##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-K

x
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the Fiscal Year ended December 31, 2003
Commission file number 1-12284

GOLDEN STAR RESOURCES LTD.

(Exact Name of Registrant as Specified in Its Charter)


Canada
    
    98-0101955(State or other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)10901 West Toller Drive, Suite 300
Littleton, Colorado
    
    80127-6312(Address of Principal Executive Office)
    
    (Zip Code)


Registrants telephone number, including area code (303) 830-9000

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class
    
    Name of each exchange on which registeredCommon Shares
    
    American Stock Exchange


Securities registered or to be registered pursuant to Section 12(g) of the
Act:

Warrants Issued July 2002Warrants Issued February 2003


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x     No o

Indicate by check mark if disclosure of delinquent filers pursuant to
item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form l0-K. o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes x     No o

The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the Registrant was approximately $700.4 million as of January 29, 2004, based on the closing price of the shares
on the American Stock Exchange of $5.31 per share.

Number of Common Shares outstanding as at January 29, 2004: 133,140,528.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of our Definitive Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A in
connection with the 2004 Annual Meeting of Shareholders are incorporated
by reference to Part III of this Report on Form 10-K.





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TABLE OF CONTENTS



|                                                  |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                           
|                                                  | ITEM 1. DESCRIPTION OF BUSINESS                                                              
|                                                  | ITEM 2. DESCRIPTION OF PROPERTIES                                                            
|                                                  | ITEM 3. LEGAL PROCEEDINGS                                                                    
|                                                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II  OTHER INFORMATION                      
|                                                  | ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS            
|                                                  | ITEM 6. SELECTED FINANCIAL DATA                                                              
|                                                  | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                  | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                                  | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                                                  | ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  
|                                                  | ITEM 9A CONTROLS AND PROCEDURES                                                              
|PART III                                         
|                                                  | ITEMS 10, 11, 12, 13 AND 14                                                                  
|PART IV                                          
|                                                  | ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                      
|SIGNATURES                                       
|EXHIBITS                                         
|EX-21 Subsidiaries of the Company                
|EX-23 Consent of PricewaterhouseCoopers LLP      
|EX-31.1 Certification of PEO Pursuant to Sec. 302
|EX-31.2 Certification of PFO Pursuant to Sec. 302
|EX-31.1 Certification of PEO Pursuant to Sec. 906
|EX-31.2 Certification of PFO Pursuant to Sec. 906



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REPORTING CURRENCY, FINANCIAL AND OTHER INFORMATION

All amounts in this Report are expressed in US dollars, unless otherwise
indicated. Canadian currency is denoted as Cdn$ and the
Euro is denoted as .

Financial information is presented in accordance with accounting principles
generally accepted in Canada (Cdn GAAP). Differences between accounting
principles generally accepted in the US (US GAAP) and those applied in
Canada, as applicable to Golden Star Resources Ltd., are explained in Note 22
to the Consolidated Financial Statements.

Information in Part I and II of this report includes data expressed in various
measurement units and contains numerous technical terms used in the gold mining
industry. To assist readers in understanding this information, a conversion
table and glossary are provided below.

References to Golden Star, we, our, and us mean Golden Star Resources
Ltd., its predecessors and consolidated subsidiaries, or any one or more of
them, as the context requires.

NON-GAAP FINANCIAL MEASURES

In this Form 10-K, the terms
total cash cost and cash operating cost is used on a per ounce of
gold basis. Total cash cost per ounce is equivalent to mining operations expense for the period as found
on the consolidated statements of operations, divided by the number of ounces of gold sold during the period.
Cash operating cost per ounce is equivalent to mining operations
expense for the period,
less production royalties, divided by the number of ounces of gold sold during
the period.

We have included total cash cost and cash operating cost information to provide investors with
information about the cost structure of our mining operations. We use this
information for the same purpose and for monitoring the performance of our
operations. This information differs from measures of performance determined
in accordance with GAAP in Canada and the US and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP. These measures are not necessarily indicative of operating profit or
cash flow from operations as determined under GAAP and might not be comparable
to similarly titled measures of other companies. See Item 7, Managements
Discussion and Analysis of Financial Condition and Results of Operations for a
reconciliation of these non-GAAP measures to our Statement of Operations.

