##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the Fiscal Year ended December 31, 2006
 Commission file number 1-12284
 GOLDEN STAR RESOURCES LTD.
  Canada
    
    98-0101955(State or other Jurisdiction of Incorporation
    
    (I.R.S. Employer Identification No.)or Organization)10901 West Toller Drive, Suite 300Littleton, Colorado
    
    80127-6312(Address of Principal Executive Office)
    
    (Zip Code)
 (303) 830-9000
 Title of Each Class
    
    Name of each exchange on which registeredCommon Shares
    
    American Stock Exchange
  þ o
 o þ
 þ o
 þ
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS  Item 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. DESCRIPTION OF PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERSITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONITEMS 10, 11, 12, 13 AND 14ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT INDEXArticles of AmendmentAmendment No. 1 to Senior Convertible NotesSubsidiaries of the CompanyConsent of PricewaterhouseCoopers LLPCertification of Principal Executive OfficerCertification of Principal Financial OfficerCertification of Principal Executive OfficerCertification of Principal Financial Officer    Table of Contents  REPORTING CURRENCY, FINANCIAL AND OTHER INFORMATION
 
    NON-GAAP FINANCIAL MEASURES
  STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
     
    
    significant increases or decreases in gold prices;
    
    failure to develop Mineral Reserves on the HBB Properties or failure to expand Mineral
Reserves around our existing mines;
    
    unexpected events during the construction and start-up of the Bogoso sulfide expansion project;
    
    unexpected changes in business and economic conditions;
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
    
    inaccuracies in Mineral reserves ad non-reserves estimates;
    
    changes in interest and currency exchange rates;
    
    timing and amount of gold production;
    
    unanticipated variations in ore grade, tonnes mined and crushed or milled;
    
    unanticipated recovery or production problems;
    
    effects of illegal mining on our properties;
    
    changes in mining and processing costs, including changes to costs of raw materials,
supplies, services and personnel;
    
    changes in metallurgy and processing;
    
    availability of skilled personnel, contractors, materials, equipment, supplies, power and water;
    
    changes in project parameters or mine plans;
    
    costs and timing of development of new reserves;
    
    weather, including continuing drought in West Africa;
    
    global warming and its impacts on climate and regulatory
frameworks that may impact our activities directly or indirectly;
    
    results of current and future exploration activities;
    
    results of pending and future feasibility studies;
    
    acquisitions and joint venture relationships;
    
    political or economic instability, either globally or in the countries in which we operate;
    
    changes in regulations affecting our operations, particularly in Ghana, where our
principal producing properties are located;
    
    local and community impacts and issues;
    
    availability and cost of replacing reserves;
    
    timing of receipt and maintenance of government approvals and permits;
    
    unanticipated transportation costs and shipping incidents and losses;
    
    accidents, labor disputes and other operational hazards;
    
    environmental costs and risks;
    
    unanticipated title issues;
    
    competitive factors, including competition for property acquisitions;
    
    possible litigation; and
    
    availability of capital at reasonable rates or at all.
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CONVERSION FACTORS AND ABBREVIATIONS
  1 acre
    
    = 0.4047 hectare
    
    1 mile
    
    = 1.6093 kilometers1 foot
    
    = 0.3048 meter
    
    1 troy ounce
    
    = 31.1035 grams1 gram per metric tonne
    
    = 0.0292 troy
ounce/short ton
    
    1 square mile
    
    = 2.59 square kilometers1 short ton (2000
pounds)
    
    = 0.9072 tonne
    
    1 square kilometer
    
    = 100 hectares1 tonne
    
    = 1,000 kg or 2,204.6 lbs
    
    1 kilogram
    
    = 2.204 pounds or 32.151 troy oz1 hectare
    
    = 10,000 square meters
    
    1 hectare
    
    = 2.471 acres
  Au
    
    = gold
    
    m2
    
    = square meterg
    
    = gram
    
    m3
    
    = cubic meterAu g/t
    
    = grams of gold per tonne
    
    Mg or mg
    
    = milligramha
    
    = hectare
    
    mg/m3
    
    = milligrams per cubic meterkm
    
    = kilometer
    
    T or t
    
    = tonnekm2
    
    = square kilometers
    
    oz
    
    = troy ouncekg
    
    = kilogram
    
    ppb
    
    = parts per billionm
    
    = meter
    
    Ma
    
    = million years
  GLOSSARY OF TERMS
   NI 43-101 DEFINITIONS
 Mineral Reserve
    
    The term Mineral Reserve refers to the
economically mineable part of a Measured or
Indicated Mineral Resource demonstrated by
at least a preliminary feasibility study.
The study must include adequate information
on mining, processing, metallurgical,
economic, and other relevant factors that
demonstrate, at the time of reporting, that
economic extraction can be justified. A
mineral reserve includes diluting materials
and allowances for losses that might occur
when the material is mined.Proven Mineral Reserve
    
    The term Proven Mineral Reserve refers to
the economically mineable part of a
Measured Mineral Resource demonstrated by
at least a preliminary feasibility study.
This study must include adequate
information on mining, processing,
metallurgical, economic, and other relevant
factors that demonstrate, at the time of
reporting, that economic extraction is
justified.(1)Probable Mineral Reserve
    
    The term Probable Mineral Reserve refers
to the economically mineable part of an
Indicated, and in some circumstances, a
Measured Mineral Resource demonstrated by
at least a preliminary feasibility study.
This study must include adequate
information on mining, processing,
metallurgical, economic, and other relevant
factors that demonstrate, at the time of
reporting, that economic extraction can be
justified.Mineral Resource
    
    The term Mineral Resource refers to a
concentration or occurrence of diamonds,
natural, solid, inorganic material, or
natural solid fossilized organic material
including base and precious metals, coal,
and industrial minerals in or on the
Earths crust in such form and quantity and
of such a grade or quality that it has
reasonable prospects for economic
extraction. The location, quantity, grade,
geological characteristics and continuity
of a Mineral Resource are known, estimated
or interpreted from specific geological
evidence and knowledge.
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Measured Mineral Resource
    
    The term Measured Mineral Resource refers
to that part of a Mineral Resource for
which quantity, grade or quality,
densities, shape and physical
characteristics are so well established
that they can be estimated with confidence
sufficient to allow the appropriate
application of technical and economic
parameters, to support production planning
and evaluation of the economic viability of
the deposit. The estimate is based on
detailed and reliable exploration, sampling
and testing information gathered through
appropriate techniques from locations such
as outcrops, trenches, pits, workings and
drill holes that are spaced closely enough
to confirm both geological and grade
continuity.Indicated Mineral Resource
    
    The term Indicated Mineral Resource
refers to that part of a Mineral Resource
for which quantity, grade or quality,
densities, shape and physical
characteristics can be estimated with a
level of confidence sufficient to allow the
appropriate application of technical and
economic parameters, to support mine
planning and evaluation of the economic
viability of the deposit. The estimate is
based on detailed and reliable exploration
and testing information gathered through
appropriate techniques from locations such
as outcrops, trenches, pits, workings and
drill holes that are spaced closely enough
for geological and grade continuity to be
reasonably assumed.Inferred Mineral Resource
    
    The term Inferred Mineral Resource refers
to that part of a Mineral Resource for
which quantity and grade or quality can be
estimated on the basis of geological
evidence and limited sampling and
reasonably assumed, but not verified,
geological and grade continuity. The
estimate is based on limited information
and sampling gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drill holes.qualified person(1)
    
    The term qualified person refers to an
individual who is an engineer or
geoscientist with at least five years of
experience in mineral exploration, mine
development or operation or mineral project
assessment, or any combination thereof, has
experience relevant to the subject matter
of the project and the technical report and
is a member in good standing of a
professional association.
 SEC INDUSTRY GUIDE 7 DEFINITIONS
 Reserve
    
    The term reserve refers to that part of a
mineral deposit which could be economically
and legally extracted or produced at the
time of the reserve determination.
Reserves must be supported by a
feasibility(2) study done to
bankable standards that demonstrates the
economic extraction. (bankable standards
implies that the confidence attached to the
costs and achievements developed in the
study is sufficient for the project to be
eligible for external debt financing.) A
reserve includes adjustments to the in-situ
tonnes and grade to include diluting
materials and allowances for losses that
might occur when the material is mined.proven reserve
    
    The term proven reserve refers to
reserves for which (a) quantity is computed
from dimensions revealed in outcrops,
trenches, workings or drill holes; grade
and/or quality are computed from the
results of detailed sampling and (b) the
sites for inspection, sampling and
measurement are spaced so closely and the geologic character is so well defined that size, shape depth and
mineral content of reserves are well-established.probable reserve
    
    The term probable reserve refers to reserves for which quantity and
grade and/or quality are computed from information similar to that used
for proven (measured) reserves, but the sites for inspection, sampling,
and measurement are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for proven
reserves, is high enough to assume continuity between points of
observation.mineralized
material(3)
    
    The term mineralized material refers to material that is not included
in the reserve as it does not meet all of the criteria for adequate
demonstration for economic or legal extraction.non-reserves
    
    The term non-reserves refers to mineralized material that is not
included in the reserve as it does not meet all of the criteria for
adequate demonstration for economic or legal extraction.
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exploration stage
    
    An exploration stage prospect is one which is not in either the
development or production stage.development stage
    
    A development stage project is one which is undergoing preparation of
an established commercially mineable deposit for its extraction but
which is not yet in production. This stage occurs after completion of
a feasibility study.production stage
    
    A production stage project is actively engaged in the process of
extraction and beneficiation of mineral reserves to produce a
marketable metal or mineral product.
 
 (1.)
    
    Industry Guide 7 does not require designation of a qualified person.(2.)
    
    For Industry Guide 7 purposes the feasibility study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at
the time of reporting, that economic extraction is justified.(3.)
    
    This category is substantially equivalent to the combined categories of Measured and
Indicated Mineral Resources specified in NI 43-101. ADDITIONAL DEFINITIONS
 alteration 
 ancillary equipment
 artisanal
 assay
 Au
 bio-oxidation or BIOX ® -
 Birimian 
 cash operating cost per ounce
 CIL or carbon-in-leach
 craton 
 cut-off grade
 cyanidation 
 diamond drilling
 dip
 diorite
 disseminated
 doré 
 fault
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feasibility study
 fold
 formation
 gabbro
 gabbroic
 geochemistry
 geochemical prospecting
 geophysics
 geophysical surveys 
 geotechnical 
 grade 
 greenstone
 granodiorite
 heap leach
 host rock
 hydrothermal
 in-situ
 life-of-mine
 mapped or geological mapping
 metasediment
 metavolcanic 
 mineral
 mineralization
 National Instrument 43-101 or NI 43-101
 non-refractory 
 outcrop
 open pit or open cut
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ore
 ore body
 ore grade
 oxide
 pH
 plunge
 pre-strip
 Proterozoic
 put
 pyrite
 QA/QC
 quartz 2
 RAB (rotary air blast) drilling 
 RC (reverse circulation) drilling 
 run-of-mine or ROM
 reef
 refractory 
 rock
 SAG
 sampling and analytical variance/precision 
 sediment
 sedimentary rock
 sericitic 
 shear
 shield
 stratigraphic or stratigraphically 
 strike
 strip
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sulfide -
 syncline
 tailings
 Tarkwaian -
 tonne
 total cash cost per ounce
 total production cost per ounce
 transition ore -
 vein
 volcanics
 volcano-sedimentary -
 wall rock
 weathering
 wire frame
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Item 1. BUSINESS
  Canada Business Corporations Act Alberta Business Corporations Act nd
         GOLD SALES AND PRODUCTION
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GOLD PRICE HISTORY
   Average Price ReceivedYear
    
    High
    
    Low
    
    Average
    
    by Golden Star1996
    
    
    415
    
    
    
    367
    
    
    
    388
    
    
    
    N/A1997
    
    
    362
    
    
    
    283
    
    
    
    331
    
    
    
    N/A1998
    
    
    313
    
    
    
    273
    
    
    
    294
    
    
    
    N/A1999
    
    
    326
    
    
    
    253
    
    
    
    279
    
    
    
    2932000
    
    
    313
    
    
    
    264
    
    
    
    279
    
    
    
    2802001
    
    
    293
    
    
    
    256
    
    
    
    271
    
    
    
    2712002
    
    
    349
    
    
    
    278
    
    
    
    310
    
    
    
    3112003
    
    
    416
    
    
    
    320
    
    
    
    363
    
    
    
    3642004
    
    
    454
    
    
    
    375
    
    
    
    410
    
    
    
    4102005
    
    
    537
    
    
    
    411
    
    
    
    445
    
    
    
    4462006
    
    
    725
    
    
    
    525
    
    
    
    603
    
    
    
    607To March 12, 2007
    
    
    686
    
    
    
    608
    
    
    
    647
    
    
    
    650
 
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BUSINESS STRATEGY AND DEVELOPMENT
   ® ® ®
    12




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We employ a number of different strategies to achieve our exploration goals including the following:
 
    
    we maintain a staff of geologists in Ghana responsible for exploring for new
Mineral Resources in Ghana and for developing new Mineral Reserves in areas
around the existing operations;
 
    
    we contract with geologic consultants who advise us on existing holdings and
who seek to identify new exploration opportunities;
 
    
    we have purchased equity ownership in gold exploration companies that use
the equity funds provided by us to explore in their areas of expertise;
 
    
    we provide funding to joint venture partners that use our funding to conduct
active exploration efforts; and
 
    
    we maintain an international exploration group that carries out work on
various properties in the Guiana Shield area of South America and in other
areas of Africa outside of Ghana.
 OUR ASSETS
 Bogoso/Prestea Property
 Prestea Underground The Prestea Underground is located directly beneath the
Prestea property. It consists of a large underground gold mine that operated for over 100
years under a number of former owners. We are continuing to conduct exploration and
development drilling and carry out engineering, geological and economic analysis of the
mine to determine if it can be reopened on a profitable basis. The mine includes three
useable shafts which allow access to all levels and several kilometers of underground
workings on numerous levels extending as deep as 1,400 meters below the surface.Pampe The Pampe deposit is located approximately 19 kilometers west of the
Bogoso processing plants. We have identified an Probable Mineral Reserve of 2.1 million
tonnes at an average gold grade of 3.31 g/t, which we believe is recoverable by open pit
mining methods. Development of this deposit as a satellite to our Bogoso/Prestea property
is substantially complete and ore production commenced in March 2007.Mampon The Mampon deposit is located approximately 35 kilometers north of the
Bogoso processing plant. It was acquired in 2003 as part of the Dunkwa property
acquisition. Mampon is an undeveloped gold deposit with 1.3 million tonnes of Probable
Mineral Reserves at an average gold grade of 5.14 g/t which we believe is recoverable by
open pit mining methods. Production from this deposit, as a satellite pit to our
Bogoso/Prestea property, is scheduled to begin in late 2008.
 Wassa Property
 HBB Properties 
 Exploration Assets
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GOLD PRODUCTION AND UNIT COSTS
  2007Production and Cost Per Ounce(1)
    
    2004
    
    2005
    
    2006
    
    ProjectedBOGOSO/PRESTEAProduction(2) (thousands of ounces)
    
    
    147.9
    
    
    
    131.9
    
    
    
    103.8
    (3)
    
    
    280.0Cash Operating Cost ($/oz)
    
    
    250
    
    
    
    338
    
    
    
    412
    
    
    
    380Total Cash Cost ($/oz)
    
    
    264
    
    
    
    351
    
    
    
    430
    
    
    
    Total Operating Cost ($/oz)
    
    
    350
    
    
    
    423
    
    
    
    530
    
    
    
    WASSA(3)Production(2) (thousands of ounces)
    
    
    
    
    
    
    69.1
    (4)
    
    
    97.6
    
    
    
    110.0Cash Operating Cost ($/oz)
    
    
    
    
    
    
    468
    (4)
    
    
    475
    
    
    
    410Total Cash Cost ($/oz)
    
    
    
    
    
    
    482
    (4)
    
    
    493
    
    
    
    Total Operating Cost ($/oz)
    
    
    
    
    
    
    587
    (4)
    
    
    615
    
    
    
    CONSOLIDATEDConsolidated Total Production(2) (thousands of ounces)
    
    
    147.9
    
    
    
    201.0
    
    
    
    201.4
    
    
    
    390.0Consolidated Cash Operating Cost ($/oz)
    
    
    250
    
    
    
    383
    
    
    
    442
    
    
    
    389Consolidated Total Cash Cost ($/oz)
    
    
    264
    
    
    
    396
    
    
    
    460
    
    
    
    Consolidated Total Operating Cost ($/oz)
    
    
    350
    
    
    
    479
    
    
    
    560
    
    
    
    
 
 (1)
    
    See Managements Discussion and Analysis of Financial Condition and Results of Operations
for definitions of the cost per ounce measures as used in this table.(2)
    
    Gold production is shown on a 100% basis, which represents our current beneficial interest in
gold production and revenues. The Government of Ghana, which has a 10% carried interest in
Bogoso/Prestea and Wassa, would receive 10% of any dividends distributed from Bogoso/Prestea
and Wassa once all capital costs have been repaid.(3)
    
    Amounts shown exclude fourth quarter sales of 2,169 ounces produced during commissioning
activities at the Bogoso sulfide expansion project .(4)
    
    Represents Wassa production for the nine-month period following its April 1, 2005
in-service date. MINERAL RESERVES
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PROVEN AND PROBABLE MINERAL RESERVES
 As at December 31, 2006
    
    As at December 31, 2005Property
    
    Tonnes
    
    Gold Grade
    
    Ounces
    
    Tonnes
    
    Gold Grade
    
    OuncesMineral Reserve Category
    
    (millions)
    
    (g/t)
    
    (millions)
    
    (millions)
    
