SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
Amendment No. 2
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
     OF 1934
For the Fiscal Year ended December 31, 2004
Commission file number 1-12284 
GOLDEN STAR RESOURCES LTD.
(Exact Name of Registrant as Specified in Its Charter)
 	 	 	
Canada
(State or other Jurisdiction of
Incorporation or Organization)	 	98-0101955
(I.R.S. Employer
Identification No.)	
 	 	 	
10901 West Toller Drive, Suite 300
Littleton, Colorado
(Address of Principal Executive Office)	 	80127-6312
(Zip Code)	
Registrant’s telephone number, including area code (303) 830-9000
Securities registered or to be registered pursuant to Section 12 (b) of the Act:

Title of Each Class	 	Name of each exchange on which registered	
 	 	 	
Common Shares	 	American Stock Exchange	
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Warrants Issued February 2003
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form l0-K. o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was approximately $609.4 million as of June 30, 2004, based on the closing price of the shares on the American Stock Exchange of $4.64 per share.
Number of Common Shares outstanding as at January 31, 2005: 142,346,703.

 

DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A in connection with the 2005 Annual Meeting of Shareholders are incorporated by reference to Part III of this Report on Form 10-K/A.
EXPLANATORY NOTE
This Amendment No. 2 to the Company’s 2004 Annual Report on Form 10-K is solely for the purpose of including “Management’s Report on Internal Control Over Financial Reporting” and the “Report of Independent Registered Public Accounting Firm” as required by Item 9A and as included in Item 8. These reports were initially omitted from Registrant’s original 2004 Form 10-K filing, as amended (“Original Report”) as permitted by the Order under Section 36 of the Securities Exchange Act of 1934 Granting an Exemption from Specified Provisions of Exchange Act Rules 13a-1 and 15d-1 issued by the Securities and Exchange Commission (“SEC”) on November 30, 2004. Conforming changes have also been made to Item 9A and Exhibits 31.1 and 31.2 included in the Original Report. Exhibits 23.1 and 32.1 and 32.2 are being currently dated but are otherwise unchanged from those filed in the Original Report. No other changes to the Original Report have been made. This Amendment No. 2 does not reflect events occurring after the filing of the Original Report or modify or update the disclosures therein in any way other than as described above.  
ITEM 8       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements of
Golden Star Resources Ltd.

Management’s Responsibility for Financial Information and Report on Internal Control Over Financial Reporting	2	
Report of Independent Registered Public Accounting Firm	3	
Consolidated Balance Sheets as of December 31, 2004 and 2003	4	
Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002	5	
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002	6	
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002	7	
Notes to the Consolidated Financial Statements	8	

 

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION AND REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Shareholders of
Golden Star Resources Ltd.:
The consolidated financial statements and all information in the Annual Report are the responsibility of the Board of Directors and management. The consolidated financial statements have been prepared by management based on information available to February 2, 2005, and are in accordance with accounting principles generally accepted in Canada.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of management, including the Chief Executive Officer and Chief Financial Officer, in order to provide reasonable assurance that financial information is accurate and reliable, and that our assets are safeguarded. Limitations exist in all cost effective systems of internal controls. Our systems have been designed to provide reasonable but not absolute assurance that financial records are adequate to allow for the completion of reliable financial information and the safeguarding of our assets. In designing our system of internal controls we have used the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). We believe that the systems are adequate to achieve the stated objectives.
Our system of internal control over financial reporting includes policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in Canada, and that receipts and expenditures are being made only in accordance with authorizations of management and our Board of Directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
The Audit Committee of the Board of Directors is comprised of three outside directors, operates in accordance with its charter and meets quarterly with management and the independent auditors to ensure that management is maintaining adequate internal controls and systems and to approve the annual and quarterly consolidated financial statements of the Company. The Committee also reviews the audit plan of the independent auditors and discusses the results of their audit and their report prior to submitting the consolidated financial statements to the Board of Directors for approval.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2004. Based upon its assessment, management concluded that, as of December 31, 2004, our internal control over financial reporting is effective based on the COSO criteria.
The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants, who were appointed by the shareholders. Such registered public accounting firm has issued an attestation report on management’s assessment of our internal control over financial reporting and such report is included herein.

/s/ Peter J. Bradford	 	/s/ Allan J. Marter	
 	 	 	
Peter J. Bradford
President and Chief Executive Officer	 	Allan J. Marter
Senior Vice President and Chief Financial Officer	
 	 	 	
April 28, 2005	 	April 28, 2005	
2

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited management’s assessment, included in the accompanying REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING, that Golden Star Resources Ltd.(the “Company”) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.
We conducted our audit 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. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2004 and 2003 and the consolidated statements of operations, changes in shareholders’ equity and cash flows for the each of the three years in the period ended December 31, 2004 and our report dated February 2, 2005 expressed an unqualified audit opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Calgary, Alberta, Canada
April 28, 2005
3

 

GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of US dollars except shares issued and outstanding)

 	
 	 	As of December 31,	 	
ASSETS	 	2004	 	 	2003	 	
 	
CURRENT ASSETS	 	 	 	 	 	 	 	 	
Cash and cash equivalents (Note 1)	 	$	51,727	 	 	$	89,970	 	
Accounts receivable	 	 	3,592	 	 	 	790	 	
Inventories (Notes 1 and 3)	 	 	15,366	 	 	 	12,661	 	
Due from sale of property (Note 4)	 	 	1,000	 	 	 	1,000	 	
Tax asset (Note 17)	 	 	1,542	 	 	 	—	 	
Deposits (Note 5)	 	 	5,102	 	 	 	—	 	
Prepaids	 	 	517	 	 	 	514	 	
 	
Total Current Assets	 	 	78,846	 	 	 	104,935	 	
 		
RESTRICTED CASH (Note 14)	 	 	3,351	 	 	 	3,317	 	
DUE FROM SALE OF PROPERTY (Note 4)	 	 	—	 	 	 	1,000	 	
LONG TERM INVESTMENTS (Note 6)	 	 	5,528	 	 	 	888	 	
DEFERRED EXPLORATION AND DEVELOPMENT COSTS (Note 7)	 	 	7,452	 	 	 	9,108	 	
PROPERTY, PLANT AND EQUIPMENT (Note 8)	 	 	28,653	 	 	 	18,202	 	
MINING PROPERTIES (Note 9)	 	 	74,197	 	 	 	56,808	 	
MINE CONSTRUCTION-IN-PROGRESS (Note 10)	 	 	51,159	 	 	 	27,376	 	
DEFERRED STRIPPING (Notes 1 and 11)	 	 	1,357	 	 	 	—	 	
OTHER ASSETS	 	 	1,617	 	 	 	757	 	
 	
Total Assets	 	$	252,160	 	 	$	222,391	 	

LIABILITIES	 	 	 	 	 	 	 	 	
CURRENT LIABILITIES	 	 	 	 	 	 	 	 	
Accounts payable	 	$	7,010	 	 	$	3,800	 	
Construction retention payable	 	 	—	 	 	 	1,350	 	
Other accrued liabilities	 	 	9,203	 	 	 	2,859	 	
Current debt (Note 12)	 	 	1,267	 	 	 	142	 	
 	
Total Current Liabilities	 	 	17,480	 	 	 	8,151	 	
 		
LONG TERM DEBT (Note 12)	 	 	1,707	 	 	 	657	 	
ASSET RETIREMENT OBLIGATIONS (Note 13)	 	 	8,660	 	 	 	7,745	 	
 	
Total Liabilities	 	 	27,847	 	 	 	16,553	 	

MINORITY INTEREST	 	 	6,353	 	 	 	7,476	 	

COMMITMENTS AND CONTINGENCIES (Note 14)	 	 	 	 	 	 	 	 	
 		
SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
SHARE CAPITAL	 	 	 	 	 	 	 	 	
First Preferred Shares, without par value, unlimited shares authorized. No shares issued	 	 	—	 	 	 	—	 	
Common shares, without par value, unlimited shares authorized. Shares issued and outstanding: 142,244,112 at December 31, 2004; 132,924,278 at December 31, 2003	 	 	342,494	 	 	 	326,623	 	
CONTRIBUTED SURPLUS	 	 	2,040	 	 	 	955	 	
DEFICIT	 	 	(126,574	)	 	 	(129,216	)	
 	
Total Shareholders’ Equity	 	 	217,960	 	 	 	198,362	 	
 	
Total Liabilities and Shareholders’ Equity	 	$	252,160	 	 	$	222,391	 	
 	
      The accompanying notes are an integral part of these consolidated financial statements.

By:	 	/s/ David K. Fagin — Director	 	By:	 	/s/ Peter J. Bradford — Director	
	 	 	 	 	 	 	
4

 

GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of US dollars except per share amounts)

 	 	For the years ended December 31,	 	
 	 	2004	 	 	2003	 	 	2002	 	
 	
REVENUE	 	 	 	 	 	 	 	 	 	 	 	 	
Gold sales	 	$	60,690	 	 	$	63,512	 	 	$	38,091	 	
Royalty income	 	 	3,049	 	 	 	—	 	 	 	—	 	
Interest and other	 	 	1,290	 	 	 	858	 	 	 	711	 	
 	
 	 	 	65,029	 	 	 	64,370	 	 	 	38,802	 	
 	
EXPENSES	 	 	 	 	 	 	 	 	 	 	 	 	
Mining operations	 	 	39,095	 	 	 	32,125	 	 	 	26,747	 	
Depreciation, depletion and amortization	 	 	8,096	 	 	 	4,993	 	 	 	2,459	 	
Accretion of asset retirement amortization	 	 	645	 	 	 	578	 	 	 	—	 	
 	
Total production costs	 	 	47,836	 	 	 	37,696	 	 	 	29,206	 	
Exploration expense (Note 1)	 	 	895	 	 	 	594	 	 	 	485	 	
General and administrative expense	 	 	6,811	 	 	 	5,153	 	 	 	3,886	 	
Corporate development expense	 	 	4,504	 	 	 	10	 	 	 	—	 	
Option expense (Note 16)	 	 	1,386	 	 	 	403	 	 	 	—	 	
Loss on equity investment	 	 	331	 	 	 	—	 	 	 	—	 	
Abandonment and impairment of mineral properties	 	 	470	 	 	 	175	 	 	 	—	 	
Loss on sale of assets	 	 	—	 	 	 	—	 	 	 	(425	)	
Interest	 	 	139	 	 	 	42	 	 	 	265	 	
Foreign exchange (gain)/loss	 	 	280	 	 	 	(2,331	)	 	 	(139	)	
 	
Total expenses	 	 	62,652	 	 	 	41,742	 	 	 	33,278	 	
 	
INCOME BEFORE THE UNDERNOTED	 	 	2,377	 	 	 	22,628	 	 	 	5,524	 	
Gain on sale of marketable securities	 	 	—	 	 	 	1,905	 	 	 	—	 	
Omai preferred share redemption premium	 	 	—	 	 	 	—	 	 	 	170	 	
 	
Income before minority interest	 	 	2,377	 	 	 	24,533	 	 	 	5,694	 	
Minority interest	 	 	(1,277	)	 	 	(2,577	)	 	 	(838	)	
 	
NET INCOME BEFORE TAX	 	 	1,100	 	 	 	21,956	 	 	 	4,856	 	
Income tax recovery (Note 17)	 	 	1,542	 	 	 	—	 	 	 	—	 	
 	
NET INCOME	 	$	2,642	 	 	$	21,956	 	 	$	4,856	 	
 	
NET INCOME PER COMMON SHARE – BASIC (Note 18)	 	$	0.019	 	 	$	0.198	 	 	$	0.067	 	
NET INCOME PER COMMON SHARE – DILUTED (Note 18)	 	$	0.018	 	 	$	0.186	 	 	$	0.063	 	
WEIGHTED AVERAGE SHARES OUTSTANDING (millions of shares)	 	 	138.3	 	 	 	111.0	 	 	 	72.4	 	
The accompanying notes are an integral part of these consolidated financial statements.
5

 

GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Stated in thousands of United States dollars except share amounts)

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Equity	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Component	 	 	 	 	
 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 	 	 	of	 	 	 	 	
 	 	Common	 	 	Share	 	 	Contributed	 	 	 	 	 	 	Convertible	 	 	 	 	
 	 	Shares	 	 	Capital	 	 	Surplus	 	 	Warrants	 	 	Debentures	 	 	Deficit	 	
 	
Balance at December 31, 2001	 	 	49,259,548	 	 	$	167,929	 	 	$	—	 	 	$	410	 	 	$	545	 	 	$	(156,511	)	
 	
Shares issued	 	 	31,506,000	 	 	 	27,507	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Issue costs	 	 	—	 	 	 	(2,558	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued under options	 	 	547,916	 	 	 	520	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued under warrants	 	 	2,535,960	 	 	 	1,778	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Stock bonus	 	 	107,000	 	 	 	78	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Debenture conversions	 	 	2,994,278	 	 	 	2,903	 	 	 	—	 	 	 	—	 	 	 	(545	)	 	 	—	 	
Warrants issued	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,817	 	 	 	—	 	 	 	—	 	
Warrants exercised	 	 	—	 	 	 	397	 	 	 	—	 	 	 	(397	)	 	 	—	 	 	 	—	 	
Warrants issued to acquire property	 	 	—	 	 	 	—	 	 	 	—	 	 	 	255	 	 	 	—	 	 	 	—	 	
Other	 	 	450,000	 	 	 	400	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	4,856	 	
 	
Balance at December 31, 2002	 	 	87,400,702	 	 	 	198,954	 	 	 	—	 	 	 	2,085	 	 	 	—	 	 	 	(151,655	)	
 	