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

This Form 10-K contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended, with respect to our financial condition,
results of operations, business prospects, plans, objectives, goals,
strategies, future events, capital expenditure, and exploration and development
efforts. Words such as anticipates, expects, intends, plans,
forecasts, projects, budgets, believes, seeks, estimates, could,
might, should, and similar expressions identify forward-looking statements.
Although we believe that our plans, intentions and expectations reflected in
these forward-looking statements are reasonable, we cannot be certain that
these plans, intentions or expectations will be achieved. Actual results,
performance or achievements could differ materially from those contemplated,
expressed or implied by the forward-looking statements contained or
incorporated by reference in this Form 10-K. These statements include comments
regarding: the establishment and estimates of mineral reserves and mineral
resources, production, production commencement dates, productions costs, cash
operating costs per ounce, total cash costs per ounce, grade, processing
capacity, potential mine life, feasibility studies, development costs, capital
and operating expenditures, exploration, the closing of certain transactions
including acquisitions and offerings, our expansion plans for Bogoso/Prestea,
including relocation of a recently acquired carbon-in-leach
(CIL) processing plant to Prestea,
and the development and start-up of Wassa.

The following, in addition to the factors described in Risk Factors in this
Form 10-K, are among the factors that could cause actual results to differ
materially from the forward-looking statements:



| |  |  | unexpected changes in business and economic conditions;
| | - |  | -------------------------------------------------------



| |  |  | significant increases or decreases in gold prices;
| | - |  | --------------------------------------------------

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| |  |  | changes in interest rates and currency exchange rates;
| | - |  | ------------------------------------------------------



| |  |  | timing and amount of production;
| | - |  | --------------------------------



| |  |  | unanticipated grade changes;
| | - |  | ----------------------------



| |  |  | unanticipated recovery rates or production problems;
| | - |  | ----------------------------------------------------



| |  |  | changes in mining, processing and overhead costs;
| | - |  | -------------------------------------------------



| |  |  | changes in metallurgy and processing technology;
| | - |  | ------------------------------------------------



| |  |  | access and availability of materials, equipment,
supplies, labor and supervision, power and water;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | determination of mineral reserves and mineral resources;
| | - |  | --------------------------------------------------------



| |  |  | availability of drill rigs;
| | - |  | ---------------------------



| |  |  | changes in project parameters;
| | - |  | ------------------------------



| |  |  | costs and timing of development of new mineral reserves;
| | - |  | --------------------------------------------------------



| |  |  | results of current and future exploration activities;
| | - |  | -----------------------------------------------------



| |  |  | results of pending and future feasibility studies;
| | - |  | --------------------------------------------------



| |  |  | joint venture relationships;
| | - |  | ----------------------------



| |  |  | political or economic instability, either globally or in the countries in which we operate;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | local and community impacts and issues;
| | - |  | ---------------------------------------



| |  |  | timing of receipt of government approvals;
| | - |  | ------------------------------------------



| |  |  | accidents and labor disputes;
| | - |  | -----------------------------



| |  |  | environmental costs and risks;
| | - |  | ------------------------------



| |  |  | competitive factors, including competition for property acquisitions; and
| | - |  | -------------------------------------------------------------------------



| |  |  | availability of capital at reasonable rates or at all.
| | - |  | ------------------------------------------------------

These factors are not intended to represent a complete list of the general or
specific factors that could affect us. We might note additional factors
elsewhere in this Form 10-K, and in any documents incorporated by reference
into this Form 10-K. We undertake no obligation to update forward-looking
statements.

CONVERSION FACTORS AND ABBREVIATIONS

For ease of reference, the following conversion factors are provided:

1 acre
    
    = 0.4047 hectare
    
    1 mile
    
    = 1.6093 kilometers1 foot
    
    = 0.3048 meter
    
    1 troy ounce
    
    = 31.1035 grams1 gram per tonne
    
    = 0.0292 ounce per 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 pounds
    
    1 kilogram
    
    = 2.2 pounds or 32.151
troy ounces


The following abbreviations of measurements could be used herein:

Au
    
    = gold
    
    m2
    
    = square meterg
    
    = gram
    
    m3
    
    = cubic meterg/t
    
    = grams of gold per tonne
    
    mg
    
    = milligramha
    
    = hectare
    
    mg/m3
    
    = milligrams per cubic meterkm
    
    = kilometer
    
    t
    
    = tonnekm2
    
    = square kilometers
    
    oz
    
    = troy ouncekg
    
    = kilogram
    
    ppb
    
    = parts per billionm
    
    = meter
    
    Ma
    
    = million years


Note: All units in this report are stated in metric measurements unless
otherwise noted.

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GLOSSARY OF TERMS

Note: The definitions of proven and probable mineral reserves and the
definitions for measured, indicated and inferred mineral resources set forth
below are those used in Canada as required in accordance with National
Instrument 43-101. The definitions of proven and probable mineral reserves are
consistent with those prescribed for use in the US by the Securities and
Exchange Commission and set forth in SEC Industry Guide 7.

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.
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. 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.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  also
referred to as non-reserves
    
    The term mineral resource refers to a
concentration or occurrence of natural,
solid, inorganic or fossilized organic
material 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.measured mineral resource
    
    The term measured mineral resource refers
to that part of a mineral resource for which
quantity, grade or quality, densities,
shape, 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.