    (g/t)
    
    (millions)Bogoso/Prestea(1)Proven Mineral ReservesNon-refractory
    
    
    0.9
    
    
    
    2.30
    
    
    
    0.07
    
    
    
    1.9
    
    
    
    3.82
    
    
    
    0.23Refractory
    
    
    14.5
    
    
    
    2.95
    
    
    
    1.38
    
    
    
    13.0
    
    
    
    3.00
    
    
    
    1.25Total Proven
    
    
    15.5
    
    
    
    2.91
    
    
    
    1.45
    
    
    
    14.9
    
    
    
    3.11
    
    
    
    1.48Probable Mineral ReservesNon-refractory
    
    
    6.9
    
    
    
    2.59
    
    
    
    0.57
    
    
    
    8.0
    
    
    
    2.42
    
    
    
    0.62Refractory
    
    
    19.3
    
    
    
    2.65
    
    
    
    1.64
    
    
    
    11.9
    
    
    
    2.60
    
    
    
    1.00Total Probable
    
    
    26.2
    
    
    
    2.64
    
    
    
    2.22
    
    
    
    20.0
    
    
    
    2.53
    
    
    
    1.62Total Proven and ProbableNon-refractory
    
    
    7.8
    
    
    
    2.56
    
    
    
    0.64
    
    
    
    9.9
    
    
    
    2.68
    
    
    
    0.86Refractory
    
    
    33.8
    
    
    
    2.78
    
    
    
    3.02
    
    
    
    24.9
    
    
    
    2.81
    
    
    
    2.25Total Bogoso/Prestea Proven
and Probable
    
    
    41.6
    
    
    
    2.74
    
    
    
    3.67
    
    
    
    34.8
    
    
    
    2.78
    
    
    
    3.11WassaProven
Mineral Reserves
Non-refractory
    
    
    0.5
    
    
    
    1.08
    
    
    
    0.02
    
    
    
    
    
    
    
    
    
    
    
    Probable Mineral Reserves
Non-refractory
    
    
    13.0
    
    
    
    1.11
    
    
    
    0.46
    
    
    
    21.9
    
    
    
    1.34
    
    
    
    0.94Total Wassa Proven &
Probable
    
    
    13.6
    
    
    
    1.11
    
    
    
    0.48
    
    
    
    21.9
    
    
    
    1.34
    
    
    
    0.94TotalsProven Mineral ReservesNon-refractory
    
    
    1.5
    
    
    
    1.85
    
    
    
    0.09
    
    
    
    1.9
    
    
    
    3.82
    
    
    
    0.23Refractory
    
    
    14.5
    
    
    
    2.95
    
    
    
    1.38
    
    
    
    13.0
    
    
    
    3.00
    
    
    
    1.25Total Proven
    
    
    16.0
    
    
    
    2.85
    
    
    
    1.47
    
    
    
    14.9
    
    
    
    3.11
    
    
    
    1.48Probable Mineral ReservesNon-refractory
    
    
    19.9
    
    
    
    1.62
    
    
    
    1.04
    
    
    
    30.0
    
    
    
    1.63
    
    
    
    1.57Refractory
    
    
    19.3
    
    
    
    2.65
    
    
    
    1.64
    
    
    
    11.9
    
    
    
    2.60
    
    
    
    1.00Total Probable
    
    
    39.2
    
    
    
    2.13
    
    
    
    2.68
    
    
    
    41.9
    
    
    
    1.90
    
    
    
    2.57Total Proven and ProbableNon-refractory
    
    
    21.4
    
    
    
    1.64
    
    
    
    1.13
    
    
    
    31.9
    
    
    
    1.76
    
    
    
    1.80Refractory
    
    
    33.8
    
    
    
    2.78
    
    
    
    3.02
    
    
    
    24.9
    
    
    
    2.81
    
    
    
    2.25Total Proven and Probable
    
    
    55.2
    
    
    
    2.34
    
    
    
    4.15
    
    
    
    56.8
    
    
    
    2.22
    
    
    
    4.05
 Notes to the Mineral Reserve Statement:(1)
    
    The stated Mineral Reserve for Bogoso/Prestea includes Pampe and Mampon.(2)
    
    The stated Mineral Reserves have been prepared in accordance with Canadas National
Instrument 43-101 Standards of Disclosure for Mineral Projects. Mineral Reserves are
equivalent to Proven and Probable Reserves as defined by the United States Securities and
Exchange Commission Industry Guide 7.(3)
    
    The 2006 Mineral Reserves have been prepared under the supervision of Mr. Peter Bourke,
P.Eng., Vice President Technical Services for the Company. Our 2005 Mineral Reserves were
prepared by Mr. William Tanaka, our Group Reserves Manager. Each of Mr. Bourke and Mr.
Tanaka is a Qualified Person as defined by Canadas National Instrument 43-101.(4)
    
    The Mineral Reserves at December 31, 2006 were estimated using a gold price of $480 per
ounce, which is approximately equal to the three year average price. At December 31, 2005
Mineral Reserves were calculated using a gold price of $400 per ounce. 15




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(5)
    
    The terms non-refractory and refractory refer to the metallurgical characteristics of
the ore and are defined in the Glossary of Terms. We plan to process the refractory ore in
our BIOX® bio-oxidation plant that is currently being constructed at Bogoso and
to process the non-refractory ore using our more traditional gravity, flotation and/or
cyanidation techniques.(6)
    
    Optimized pit parameters are based on historical and projected operating costs at
Bogoso/Prestea and Wassa and estimated costs for processing refractory ores in the
BIOX®plant. Metallurgical recoveries are based on historical performance or
estimated from test work and typically range between 80% to 92% for non-refractory ores and
are estimated at 70% to 90% for refractory ores. Pit designs are based on geotechnical
criteria established by external consultants. Mining dilution and mining recovery vary by
deposit and have been applied in estimating the Mineral Reserves.(7)
    
    Mineral Reserves are expressed on a 100% basis. Our share of the Mineral Reserves is
subject to the Government of Ghanas 10% carried interest which entitles it to a 10%
dividend once our capital costs have been recovered.(8)
    
    Numbers may not add due to rounding. Stockpiled Ores
  STOCKPILES INCLUDED IN MINERAL RESERVES
 As at December 31, 2006
    
    As at December 31, 2005Property
    
    Tonnes
    
    Gold Grade
    
    Ounces
    
    Tonnes
    
    Gold Grade
    
    OuncesMineral Reserve Category
    
    (millions)
    
    (g/t)
    
    (millions)
    
    (millions)
    
    (g/t)
    
    (millions)Bogoso/PresteaProven StockpilesNon-refractory
    
    
    0.5
    
    
    
    2.70
    
    
    
    0.04
    
    
    
    0.2
    
    
    
    2.39
    
    
    
    0.02Refractory
    
    
    1.1
    
    
    
    3.09
    
    
    
    0.10
    
    
    
    0.2
    
    
    
    2.44
    
    
    
    0.01Total Proven Stockpiles
    
    
    1.6
    
    
    
    2.96
    
    
    
    0.15
    
    
    
    0.4
    
    
    
    2.42
    
    
    
    0.03WassaProven StockpilesNon-refractory
    
    
    0.3
    
    
    
    0.79
    
    
    
    0.01
    
    
    
    
    
    
    
    
    
    
    
    TotalsProven StockpilesNon-refractory
    
    
    0.8
    
    
    
    2.01
    
    
    
    0.05
    
    
    
    0.2
    
    
    
    2.39
    
    
    
    0.02Refractory
    
    
    1.1
    
    
    
    3.09
    
    
    
    0.10
    
    
    
    0.2
    
    
    
    2.44
    
    
    
    0.01Total Proven
    
    
    1.9
    
    
    
    2.62
    
    
    
    0.16
    
    
    
    0.4
    
    
    
    2.42
    
    
    
    0.03
 Reconciliation of Mineral Reserves as shown under NI 43-101 and under SEC Industry Guide 7
   16




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Reconciliation of Proven and Probable Mineral Reserves  December 31, 2005 to December 31, 2006
 Tonnes
    
    Contained Ounces
    
    Tonnes
    
    OuncesReconciliation
    
    (millions)
    
    (millions)
    
    (% of Opening)
    
    (% of Opening)Opening Mineral Reserves at
December 31, 2005
    
    
    56.8
    
    
    
    4.05
    
    
    
    100
    
    
    
    100Gold Price Increase(1)
    
    
    28.6
    
    
    
    1.37
    
    
    
    50
    
    
    
    34Exploration Changes(2)
    
    
    (2.1
    )
    
    
    (0.04
    )
    
    
    (4
    )
    
    
    (1
    )Mining Depletion(3)
    
    
    (4.9
    )
    
    
    (0.28
    )
    
    
    (9
    )
    
    
    (7
    )Engineering (4)
    
    
    (23.2
    )
    
    
    (0.95
    )
    
    
    (41
    )
    
    
    (23
    )Closing Mineral Reserves at
December 31, 2006
    
    
    55.2
    
    
    
    4.15
    
    
    
    97
    
    
    
    102
 
 Notes to the reconciliation of Mineral Reserves:(1)
    
    Gold Price Increase represents changes resulting from an increase in gold price used in
the Mineral Reserve estimates from $400 per ounce in 2005 to $480 per ounce in 2006.(2)
    
    Exploration Changes include changes due to geological modeling, data interpretation and
resource block modeling methodology as well as due to exploration discovery of new
mineralization.(3)
    
    Mining Depletion represents 2005 Mineral Reserve mined and processed in 2006 before
considering recovery losses and therefore does not correspond with 2006 actual gold
production.(4)
    
    Engineering includes changes as a result of engineering facts such as changes in
operating costs, mining dilution and recovery assumptions, metallurgical recoveries, pit
slope angles and other mine design considerations. NON-RESERVES  MEASURED AND INDICATED MINERAL RESOURCES
 Measured and Indicated Mineral Resources
 Cautionary Note to US Investors concerning estimates of Measured and Indicated Mineral Resources
 US investors are cautioned not to
assume that any part or all of the mineral deposits in these categories will ever be converted into
Mineral Reserves.
 do not
include include
  17




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Measured &Measured
    
    Indicated
    
    IndicatedGold
    
    
    
    
    
    Gold
    
    
    
    
    
    GoldTonnes
    
    Grade
    
    Tonnes
    
    Grade
    
    Tonnes
    
    GradeProperty
    
    (millions)
    
    (g/t)
    
    (millions)
    
    (g/t)
    
    (millions)
    
    (g/t)Bogoso/Prestea(1)
    
    
    6.1
    
    
    
    2.05
    
    
    
    14.0
    
    
    
    2.32
    
    
    
    20.2
    
    
    
    2.23Prestea Underground
    
    
    
    
    
    
    
    
    
    
    1.1
    
    
    
    16.30
    
    
    
    1.1
    
    
    
    16.30Wassa
    
    
    0.2
    
    
    
    1.05
    
    
    
    11.7
    
    
    
    0.75
    
    
    
    11.9
    
    
    
    0.76Hwini-Butre & Benso
    
    
    
    
    
    
    
    
    
    
    5.2
    
    
    
    4.30
    
    
    
    5.2
    
    
    
    4.30Goulagou(8)
    
    
    
    
    
    
    
    
    
    
    2.7
    
    
    
    1.75
    
    
    
    2.7
    
    
    
    1.75Total 2006
    
    
    6.4
    
    
    
    2.02
    
    
    
    34.7
    
    
    
    2.48
    
    
    
    41.0
    
    
    
    2.40Total 2005
    
    
    3.5
    
    
    
    2.20
    
    
    
    33.9
    
    
    
    2.09
    
    
    
    37.4
    
    
    
    2.10
 
 Notes to Non-Reserves  Measured and Indicated Mineral Resources Table:(1)
    
    The Mineral Resources for Bogoso/Prestea include Pampe and Mampon.(2)
    
    The Mineral Resources were estimated in accordance with the definitions and
requirements of Canadas National Instrument 43-101. The Mineral Resources are equivalent
to Mineralized Material as defined by the United States Securities and Exchange Commission
Industry Guide 7.(3)
    
    The Mineral Resources, other than for the Prestea Underground, were estimated using an
optimized pit shell at a gold price of $560 per ounce from which the Mineral Reserves have
been subtracted. Other than gold price, the same optimized pit shell parameters and
modifying factors used to determine the Mineral Reserves were used to determine the Mineral
Resources. The Prestea Underground Mineral Resources were estimated using a cut off grade
based on a $560 per ounce gold price and are commensurate with estimated underground mining
costs. In 2005, we used a gold price of $480 per ounce for the optimized shell and the
underground cutoff grade.(4)
    
    The Mineral Resources are in addition to the Mineral Reserves described above.(5)
    
    The Qualified Person for the estimation of the Mineral Resources is S. Mitchel Wasel,
our Exploration Manager.(6)
    
    Tables may not add to the total due to rounding.(7)
    
    Mineral Resources are shown on a 100% basis. Golden Stars share of the Mineral
Resources is subject to the Government of Ghanas 10% carried interest which entitles them
to a 10% dividend once our capital costs have been recovered, in the case of Bogoso/Prestea
and Wassa, and are subject to the Government of Ghanas 19% minority interest in the
Prestea Underground where Golden Star currently has an 81% beneficial interest.(8)
    
    Pit optimization parameters for the Goulagou Mineral Resources were estimated based on
feasibility studies on other similar gold deposits in Burkina Faso, Golden Stars
experience in West Africa, and from limited metallurgical test work on the Goulagou ores.
Heap leach processing was the assumed processing option for this deposit. NON-RESERVES  INFERRED MINERAL RESOURCES
 Inferred Mineral Resources
 Cautionary Note to US Investors concerning estimates of Inferred Mineral Resources
 US investors are cautioned not to assume that part or all
of the Inferred Mineral Resource exists, or is economically or legally mineable.
 include
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InferredGoldTonnes
    
    GradeProperty
    
    (millions)
    
    (g/t)Bogoso/Prestea(1)
    
    
    4.2
    
    
    
    2.70Prestea Underground
    
    
    5.0
    
    
    
    8.68Wassa
    
    
    7.2
    
    
    
    1.18Hwini-Butre & Benso
    
    
    1.6
    
    
    
    4.02Goulagou
    
    
    0.5
    
    
    
    1.02Paul Isnard(9)
    
    
    10.2
    
    
    
    1.70Total 2006
    
    
    28.7
    
    
    
    3.05Total 2005
    
    
    34.0
    
    
    
    2.86
 Notes to Non-Reserves  Inferred Mineral Resources Table
 
 (1)
    
    The Inferred Mineral Resources for Bogoso/Prestea incorporates Pampe and Mampon.(2)
    
    The Inferred Mineral Resources were estimated in accordance with the definitions and
requirements of Canadas National Instrument 43-101. Inferred Mineral Resources are not
recognized by the United States Securities and Exchange Commission.(3)
    
    The Inferred Mineral Resources, other than for the Prestea Underground, were estimated
using an optimized pit shell at a gold price of $560 per ounce from which the Mineral
Reserves have been subtracted. Other than gold price, the same optimized pit shell
parameters and modifying factors used to determine the Mineral Reserves were used to
determine the Mineral Resources. The Prestea Underground Inferred Mineral Resources were
estimated using a cut off grade based on a $560 per ounce gold price and are commensurate
with estimated underground mining costs. In 2005, we used a gold price of $480 per ounce
for the optimized shell and the underground cutoff grade, as reported in our press release
of February 1, 2006.(4)
    
    The Inferred Mineral Resources are in addition to the Mineral Reserves described
above.(5)
    
    The Qualified Person for the estimation of the Inferred Mineral Resources is S. Mitchel
Wasel, our Exploration Manager.(6)
    
    Tables may not add to the total due to rounding.(7)
    
    Inferred Mineral Resources are shown on a 100% basis. Golden Stars share of the
Inferred Mineral Resources is subject to the Government of Ghanas 10% carried interest
which entitles it to a 10% dividend once our capital costs have been recovered, in the case
of Bogoso/Prestea and Wassa, and are subject to the Government of Ghanas 19% minority
interest in the Prestea Underground where Golden Star currently has an 81% beneficial
interest.(8)
    
    Pit optimization parameters for the Goulagou Inferred Mineral Resources were estimated
based on feasibility studies on other similar gold deposits in Burkina Faso, Golden Stars
experience in West Africa, and from limited metallurgical test work on the Goulagou ores.
Heap leach processing was the assumed processing option for this deposit.(9)
    
    We have the right to acquire this property. EMPLOYEES
  CUSTOMERS
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COMPETITION
   SEASONALITY
  AVAILABLE INFORMATION
  
 ITEM 1A. RISK FACTORS
 RISK FACTORS
 You should consider the following discussion of risks in addition to the other information
contained in or included by reference in this Form 10-K . In addition to historical information,
the information in this form 10-K contains forward-looking statements about our future business
and performance. Our actual operating results and financial performance may be very different from
what we expect as of the date of this Form 10-K . The risks below address material factors that may
affect our future operating results and financial performance.
 Financial Risks
 A substantial or prolonged decline in gold prices would have a material adverse effect on us.
  20




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
    
    cause suspension of our mining operations at Bogoso/Prestea and Wassa if the operations
become uneconomic at the then-prevailing gold price, thus further reducing revenues;
    
    cause us to be unable to fulfill our obligations under agreements with our partners or
under our permits and licenses which could cause us to lose our interests in, or be forced
to sell, some of our properties;
    
    cause us to be unable to fulfill our debt payment obligations;
    
    halt or delay the development of new projects; and
    
    reduce funds available for exploration, with the result that depleted reserves are not replaced.
  We may incur substantial losses in the future that could make financing our operations and business
strategy more difficult.
  Our obligations could strain our financial position and impede our business strategy.
  
