 2010 and 2011, equal to 5% of pre-tax income as reported in our financial accounting records. This tax was considered a current mine operating tax and was expensed as incurred.
NET INCOME/(LOSS) PER SHARE
Basic income/(loss) per share of common stock is calculated by dividing income available to Golden Star's common shareholders by the weighted average number of common shares outstanding during the period. In periods with earnings, the calculation of diluted net income per common share uses the treasury stock method to compute the dilutive effects of stock options and warrants and the if-converted method to calculate the dilutive effect of the convertible debentures. In periods of loss, diluted net loss per share is equal to basic income per share.
REVENUE RECOGNITION
Revenue from the sale of metal is recognized when there is persuasive evidence that an arrangement exists, the price is determinable, the metal has been delivered, title and risk of ownership has passed to the buyer and collection is reasonably assured. All of our gold is transported to a South African gold refiner who locates a buyer and arranges for sale of our gold on the same day that the gold is shipped from the mine site. The sales price is based on the London P.M. fix on the day of shipment. Title and risk of ownership pass to the buyer on the day doré is shipped from the mine sites.
STOCK BASED COMPENSATION
Under the Company's Third Amended and Restated 1997 Stock Option Plan, common share options may be granted to executives, employees, consultants and non-employee directors. Compensation expense for such grants is recorded in the Consolidated Statements of Operations as a component of general and administrative expense, with a corresponding increase recorded in the Contributed Surplus account in the Consolidated Balance Sheets. The expense is based on the fair values of the option at the time of grant and is recognized over the vesting periods of the respective options. Consideration paid to the company on exercise of options is credited to share capital.
Under the Company's Deferred Share Unit ("DSU") plan, DSUs may be granted to executive officers and directors. Compensation expense for such grants is recorded in the Consolidated Statements of Operations as a component of general and administrative expense, with a corresponding increase recorded in the Contributed Surplus account in the Consolidated Balance Sheets. The expense is based on the fair values at the time of grant and is recognized over the vesting periods of the respective DSU. Upon exercise the Company's compensation committee may, at its discretion, issue cash, shares of a combination thereof.
The Company's Share Appreciation Rights ("SAR") plan allows SARs to be issued to executives and directors. SARs vests after a period of three years. These awards are settled in cash equal to the Company's stock price less the strike price on the grant date. Since these awards are settled in cash, the Company marks-to-market the associated expense for each award at the end of each reporting period. The Company accounts for these as liability awards and marks-to-market the fair value of the award until final settlement. 
LEASES
Leases that transfer substantially all of the benefits and risks of ownership to the Company are recorded as capital leases and classified as property, plant and 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
Investments
Equity security investments are accounted for as available for sale securities, changes in the fair value of available for sale investments are charged or credited to other comprehensive income until the instrument is realized.

The Company periodically evaluates whether declines in fair values of its investments below the Company's carrying value are other-than-temporary in accordance with guidance for the meaning of other-than-temporary impairment and its application to certain investments. The Company also monitors its investments for events or changes in circumstances that have occurred that may have a significant adverse effect on the fair value of the investment and evaluates qualitative and quantitative factors regarding the severity and duration of the unrealized loss and the Company's ability to hold the investment until a forecasted recovery occurs to determine if the decline in value of an investment is other-than-temporary. Declines in fair value below the Company's carrying value deemed to be other-than-temporary are charged to the statement of operations.

Convertible debentures
The Convertible debentures are recorded at fair value determined based on unadjusted quoted prices in active markets when available, otherwise by valuing the conversion feature and the debt separately. The conversion feature is valued using a Black-Scholes model and the value of the debt is determined based on the present value of the future cash flows. Changes in fair value are recorded in the Consolidated Statement of Operations. Upfront costs and fees related to the convertible debentures were recognized in the statement of operations as incurred and not deferred.

Derivatives
At various times we utilize foreign exchange and commodity price derivatives to manage exposure to fluctuations in foreign currency exchange rates and gold prices, respectively. We do not employ derivative 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 recognized in the statement of operations at the end of each period in an account titled “Derivative mark-to-market gain/(loss)”.
OTHER COMPREHENSIVE INCOME/(LOSS) (“OCI”)
Components of comprehensive income/(loss) consist of unrealized gains/(losses) on available-for-sale investments and net income. Unrealized gains or losses on securities are net of any reclassification adjustments for realized gains or losses included in net income.
RECENTLY ISSUED STANDARDS
Presentation of Comprehensive Income: In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220)-Presentation of Comprehensive Income (ASU 2011-05), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. ASU 2011-05 is effective for us in the first quarter of fiscal 2012 and should be applied retrospectively. Our presentation of comprehensive income already complies with this new guidance.
Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements: In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (Topic 820)-Fair Value Measurement (ASU 2011-04), to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. ASU 2011-04 is effective for us in 2012 and should be applied prospectively. The fair value measurement principles used before the adoption of this standard is consistent with the standard and the disclosures made in the financial statements comply with this new guidance.
Financial Instruments
Financial Instruments
FINANCIAL INSTRUMENTS
The following tables illustrate the classification of the Company's financial instruments within the fair value hierarchy as of December 31, 2012. The three levels of the fair value hierarchy are:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 - Inputs that are not based on observable market data.

 
Financial assets measured at fair value as at
 
December 31, 2012
 
Level 1    
 
Level 2    
 
Level 3    
 
Total    
Available for sale investments
$
15,034

 
$

 
$

 
$
15,034

 
$
15,034

 
$

 
$

 
$
15,034


Available for sale investments in Level 1 are based on the quoted market price for the equity investment. It is possible that some of these investments could be sold in large blocks at a future date via a negotiated agreement and such agreements may include a discount from the quoted price.
 
