Golden Star Resources Reports Second Quarter Financial Results

Aug 08, 2012 (Marketwire via COMTEX) --Golden Star Resources Ltd. (NYSE MKT: GSS) (TSX: GSC) (GHANA: GSR)

Gold sales up 10% to 85,183 Ounces in Q2 2012 from 77,725 Ounces in Q1 and up 20% from 70,811 ounces in Q4 2011

Cash operating costs per ounce decline to $921 in Q2 2012 from $1,118 in Q1 and $1,089 in Q4 2011

Second Quarter 2012 revenue up 24% to $136.3 million from $109.8 million year over year

Second Quarter 2012 net income of $2.5 million, up from net loss of $5.0 million year over year

Year-to-date revenue up 18% to $267.3 million from $226.3 million in 2011

Year-to-date net income of $11.6 million versus $0.9 million in 2011

Fourth straight quarter of positive cash flow -- $17.6 million in cash from operations in Q2 2012 versus $17.9 million in Q1 and $1.5 million in cash used in operations in Q2 2011

Operating cash flow before changes in working capital of $33.1 million and $54.0 million for the second quarter and first half of 2012, respectively

Golden Star Resources Ltd. (NYSE MKT: GSS) (TSX: GSC) (GHANA: GSR) ("Golden Star" or the "Company") today reported unaudited financial results for its second quarter and six-month period ended June 30, 2012.

Total second quarter 2012 gold sales increased 17% to 85,183 ounces at a cash operating cost of $921 per ounce from 72,540 ounces at a cash operating cost of $1,079 per ounce in the second quarter of 2011. The increased production led to second quarter revenue of $136.3 million, up 4% over $131.0 in the first quarter and up 24% over $109.8 million in the second quarter of 2011. Net income attributable to Golden Star shareholders in the second quarter increased to $2.5 million, or $0.01 per share, from a net loss of $5.0 million, or $0.02 per share, in the same quarter last year.

A 13% increase in average realized gold price, combined with a 4% increase in year-to-date gold production -- to 162,908 ounces in the first six months of 2012 from 156,448 ounces in the same period a year ago -- led to an 18% increase in revenue for the respective six-month periods to $267.3 million from $226.3 million. Net income attributable to Golden Star shareholders for the first half of 2012 was $11.6 million, or $0.045 per share, up from $0.9 million, or than $0.003 per share, in the same period a year ago. Year-to-date net income included a $22.4 million gain on sale of assets in the first quarter.

Golden Star generated $17.6 million in cash from operations in the second quarter of 2012, down slightly from $17.9 million in the first quarter but up from $1.5 million in cash used in operations in the second quarter last year. The Company has achieved four consecutive quarters of positive cash flow from operations. On a year-to-date basis, Golden Star generated $35.5 million in cash from operations versus $7.3 million in cash used in operations through the first six months of 2011. Operating cash flow before changes in working capital was $33.1 million and $54.0 million for the second quarter and first half of 2012, respectively.

"We achieved second quarter guidance both in terms of gold production and cash operating costs, the latter coming in approximately $120 per ounce lower than the guidance of $1,040 per ounce. The Golden Star management team remains focused on increasing gold production at both mines and working to reduce costs, improve efficiencies and increase profitability," said Tom Mair, President and CEO. "At the same time, we are moving forward aggressively with exploration activities and seeing promising results from our drilling program below the current Wassa pits. Based on recent results that indicate wider and higher-grade mineralization than previously mined at Wassa, we have increased our rig count from two to five in order to accelerate the program. We also continue to advance our Prestea Underground project, where we are proceeding with a full feasibility study following the second quarter completion of a positive Preliminary Economic Assessment that indicates the West Reef may provide an important new source of low-cost gold for Golden Star."

Over the last year, the Company has successfully focused on returning the pits back to plan, as evidenced by high stripping ratios in 2011 (above 10:1) and more normal (approximately 6:1) stripping ratios early this year. As a result, total material mined in the second quarter of 2012 was lower at 10.4 million tonnes versus 13.3 million tonnes mined in the first quarter. Both mines also invested considerable effort in optimizing their stockpile management programs, particularly over the recent rainy season. In addition, new mining equipment had the effect of improving pit productivity, further reducing mining operating costs.

As gold production from the oxide plant at Bogoso continues to increase, cash operating costs at Bogoso have come down. With Wassa also achieving lower operating costs, combined cash operating costs in the second quarter of 2012 were $921 per ounce, down 18% from $1,118 in the first quarter and down 15% from $1,079 in the second quarter last year.