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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
    
    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, production activities and
project assessment, or any combination
thereof, including experience relevant to
the subject matter of the project or report
and is a member in good standing of a
self-regulating organization.


We use the following definitions of the stages of the exploration and
development process. There can be no assurance that the terminology used by us
is consistent with the terminology used by other companies in the mining
industry or by industry analysts.

exploration stage
    
    an exploration stage prospect typically involves
testing one or more targets within an area which have
been determined to have merit, first with a
combination of geological, geochemical and geophysical
analysis, and then, once better defined targets have
been established, by testing at depth, typically by
trenching and drilling, and generating the information
necessary to develop a three dimensional geologic
model of the mineralized zone, which could be used to
demonstrate mineralized materials and/or mineral
reserves.feasibility stage
    
    during the feasibility stage, exploration continues to
further increase confidence in mineralization while
attempting to further expand the mineralization.
During this stage, management develops in detail the
necessary engineering and costing for mining,
processing, power and infrastructure, as well as the
designs for the plant and equipment required to
construct and operate a modern mining operation. It is
at the end of this stage that mineralization could be
categorized as proven and/or probable mineral reserves
if a positive mining decision is justified. The
feasibility stage normally incorporates several phases
of work, which involve increasing levels of detail
including (i) scoping study, (ii) pre-feasibility
study, and (iii) bankable feasibility study.development stage
    
    after the feasibility stage, a company could decide to
bring the property into production. The process of
bringing a mine from the feasibility stage to the
production stage is the development stage. It is
during this stage that costs are capitalized for US
financial reporting purposes. Construction activities
carried out during the development stage include shaft
sinking, crosscutting, drifting and raising,
stripping, processing plant construction, leach pad
construction, tailings impoundment and infrastructure
construction (roads, power, water, ports, etc.).mining
    
    mining is the process of extraction and beneficiation
of mineral reserves to produce a marketable metal or
mineral product. Exploration continues during the
mining process and, in many cases, mineral reserves
are expanded during the life of the mine operations as
the exploration potential of the deposit is realized.


alterationany change in the mineral composition of a rock brought about by
physical or chemical means

bio-oxidation or BIOXa processing method that uses bacteria to oxidize
refractory sulfide ore to make it amenable to normal oxide ore processing
techniques such as carbon-in-leach

Birimiana thick and extensive sequence of Proterozoic age metamorphosed
sediments and volcanics first identified in the Birim region of southern Ghana

cash operating cost per ounceis equal to total cash cost per ounce less
royalties and production taxes divided by ounces sold during the period. This
definition is consistent with the Gold Institutes definition

CIL or carbon-in-leachan ore processing method involving the use of cyanide
where activated carbon which has been added to the leach tanks is used to
absorb gold containing solutions

cratona stable relatively immobile area of the earths crust

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cyanidationthe process of introducing cyanide to ore to recover gold

dipthe angle that a structural surface, a bedding or fault plane, makes with
the horizontal, measured perpendicular to the strike of the structure

disseminatedwhere minerals occur as scattered particles in the rock

doréunrefined gold bullion bars containing various impurities such as silver,
copper and mercury, which will be further refined to near pure gold.

faulta surface or zone of rock fracture along which there has been
displacement

folda curve or bend of a planar structure such as rock strata, bedding
planes, foliation, or cleavage

formationa distinct layer of sedimentary rock of similar composition

geochemistrythe study of the distribution and amounts of the chemical
elements in minerals, ores, rocks, solids, water, and the atmosphere

geophysicistone who studies the earth; in particular the physics of the
solid earth, the atmosphere and the earths magnetosphere

geotechnicalthe study of ground stability

greenstonea sequence of usually metamorphosed volcanic-sedimentary rock
assemblages

heap leacha mineral processing method involving the crushing and stacking of
an ore on an impermeable liner upon which solutions would be sprayed that
dissolve metals i.e. gold/copper etc.; the solutions containing the metals are
then collected and treated to recover the metals

hydrothermalthe products of the actions of heated water, such as a mineral
deposit precipitated from a hot solution

mapped or geological mappingthe recording of geologic information such as the
distribution and nature of rock units and the occurrence of structural
features, mineral deposits, and fossil localities

metasedimenta sedimentary rock which shows evidence of having been subjected
to metamorphism

metavolcanica volcanic rock which shows evidence of having been subjected to
metamorphism

minerala naturally formed chemical element or compound having a definite
chemical composition and, usually, a characteristic crystal form

mineralizationa natural occurrence in rocks or soil of one or more metal
yielding minerals

non-refractoryore containing gold that can be satisfactorily recovered by
basic gravity concentration or simple cyanidation

outcropthat part of a geologic formation or structure that appears at the
surface of the earth

oxidewhen used in reference to gold mining ores signifies an ore where
natural processes have oxidized any sulfide minerals.