Financial liabilities measured at fair value as at
 
December 31, 2012
 
Level 1
 
Level 2
 
Level 3
 
Total
5% Convertible Debentures

 

 
99,604

 
99,604

 
$

 
$

 
$
99,604

 
$
99,604



The 5% convertible senior unsecured debentures ("5% Convertible Debentures") are recorded at fair value. The debt component of the 5% Convertible Debentures are valued based on discounted cash flows and the equity component are valued using a Black-Scholes model. Inputs used to determine these values were: discount rate of 8.6%, risk free interest rate of 0.73%, volatility of 40% and a remaining life of 4.42 years. The 5% Convertible Debentures $99.6 million fair value includes $0.3 million of accrued interest as of December 31, 2012. See Note 13, Debt for further discussion on the 4% and 5% Convertible Debentures.
The risk free interest rate used in the fair value computation is the interest rate on US treasury rate with a maturity that is similar to the remaining life of the convertible debenture. The discount rate used is determined by adding our risk premium (7.87%) on the date of the issuance of the convertible debenture to the risk free interest rate. A 10% increase in the risk premium results in a 2% decrease in the fair value of the convertible debenture. Volatility is 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 debenture. Investors trading in these instruments would normally cap the volatility used in the Black-Scholes model, to be consistent we cap the weekly volatility used at 40%. If the volatility assumption is decreased by 10% the fair value of the convertible debenture will decrease by 2%.
Fair value measurements using significant unobservable inputs
 
Level 3
Balance at December 31, 2011
 
$

5% Convertible Debentures transferred into Level 3
 
74,003

Unrealized loss included in loss on fair value of Convertible Debentures in Statement of Operations
 
25,601

Balance at December 31, 2012
 
$
99,604


It is our policy to transfer fair value measurements if there is an indication that quoted market prices will not be available to value the convertible debentures. As a result the 5% Convertible Debentures was transferred from Level 1 to Level 3 on July 1, 2012 because of a lack of observable market data, resulting from a decrease in market activity of these 5% Convertible Debentures.
During the year ended December 31, 2012, an unrealized loss of $28.0 million (2011: gain of $26.2 million) was recorded in the Statement of Operations relating to the change in fair value of the 5% Convertible Debentures.
 
Financial assets measured at fair value as at
 
December 31, 2011
 
Level 1    
 
Level 2    
 
Level 3    
 
Total    
Available for sale investments
$
1,416

 
$

 
$

 
$
1,416

Warrants

 
555

 

 
555

 
$
1,416

 
$
555

 
$

 
$
1,971


 
Financial liabilities measured at fair value as at
 
December 31, 2011
 
Level 1
 
Level 2
 
Level 3
 
Total
4% Convertible Debentures
$
121,625

 
$

 
$

 
$
121,625

 
$
121,625

 
$

 
$

 
$
121,625

Derivative Losses
Derivative Gains And Losses
DERIVATIVE GAINS AND LOSSES
The derivative mark-to-market losses/(gains) recorded in the Statement of Operations are comprised of the following amounts: 
 
For the years ended December 31,
 
2012
 
2011
 
2010
Riverstone Resources, Inc. - warrants
$
162

 
$
(177
)
 
$
(216
)
Gold price derivatives

 
19,453

 
1,066

Derivative loss
$
162

 
$
19,276

 
$
850


 
For the years ended December 31,
 
2012
 
2011
 
2010
Realized loss
$
162

 
$
19,453

 
$
1,066

Unrealized gain

 
(177
)
 
(216
)
Derivative loss
$
162

 
$
19,276

 
$
850


TRUE GOLD MINING INC. - WARRANTS
In 2008, we received 2.0 million warrants from True Gold Mining Inc. ("TGM"), formerly Riverstone Resources Inc., as partial payment for the right to earn an ownership interest in our exploration projects in Burkina Faso. These warrants were exercisable through January 2012 at Cdn$0.45, and in January 2012, the TGM warrants were exercised, see Note 8.
GOLD PRICE DERIVATIVES
In January 2011, we entered into a series of put and call contracts covering 76,800 ounces of future gold production between February and December 2011. The contracts were spread evenly in each week over this period and structured as cashless collars with a floor of $1,200 per ounce and a cap of $1,457 per ounce. In early February 2011, we entered into a second set of put and call contracts covering 75,200 ounces of future gold production between February and December 2011. The contracts were spread evenly in each week during this period and structured as cashless collars with a floor of $1,200 per ounce and a cap of $1,503 per ounce. We did not enter into any additional put and call contracts during 2012, as a result there were no outstanding gold price contracts as of December 31, 2012.
Inventories
Inventories
INVENTORIES
Our inventories at December 31, 2012 and December 31, 2011 include the following components:
 
As at
December 31,
 
2012
 
2011
Stockpiled ore
$
33,130

 
$
16,773

In-process
7,571

 
8,912

Materials and supplies
43,548

 
48,612

Finished goods
5,963

 

       Total
$
90,212

 
$
74,297


Included in the value of the stockpile ore and in-process inventories above were approximately 45,000 and 36,000 recoverable ounces of gold at December 31, 2012, and December 31, 2011, respectively. Stockpile inventories are short-term surge piles expected to be processed within the next 12 months. Finished goods at December 31, 2012 consisted of 5,070 ounces of unsold gold doré. A total of $0.5 million and $1.4 million of material and supply inventories were written off in 2012 and 2011 respectively, due to obsolescence and counts and an additional $0.1 million and $1.7 million of net realizable value adjustments in 2012 and 2011 respectively. The net realizable value adjustments in 2012 are related to in-process inventory in the non-refractory plant.
Accounts Receivable (Notes)
Accounts Receivables
ACCOUNTS RECEIVABLE  
Accounts receivable at December 31, 2012 and December 31, 2011 includes the following components:
 
 
As at
December 31,
 
 
2012
 
2011
Value added tax refunds
 
$
9,766

 
$
8,051

Other
 
2,130

 
2,026

Total
 
$
11,896

 
$
10,077

Available For Sale Investments
Available for Sale Investments
AVAILABLE FOR SALE INVESTMENTS
The following table presents changes in available for sale investments for 2012 and 2011:
 