Shares issued	 	 	33,030,000	 	 	 	107,598	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Issue costs	 	 	—	 	 	 	(6,455	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Warrants issued	 	 	—	 	 	 	—	 	 	 	—	 	 	 	1,780	 	 	 	—	 	 	 	—	 	
Warrants exercised	 	 	—	 	 	 	1,504	 	 	 	—	 	 	 	(1,504	)	 	 	—	 	 	 	—	 	
Option issued — net of forfeitures	 	 	—	 	 	 	(955	)	 	 	955	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued under options	 	 	1,518,420	 	 	 	2,858	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued under warrants	 	 	8,167,956	 	 	 	8,595	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Stock bonus	 	 	57,200	 	 	 	118	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued to acquire property	 	 	2,750,000	 	 	 	12,045	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Cumulative effect of change in accounting method	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	483	 	
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	21,956	 	
 	
Balance at December 31, 2003	 	 	132,924,278	 	 	 	324,262	 	 	 	955	 	 	 	2,361	 	 	 	—	 	 	 	(129,216	)	
 	
Warrants exercised	 	 	—	 	 	 	755	 	 	 	—	 	 	 	(755	)	 	 	—	 	 	 	—	 	
Option issued — net of forfeitures	 	 	—	 	 	 	—	 	 	 	1,218	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued under options	 	 	767,180	 	 	 	1,239	 	 	 	(133	)	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued under warrants	 	 	8,494,609	 	 	 	14,332	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Shares issued to acquire property	 	 	58,045	 	 	 	300	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Net income	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,642	 	
 	
Balance at December 31, 2004	 	 	142,244,112	 	 	$	340,888	 	 	$	2,040	 	 	$	1,606	 	 	$	—	 	 	$	(126,574	)	
 	
The accompanying notes are an integral part of these consolidated financial statements.
6

 

GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of US dollars)

 	 	For the years ended December 31,	 	
 	 	2004	 	 	2003	 	 	2002	 	
 	
OPERATING ACTIVITIES:	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	2,642	 	 	$	21,956	 	 	$	4,856	 	
 	
Reconciliation of net income to net cash used in operating activities:	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation, depletion and amortization	 	 	8,096	 	 	 	4,993	 	 	 	2,459	 	
Deferred stripping	 	 	(1,357	)	 	 	—	 	 	 	—	 	
Loss on equity investment	 	 	331	 	 	 	—	 	 	 	—	 	
Convertible debentures accretion	 	 	—	 	 	 	—	 	 	 	46	 	
Premium on Omai preferred share redemption	 	 	—	 	 	 	—	 	 	 	(170	)	
Non-cash employee compensation	 	 	1,386	 	 	 	1,085	 	 	 	78	 	
Abandonment and impairment of mineral properties	 	 	470	 	 	 	175	 	 	 	—	 	
Tax asset	 	 	(1,542	)	 	 	—	 	 	 	—	 	
Gain on sale of assets	 	 	—	 	 	 	—	 	 	 	(425	)	
Reclamation expenditures	 	 	(730	)	 	 	(841	)	 	 	(465	)	
Asset retirement obligation	 	 	645	 	 	 	578	 	 	 	—	 	
Minority interest	 	 	1,277	 	 	 	2,577	 	 	 	838	 	
 	
 	 	 	11,218	 	 	 	30,523	 	 	 	7,217	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(2,802	)	 	 	1,187	 	 	 	(746	)	
Inventories	 	 	(2,705	)	 	 	(4,240	)	 	 	(424	)	
Accounts payable and accrued liabilities	 	 	8,204	 	 	 	690	 	 	 	45	 	
Marketable securities	 	 	—	 	 	 	906	 	 	 	(906	)	
Other	 	 	(5	)	 	 	10	 	 	 	(293	)	
 	
Net Cash Provided by Operating Activities	 	 	13,910	 	 	 	29,076	 	 	 	4,893	 	
 	
INVESTING ACTIVITIES:	 	 	 	 	 	 	 	 	 	 	 	 	
Expenditures on deferred exploration and development	 	 	(5,260	)	 	 	(4,539	)	 	 	(208	)	
Expenditures on mining properties	 	 	(19,302	)	 	 	(31,142	)	 	 	(12,075	)	
Expenditures on property, plant and equipment	 	 	(12,286	)	 	 	(10,691	)	 	 	(3,430	)	
Expenditures on mine construction-in-progress	 	 	(23,783	)	 	 	(22,833	)	 	 	—	 	
Omai preferred share redemption	 	 	—	 	 	 	—	 	 	 	310	 	
Asset retirement obligation assets	 	 	1,000	 	 	 	1,192	 	 	 	—	 	
Sale of property	 	 	1,000	 	 	 	1,000	 	 	 	5,425	 	
Deposits	 	 	(5,102	)	 	 	—	 	 	 	—	 	
Investments	 	 	(4,971	)	 	 	(888	)	 	 	—	 	
Other	 	 	(894	)	 	 	(139	)	 	 	(392	)	
 	
Net Cash Used in Investing Activities	 	 	(69,598	)	 	 	(68,040	)	 	 	(10,370	)	
 	
FINANCING ACTIVITIES:	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of share capital, net of issue costs	 	 	15,270	 	 	 	113,408	 	 	 	29,095	 	
Debt repayment	 	 	(153	)	 	 	(5,289	)	 	 	(6,502	)	
Increase in debt	 	 	2,328	 	 	 	799	 	 	 	2,384	 	
Other	 	 	—	 	 	 	—	 	 	 	7	 	
 	
Net Cash Provided by Financing Activities	 	 	17,445	 	 	 	108,918	 	 	 	24,984	 	
 	
Increase/(decrease) in cash and cash equivalents	 	 	(38,243	)	 	 	69,954	 	 	 	19,507	 	
Cash and cash equivalents, beginning of period	 	 	89,970	 	 	 	20,016	 	 	 	509	 	
 	
Cash and cash equivalents end of period	 	$	51,727	 	 	$	89,970	 	 	$	20,016	 	
 	
See Note 19 for supplemental cash flow information. Cash and cash equivalents at December 31, 2004 consisted of $2.8 million in money market funds, $38.9 million of short-term (less than 90 days) investments and $10.0 million of cash in checking accounts.
The accompanying notes are an integral part of these consolidated financial statements.
7

 

GOLDEN STAR RESOURCES LTD.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in tables are in thousands of US Dollars unless noted otherwise)

1. Summary of Significant Accounting Policies
Basis of Consolidation and the Preparation of Financial Statements
These consolidated financial statements are prepared and reported in United States (“US”) dollars and in accordance with generally accepted accounting principles in Canada, (“Canadian GAAP”) which differ in some respects from GAAP in the United States (“US GAAP”). These differences are quantified and explained in Note 22. The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries and joint ventures. All material inter-company balances and transactions have been eliminated.
Fiscal Year
Our fiscal year runs from January 1 to December 31.
Use of Estimates
Preparation of our consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that can affect reported amounts of assets, liabilities, revenues and expenses. The more significant areas requiring the use of estimates include asset impairments, 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, gold reserves, gold recoveries, future gold prices, future operating costs, asset usage rates, and future mining activities. Management bases its estimates on historical experience and on other assumptions we believe to be reasonable under the circumstances. However, actual results may differ from our estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash deposits and highly liquid short term investments. We consider all highly liquid marketable securities with maturities of less than 91 days at date of purchase to be cash equivalents. Our cash equivalents consist mostly of US and Canadian government treasury bills, agency notes, auction rate certificates and money market funds.
Inventories
Inventories classifications include “stockpiled ore”, “in-process inventory”, “finished goods inventory” and “materials and supplies”. All of our inventories are recorded at the lower of cost or market, including direct production costs and attributable overhead and depreciation.
Stockpiled ore represents coarse ore that has been extracted from the mine and is ready for further processing. Stockpile ore is measured by estimating the number of tonnes (via truck counts or by physical surveys) added or removed from the stockpile, the number of contained ounces (based on assay data) and the 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 recoverable ounce of gold in the stockpile.
In-process inventory represents material that is currently in the process of being treated 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 depreciation and amortization related to the processing facilities.
8

 

Finished goods inventory is composed of saleable gold in the form of doré bars that have been poured but not yet delivered to the buyer. The bars are valued at the lower of total cost or market value. Included in the total costs are the direct costs of the mining and processing operations as well as direct overheads, amortization and depreciation.
Materials and supplies inventories consist mostly of equipment parts, fuel and lubricants and reagents consumed in ore processing. Materials and supplies are valued at the lower of average cost or replacement cost.
Reserve Quantities Used in Units-of-Production Amortization
Gold ounces contained in ore stockpiles recognized in inventory balances on the balance sheet are excluded from total reserves when determining units-of-production amortization of mining property, asset retirement assets and other assets.
Marketable Securities
Short term investments in publicly traded marketable securities are recorded at the lower of cost or quoted market prices, with unrealized losses included in income. The market value is based on the closing price at the end of the period, as reported on recognized securities exchanges.
Exploration Costs
Exploration costs related to specific, identifiable properties, including the cost of acquisition, exploration and development, are capitalized until viability of the exploration property is determined. Exploration costs not directly related to an identifiable property are expensed as incurred.
Management periodically reviews, on a property-by-property basis, the carrying value of such properties including the costs of acquisition, exploration and development incurred to date. A decision to abandon, reduce or expand a specific project is based upon many factors including general and specific assessments of contained or potential mineralized materials, potential reserves, anticipated future mineral prices, the anticipated costs of additional exploration and, if warranted, costs of potential future development and operational costs, and the expiration terms and ongoing expenses of maintaining leased mineral properties. We do not set a pre-determined holding period for properties with unproven reserves; however, properties which have not demonstrated suitable metal concentrations at the conclusion of each phase of an exploration program are re-evaluated to determine if future exploration is warranted and if their carrying values are appropriate.
If an exploration property is abandoned or it is determined that its carrying value cannot be supported by future production or sale, the related costs are charged against operations in the year of abandonment or determination of value. Any subsequent costs incurred for that property are expensed as incurred.
The accumulated costs of mineral properties are reclassed as mine property and depleted on a units-of-production basis at such time as production commences.
Impairment of Long-Lived Assets
We review and evaluate our long-lived assets for impairment at least annually and also when events or changes in circumstances indicate the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated future cash flows, on an undiscounted basis, are less than the carrying amount of the asset. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected gold and other commodity prices (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.
The significant assumptions used in determining the future cash flows for each operating unit at December 31, 2004, apart from production cost and capitalized expenditure assumptions unique to each operation, included a long-term gold price of $400 per ounce. In estimating future cash flows, assets are grouped at the lowest levels for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. With the
9

 

exception of other mine-related exploration potential and exploration potential in areas outside of the immediate mine-site, all assets at a particular operation are considered together for purposes of estimating future cash flows. In the case of mineral interests associated with other mine-related exploration potential and exploration potential in areas outside of the immediate mine-site, cash flows and fair values are individually evaluated based primarily on recent exploration results.
Various factors 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 impairment charges to operations.
Property, Plant, Equipment and Mine Development
Property, plant and equipment assets, including, machinery, processing equipment, mining equipment, mine site facilities, vehicles and expenditures that extend the life of such assets are recorded at cost, including direct acquisition costs. Depreciation for such assets is computed using the straight-line method at rates calculated to depreciate the cost of the assets, less their anticipated residual values, if any, over their estimated useful lives.
Mineral property acquisition, exploration and development costs, buildings, processing plants and other long-lived assets are amortized over the life of the reserves of the associated mining property using a units-of-production amortization method. The net book value of property, plant and equipment assets at property locations is charged against income if the site is abandoned and it is determined that the assets cannot be economically transferred to another project or sold.
Deferred Stripping
In open pit mines with multi-year lives and highly variable waste-to-ore stripping ratios over a pit’s life, we defer and subsequently recover waste removal costs in a manner that effectively allocates an equal share of the waste mining costs to each tonne of ore extracted. This practice is typically referred to as deferred stripping accounting and is widely used in the mining industry. Application of deferred stripping accounting results in a smoothing of the cost of waste-rock removal over the life of the pit rather than expensing the actual waste removal costs as incurred in each period. The full amount of the waste removal costs in the pit will not be expensed until the end of the pit life. When properly executed, a deferred waste stripping program will result in the deferred asset being fully amortized to zero balance when the last tonne of ore is removed from the pit.
Capitalized amounts are calculated each period by determining the tonnes of waste moved in excess of the life-of-pit average stripping ratio and valuing them at the average mining cost per tonne during the period. Costs are recovered in periods when the actual tonnes of waste moved are less than what would have been moved at the average stripping rate. The estimates required to be made in establishing and operating a deferred stripping program include the amount and location of ores reserves to be recovered and the amount of waste rock to be removed. Such estimates are subject to several uncertainties mainly related to the limited access to a buried ore body. Factors including fluctuating metal prices, unexpected changes in operating costs, discovery of additional reserves or discovery that certain areas of the mine thought to be ore bearing are not and unexpected changes in the geologic environment at depth can all impact the estimates used in a deferred stripping program. At least annually an engineering study evaluates the remaining ore and waste tonnages in the pit using the most recent information available and adjustments to the capitalization and recovery rates are made to insure that the capitalized costs will be appropriately expensed over the remaining ore reserve tonnes in the pit.
There are mixed accounting practices in this area and some mining companies expense waste removal costs as incurred, which may result in reporting greater volatility in period to period results of operations than would be expected from a company that employs a deferred stripping policy. Mining companies also use differing mechanisms for determining the amount and cost of the waste tonnages capitalized and amounts recovered.
10

 