Proterozoicthe more recent time division of the Precambrian; rocks aged
between 250 and 550 million years old

putsa financial instrument that provides the right, but not the obligation,
to sell a specified number of ounces of gold at a specified price.

quartzcrystalline silica; silicon dioxide

refractoryore containing gold that cannot be satisfactorily recovered by
basic gravity concentration or simple cyanidation

SEDARthe term SEDAR refers to the System for Electronic Document Analysis
Retrieval. The SEDAR web site, www.sedar.com, contains public security filings
for Canadian public companies.

sheara form of strain resulting from stresses that cause or tend to cause
contiguous parts of a body of rock to slide relatively to each other in a
direction parallel to their plane of contact

shielda large area of exposed basement rocks often surrounded by younger
rocks, e.g. Guyana Shield

stratigraphic, stratigraphicallygeology that deals with the origin and
succession of strata

strikethe direction or trend that a structural surface, e.g. a bedding or
fault plane, takes as it intersects the horizontal

stripto remove overburden in order to expose ore

sulfidea mineral including sulfur (S) and Iron (Fe) as well as other elements

synclinea concave downward fold, the core of which contains the
stratigraphically younger rocks

Tarkwaiana scattered group of mainly shallow water sedimentary rocks of
Proterozoic age named after the town of Tarkwa in southern Ghana where they
were found to be gold bearing

total cash cost per ounceis equal to mining operation expenses as reported in
the statement of operations, divided by the ounces sold during the period.
Includes the costs of mining and processing, waste stripping, mine site general
and administrative costs, third party smelting and refining costs, and
by-product credits. [This definition is consistent with the Gold Institutes
definition.]

transition oreis an ore zone lying between the oxide ore and the sulfide ore

veina thin, sheet like crosscutting body of hydrothermal mineralization,
principally quartz

volcanicsthose originally molten rocks, generally fine grained, that have
reached or nearly reached the Earths surface before solidifying

volcano-sedimentaryrocks composed of materials of both volcanic and
sedimentary origin

wall rockthe rock adjacent to a vein

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PART I




ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW OF GOLDEN STAR

Golden Star Resources Ltd. was established under the Canada Business
Corporations Acton May 15, 1992 as a result of the amalgamation of South
American Goldfields Inc., a corporation incorporated under the federal laws of
Canada, and Golden Star Resources Ltd., a corporation originally incorporated
under the provisions of the Alberta Business Corporations Acton March 7, 1984
as Southern Star Resources Ltd. We are a Canadian international gold mining
and exploration company producing gold in Ghana, West Africa. Our principal
office is located at 10901 West Toller Drive, Suite 300, Littleton, Colorado
80127, and the registered and records office is located at 19th Floor, 885 West
Georgia Street, Vancouver, British Columbia, Canada V6C 3H4. Our fiscal year
ends on December 31.

Through our subsidiaries and joint ventures we own a controlling interest in
four significant gold properties in Southern Ghana: the Bogoso property
(Bogoso), the Prestea property (Prestea), the Wassa property (Wassa) and
the Prestea Underground property (Prestea Underground). Bogoso and Prestea
are adjoining properties, operating as a single operation and referred to as
Bogoso/Prestea. Bogoso/Prestea and the Prestea Underground are owned by
our 90% owned subsidiary Bogoso Gold Limited (BGL). In 2003 Bogoso/Prestea
sold 174,315 ounces of gold for an average gold price and cash operating cost
of approximately $364 and $166 per ounce, respectively. Bogoso/Prestea has
produced all of our gold since initiating production in late 1999.

We hold a 90% equity interest in Wexford Goldfields Limited (WGL), which owns
the Wassa gold property, located some 35 kilometers east of Bogoso/Prestea.
Wassa is currently in development, and we expect gold production to commence in
early 2004.

The Prestea Underground is located on the Prestea property and consists of a
currently inactive underground gold mine and associated support facilities. As
of December 31, 2003 BGL owned an approximately 66% operating interest in this
mine and we are currently seeking to determine if the underground mine can be
reactivated on a profitable basis.

We also hold interests in gold exploration properties in Ghana, Sierra Leone,
Mali, Suriname, and French Guiana. The French Guiana properties are mainly
held through our 73%-owned subsidiary, Guyanor Ressources S.A. (Guyanor). We
hold a royalty right on the Gross Rosebel gold mine in Suriname and expect to
begin receiving cash royalties from this property during 2004.

Most of our senior corporate management reside in Littleton, Colorado where we
maintain our corporate headquarters. In addition to the Bogoso/Prestea and
Wassa employees, we have a small administrative office and staff in Accra, the
capital of Ghana, and a small staff in French Guiana where most of our South
American exploration properties are located. Our accounting records are kept
in compliance with Canadian GAAP and all of our operations, except for the
French Guiana office, transact business in US dollars and keep financial
records in US dollars.