As at December 31, 2012
 
As at December 31, 2011
 
TGM
 
TGM
 
Fair Value
 
Shares
 
Fair Value
 
Shares
Balance at beginning of year
$
1,416

 
2,000,000

 
$
928

 
1,300,000

Acquisitions
17,117

 
23,676,301

 
469

 
700,000

Dispositions
(805
)
 
(1,155,200
)
 

 

OCI - unrealized (loss)/gain
(2,694
)
 


 
19

 


Balance at end of year
$
15,034

 
24,521,101

 
$
1,416

 
2,000,000



During the first quarter of 2012, we acquired True Gold Mining Inc. ("TGM") shares. The acquisition was accomplished through two transactions. The first was an exercise of the two million warrants on January 9, 2012, at an exercise price of Cdn$0.45 for cash consideration of Cdn$0.9 million, the fair value of the shares acquired was $1.3 million. The second transaction was the sale of the Company's Burkina Faso subsidiary to TGM on February 2, 2012. The sale generated $6.6 million of cash plus 21.7 million TGM shares. We recognized the shares at their fair value of $15.8 million on February 2, 2012, when the sale was finalized.
Available for sale investments are recorded at fair value on the balance sheet date, changes in the fair value of available for sale investments are charged or credited to other comprehensive income. Available for sale investments consists solely of our investment in TGM. It is possible that some of these shares could be sold in large blocks at a future date via a negotiated agreement and such agreements may include a discount from the quoted price.
The quoted market price of TGM's common share has decreased since the February 2, 2012 acquisition, such that for the period ended December 31, 2012, we recognized through Comprehensive Income a loss of $2.7 million related to our share holdings. TGM's share price has experienced a high degree of volatility over the last twelve months, and is sensitive to fluctuations in the gold price. If the gold prices continues to follow its long term upward trend TGM shares could recover from the unrealized losses.
Property, Plant And Equipment
Property, Plant And Equipment
PROPERTY, PLANT AND EQUIPMENT
The following table shows the categories of property, plant and equipment at December 31, 2012 and December 31, 2011:
 
As at December 31, 2012
 
As at December 31, 2011
 
Cost
 
Accumulated
Depreciation
 
Net Book Value
 
Cost
 
Accumulated
Depreciation
 
Net Book Value
Bogoso/Prestea
$
189,247

 
$
(112,838
)
 
$
76,409

 
$
179,216

 
$
(109,519
)
 
$
69,697

Bogoso refractory plant
196,066

 
(67,230
)
 
128,836

 
186,607

 
(58,873
)
 
127,734

Wassa/HBB
120,766

 
(65,463
)
 
55,303

 
106,631

 
(52,430
)
 
54,201

Corporate & other
1,363

 
(925
)
 
438

 
1,378

 
(879
)
 
499

Total
$
507,442

 
$
(246,456
)
 
$
260,986

 
$
473,832

 
$
(221,701
)
 
$
252,131



There was no interest capitalized in new additions to property, plant and equipment in the periods shown above.
Mining Properties
Mining Properties
MINING PROPERTIES
The following table provides a breakdown of mining properties at December 31, 2012 and December 31, 2011:
 
As at December 31, 2012
 
As at December 31, 2011
 
Cost
 
Accumulated
Amortization
 
Net Book Value
 
Cost
 
Accumulated
Amortization
 
Net Book Value
Bogoso/Prestea
$
128,713

 
$
(64,972
)
 
$
63,741

 
$
119,700

 
$
(60,186
)
 
$
59,514

Bogoso refractory properties
70,865

 
(40,662
)
 
30,203

 
70,090

 
(34,839
)
 
35,251

Mampon
16,095

 

 
16,095

 
16,095

 

 
16,095

Wassa/HBB
352,241

 
(234,847
)
 
117,394

 
314,801

 
(180,486
)
 
134,315

Other
32,182

 
(7,439
)
 
24,743

 
27,312

 
(2,330
)
 
24,982

Total
$
600,096

 
$
(347,920
)
 
$
252,176

 
$
547,998

 
$
(277,841
)
 
$
270,157



There was no interest capitalized in new additions to mining properties in the periods shown above.
Intangible Assets (Notes)
Intangible Asset
INTANGIBLE ASSET
The intangible asset represents a right to receive, from the Ghana national grid, an amount of electric power equal to one fourth of a particular plant's power output over and above any rationing limit that might be imposed in the future by the Ghana national power authority. The intangible asset is being amortized over five years ending in 2014. As of December 31, 2012, the carrying value of the intangible asset was $3.2 million, with a gross asset value of $12.4 million and accumulated amortization of $9.3 million. We amortized $2.1 million during 2012 and expect the same for 2013 with the remaining amount amortized in 2014.
Asset Retirement Obligations
Asset Retirement Obligations
ASSET RETIREMENT OBLIGATIONS
At December 31, 2012 and December 31, 2011, the total undiscounted amount of the estimated future cash needs was estimated to be $73.4 million and $72.8 million, respectively. Discount rates used to value the ARO range between 8% and 10%. The schedule of payments required to settle the December 31, 2011 ARO liability extends through 2029.
The changes in the carrying amount of the ARO during the years ended December 31, 2012, and December 31, 2011, are as follows:
 
For the years ended
December 31,
 
2012
 
2011
Beginning balance
$
33,880

 
$
44,952

Accretion expense
2,816

 
3,845

Additions and changes in estimates
3,620

 
11,978

Cost of reclamation work performed
(6,203
)
 
(26,895
)
Balance at December 31
$
34,113

 
$
33,880

 
 
 
 
Current portion
$
9,943

 
$
8,996

Long term portion
$
24,170

 
$
24,884

Debt
Debt
DEBT
The following table lists the current and long term portion of each of our debt instruments at December 31, 2012 and December 31, 2011:
 