Capitalized waste-rock removal costs are shown on our consolidated balance sheet in a line titled “Deferred Stripping”. The cost impact is included in the statement of operations in the line titled “Mining operations”.
In early March 2005 an Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board reached a consensus on EITF issue 04-06 “Accounting for Stripping Costs in the Mining Industry”. The consensus was that deferred stripping costs should no longer be capitalized but rather should be considered a variable production cost. Transition provisions provide that deferred stripping will no longer be appropriate for fiscal years beginning after December 15, 2005. The EITF’s consensus will considered for ratification by the FASB Board March 30, 2005.
Environmental Rehabilitation and Closure
In accordance with the requirements of the CICA Handbook Section 3110, “Asset Retirement Obligations” environmental reclamation and closure liabilities are recognized at the time of environmental disturbance in amounts equal to the discounted value of expected future reclamation and closure costs. The discounted cost of future reclamation and closure activities is capitalized into mine property 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. Cash expenditures for environmental remediation and closure are netted against the accrual as incurred.
Foreign Currencies and Foreign Currency Translation
Our functional currency is the US dollar. Transaction amounts denominated in foreign currencies are translated to US dollars at exchange rates prevailing at the date of the transaction. The carrying value of monetary assets and liabilities is translated at the rate of exchange prevailing at the balance sheet date. Non-monetary assets 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”, and Ghanaian currency is denoted as “Cedi” or “Cedis”.
Income and Mining Taxes
Income and mining taxes comprise the provision (or relief) for taxes actually paid or payable and for future taxes. Future income and mining taxes are computed using the asset and liability method whereby future income and mining 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. Future income and mining tax assets and liabilities are computed using income tax rates in effect when the temporary differences are expected to reverse. The effect on the future tax assets and liabilities of a change in tax rates is recognized in the period of substantive enactment. The provision or relief for future taxes is based on the changes in future tax assets and liabilities during the period. In estimating future income and mining tax assets, a valuation allowance is determined to reduce the future tax assets to amounts that are more likely than not to be realized.
Net Income per Share
Basic income per share is calculated by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. The calculation of diluted net income per common share uses the treasury stock method to compute the dilutive effects of stock options and warrants.
Revenue Recognition
Revenue from the sale of gold is recognized when title and the risk of ownership pass to the buyer. Title and risk of ownership pass to the buyer when doré is delivered into the buyer’s custody. Our gold is sold to a South African gold refinery and revenue is recognized when title is transferred to the customer at the refinery. The sales price is based on the London P.M. fix on the day of delivery.
Credits from by-products are credited against operating costs and not included in revenues. By-product costs have been de minimis to date at our existing properties.
Stock Based Compensation
11

 

In accordance with the requirements of CICA Handbook Section 3870, “Stock Based Compensation and other Stock-based Payments” we use the fair value method to expense the fair value of options granted to employees and directors. The fair value of options granted is established at the date of the grant, using the Black-Scholes option-pricing model. Compensation expense for options with immediate vesting is recognized in the period of the grant. Compensation expense for options with graded vesting is recognized on a straight line basis over the vesting periods.
Reclassifications
For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation.
Recent Accounting Pronouncements
In November 2003, the CICA amended CICA 3870 - “Stock-based Compensation and Other Stock-based Payments” to require recognition at the date of grant, of expense for stock option grants after December 31, 2003 in an amount equal to the fair value of the option. We opted for an early adoption of this new guidance and began expensing stock options during 2003. The impact of this election resulted in recognition of approximately $1.0 million of stock option expense in 2003 and approximately $1.4 million in 2004.
In December 2001, the CICA issued Accounting Guideline 13 (“AcG-13”), “Hedging Relationships”. The guideline establishes requirements for the identification, documentation and effectiveness of hedging relationships, which would have been effective for fiscal years beginning on or before July 1, 2003. Since we had no hedging instruments there was no impact on our financial results from the adoption of the guidance.
AcG 15 – Consolidations of variable interest entities
In November 2004, the CICA issued Accounting Guideline “Consolidation of Variable Interest Entities” (“AcG-15”) to provide guidance for determining when an enterprise includes assets, liabilities and results of activities of variable interest entities in its consolidated financial statements. Variable interest entities are those in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. We do not anticipate any material impact on our consolidated financial statements or financial results from the adoption of AcG-15.
For a discussion of recent accounting pronouncements under US GAAP, see Note 22 to the Consolidated Financial Statements.
2. Financial Instruments
(a) Fair Value - Our financial instruments are comprised of cash, short-term investments, accounts receivable, restricted cash, accounts payable, accrued liabilities, accrued wages, payroll taxes and debt. The fair value of cash and short-term investments, accounts receivable, accounts payable, accrued liabilities and accrued wages, payroll taxes and debt equals their carrying value due to the short-term nature of these items. The fair value of restricted cash is equal to the carrying value as the cash is invested in short-term, high-quality instruments.
(b) Commodity Instruments – In the past we have purchased put option contracts (“puts”). Puts provide the right, but not the obligation, to sell a specified number of ounces of gold at a specified price on a specified future transaction date. Put options thereby provide a floor price for a portion of future production but they do not limit the upside potential of higher gold prices in excess of the specified price. If we opt to forego exercising a put option, the put expires on its specified transaction date. We have not entered into a hedging program nor do we currently otherwise manage exposure to commodity price risk.
12

 

3. Inventories 

 	
 	 	 	 	As of December 31,	 	 	
 	 	 	 	2004	 	 	 	2003	 	 	
 	Stockpiled ore	 	 	$	3,659	 	 	 	$	4,167	 	 	
 	In-process	 	 	 	2,858	 	 	 	 	2,821	 	 	
 	Materials and supplies	 	 	 	8,849	 	 	 	 	5,673	 	 	
 	Total	 	 	$	15,366	 	 	 	$	12,661	 	 	
 	
There were approximately 15,400 and 28,000 recoverable ounces of gold in ore stockpile inventories at December 31, 2004 and 2003, respectively. These ounces contained in our ore stockpile inventories are included in ore reserves. The stockpile inventories are for the most part short-term surge piles which will be processed in the next 12 months or less.
4. Guiana Shield transactions
In 2001 we sold our 50% interest in the Rosebel exploration property in South America to Cambior Inc. In addition to a $5.0 million payment received at closing in 2002 and a future royalty (or participation right) based on future Rosebel production, the terms of the sale agreement provided that Cambior would make three deferred payments of $1.0 million each and also pays a royalty on future gold production. The first of the deferred payments was received in the first quarter of 2003. The second deferred payment was made in the first quarter of 2004, and the third and final payment is expected in the first quarter of 2005.
We began receiving royalty payments in early 2004 from Cambior Inc. related to the participation right. Royalty income totaled $3.0 million during 2004. On December 31, 2004 we sold the Rosebel partition right to our 53% owned subsidiary Guyanor Ressources SA for $12.0 million, of which $6.0 million was paid on January 8, 2005 and the balance is due to Golden Star prior to June 30, 2005. There was no gain recognition on the sale. Additionally, Golden Star will receive up to $2.50 per ounce of Rosebel production for all production in excess of 2 million ounces but less than 4 million ounces and up to $5.00 per ounce when production exceeds 4 million ounces up to 7 million ounces.
5. Deposits
Represents cash advances for equipment and materials purchases at WGL and BGL.
6. Long Term Investments
Represents a $1.4 million investment in Goldmin Holdings, a private exploration firm with a focus on South American projects and a $4.1 million investment in the common shares of Moto Gold Mines Limited (“Moto”), a publicly traded gold exploration and development firm.
We invested an additional $0.8 million in Goldmin Holdings during 2004 bringing our ownership to 30.5%. We carry this investment as an equity investment and recognized $0.3 million of equity losses in 2004.
During 2004 when we acquired a 9.5% equity interest in Moto for $4.1 million. In addition to the common shares, we received warrants, which if exercised will raise our interest to 13.3%. This investment is carried as a long-term investment. The fair value of our investment in Moto remained at $4.1 million as of December 31, 2004.
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7. Deferred Exploration and Development Costs
The consolidated property expenditures on our exploration projects for the year ended December 31, 2004 were as follows: 

 	 	 	
 	 	 	 	Deferred	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Deferred	 	 	
 	 	 	 	Exploration &	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Exploration &	 	 	
 	 	 	 	Development	 	 	 	Capitalized	 	 	 	 	 	 	 	 	 	 	 	 	 	Reclassified	 	 	 	Development	 	 	
 	 	 	 	Costs	 	 	 	Exploration	 	 	 	 	 	 	 	 	Impairment	 	 	 	to Mining	 	 	 	Costs	 	 	
 	 	 	 	as of 12/31/03	 	 	 	Expenditures	 	 	 	Acquisitions	 	 	 	Write-offs	 	 	 	Property	 	 	 	as of 12/31/04	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	GHANA:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Bogoso Sulfide Project	 	 	$	5,930	 	 	 	$	—	 	 	 	$	—	 	 	 	$	—	 	 	 	$	(5,930	)	 	 	$	—	 	 	
 	Akropong Trend & Other Ghana	 	 	 	2,037	 	 	 	 	406	 	 	 	 	—	 	 	 	 	—	 	 	 	 	—	 	 	 	 	2,443	 	 	
 	Prestea Property Projects	 	 	 	—	 	 	 	 	2,537	 	 	 	 	—	 	 	 	 	(470	)	 	 	 	—	 	 	 	 	2,067	 	 	
 	Beta Boundary	 	 	 	814	 	 	 	 	—	 	 	 	 	—	 	 	 	 	 	 	 	 	 	(814	)	 	 	 	—	 	 	
 	MALI:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Mininko	 	 	 	130	 	 	 	 	903	 	 	 	 	—	 	 	 	 	—	 	 	 	 	—	 	 	 	 	1,033	 	 	
 	SIERRA LEONE	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Mano River	 	 	 	—	 	 	 	 	758	 	 	 	 	—	 	 	 	 	—	 	 	 	 	—	 	 	 	 	758	 	 	
 	FRENCH GUIANA:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Bon Espoir	 	 	 	—	 	 	 	 	—	 	 	 	 	501	 	 	 	 	—	 	 	 	 	—	 	 	 	 	501	 	 	
 	Paul Isnard	 	 	 	—	 	 	 	 	—	 	 	 	 	256	 	 	 	 	—	 	 	 	 	—	 	 	 	 	256	 	 	
 	SURINAME:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Saramacca	 	 	 	197	 	 	 	 	197	 	 	 	 	—	 	 	 	 	—	 	 	 	 	—	 	 	 	 	394	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	TOTAL	 	 	$	9,108	 	 	 	$	4,801	 	 	 	$	757	 	 	 	$	(470	)	 	 	$	(6,744	)	 	 	$	7,452	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Bogoso Sulfide Project and the Beta Boundary Project (now referred to as the Bondaye Project) were reclassified as Mining Properties during 2004.
Consolidated property expenditures for exploration projects for the year ended December 31, 2003 were as follows: 

 	 	 	
 	 	 	 	Deferred	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Deferred	 	 	
 	 	 	 	Exploration &	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Exploration &	 	 	
 	 	 	 	Development	 	 	 	Capitalized	 	 	 	 	 	 	 	 	 	 	 	 	 	Development	 	 	
 	 	 	 	Costs	 	 	 	Exploration	 	 	 	 	 	 	 	 	Impairment	 	 	 	Costs	 	 	
 	 	 	 	as of 12/31/02	 	 	 	Expenditures	 	 	 	Acquisitions	 	 	 	Write-offs	 	 	 	as of 12/31/03	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	GHANA:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Obuom	 	 	$	269	 	 	 	$	9	 	 	 	$	—	 	 	 	$	—	 	 	 	$	278	 	 	
 	Bogoso Sulfide Project	 	 	 	3,621	 	 	 	 	119	 	 	 	 	2,190	 	 	 	 	—	 	 	 	 	5,930	 	 	
 	Akropong Trend & Other Ghana	 	 	 	787	 	 	 	 	972	 	 	 	 	—	 	 	 	 	—	 	 	 	 	1,759	 	 	
 	Beta Boundary	 	 	 	—	 	 	 	 	814	 	 	 	 	—	 	 	 	 	—	 	 	 	 	814	 	 	
 	Other Bogoso Area Properties	 	 	 	—	 	 	 	 	109	 	 	 	 	—	 	 	 	 	(109	)	 	 	 	—	 	 	
 	MALI:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Mininko	 	 	 	—	 	 	 	 	130	 	 	 	 	—	 	 	 	 	—	 	 	 	 	130	 	 	
 	FRENCH GUIANA:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Yaou	 	 	 	33	 	 	 	 	—	 	 	 	 	—	 	 	 	 	(33	)	 	 	 	—	 	 	
 	Dorlin	 	 	 	33	 	 	 	 	—	 	 	 	 	—	 	 	 	 	(33	)	 	 	 	—	 	 	
 	SURINAME:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Saramacca	 	 	 	—	 	 	 	 	197	 	 	 	 	—	 	 	 	 	—	 	 	 	 	197	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	TOTAL	 	 	$	4,743	 	 	 	$	2,350	 	 	 	$	2,190	 	 	 	$	(175	)	 	 	$	9,108	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
14

 

8. Property, Plant and Equipment 

 	 	 	
 	 	 	 	As of December 31, 2004	 	 	 	As of December 31, 2003	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Property,	 	 	 	 	 	 	 	 	 	 	 	 	 	Property,	 	 	
 	 	 	 	Property,	 	 	 	 	 	 	 	 	Plant and	 	 	 	Property,	 	 	 	 	 	 	 	 	Plant and	 	 	
 	 	 	 	Plant and	 	 	 	 	 	 	 	 	Equipment	 	 	 	Plant and	 	 	 	 	 	 	 	 	Equipment	 	 	
 	 	 	 	Equipment at	 	 	 	Accumulated	 	 	 	Net Book	 	 	 	Equipment at	 	 	 	Accumulated	 	 	 	Net Book	 	 	
 	 	 	 	Cost	 	 	 	Depreciation	 	 	 	Value	 	 	 	Cost	 	 	 	Depreciation	 	 	 	Value	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Bogoso/Prestea	 	 	$	27,722	 	 	 	$	5,057	 	 	 	$	22,665	 	 	 	$	15,765	 	 	 	$	4,143	 	 	 	$	11,622	 	 	
 	Prestea Underground	 	 	 	238	 	 	 	 	—	 	 	 	 	238	 	 	 	 	227	 	 	 	 	—	 	 	 	 	227	 	 	
 	Guyanor	 	 	 	1,969	 	 	 	 	1,951	 	 	 	 	18	 	 	 	 	1,985	 	 	 	 	1,952	 	 	 	 	33	 	 	
 	Wassa	 	 	 	5,460	 	 	 	 	—	 	 	 	 	5,460	 	 	 	 	6,259	 	 	 	 	—	 	 	 	 	6,259	 	 	
 	Corporate & other	 	 	 	1,060	 	 	 	 	788	 	 	 	 	272	 	 	 	 	782	 	 	 	 	721	 	 	 	 	61	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	 	$	36,449	 	 	 	$	7,796	 	 	 	$	28,653	 	 	 	$	25,018	 	 	 	$	6,816	 	 	 	$	18,202	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
9. Mining Properties 