    
    increasing our vulnerability to general adverse economic and industry conditions;
    
    limiting our ability to obtain additional financing to fund future working capital,
capital expenditures, exploration costs and other general corporate requirements;
    
    requiring us to dedicate a significant portion of our cash flow from operations to make
debt service payments, which would reduce our ability to fund working capital, capital
expenditures, exploration costs and other general corporate requirements;
    
    limiting our flexibility in planning for, or reacting to, changes in our business and the
industry; and
    
    placing us at a disadvantage when compared to our competitors that have less debt
relative to their market capitalization.
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Our estimates of Mineral Reserves and non-reserves could be inaccurate, which could cause
production and costs to differ from estimates.
   We currently have only two sources of operational cash flows, which will likely be insufficient by
themselves to fund our continuing exploration and development activities.
  We are subject to fluctuations in currency exchange rates, which could materially adversely affect
our financial position.
   Gold hedging could be unsuccessful and result in losses.
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Risks inherent in acquisitions that we might undertake could adversely affect our current business
and financial condition and our growth.
  We are subject to litigation risks.
  Operational Risks
 The technology and cost of production with respect to refractory materials at Bogoso/Prestea remain
subject to a number of uncertainties.
 ® ®
 We are subject to a number of operational hazards that can delay production or result in liability
to us.
 Our activities are subject to a number of risks and hazards including:
 
    
    difficulty in applying technology such as bio-oxidation processing;
    
    power shortages;
    
    environmental hazards;
    
    discharge of pollutants or hazardous chemicals;
    
    industrial accidents;
    
    labor disputes and shortages;
    
    supply and shipping problems and delays;
    
    shortage of equipment and contractor availability;
    
    unusual or unexpected geological or operating conditions;
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##### Table of Contents




    
    cave-ins of underground workings;
    
    slope failures and failure of pit walls or dams;
    
    fire;
    
    marine and transit damage and/or loss;
    
    changes in the regulatory environment; and
    
    natural phenomena such as inclement weather conditions, floods, droughts and earthquakes.
  Our mining operations are subject to numerous environmental laws, regulations and permitting
requirements that can delay production and adversely affect operating and development costs.
      The development and operation of our mining projects involve numerous uncertainties that could
affect the feasibility or profitability of such projects.
  24




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##### Table of Contents




    
    estimation of Mineral Reserves and Mineral Resources;
    
    mining rate, dilution and recovery
    
    anticipated metallurgical and throughput recovery rates;
    
    environmental considerations and permitting;
    
    future gold prices; and
    
    anticipated capital and operating costs.
   
    
    unanticipated changes in grade and tonnage of ore to be mined and processed;
    
    unanticipated adverse geotechnical conditions;
    
    incorrect data on which engineering assumptions are made;
    
    costs of constructing and operating a mine in a specific environment;
    
    availability and cost of processing and refining facilities;
    
    availability of economic sources of power;
    
    adequacy of water supply;
    
    adequate access to the site including competing land uses (such as agriculture and illegal mining);
    
    unanticipated transportation costs and shipping incidents and losses;
    
    significant increases in the cost of diesel fuel, cyanide or other major components of operating costs;
    
    government regulations (including regulations relating to prices, royalties, duties,
taxes, permitting, restrictions on production, quotas on exportation of minerals, as well as
the costs of protection of the environment and agricultural lands);
    
    fluctuations in gold prices; and
    
    accidents, labor actions and force majeure events.
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We need to continually discover, develop or acquire additional Mineral Reserves for gold production
and a failure to do so would adversely affect our business and financial position in the future.
 ®
 Gold exploration is highly speculative, involves substantial expenditures, and is frequently
non-productive.
  
    
    the identification of potential gold mineralization based on superficial analysis;
    
    availability of prospective land;
    
    availability of government-granted exploration and exploitation permits;
    
    the quality of our management and our geological and technical expertise; and
    
    the funding available for exploration and development.
  We face competition from other mining companies in connection with the acquisition of properties.
  Title to our mineral properties could be challenged.
  We depend on the services of key executives.
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##### Table of Contents



Our insurance coverage could be insufficient.
 Our business is subject to a number of risks and hazards generally, including:
 
    
    adverse environmental conditions;
    
    industrial accidents;
    
    labor disputes;
    
    unusual or unexpected geological conditions;
    
    ground or slope failures;
    
    cave-ins;
    
    changes in the regulatory environment;
    
    marine transit and shipping damage and/or losses;
    
    natural phenomena such as inclement weather conditions, floods and earthquakes; and
    
    political risks including expropriation and civil war.
 Such occurrences could result in:
 
    
    damage to mineral properties or production facilities;
    
    personal injury or death;
    
    loss of legitimate title to properties;
    
    environmental damage to our properties or the properties of others;
    
    delays in mining, processing and development;
    
    monetary losses; and
    
    possible legal liability.
  Governmental and Regulatory Risks
 As a holding company, limitations on the ability of our operating subsidiaries to make
distributions to us could adversely affect the funding of our operations.
  We are subject to changes in the regulatory environment where we operate which may increase our
costs of compliance.
 27




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##### Table of Contents




    
    licensing;
    
    production;
    
    taxes;
    
    disposal of process water or waste rock;
    
    toxic substances;
    
    development and permitting;
    
    exports and imports;
    
    labor standards;
    
    mine and occupational health and safety;
    
    environmental protections; and
    
    mine closure plans.
 Compliance with these regulations increases the costs of the following:
 
    
    planning;
    
    designing;
    
    drilling;
    
    operating;
    
    developing;
    
    constructing; and
    
    closure and reclamation.
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##### Table of Contents



The Government of Ghana has the right to increase its control of certain
subsidiaries.
    We are subject to risks relating to exploration, development and operations in foreign countries.
   
    
    the risks of war, civil unrest, terrorism, coups or other violent or unexpected changes in government;
    
    political instability and violence;
    
    expropriation and nationalization;
    
    renegotiation or nullification of existing concessions, licenses, permits, and contracts;
    
    illegal mining;
    
    changes in taxation policies;
    
    restrictions on foreign exchange and repatriation; and
    
    changing political conditions, currency controls, and governmental regulations that favor
or require the awarding of contracts to local contractors or require foreign contractors to
employ citizens of, or purchase supplies from, a particular jurisdiction.
 Illegal mining has occurred on our properties, is difficult to control, can disrupt our business
and can expose us to liability.
   29




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##### Table of Contents



Our activities are subject to complex laws, regulations and accounting standards that can adversely
affect operating and development costs, the timing of operations, the ability to operate and
financial results.
  Failure to maintain effective internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act could have a material adverse effect on our business and share price.
  Market Risks
 The market price of our common shares could experience volatility and could decline significantly.
  
    
    the extent of analytical coverage available to investors concerning our business could be
limited if investment banks with research capabilities do not continue to follow our
securities;
    
    the trading volume and general market interest in our securities could affect an
investors ability to trade significant numbers of common shares;
    
    the size of the public float in our common shares may limit the ability of some
institutions to invest in our securities; and
    
    a substantial decline in our stock price that persists for a significant period of time
could cause our securities to be delisted from the American Stock Exchange and the Toronto
Stock Exchange, further reducing market liquidity.
  Investors could have difficulty or be unable to enforce certain civil liabilities on us, certain of
our directors and our experts.
  30




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##### Table of Contents



There are certain U.S. federal income tax risks associated with ownership of Golden Star
common shares.
   The existence of outstanding rights to purchase or acquire common shares could impair our ability
to raise capital.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  31




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ITEM 2. DESCRIPTION OF PROPERTIES
 MAPS OF OPERATIONS AND PROPERTIES
  
 
 32




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PROPERTY STATUS TABLE
  2006Property
    
    Type of Interest
    
    Expiry Date
    
    Property size
    
    Status
    
    CommentsBogoso
(Ghana)
    
    Government granted
mining leases held by
a 90% owned
subsidiary
    
    8/21/2017
8/16/2018
    
    95 km2
    
    Active
    
    Mining stagePrestea
(Ghana)
    
    Government granted
mining lease held by
a 90% owned
subsidiary
    
    7/6/2031
    
    129 km2
    
    Active
    
    Mining stageWassa
(Ghana)
    
    Government granted
mining lease held by
a 90% owned
subsidiary
    
    9/16/2022
    
    102 km2,
another 15
km2
applied for
    
    Active
    
    Mining stagePrestea Underground
(Ghana)
    
    Government granted
mining lease, 81%
beneficial interest
    
    7/6/2031
    
    129
km2 lies
directly below Prestea surface
lease
    
    Active
    
    Exploration stageDunkwa-Mampon
(Ghana)
    
    Prospecting License
    
    1/26/07, extension
applied for
    
    66 km2
    
    Active
    
    Development stageDunkwa-Mansiso
(Ghana)
    
    Prospecting License
    
    1/9/08
    
    56 km2
    
    Active
    
    Exploration stagePampe
    
    Prospecting License
    
    Conversion to
mining lease
underway
    
    5.8 km2
    
    Active
    
    Development stageHwini-Butre
(Ghana)
    
    2 Prospecting Licenses
    
    3/10/08; Conversion
to mining lease
underway
    
    180 km2
    
    Active
    
    Advanced
exploration stageBenso
(Ghana)
    
    3 Prospecting Licenses
    
    05/16/06;
Conversion to
mining lease
underway
    
    21 km2
    
    Active
    
    Advanced
exploration stageCôte dIvoire 
Regional
    
    2 Permis de Recherche
    
    Various
    
    ~2,000 km2
    
    Active
    
    Exploration stageMano JV
(Sierra Leone)
    
    5 Prospecting Permits
    
    Various
    
    550 km2
    
    Active
    
    Exploration stageGoulagou, Rounga, 
Titao
(Burkina Faso)
    
    2 Permis de Recherche
Agreements allow
earning up to 90%.
    
    6/1/09
    
    487 km2
    
    Active
    
    Advanced
exploration stageDeba & Tialkam
(Niger)
    
    2 Permis de Recherche
    
    11/24/07
    
    1,842 km2
    
    Active
    
    Exploration stageSaramacca
(Suriname)
    
    Various Government
granted rights of
exploration and
option agreements
    
    Renewals Pending
    
    660 km2
    
    Active
    
    Exploration stage
 MINING IN GHANA
 Ghanaian Ownership and Special Rights
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
    
    the special share would carry no voting rights, but the holder
would be entitled to receive notice of and attend and speak at any
general meeting of the members or any separate meeting of the
holders of any class of shares;
 
    
    the special share could only be issued to, held by, or transferred
to the Government or a person acting on behalf of the Government;
 
    
    the written consent of the holder of the special share would be
required for all amendments to the organizational documents of the
company, the voluntary winding-up or liquidation of the company or
the disposal of any mining lease or the whole or any material part
of the assets of the company;
 
    
    the special share does not confer a right to participate in the
dividends, profits or assets of the company or a return of assets
in a winding up or liquidation of the company;
 
    
    the holder of a special share may require the company to redeem
the special share at any time for no consideration or for a
consideration determined by the company.
   Ghanaian Royalty Requirements
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Ghanaian Environmental Regulations
     COMMUNITY DEVELOPMENT PROGRAMS AND SUSTAINABILITY
      35




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OPERATING PROPERTIES
 The Bogoso/Prestea Gold Mine
 Overview of the Bogoso/Prestea Operation
 ®
  Operating Results for Bogoso/Prestea
  Bogoso/Prestea Operating Results
    
    2006
    
    2005
    
    2004Ore milled (t)
    
    
    1,493,948
    
    
    
    1,557,881
    
    
    
    1,650,412Rate (t/day)
    
    
    4,093
    
    
    
    4,268
    
    
    
    4,526Grade milled (g/t)
    
    
    3.56
    
    
    
    4.14
    
    
    
    4.09Recovery %
    
    
    60.4
    
    
    
    60.7
    
    
    
    67.3Total gold sales (oz) (1)
    
    
    103,792
    
    
    
    131,898
    
    
    
    147,875Cash operating cost ($/oz)
    
    
    412
    
    
    
    338
    
    
    
    250Total cash cost ($/oz)
    
    
    430
    
    
    
    351
    
    
    
    264
 
 (1)
    
    Gold sale is shown on a 100% basis, which represents our current beneficial interest in
gold production and revenues. Once all capital has been repaid, the Government of Ghana
would receive 10% of the dividends from the subsidiaries owning the Bogoso/Prestea and
Wassa mines. ®
 Bogoso/Prestea Expansion Project
   ® ®
 36




---



##### Table of Contents



® ®
 ®
 ®
   As of December 31,2006Plant construction cost
    
    $
    118,826Mining equipment cost
    
    
    10,505Pre-production stripping cost
    
    
    22,397Sub-total
    
    
    151,728Costs prior
to project commencement
    
    
    7,216Capitalized interest
    
    
    6,211Total
    
    $
    165,155
 ®
 ®
 Geology at Bogoso/Prestea
  Mineral Reserves and Non-Reserve Mineral Resources at Bogoso/Prestea
  37




---



##### Table of Contents



Exploration at Bogoso/Prestea
 ®
   The Pampe Project
  The Mampon Project
  Prestea South (formerly referred to as Bondaye/Tuapim Area)
  The Wassa Gold Mine
 Overview of the Wassa Gold Mine
   38




---



##### Table of Contents



Geology at Wassa
   Operating Results for Wassa
  Wassa Operating Results
    
    2006
    
    2005
    
    2004Ore milled (t)
    
    
    3,690,672
    
    
    
    2,691,923
    
    
    
    Rate (t/day)
    
    
    10,111
    
    
    
    9,789
    
    
    
    Grade milled (g/t)
    
    
    0.90
    
    
    
    0.91
    
    
    
    Recovery %
    
    
    88.80
    
    
    
    88.7
    
    
    
    Total gold production (oz)(1)
    
    
    97,614
    
    
    
    69,070
    
    
    
    Cash operating cost ($/oz)
    
    
    474
    
    
    
    468
    
    
    
    Total cash cost ($/oz)
    
    
    493
    
    
    
    482
    
    
    
    
 Mineral Reserves and Mineral Resources at Wassa
  Exploration at Wassa
 galamsey
 39




---



##### Table of Contents



EXPLORATION STAGE PROPERTIES IN GHANA
 Prestea Underground
 Overview
    Geology of Prestea Underground
   Mineral Resources at Prestea Underground
  Exploration Activities at Prestea Underground
     HBB Properties
  40




---



##### Table of Contents



Akropong Trend Properties
  Dunkwa Properties
  41




---



##### Table of Contents



Regional Activities in Ghana
   OTHER EXPLORATION STAGE PROPERTIES IN AFRICA
 Mano River Joint Venture, Sierra Leone
    Afema, Cote dIvoire
 (
  Goulagou, Burkina Faso
  42




---



##### Table of Contents



Deba and Tialkam Projects, Niger
   EXPLORATION STAGE PROPERTIES IN SOUTH AMERICA
 Saramacca Property
 en-echelon
    i)
    
    It does so within two years of earning 51%, andii)
    
    Golden Star does not exercise its one-time option to elect to contribute to maintain
its 49% equity interest.
    43




---



##### Table of Contents



Bon Espoir Property
  Paul Isnard
     Benzdorp
 2
 Minera IRL
      44




---



##### Table of Contents



Other Areas
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
   Toronto Stock Exchange
    
    American Stock ExchangeCdn$
    
    Cdn$
    
    $
    
    $2006
    
    High
    
    Low
    
    High
    
    LowFirst Quarter
    
    
    4.39
    
    
    
    3.09
    
    
    
    3.84
    
    
    
    2.64Second Quarter
    
    
    4.05
    
    
    
    2.78
    
    
    
    3.75
    
    
    
    2.53Third Quarter
    
    
    3.84
    
    
    
    2.84
    
    
    
    3.52
    
    
    
    2.54Fourth Quarter
    
    
    3.76
    
    
    
    2.77
    
    
    
    3.30
    
    
    
    2.48
 Toronto Stock Exchange
    
    American Stock ExchangeCdn$
    
    Cdn$
    
    $
    
    $2005
    
    High
    
    Low
    
    High
    
    LowFirst Quarter
    
    
    4.94
    
    
    
    3.15
    
    
    
    4.04
    
    
    
    2.58Second Quarter
    
    
    4.02
    
    
    
    3.01
    
    
    
    3.23
    
    
    
    2.35Third Quarter
    
    
    4.33
    
    
    
    3.40
    
    
    
    3.73
    
    
    
    2.84Fourth Quarter
    
    
    3.78
    
    
    
    2.54
    
    
    
    3.32
    
    
    
    2.12
  Performance Graph and Table
  45




---



##### Table of Contents



2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006Golden Star Resources Ltd.Dollar Value
    
    
    
    100.00
    
    
    
    
    322.22
    
    
    
    
    1,006.67
    
    
    
    
    535.56
    
    
    
    
    343.33
    
    
    
    
    378.89Annualized Return since base Year
    
    
    
    
    
    
    
    
    222.2
    %
    
    
    
    17.3
    %
    
    
    
    75.0
    %
    
    
    
    36.1
    %
    
    
    
    30.5
    %Return over previous year
    
    
    
    
    
    
    
    
    222.2
    %
    
    
    
    212.4
    %
    
    
    
    (46.8
    )%
    
    
    
    (35.9
    )%
    
    
    
    10.4
    %S&P/TSX Composite IndexDollar Value
    
    
    
    100.00
    
    
    
    
    86.03
    
    
    
    
    106.93
    
    
    
    
    120.27
    
    
    
    
    146.61
    
    
    
    
    167.89Annualized Return since base Year
    
    
    
    
    
    
    
    
    (14.0
    )%
    
    
    
    3.4
    %
    
    
    
    6.3
    %
    
    
    
    10.0
    %
    
    
    
    10.9
    %Return over previous year
    
    
    
    
    
    
    
    
    (14.0
    )%
    
    
    
    24.3
    %
    
    
    
    12.5
    %
    
    
    
    21.9
    %
    
    
    
    14.5
    %Canadian Gold IndexDollar Value
    
    
    
    100.00
    
    
    
    
    145.87
    
    
    
    
    166.06
    
    
    
    
    150.67
    
    
    
    
    182.84
    
    
    
    
    235.98Annualized Return since base Year
    
    
    
    
    
    
    
    
    45.9
    %
    
    
    
    28.9
    %
    
    
    
    14.6
    %
    
    
    
    16.3
    %
    
    
    
    18.7
    %Return over previous year
    
    
    
    
    
    
    
    
    45.9
    %
    
    
    
    13.8
    %
    
    
    
    (9.3
    )%
    
    
    
    21.4
    %
    
    
    
    29.1
    %
 RECENT SALE OF UNREGISTERED SECURITIES
  CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
 Income Tax Act
  46




---



##### Table of Contents



(a)
    
    the common share formed part of the business property of a permanent
establishment or fixed base in Canada that the holder has or had within the
twelve-month period preceding the disposition; or(b)
    
    the holder was an individual and
 (i)
    
    was resident in Canada for 120 months during any period of 20
consecutive years preceding the disposition; and(ii)
    
    was resident in Canada at any time during the ten years
immediately preceding the disposition; and(iii)
    
    owned the common share when he ceased to be a resident of
Canada.
  SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO
THE INCOME AND OTHER TAX CONSEQUENCES ARISING IN THEIR PARTICULAR CIRCUMSTANCES
 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
 There are certain U.S. federal income tax risks associated with investments in Golden Star.
    47




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
  Summary of Financial Condition
  As of Dec.
    