Gold Sales and Production

Ghana has been a significant gold producing country for the last 100 years with
Ashanti Goldfields Company Limiteds Obuasi mine and the underground mine at
Prestea historically being the two major producers. Several other areas in
Ghana have also produced significant amounts of gold. The gold industry in
Ghana is currently experiencing resurgence in exploration, development spending
and gold production. Several large international gold mining companies have
announced in the past year plans to spend several hundred million dollars on
exploration and expansion projects in Ghana. Gold production in Ghana exceeded
2 million ounces in each year from 1998 through 2002, reaching approximately
2.2 million ounces in 2002. Gold production in Ghana is projected to rise in
the future as the planned developments and expansions reach the production
stage.

All of our gold is sent to a South African gold refinery in the form of doré
bars which average approximately 91% gold with the remaining portion being
primarily silver which we account for as a by-product. Our gold is sold to a

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European bank and revenue is recognized when title is transferred to the
customer at the Accra International Airport in Ghana. The sales price is based
on the London P.M. fix on the day of delivery.

Gold Price History

The price of gold is volatile and is affected by numerous factors beyond our
control such as the sale or purchase of gold by various central banks and
financial institutions, inflation or deflation, fluctuation in the value of the
US dollar and foreign currencies, global and regional demand, and the political
and economic conditions of major gold-producing countries throughout the world.

The following table presents the high, low and average afternoon fixing prices
for gold per ounce on the London Bullion Market over the past ten years:

Year
    
    High
    
    Low
    
    Average
    
    Golden Star1994
    
    $
    396
    
    
    $
    370
    
    
    $
    384
    
    
    $
    N/A1995
    
    
    396
    
    
    
    372
    
    
    
    384
    
    
    
    N/A1996
    
    
    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
    
    
    
    364To January 29, 2004
    
    
    425
    
    
    
    406
    
    
    
    415
    
    
    
    418


Data Source: www.kitco.com

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The following diagram depicts the organizational structure of Golden Star and
our significant subsidiaries:

flowchart

BUSINESS STRATEGY AND DEVELOPMENT

Our business and development strategy since 1999 has been to focus primarily on
the acquisition of producing and development stage gold properties in Ghana and
on the exploration, development and operation of these properties. Given our
significant mineral resource position, we are currently carrying out technical
studies to expand our production at Bogoso/Prestea. At our Wassa property, we
commenced development in mid-2003, and now expect to commence production in
early 2004 by processing material from the existing heap leach pads left by the
former owner. We plan to commence ore production from the Wassa
open pit mine in early 2005. If the above mentioned expansion and development plans are
approved and permitted (as expected), our annualized production
should exceed 350,000 ounces of gold. However, there can be no assurance that
development and start-up can be completed as anticipated or that our production
goals will be achieved.

Our objective is to grow our business to become a mid-tier gold producer (which
we understand to be a producer with annual production of approximately 500,000
ounces) over the next few years. Due to higher gold prices and our improved
financial condition, we believe we are well placed to pursue the acquisition of
producing, development and advanced stage exploration gold properties and
companies, primarily in Ghana and elsewhere in Africa. We are actively
investigating potential acquisition and merger candidates, some of which have
indicated to potential acquirers or their advisors that they or certain of
their properties might be available for acquisition. However, we presently have no
agreement or understanding with respect to any potential transaction. We have
increased exploration activities and expenditures on our current exploration
properties, primarily in Ghana.

OUR ASSETS

Bogoso/Prestea As mentioned above, we own and operate the Bogoso/Prestea gold
mine in Ghana, West Africa. Ore is currently mined from an open-pit surface
operation at Prestea and trucked approximately 15 kilometers from the Prestea
mine site to the nominal 6,000 tonne-per-day Bogoso processing plant where the
ore is processed. The Bogoso processing plant utilizes CIL technology along
with gravity and flotation processes to separate gold from the ore. CIL
technology is well known and is widely used for treating gold ores. In
addition to the mine and processing plant facility, our assets include a fleet
of mining equipment, numerous ancillary facilities including warehouses,
maintenance shops, roadways and administrative offices. We also own several
housing complexes at Bogoso which include a
medical center,  cafeteria,  store,  recreation facility and golf course.

Under normal operating conditions and current processing capacity,
Bogoso/Prestea would produce approximately 130,000 to 140,000 ounces per year;
however in 2003 we sold 174,315 ounces due primarily to higher than average ore
grades and improved recoveries. Historical and forecast production from
Bogoso/Prestea are shown on the Gold Production and Cash Costs table below.

Wassa Once Wassas development and construction
are completed in 2004, it will be very similar to Bogoso/Prestea including an
open-pit surface mine, a CIL processing plant, mining equipment and a town site
with associated facilities.