 	 	 	
 	 	 	 	As of December 31, 2004	 	 	 	As of December 31, 2003	 	 	
 	 	 	 	Mine	 	 	 	 	 	 	 	 	Mine	 	 	 	Mine	 	 	 	 	 	 	 	 	Mine	 	 	
 	 	 	 	Property at	 	 	 	Accumulated	 	 	 	Property, Net	 	 	 	Property at	 	 	 	Accumulated	 	 	 	Property, Net	 	 	
 	 	 	 	Cost	 	 	 	Amortization	 	 	 	Book Value	 	 	 	Cost	 	 	 	Amortization	 	 	 	Book Value	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Bogoso/Prestea	 	 	$	43,420	 	 	 	$	23,113	 	 	 	$	20,307	 	 	 	$	41,885	 	 	 	$	16,856	 	 	 	$	25,029	 	 	
 	Prestea Underground	 	 	 	12,984	 	 	 	 	—	 	 	 	 	12,984	 	 	 	 	8,560	 	 	 	 	—	 	 	 	 	8,560	 	 	
 	Wassa	 	 	 	9,653	 	 	 	 	—	 	 	 	 	9,653	 	 	 	 	9,778	 	 	 	 	—	 	 	 	 	9,778	 	 	
 	Bogoso Sulfide	 	 	 	13,065	 	 	 	 	—	 	 	 	 	13,065	 	 	 	 	—	 	 	 	 	—	 	 	 	 	—	 	 	
 	Mampon	 	 	 	13,676	 	 	 	 	—	 	 	 	 	13,676	 	 	 	 	13,441	 	 	 	 	—	 	 	 	 	13,441	 	 	
 	Beta Boundary	 	 	 	4,512	 	 	 	 	—	 	 	 	 	4,512	 	 	 	 	—	 	 	 	 	—	 	 	 	 	—	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Total	 	 	$	97,310	 	 	 	$	23,113	 	 	 	$	74,197	 	 	 	$	73,664	 	 	 	$	16,856	 	 	 	$	56,808	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Some prior period numbers have been adjusted to conform to the 2004 presentation.
In June 2004 due to financial difficulties experienced by our joint venture partner, the portion of the Prestea Underground owned by our joint venture partner reverted to our ownership per the terms of the original joint venture agreement. As a result, a $2.4 million minority interest recorded when the partnership was originally organized was reversed and a $2.4 million reduction was recorded in the carrying value of the Prestea Underground Mining Property assets.
The Bogoso Sulfide project, and the Beta Boundary project at Prestea, which is expected to feed the proposed Bondaye processing plant, were deemed sufficiently advanced by early 2004 for reclassification as Mining Properties rather than as exploration properties. Reclassification was based upon having defined proven and probable reserves at both projects, completion of a feasibility study for the Bogoso Sulfide project showing it to be economically viable, and advanced engineering and design work on the Bondaye/Beta Boundary project which is now awaiting environmental permits. The Mining Properties costs associated with these two projects will be amortized over production ounces when gold production begins.
10. Mine Construction-in-Progress
Mine construction in progress represents costs incurred at the Wassa project subsequent to acquisition. The balance includes feasibility study costs, equipment purchases and construction costs, including interim payments to the construction contractor and development costs.
11. Deferred Stripping
We initiated a deferred waste stripping policy at the Plant-North pit at Prestea in the third quarter of 2004. In the past, most of our pits have been relatively shallow and short-lived because the Bogoso processing plant could effectively process only near-surface ores that had been naturally oxidized by relatively shallow ground water. With recent plant modifications we are now able to process certain deeper ores from Prestea. As a result we anticipate deeper pits with longer lives than in the past. Adoption of this policy resulted in deferral of $1.4 million of Plant-North waste stripping costs during the second half of 2004. There were no recoveries of stripping costs during 2004. We expect that the entire $1.4 million of deferred stripping costs will be recovered during 2005. The value of capitalized waste costs is included in the Mining Properties balance on our consolidated balance sheets. The cost impact is included in the statement of operations in the line titled “Mining operations”. 
12. Debt
15

 

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	
 	 	 	 	As of	 	 	 	As of	 	 	
 	 	 	 	December 31,	 	 	 	December 31,	 	 	
 	 	 	 	2004	 	 	 	2003	 	 	
 	 	 	 	 	 	 	 	 	
 	Current debt:	 	 	 	 	 	 	 	 	 	 	 	
 	Equipment financing loans — Bogoso (Note a)	 	 	$	1,130	 	 	 	$	—	 	 	
 	Equipment financing loans – Wassa (Note b)	 	 	 	137	 	 	 	 	142	 	 	
 	 	 	 	 	 	 	 	 	
 	Total current debt	 	 	$	1,267	 	 	 	$	142	 	 	
 	 	 	 	 	 	 	 	 	
 	Long term debt:	 	 	 	 	 	 	 	 	 	 	 	
 	Equipment financing loans — Bogoso (Note a)	 	 	 	1,198	 	 	 	 	—	 	 	
 	Equipment financing loans – Wassa (Note b)	 	 	$	509	 	 	 	$	657	 	 	
 	 	 	 	 	 	 	 	 	
 	Total long term debt	 	 	$	1,707	 	 	 	$	657	 	 	

(a)	 	In June 2004 an equipment financing credit facility of up to $25 million was established between Caterpillar Financial Services Corporation and BGL and WGL, subsidiaries of Golden Star, with Golden Star as the guarantor of all amounts borrowed. The facility provides credit for a mixture of new and used mining equipment and is available until April 2005. Amounts drawn under this facility are repayable over five years for new equipment and over two years for used equipment. The interest rate is fixed using the Federal Reserve Bank 2-year or 5-year swap rate plus 2.28% or we can opt for a floating interest rate of LIBOR plus 2.28%. As of December 31, 2004, $2.3 million had been drawn to purchase used equipment and is repayable in 24 equal monthly installments beginning December 2004 with an interest rate of 6.01%.	
 		
(b)	 	Caterpillar Financial Services Corporation - A $0.8 million installment loan was used to purchase mobile equipment at Wassa and is repayable in 60 equal monthly installments from December 2003 with an interest rate of 6.25%.	
13. Asset Retirement Obligations
Effective January 1, 2003, we changed our accounting policy for asset retirement obligations to comply with CICA Handbook Section 3110, “Asset Retirement Obligations.” This change was made on a retroactive basis. Upon the adoption of this new standard, we recognized a $0.5 million reduction in the carrying value of liabilities related to future reclamation and other asset retirement obligations. The cumulative effect of the adoption of this new standard totaled $0.5 million and was recorded as a reduction in the deficit account in shareholders’ equity.
Our Asset Retirement Obligations (“ARO”) recognize the present value of the ultimate closure cost associated with reclamation, demolition and stabilization of our mining properties. Included in this liability are the costs of mine closure and reclamation, processing plant and infrastructure demolition, tailings pond stabilization and reclamation and environmental monitoring costs.
16

 

The changes in the carrying amount of the ARO during 2004 were as follows: 

 	
 	Asset Retirement Obligations	 	 	Year ended December 31, 2004	 	 	
 	Balance at beginning of the year	 	 	$	7,745	 	 	
 	Accretion expense	 	 	 	645	 	 	
 	Reclamation work performed	 	 	 	(730	)	 	
 	New AROs incurred during the period	 	 	 	1,000	 	 	
 	Balance at December 31, 2004	 	 	$	8,660	 	 	
 	
14. Commitments and Contingencies
(a) Environmental Regulations and Asset Retirement Obligations - We are not aware of any events of material non-compliance with environmental laws and regulations in our operations which could have a material adverse effect on our operations or financial condition. The exact nature of environmental control problems, if any, which we may encounter in the future cannot be predicted, primarily because of the changing character of environmental requirements that may be enacted within various jurisdictions. Asset retirement obligations, which include environmental rehabilitation liabilities for reclamation and for closure costs, were $6.0 million at Bogoso/Prestea at December 31, 2004, up from $5.2 million at December 31, 2003. Asset retirement obligations at Wassa totaled $2.7 million at December 31, 2004, up from $2.5 million at the end of 2003.
(b) Cash Restricted for Environmental Rehabilitation Liabilities - In 1999, we were required, according to the acquisition agreement with the sellers of BGL, to restrict $6.0 million of cash to be used for the ongoing and final reclamation and closure costs at Bogoso. The withdrawal of these funds must be agreed to by the sellers, who are ultimately responsible for the reclamation in the event of our non-performance. There have been no agreements for disbursements since 2001. We are seeking to obtain an amendment to the agreement that would remove the restriction and in its place establish a reclamation bond to meet Ghana’s Environmental Protection Agency reclamation bonding requirements as discussed below. At December 31, 2004, approximately $3.4 million of restricted cash was held as a cash provision against future reclamation commitments at Bogoso.
(c) Corporate Office Building Lease – Effective January 1, 2004, we entered into a five year office building lease for our corporate headquarters in Littleton, Colorado. The annual initial lease rate was $19.00 per rentable square foot, which escalates to $21.00 per rentable square foot in the last year of the lease.
(d) Environmental Bonding in Ghana - During 2004 the Ghana Environmental Protection Agency requested that we provide cash collateralized environmental reclamation bonds for both Bogoso/Prestea and Wassa. While the Environmental Protection Agency has not specified the exact amount of the required bonds, we expect, based on our cost estimates for required future reclamation spending, that the bonds will be approximately $9.0 million for Bogoso/Prestea and approximately $3.9 million for Wassa. We plan to fund these obligations with a combination of cash on hand and letters of credit.
(e) Royalties -
(i) Dunkwa Properties: As part of the acquisition of the Dunkwa properties in August 2003, we agreed to pay the seller a net smelter return royalty on future gold production from the Mansiso and Asikuma properties, excluding any royalty 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 of or below $300 per ounce up to 3.5% for gold prices in excess of $400 per ounce.
(ii) Government of Ghana: Under the laws of Ghana, a holder of a mining lease is required to pay an annual royalty of not less than 3% and not more than 12% of the total revenues earned from the lease area. The royalty is payable on a quarterly basis. We currently pay a 3% annual royalty on gold production from Bogoso/Prestea and expect to pay a royalty at a similar rate on Wassa production. The Government of Ghana retains the right to increase the amount of the royalty to as much as 12% based upon a formula related to a company’s operating margin.
17

 

(f) Wassa Construction Contract - We entered into a contract with Metallurgical Design and Management (Pty) Ltd. (“MDM”), a South African company, in July 2003, for the construction of the CIL processing plant facility and other associated processing facilities at Wassa. By the end of 2004 substantially all construction work had been completed at Wassa, except for the completion of the power line, and the contract with MDM was terminated and no further payments are due them.
(g) Mano River Joint Venture - We entered into a joint venture agreement in late 2003 to invest up to $6 million over four years in the Mano River project in Sierra Leone via an earn-in agreement with a junior exploration company which holds a group of gold exploration properties in Sierra Leone. The initial $6 million, if fully funded (we can terminate the agreement after spending $1.0 million) would yield a 51% interest in the joint venture. Further provisions of the joint venture agreement provide the opportunity to acquire up to 85% of the joint venture by continued long term funding. The joint venture agreement is subject to completion of documentation. Spending during 2003 was nil. Spending in 2004 totaled $0.8 million leaving $0.2 million left on our minimum commitment to the project.
(h) Mininko Joint Venture - In late 2003 we entered into a joint venture agreement, agreeing to fund exploration work on the Mininko gold property in Mali. Funding of $2.6 million would earn a 51% interest in the joint venture. We can terminate the joint venture after spending $0.4 million of which $0.1 million was spent in 2003. Spending during 2004 totaled $0.9 million. The joint venture agreement provides that we can earn up to an 82.5% interest by continued funding of exploration and development, if warranted.
15. Warrants
At December 31, 2004, there were two series of warrants outstanding to purchase a total of 8.8 million common shares. Of the total, 8.4 million were issued during 2003 and 0.4 million were issued during 2002 as follows: 

 	
 	 	 	 	 	 	 	Warrants	 	 	 	Exercise	 	 	 	 	 	 	Expiration	 	
 	Type:	 	 	Date issued	 	 	outstanding	 	 	 	price	 	 	 	Term	 	 	date	 	
 	Broker warrants	 	 	July 24, 2002	 	 	 	385,000	 	 	 	Cdn$2.28	 	 	2 years (1)	 	 	July 24, 2005	 	
 	Equity offering	 	 	February 14, 2003	 	 	 	8,448,334	 	 	 	Cdn$4.60	 	 	4 years	 	 	February 14, 2007	 	
 	Total	 	 	 	 	 	 	8,833,334	 	 	 	 	 	 	 	 	 	 	 	 	 	