For the years ended
December 31,
 
2012
 
2011
Current debt:
 
 
 
Equipment financing credit facility
$
6,968

 
$
7,036

Capital lease

 
224

4% Convertible Debentures

 
121,199

Total current debt
$
6,968

 
$
128,459

Long term debt:
 
 
 
Equipment financing credit facility
$
11,232

 
$
10,759

5% Convertible Debentures
99,275

 

Total long term debt
$
110,507

 
$
10,759


Schedule of payments on outstanding debt as of December 31, 2012:
Debt
2013
 
2014
 
2015
 
2016
 
2017
 
Maturity
Equipment financing loans
 
 
 
 
 
 
 
 
 
 
 
     principal
$
6,968

 
$
4,732

 
$
3,798

 
$
2,208

 
$
494

 
 2012 to 2017
     interest
1,003

 
604

 
322

 
120

 
9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
5% Convertible Debentures
 
 
 
 
 
 
 
 
 
 
 
     principal

 

 

 

 
77,490

 
June 1, 2017
     interest
3,875

 
3,875

 
3,875

 
3,875

 
1,937

 
 
Total
$
11,846

 
$
9,211

 
$
7,995

 
$
6,203

 
$
79,930

 
 

EQUIPMENT FINANCING CREDIT FACILITY
GSBPL and GSWL maintain a $35.0 million equipment financing facility with Caterpillar Financial Services Corporation, with Golden Star as the guarantor of all amounts borrowed. The facility provides credit for new and used mining equipment and is reviewed and renewed annually in May. Amounts drawn under this facility are repayable over five years for new equipment and over two years for used equipment. The interest rate for each draw-down is fixed at the date of the draw-down using the Federal Reserve Bank 2-year or 5-year swap rate or London Interbank Offered Rate (“LIBOR”) plus 2.38%. At December 31, 2012, approximately $16.8 million was available to draw down, compared to $22.2 million at December 31, 2011. The average interest rate on the outstanding loans was approximately 6.6% at December 31, 2012, down marginally from 6.8% at December 31, 2011. Each outstanding equipment loan is secured by the title of the specific equipment purchased with the loan until the loan has been repaid in full.
CONVERTIBLE DEBENTURES
During 2012, we had two series of convertible debentures outstanding. The first series, consisting of 4% Convertible Senior Unsecured Debentures (the "4% Convertible Debentures") in the amount of $125.0 million at December 31, 2011, were redeemed during 2012. The second series, consisting of the 5% Convertible Senior Unsecured Debentures due June 1, 2017, (the "5% Convertible Debentures") in the amount of $77.5 million, are currently outstanding.
Both the 4% and 5% Convertible Debentures are accounted for at fair value and marked to market each reporting period and the corresponding gain/loss on fair value is recorded in the Statement of Operations.
5% Convertible Debentures
The 5% Convertible Debentures were issued on May 31, 2012, in the amount of $77.5 million, in exchange for $74.5 million of the principal outstanding under our 4% Convertible Debentures in privately negotiated 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 Corporation, as Indenture Trustee.
Interest on the 5% Convertible Debentures is payable semi-annually in arrears on May 31 and November 30 of each year, beginning November 30, 2012, and continuing until maturity on June 1, 2017. The 5% Convertible Debentures are, subject to certain limitations, 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 senior unsecured indebtedness of the Company, ranking pari-passu with all other senior unsecured indebtedness, and senior to all subordinated indebtedness of the Company. None of our subsidiaries has guaranteed the 5% Convertible Debentures, and there are no additional debt restrictions on the Company.
The 5% Convertible Debentures were initially recorded at the fair value of $74.2 million on their May 31, 2012, issue date, and a loss of $0.6 million on the extinguishment of the 4% Convertible Debentures was incurred. The fair value of the 4% Convertible Debentures exchanged for 5% Convertible Debentures was $73.6 million at the time of the extinguishment.
Financing charges of $2.1 million related to the 5% Convertible Debentures are included in interest expense in the Statement of Operations for the year ending December 31, 2012.
4% Convertible Debentures
The 4% Convertible Debentures were issued in November 2007 in the amount of $125.0 million. The 4% Convertible Debentures were, subject to certain limitations, convertible into common shares at a conversion rate of 200 shares per $1,000 principal amount (equal to a conversion price of $5.00 per share) subject to adjustment under certain circumstances. The 4% Convertible Debentures were not redeemable at our option.
The 4% Convertible Debentures were direct senior unsecured indebtedness of Golden Star Resources Ltd., ranked pari-passu with all our other senior unsecured indebtedness, and senior to all our subordinated indebtedness. None of our subsidiaries guaranteed the 4% Convertible Debentures, and there were no additional debt restrictions on the Company.
On May 31, 2012, we exchanged $74.5 million of the 4% Convertible Debentures with private holders for $77.5 million of 5% Convertible Debentures. See details of this transaction in the "5% Convertible Debentures" section above. Subsequently, on September 14, 2012, we redeemed $6.1 million of the remaining 4% Convertible Debentures by way of a privately negotiated transaction. The remaining $44.4 million outstanding 4% Convertible Debentures, plus accumulated interest, were settled in cash on November 30, 2012, leaving the 4% Convertible Debentures completely settled with zero due at December 31, 2012.
REVOLVING CREDIT FACILITY
Our $31.5 million revolving credit facility expired on April 1, 2012, with no outstanding balance.
CAPITAL LEASE
In February 2010, GSBPL accepted delivery of a nominal 20 megawatt power plant. Upon acceptance, a $4.9 million liability was recognized which, at the time, was equal to the present value of future lease payments. The life of the lease was two years from the plant's February 2010 in-service date. We were required to pay the owner/operator a minimum of $0.3 million per month on the lease, of which $0.23 million was allocated to principal and interest on the recognized liability and the remainder of the monthly payments were charged as operating costs. In February 2012, we made the final lease payment and assumed ownership of the power plant.
Gain On Sale Of Assets (Notes)
Gain on Sale of Assets
GAIN ON SALE OF ASSETS
The gain on sale assets includes the following components:
 