Prestea Underground The Prestea Underground is located directly beneath the
Prestea property. It is a large underground gold mine that operated for over
100 years producing a total of approximately nine million ounces
of gold prior to its closure in early 2002. We have entered into a joint venture with the
previous owner and are now performing engineering, geological and economic
analysis of the mine to determine if it can be reopened on a profitable basis.
The mine includes two useable shafts and several kilometers of underground
workings on numerous levels extending as deep as 1,400 meters below the
surface.

Other Assets We hold or have an interest in numerous exploration properties
in Ghana, Sierra Leone, Mali, and South America. Most of the exploration
properties in Ghana are within trucking distance of Bogoso/Prestea or Wassa.
The Mampon property, located approximately 35 kilometers north of the Bogoso
processing plant, has

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mineral reserves of approximately 0.2 million ounces
which are expected to be trucked to the Bogoso processing
plant after 2005. We have a staff of geologists in Ghana that are actively
investigating the mineral resource potential of the various exploration
properties, and we anticipate that such exploration effort will increase in
2004.

GOLD PRODUCTION AND CASH COSTS

The following table represents historical gold production and projected
production for 2004.

2004PRODUCTION AND CASH COST PER OUNCE
    
    2001
    
    2002
    
    2003
    
    ProjectedBOGOSO/PRESTEA(1)Ounces (thousands)
    
    
    87.9
    
    
    
    124.4
    
    
    
    174.3
    
    
    
    135-155Cash Operating Cost ($/oz)
    
    
    263
    
    
    
    193
    
    
    
    166
    
    
    
    200-220Total Cash Cost ($/oz)
    
    
    271
    
    
    
    215
    
    
    
    184
    
    
    
    210-230WASSA(2)Ounces (thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50-55Cash Operating Cost ($/oz)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200-240Total Cash Cost ($/oz)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210-250Total Ounces(3) (thousands)
    
    
    87.9
    
    
    
    124.4
    
    
    
    174.3
    
    
    
    185-210Consolidated Cash Operating Cost ($/oz)
    
    
    263
    
    
    
    193
    
    
    
    166
    
    
    
    200-225Consolidated Total Cash Cost ($/oz)
    
    
    271
    
    
    
    215
    
    
    
    184
    
    
    
    210-235


(1) The 2004 projection for Bogoso/Prestea excludes any impact from the
planned installation of the Bondaye processing plant at Prestea, which subject
to approvals and permitting, is expected to be completed by early 2005.

(2) Wassa is expected to begin production by reprocessing materials, left on
heap leach pads by a former owner, in early 2004, subject
to the timely receipt of the necessary operating permits and the commissioning
of the CIL processing plant which are progressing on schedule.

(3) Gold production 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.

MINERAL RESERVES

Our proven and probable mineral reserves are estimated in conformance with
definitions set out in Canadas National Instrument 43-101. We have filed on
SEDAR (www.sedar.com) Technical Reports on our mineral reserves for
Bogoso/Prestea and Wassa as required in Canadas National Instrument 43-101.
We intend to file Technical Reports on our mineral reserves for Bogoso/Prestea
and Wassa as of December 31, 2003 during the first quarter of 2004. See our
Glossary of Terms. The proven and probable mineral reserves are those ore
tonnages contained within engineered pits, using current and predicted mining
and processing methods, and related operating costs and performance parameters.
We believe that the definitions of proven and probable mineral reserves are
consistent with the definition of proven and probable mineral reserves
prescribed for use in the US by the US Securities and Exchange Commission and
set forth in SEC Industry Guide 7.

The estimation of the mineral reserves is based on information compiled and/or
validated by Mr. Dave Alexander, our Projects Planning Manager. Mr. Alexander
is a qualified mining engineer with 20 years of experience, a member of
the Institute of Materials, Minerals and Mining, and a Chartered Engineer
under the auspices of the Engineering Council of the United Kingdom. Mr.
Alexander is considered a qualified person under Canadas National Instrument
43-101.

The proven and probable mineral reserves as of December 31, 2003 have been
estimated at an economic cut-off grade based on a gold price of $325 per ounce. This
compares to $300 per ounce used for the estimate of our mineral reserves at
December 31, 2002.