    As of Dec.
    
    As of Dec.
    
    As of Dec.
    
    As of Dec.Canadian GAAP
    
    31, 2006
    
    31, 2005
    
    31, 2004
    
    31, 2003
    
    31, 2002Working capital
    
    $
    21,383
    
    
    $
    91,974
    
    
    $
    61,366
    
    
    $
    96,784
    
    
    $
    21,963Current assets
    
    
    90,534
    
    
    
    132,789
    
    
    
    78,846
    
    
    
    104,935
    
    
    
    32,843Total assets
    
    
    663,774
    
    
    
    564,603
    
    
    
    252,160
    
    
    
    222,391
    
    
    
    74,135Current liabilities
    
    
    69,151
    
    
    
    40,815
    
    
    
    17,480
    
    
    
    8,151
    
    
    
    10,880Long-term liabilities
    
    
    125,099
    
    
    
    124,919
    
    
    
    10,367
    
    
    
    8,402
    
    
    
    8,973Shareholders equity
    
    
    462,100
    
    
    
    392,240
    
    
    
    217,960
    
    
    
    198,362
    
    
    
    49,384
 For the
    
    For the
    
    For the
    
    For the
    
    For theYear
    
    Year
    
    Year
    
    Year
    
    YearEnded Dec.
    
    Ended Dec.
    
    Ended Dec.
    
    Ended Dec.
    
    Ended Dec.Canadian GAAP
    
    31, 2006
    
    31, 2005
    
    31, 2004
    
    31, 2003
    
    31, 2002Revenues
    
    $
    128,690
    
    
    $
    95,465
    
    
    $
    65,029
    
    
    $
    64,370
    
    
    $
    38,802Net income/(loss)
    
    
    64,689
    
    
    
    (13,351
    )
    
    
    2,642
    
    
    
    21,956
    
    
    
    4,856Net income/(loss) per share  basic
    
    
    0.312
    
    
    
    (0.094
    )
    
    
    0.019
    
    
    
    0.198
    
    
    
    0.067
 As of Dec.
    
    As of Dec.
    
    As of Dec.
    
    As of Dec.
    
    As of Dec.US GAAP1
    
    31, 2006
    
    31, 2005
    
    31, 2004
    
    31, 2003
    
    31, 2002Working capital
    
    $
    21,383
    
    
    $
    91,794
    
    
    $
    61,366
    
    
    $
    96,784
    
    
    $
    22,262Current assets
    
    
    90,534
    
    
    
    132,789
    
    
    
    78,846
    
    
    
    104,935
    
    
    
    33,391Total assets
    
    
    606,095
    
    
    
    522,443
    
    
    
    219,972
    
    
    
    200,337
    
    
    
    62,644Current liabilities
    
    
    69,151
    
    
    
    40,815
    
    
    
    17,480
    
    
    
    8,151
    
    
    
    10,880Long-term liabilities
    
    
    129,624
    
    
    
    135,832
    
    
    
    22,432
    
    
    
    87,126
    
    
    
    14,445Shareholders equity
    
    
    404,418
    
    
    
    343,832
    
    
    
    176,161
    
    
    
    98,698
    
    
    
    35,597
 For the
    
    For the
    
    For the
    
    For the
    
    For theYear
    
    Year
    
    Year
    
    Year
    
    YearEnded Dec.
    
    Ended Dec.
    
    Ended Dec.
    
    Ended Dec.
    
    Ended Dec.US GAAP1
    
    31, 2006
    
    31, 2005
    
    31, 2004
    
    31, 2003
    
    31, 2002Revenues
    
    $
    128,690
    
    
    $
    102,237
    
    
    $
    65,029
    
    
    $
    64,370
    
    
    $
    38,802Net income/(loss)
    
    
    57,875
    
    
    
    (24,470
    )
    
    
    47,708
    
    
    
    (58,611
    )
    
    
    7,212Net income/(loss) per share  basic
    
    
    0.279
    
    
    
    (0.170
    )
    
    
    0.345
    
    
    
    (0.528
    )
    
    
    0.094
 1
 48




---



##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OUR BUSINESS
  
    
    Bogoso/Prestea property, which is comprised of the adjoining Bogoso and Prestea surface
mining leases (Bogoso/Prestea);
    
    Prestea Underground property (Prestea
Underground);
    
    Wassa property (Wassa); and
    
    HwiniButre and Benso Properties (HBB Properties).
        NONGAAP FINANCIAL MEASURES
   49




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##### Table of Contents



Derivation of Total Mine Operating Cost
 2006Wassa
    
    Bogoso/Prestea
    
    CombinedMining operations
    
    $
    48,080
    
    
    $
    44,650
    
    
    $
    92,730Mining related depreciation and amortization
    
    
    11,763
    
    
    
    9,697
    
    
    
    21,460Accretion of asset retirement obligations
    
    
    221
    
    
    
    614
    
    
    
    835Total mine operating costs
    
    $
    60,064
    
    
    $
    54,961
    
    
    $
    115,025Ounces sold
    
    
    97,614
    
    
    
    103,792
    
    
    
    201,406Derivation of cost per ounce:Total mine operating costs  GAAP ($/oz)
    
    $
    615
    
    
    $
    531
    
    
    $
    571Less depreciation and amortization ($/oz)
    
    
    120
    
    
    
    93
    
    
    
    107Less accretion of asset retirement
obligations ($/oz)
    
    
    2
    
    
    
    6
    
    
    
    4Total cash cost ($/oz)
    
    
    493
    
    
    
    430
    
    
    
    460Less royalties and production taxes ($/oz)
    
    
    18
    
    
    
    18
    
    
    
    18Cash operating cost per ounce ($/oz)
    
    
    475
    
    
    
    412
    
    
    
    442
 Derivation of Total Mine Operating Cost
 2005Wassa
    
    Bogoso/Prestea
    
    CombinedMining operations
    
    $
    33,227
    
    
    $
    46,322
    
    
    $
    79,599Mining related depreciation and amortization
    
    
    7,105
    
    
    
    8,878
    
    
    
    15,983Accretion of asset retirement obligations
    
    
    190
    
    
    
    562
    
    
    
    752Total mine operating costs
    
    $
    40,572
    
    
    $
    55,762
    
    
    $
    96,334Ounces sold
    
    
    69,070
    
    
    
    131,898
    
    
    
    200,968Derivation of cost per ounce:Total operating costs  GAAP ($/oz)
    
    $
    587
    
    
    $
    423
    
    
    $
    479Less depreciation and amortization ($/oz)
    
    
    103
    
    
    
    67
    
    
    
    80Less accretion of asset retirement
obligations ($/oz)
    
    
    3
    
    
    
    4
    
    
    
    4Total cash cost ($/oz)
    
    
    482
    
    
    
    351
    
    
    
    396Less royalties and production taxes ($/oz)
    
    
    14
    
    
    
    13
    
    
    
    13Cash operating cost per ounce ($/oz)
    
    
    468
    
    
    
    338
    
    
    
    383
  Ownership
 50




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##### Table of Contents



BUSINESS STRATEGY AND DEVELOPMENT
  ® ® ® ® ®
  ®
 SIGNIFICANT TRENDS AND EVENTS DURING 2006
 Saramacca Project Joint Venture with Newmont
  Illegal Mining
     Power Restrictions in Ghana
  51




---



##### Table of Contents



® ®
 Personnel changes
 Vice President Operations:
 Vice President Ghana:
 Chief Financial Officer:
 Other Additions to Management:
 Sale of Shares of Moto Goldmines Limited
  Gold Prices
  52




---



##### Table of Contents



Bogoso Sulfide Expansion Project
 ® ® ® ® ® ®
 ® ® ® ® ®
 ®
 Pampe Ore Body
    Sale of EURO Shares and Change in Accounting for EURO
     53




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##### Table of Contents



Reduced Gold Derivatives
   Debt facilities
  Improved Operating Margins
  Subsequent Events
  RESULTS OF OPERATIONS  2006 COMPARED TO 2005
  SUMMARY OF FINANCIAL RESULTS
    
    2006
    
    2005
    
    2004Gold sales (oz)
    
    
    201,406
    
    
    
    200,968
    
    
    
    147,875Average realized price ($/oz)
    
    
    607
    
    
    
    446
    
    
    
    410Revenues ($ in thousands)
    
    
    128,690
    
    
    
    95,465
    
    
    
    65,029Cash flow provided by operations ( $ in thousands)
    
    
    5,398
    
    
    
    1,060
    
    
    
    13,910Net income/(loss) ($ in thousands)
    
    
    64,689
    
    
    
    (13,531
    )
    
    
    2,642Net income/(loss) per share  basic ($)
    
    
    0.312
    
    
    
    (0.094
    )
    
    
    0.019
   54




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##### Table of Contents



Bogoso/Prestea Operations
 2006 compared to 2005
 BOGOSO/PRESTEA
 OPERATING RESULTS
    
    2006
    
    2005
    
    2004Ore mined (t) (Plant-North pit)
    
    
    1,363,616
    
    
    
    1,646,276
    
    
    
    1,411,243Waste mined (t) (Plant-North pit)
    
    
    6,013,859
    
    
    
    10,740,500
    
    
    
    8,065,915Ore processed (t)
    
    
    1,493,948
    
    
    
    1,557,881
    
    
    
    1,650,412Grade processed (g/t)
    
    
    3.56
    
    
    
    4.14
    
    
    
    4.09Recovery (%)
    
    
    60.4
    
    
    
    60.7
    
    
    
    67.3Gold sales (oz)
    
    
    103,792
    
    
    
    131,898
    
    
    
    147,875Cash operating cost ($/oz)
    
    
    412
    
    
    
    338
    
    
    
    250Royalties ($/oz)
    
    
    18
    
    
    
    13
    
    
    
    14Total cash cost ($/oz)
    
    
    430
    
    
    
    351
    
    
    
    264
 ®
   Wassa Operations
 2006 compared to 2005
  55




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##### Table of Contents



WASSA OPERATING RESULTS
    
    2006
    
    2005(1)
    
    2004(1)Ore mined (t)
    
    
    2,449,272
    
    
    
    2,059,777
    
    
    
    Waste mined (t)
    
    
    11,608,484
    
    
    
    7,848,410
    
    
    
    Ore and heap leach materials processed (t)
    
    
    3,690,672
    
    
    
    2,691,923
    
    
    
    Grade processed (g/t)
    
    
    0.90
    
    
    
    0.91
    
    
    
    Recovery (%)
    
    
    88.8
    
    
    
    88.7
    
    
    
    Gold sales (oz)
    
    
    97,614
    
    
    
    69,070
    
    
    
    Cash operating cost ($/oz)
    
    
    474
    
    
    
    468
    
    
    
    Royalties ($/oz)
    
    
    19
    
    
    
    14
    
    
    
    Total cash cost ($/oz)
    
    
    493
    
    
    
    482
    
    
    
    
 
 (1)
    
    The Wassa mine commenced commercial production in April 2005, thus amount shown for 2005 are
for nine months of operation while the 2006 results reflect a full twelve months of operation.   
    
    Gold prices per ounce of $650 in 2007, $638 in 2008, $592 in
2009, and $562 in 2010 and 2011.
 
    
    Approximately one third of the non-reserve resources would
eventually be found economic and would be mined and processed.
  Other Gains and Losses
 Derivatives 
 Interest
 Foreign Exchange Gains 
 RESULTS OF OPERATIONS   2005 COMPARED to 2004
  56




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##### Table of Contents



Bogoso/Prestea
 Operations 2005 compared to 2004
    Wassa Operations
 2005 compared to 2004 
    Derivatives 
 Interest
 57




---



##### Table of Contents



Other revenues and costs
 DEVELOPMENT PROJECTS
 Bogoso Sulfide Expansion Project
 ® ® ®
 ®
 ® ® ®
 ®
    As of December 31,2006Plant construction cost
    
    $
    118,826Mining equipment cost
    
    
    10,505Pre-production stripping cost
    
    
    22,397Sub-total
    
    
    151,728Costs prior
to project commencement
    
    
    7,216Capitalized interest
    
    
    6,211Total
    
    $
    165,155
 EXPLORATION PROJECTS
  Exploration in Ghana
  
    
    Drilling of the Father Brown, Adiokrom, Subriso East, Subriso
West, and the Benso G & I Zones at the Benso property. Studies to
determine the best development options for these deposits are
currently in progress;
 
    
    Drilling beneath the Plant-North pit and Prestea South deposits at
Prestea to investigate their near surface and shallow decline
access potential; and
 58




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##### Table of Contents




    
    Drilling of the Prestea West Reef system between 17 and 24 Levels
to provide a major upgrade in the resources within this area, and
commencement of drilling below Prestea 30 Level to investigate the
continuity and grade of the down plunge extensions of the
historically mined shoots.
 Exploration Elsewhere in Africa
   Exploration on the Guiana Shield
   2007 Opportunities
  
    
    Complete drilling of the decline-accessible Prestea Main Reef Foot Wall target below
the Plant-North pit so that a pre-feasibility study followed by a feasibility study can
commence;
    
    Advance exploration of the known oxide targets in the Prestea South area to allow
feasibility and permitting to be completed by end-2007; and
    
    Test the strike and down dip extensions of existing mineralization at the HBB
Properties and continue testing of new target areas.
   
    
    Saramacca Anomaly M in Suriname, where we plan to follow up the encouraging 2005
drilling in our joint venture with Newmont; and
    
    Sierra Leone where we plan to commence drilling of the promising new soil anomalies on
the Pampana and Sonfon properties.
 LIQUIDITY AND CAPITAL RESOURCES
    59




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##### Table of Contents



Liquidity Outlook
     AmountCAPITAL SPENDING BUDGET FOR 2007
    
    (millions)Deferred exploration
    
    $
    9.0Completion of the Bogoso sulfide expansion project
    
    
    15.0Sustaining capital Wassa
    
    
    5.0Sustaining capital Bogoso
    
    
    6.5Power plant
    
    
    10.0Mine development  operating mines
    
    
    3.8Mine development  developing mines
    
    
    7.1Mine equipment  developing mines
    
    
    13.6Prestea Underground development
    
    
    5.8Total
    
    $
    75.8
 LOOKING AHEAD
  
    
    completion of construction and commissioning of the Bogoso sulfide expansion project by the end of the first quarter of
2007;
 
    
    commencement of oxide ore mining from the Pampe deposit on the Akropong trend west of Bogoso, to provide oxide ore to
the Bogoso plant by March 2007;
 
    
    permitting and commencement of oxide mining from Prestea South ore bodies to provide oxide ore to the Bogoso plant in
the second half of 2007;
 
    
    completion of a feasibility study on the HBB Properties by the end of March 2007 and commencement of project
development by mid-2007;
 
    
    completion of a feasibility study on the West Reef underground deposit by the end of 2007 and continued evaluation of
the Prestea Underground potential;
 
    
    optimization of our mining and processing activities at Bogoso/Prestea and Wassa;
 60




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##### Table of Contents




    
    a continued high level of exploration effort; and
 
    
    continuation of efforts to identify and pursue acquisition and growth opportunities in Ghana and elsewhere.
    RELATED PARTY TRANSACTIONS
   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
     
    
    Ore stockpiles: Stockpiles represent coarse ore that has been
extracted from the mine and is available for further processing.
Stockpiles are measured by estimating the number of tonnes of ore
added and removed from the stockpile, the number of contained
ounces based on assay data, and the estimated recovery percentage
based on the expected processing method. Stockpiles are valued
based on mining costs incurred up to the point of stockpiling the
ore, including a share of direct overhead and applicable depreciation, depletion and amortization
relating to mining operations. Costs are added to a stockpile
based on current mining costs and are removed at the average
mining cost per tonne for material processed. Stockpiles are
reduced as material is removed and fed to the mill. A 10%
adjustment of the stockpile value, based on stockpile levels at
the end of 2006, would change the carrying value of the stockpile
inventory by approximately $2.2 million.
 