(1)	 	The July 24, 2002 broker warrants are exercisable during a two-year period ending July 24, 2005.	
During 2004, 8.5 million warrants were exercised resulting in cash proceeds of $14.3 million to Golden Star.
The warrants issued in conjunction with the February 14, 2003 equity offering are traded on the Toronto Stock Exchange under the symbol GSC.WT.A. There is no public market for the broker warrants.
16. Stock Based Compensation
(a) Stock Options - We have one stock option plan, the 1997 Stock Option Plan, as amended (the “GSR Plan”) and options are granted under this plan from time to time at the discretion of the Compensation Committee. Options granted are non-assignable and are exercisable for a period of ten years or such other period as stipulated in a stock option agreement between Golden Star and the optionee. Under the GSR Plan, we may grant options to employees, consultants and directors of the Company or its subsidiaries for up to 15,000,000 shares of common stock. Options take the form of non-qualified stock options, and the exercise price of each option is not less than the market price of our stock on the date of grant. Options typically vest over periods ranging from immediately to four years from the date of grant. Vesting periods are determined at the discretion of the Compensation Committee.
18

 

The following tables summarize information about options under the GSR Plan: 

 	
 	 	 	 	2004	 	 	 	2003	 	 	 	 	 	 	 	 	2002	 	 	
 	 	 	 	 	 	 	 	 	Weighted-	 	 	 	 	 	 	 	 	Weighted-	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	Average	 	 	 	 	 	 	 	 	Average	 	 	 	 	 	 	 	 	Weighted-	 	 	
 	 	 	 	Shares	 	 	 	Exercise Price	 	 	 	Shares	 	 	 	Exercise Price	 	 	 	Shares	 	 	 	Average Exercise	 	 	
 	GSR Plan	 	 	(000s)	 	 	 	(Cdn$)	 	 	 	(000s)	 	 	 	(Cdn$)	 	 	 	(000s)	 	 	 	Price (Cdn$)	 	 	
 	Outstanding at beginning of year	 	 	 	5,241	 	 	 	 	2.41	 	 	 	 	4,489	 	 	 	 	1.36	 	 	 	 	4,595	 	 	 	 	1.42	 	 	
 	Granted	 	 	 	855	 	 	 	 	6.95	 	 	 	 	2,354	 	 	 	 	3.99	 	 	 	 	640	 	 	 	 	1.17	 	 	
 	Exercised	 	 	 	(767	)	 	 	 	2.12	 	 	 	 	(1,518	)	 	 	 	1.73	 	 	 	 	(548	)	 	 	 	1.49	 	 	
 	Forfeited	 	 	 	(58	)	 	 	 	4.31	 	 	 	 	(84	)	 	 	 	2.92	 	 	 	 	(198	)	 	 	 	1.76	 	 	
 	Outstanding at end of year	 	 	 	5,271	 	 	 	 	3.17	 	 	 	 	5,241	 	 	 	 	2.41	 	 	 	 	4,489	 	 	 	 	1.36	 	 	
 	Options vested and exercisable at year-end	 	 	 	4,140	 	 	 	 	2.54	 	 	 	 	3,803	 	 	 	 	1.81	 	 	 	 	4,006	 	 	 	 	1.40	 	 	
 	Weighted-average fair value of options granted during the year	 	 	 	 	 	 	 	 	2.45	 	 	 	 	 	 	 	 	 	1.25	 	 	 	 	 	 	 	 	 	0.86	 	 	

 	
 	 	 	 	Options Outstanding	 	 	 	Options Exercisable	 	 	
 	 	 	 	Number	 	 	 	Weighted-	 	 	 	 	 	 	 	 	Number	 	 	 	 	 	 	
 	 	 	 	Outstanding at	 	 	 	Average	 	 	 	Weighted-	 	 	 	Exercisable at	 	 	 	Weighted-	 	 	
 	 	 	 	December 31,	 	 	 	Remaining	 	 	 	Average	 	 	 	December 31,	 	 	 	Average	 	 	
 	 	 	 	2004	 	 	 	Contractual Life	 	 	 	Exercise Price	 	 	 	2004	 	 	 	Exercise Price	 	 	
 	GSR Plan Range of Exercise Prices (Cdn$)	 	 	(000s)	 	 	 	(years)	 	 	 	(Cdn$)	 	 	 	(000s)	 	 	 	(Cdn$)	 	 	
 	1.00 to 2.50	 	 	 	2,869	 	 	 	 	5.6	 	 	 	 	1.39	 	 	 	 	2,794	 	 	 	 	1.36	 	 	
 	2.51 to 4.00	 	 	 	1,162	 	 	 	 	8.2	 	 	 	 	3.46	 	 	 	 	757	 	 	 	 	3.38	 	 	
 	4.01 to 7.00	 	 	 	1,026	 	 	 	 	9.3	 	 	 	 	6.65	 	 	 	 	482	 	 	 	 	6.63	 	 	
 	7.01 to 10.00	 	 	 	214	 	 	 	 	8.9	 	 	 	 	8.83	 	 	 	 	107	 	 	 	 	8.83	 	 	
 	All options	 	 	 	5,271	 	 	 	 	7.1	 	 	 	 	3.17	 	 	 	 	4,140	 	 	 	 	2.54	 	 	
 	
Options granted during 2004: 

 	
 	 	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Fair	 	 	 	 	 	 	
 	Date	 	 	Options	 	 	 	Strike Price	 	 	 	Fair Value per	 	 	 	Value	 	 	 	Option	 	 	
 	Granted	 	 	(000s)	 	 	 	(Cdn$)	 	 	 	option (Cdn$)	 	 	 	(000s of Cdn$)	 	 	 	Life	 	 	
 	May 14, 2004	 	 	 	855	 	 	 	 	6.95	 	 	 	 	2.45	 	 	 	 	2,094	 	 	 	10 years	 	
 	Total	 	 	 	855	 	 	 	 	6.95	 	 	 	 	2.45	 	 	 	 	2,094	 	 	 	10 years	 	
 	
Options granted during 2003: 

 	
 	 	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Fair	 	 	 	 	 	 	
 	Date	 	 	Options	 	 	 	Strike Price	 	 	 	Fair Value per	 	 	 	Value	 	 	 	Option	 	 	
 	Granted	 	 	(000s)	 	 	 	(Cdn$)	 	 	 	option (Cdn$)	 	 	 	(000s of Cdn$)	 	 	 	Life	 	 	
 	January 30, 2003	 	 	 	1,134	 	 	 	 	3.14	 	 	 	 	0.96	 	 	 	 	1,093	 	 	 	10 years	 	
 	March 21, 2003	 	 	 	225	 	 	 	 	2.39	 	 	 	 	0.90	 	 	 	 	203	 	 	 	10 years	 	
 	July 30, 2003	 	 	 	556	 	 	 	 	4.00	 	 	 	 	1.17	 	 	 	 	648	 	 	 	10 years	 	
 	September 18, 2003	 	 	 	225	 	 	 	 	5.25	 	 	 	 	1.94	 	 	 	 	436	 	 	 	10 years	 	
 	October 30, 2003	 	 	 	32	 	 	 	 	7.45	 	 	 	 	2.21	 	 	 	 	71	 	 	 	10 years	 	
 	
19

 

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
 	 	 	 	Number of	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Fair	 	 	 	 	 	 	
 	Date	 	 	Options	 	 	 	Strike Price	 	 	 	Fair Value per	 	 	 	Value	 	 	 	Option	 	 	
 	Granted	 	 	(000s)	 	 	 	(Cdn$)	 	 	 	option (Cdn$)	 	 	 	(000s of Cdn$)	 	 	 	Life	 	 	
 	December 18, 2003	 	 	 	182	 	 	 	 	9.07	 	 	 	 	2.67	 	 	 	 	486	 	 	 	10 years	 	
 	Total	 	 	 	2,354	 	 	 	 	3.99	 	 	 	 	1.25	 	 	 	 	2,937	 	 	 	10 years	 	
 	
The fair value of options granted during 2004, 2003 and 2002 were estimated at the grant dates using the Black-Scholes option-pricing model with the following weighted average assumptions: 

 	
 	 	 	 	2004	 	 	2003	 	 	2002	 	
 	Expected volatility	 	 	36%	 	 	34%	 	 	89% to 102%	 	
 	Risk-free interest rate	 	 	3.72% - 4.06%	 	 	3.01% - 4.46%	 	 	3.68% - 4.47%	 	
 	Expected lives	 	 	3.5 to 5 years	 	 	3.5 to 5 years	 	 	5 years	 	
 	Dividend yield	 	 	0%	 	 	0%	 	 	0%	 	
 	
In November 2003 the Accounting Standards Board of the Canadian Institute of Certified Accountants amended CICA Handbook CICA 3870, – “Stock-based Compensation and other Stock-based Payments” to require expensing of all stock based compensation awards for fiscal years beginning on or after January 1, 2004. In light of this development we adopted the new provision of CICA 3870 in 2003. As a result, we recognized stock based compensation expense of approximately $1.4 million and $1.0 million in 2004 and 2003 respectively for stock options granted during 2004 and 2003. During 2003 approximately $0.5 million of the total option expense was included in mining operations expense.
Prior to 2003 we did not recognize compensation costs related to stock options granted. Had compensation costs been recognized for options vesting in 2002, our net income and earnings per share would have been reduced to the pro forma amounts shown below: 

 	
 	 	 	 	 	 	 	2004	 	 	 	2003	 	 	 	2002	 	 	
 	Net income	 	 	As reported	 	 	$	2,642	 	 	 	$	21,956	 	 	 	$	4,856	 	 	
 	 	 	 	Pro forma	 	 	$	2,633	 	 	 	$	21,882	 	 	 	$	4,339	 	 	
 	Net income per share	 	 	As reported	 	 	$	0.019	 	 	 	$	0.198	 	 	 	$	0.067	 	 	
 	 	 	 	Pro forma	 	 	$	0.019	 	 	 	$	0.197	 	 	 	$	0.060	 	 	
 	
(b) 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, provided for the issuance of 900,000 common shares of bonus stock of which 445,820 common shares have been issued as of December 31, 2004.
During 2004, 2003 and 2002 a total of nil, 57,200 and 107,000 common shares respectively were issued to employees pursuant to the Bonus Plan. We recognized compensation expense related to bonuses under the Bonus Plan during 2004, 2003 and 2002 of nil, $117,800 and $78,000.
17. Income Taxes
We recognize future tax assets and liabilities based on the difference between the financial reporting and tax basis of assets and liabilities using the enacted tax rates expected to be in effect when the taxes are paid or recovered. We provide a valuation allowance against future tax assets for which we do not consider realization of such assets to meet the required “more likely than not” standard.
20

 

Our future tax assets and liabilities at December 31, 2004 and 2003 include the following components: 

 	
 	(in thousands)	 	 	2004	 	 	 	2003	 	 	
 	Future tax assets:	 	 	 	 	 	 	 	 	 	 	 	
 	Offering costs	 	 	$	2,218	 	 	 	$	2,835	 	 	
 	Loss carryovers	 	 	 	59,795	 	 	 	 	62,745	 	 	
 	Mine property costs	 	 	 	18,132	 	 	 	 	16,366	 	 	
 	Valuation allowance	 	 	 	(64,399	)	 	 	 	(66,222	)	 	
 	Future tax assets	 	 	$	15,746	 	 	 	$	15,724	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Future tax liabilities:	 	 	 	 	 	 	 	 	 	 	 	
 	Mine property costs	 	 	$	13,805	 	 	 	$	15,724	 	 	
 	Reclamation costs	 	 	 	399	 	 	 	 	—	 	 	
 	Deferred tax liabilities	 	 	$	14,204	 	 	 	$	15,724	 	 	
 	Net future tax asset	 	 	$	1,542	 	 	 	$	0	 	 	
 	
The composition of our valuation allowance is summarized as follows: 

 	
 	(in thousands)	 	 	2004	 	 	 	2003	 	 	
 	Canada	 	 	$	32,756	 	 	 	$	31,826	 	 	
 	France	 	 	 	26,141	 	 	 	 	27,065	 	 	
 	Ghana	 	 	 	5,502	 	 	 	 	7,331	 	 	
 	Total Valuation Allowance	 	 	$	64,399	 	 	 	$	66,222	 	 	
 	
During 2004, we reduced the valuation allowance by $1.5 million. This allowance was related to our net future tax assets in Ghana.
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: 

 	
 	 	 	 	2004	 	 	 	2003	 	 	 	2002	 	 	
 	Net income before minority interest	 	 	$	2,377	 	 	 	$	24,533	 	 	 	$	5,694	 	 	
 	Statutory tax rate	 	 	 	32.1	%	 	 	 	34.1	%	 	 	 	36.1	%	 	
 	Tax expense (recovery) at statutory rate	 	 	 	763	 	 	 	 	8,365	 	 	 	 	2,057	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Enacted future tax rate reductions	 	 	 	—	 	 	 	 	(490	)	 	 	 	(228	)	 	
 	Foreign tax rates	 	 	 	(152	)	 	 	 	(6,489	)	 	 	 	(797	)	 	
 	Change in tax rates	 	 	 	—	 	 	 	 	—	 	 	 	 	5,870	 	 	
 	Nondeductible portion of capital losses	 	 	 	3,174	 	 	 	 	—	 	 	 	 	—	 	 	
 	Expired loss carryovers	 	 	 	1,450	 	 	 	 	2,866	 	 	 	 	1,861	 	 	
 	Ghana investment allowance	 	 	 	(316	)	 	 	 	(636	)	 	 	 	(339	)	 	
 	Nondeductible stock option compensation	 	 	 	445	 	 	 	 	129	 	 	 	 	—	 	 	
 	Nondeductible expenses	 	 	 	119	 	 	 	 	—	 	 	 	 	—	 	 	
 	Tax loss on sale of Guyanor shares	 	 	 	(2,898	)	 	 	 	—	 	 	 	 	—	 	 	
 	Loss carryover not previously recognized	 	 	 	4,447	 	 	 	 	—	 	 	 	 	(9,766	)	 	
 	Ghana property basis not previously recognized	 	 	 	(2,733	)	 	 	 	716	 	 	 	 	(5,571	)	 	
 	Change in future tax assets due to exchange rates	 	 	 	(3,919	)	 	 	 	(8,283	)	 	 	 	(3,214	)	 	
 	Change in valuation allowance	 	 	 	(1,922	)	 	 	 	3,822	 	 	 	 	10,127	 	 	
 	Income tax expense (recovery)	 	 	$	(1,542	)	 	 	$	—	 	 	 	$	—	 	 	
 	