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The following table summarizes total and our share of estimated proven and
probable mineral reserves as of December 31, 2003 and December 31,
2002:

PROVEN AND PROBABLE MINERAL RESERVESAs of December 31, 2003
    
    As of December 31, 2002Property
    
    
    
    
    
    Gold
    
    Contained(2)
    
    
    
    
    
    Gold
    
    Contained(2)Mineral Reserve
    
    Tonnes(1)
    
    Grade
    
    Ounces
    
    Tonnes(1)
    
    Grade
    
    OuncesCategory
    
    (thousands)
    
    (g/t)
    
    (thousands)
    
    (thousands)
    
    (g/t)
    
    (thousands)Bogoso/Prestea(3)Proven
    
    
    8,254
    
    
    
    3.31
    
    
    
    878
    
    
    
    14,170
    
    
    
    3.26
    
    
    
    1,485Probable
    
    
    19,048
    
    
    
    3.29
    
    
    
    2,011
    
    
    
    8,902
    
    
    
    2.54
    
    
    
    726Sub-total
    
    
    27,302
    
    
    
    3.29
    
    
    
    2,890
    
    
    
    23,072
    
    
    
    2.98
    
    
    
    2,211Attributable Share
    
    
    24,572
    
    
    
    3.29
    
    
    
    2,601
    
    
    
    20,765
    
    
    
    2.98
    
    
    
    1,990Wassa(4)Probable
    
    
    16,207
    
    
    
    1.28
    
    
    
    665
    
    
    
    
    
    
    
    
    
    
    
    Attributable Share
    
    
    14,586
    
    
    
    1.28
    
    
    
    599
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    43,509
    
    
    
    2.54
    
    
    
    3,555
    
    
    
    23,072
    
    
    
    2.98
    
    
    
    2,211Attributable Share
    
    
    39,158
    
    
    
    2.54
    
    
    
    3,200
    
    
    
    20,765
    
    
    
    2.98
    
    
    
    1,990


Notes to Proven and Probable Mineral Reserves Table

(1) Tonnes of mineral reserves are net of a 5% dilution allowance for mining
to account for losses resulting from planned mining methods, and a 98% ore
recovery factor.

(2) Calculation of contained
ounces includes adjustments due to rounding.

(3) Approximately 68% of the 2003 Bogoso/Prestea mineral reserves are
refractory ore. We are currently planning to add a bio-oxidation circuit to
the Bogoso processing plant to process the refractory mineral reserves. The
estimated recovery rates utilized in our mineral reserve calculations in 2003
ranged from 65% to 85% for oxides and other non-refractory ores, and from 78%
to 85% for refractory ore. The estimated cut-off grades utilized in mineral
reserve calculations in 2003 ranged from 0.7 g/t to 1.8 g/t for oxide ore and
other non-refractory ores and from 1.5 g/t to 2.3 g/t for refractory ore.
Included in the December 31, 2003 proven mineral reserve category is 0.8
million tonnes of ores at an average grade of 2.4 g/t in stockpiles which are
located at Bogoso. Also included in the December 31, 2003 probable mineral
reserve category are the Mampon property mineral reserves of 0.9 million tonnes
of ore at an average grade of approximately 5.6 g/t containing approximately
162,000 ounces of gold. These mineral reserves were purchased as part of the
Dunkwa properties acquisition in June 2003.

(4) All of the Wassa mineral reserves are non-refractory and should be
treatable in the Wassa CIL processing plant now under construction. The
estimated recoveries utilized in mineral reserve calculations in 2003 ranged
from 92% to 93%. The estimated cut-off grades utilized in mineral reserve
calculations in 2003 range from 0.5 g/t to 0.6 g/t. The mineral reserves
include 4.2 million tonnes of material grading 0.7 g/t remaining on the leach
pads established by the previous operator of the Wassa mine. No mineral
reserves were declared for Wassa in 2002.

Reconciliation of Proven and Probable Mineral Reserves(In thousands of ounces of total contained gold)

PROPERTY
    
    December 31, 2002
    
    2003 Depletion(1)
    
    Increase(2)
    
    December 31, 2003Bogoso/Prestea
    
    
    2,211
    
    
    
    (221
    )
    
    
    900
    
    
    
    2,890Wassa
    
    
    
    
    
    
    
    
    
    
    665
    
    
    
    665Total
    
    
    2,211
    
    
    
    (221
    )
    
    
    1,565
    
    
    
    3,555


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Notes to Reconciliation of Proven and Probable Mineral Reserves Table

(1) Depletion represents contained ounces of mineral reserves processed during
2003 before considering recovery losses and therefore does not equal 2003 gold
production.

(2) Increases and decreases in mineral reserves can result from the discovery
of new mineralization, conversion of mineral resources to mineral reserves,
changes in price assumptions, unit costs and recoveries or any combination of
these factors. The increases in mineral reserves during 2004 were due
primarily to the exploration successes at Bogoso/Prestea, the acquisition of
the Dunkwa properties which included the mineral reserves at the Mampon
property, and the successful completion of the feasibility study at Wassa.