    
    Impairment Charges: We periodically review and evaluate our
long-lived assets for impairment when events or changes in
circumstances indicate the related carrying amounts may not be
recoverable from continued operation of the asset. An asset
impairment is considered to exist if the sum of all estimated
future cash flows, on an undiscounted basis, are
 61




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##### Table of Contents



less than the
carrying value of the long-lived asset. The determination of
expected future cash flows requires numerous estimates about the
future, including gold prices, operating costs, gold recovery,
reclamation spending, ore reserves and capital expenditures. A
review of Bogoso/Presteas and Wassas expected future cash flows
as of December 31, 2006 indicated that there are no impairments.
 
    
    Mining properties: Mining properties recorded on our financial
records are amortized using a units-of-production method over
Proven and Probable Mineral Reserves. Reserve estimates, which
serve as the denominator in units of production amortization
calculations, involve the exercise of subjective judgment and are
based on numerous assumptions about future operating costs, future
gold prices, continuity of mineralization, future gold recovery
rates, spatial configuration of gold deposits, and other factors
that may prove to be incorrect. A 10% adjustment in estimated
reserves could result in an approximately $1.0 to $2.0 million
annual change in amortization expense.
 
    
    Tax Assets: Recognition of future tax assets requires an analysis
of future taxable income expectations to evaluate the probability
of sufficient future taxable income to utilize the accrued tax
benefits. Determination of expected future taxable income
requires numerous estimates of future variable including but not
limited to, gold prices, operating costs, gold recovery, ore
reserves, gold production, ore grades, administrative costs, tax
rates, and potential changes in tax laws.
 
    
    Asset retirement obligation and reclamation expenditures:
Accounting for reclamation obligations requires management to make
estimates at each mining operation of reclamation and closure
costs to be incurred in the future as required to complete the
reclamation and environmental remediation work mandated by
existing laws, regulations and customs. Actual costs incurred in
future periods could differ from amounts estimated. Additionally,
future changes to environmental laws and regulations could
increase the extent of reclamation and remediation work required.
Based upon our current situation, we estimate that a 10% increases
in total future reclamation and closure costs would result in an
approximately $2.1 million increase in our asset retirement
obligations.
 RECENT ACCOUNTING PRONOUNCEMENTS
      62




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OFF BALANCE SHEET ARRANGEMENTS
  TABLE OF CONTRACTUAL OBLIGATIONS
 Payments due by periodMoreCONTRACTUAL OBLIGATIONS
    
    
    
    
    
    Less than 1
    
    
    1 to 3
    
    
    3 to 5
    
    
    than 5As of December 31, 2006
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsDebt(1)
    
    $
    87,962
    
    
    $
    12,549
    
    
    $
    72,514
    
    
    $
    2,899
    
    
    $
    Interest on long term debt
    
    
    14,008
    
    
    
    6,562
    
    
    
    7,349
    
    
    
    97
    
    
    
    Operating lease obligations
    
    
    298
    
    
    
    147
    
    
    
    151
    
    
    
    
    
    
    
    Asset retirement obligations(2)
    
    
    31,512
    
    
    
    3,314
    
    
    
    9,006
    
    
    
    2,014
    
    
    
    17,179Total
    
    $
    133,780
    
    
    $
    22,572
    
    
    $
    89,019
    
    
    $
    5,010
    
    
    $
    17,179
 
 (1)
    
    Includes $50.0 million of convertible notes maturing in 2009. Golden Star
has the right to repay the $50.0 million in cash or in common shares at the due date
under certain circumstances. The presentation shown above assumes payment is made in
cash and also assumes no conversions of the debt to common shares by the note holders
prior to the maturity date.(2)
    
    Asset retirement obligations include several estimates about future
reclamation costs, mining schedules, timing of the performance of reclamation work and
the quantity of ore reserves, an analysis of which determines the ultimate closure
date and impacts the discounted amounts of future asset retirement liabilities. The
discounted value of these projected cash flows is recorded as Asset retirement
obligations on the balance sheet of $19.1 million as of December 31, 2006. The
amounts shown above are undiscounted to show full expected cash requirements. OUTSTANDING SHARE DATA
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
   Foreign Currency Exchange Rate Risk
  63




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Commodity Price Risk
    Equity Price Risk
  64




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 Auditors Report
    
    66Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    68Consolidated Statements of Operations for the years ended
December 31, 2006, 2005 and 2004
    
    69Consolidated Statement of Changes in Shareholders Equity for the years ended
December 31, 2006, 2005 and 2004
    
    70Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2005 and 2004
    
    71Notes to the Consolidated Financial Statements
    
    72-154
 65




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Independent Auditors Report
   Consolidated financial statements
    Internal control over financial reporting
 Internal Control  Integrated Framework
   66




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Chartered Accountants
Vancouver, British Columbia, Canada
 March 13, 2007
 67




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GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of US dollars except shares issued and outstanding)
 As of December 31,2006
    
    
    2005ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    27,108
    
    
    $
    89,709Accounts receivable
    
    
    8,820
    
    
    
    6,560Inventories (Note 3)
    
    
    45,475
    
    
    
    23,181Future tax assets (Note 17)
    
    
    
    
    
    
    6,248Fair value of derivatives (Note 12)
    
    
    
    
    
    
    1,220Deposits (Note 4)
    
    
    7,673
    
    
    
    5,185Prepaids and other
    
    
    1,458
    
    
    
    686Total Current Assets
    
    
    90,534
    
    
    
    132,789RESTRICTED CASH
    
    
    1,581
    
    
    
    5,442LONG TERM INVESTMENTS (Note 5)
    
    
    1,457
    
    
    
    8,160DEFERRED EXPLORATION AND DEVELOPMENT COSTS (Note 6)
    
    
    167,983
    
    
    
    167,532PROPERTY, PLANT AND EQUIPMENT (Note 7)
    
    
    93,058
    
    
    
    84,527MINING PROPERTIES (Note 8)
    
    
    136,775
    
    
    
    118,088CONSTRUCTION IN PROGRESS (Note 9)
    
    
    165,155
    
    
    
    36,707DEFERRED STRIPPING (Note 10)
    
    
    
    
    
    
    1,548FUTURE TAX ASSETS (Note 17)
    
    
    6,657
    
    
    
    8,223OTHER ASSETS
    
    
    574
    
    
    
    1,587Total Assets
    
    $
    663,774
    
    
    $
    564,603LIABILITIESCURRENT LIABILITIESAccounts payable
    
    $
    19,012
    
    
    $
    9,093Accrued liabilities
    
    
    25,516
    
    
    
    17,051Fair value of derivatives (Note 12)
    
    
    685
    
    
    
    4,709Current portion of future tax liability (Note 17)
    
    
    1,450
    
    
    
    Asset retirement obligations (Note 13)
    
    
    3,064
    
    
    
    3,107Current debt (Note 11)
    
    
    19,424
    
    
    
    6,855Total Current Liabilities
    
    
    69,151
    
    
    
    40,815LONG TERM DEBT (Note 11)
    
    
    66,911
    
    
    
    64,298ASSET RETIREMENT OBLIGATIONS (Note 13)
    
    
    16,034
    
    
    
    8,286FAIR VALUE OF DERIVATIVES (Note 12)
    
    
    
    
    
    
    7,263FUTURE TAX LIABILITY (Note 17)
    
    
    42,154
    
    
    
    45,072Total liabilities
    
    
    194,250
    
    
    
    165,734MINORITY INTEREST
    
    
    7,424
    
    
    
    6,629COMMITMENTS AND CONTINGENCIES (Note 14)
    
    
    
    
    
    
    SHAREHOLDERS EQUITYSHARE CAPITALFirst 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: 207,891,358 at December 31, 2006; 205,954,582 at December 31, 2005
    
    
    524,619
    
    
    
    522,510CONTRIBUTED SURPLUS
    
    
    10,040
    
    
    
    6,978EQUITY COMPONENT OF CONVERTIBLE NOTES
    
    
    2,857
    
    
    
    2,857DEFICIT
    
    
    (75,416
    )
    
    
    (140,105
    )Total Shareholders Equity
    
    
    462,100
    
    
    
    392,240Total Liabilities and Shareholders Equity
    
    $
    663,774
    
    
    $
    564,603
 The accompanying notes are an integral part of these financial statements
 By:
    
    Lars-Eric Johansson  Director
    
    By:
    
    /s/ Peter J. Bradford  Director
 68




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GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Stated in thousands of US dollars except per share amounts)
 For the years ended December 31,2006
    
    
    2005
    
    
    2004REVENUEGold sales
    
    $
    122,586
    
    
    $
    89,663
    
    
    $
    60,690Royalty income
    
    
    4,026
    
    
    
    4,178
    
    
    
    3,049Interest and other
    
    
    2,078
    
    
    
    1,624
    
    
    
    1,290Total revenues
    
    
    128,690
    
    
    
    95,465
    
    
    
    65,029PRODUCTION EXPENSESMining operations
    
    
    92,730
    
    
    
    79,609
    
    
    
    39,095Depreciation, depletion and amortization
    
    
    21,460
    
    
    
    15,983
    
    
    
    8,096Accretion of asset retirement obligation (Note 13)
    
    
    835
    
    
    
    752
    
    
    
    645Total mine operating costs
    
    
    115,025
    
    
    
    96,344
    
    
    
    47,836OPERATING EXPENSESExploration expense
    
    
    1,462
    
    
    
    951
    
    
    
    895General and administrative expense
    
    
    10,873
    
    
    
    8,631
    
    
    
    8,197Corporate development expense
    
    
    
    
    
    
    248
    
    
    
    4,504Total production and operating expenses
    
    
    127,360
    
    
    
    106,174
    
    
    
    61,432Operating income/(loss)
    
    
    1,330
    
    
    
    (10,709
    )
    
    
    3,597OTHER EXPENSES, (GAINS) AND LOSSESDerivative mark-to-market loss (Note 12)
    
    
    9,589
    
    
    
    11,820
    
    
    
    Abandonment and impairment of mineral properties
    
    
    1,847
    
    
    
    1,403
    
    
    
    470Gain on partial sale of investment in EURO (Note 5)
    
    
    (50,903
    )
    
    
    (977
    )
    
    
    Gain on sale of investment in Moto (Note 5)
    
    
    (30,240
    )
    
    
    
    
    
    
    Loss on equity investments
    
    
    
    
    
    
    239
    
    
    
    331Interest expense
    
    
    1,846
    
    
    
    2,416
    
    
    
    139Foreign exchange (gain)/loss
    
    
    (2,330
    )
    
    
    574
    
    
    
    280Income/(loss) before minority interest
    
    
    71,521
    
    
    
    (26,184
    )
    
    
    2,377Minority interest
    
    
    (794
    )
    
    
    (277
    )
    
    
    (1,277
    )Net income/(loss) before income tax
    
    
    70,727
    
    
    
    (26,461
    )
    
    
    1,100Income tax expense/(recovery) (Note 17)
    
    
    (6,038
    )
    
    
    12,930
    
    
    
    1,542Net income/(loss)
    
    $
    64,689
    
    
    $
    (13,531
    )
    
    $
    2,642Net income/(loss) per common share  basic (Note 18)
    
    $
    0.312
    
    
    $
    (0.094
    )
    
    $
    0.019Net income/(loss) per common share  diluted (Note 18)
    
    $
    0.308
    
    
    $
    (0.092
    )
    
    $
    0.018Weighted average shares outstanding (millions of shares)
    
    
    207.5
    
    
    
    143.6
    
    
    
    138.5
 The accompanying notes are an integral part of these financial statements
 69




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GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Stated in thousands of US dollars)
 EquitycomponentNumber of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ofCommon
    
    
    Share
    
    
    Contributed surplus
    
    
    convertibleshares
    
    
    capital
    
    
    Warrants
    
    
    Options
    
    
    debentures
    
    
    DeficitBalance at December 31, 2003
    
    
    132,924,278
    
    
    $
    324,262
    
    
    $
    2,361
    
    
    $
    955
    
    
    $
    
    
    
    $
    (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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,642Balance at December 31, 2004
    
    
    142,244,112
    
    
    $
    340,888
    
    
    $
    1,606
    
    
    $
    2,040
    
    
    $
    
    
    
    $
    (126,574
    )Shares issued
    
    
    31,589,600
    
    
    
    75,864
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    (4,168
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Warrants issued
    
    
    
    
    
    
    
    
    
    
    992
    
    
    
    
    
    
    
    
    
    
    
    Warrants exercised
    
    
    
    
    
    
    22
    
    
    
    (22
    )
    
    
    
    
    
    
    
    
    
    
    Option issued  net of forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,476
    
    
    
    
    
    
    
    Shares issued under options
    
    
    312,940
    
    
    
    722
    
    
    
    
    
    
    
    (114
    )
    
    
    
    
    
    
    Shares issued under warrants
    
    
    385,000
    
    
    
    718
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock bonus
    
    
    45,342
    
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares issued to acquire property
    
    
    31,377,588
    
    
    
    108,298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity Component of Convertible
Debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,857
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,531
    )Balance at December 31, 2005
    
    
    205,954,582
    
    
    $
    522,510
    
    
    $
    2,576
    
    
    $
    4,402
    
    
    $
    2,857
    
    
    $
    (140,105
    )Options issued  net of forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,842
    
    
    
    
    
    
    
    Shares issued under options
    
    
    1,932,776
    
    
    
    4,818
    
    
    
    
    
    
    
    (1,355
    )
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    (149
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock bonus
    
    
    4,000
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reclassification of warrants to
Contributed surplus
    
    
    
    
    
    
    (2,575
    )
    
    
    2,575
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,689Balance at December 31, 2006
    
    
    207,891,358
    
    
    $
    524,619
    
    
    $
    5,151
    
    
    $
    4,889
    
    
    $
    2,857
    
    
    $
    (75,416
    )
 The accompanying notes are an integral part of these financial statements
 70




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GOLDEN STAR RESOURCES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in thousands of US dollars)
 For the years ended December 31,2006
    
    
    2005
    
    
    2004OPERATING ACTIVITIES:Net income/(loss)
    
    $
    64,689
    
    
    $
    (13,531
    )
    
    $
    2,642Reconciliation of net income to net cash provided by
operating activities:Depreciation, depletion and amortization
    
    
    21,530
    
    
    
    16,042
    
    
    
    8,096Amortization of loan acquisition cost
    
    
    358
    
    
    
    228
    
    
    
    Deferred stripping
    
    
    1,548
    
    
    
    (191
    )
    
    
    (1,357
    )Loss on equity investment
    
    
    
    
    
    
    239
    
    
    
    331Gain on sale of investments in Moto and EURO
    
    
    (81,143
    )
    
    
    (977
    )
    
    
    Non-cash employee compensation
    
    
    1,857
    
    
    
    1,007
    
    
    
    1,386Impairment of deferred exploration projects
    
    
    1,847
    
    
    
    1,413
    
    
    
    470Income tax expense/(benefit)
    
    
    6,347
    
    
    
    (12,930
    )
    
    
    (1,542
    )Reclamation expenditures
    
    
    (1,130
    )
    
    
    (691
    )
    
    
    (730
    )Fair value of derivatives
    
    
    3,640
    
    
    
    10,752
    
    
    
    Accretion of convertible debt
    
    
    706
    
    
    
    523
    
    
    
    Accretion of asset retirement obligations
    
    
    835
    
    
    
    752
    
    
    
    645Minority interests
    
    
    794
    
    
    
    277
    
    
    
    1,27721,824
    
    
    
    2,913
    
    
    
    11,218Changes in assets and liabilities:Accounts receivable
    
    
    (4,077
    )
    
    
    (2,853
    )
    
    
    (2,802
    )Inventories
    
    
    (22,294
    )
    
    
    (7,815
    )
    
    
    (2,705
    )Deposits
    
    
    (67
    )
    
    
    163
    
    
    
    Accounts payable and accrued liabilities
    
    
    10,716
    
    
    
    8,817
    
    
    
    8,204Other
    
    
    (758
    )
    
    
    (165
    )
    
    
    (5
    )Net cash provided by operating activities
    
    
    5,398
    
    
    
    1,060
    
    
    
    13,910INVESTING ACTIVITIES:Expenditures on deferred exploration and development
    
    
    (8,606
    )
    
    
    (5,954
    )
    
    
    (5,260
    )Expenditures on mining properties
    
    
    (15,784
    )
    
    
    (26,631
    )
    
    
    (18,302
    )Expenditures on property, plant and equipment
    
    
    (19,372
    )
    
    
    (36,321
    )
    
    
    (12,286
    )Expenditures on mine construction in progress
    
    
    (126,954
    )
    
    
    (35,530
    )
    
    
    (23,783
    )Cash invested in short term investments
    
    
    (21,080
    )
    
    
    
    
    
    
    (38,850
    )Cash provided by short term investments
    
    
    21,080
    
    
    
    38,850
    
    
    
    Cash provided by draw down of restricted cash
    
    
    3,861
    
    
    
    
    
    
    
    Expenditure on purchase of Moto shares
    
    
    (1,656
    )
    
    
    
    
    
    
    Proceeds from sale of investment in Moto
    
    
    38,952
    
    
    
    
    
    
    
    Proceeds from sale of investment in EURO
    
    
    33,202
    
    
    
    
    
    
    
    Change in payable on capital expenditures
    
    
    6,914
    
    
    
    434
    
    
    
    Sale of property
    
    
    
    
    
    
    1,000
    
    
    
    1,000Long term investments
    
    
    (300
    )
    
    
    (2,871
    )
    
    
    (4,971
    )Deposits
    
    
    (2,420
    )
    
    
    (246
    )
    
    
    (5,102
    )Other
    
    
    41
    
    
    
    (220
    )
    
    
    (894
    )Net cash used in investing activities
    
    
    (92,122
    )
    
    
    (67,489
    )
    