21

 

During 2004, 2003 and 2002, we recognized $0.3 million, $6.4 million and $2.6 million, respectively, of share offering costs. Shareholders’ equity has been credited in the amounts of $0.1 million, $2.1 million and $0.8 million for the tax benefits of these deductions; however a valuation allowance had been provided against their full amount.
The $1.5 million provision for taxes is a deferred foreign provision.
At December 31, 2004 we had loss carryovers expiring as follows: 

 	
 	 	 	 	Canada	 	 	 	Ghana	 	 	 	France	 	 	
 	2005	 	 	$	10,187	 	 	 	$	—	 	 	 	$	—	 	 	
 	2006	 	 	 	2,508	 	 	 	 	—	 	 	 	 	—	 	 	
 	2007	 	 	 	344	 	 	 	 	—	 	 	 	 	—	 	 	
 	2008	 	 	 	1,837	 	 	 	 	—	 	 	 	 	—	 	 	
 	2009	 	 	 	2,265	 	 	 	 	—	 	 	 	 	—	 	 	
 	2010	 	 	 	1,134	 	 	 	 	—	 	 	 	 	—	 	 	
 	2011	 	 	 	6,723	 	 	 	 	—	 	 	 	 	—	 	 	
 	Indefinite	 	 	 	39,583	 	 	 	 	65,377	 	 	 	 	73,215	 	 	
 	Total	 	 	$	64,582	 	 	 	$	65,377	 	 	 	$	73,215	 	 	
 	
18. Earnings per Common Share
The following table provides a reconciliation between basic and diluted earnings per common share: 

 	
 	 	 	 	For the years ended December 31,	 	 	
 	 	 	 	2004	 	 	 	2003	 	 	 	2002	 	 	
 	Net Income/(Loss)	 	 	$	2,642	 	 	 	$	21,956	 	 	 	$	4,856	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Shares (in millions)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Weighted average number of common shares	 	 	 	138.3	 	 	 	 	111.0	 	 	 	 	72.4	 	 	
 	Dilutive Securities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Options	 	 	 	2.9	 	 	 	 	2.7	 	 	 	 	1.6	 	 	
 	Warrants	 	 	 	2.5	 	 	 	 	4.2	 	 	 	 	2.7	 	 	
 	Weighted average number of dilutive common shares	 	 	 	143.7	 	 	 	 	117.9	 	 	 	 	76.7	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic Income/(Loss) Per Common Share	 	 	$	0.019	 	 	 	$	0.198	 	 	 	$	0.067	 	 	
 	Diluted Income/(Loss) Per Common Share	 	 	$	0.018	 	 	 	$	0.186	 	 	 	$	0.063	 	 	
 	
19. Supplemental Cash Flow Information
The following is a summary of non-cash transactions: 

 	
 	 	 	 	For the years ended December 31,	 	 	
 	 	 	 	2004	 	 	 	2003	 	 	 	2002	 	 	
 	Investing:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Prestea acquisition costs paid with common shares	 	 	$	—	 	 	 	$	—	 	 	 	$	(400	)	 	
 	Common shares issued for Prestea acquisition cost	 	 	 	—	 	 	 	 	—	 	 	 	 	400	 	 	
 	Receivable on sale of property	 	 	 	—	 	 	 	 	—	 	 	 	 	(3,000	)	 	
 	Acquisition, deferred exploration and development	 	 	 	—	 	 	 	 	—	 	 	 	 	3,000	 	 	
 	Wassa property acquisition	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Property, plant and equipment	 	 	 	—	 	 	 	 	—	 	 	 	 	(4,120	)	 	
 	
22

 

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	
 	 	 	 	For the years ended December 31,	 	 	
 	 	 	 	2004	 	 	 	2003	 	 	 	2002	 	 	
 	Reclamation liability assumed	 	 	 	—	 	 	 	 	—	 	 	 	 	2,302	 	 	
 	Assumption of bank debt	 	 	 	—	 	 	 	 	—	 	 	 	 	1,818	 	 	
 	Minority interest in Prestea Underground joint venture	 	 	 	—	 	 	 	 	—	 	 	 	 	2,400	 	 	
 	Mine property Prestea Underground joint venture	 	 	 	—	 	 	 	 	—	 	 	 	 	(2,400	)	 	
 	Warrants issued for Obuom acquisition	 	 	 	—	 	 	 	 	—	 	 	 	 	255	 	 	
 	Obuom property acquisition	 	 	 	—	 	 	 	 	—	 	 	 	 	(255	)	 	
 	Acquisition of properties in French Guiana	 	 	 	—	 	 	 	 	—	 	 	 	 	(66	)	 	
 	Guiana Shield transaction property exchange	 	 	 	—	 	 	 	 	—	 	 	 	 	66	 	 	
 	Barnex royalty buy-back	 	 	 	—	 	 	 	 	12,045	 	 	 	 	—	 	 	
 	Common shares issued for Barnex royalty buy-back	 	 	 	—	 	 	 	 	(12,045	)	 	 	 	—	 	 	
 	Common shares issued to purchase Goldfields Minière S.A.	 	 	 	300	 	 	 	 	—	 	 	 	 	—	 	 	
 	Acquisition of Investment in Goldfields Minière S.A.	 	 	 	(300	)	 	 	 	—	 	 	 	 	—	 	 	
 	Acquisition of minority interest in Prestea Underground:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Minority interest	 	 	 	(2,400	)	 	 	 	—	 	 	 	 	—	 	 	
 	Mining Property	 	 	 	2,400	 	 	 	 	—	 	 	 	 	—	 	 	
 	Financing:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Equity component of convertible debentures	 	 	 	—	 	 	 	 	—	 	 	 	 	(545	)	 	
 	Common shares issued upon conversion of convertible debentures	 	 	 	—	 	 	 	 	—	 	 	 	 	2,903	 	 	
 	Conversion of convertible debentures	 	 	 	—	 	 	 	 	—	 	 	 	 	(2,358	)	 	
 	
There was no cash paid for income taxes during 2004, 2003 and 2002. Cash paid for interest was $0.1 million in 2004, $0.1 million in 2003 and $0.4 million in 2002.
20. Operations by Segment and Geographic Area
The following segment and geographic data includes revenues based on product shipment origin and long-lived assets based on physical location. The corporate entity is incorporated in Canada and domiciled in the United States. 

 	 	 	 	Africa - Ghana	 	 	 	 	 	 	 	 	 	 	
(as of December 31 or for	 	Bogoso/	 	 	 	 	 	 	 	 	 	 	South	 	 	 	 	 	 	 	
the year ended)	 	Prestea	 	 	Wassa	 	 	Other	 	 	America	 	 	Corporate	 	 	Total	 	
 	
2004	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Revenues	 	$	61,002	 	 	$	—	 	 	$	—	 	 	$	3,145	 	 	$	882	 	 	$	65,029	 	
 	 	Net Income/(Loss)	 	 	12,533	 	 	 	(168	)	 	 	—	 	 	 	1,772	 	 	 	(11,495	)	 	 	2,642	 	
 	 	Total Assets	 	 	90,297	 	 	 	70,681	 	 	 	31,080	 	 	 	817	 	 	 	59,285	 	 	 	252,160	 	
 	
2003	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Revenues	 	$	63,640	 	 	$	—	 	 	$	—	 	 	$	102	 	 	$	628	 	 	$	64,370	 	
 	 	Net Income/(Loss)	 	 	23,253	 	 	 	(171	)	 	 	—	 	 	 	(1,411	)	 	 	285	 	 	 	21,956	 	
 	 	Total Assets	 	 	64,828	 	 	 	44,523	 	 	 	20,058	 	 	 	352	 	 	 	92,630	 	 	 	222,391	 	
 	
2002	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Revenues	 	$	38,199	 	 	$	—	 	 	$	—	 	 	$	466	 	 	$	137	 	 	$	38,802	 	
 	 	Net Income/(Loss)	 	 	8,089	 	 	 	—	 	 	 	—	 	 	 	(1,106	)	 	 	(2,127	)	 	 	4,856	 	
 	 	Total Assets	 	 	36,585	 	 	 	10,434	 	 	 	3,688	 	 	 	189	 	 	 	23,239	 	 	 	74,135	 	
 	
21. Related Parties
During 2004 we obtained legal services from a legal firm to which our Chairman is of counsel. Total cost of all services purchased during 2004 was $1.7 million. Our Chairman did not personally perform any legal services for us during 2004 nor did he benefit directly or indirectly from payments for the services performed by the firm.
23

 

22. Generally Accepted Accounting Principles in Canada and the United States
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada, which differ from US GAAP. The effect of applying US GAAP to our financial statements is shown below. 

 	 	 	
 	(a) Balance Sheets Under US GAAP	 	 	As of December 31,	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	2004	 	 	2003	 	
 	 	 	 	 	 	 	 	 	
 	ASSETS	 	 	 	 	 	 	 	 	 	 	 	
 	Current assets:	 	 	 	 	 	 	 	 	 	 	 	
 	Cash and short term investments	 	 	$	51,727	 	 	 	$	89,970	 	 	
 	Accounts receivable	 	 	 	3,592	 	 	 	 	790	 	 	
 	Inventories	 	 	 	15,366	 	 	 	 	12,661	 	 	
 	Due from sale of property	 	 	 	1,000	 	 	 	 	1,000	 	 	
 	Current tax asset	 	 	 	1,542	 	 	 	 	—	 	 	
 	Deposits	 	 	 	5,102	 	 	 	 	—	 	 	
 	Prepaids	 	 	 	517	 	 	 	 	514	 	 	
 	 	 	 	 	 	 	 	 	
 	Total current assets	 	 	 	78,846	 	 	 	 	104,935	 	 	
 	 	 	 	 	 	 	 	 	
 	Restricted cash	 	 	 	3,351	 	 	 	 	3,317	 	 	
 	Due from sale of property	 	 	 	—	 	 	 	 	1,000	 	 	
 	Long term investments	 	 	 	4,132	 	 	 	 	—	 	 	
 	Deferred exploration and development costs (Note 2)	 	 	 	—	 	 	 	 	—	 	 	
 	Property, plant and equipment, net	 	 	 	28,653	 	 	 	 	18,202	 	 	
 	Mining property (Note 3)	 	 	 	52,586	 	 	 	 	46,478	 	 	
 	Mine construction in progress	 	 	 	49,430	 	 	 	 	25,647	 	 	
 	Deferred stripping	 	 	 	1,357	 	 	 	 	—	 	 	
 	Other assets	 	 	 	1,617	 	 	 	 	758	 	 	
 	 	 	 	 	 	 	 	 	
 	Total Assets	 	 	$	219,972	 	 	 	$	200,337	 	 	
 	 	 	 	 	 	 	 	 	
 	Current liabilities	 	 	$	17,480	 	 	 	$	8,151	 	 	
 	Long term debt	 	 	 	1,707	 	 	 	 	657	 	 	
 	Asset retirement obligations (Note 4)	 	 	 	8,660	 	 	 	 	7,745	 	 	
 	 	 	 	 	 	 	 	 	
 	Total Liabilities	 	 	 	27,847	 	 	 	 	16,553	 	 	
 	 	 	 	 	 	 	 	 	
 	Minority interest (Notes 2 and 3)	 	 	 	3,899	 	 	 	 	3,367	 	 	
 	 	 	 	 	 	 	 	 	
 	Share capital (Note 6)	 	 	 	339,524	 	 	 	 	323,654	 	 	
 	Contributed capital	 	 	 	2,040	 	 	 	 	955	 	 	
 	Accumulated comprehensive income (Note 1)	 	 	 	1,316	 	 	 	 	1,316	 	 	
 	Deficit (Note 4)	 	 	 	(154,654	)	 	 	 	(145,508	)	 	
 	 	 	 	 	 	 	 	 	