For the years ended December 31,
 
2012
 
2011
 
2010
Gain on sale of Burkina Faso exploration properties
$
22,361

 
$

 
$

Gain on sale of Saramacca
9,175

 

 

Gain on sale of other assets
41

 
1,350

 
1,171

Gain on sale of assets
$
31,577

 
$
1,350

 
$
1,171


Gain on sale of Burkina Faso exploration properties
In December 2011, TGM notified us, per terms of a 2007 exploration earn-in agreement, of their intent to exercise their purchase option for our Goulagou and Rounga exploration properties in Burkina Faso. The sale of these exploration projects was completed in February 2012 upon our receipt of $6.6 million of cash and 21.7 million TGM common shares valued at $15.8 million on the day of the sale. On the day of the sale, we also held 4.0 million TGM shares from earlier transactions with TGM. The underlying properties' carrying value had been written down to zero in prior periods, resulting in the recognition of a net gain of $22.4 million on the completion of this disposition.
Gain on sale of Saramacca
In 2009, we entered into an agreement to sell our Saramacca gold exploration project in Suriname to Newmont Mining Corporation. In December 2012, all requirements for the sale and transfer were met and ownership and control of the Saramacca project was turned over to Newmont Mining Corporation for total consideration of $9.0 million cash. We received $8.0 million of cash in December 2012 and a final payment of $1.0 million in early 2013. A net gain of $9.2 million was recognized on this transaction.
Gain on sale of other assets
The gain on sale of other assets includes the sale of mining equipment, exploration properties and available for sale investments.
Income Taxes
Income Taxes
INCOME TAXES
We recognize deferred tax assets and liabilities based on the difference between the financial reporting and tax basis of assets and liabilities using the enacted tax rates expected to be in effect when the taxes are paid or recovered. We provide a valuation allowance against deferred tax assets for which we do not consider realization of such assets to meet the required “more likely than not” standard.  
Our deferred tax assets and liabilities at December 31, 2012, and 2011 include the following components:
 
 
As of December 31, 
 
 
2012
 
2011
Deferred tax assets:
 
 
 
 
Offering costs
 
$
120

 
$
595

Non-capital loss carryovers
 
222,213

 
191,182

Capital loss carryovers
 
741

 
907

Mine property costs
 
7,118

 
7,154

Reclamation costs
 
9,765

 
6,638

Unrealized loss on available for sale investments
 
508

 
(173
)
Other
 
9,609

 
5,061

Valuation allowance
 
(163,890
)
 
(131,208
)
Future tax assets
 
86,184

 
80,156

Deferred tax liabilities:
 
 
 
 

Mine property costs
 
114,595

 
102,948

Derivatives
 
4

 
1,094

Other
 

 
107

Deferred tax liabilities
 
114,599

 
104,149

Net deferred tax liabilities
 
$
28,415

 
$
23,993


The composition of our valuation allowance by tax jurisdiction is summarized as follows:
 
 
As at December 31, 
 
 
2012
 
2011
Canada
 
$
42,832

 
$
46,254

U.S.
 
15

 
228

Ghana
 
121,043

 
84,067

Burkina Faso
 

 
659

Total valuation allowance
 
$
163,890

 
$
131,208


The income taxes expense includes the following components:
 
For the years ended December 31,
 
2012
 
2011
 
2010
Current expense:
 
 
 
 
 
Canada
$

 
$

 
$

Foreign
12,393

 
2,669

 
1,487

Deferred tax expense:
 
 
 
 
 
Canada

 

 

Foreign
4,423

 
8,315

 
3,990

Total expense
$
16,816

 
$
10,984

 
$
5,477


A reconciliation of expected income tax on net income before minority interest at statutory rates with the actual expenses (recovery) for income taxes is as follows:  
 
 
For the years ended December 31, 
 
 
2012
 
2011
 
2010
Net income /(loss) before tax
 
$
6,601

 
$
8,482

 
$
(9,128
)
Statutory tax rate
 
25.0
%
 
26.5
%
 
28.5
%
Tax expense/(benefit) at statutory rate
 
$
1,650

 
$
2,248

 
$
(2,601
)
Foreign tax rates
 
(6,193
)
 
(7,340
)
 
(7,548
)
Change in tax rates
 
(22,145
)
 
3,395

 
659

Expired loss carryovers
 
6,144

 

 

Ghana investment allowance
 
300

 
(513
)
 
(761
)
Non-deductible stock option compensation
 
1,303

 
884

 
848

Non-deductible expenses
 
270

 
376

 
543

Nondeductible convertible debenture
 
6,096

 

 

Loss carryover not previously recognized
 
627

 
(1,189
)
 
2,321

Ghana property basis not previously recognized
 
(3,523
)
 
(1,385
)
 
912

Change in future tax assets due to exchange rates
 
(445
)
 
738

 
(1,864
)
Change in valuation allowance
 
31,932

 
10,881

 
10,907

National Tax Levy
 

 
2,669

 
1,488

Other
 
800

 
220

 
573

Income tax expense /(recovery)
 
$
16,816

 
$
10,984

 
$
5,477


During 2012, we recognized $2.7 million unrealized loss on investments in other comprehensive income. Other comprehensive income was credited in the amount of $0.7 million for the tax benefit of the loss, with an offsetting $0.7 million valuation allowance recorded in other comprehensive income.
 At December 31, 2012, we had tax pool and loss carryovers expiring as follows:
 
 
Canada
 
Ghana
2013
 
$

 
$
46,294

2014
 

 

2015
 
3,831

 

2016
 

 
31,233

2026
 
15,800

 

2027
 
16,096

 

2028
 
14,468

 

2029
 
22,248

 