    
    (108,448
    )FINANCING ACTIVITIES:Issuance of share capital, net of issue costs
    
    
    3,463
    
    
    
    73,132
    
    
    
    15,270Debt repayments (Note 11)
    
    
    (6,622
    )
    
    
    (3,678
    )
    
    
    (153
    )Issuance of debt (Note 11)
    
    
    27,431
    
    
    
    74,191
    
    
    
    2,328Other
    
    
    (149
    )
    
    
    (384
    )
    
    
    Net cash provided by financing activities
    
    
    24,123
    
    
    
    143,261
    
    
    
    17,445Increase/(decrease) in cash and cash equivalents
    
    
    (62,601
    )
    
    
    76,832
    
    
    
    (77,093
    )Cash and cash equivalents, beginning of period
    
    
    89,709
    
    
    
    12,877
    
    
    
    89,970Cash and cash equivalents end of period
    
    $
    27,108
    
    
    $
    89,709
    
    
    $
    12,877
 (See Note 19 for supplemental cash flow information)
 The accompanying notes are an integral part of these financial statements
 71




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##### Table of Contents



GOLDEN STAR RESOURCES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in tables are in thousands of US Dollars unless noted otherwise)
 1. Nature of operations
  
    
    Bogoso/Prestea property, which is comprised of the adjoining Bogoso and Prestea surface
mining leases (Bogoso/Prestea);
    
    Prestea Underground property (Prestea
Underground);
    
    Wassa property (Wassa); and
    
    HwiniButre and Benso concessions (HBB Properties).
        2. Summary of Significant Accounting Policies
 Basis of consolidation and the preparation of financial statements
  72




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##### Table of Contents



Use of estimates
  Cash and cash equivalents
  Marketable securities
  Inventories
      Reserve quantities used in units-of-production amortization
  73




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##### Table of Contents



Exploration costs
     Impairment of long-lived assets
     Property, plant, equipment and mine development
   74




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##### Table of Contents



Deferred stripping
   Asset retirement obligations
  Foreign currencies and foreign currency translation
  
 Income taxes
  Net income per share
  Revenue recognition
  75




---



##### Table of Contents



de minimis
 Stock based compensation
  Derivatives
  Recent accounting pronouncements
      76




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##### Table of Contents



3. Inventories
 As of December 31,2006
    
    
    2005Stockpiled ore
    
    $
    18,244
    
    
    $
    5,753Inprocess
    
    
    4,596
    
    
    
    3,106Materials and supplies
    
    
    22,635
    
    
    
    14,322Total
    
    $
    45,475
    
    
    $
    23,181
  4. Deposits
  5. Long term investments
 Investment in Minera IRL
  Investment in Moto Goldmines Limited
  Investment in EURO
     77




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##### Table of Contents



6. Deferred exploration and development costs
  Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeferredExploration &
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration &Development
    
    
    Capitalized
    
    
    
    
    
    
    
    
    
    
    Transfer to
    
    
    DevelopmentCosts as of
    
    
    Exploration
    
    
    Acquisition
    
    
    
    
    
    
    mining
    
    
    Costs as of12/31/05
    
    
    Expenditures
    
    
    Costs
    
    
    Impairments
    
    
    properties
    
    
    12/31/06AFRICAN PROJECTSAkropong trend and other Ghana
    
    $
    4,947
    
    
    $
    95
    
    
    $
    
    
    
    $
    
    
    
    $
    (4,209
    )
    
    $
    833Prestea property  Ghana
    
    
    2,074
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    (2,099
    )
    
    
    HwiniButre and Benso  Ghana
    
    
    135,832
    
    
    
    4,486
    
    
    
    2,397
    
    
    
    
    
    
    
    
    
    
    
    142,715Mano River  Sierra Leone
    
    
    1,285
    
    
    
    927
    
    
    
    
    
    
    
    (197
    )
    
    
    
    
    
    
    2,015Afema  Ivory Coast
    
    
    1,028
    
    
    
    484
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,512Goulagou  Burkina Faso
    
    
    18,247
    
    
    
    288
    
    
    
    254
    
    
    
    
    
    
    
    
    
    
    
    18,789Other Africa
    
    
    1,750
    
    
    
    422
    
    
    
    (1,090
    )
    
    
    
    
    
    
    
    
    
    
    1,082SOUTH AMERICAN PROJECTSSaramacca  Suriname
    
    
    731
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    781Bon Espoir  French Guiana
    
    
    1,382
    
    
    
    268
    
    
    
    
    
    
    
    (1,650
    )
    
    
    
    
    
    
    Other South America
    
    
    256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256Total
    
    $
    167,532
    
    
    $
    7,045
    
    
    $
    1,561
    
    
    $
    (1,847
    )
    
    $
    (6,308
    )
    
    $
    167,983
  Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeferredExploration &
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration &Development
    
    
    Capitalized
    
    
    
    
    
    
    
    
    
    
    Transfer to
    
    
    DevelopmentCosts as of
    
    
    Exploration
    
    
    Acquisition
    
    
    
    
    
    
    mining
    
    
    Costs as of12/31/04
    
    
    Expenditures
    
    
    Costs
    
    
    Impairments
    
    
    properties
    
    
    12/31/05AFRICAN PROJECTSAkropong trend and other Ghana
    
    $
    2,443
    
    
    $
    2,824
    
    
    $
    
    
    
    $
    (320
    )
    
    $
    
    
    
    $
    4,947Prestea property  Ghana
    
    
    2,067
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,074HwiniButre and Benso  Ghana
    
    
    
    
    
    
    
    
    
    
    135,832
    
    
    
    
    
    
    
    
    
    
    
    135,832Mano River  Sierra Leone
    
    
    758
    
    
    
    527
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,285Afema  Ivory Coast
    
    
    
    
    
    
    918
    
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    1,028Goulagou  Burkina Faso
    
    
    
    
    
    
    
    
    
    
    18,247
    
    
    
    
    
    
    
    
    
    
    
    18,247Mininke  Mali
    
    
    1,033
    
    
    
    50
    
    
    
    
    
    
    
    (1,083
    )
    
    
    
    
    
    
    Other Africa
    
    
    
    
    
    
    
    
    
    
    1,750
    
    
    
    
    
    
    
    
    
    
    
    1,750SOUTH AMERICAN PROJECTSSaramacca  Suriname
    
    
    394
    
    
    
    337
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    731Bon Espoir  French Guiana
    
    
    501
    
    
    
    881
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,382Other South America
    
    
    256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    256Total
    
    $
    7,452
    
    
    $
    5,834
    
    
    $
    155,649
    
    
    $
    (1,403
    )
    
    $
    
    
    
    $
    167,532
 78




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##### Table of Contents



7. Property, plant and equipment
 As of December 31, 2006
    
    
    As of December 31, 2005Property,
    
    
    
    
    
    
    
    
    
    
    Property,Property,
    
    
    
    
    
    
    Plant and
    
    
    Property,
    
    
    
    
    
    
    Plant andPlant and
    
    
    
    
    
    
    Equipment
    
    
    Plant and
    
    
    
    
    
    
    Equipment,Equipment
    
    
    Accumulated
    
    
    Net Book
    
    
    Equipment
    
    
    Accumulated
    
    
    Net Bookat Cost
    
    
    Depreciation
    
    
    Value
    
    
    at Cost
    
    
    Depreciation
    
    
    ValueBogoso/Prestea
    
    $
    57,392
    
    
    $
    13,263
    
    
    $
    44,129
    
    
    $
    40,802
    
    
    $
    8,240
    
    
    $
    32,562Prestea Underground
    
    
    236
    
    
    
    
    
    
    
    236
    
    
    
    2,748
    
    
    
    
    
    
    
    2,748Wassa
    
    
    55,785
    
    
    
    7,618
    
    
    
    48,167
    
    
    
    50,701
    
    
    
    1,985
    
    
    
    48,716EURO Ressources
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,456
    
    
    
    1,449
    
    
    
    7Corporate & Other
    
    
    924
    
    
    
    398
    
    
    
    526
    
    
    
    611
    
    
    
    117
    
    
    
    494Total
    
    $
    114,337
    
    
    $
    21,279
    
    
    $
    93,058
    
    
    $
    96,318
    
    
    $
    11,791
    
    
    $
    84,527
 8. Mining properties
 As of December 31, 2006
    
    
    As of December 31, 2005Mining
    
    
    
    
    
    
    
    
    
    
    MiningMining
    
    
    
    
    
    
    Properties,
    
    
    Mining
    
    
    
    
    
    
    Properties,Properties at
    
    
    Accumulated
    
    
    Net Book
    
    
    Properties at
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    Value
    
    
    Cost
    
    
    Amortization
    
    
    ValueBogoso/Prestea
    
    $
    51,868
    
    
    $
    33,241
    
    
    $
    18,627
    
    
    $
    46,970
    
    
    $
    28,792
    
    
    $
    18,178Prestea Underground
    
    
    28,891
    
    
    
    
    
    
    
    28,891
    
    
    
    21,612
    
    
    
    
    
    
    
    21,612Bogoso Sulfide
    
    
    13,352
    
    
    
    
    
    
    
    13,352
    
    
    
    13,065
    
    
    
    
    
    
    
    13,065Mampon
    
    
    15,721
    
    
    
    
    
    
    
    15,721
    
    
    
    15,062
    
    
    
    
    
    
    
    15,062Wassa
    
    
    58,578
    
    
    
    11,234
    
    
    
    47,344
    
    
    
    50,810
    
    
    
    5,104
    
    
    
    45,706Other
    
    
    12,840
    
    
    
    
    
    
    
    12,840
    
    
    
    4,465
    
    
    
    
    
    
    
    4,465Total
    
    $
    181,250
    
    
    $
    44,475
    
    
    $
    136,775
    
    
    $
    151,984
    
    
    $
    33,896
    
    
    $
    118,088
 9. Construction-in-progress
  As of December 31,2006
    
    
    2005Plant construction cost
    
    $
    118,826
    
    
    $
    27,655Mining equipment cost
    
    
    10,505
    
    
    
    Pre-production stripping cost
    
    
    22,397
    
    
    
    Sub-total
    
    
    151,728
    
    
    
    27,655Costs prior to project commencement
    
    
    7,216
    
    
    
    7,216Capitalized interest
    
    
    6,211
    
    
    
    1,836Total
    
    $
    165,155
    
    
    $
    36,707
 10. Deferred stripping
    79




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##### Table of Contents



11.
    
    Debt
 As of December 31,2006
    
    
    2005Current debt:Bank loan  EURO (Note a)
    
    $
    
    
    
    $
    2,667Debt facility (Note b)
    
    
    6,875
    
    
    
    Equipment financing loans (Note c)
    
    
    12,549
    
    
    
    4,188Total current debt
    
    $
    19,424
    
    
    $
    6,855Long term debt:Bank loan  EURO (Note a)
    
    $
    
    
    
    $
    5,000Debt facility (Note b)
    
    
    8,125
    
    
    
    Equipment financing loans (Note c)
    
    
    10,413
    
    
    
    11,632Convertible notes (Note d)
    
    
    48,373
    
    
    
    47,666Total long term debt
    
    $
    66,911
    
    
    $
    64,298
 
 (a)
    
    Bank loan  As a result of the sale of the EURO shares during the year (see
Note 5), Golden Star no longer consolidates the financial statements of EURO. Therefore
the EURO bank loan is not included within consolidated debt as of December 31, 2006.(b)
    
    Debt facility  On
October 11th,
2006, GSBPL entered into an
agreement for a $15.0 million debt facility with two Ghana-based banks known as Ecobank
Ghana Limited and Cal Bank Limited. The $15.0 million was drawn down in October and
November and is repayable over a term of 24 months starting
3 months after draw-down at
an interest rate of US prime (currently 8.25%) plus 1%. Loan fees totaled one percent
of the facility amount. The debt is secured by
the non-mobile assets of Bogoso/Prestea and proceeds are to be used to cover
construction costs of the Bogoso Sulfide Expansion Project. There are no hedging
requirements or equity-type incentives required under the facility.
Due to the short term nature of this facility, the fair value of
the debt facility approximates the book value at December 31, 2006.(c)
    
    Equipment financing credit facility  We maintain an equipment financing
facility between Caterpillar Financial Services Corporation, GSBPL and GSWL, with
Golden Star as the guarantor of all amounts borrowed. The facility provides credit for
new and used mining equipment. This facility is reviewed annually. Amounts drawn under
this facility are repayable over five years for new equipment and over two years for
used equipment. The interest rate for each drawdown is fixed at the date of the
drawdown using the Federal Reserve Bank 2year or 5year swap rate or LIBOR plus
2.38%. As of December 31, 2006, $23.0 million was outstanding under this facility. The
average interest rate on the outstanding loans is approximately 6.7%. We estimate the
fair value of the equipment financing facility to be approximately $21.7 million at
December 31, 2006.(d)
    
    Convertible notes  We sold $50 million of senior unsecured convertible notes
to a private investment fund on April 15, 2005. These notes were issued at par and bear
interest at 6.85%. They are convertible at any time at the option of the holder at a
conversion price of $4.50 per common share. At the maturity date, April 15, 2009, we
have the option to repay the outstanding notes with i.) cash, ii.) common shares issued
to the note holders or iii.) a combination of cash and common shares. For any notes
repaid in common shares the number of shares will be determined by dividing the loan
balance by an amount equal to 95% of the average price over the 20 trading day period
ended five days before the notes are due. Due to the beneficial conversion feature,
approximately $47.1 million of the note balance was initially classified as a liability
and $2.9 million was classified as equity. Periodic accretion will increase the
liability to the full $50 million amount due (after adjustments, if any, for converted
notes) by the end of the note term. The periodic accretion is included in interest
expense. A total of $6.2 million of interest on the convertible notes has been
capitalized as Bogoso sulfide expansion project costs. The loan fees totaled
approximately $0.9 million, this amount was capitalized and is being amortized over the
term of the notes. The remaining balance of $0.6 million was included in other assets
at December 31, 2006. We estimate the fair value of the convertible notes to be
approximately $47.5 million at December 31, 2006. 80




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##### Table of Contents



12.
    
    Derivatives
 EURO
   Gold Derivatives
   Foreign Currency Forward Positions
  Scheduled forsettlement infirst quarter ofAt December 31, 2006
    
    2007Gold put optionsOunces (thousands)
    
    
    37.5Average price per ounce ($)
    
    
    404Gold call optionsOunces (thousands)
    
    
    6Average price per ounce ($)
    
    
    525
 81




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##### Table of Contents



Fair value ofEURODecember 31,
    
    
    derivative on
    
    
    December 31,
    
    
    (Expense)/Fair Value of Derivatives
    
    2006
    
    
    June 19, 2006
    
    
    2005
    
    
    GainCashsettled forward gold price agreements
    
    $
    
    
    
    $
    (13,707
    )
    
    $
    (9,560
    )
    
    $
    (4,147
    )Puts
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    (74
    )Calls
    
    
    (685
    )
    
    
    
    
    
    
    (2,250
    )
    
    
    1,565Rand forward purchases
    
    
    
    
    
    
    
    
    
    
    1,146
    
    
    
    (1,146
    )Euro forward purchases
    
    
    
    
    
    
    
    
    
    
    (162
    )
    
    
    162Unrealized loss
    
    $
    (685
    )
    
    $
    (13,707
    )
    
    $
    (10,752
    )
    
    $
    (3,640
    )Realized lossCashsettled forward gold price agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (757
    )Calls
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,192
    )Total derivative loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (9,589
    )
 13.
    
    Asset retirement obligations
   2006
    
    
    2005Balance at January 1
    
    $
    11,393
    
    
    $
    8,660Accretion expense
    
    
    835
    
    
    
    752Cost of reclamation work performed
    
    
    (1,130
    )
    
    
    (691
    )Additions, change in estimates and other
    
    
    8,000
    
    
    
    2,672Balance at December 31
    
    $
    19,098
    
    
    $
    11,393Current portion
    
    $
    3,064
    
    
    $
    3,107Long term portion
    
    $
    16,034
    
    
    $
    8,286
   14.
    