 	Total Shareholders’ Equity	 	 	 	188,226	 	 	 	 	180,417	 	 	
 	 	 	 	 	 	 	 	 	
 	Total Liabilities and Shareholders’ Equity	 	 	$	219,972	 	 	 	$	200,337	 	 	

 	 	 	
 	(b) Statements of Operations under US GAAP	 	 	For the Years ended December 31,	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	2004	 	 	2003	 	 	2002	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Net income under Cdn GAAP	 	 	$	2,642	 	 	 	$	21,956	 	 	 	$	4,856	 	 	
 	Deferred exploration expenditures expensed per US GAAP (Note 2)	 	 	 	(5,735	)	 	 	 	(5,252	)	 	 	 	(529	)	 	
 	Gain on sale of exploration property (Note 5)	 	 	 	—	 	 	 	 	—	 	 	 	 	8,066	 	 	
 	Effect of mining property depletion	 	 	 	—	 	 	 	 	—	 	 	 	 	—	 	 	
 	Capitalized mine property acquisition costs expensed for US GAAP (Note 3)	 	 	 	(6,799	)	 	 	 	(4,763	)	 	 	 	(7,246	)	 	
 	Other	 	 	 	—	 	 	 	 	—	 	 	 	 	(7	)	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Net income/(loss) under US GAAP before minority interest	 	 	 	(9,892	)	 	 	 	11,941	 	 	 	 	5,140	 	 	
 	Minority interest, as adjusted (Notes 2 and 3)	 	 	 	746	 	 	 	 	933	 	 	 	 	1,612	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Net income/(loss) under US GAAP before cumulative effect of change in accounting method	 	 	 	(9,146	)	 	 	 	12,874	 	 	 	 	6,752	 	 	
 	Cumulative effect of change in accounting method (Note 4)	 	 	 	—	 	 	 	 	483	 	 	 	 	—	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Net Income/(loss) under US GAAP	 	 	 	(9,146	)	 	 	 	13,357	 	 	 	 	6,752	 	 	
 	Other comprehensive income — gain on marketable securities (Note 1)	 	 	 	—	 	 	 	 	(548	)	 	 	 	548	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Comprehensive income/(loss)	 	 	$	(9,146	)	 	 	$	12,809	 	 	 	$	7,300	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Basic net income/(loss) per share under US GAAP before cumulative effect of change in accounting method	 	 	$	(0.066	)	 	 	$	0.116	 	 	 	$	0.093	 	 	
 	Cumulative effect of change in accounting method	 	 	 	—	 	 	 	 	0.004	 	 	 	 	—	 	 	
 	Basic net income/(loss) per share under US GAAP after cumulative effect of change in accounting method	 	 	$	(0.066	)	 	 	$	0.120	 	 	 	$	0.093	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Diluted net income/(loss) per share under US GAAP before cumulative effect of change in accounting method	 	 	$	(0.066	)	 	 	$	0.109	 	 	 	$	0.088	 	 	
 	Cumulative effect of change in accounting method	 	 	 	—	 	 	 	 	0.004	 	 	 	 	—	 	 	
 	Diluted net income/(loss) per share under US GAAP after cumulative effect of change in accounting method	 	 	$	(0.066	)	 	 	$	0.113	 	 	 	$	0.088	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
24

 

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	
 	(c) Statements of Cash Flows under US GAAP	 	 	For the years ended December 31,	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	2004	 	 	2003	 	 	2002	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash provided by (used in):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	Operating Activities	 	 	$	575	 	 	 	$	19,029	 	 	 	$	1,040	 	 	
 	Investing activities	 	 	 	(56,263	)	 	 	 	(57,993	)	 	 	 	(6,517	)	 	
 	Financing activities	 	 	 	17,445	 	 	 	 	108,918	 	 	 	 	24,984	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Increase/(Decrease) in cash and cash equivalents for the year	 	 	 	(38,243	)	 	 	 	69,954	 	 	 	 	19,507	 	 	
 	Cash and cash equivalent beginning of the year	 	 	 	89,970	 	 	 	 	20,016	 	 	 	 	509	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Cash and cash equivalents end of the year	 	 	$	51,727	 	 	 	$	89,970	 	 	 	$	20,016	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
(d) Notes
(1) Under US GAAP, marketable securities available for sale are marked to market and gains or losses are recognized in Other Comprehensive Income until the securities are sold. Under Cdn GAAP, marketable securities are accounted for at the lower of cost or market.
(2) Under US GAAP, exploration, acquisition and general and administrative costs related to exploration projects are charged to expense as incurred. Under Cdn GAAP, exploration, acquisition and general and administrative costs related to exploration projects are capitalized. In each subsequent period, the exploration, engineering, financial and market information for each exploration project is reviewed by management to determine if any of the capitalized costs are impaired. If found impaired, the asset’s cost basis is reduced in accordance with Cdn GAAP provisions.
25

 

(3) Under US GAAP, the initial purchase cost of mining properties is capitalized. Pre-acquisition costs and subsequent development costs incurred, until such time as a final feasibility study is completed, are expensed in the period incurred. Under Cdn GAAP, the purchase costs of new mine properties as well as all development costs incurred after acquisition are capitalized and subsequently reviewed each period for impairment. If found impaired, the asset’s cost basis is reduced in accordance with Cdn GAAP provisions.
(4) Under US GAAP the cumulative effect of applying SFAS 143 “Accounting for Asset Retirement Obligations” in January 2003 is included in net income for the period. In Cdn GAAP, under CICA 3110 “Asset Retirement Obligations”, the cumulative effect of the application of this new standard was recorded as an adjustment to beginning deficit account.
(5) The US GAAP basis in the Rosebel deferred exploration had been expensed in prior periods. Thus under US GAAP the full amount of the sales price was a gain. In Cdn GAAP, this property’s basis approximated the sales price and thus there was no material impact on the statement of operations from the sale.
(6) Numerous transactions since the Company’s organization in 1992 have contributed to the difference in share capital versus the Canadian GAAP balance, including: i.) under US GAAP, compensation expense was recorded for the difference between quoted market prices and the strike price of options granted to employees and directors under stock option plans – under Canadian GAAP, recognition of compensation expense was not required; ii.) in May 1992 our accumulated deficit was eliminated through an amalgamation (defined as a quasi-reorganization under US GAAP) - under US GAAP the cumulative deficit was greater than the deficit under Canadian GAAP due to the past write-offs of certain deferred exploration costs; iii.) gains recognized in Canadian GAAP upon issuances of subsidiaries’ shares were not allowed under US GAAP; and iv.) Canadian GAAP requires that convertible debentures be classified into its component parts as liability and equity – under US GAAP convertible debentures are classified entirely as debt.
(e) Impact of Recently Issued Accounting Standards
The adoption of the following recent accounting pronouncements did not have any impact on our results of operations and financial condition:

•  	FASB Interpretation No. 46(R) (“FIN 46R”), “Consolidation of Variable Interest Entities-An Interpretation of ARB No. 51”.	

•  	EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”.	
In November 2004, the FASB issued SFAS No. 151, “Inventory Costs—An Amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005 and is required to be adopted by us in the first quarter of fiscal 2006, beginning on January 1, 2006. We are currently evaluating the effect that the adoption of SFAS 151 will have on our consolidated results of operations and financial condition but we do not expect SFAS 151 to have a material impact.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values beginning with the first interim or annual period after June 15, 2005, with early adoption encouraged. The pro forma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement
26

 

recognition. We adopted a policy of recognizing the cost of stock options at the beginning of 2003 and as a result anticipate no impact on our consolidated results of operations and financial condition when “Share-Based Payment” (“SFAS 123R”) becomes effective.
In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets–An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions” (“SFAS 153”). SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, “Accounting for Nonmonetary Transactions,” and replaces it with an exception for exchanges that do not have commercial substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for the fiscal periods beginning after June 15, 2005. We will adopt SFAS 153 in the first quarter of 2006. We are currently evaluating the effect that the adoption of SFAS 153 will have on our consolidated results of operations and financial condition but do not expect it to have a material impact.
23. Quarterly Financial Data - Unaudited 

 	
 	 	First	 	 	Second	 	 	Third	 	 	Fourth	 	 	 	 	
 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Total	 	
 	
 	 	2004	
Net Sales	 	$	19,857	 	 	$	16,494	 	 	$	13,445	 	 	$	15,233	 	 	$	65,029	 	
Gross Profit	 	 	8,061	 	 	 	3,975	 	 	 	1,029	 	 	 	3,233	 	 	 	16,298	 	
Net Income/(Loss)	 	 	5,194	 	 	 	1,115	 	 	 	(4,258	)	 	 	591	 	 	 	2,642	 	
Basic Earning/(Loss) Per Common Share	 	$	0.039	 	 	$	0.008	 	 	$	(0.030	)	 	$	0.004	 	 	$	0.019	 	
 	
 	 	2003	
 	
Net Sales	 	$	15,141	 	 	$	12,693	 	 	$	18,801	 	 	$	17,735	 	 	$	64,370	 	
Gross Profit	 	 	5,572	 	 	 	3,434	 	 	 	7,838	 	 	 	9,236	 	 	 	26,080	 	
Net Income	 	 	3,984	 	 	 	3,993	 	 	 	6,095	 	 	 	7,884	 	 	 	21,956	 	
Basic Earning Per Common Share	 	$	0.041	 	 	$	0.037	 	 	$	0.053	 	 	$	0.063	 	 	$	0.198	 	
 	
 	 	2002	
 	
Net Sales	 	$	9,332	 	 	$	9,699	 	 	$	8,350	 	 	$	11,421	 	 	$	38,802	 	
Gross Profit	 	 	2,447	 	 	 	2,954	 	 	 	1,762	 	 	 	1,948	 	 	 	9,111	 	
Net Income	 	 	1,454	 	 	 	1,557	 	 	 	834	 	 	 	1,011	 	 	 	4,856	 	
Basic Earning Per Common Share	 	$	0.024	 	 	$	0.024	 	 	$	0.010	 	 	$	0.009	 	 	$	0.067	 	
 	
27

 

ITEM 9A CONTROLS AND PROCEDURES
We carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective.
There have been no significant changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s report on internal control over financial reporting and the attestation report of PricewaterhouseCoopers LLP, our registered public accounting firm, are included in Item 8 of this Annual Report on Form 10-K/A. 
PART IV 
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)	 	The following documents are filed as part of this Report:	
 	 	 	
	 	1. Financial Statements	

•  	Management’s Responsibility for Financial Information and Report On Internal Control Over Financial Reporting	
 	
•  	Report of Independent Registered Public Accounting Firm	
 	
•  	Consolidated Balance Sheets as of December 31, 2004 and 2003	
 	
•  	Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002	
 	
•  	Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002	
 	
•  	Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002	
 	
•  	Notes to the Consolidated Financial Statements	

	 		
 	 	 	
	 	2. Financial Statement Schedules	
 	 	 	
	 	Financial Statement schedules have been omitted since they are either not required, are not applicable, or the required information is shown in the financial statements or related notes.	
 	 	 	
(b)	 	Exhibits	
 	 	 	 	 	 	 	
	 	 	3	(i)	 	Incorporating Documents of the Company, including: Articles of Arrangement dated May 14, 1992, with Plan of Arrangement attached, with Certificate of Amendment with respect thereto dated May 15, 1992; Certificate of Amendment dated May 15, 1992, with Articles of Amendment; Certificate of Amendment dated March 26, 1993, with Articles of Amendment; Articles of Arrangement dated March 7, 1995, with Plan of Arrangement attached, with Certificate of Amendment with respect thereto dated March 14, 1995; Certificate of Amendment dated July 29, 1996, with Articles of Amendment; and Certificate of Amendment dated July 10, 2002, with Articles of Amendment (all incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	 	 	 	 	
	 	3(ii)	 	Bylaws of the Company, including: Bylaw Number One, amended and restated as of April 3, 2002 (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3 (Reg. No. 333-102225) filed on December 27, 2002); Bylaw Number Two, effective May 15, 1992 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on January 23, 2003); and Bylaw Number Three, effective May 15, 1992 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on January 23, 2003)	
28

 

 	 	 	 	 	 	 	
	 	 	4.1	 	 	Form of Specimen Certificate for Common Shares (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3/A (Reg. No. 333-91666) filed on July 15, 2002)	
 	 	 	 	 	 	 	
	 	 	4.2	 	 	Amended and Restated Shareholder’s Rights Plan dated as of May 20, 2004 between the Company and CIBC Mellon Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed June 3, 2004)	
 	 	 	 	 	 	 	
	 	 	4.7	 	 	Form of Underwriters’ Warrants (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3/A (Reg. 333-91666) filed on July 15, 2002)	
 	 	 	 	 	 	 	
	 	 	4.9	 	 	Warrant Indenture, dated as of February 14, 2003, between the Company and CIBC Mellon Trust Company, including the Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on February 14, 2003)	
 	 	 	 	 	 	 	
	 	 	4.10	 	 	Form of Underwriters’ Warrant, dated February 14, 2003 (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed on February 14, 2003)	
 	 	 	 	 	 	 	
	 	 	10.1	 	 	Summary of Executive Management Performance Bonus Plan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	 	 	 	 	
	 	 	10.2	 	 	Second Amended and Restated 1997 Stock Option Plan, effective as of April 8, 2004 (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	10.3	 	 	Form of Indemnification Agreement between the Company and its officers and directors (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	 	 	 	 	
	 	 	10.4	 	 	Summary of Severance Arrangements between the Company and certain executive officers (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	 	 	 	 	
	 	 	10.5	 	 	Employees’ Stock Bonus Plan amended and restated to April 6, 2000 (incorporated by reference to Exhibit 10(j) to the Company’s Form 10-K for the year ended December 31, 2000)	
 	 	 	 	 	 	 	
	 	 	10.6	 	 	Guyanor Ressources S.A. Stock Option Plan amended and restated as of June 15, 1999 (English translation) (incorporated by reference to Exhibit 10.35(a) to the Company’s Form 10-K for the year ended December 31, 1999)	
 	 	 	 	 	 	 	
	 	 	10.7	 	 	Amended and Restated Employment Agreement with Mr. Peter Bradford dated April 30, 2004 (incorporation by reference to Exhibit 10.7 to the Company’s Form 10-K for the year ended December 31, 2004); Letter Agreement amending Mr. Bradford’s Amended and Restated Employment Agreement dated February 3, 2005	
 	 	 	 	 	 	 	
	 	 	10.8	 	 	Amended and Restated Employment Agreement with Mr. Allan J. Marter dated April 30, 2004 (incorporation by reference to Exhibit 10.8 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	10.9	 	 	Amended and Restated Employment Agreement with Dr. Douglas Jones dated April 30, 2004 (incorporation by reference to Exhibit 10.9 to the Company’s Form 10-K for the year ended December 31, 2004)	
29

 