2030
 
20,421

 

2031
 
38,314

 

Indefinite
 
5,930

 
459,423

Total
 
$
137,108

 
$
536,950


The Ghana tax pool is further limited to taxable income generated at Bogoso.
Commitments And Contingencies
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
Our commitments and contingencies include the following items:
ENVIRONMENTAL BONDING IN GHANA
The Ghana Environmental Protection Agency ("EPA") requires environmental compliance bonds that provide assurance for environmental remediation at our Bogoso/Prestea and Wassa mining operations. In July 2011, we increased a letter of credit for Wassa/HBB's environmental bonding from $2.85 million to $7.8 million. This brought the total bonded amount, including $0.15 million of cash, from $3.0 million to $7.95 million. In early 2012, the Ghana Environmental Protection Agency raised Wassa/HBB's reclamation bonding requirement to approximately $10.6 million, reflecting increases in on-going mining disturbances. In July 2012, we increased our cash deposit by $0.9 million and our existing letter of credit by $1.7 million to meet the $2.65 million bonding increase.
We have also bonded $9.0 million to cover rehabilitation and closure obligations at Bogoso/Prestea. These bonding requirements have been met by an $8.1 million letter of credit from a commercial bank and a $0.9 million cash deposit held by the same bank on behalf of the EPA. The cash deposits are recorded as Restricted Cash on our Consolidated Balance Sheets.
Prior to April 1, 2012, our reclamation bonds were provided by the same bank that provided our revolving credit facility. The credit facility expired on April 1, 2012, and the bonds expired on April 30, 2012. The environmental bonds were replaced with new bonds provided by a Ghanaian bank on May 1, 2012, on terms similar to the prior bonds. The Ghanaian bank provided an $8.1 million bond to GSBPL and a $9.6 million bond to GSWL. The new bonds are guaranteed by Golden Star Resources Ltd.
GOVERNMENT OF GHANA'S RIGHTS TO INCREASE ITS PARTICIPATION
Under Act 703, the Government of Ghana has the right to acquire a special share in our Ghanaian subsidiaries at any time for no consideration or such consideration as the Government of Ghana and such subsidiaries might agree, and a pre-emptive right to purchase all gold and other minerals produced by such subsidiaries. A special share carries no voting rights and does not participate in dividends, profits or assets. If the Government of Ghana acquires a special share, it may require us to redeem the special share at any time for no consideration or for consideration determined by us. To date, the Government of Ghana has not sought to exercise any of these rights at our properties.

ROYALTIES
Government of Ghana
The Ghana Government receives a royalty equal to 5% of mineral revenues.
Dunkwa Properties
As part of the acquisition of the Dunkwa properties in 2003, we agreed to pay the seller a net smelter return royalty on future gold production from the Mansiso and Asikuma properties. As per the acquisition agreement, there will be no royalty due on the first 200,000 ounces produced from Mampon which is located on the Asikuma property. The amount of the royalty is based on a sliding scale which ranges from 2% of net smelter return at gold prices at or below $300 per ounce and progressively increases to 3.5% for gold prices in excess of $400 per ounce. Since this property is currently undeveloped, we are not required to pay a royalty on this property.
Hwini-Butre
As part of the agreement for the purchase of the Hwini-Butre properties, Golden Star agreed to pay B.D. Goldfields Ltd, Hwini-Butre’s former owner, an additional $1.0 million in cash if at least one million ounces of gold are produced and recovered in the first five years of production from the area covered by the Hwini-Butre prospecting license. Gold production was initiated at Hwini-Butre in May 2009. It is not possible at this time to know if future exploration work will increase Hwini-Butre’s reserves sufficiently to yield production of one million ounces prior to May 2014, and as such, no amounts have been accrued in the financial statements.
EXPLORATION AGREEMENTS
Obuom
In October 2007, we entered into an agreement with AMI Resources Inc. (“AMI”), which gives AMI the right to earn our 54% ownership position in the Obuom property in Ghana. Should AMI eventually obtain full rights to our 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.
Stock Based Compensation
Stock Based Compensation
STOCK BASED COMPENSATION
Non-cash employee compensation expense recognized in general and administrative expense in the Statements of Operations with respect to our non-cash employee compensation plans are as follows:
 
For the years ended December 31,
 
2012
 
2011
 
2010
 
Total stock compensation expense
$
6,111

 
$
3,385

 
$
2,975

 

STOCK OPTIONS
We have one stock option plan, the Third Amended and Restated 1997 Stock Option Plan (the “Plan”) approved by shareholders in May 2010, under which options are granted at the discretion of the Board of Directors. Options granted are non-assignable and are exercisable for a period of ten years or such other period as is 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 5,029,646 are available for grant as of December 31, 2012. The exercise price of each option is not less than the closing price of our shares on the Toronto Stock Exchange on the day prior to the date of grant. Options typically vest over periods ranging from immediately to four years from the date of grant. Vesting periods are determined at the discretion of the Board of Directors.
We granted 5,164,000 and 2,288,000 options in 2012 and 2011 respectively. We do not receive a tax deduction for the issuance of options. As a result, we do not recognize any income tax benefit related to the stock compensation expense.
The fair value of our option grants are estimated at the grant dates using the Black-Scholes option-pricing model. Fair values of options granted in 2012 and 2011 were based on the assumptions noted in the following table:
 
For the years ended December 31,
 
2012
 
2011
 
2010
Expected volatility
57.11% to 87.50%
 
66.06% to 70.29%
 
68.67% to 77.37%
Risk-free interest rate
0.36% to 1.91%
 
0.90% to 2.26%
 
1.18% to 2.58%
Expected lives
3 to 8 years
 
6 to 9 years
 
6 to 9 years
Dividend yield
0%
 
0%
 
0%

Expected volatilities are based on the mean reversion tendency of the volatility of Golden Star's shares. Golden Star uses historical data to estimate share option exercise and employee departure behavior and this data is used in determining input data for the Black-Scholes model. Groups of employees that have dissimilar historical behavior are considered separately for valuation purposes. The expected term of the options granted represents the period of time that the options granted are expected to be outstanding; the range given above results from certain groups of employees exhibiting different post-vesting behaviors. The risk-free rate for periods within the contractual term of the option is based on the Canadian Chartered Bank administered interest rates in effect at the time of the grant.
A summary of option activity under the Plan during the year ended ended December 31, 2012:
 