    Commitments and contingencies
  (a)
    
    Environmental Regulations The Companys mining and exploration activities are
subject to various laws and regulations governing the protection of the environment.
These laws and regulations are continually changing and are generally becoming more
restrictive. As such we cannot predict the full amount of our future expenditure to
comply with these laws and regulations. We conduct our operations so as to protect the
environment and believe our operations are in compliance with applicable laws and
regulations in all material respects.
 82




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##### Table of Contents



(b)
    
    Environmental Bonding in Ghana In 2005, pursuant to a reclamation bonding
agreement between the EPA and GSWL, we bonded $3.0 million to cover future reclamation
obligations at Wassa. To meet the bonding requirements we established a $2.85 million
letter of credit and deposited $0.15 million of cash with the EPA. In addition,
pursuant to a bonding agreement between the EPA and GSBPL we bonded $9.5 million in
early 2006 to cover our future obligations at Bogoso/Prestea. To meet these
requirements we deposited $0.9 million of cash with the EPA with the balance covered by
a letter of credit.(c)
    
    Cash Restricted for Environmental Rehabilitation Liabilities In 1999, we were
required, according to the acquisition agreement with the sellers of GSBPL, to restrict
$6.0 million of cash to be used for the ongoing and final reclamation and closure costs
at Bogoso. Between 1999 and 2001
we withdrew $2.6 million of the restricted cash to cover our outofpocket cash
reclamation costs. In early 2006, GSBPL met the EPAs bonding requirements and as a
result the sellers of GSBPL released the remaining $3.5 million to us in September
2006.(d)
    
    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. Per
the acquisition agreement, there will be no royalty due on the first 200,000
ounces produced from Mampon which is located on the Asikuma property. The
amount of the royalty is based on a sliding scale which ranges from 2% of net
smelter return at gold prices at or below $300 per ounce 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 6% 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 Wassa.(iii)
    
    Benso: Benso is subject to a 1.5% net smelter return royalty
and a $1.00 per ounce gold production royalty. The smelter return royalty may
be purchased for $4.0 million (or $6.0 million if a feasibility study indicates
more than 3.5 million ounces of recoverable gold) and the gold production
royalty may be purchased for $0.5 million.(iv)
    
    Riyadh: Riyadh is subject to a 10% net smelter return royalty.(v)
    
    Prestea Underground  The Prestea Underground is subject to a
2.5% net profits interest on future income. Ownership of the 2.5% net profit
interest is currently held by the bankruptcy trustee overseeing liquidation of
Prestea Gold Resources Limited, our former joint venture partner in the Prestea
Underground.
 (e)
    
    Afema Project On March 29, 2005 we entered into an agreement with Societe
dEtat pour le Development Minier de la Cote dIvoire (SO.DE.MI.), the Cote
dIvoire state mining and exploration company, to acquire its 90% interest in the Afema
gold property in southeast Cote dIvoire. Golden Star has the right to complete the
transaction to acquire 100% of SO.DE.MI.s rights in the Afema property for $1.5
million. In addition to the acquisition payment, we agreed to pay SO.DE.MI. a royalty
on any future gold production from the Afema property. The royalty is indexed to the
gold price and ranges from 2% of net smelter returns at gold prices below $300 per
ounce to 3.5% of net smelter returns for gold prices exceeding $525 per ounce. If we
proceed with the $1.5 million payment to acquire full rights to the property, the
purchase agreement requires us to spend an additional $3.5 million on exploration work
at Afema, subject to exploration success, over the following three and a half years.(f)
    
    Hwini-Butre As part of the Sales Agreement for the purchase of the HBB
properties, Golden Star has agreed to pay B.D. Goldfields Ltd an additional $1.0
million upon receipt of all the necessary licenses, permits, approvals and consents
required to mine the Hwini-Butre concession.(g)
    
    We are engaged in routine litigation incidental to our business. No material
legal proceedings, involving us or our business are pending, or, to our knowledge,
contemplated, by any governmental authority. We are not aware of any material events of
noncompliance with environmental laws and regulations.
 83




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##### Table of Contents



15.
    
    Warrants
  WarrantsIssued with:
    
    Date issued
    
    outstanding
    
    Exercise price
    
    Expiration dateEquity offering
    
    February 14, 2003
    
    
    8,448,334
    
    
    Cdn$4.60
    
    February 14, 2007St. Jude acquisition
    
    December 21, 2005
    
    
    3,240,000
    
    
    Cdn$4.17
    
    November 20, 2008Total
    
    
    
    
    
    
    11,688,334
  16.
    
    Stock based compensation
 Stock Options
   2006
    
    2005
    
    2004Total stock compensation cost during the period
    
    $
    1,842
    
    
    $
    900
    
    
    $
    1,400
   2006
    
    2005
    
    2004Expected volatility
    
    50.67 to 63.83%
    
    27.3 to 34.9%
    
    36%Riskfree interest rate
    
    4.00% to 4.70%
    
    2.75% to 3.50%
    
    3.72% to 4.06%Expected lives
    
    4 to 7 years
    
    0.5 to 5 years
    
    3.5 to 5 yearsDividend yield
    
    0%
    
    0%
    
    0%
  84




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##### Table of Contents



Weighted
    
    WeightedAverage
    
    Average
    
    AggregateExercise
    
    Remaining
    
    intrinsicOptions
    
    price
    
    Contractual
    
    value(000)
    
    (Cdn$)
    
    Term (Years)
    
    ($000)Outstanding as of December 31, 2005
    
    
    7,390
    
    
    
    2.75
    
    
    
    5.2
    
    
    
    $ 2,533Granted
    
    
    1,412
    
    
    
    3.59
    
    
    
    9.6Exercised
    
    
    (1,933
    )
    
    
    1.96
    
    
    
    
    
    
    
    (3,162
    )Forfeited
    
    
    (313
    )
    
    
    5.89Outstanding as of December 31, 2006
    
    
    6,556
    
    
    
    2.98
    
    
    
    5.7
    
    
    
    3,583Exercisable at December 31, 2006
    
    
    5,381
    
    
    
    2.73
    
    
    
    5.0
    
    
    
    $ 2,668
 Options outstanding
    
    Options exercisableWeighted
    
    
    
    
    
    
    
    
    
    Weighted-Number
    
    average
    
    Weighted-
    
    Number
    
    averageoutstanding at
    
    remaining
    
    average
    
    exercisable at
    
    exerciseRange of exercise
    
    December 31,
    
    contractual
    
    exercise price
    
    December 31,
    
    priceprices (Cdn$)
    
    2006
    
    life (years)
    
    (Cdn$)
    
    2006
    
    (Cdn$)1.00 to 2.50
    
    
    3,396
    
    
    
    3.5
    
    
    
    1.58
    
    
    
    3,396
    
    
    
    1.582.51 to 4.00
    
    
    1,882
    
    
    
    8.4
    
    
    
    3.46
    
    
    
    1,078
    
    
    
    3.434.01 to 7.00
    
    
    1,234
    
    
    
    7.5
    
    
    
    5.90
    
    
    
    863
    
    
    
    6.077.01 to 10.00
    
    
    44
    
    
    
    7.0
    
    
    
    9.07
    
    
    
    44
    
    
    
    9.076,556
    
    
    
    5.7
    
    
    
    2.98
    
    
    
    5,381
    
    
    
    2.73
   WeightedaverageNumber of
    
    grant dateoptions
    
    fair value(000)
    
    (Cdn$)Non-vested at January 1, 2006
    
    
    670
    
    
    
    1.95Granted
    
    
    1,412
    
    
    
    2.61Vested
    
    
    (764
    )
    
    
    2.43Forfeited
    
    
    (143
    )
    
    
    2.36Non-vested at December 31, 2006
    
    
    1,175
    
    
    
    2.38
  Stock Bonus Plan
  85




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##### Table of Contents



17.
    
    Income taxes
   December 31,2006
    
    
    2005Future tax assets:Offering costs
    
    $
    1,489
    
    
    $
    2,577Non-capital loss carryovers
    
    
    64,228
    
    
    
    62,745Capital loss carryovers
    
    
    1,361
    
    
    
    12,206Mine property costs
    
    
    10,883
    
    
    
    10,840Reclamation costs
    
    
    3,225
    
    
    
    1,226Derivatives
    
    
    2,664
    
    
    
    4,288Other
    
    
    887
    
    
    
    1,479Valuation allowance
    
    
    (37,227
    )
    
    
    (39,240
    )Future tax assets
    
    $
    47,510
    
    
    $
    56,121Future tax liabilities:Mine property costs
    
    $
    81,870
    
    
    $
    85,575Derivatives
    
    
    439
    
    
    
    388Conversion feature discount
    
    
    529
    
    
    
    759Other
    
    
    1,619
    
    
    
    Future tax
liabilities
    
    
    84,457

    
    
    
    86,722Net future tax assets/(liabilities)
    
    $
    (36,947
    )
    
    $
    (30,601
    )Reconciliation of net future tax assets/(liabilities) to Balance sheet:Current portion of future tax assets
    
    
    
    
    
    
    6,248Future tax assets
    
    
    6,657
    
    
    
    8,223Current portion of future tax liability
    
    
    (1,450
    )
    
    
    Future tax liability
    
    
    (42,154
    )
    
    
    (45,072
    )Net future tax assets/(liabilities)
    
    $
    (36,947
    )
    
    $
    (30,601
    )
  2006
    
    
    2005Canada
    
    $
    24,692
    
    
    $
    23,712France
    
    
    
    
    
    
    5,584Ghana
    
    
    12,535
    
    
    
    9,944Total valuation allowance
    
    $
    37,227
    
    
    $
    39,240
  86




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##### Table of Contents



2006
    
    
    2005
    
    
    2004CurrentCanada
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    
    
    
    
    
    
    
    
    FutureCanada
    
    
    4,926
    
    
    
    (4,926
    )
    
    
    Foreign
    
    
    1,112
    
    
    
    (8,004
    )
    
    
    (1,542
    )Total
    
    $
    6,038
    
    
    $
    (12,930
    )
    
    $
    (1,542
    )
  2006
    
    
    2005
    
    
    2004Net income /(loss) before minority interest
    
    $
    71,521
    
    
    $
    (26,184
    )
    
    $
    2,377Statutory tax rate
    
    
    32.5
    %
    
    
    32.5
    %
    
    
    32.1
    %Tax expense/(benefit) at statutory rate
    
    
    23,258
    
    
    
    (8,515
    )
    
    
    763Foreign tax rates
    
    
    (7,104
    )
    
    
    (3,296
    )
    
    
    (152
    )Change in tax rates
    
    
    (2,634
    )
    
    
    568
    
    
    
    Non-taxable portion of capital (gains)/losses
    
    
    (5,555
    )
    
    
    270
    
    
    
    3,174Expired loss carryovers
    
    
    842
    
    
    
    16,287
    
    
    
    1,450Deconsolidation of EURO carryovers and tax basis
    
    
    (1,894
    )
    
    
    
    
    
    
    Ghana investment allowance
    
    
    
    
    
    
    (666
    )
    
    
    (316
    )Non-deductible stock option compensation
    
    
    599
    
    
    
    274
    
    
    
    445Non-deductible expenses
    
    
    36
    
    
    
    163
    
    
    
    119Non-taxable income
    
    
    (624
    )
    
    
    
    
    
    
    Tax loss of EURO shares
    
    
    
    
    
    
    
    
    
    
    (2,898
    )Loss carryover not previously recognized
    
    
    (402
    )
    
    
    (444
    )
    
    
    4,447Intercompany asset basis not deductible
    
    
    
    
    
    
    6,320
    
    
    
    Ghana property basis not previously recognized
    
    
    
    
    
    
    862
    
    
    
    (2,733
    )Non-deductible Ghana property basis
    
    
    2,213
    
    
    
    597
    
    
    
    Change in future tax assets due to exchange rates
    
    
    (637
    )
    
    
    238
    
    
    
    (3,919
    )Change in valuation allowance
    
    
    (2,060
    )
    
    
    (25,588
    )
    
    
    (1,922
    )Income tax expense /(recovery)
    
    $
    6,038
    
    
    $
    (12,930
    )
    
    $
    (1,542
    )
   Canada
    
    
    Ghana2007
    
    $
    3562008
    
    
    1,8972009
    
    
    2,3392010
    
    
    1,0992014
    
    
    10,6222015
    
    
    5,9692026
    
    
    3,996Indefinite
    
    
    8,368
    
    
    $
    222,732Total
    
    $
    34,646
    
    
    $
    222,732
 87




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##### Table of Contents



18.
    
    Earnings per Common share
  For the years ended December 31,2006
    
    
    2005
    
    
    2004Net income/(loss)
    
    $
    64,689
    
    
    $
    (13,531
    )
    
    $
    2,642Weighted average number of common shares (millions)
    
    
    207.5
    
    
    
    143.6
    
    
    
    138.3Dilutive securities:Options
    
    
    2.2
    
    
    
    2.7
    
    
    
    2.9Warrants
    
    
    
    
    
    
    
    
    
    
    2.5Weighted average number of diluted shares
    
    
    209.7
    
    
    
    146.3
    
    
    
    143.7Basic earnings/(loss) per share
    
    $
    0.312
    
    
    $
    (0.094
    )
    
    $
    0.019Diluted earnings/(loss) per share
    
    $
    0.308
    
    
    $
    (0.092
    )
    
    $
    0.018
 19.
    
    Supplemental cash flow information
  2006
    
    2005
    
    2004Supplemental disclosure of non-cash transactionsDe-consolidation of EURO (see Note 5):- Accounts receivable
    
    $
    2,341
    
    
    $
    
    
    
    $
    - Capitalized loan fees
    
    
    91
    
    
    
    
    
    
    
    - Accounts payable
    
    
    754
    
    
    
    
    
    
    
    - Derivative liability
    
    
    6,333
    
    
    
    
    
    
    
    Investment
in Goldfields Miniere S.A.(1)
    
    
    
    
    
    
    
    
    
    
    300Common shares issued to purchase Goldfields Miniere
S.A
    
    
    
    
    
    
    
    
    
    
    (300
    )Non-cash component of St. Jude Resources Ltd.
    
    
    
    
    
    
    110,924
    
    
    
    Common shares, warrants and options issued to
purchase St. Jude Resources Ltd.
    
    $
    
    
    
    $
    (110,924
    )
    
    $
    
   20.
    
    Operations by segment and geographic area
  88




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##### Table of Contents



AfricaAs of and for the
    
    Bogoso/
    
    
    
    
    
    
    
    
    
    Southyear ended December 31,
    
    Prestea
    
    Wassa
    
    Other
    
    America
    
    Corporate
    
    Total2006Revenues
    
    $
    63,563
    
    
    $
    59,262
    
    
    $
    18
    
    
    $
    4,254
    
    
    $
    1,593
    
    
    $
    128,690Interest expense
    
    
    786
    
    
    
    779
    
    
    
    
    
    
    
    281
    
    
    
    
    
    
    
    1,846Income tax expense/(recovery)
    
    
    2,117
    
    
    
    
    
    
    
    (3,229
    )
    
    
    
    
    
    
    (4,926
    )
    
    
    (6,038
    )Net income/(loss)
    
    
    8,045
    
    
    
    (1,512
    )
    
    
    2,586
    
    
    
    (3,981
    )
    
    
    59,551
    
    
    
    64,689Total assets
    
    
    360,455
    
    
    
    110,866
    
    
    
    166,750
    
    
    
    7,852
    
    
    
    17,851
    
    
    
    663,7742005Revenues
    
    $
    58,534
    
    
    $
    31,405
    
    
    $
    
    
    
    $
    4,282
    
    
    $
    1,244
    
    
    $
    95,465Interest expense
    
    
    325
    
    
    
    348
    
    
    
    
    
    
    
    415
    
    
    
    1,328
    
    
    
    2,416Income tax expense/(recovery)
    
    
    4,848
    
    
    
    
    
    
    
    
    
    
    
    3,156
    
    
    
    4,926
    
    
    
    12,930Net income/(loss)
    
    
    4,578
    
    
    
    (8,994
    )
    
    
    (20
    )
    
    
    (412
    )
    
    
    (8,683
    )
    
    
    (13,531
    )Total assets
    
    
    168,166
    
    
    
    103,506
    
    
    
    175,232
    
    
    
    10,604
    
    
    
    107,095
    
    
    
    564,6032004Revenues
    
    $
    61,002
    
    
    $
    
    
    
    $
    
    
    
    $
    3,145
    
    
    $
    882
    
    
    $
    65,029Interest expense
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    19
    
    
    
    139Income tax expense/(recovery)
    
    
    1,542
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,542Net income/(loss)
    
    
    12,533
    
    
    
    (168
    )
    
    
    
    
    
    
    1,772
    
    
    
    (11,495
    )
    
    
    2,642Total assets
    
    
    105,624
    
    
    
    70,681
    
    
    
    15,753
    
    
    
    817
    
    
    
    59,285
    
    
    
    252,160
 21.
    
    Related parties
   22.
    
    Financial Instruments
 -
 23.
    
    Subsequent Event
   89




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##### Table of Contents



24.
    