 	 	 	 	 	 	 	
	 	 	10.10	 	 	Amended and Restated Employment Agreement with Mr. Bruce Higson-Smith dated April 30, 2004 (incorporation by reference to Exhibit 10.10 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	10.11	 	 	Amended and Restated Employment Agreement with Mr. Richard Q. Gray dated April 30, 2004 (incorporation by reference to Exhibit 10.11 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	10.12	 	 	Agreements between the Company and its outside directors granting them options to purchase Guyanor Class “B” common shares, (1) dated December 8, 1995, and December 10, 1996 (incorporated by reference as Exhibit 10.39 to the Company’s Form 10-K for the year ended December 31, 1996), (2) dated December 9, 1997 (incorporated by reference to Exhibit 10.39(a) to the Company’s Form 10-K for the year ended December 31, 1997), (3) dated December 8, 1998 (incorporated by reference to Exhibit 10.39(b) to the Company’s Form 10-K for the year ended December 31, 1998), (4) dated June 15, 1999 (incorporated by reference to Exhibit 10.39(c) to the Company’s Form 10-K for the year ended December 31, 1999), and (5) dated August 16, 2001 (incorporated by reference to Exhibit 10.11 to the Company’s Form 10-K for the year ended December 31, 2002)	
 	 	 	 	 	 	 	
	 	 	10.22	 	 	Agreement, dated November 16, 2001, between Bogoso Gold Limited and Prestea Gold Resources Limited for the purchase of Prestea mining lease rights and option payments (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on March 6, 2002)	
 	 	 	 	 	 	 	
	 	 	10.24	 	 	Guiana Shield Transaction Agreement with Cambior Inc. dated October 25, 2001 for the sale and swap of Golden Star’s interest in Gross Rosebel and other properties (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed March 6, 2002)	
 	 	 	 	 	 	 	
	 	 	10.25	 	 	Mining lease, dated June 29, 2001, between the Government of the Republic of Ghana and Bogoso Gold Limited, relating to the Prestea property (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 6, 2002)	
 	 	 	 	 	 	 	
	 	 	10.26	 	 	Mining lease, dated September 17, 1992 between the Government of the Republic of Ghana and Satellite Goldfields Limited, with letter dated April 25, 2002 from the Ministry of Mines consenting to assignment to Wexford Goldfields Limited, relating to the Wassa property (incorporation by reference to Exhibit 10.26 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	10.27	 	 	Mining lease dated June 29, 2001, between the Government of the Republic of Ghana and Prestea Gold Resources Limited, relating to the Prestea underground property (incorporation by reference to Exhibit 10.27 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	10.28	 	 	Joint Operating Agreement, dated January 31, 2002, between Bogoso Gold Limited and Prestea Gold Resources Limited (incorporated by reference to Exhibit 10.25 to the Company’s Form 10-K for the year ended December 31, 2002)	
 	 	 	 	 	 	 	
	 	 	10.29	 	 	Memorandum of Agreement, dated March 14, 2002, among Prestea Gold Resources Limited, Bogoso Gold Limited and others (incorporated by reference to Exhibit 10.26 to the Company’s Form 10-K for the year ended December 31, 2002)	
 	 	 	 	 	 	 	
	 	 	10.30	 	 	Letter agreement between the Company and Guyanor Ressources S.A. dated September 30, 2004 relating to sale of Gross Rosebel Participation Right (incorporation by reference to Exhibit 10.30 to the Company’s Form 10-K for the year ended December 31, 2004)	
30

 

 	 	 	 	 	 	 	
	 	 	21	 	 	Subsidiaries of the Company (incorporated by reference to Exhibit 21 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	23.1	 	 	Consent of PricewaterhouseCoopers LLP	
 	 	 	 	 	 	 	
	 	 	23.2	 	 	Consent of Colin Jones (incorporated by reference to Exhibit 23.2 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	 	 	 	 	
	 	 	31.1	 	 	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	
 	 	 	 	 	 	 	
	 	 	31.2	 	 	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	
 	 	 	 	 	 	 	
	 	 	32.1	 	 	Certificate of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	
 	 	 	 	 	 	 	
	 	 	32.2	 	 	Certificate of Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	
31

 
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized.

 	GOLDEN STAR RESOURCES LTD.
Registrant
 	 	
 	By:  	/s/ Peter J. Bradford  	 	
 	 	Peter J. Bradford 	 	
 	 	President and Chief Executive Officer 	 	
 	
Date: April 28, 2005
32

 
EXHIBIT INDEX 

3(i)	 	Incorporating Documents of the Company, including: Articles of Arrangement dated May 14, 1992, with Plan of Arrangement attached, with Certificate of Amendment with respect thereto dated May 15, 1992; Certificate of Amendment dated May 15, 1992, with Articles of Amendment; Certificate of Amendment dated March 26, 1993, with Articles of Amendment; Articles of Arrangement dated March 7, 1995, with Plan of Arrangement attached, with Certificate of Amendment with respect thereto dated March 14, 1995; Certificate of Amendment dated July 29, 1996, with Articles of Amendment; and Certificate of Amendment dated July 10, 2002, with Articles of Amendment (all incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	
3(ii)	 	Bylaws of the Company, including: Bylaw Number One, amended and restated as of April 3, 2002 (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3 (Reg. No. 333-102225) filed on December 27, 2002); Bylaw Number Two, effective May 15, 1992 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on January 23, 2003); and Bylaw Number Three, effective May 15, 1992 (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	
4.1	 	Form of Specimen Certificate for Common Shares (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3/A (Reg. No. 333-91666) filed on July 15, 2002)	
 	 	 	
4.2	 	Amended and Restated Shareholder’s Rights Plan dated as of May 20, 2004 between the Company and CIBC Mellon Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed June 3, 2004)	
 	 	 	
4.7	 	Form of Underwriters’ Warrants (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-3/A (Reg. 333-91666) filed on July 15, 2002)	
 	 	 	
4.9	 	Warrant Indenture, dated as of February 14, 2003, between the Company and CIBC Mellon Trust Company, including the Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on February 14, 2003)	
 	 	 	
4.10	 	Form of Underwriters’ Warrant, dated February 14, 2003 (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed on February 14, 2003)	
 	 	 	
10.1	 	Summary of Executive Management Performance Bonus Plan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	
10.2	 	Second Amended and Restated 1997 Stock Option Plan, effective as of April 8, 2004 (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
10.3	 	Form of Indemnification Agreement between the Company and its officers and directors (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed on January 23, 2003)	
 	 	 	
10.4	 	Summary of Severance Arrangements between the Company and certain executive officers (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed on January 23, 2003)	

 

10.5	 	Employees’ Stock Bonus Plan amended and restated to April 6, 2000 (incorporated by reference to Exhibit 10(j) to the Company’s Form 10-K for the year ended December 31, 2000)	
 	 	 	
10.6	 	Guyanor Ressources S.A. Stock Option Plan amended and restated as of June 15, 1999 (English translation) (incorporated by reference to Exhibit 10.35(a) to the Company’s Form 10-K for the year ended December 31, 1999)	
 	 	 	
10.7	 	Amended and Restated Employment Agreement with Mr. Peter Bradford dated April 30, 2004 (incorporation by reference to Exhibit 10.7 to the Company’s Form 10-K for the year ended December 31, 2004); Letter Agreement amending Mr. Bradford’s Amended and Restated Employment Agreement dated February 3, 2005	
 	 	 	
10.8	 	Amended and Restated Employment Agreement with Mr. Allan J. Marter dated April 30, 2004 (incorporation by reference to Exhibit 10.8 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
10.9	 	Amended and Restated Employment Agreement with Dr. Douglas Jones dated April 30, 2004 (incorporation by reference to Exhibit 10.9 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
10.10	 	Amended and Restated Employment Agreement with Mr. Bruce Higson-Smith dated April 30, 2004 (incorporation by reference to Exhibit 10.10 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
10.11	 	Amended and Restated Employment Agreement with Mr. Richard Q. Gray dated April 30, 2004 (incorporation by reference to Exhibit 10.11 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
10.12	 	Agreements between the Company and its outside directors granting them options to purchase Guyanor Class “B” common shares, (1) dated December 8, 1995, and December 10, 1996 (incorporated by reference as Exhibit 10.39 to the Company’s Form 10-K for the year ended December 31, 1996), (2) dated December 9, 1997 (incorporated by reference to Exhibit 10.39(a) to the Company’s Form 10-K for the year ended December 31, 1997), (3) dated December 8, 1998 (incorporated by reference to Exhibit 10.39(b) to the Company’s Form 10-K for the year ended December 31, 1998), (4) dated June 15, 1999 (incorporated by reference to Exhibit 10.39(c) to the Company’s Form 10-K for the year ended December 31, 1999), and (5) dated August 16, 2001 (incorporated by reference to Exhibit 10.11 to the Company’s Form 10-K for the year ended December 31, 2002)	
 	 	 	
10.22	 	Agreement, dated November 16, 2001, between Bogoso Gold Limited and Prestea Gold Resources Limited for the purchase of Prestea mining lease rights and option payments (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on March 6, 2002)	
 	 	 	
10.24	 	Guiana Shield Transaction Agreement with Cambior Inc. dated October 25, 2001 for the sale and swap of Golden Star’s interest in Gross Rosebel and other properties (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed March 6, 2002)	
 	 	 	
10.25	 	Mining lease, dated June 29, 2001, between the Government of the Republic of Ghana and Bogoso Gold Limited, relating to the Prestea property (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on March 6, 2002)	
 	 	 	
10.26	 	Mining lease, dated September 17, 1992 between the Government of the Republic of Ghana and Satellite Goldfields Limited, with letter dated April 25, 2002 from the Ministry of Mines consenting to assignment to Wexford Goldfields Limited, relating to the Wassa property	

 

	 	(incorporation by reference to Exhibit 10.26 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
10.27	 	Mining lease dated June 29, 2001, between the Government of the Republic of Ghana and Prestea Gold Resources Limited, relating to the Prestea underground property (incorporation by reference to Exhibit 10.27 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
10.28	 	Joint Operating Agreement, dated January 31, 2002, between Bogoso Gold Limited and Prestea Gold Resources Limited (incorporated by reference to Exhibit 10.25 to the Company’s Form 10-K for the year ended December 31, 2002)	
 	 	 	
10.29	 	Memorandum of Agreement, dated March 14, 2002, among Prestea Gold Resources Limited, Bogoso Gold Limited and others (incorporated by reference to Exhibit 10.26 to the Company’s Form 10-K for the year ended December 31, 2002)	
 	 	 	
10.30	 	Letter agreement between the Company and Guyanor Ressources S.A. dated September 30, 2004 relating to sale of Gross Rosebel Participation Right (incorporation by reference to Exhibit 10.30 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
21	 	Subsidiaries of the Company (incorporated by reference to Exhibit 21 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
23.1	 	Consent of PricewaterhouseCoopers LLP	
 	 	 	
23.2	 	Consent of Colin Jones (incorporated by reference to Exhibit 23.2 to the Company’s Form 10-K for the year ended December 31, 2004)	
 	 	 	
31.1	 	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	
 	 	 	
31.2	 	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	
 	 	 	
32.1	 	Certificate of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	
 	 	 	
32.2	 	Certificate of Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)	

 

EX 23.1 
AUDITORS’ CONSENT
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 33-81614, 333-105820, 333-105821, 333-118958), the Registration Statements on Form S-3, as amended (File Nos. 333-33237, 333-89767, 333-82106, 333-102225, 333-118956) and the Registration Statement on Form S-4, as amended (File No. 333-118957) of Golden Star Resources Ltd. of our report dated April 28, 2005 relating to the consolidated financial statements, which appears in this Annual Report on Form 10-K/A, Amendment No. 2.
/s/ PricewaterhouseCoopers LLP
CHARTERED ACCOUNTANTS
Calgary, Canada
April 28, 2005

 

EXHIBIT 31.1 
CERTIFICATION
I, Peter J. Bradford, certify that:

1.  	I have reviewed this report on Form 10-K/A of Golden Star Resources Ltd. (“Registrant”);	
 	
2.  	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;	
 	
3.  	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;	
 	
4.  	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:	

 	a)  	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;	
 	
 	b)  	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	
 	c)  	evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	
 	d)  	disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and	

5.  	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):	

 	a)  	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and	
 	
 	b)  	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.	
Date: April 28, 2005
/s/ Peter J. Bradford
Peter J. Bradford
President and Chief Executive Officer

 

EXHIBIT 31.2 
CERTIFICATION
I, Allan J. Marter, certify that:

1.  	I have reviewed this report on Form 10-K/A of Golden Star Resources Ltd. (“Registrant”);	
 	
2.  	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;	
 	
3.  	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;	
 	
4.  	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:	

 	a)  	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;	
 	
 	b)  	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	
 	c)  	evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	
 	
 	d)  	disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and	

5.  	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):	

 	a)  	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and	
 	
 	b)  	any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.	
Date: April 28, 2005
/s/ Allan J. Marter
Allan J. Marter
Senior Vice President and Chief Financial Officer

 

EXHIBIT 32.1 
Certification of Principal Executive Officer
Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
I, Peter J. Bradford, President and Chief Executive Officer of Golden Star Resources Ltd., certify, to the best of my knowledge, based upon a review of the Annual Report on Form 10-K/A for the period ended December 31, 2004 of Golden Star Resources Ltd. that:
(1) The Annual Report on Form 10-K/A fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained and incorporated by reference in the Annual Report on Form 10-K/A fairly presents, in all material respects, the financial condition and results of operations of Golden Star Resources Ltd.
/s/ Peter J. Bradford
Peter J. Bradford
President and Chief Executive Officer
April 28, 2005

 

EXHIBIT 32.2 
Certification of Principal Financial Officer
Pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
I, Allan J. Marter, Senior Vice President and Chief Financial Officer of Golden Star Resources Ltd., certify, to the best of my knowledge, based upon a review of the Annual Report on Form 10-K/A for the period ended December 31, 2004 of Golden Star Resources Ltd. that:
(1) The Annual Report on Form 10-K/A fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained and incorporated by reference in the Annual Report on Form 10-K/A fairly presents, in all material respects, the financial condition and results of operations of Golden Star Resources Ltd.
/s/ Allan J. Marter
Allan J. Marter
Senior Vice President and Chief Financial Officer
April 28, 2005