SUMMARY OF CONSOLIDATED FINANCIAL RESULTS   Three months ended     Three months ended
(Unaudited)   June 30,     March 31,   Dec. 31,
    2012   2011     2012   2011
Bogoso/Prestea gold sold (oz)   44,115   34,077     41,242   35,475
Wassa/HBB gold sold (oz)   41,068   38,463     36,483   35,336
Total gold sold (oz)   85,183   72,540     77,725   70,811
Average realized gold price ($/oz)   1,600   1,513     1,686   1,678
Cash operating cost - combined ($/oz)   921   1,079     1,118   1,089
Gold revenues ($000s)   136,313   109,807     131,020   118,814
Cash flow provided by (used in) operations ($000s)   17,570   (1,450 )   17,884   19,491
Net income (loss) attributable to shareholders ($000s)   2,483   (5,048 )   9,113   7,241
Net income (loss) attributable to shareholders ($/share)   0.01   (0.02 )   0.035   0.028

Bogoso/Prestea gold sales in the second quarter of 2012 increased 29% to 44,115 ounces from 34,077 ounces in the same quarter last year and increased 7% over 41,242 ounces in the first quarter of 2012. The increased production was attributed to the first quarter 2012 startup of the Bogoso oxide plant, which contributed 6,904 ounces of gold in the first quarter of 2012 and 10,064 ounces in the second quarter. Although refractory ore processed in the second quarter of 2012 was 6% lower than the second quarter last year, the Bogoso sulfide plant produced roughly the same number of ounces in both periods due to higher feed grade and improved metallurgical recovery in the 2012 second quarter. The Company expects to achieve improved throughput at the sulfide plant going forward.

The Company's focus on stockpile management in the second quarter of 2012 enabled it to avoid higher mining costs during the wet season and to complete maintenance work on mining equipment. As expected, it also resulted in less ore mined on a sequential quarter basis -- 5.9 million tonnes in the second quarter versus 8.2 million tonnes in the first quarter -- and contributed to lower cash operating costs at Bogoso -- $999 per ounce in the second quarter of 2012, down 18% from $1,222 per ounce in the first quarter and down 28% from $1,383 per ounce in the second quarter last year. 

Refractory ore stockpiles increased to approximately 747,631 tonnes in the second quarter of 2012, which enables the Company to extend the slowdown in mining operations at Bogoso without compromising planned mill throughput rates. The Company has made good progress in achieving faster startup of the stand-by power generator at Bogoso in response to intermittent grid power interruptions that are common in Ghana. In addition to limiting down time at the plant, this initiative reduces the mechanical strain on plant equipment, which helps control maintenance costs. 

The oxide plant also primarily processed stockpiled ore in the second quarter of 2012, which resulted in less than optimum throughput, offset by expected grade and recovery improvements over the first quarter startup phase. At the Pampe pit, which we expect to be the main source of ore for the oxide plant in the near future, the Company has made substantial progress removing excess material from two bench slips that occurred in the first quarter of 2012 and expects to complete this effort in the third quarter of this year. With more consistent ore from Pampe, Golden Star expects to improve throughput and achieve continued gains in recovery levels.

Bogoso/Prestea Key Metrics   2Q-12   1Q-12   4Q-11   2Q-11
Refractory ore mined (000st)   605   770   711   608
Non-refractory ore mined (000st)   245   141   16   7
Total ore mined (000st)   849   910   727   615
Waste mined (000st)   5,014   7,242   8,877   5,393
Refractory ore processed (000st)   570   611   493   604
Refractory grade (g/t)   2.60   2.55   2.95   2.31
Refractory ore recovery (%)   71.3   73.3   77.7   66.0
Gold sold (oz) refractory   34,051   34,338   35,475   34,077
Non-refractory ore processed (000st)   202   173   --   --
Non-refractory grade (g/t)   2.71   2.66   --   --
Non-refractory ore recovery (%)   62.2   54.1   --   --
Gold sold (oz) non-refractory   10,064   6,904   --   --
Total gold sold (oz)   44,115   41,242   35,475   34,077
Cash operating cost ($/oz)   999   1,222   1,166   1,383

Wassa/HBB gold sales in the second quarter of 2012 met expectations at 41,068 ounces, up 7% from 38,463 ounces in the same quarter last year and up 13% from 36,483 ounces in the first quarter of 2012. Cash operating costs in the second quarter of 2012 declined to $838 per ounce, down 16% from $999 per ounce in the first quarter and down 17% from $1,012 per ounce in the fourth quarter of 2011.