Options
(‘000)
 
Weighted–
Average
Exercise
price
(Cdn$)
 
Weighted–
Average
Remaining
Contractual
Term (Years)
 
Aggregate
intrinsic  value
Cdn($000)
Outstanding as of December 31, 2011
8,539

 
3.18

 
7.0

 
95

Granted
5,164

 
1.94

 
6.4

 

Exercised
(203
)
 
1.45

 
3.5

 
125

Forfeited, canceled and expired
(1,163
)
 
2.74

 
6.0

 

Outstanding as of December 31, 2012
12,337

 
2.74

 
6.2

 
541

 
 
 
 
 
 
 
 
Exercisable as of December 31, 2012
7,920

 
3.04

 
5.7

 
356


A summary of option activity under the Plan during the year ended ended December 31, 2011:
 
Options
(‘000)
 
Weighted–
Average
Exercise
price
(Cdn$)
 
Weighted–
Average
Remaining
Contractual
Term (Years)
 
Aggregate
intrinsic  value
Cdn($000)
Outstanding as of December 31, 2010
6,724

 
3.35

 
7.0

 
9,001

Granted
2,288

 
2.67

 
9.3

 

Exercised
(159
)
 
1.78

 
4.6

 

Forfeited, canceled and expired
(314
)
 
3.67

 
6.8

 

Outstanding as of December 31, 2011
8,539

 
3.18

 
7.0

 
95

 
 
 
 
 
 
 
 
Exercisable as of December 31, 2011
6,233

 
3.30

 
6.2

 
95


A summary of option activity under the Plan during the year ended ended December 31, 2010:
 
Options
(‘000)
 
Weighted–
Average
Exercise
price
(Cdn$)
 
Weighted–
Average
Remaining
Contractual
Term (Years)
 
Aggregate
intrinsic  value
Cdn($000)
Outstanding as of December 31, 2009
7,283

 
3.19

 
7.0

 
4,221

Granted
1,599

 
3.77

 
9.3

 

Exercised
(1,149
)
 
2.11

 
5.4

 
2,423

Forfeited, canceled and expired
(1,009
)
 
4.27

 

 

Outstanding as of December 31, 2010
6,724

 
3.35

 
7.0

 
9,001

 
 
 
 
 
 
 
 
Exercisable as of December 31, 2010
4,622

 
3.48

 
6.3

 
5,770

The number of options outstanding by strike price as of December 31, 2012 is shown in the following table:
 
 
Options outstanding 
 
Options exercisable 
Range of exercise prices (Cdn$) 
 
Number
outstanding at
December 31, 2012
(000) 
 
Weighted-
average
remaining
contractual life
(years) 
 
Weighted-
average
exercise price
(Cdn$) 
 
Number
exercisable at
December 31, 2012
(000) 
 
Weighted-
average
exercise price
(Cdn$) 
1.00 to 2.50
 
5,984

 
6.6
 
1.88

 
2,641

 
1.80

2.51 to 4.00
 
5,187

 
6.2
 
3.23

 
4,158

 
3.30

4.01 to 7.00
 
1,166

 
3.7
 
4.99

 
1,121

 
5.00

 
 
12,337

 
6.2
 
2.74

 
7,920

 
3.04

The number of options outstanding by strike price as of December 31, 2011 is shown in the following table:
 
 
Options outstanding 
 
Options exercisable 
Range of exercise prices (Cdn$) 
 
Number
outstanding at
December 31, 2011
(000) 
 
Weighted-
average
remaining
contractual life
(years) 
 
Weighted-
average
exercise price
(Cdn$) 
 
Number
exercisable at
December 31, 2011
(000) 
 
Weighted-
average
exercise price
(Cdn$) 
1.00 to 2.50
 
1,619

 
7.2
 
1.66

 
1,215

 
1.64

2.51 to 4.00
 
5,688

 
7.3
 
3.22

 
3,901

 
3.32

4.01 to 7.00
 
1,232

 
4.8
 
5.00

 
1,117

 
5.02

 
 
8,539

 
6.9
 
3.18

 
6,233

 
3.29

The number of options outstanding by strike price as of December 31, 2010 is shown in the following table:
 
 
Options outstanding 
 
Options exercisable 
Range of exercise prices (Cdn$) 
 
Number
outstanding at
December 31, 2010
(000) 
 
Weighted-
average
remaining
contractual life
(years) 
 
Weighted-
average
exercise price
(Cdn$) 
 
Number
exercisable at
December 31, 2010
(000) 
 
Weighted-
average
exercise price
(Cdn$) 
1.00 to 2.50
 
1,472

 
7.5
 
1.61

 
804

 
1.53

2.51 to 4.00
 
3,965

 
7.2
 
3.43

 
2,845

 
3.44

4.01 to 7.00
 
1,287

 
6.0
 
4.98

 
973

 
5.10

 
 
6,724

 
7.0
 
3.35

 
4,622

 
3.48



The weighted-average grant date fair value of share options granted during the years ended December 31, 2012, 2011 and 2010 was Cdn$1.20, Cdn$1.78 and Cdn$2.54, respectively. The intrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010 was Cdn$0.1 million, Cdn$0.3 million and Cdn$2.4 million, respectively.
A summary of the status of non-vested options at December 31, 2012, 2011 and 2010 and the changes during the years ended December 31, 2012, 2011 and 2010 is presented below:  
 
 
Number of options
(000) 
 