    Generally Accepted Accounting Principles in the United States
   (a) Consolidated Balance Sheets in US GAAP
 As of December 31,2006
    
    2005(restated)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    27,108
    
    
    $
    89,709Accounts receivable
    
    
    8,820
    
    
    
    6,560Inventories
    
    
    45,475
    
    
    
    23,181Future tax assets
    
    
    
    
    
    
    6,248Fair value of derivatives
    
    
    
    
    
    
    1,220Deposits
    
    
    7,673
    
    
    
    5,185Other current assets
    
    
    1,458
    
    
    
    686Total current assets
    
    
    90,534
    
    
    
    132,789Restricted cash
    
    
    1,581
    
    
    
    3,865Available-for-sale and long term investments (Notes d1 and d2)
    
    
    5,718
    
    
    
    15,182Deferred exploration and development costs (Notes d3 and d4)
    
    
    
    
    
    
    Property, plant and equipment (Note d5)
    
    
    92,345
    
    
    
    83,813Mine construction in progress
    
    
    165,155
    
    
    
    36,706Mining properties (Notes d3, d4 and d5)
    
    
    243,532
    
    
    
    237,153Deferred stripping (Note d6)
    
    
    
    
    
    
    1,548Future tax asset (Note d10)
    
    
    6,657
    
    
    
    8,223Other assets
    
    
    573
    
    
    
    3,164Total assets
    
    $
    606,095
    
    
    $
    522,443LIABILITIESCurrent liabilities
    
    $
    69,151
    
    
    $
    40,815Long term debt (Note d8)
    
    
    68,539
    
    
    
    66,632Asset retirement obligations
    
    
    16,034
    
    
    
    8,286Future tax liability
    
    
    42,154
    
    
    
    45,072Fair value of long term derivatives (Note d7)
    
    
    2,897
    
    
    
    15,842Total liabilities
    
    
    198,775
    
    
    
    176,647Minority interest
    
    
    2,902
    
    
    
    1,964Commitments and contingencies
    
    
    
    
    
    
    SHAREHOLDERS EQUITYShare capital (Note d8)
    
    
    524,239
    
    
    
    523,696Contributed surplus (Note d10)
    
    
    9,048
    
    
    
    4,419Accumulated comprehensive income and other (Note d2)
    
    
    7,034
    
    
    
    9,495Deficit
    
    
    (135,903
    )
    
    
    (193,778
    )Total shareholders equity
    
    
    404,418
    
    
    
    343,832Total liabilities and shareholders equity
    
    $
    606,095
    
    
    $
    522,443
 90




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##### Table of Contents



(b) Consolidated Statements of Operations under US GAAP
 For the years ended December 31,2006
    
    2005
    
    2004(restated)
    
    (restated)Net income under Cdn GAAP
    
    $
    64,689
    
    
    $
    (13,531
    )
    
    $
    2,642Deferred exploration expenditures expensed per US GAAP
(Note d3 and d4)
    
    
    (15,911
    )
    
    
    (14,597
    )
    
    
    (5,735
    )Impact of start-up accounting (Note d5)
    
    
    1,738
    
    
    
    (4,888
    )
    
    
    Write-off of deferred exploration properties (Note d3)
    
    
    1,847
    
    
    
    1,403
    
    
    
    Capitalized mine property acquisition cost expensed for
US GAAP (Note d4)
    
    
    
    
    
    
    
    
    
    
    (6,799
    )Derivative gain on non-US$ warrants (Note d11)
    
    
    5,682
    
    
    
    4,478
    
    
    
    56,854Other (Notes d3)
    
    
    (28
    )
    
    
    455
    
    
    
    Net income/(loss) under US GAAP before minority interest
    
    
    58,017
    
    
    
    (26,680
    )
    
    
    46,962Minority interest, as adjusted
    
    
    (142
    )
    
    
    2,210
    
    
    
    746Net income/(loss) under US GAAP
    
    
    57,875
    
    
    
    (24,470
    )
    
    
    47,708Other comprehensive income  gain on marketable
securities (Note d2)
    
    
    5,718
    
    
    
    8,179
    
    
    
    Comprehensive income/(loss)
    
    $
    63,593
    
    
    $
    (16,291
    )
    
    $
    47,708Basic net income/(loss) per share under US GAAP
    
    $
    0.279
    
    
    $
    (0.170
    )
    
    $
    0.345Diluted net income/(loss) per share under US GAAP
    
    $
    0.276
    
    
    $
    (0.170
    )
    
    $
    0.327
 (c) Consolidated Statements of Cash Flows under US GAAP
 For the years ended December 31,2006
    
    2005
    
    2004(restated)
    
    (restated)Cash provided by (used in):Operating activities
    
    $
    (10,513
    )
    
    $
    (27,530
    )
    
    $
    575Investing activities
    
    
    (76,211
    )
    
    
    (38,899
    )
    
    
    (95,113
    )Financing activities
    
    
    24,123
    
    
    
    143,261
    
    
    
    17,445Increase/(decrease) in cash and cash equivalents
    
    
    (62,601
    )
    
    
    76,832
    
    
    
    (77,093
    )Cash and cash equivalent beginning of period
    
    
    89,709
    
    
    
    12,877
    
    
    
    89,970Cash and cash equivalents end of period
    
    $
    27,108
    
    
    $
    89,709
    
    
    $
    12,877
  (1)
    
    Under US GAAP, minority investments in entities whose major business is mineral
exploration are deemed to be equivalent to exploration spending and are expensed as
incurred.(2)
    
    Under US GAAP, investments in marketable equity securities are marked to fair value
at the end of each period with gains and losses recognized in other comprehensive income.
Under Cdn GAAP gains and losses on marketable equity securities are noted in the foot
notes and recognized in the statement of operations only when the investment is sold.(3)
    
    Under US GAAP, exploration and general and administrative costs related
to exploration projects are charged to expense as incurred. Under Cdn GAAP, exploration,
acquisition and direct 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.(4)
    
    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
bankable feasibility study is completed, are expensed in the period incurred. Under Cdn
GAAP, the purchase costs of new mining properties as well as all development costs
incurred after acquisition are capitalized and subsequently reviewed each period for
impairment. If found to be impaired, the assets cost basis is reduced in accordance with
Cdn GAAP provisions.
 91




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##### Table of Contents



(5)
    
    Under US GAAP new production facilities are placed in service once the facility has
been constructed and fully tested to the point where it can be shown that it is capable of
producing its intended product. Under Cdn GAAP new production facilities are placed in
service when output reaches a significant portion of the facilitys design capacity. As
such, the new Wassa mine and processing operation was placed in service on January 1, 2005
for US GAAP purposes and was placed in service on April 1, 2005 for Cdn GAAP purposes. All
operating expenses, including ARO accretion, depreciation, depletion and amortization and
work in process inventory adjustments were recognized in the statement of operations for US
GAAP during the first quarter of 2005 while such costs were capitalized net of revenues
generated for Cdn GAAP.(6)
    
    Under US GAAP deferred stripping should be expensed and transition provisions allow any
remaining balances in deferred stripping asset accounts to be closed directly to retained
earnings on January 1, 2006. Under Cdn GAAP deferred stripping could be retained as an
acceptable accounting method in Canada under certain circumstances. We did not defer any
additional production phase stripping costs as of January 1, 2006 for both US and Cdn GAAP
and therefore have a zero balance for deferred stripping at December 31, 2006 for both US
and Cdn GAAP.(7)
    
    Under US GAAP the fair value of warrants denominated in currencies other than US$ is
treated as a derivative liability. Under Cdn GAAP the fair value of all warrants are
treated as a component of equity.(8)
    
    For US GAAP purposes, 100% of the $50.0 million of convertible notes issued in the
second quarter of 2005 was classified as a liability. Under Cdn GAAP, the fair value of
the conversion feature is classified as equity and the balance is classified as a
liability. Under Cdn GAAP, the liability portion is accreted each period in amounts which
will increase the liability to its full amount as of the maturity date and the accretion is
recorded as interest expense.(9)
    
    Numerous transactions since the Companys organization in 1992 have contributed to the
difference in share capital versus the Cdn 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 while
under Cdn 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 Cdn GAAP due to the past write-offs of certain deferred exploration
costs; (iii) gains recognized in Cdn GAAP upon issuances of subsidiaries shares are not
allowed under US GAAP; (iv) when warrants denominated in currencies other than US$ are
exercised the difference between the fair value and the strike price of the warrant is
recorded as share capital for US GAAP purposes, but under Cdn GAAP only the strike price is
recorded as share capital on exercise.(10)
    
    Under Cdn GAAP the issuance-date fair value of all warrants issued and outstanding are
recorded as contributed surplus. Under US GAAP contributed surplus excludes the fair value
of warrants denominated in currencies other than US$. The fair value of warrants
denominated in currencies other than US$ is recorded as a derivative liability.(11)
    
    Under US GAAP the change in fair value of warrants denominated in currencies other than
US$ is recognized in the Statement of Operations. Under Cdn GAAP warrants are not marked to
fair value.(12)
    
    Impact of Recently Issued Accounting Standards.
 92




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In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid
Financial Instruments  an amendment of FASB Statements No. 133 and 140. This
Statement, among other things, allows a preparer to elect fair value measurement of
instruments in cases in which a derivative would otherwise have to be bifurcated. The
provisions of this Statement are effective for all financial
instruments acquired or issued in fiscal years beginning after September 15, 2006. We
do not believe that the adoption of this Statement in fiscal 2007 will have a
material impact on our consolidated financial position or results of operations.In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial
Assets-an amendment of FASB Statement No. 140 This Statement amends SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, with respect to the accounting for separately recognized servicing
assets and servicing liabilities. The provisions of this Statement are effective for
all financial instruments acquired or issued in fiscal years beginning after
September 15, 2006. We do not believe that the adoption of this Statement in fiscal
2007 will have a material impact on our consolidated financial position or results of
operations.In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48) which
prescribes a recognition threshold and measurement attribute, as well as criteria for
subsequently recognizing, derecognizing and measuring uncertain tax positions for
financial statement purposes. FIN 48 also requires expanded disclosure with respect
to the uncertainty in income taxes assets and liabilities. FIN 48 is effective for
fiscal years beginning after December 15, 2006 and is required to be recognized as a
change in accounting principle through a cumulative-effect adjustment to retained
earnings as of the beginning of the year of adoption. We are currently evaluating the
impact of adopting the provisions of FIN 48 in fiscal 2008.In September 2006 FASB issued SFAS No. 157, Fair Value Measurementdefine fair
value, establish a framework for measuring fair value and to expand disclosures about
fair value measurements. The statement only applies to fair value measurements that
are already required or permitted under current accounting standards and is effective
for fiscal years beginning after November 15, 2007. We do not expect the adoption of
this Interpretation to have a significant effect on the companys results of
operations or financial position.
 25. Quarterly Financial Data (Unaudited)
 2006 Quarters ended2
    

2005
Quarters
ended1($ millions, except per share data)

    
    Dec. 31
    
    Sept. 30
    
    Jun. 30
    
    Mar. 31
    
    Dec. 31
    
    Sept. 30
    
    Jun 30
    
    Mar . 31Revenues
    
    $
    33.2
    
    
    $
    36.6
    
    
    $
    31.5
    
    
    $
    27.4
    
    
    $
    27.7
    
    
    $
    24.7
    
    
    $
    24.9
    
    
    $
    18.1Net income/(loss)
    
    
    30.8
    
    
    
    1.5
    
    
    
    13.1
    
    
    
    19.3
    
    
    
    (1.0
    )
    
    
    (6.7
    )
    
    
    (3.7
    )
    
    
    (2.2
    )Net earnings/(loss) per shareBasic
    
    $
    0.148
    
    
    $
    0.007
    
    
    $
    0.063
    
    
    $
    0.093
    
    
    $
    (0.007
    )
    
    $
    (0.047
    )
    
    $
    (0.026
    )
    
    $
    (0.016
    )Diluted
    
    $
    0.146
    
    
    $
    0.007
    
    
    $
    0.063
    
    
    $
    0.092
    
    
    $
    (0.007
    )
    
    $
    (0.047
    )
    
    $
    (0.026
    )
    
    $
    (0.016
    )
 
 (1)
    
    Quarters one, two and three of 2005 have been restated as if hedge accounting had not been
applied to EUROs gold futures contracts. EURO did not apply hedge accounting to quarter four and
thus it is not restated.(2)
    
    Reflect the restatement of in-process metals inventories for
quarters one, two and three. 26.
    
    Measurement Uncertainty
  
    
    Gold prices per ounce of $650 in 2007, $638 in 2008, $592 in
2009, and $562 in 2010 and 2011.
 
    
    Approximately one third of the non-reserve resources would
eventually be found economic and would be mined and processed.
  93




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ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
       94




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 ITEMS 10, 11, 12, 13 AND 14
  
 ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 1.
    
    The following documents are filed as part of this Report:
 1.
    
    Financial Statements
 
    
    Managements Report
    
    Auditors Report
    
    Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    Consolidated Statements of Operations for the years ended December
31, 2006, 2005 and 2004
    
    Consolidated Statements of Changes in Shareholders Equity for the
years ended December 31, 2006, 2005 and 2004
    
    Consolidated Statements of Cash Flows for the years ended December
31, 2006, 2005 and 2004
    
    Notes to the Consolidated Financial Statements
 2.
    
    Financial Statement SchedulesFinancial 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.
 95




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##### Table of Contents



2.
    
    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); Articles of Amendment
dated May 6, 20053(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)4.3
    
    Securities Purchase Agreement dated April 15, 2005 between the Company and Amaranth LLC
(incorporated by reference to Exhibit 4.1 to the Companys Form 8-K filed on April 19,
2005)4.4
    
    Form of Senior Convertible Note dated April 15, 2005 (incorporated by reference to
Exhibit 4.2 to the Companys Form 8-K filed on April 19, 2005)4.5
    
    Amendment No. 1 dated January 29, 2007 to Senior Convertible Notes issued April 15, 2005.4.6
    
    Registration Rights Agreement dated April 15, 2005 between the Company and Amaranth LLC
(incorporated by reference to Exhibit 4.3 to the Companys Form 8-K filed on April 19,
2005)4.7
    
    Form of Warrant issued to warrant holders of St. Jude Resources Ltd. (incorporated by
reference to Exhibit 4.14 to the Companys Form 10-K for the year ended December 31,
2005)4.8
    
    Form of Option issued to option holders of St. Jude Resources Ltd. (incorporated by
reference to Exhibit 4.15 to the Companys Form 10-K for the year ended December 31,
2005)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
    
    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)10.5
    
    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)10.6
    
    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 (incorporated by reference to the Companys
Form 10-K for the year ended December 31, 2004)10.7
    
    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)
 96




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##### Table of Contents



10.8
    
    Severance and Release Agreement between the Company and Mr. Allan
J,. Marter dated October 13, 2006 (incorporated by reference to
Exhibit 10.1 to the Companys Form 10-Q for the quarter ended
September 30, 2006)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
    
    Employment Agreement with Mr. Colin Belshaw dated June 17, 2006
(incorporated by reference to Exhibit 10.2 to the Companys Form
10-Q for the quarter ended September 30, 2006)10.13
    
    Employment Agreement with Mr. Thomas G. Mair dated February 8, 2007
(incorporated by reference to Exhibit 10.1 of the Companys Form 8-K
filed on February 14, 2007)10.14
    
    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)10.15
    
    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)10.16
    
    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)10.17
    
    Mining lease, dated August 16, 1988, between the Government of the
Republic of Ghana and Canadian Bogosu Resources Limited, relating to
the Bogoso property (incorporated by reference to Exhibit 10.14
to the Companys Form 10-K for the year ended
December 31, 2005)10.18
    
    Mining lease, dated August 21, 1987, between the Government of the
Republic of Ghana and Canadian Bogosu Resources Limited, relating to
the Bogoso property (incorporated by reference to Exhibit 10.15
to the Companys Form 10-K for the year ended
December 31, 2005)10.19
    
    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)10.20
    
    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 Ltd., 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)10.21
    
    Mining lease dated June 29, 2001, between the Government of the
Republic of Ghana and Prestea Gold Resources, 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)10.22
    
    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)10.23
    
    Memorandum of Agreement, dated March 14, 2002, among Prestea Gold
Resources, 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)10.24
    
    Letter agreement between the Company and Guyanor Ressources S.A.
dated September 30, 2004 relating to sale of Gross Rosebel
Participation Right (incorporated by reference to Exhibit 10.30 to
the Companys
 97




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##### Table of Contents



Form 10-K for the year ended December 31, 2004)10.25
    
    Arrangement Agreement dated November 11, 2005 between the Company and St. Jude Resources Ltd.
(incorporated by reference to Exhibit 2.1 to the Companys Form 8-K filed on November 17, 2005)10.26
    
    Executive Employment Agreement, dated July 1, 2002, between St. Jude Resources Ltd. and Bluestar
Management Inc. (incorporated by reference to Exhibit 10.23 to the Companys Form 10-K for the year
ended December 31, 2005)10.27
    
    License Agreement, dated June 28,2004 between Biomin Technologies S. A. and Bogoso Gold Limited
(incorporated by reference to Exhibit 10.24 to the Companys Form 10-K for the year ended December
31, 2005)10.28
    
    EPCM Services Agreement, dated April 16, 2006, between Bogoso Gold Limited, GRD Minproc (Pty) Limited
and GRD Minproc Limited (incorporated by reference to Exhibit 10.1 to the Companys Form 10-Q for the
quarter ended June 30, 2006)10.29
    
    Medium Term Loan Agreement, dated October 11, 2006 between Ghana Limited, Cal Bank Ghana Limited and
the Company (incorporated by reference to Exhibit 10.3 to the Companys Form 10-Q for the quarter
ended September 30, 2006)14
    
    Code of Ethics for Directors, Senior Executive and Financial Officers and Other Executive Officers
(incorporated by reference to Exhibit 14 to the Companys Form 10-K for the year ended December 31,
2005)21
    
    Subsidiaries of the Company23.1
    
    Consent of PricewaterhouseCoopers LLP31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    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)
 98




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##### Table of Contents



SIGNATURES
  GOLDEN STAR RESOURCES LTD.
RegistrantBy:
    
    /s/ Peter J. Bradford

Peter J. BradfordPresident and Chief Executive OfficerDate:
    
    March 13, 2007
  By: 
Name:
    
    /s/ Peter J. Bradford

Peter J. Bradford
    
    By:
Name:
    
    /s/ Thomas G. Mair

Thomas G. MairTitle:
    
    President and Chief Executive Officer
    
    Title:
    
    Senior Vice-President and Chief Financial OfficerDate:
    
    March 13, 2007
    
    Date:
    
    March 13, 2007By:
    
    /s/ James E. Askew
    
    By:
    
    /s/ Lars-Eric JohanssonName:
    
    James E. Askew
    
    Name:
    
    Lars-Eric JohanssonTitle:
    
    Director
    
    Title:
    
    DirectorDate:
    
    March 13, 2007
    
    Date:
    
    March 13, 2007By:
    
    /s/ David K. Fagin
    
    By:
    
    /s/ Ian MacGregorName:
    
    David K. Fagin
    
    Name:
    
    Ian MacGregorTitle:
    
    Director
    
    Title:
    
    DirectorDate:
    
    March 13, 2007
    
    Date:
    
    March 13, 2007By:
    
    /s/ Michael Martineau
    
    By:
    
    /s/ Michael TerrellName:
    
    Michael Martineau
    
    Name:
    
    Michael TerrellTitle:
    
    Director
    
    Title:
    
    DirectorDate:
    
    March 13, 2007
    
    Date:
    
    March 13, 2007
 99




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##### Table of Contents



EXHIBIT INDEX
 3(i)
    
    Articles of Amendment dated May 6, 20054.5
    
    Amendment No. 1 dated January 29, 2007 to Senior Convertible Notes issued April 15, 200521
    
    Subsidiaries of the Company23.1
    
    Consent of PricewaterhouseCoopers LLP31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    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)