Wassa mine performance was highlighted by excellent results from the higher-grade Father Brown pit, which helped push the second quarter processed grade to 2.06 g/t from 1.74 g/t in the first quarter and from 1.93 g/t in the second quarter a year ago. Likewise, metallurgical recovery improved to 94.8% in the second quarter of 2012 from 93.9% in the first quarter and 94.1% in the second quarter of 2011. Of particular note was the relatively high amount of gravity-recovered gold in the circuit.

The Company continues to implement upgrades to mitigate the effects of wet weather that have resulted in plant slowdowns in recent years. These upgrades include improved drainage systems, both in pits and at the stockpile, relocation of the heap leach material feed system, profiling non-refractory ore stockpiles and modifications to the plant that enable more efficient processing of fine, wet ore. The Company expects to complete these upgrades in the third quarter of 2012.

Wassa/HBB Key Metrics   2Q-12   1Q-12   4Q-11   2Q-11
Ore mined (000st)   715   683   639   576
Waste mined (000st)   3,818   4,445   3,820   3,491
Ore processed (000st)   641   682   589   665
Grade (g/t)   2.06   1.74   2.04   1.93
Recovery (%)   94.8   93.9   94.1   94.1
Cash operating cost ($/oz)   838   999   1,012   811
Gold sold (oz)   41,068   36,483   35,336   38,463

Based on a succession of highly positive drilling results at the Wassa Main pits, the Company increased its 2012 exploration budget to approximately $15 million from $10 million. The bulk of drilling activity will involve brownfields exploration around the Wassa and Bogoso/Prestea mines. 

As detailed in its July 25, 2012, news release, recent drilling at Wassa Main continued to intersect wider zones of over 2.0 g/t gold mineralization along strike and down dip. As a result, the Company has increased the number of drill rigs on the project from two to five. Drilling results for the first half of 2012 are being incorporated into an updated resource estimate for the Company's year-end resources and reserves statement.

In Cote d'Ivoire, based on recent positive results from the first phase of deep auger drilling, the Company expects to initiate a rotary air blast (RAB) drill program in the third quarter.

In Brazil, work continues on the Iriri Joint Venture with Votorantim Metals, where regional stream sediment programs are 90% complete over the 3,400 square kilometer concession area. Golden Star has delineated several targets for further testing with regional soil sampling programs.

In the second quarter, Golden Star published a favorable Preliminary Economic Assessment (PEA) for the West Reef area of its Prestea Underground mine titled "NI 43-101 Preliminary Economic Assessment Mechanized Mining of the West Reef Resource, Prestea Underground Mine, Prestea, Ghana." The report showed the West Reef has an Indicated Mineral Resource of 874,000 tonnes grading 18.07 g/t for 508,000 ounces of gold and an Inferred Mineral Resource of 510,000 tonnes grading 11.58 g/t for 190,000 ounces of gold -- and in both cases the orebody is open along strike and down dip. The Company has acquired a new underground drilling rig that will be taken to 17 level of West Reef and commissioned in August 2012 for the next series of drilling programs. Results from the drilling program will be incorporated into the information being gathered for the West Reef feasibility study, which is expected to be completed in 2013.

For additional information regarding the PEA, please refer to the full text of the PEA, which is available at and under the Company's profile at, and to the Company's press release dated May 3, 2012, titled "Golden Star Resources Publishes Positive Preliminary Economic Assessment for Prestea Underground Mine," which is available under the Company's profile at

At June 30, 2012, Golden Star had approximately $105.7 million in cash and cash equivalents versus $103.6 million at December 31, 2011. The Company has an additional $19.0 million in borrowing capacity under its equipment financing credit facility.

Golden Star invested approximately $14.8 million in capital projects in the second quarter, including $5.0 million for development projects, $7.5 million for the acquisition of new equipment and facilities at its mine sites, and $2.3 million for mine site drilling. The Company expects to invest approximately $50 to $60 million in capital projects during the remainder of 2012. The more significant of the capital projects are the relocation of the Togbekrom village and associated construction of a new tailings facility at Wassa, relocation of Dumasi near Bogoso and the development of the Dumasi pit, ongoing development and drilling at the Prestea underground mine and expanded drilling programs at Wassa Main.