Weighted average
grant date fair value
(Cdn$) 
Non-vested at January 1, 2012
 
2,307

 
1.91

Granted
 
5,164

 
1.21

Vested
 
(2,658
)
 
1.43

Forfeited, canceled and expired
 
(396
)
 
1.65

Non-vested at December 31, 2012
 
4,417

 
1.4

 
 
 
 
 
 
 
Number of options
(000) 
 
Weighted average
grant date fair value
(Cdn$) 
Non-vested at January 1, 2011
 
2,102

 
1.90

Granted
 
2,288

 
1.78

Vested
 
(1,988
)
 
1.81

Forfeited, canceled and expired
 
(95
)
 
2.14

Non-vested at December 31, 2011
 
2,307

 
1.91

 
 
 
 
 
 
 
Number of options
(000) 
 
Weighted average
grant date fair value
(Cdn$) 
Non-vested at January 1, 2010
 
2,125

 
1.49

Granted
 
1,599

 
2.54

Vested
 
(1,491
)
 
1.94

Forfeited, canceled and expired
 
(131
)
 
1.73

Non-vested at December 31, 2010
 
2,102

 
1.9


As of December 31, 2012, there was a total unrecognized compensation cost of Cdn$3.6 million related to stock options granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.0 years. The total fair values of shares vested during the years ended December 31, 2012, 2011 and 2010 were Cdn$3.7 million, Cdn$3.6 million and Cdn$2.9 million, respectively.
Stock Bonus Plan
In December 1992, we established an Employees' Stock Bonus Plan (the “Bonus Plan”) for any full-time or part-time employee (whether or not a director) of the Company or any of our subsidiaries who has rendered meritorious services which contributed to the success of the Company or any of its subsidiaries. The Bonus Plan provides that a specifically designated committee of the Board of Directors may grant bonus common shares on terms that it might determine, within the limitations of the Bonus Plan and subject to the rules of applicable regulatory authorities. The Bonus Plan, as amended, provides for the issuance of 900,000 common shares of bonus stock, of which 710,854 common shares have been issued as of December 31, 2012. In the first quarter of 2012, 165,009 shares were issued in 2012 under the Stock Bonus Plan at a value of $0.3 million. No shares were issued in 2011.
Deferred Share Units
On March 9, 2011 the Board adopted a Deferred Share Unit Plan ("DSU Plan") which was subsequently approved by shareholders at the May 2011 annual meeting of shareholders. Our DSU Plan provides for the issuance of Deferred Share Units (“DSUs”), each representing the right to receive one share of Golden Star common shares upon redemption. DSUs may be redeemed only upon termination of the holder's services to the Company, and may be subject to vesting provisions. DSU awards are granted at the sole discretion of the Company's 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.
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.
These units were immediately vested and a compensation expense of $0.6 million and $49.5 thousand was recognized for these grants during 2012 and 2011, respectively. As of December 31, 2012, there was zero unrecognized compensation expense related to DSUs granted under the Company's DSU plan.
 
 
Number of Deferred Share Units
 
Amount (US$'000)
As of December 31, 2011
 
22,147

 
$
49

   Grants
 
394,922

 
592

   Exercises
 
(29,010
)
 
(39
)
As of December 31, 2012
 
388,059

 
$
602

 
 
Number of Deferred Share Units
 
Amount (US$'000)
As of December 31, 2010
 

 
$

   Grants
 
22,147

 
49

   Exercises
 

 

As of December 31, 2011
 
22,147

 
$
49


Share Appreciation Rights
On February 13, 2012, the Company adopted a Share Appreciation Rights Plan, and granted 1,543,043 share appreciation rights (SARs) that vest after a period of three years. Of these granted, 463,636 were subsequently forfeited leaving 1,079,407 outstanding at December 31, 2012. The SARs will be settled in cash in an amount equal to the Company’s stock price less the strike price on the award date. Since SARs are settled in cash, the Company marks-to-market the associated expense for each award at the end of each reporting period. The Company accounts for these as liability awards and marks-to-market the fair value of the award until final settlement. 
As of December 31, 2012, there was approximately $0.8 million of total unrecognized compensation cost related to unvested SARs. The Company recognized approximately $0.3 million of compensation expense related to these cash based awards for the year ended December 31, 2012.
Earnings Per Common Share
Earnings Per Common Share
EARNINGS PER COMMON SHARE
The following table provides reconciliation between basic and diluted earnings per common share:
 
For the years ended December 31,
 
2012
 
2011
 
2010
Net loss attributable to Golden Star shareholders
$
(9,490
)
 
$
(2,075
)
 
$
(11,229
)
 
 
 
 
 
 
Weighted average number of shares (millions)
258.9

 
258.6

 
258.0

Dilutive securities:
 
 
 
 
 
Options

 

 

Deferred stock units

 

 

Convertible debentures

 

 

Weighted average number of diluted shares (millions)
258.9

 
258.6

 
258.0

 
 
 
 
 
 
Net loss per share attributable to Golden Star shareholders:
 
 
 
 
 
Basic
$
(0.04
)
 
$
(0.01
)
 
$
(0.04
)
Diluted
$
(0.04
)
 
$
(0.01
)
 
$
(0.04
)

Options to purchase 12.3 million and 8.5 million common shares were outstanding at December 31, 2012, and 2011, respectively, but were not included in the computation of diluted weighted average common shares because their effect would not be dilutive. Deferred Stock Units totaling 0.4 million and zero common shares were outstanding at December 31, 2012 and 2011, respectively, but were not included in the computation of diluted weighted average common shares because their effect would not be dilutive. In addition, we had 47.0 million and 25.0 million common shares potentially outstanding at December 31, 2012 and 2011, respectively, related to the convertible debentures that were not dilutive.
Operations By Segment And Geographic Area
Operations by Segment and Geographic Area
OPERATIONS BY SEGMENT AND GEOGRAPHIC AREA