During the second quarter, the Company refinanced $74.5 million of the original $125 million of convertible debentures due in November 2012, leaving $50.5 million outstanding. These debentures can either be repaid, at the option of the Company, in (i) cash or (ii) common shares or a combination of shares and cash, based on (a) a share value which is 95% of the weighted average trading price of our common shares on the NYSE MKT stock exchange for the 20 consecutive trading days ending five days preceding the maturity date and subject to (b) a maximum share issuance of 46.7 million shares. If the value of the 46.7 million shares is less than $50.5 million, we would be required to pay cash, in addition to the shares issued, in an amount equal to the difference between the aggregate value of the shares issued and the $50.5 million. The current financial plan is to pay the convertible debenture in cash.

    Bogoso/Prestea   Wassa/HBB   Combined
Oz produced   188,000   150,000   338,000
Cash operating cost ($/oz)   1,100 to 1,180   950 to 985   1,040 to 1,100

1. Power and fuel prices used in the guidance are $0.16 per kilowatt-hour and $1.33 per liter, respectively.
2. Starting in late 2012, and continuing through 2014, water treatment costs are estimated to add approximately $60 per ounce at Bogoso, but should drop significantly thereafter when the current backlog of process water is treated.

The Company will conduct a conference call and webcast at 11:00 a.m. Eastern Time on August 9, 2012. Please call in at least five minutes prior to the conference call start time to ensure prompt access to the conference. The call can be accessed by telephone or by webcast as follows:

North American participants: (877) 407-8289
Participants outside U.S. and Canada: (201) 689-8341

A recording of the conference call will be available until August 31, 2012, through the Company's website at or by dialing:

North America: (877) 660-6853, Replay Account number: 329, Conference ID number: 397472
International outside U.S. and Canada: (201) 612-7415, Replay Account number: 329, Conference ID number: 397472

(Stated in thousands of U.S. dollars except shares issued and outstanding)  
    As of     As of  
    June 30,     December 31,  
    2012     2011  
  CURRENT ASSETS                
  Cash and cash equivalents   $ 105,729     $ 103,644  
  Accounts receivable     11,041       10,077  
  Inventories     88,109       74,297  
  Deposits     7,517       6,474  
  Prepaids and other     2,167       2,048  
    Total Current Assets     214,563       196,540  
RESTRICTED CASH     1,273       1,273  
PROPERTY, PLANT AND EQUIPMENT     255,910       252,131  
INTANGIBLE ASSETS     4,212       5,266  
MINING PROPERTIES     259,350       270,157  
AVAILABLE FOR SALE INVESTMENTS     9,565       1,416  
OTHER ASSETS     --       895  
    Total Assets   $ 744,873     $ 727,678  
  Accounts payable   $ 31,485     $ 40,708  
  Accrued liabilities     52,791       51,380  
  Asset retirement obligations     8,256       8,996  
  Current tax liability     --       197  
  Current debt     57,476       128,459  
    Total Current Liabilities     150,008       229,740  
LONG TERM DEBT     87,326       10,759  
ASSET RETIREMENT OBLIGATIONS     22,610       24,884  
DEFERRED TAX LIABILITY     39,455       23,993  
    Total Liabilities   $ 299,399     $ 289,376  
SHAREHOLDERS' EQUITY                
SHARE CAPITAL                
  First preferred shares, without par value, unlimited shares authorized. No shares issued and outstanding     --       --  
Common shares, without par value, unlimited shares authorized. Shares issued and outstanding: 258,861,960 at June 30, 2012; 258,669,487 at December 31, 2011   $ 694,341     $ 693,899  
CONTRIBUTED SURPLUS     23,093       19,815  
DEFICIT     (264,515 )     (276,112 )
    Total Golden Star Equity     445,947       439,580  
NONCONTROLLING INTEREST     (473 )     (1,278 )
    Total Equity     445,474       438,302  


(Stated in thousands of U.S. dollars except shares and per share data)  
    For the three months ended June 30,     For the six months ended June 30,  
    2012     2011     2012     2011  
Gold revenues   $ 136,313     $ 109,807     $ 267,333     $ 226,313  
Cost of sales     116,870       102,525       234,015       210,276  
  Mine operating margin     19,443       7,282       33,318       16,037  
Exploration expense     827       1,569       2,091       2,148  
General and administrative expense     4,718       7,252       11,485       14,354  
Derivative mark-to-market loss     --       2,430       162       6,679  
(Gain)/loss on fair value of convertible debentures     1,145       (6,107 )     2,037       (24,292 )
Property holding costs     1,336       1,689       3,410       4,363  
Foreign exchange loss     1,019       462       1,880       719  
Interest expense     3,723       2,112       6,496       4,470  
Interest and other income     (129 )     (63 )     (268 )     (102 )
Loss on sale of assets     (76 )     --       (61 )     --  
(Gain)/loss on sale of investments     25       2       (22,360 )     2  
Loss on extinguishment of debt     582       --       582       --  
    Income/(loss) before income tax     6,273       (2,064 )     27,864       7,696  
Income tax expense     (2,931 )     (3,801 )     (15,462 )     (8,106 )
    Net income/(loss)   $ 3,342     $ (5,865 )   $ 12,402     $ (410 )
Net income/(loss) attributable to non-controlling interest     859       (817 )     805       (1,290 )
    Net income/(loss) attributable to Golden Star shareholders   $ 2,483     $ (5,048 )   $ 11,597     $ 880  
Net income/(loss) per share attributable to Golden Star shareholders                                
Basic   $ 0.010     $ (0.020 )   $ 0.045     $ 0.003  
Diluted   $ 0.010     $ (0.020 )   $ 0.045     $ 0.003  
Weighted average shares outstanding (millions)     258.8       258.6       258.8       258.6  
Weighted average shares outstanding-diluted (millions)     258.9       258.6       258.8       259.2  


(Stated in thousands of U.S. dollars)  
    For the three months ended     For the six months ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
OPERATING ACTIVITIES:                                
Net income   $ 3,342     $ (5,865 )   $ 12,402     $ (410 )
Reconciliation of net income/(loss) to net cash provided by operating activities:                                
  Depreciation, depletion and amortization     25,175       15,274       44,224       36,492  
  Amortization of loan acquisition costs     --       318       895       672  
  Loss/(Gain) on sale of investments     25       --       (22,360 )     --  
  Loss on extinguishment of debt     582       --       582       --  
  (Loss)/Gain on sale of assets     (76 )     2       (61 )     2  
  Non-cash employee compensation     1,125       879       3,704       2,220  
  Deferred income tax expense     2,931       3,040       15,462       6,347  
  Fair value of derivatives loss     --       930       162       5,179  
  Fair value loss/(gain) on convertible debt     1,145       (6,107 )     2,037       (24,292 )
  Accretion of asset retirement obligations     705       2,183       1,408       3,116  
  Reclamation expenditures     (1,847 )     (7,945 )     (4,422 )     (11,828 )
      33,107       2,709       54,033       17,498  
Changes in non-cash working capital:                                
  Accounts receivable     1,005       (1,779 )     (964 )     (2,804 )
  Inventories     (8,492 )     (15 )     (10,504 )     (421 )
  Deposits     591       245       (714 )     (700 )
  Accounts payable and accrued liabilities     (8,546 )     (2,185 )     (5,528 )     (18,799 )
  Other     (95 )     (425 )     (869 )     (2,089 )
    Net cash provided by/(used in) operating activities     17,570       (1,450 )     35,454       (7,315 )
INVESTING ACTIVITIES:                                
  Expenditures on mining properties     (7,326 )     (9,191 )     (19,863 )     (18,031 )
  Expenditures on property, plant and equipment     (7,492 )     (9,951 )     (19,620 )     (19,863 )
  Change in accounts payable and deposits on mine equipment and material     1,007       (4,077 )     (2,689 )     (3,184 )
  Cash used for equity investments     --       --       (938 )     --  
  Proceeds from sale of assets     80       --       6,685       --  
    Net cash used in investing activities     (13,731 )     (23,219 )     (36,425 )     (41,078 )
FINANCING ACTIVITIES:                                
  Principal payments on debt     (2,271 )     (2,573 )     (4,421 )     (5,338 )
  Proceeds from debt agreements and equipment financing     350       3,470       7,386       3,470  
  Exercise of options     --       --       91       --  
  Other     --       26       --       158  
    Net cash (used in)/provided by financing activities     (1,921 )     923       3,056       (1,710 )
Increase/(decrease) in cash and cash equivalents     1,918       (23,746 )     2,085       (50,103 )
Cash and cash equivalents, beginning of period     103,811       151,661       103,644       178,018  
Cash and cash equivalents, end of period   $ 105,729     $ 127,915     $ 105,729     $ 127,915  

Golden Star Resources holds the largest land package in one of the world's largest and most prolific gold producing regions. The Company holds a 90% equity interest in Golden Star (Bogoso/Prestea) Limited and Golden Star (Wassa) Limited, which respectively own the Bogoso/Prestea and Wassa/HBB open-pit gold mines in Ghana, West Africa. In addition, Golden Star has an 81% interest in the currently inactive Prestea Underground mine in Ghana, as well as gold exploration interests elsewhere in Ghana, in other parts of West Africa and in Brazil in South America. Golden Star has approximately 259 million shares outstanding. Additional information is available at

Statements Regarding Forward-Looking Information: Some statements contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Such statements include comments regarding expected reductions in operating costs and increases in production; improvements to throughput at the Bogoso sulfide plant; the impact of Pampe ore on results at the Bogoso oxide plant and the timing of more consistent ore sourcing at Pampe; the timing and effects of upgrades at Wassa; planned investments in capital projects; the Company's exploration budget, and planned increases to such budget, and planned exploration activities and drilling, including exploration at Bogoso/Prestea, and Wassa/HBB, and elsewhere in West Africa and Brazil; timing of commissioning of the underground drilling rig at Prestea Underground; timing of updated resource estimates and of the completion of the feasibility study for Prestea Underground; and the Company's 2012 production and cash operating cost estimates, including anticipated power and fuel prices and water treatment costs. Factors that could cause actual results to differ materially include timing of and unexpected events at the Bogoso/Prestea oxide and sulfide processing plants and at the Wassa processing plant; variations in ore grade, tonnes mined, crushed or milled; variations in relative amounts of refractory, non-refractory and transition ores; delay or failure to receive board or government approvals and permits; the availability and cost of electrical power; timing and availability of external financing on acceptable terms; technical, permitting, mining or processing issues; changes in U.S. and Canadian securities markets; and fluctuations in gold price and costs and general economic conditions. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in our Form 10-K for 2011. The forecasts contained in this press release constitute management's current estimates, as of the date of this press release, with respect to the matters covered thereby. We expect that these estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this press release represent management's estimate as of any date other than the date of this press release.

Non-GAAP Financial Measures: in this news release, we use the terms "cash operating cost per ounce." Cash operating cost per ounce is equal to total cash costs less production royalties and production taxes, divided by the number of ounces of gold sold during the period. We use cash operating cost per ounce as a key operating indicator. We monitor this measure monthly, comparing each month's values to prior period's values to detect trends that may indicate increases or decreases in operating efficiencies. This measure is also compared against budget to alert management to trends that may cause actual results to deviate from planned operational results. We provide this measure to our investors to allow them to also monitor operational efficiencies of our mines. We calculate this measure for both individual operating units and on a consolidated basis. Cash operating cost per ounce should be considered as Non-GAAP Financial Measures as defined in SEC Regulation S-K Item 10 and other applicable securities laws and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. There are material limitations associated with the use of such non-GAAP measures. Since this measure does not incorporate revenues, changes in working capital and non-operating cash costs, it is not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Changes in numerous factors including, but not limited to, mining rates, milling rates, gold grade, gold recovery, and the costs of labor, consumables and mine site general and administrative activities can cause these measures to increase or decrease. We believe that these measures are the same or similar to the measures of other gold mining companies, but may not be comparable to similarly titled measures in every instance.

This release uses the terms "Indicated Mineral Resources" and "Inferred Mineral Resources". The Company advises US investors that while these terms are recognized and required by National Instrument 43-101, the US Securities and Exchange Commission ("SEC") does not recognize them. US Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into a higher category or into mineral reserves. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. US investors are cautioned not to assume that any part or all of the Inferred Mineral Resource exists, or is economically or legally mineable. Also, disclosure of contained ounces is permitted under Canadian regulations; however the SEC generally requires mineral resource information to be reported as in-place tonnage and grade. The PEA is preliminary in nature, it includes Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, there is no assurance that the PEA will be realized and mineral resources that are not mineral reserves do not have demonstrated economic viability.

The technical contents of this press release that relate to the PEA have been reviewed and approved by Dr. Martin Raffield, P.Eng., a Qualified Person pursuant to National Instrument 43‐101. Dr. Raffield is Senior Vice President Technical Services for Golden Star.

For further information, please contact:
        Bruce Higson-Smith
        Senior Vice President Finance and Corporate Development
        Jay Pfeiffer
        Pfeiffer High Investor Relations, Inc.