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
| |  |  | ------------------------------------------------------------------------------------------------



| |  |  | This section uses the terms measured mineral resources and indicated
mineral resources. We advise US investors that while those terms are
recognized and required by Canadian regulations, the US Securities and
Exchange Commission does not recognize them. US investors are cautioned
not to assume that any part or all of the mineral deposits in these
categories will ever be converted into mineral reserves.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our measured and indicated mineral
resources, which are reported in this Form 10-K,
do not includethat part of the mineral resources converted to proven and
probable mineral reserves, and have been estimated in conformance with
definitions set out in Canadas National Instrument 43-101. We have filed on
SEDAR (www.sedar.com) Technical Reports on our mineral reserves and mineral
resources (mineral resources stated in the Technical Reports includemineral
reserves) for Bogoso/Prestea and Wassa as required in Canadas National
Instrument 43-101. We intend to file Technical Reports for Bogoso/Prestea and
Wassa as of December 31, 2003 during the first quarter of 2004. See our
Glossary of Terms.

The measured and indicated mineral
resources for our properties have been
estimated at an economic cut-off grade based on a gold price of $375 per ounce
for December 31, 2003 and economic constraints that we believe are realistic.
For December 31, 2002 the economic cut-off grade was based on a gold price per
ounce of $325, except at Yaou and Dorlin where we used a gold price of $300 per
ounce.

The following table summarizes the total and our share of estimated
non-reserves  measured and indicated mineral resources as of December 31, 2003
and December 31, 2002:

NON-RESERVES
 MEASURED AND INDICATED MINERAL RESOURCES(1)As of December 31, 2003
    
    As of December 31, 2002PropertyMineral Resource
    
    Tonnes
    
    Gold Grade
    
    Tonnes
    
    Gold GradeCategory
    
    (thousands)
    
    (g/t)
    
    (thousands)
    
    (g/t)Bogoso/Prestea(2)Measured
    
    
    11,253
    
    
    
    2.45
    
    
    
    5,861
    
    
    
    3.64Indicated
    
    
    16,024
    
    
    
    2.53
    
    
    
    14,101
    
    
    
    2.69Sub-total
    
    
    27,277
    
    
    
    2.50
    
    
    
    19,962
    
    
    
    2.97Wassa(3)Indicated
    
    
    9,363
    
    
    
    0.96
    
    
    
    17,770
    
    
    
    1.29Dorlin(4)
    
    Yaou & Dorlin(4)Indicated
    
    
    3,607
    
    
    
    1.56
    
    
    
    13,800
    
    
    
    2.10


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NON-RESERVES - MEASURED AND INDICATED MINERAL RESOURCES(1)As of December 31, 2003
    
    As of December 31, 2002PropertyMineral Resource
    
    Tonnes
    
    Gold Grade
    
    Tonnes
    
    Gold GradeCategory
    
    (thousands)
    
    (g/t)
    
    (thousands)
    
    (g/t)Attributable ShareMeasured
    
    
    10,128
    
    
    
    2.45
    
    
    
    5,275
    
    
    
    3.64Indicated
    
    
    25,968
    
    
    
    1.90
    
    
    
    45,131
    
    
    
    2.05Total
    
    
    36,096
    
    
    
    2.06
    
    
    
    50,406
    
    
    
    2.22


Notes to Non-Reserves  Measured and Indicated Mineral Resources Table

(1) See Glossary Of Terms for definitions of non-reserves  mineral resources,
measured mineral resources and indicated mineral resources.

The estimation of the Bogoso/Prestea, Dunkwa and Wassa measured and indicated
mineral resources are based on information compiled and/or validated by Mr. S.
Mitchell Wasel, our Exploration Manager. Mr. Wasel is a qualified geologist
who has 16 years of experience in gold and base metal exploration and is a
member of the Australasian Institute of Mining and Metallurgy.
Mr. Wasel is considered a qualified person under Canadian
National Instrument 43-101.

The primary qualified person responsible for the estimation of the indicated
mineral resource for the Dorlin property is Mr. Colin Jones, who is a
professional geologist with 22 years of experience. Mr. Jones is a Partner and
Manager (Audits) of RSG Global Pty Ltd and a member of the Australasian
Institute of Mining and Metallurgy. Mr. Jones is considered a
qualified person under Canadian National Instrument 43-101. The amount of the mineral resource at the
Dorlin property that might have been removed by illegal mining is not known but
could be material.

(2) Approximately 81% of the 2003 Bogoso/Prestea measured and indicated
mineral resources are refractory. The estimated cut-off grades utilized in
mineral resource calculations in 2003 ranged from 0.7 g/t to 1.8 g/t for
non-refractory material and from 0.9 g/t to 2.1 g/t for refractory material.
Also included in the December 31, 2003 indicated mineral
resource category are mineral resources of 0.4 million tonnes of ore at an
average grade of approximately 2.79 g/t, which were purchased as part of the
Dunkwa properties acquisition in June 2003.

(3) All of the 2003 Wassa measured and indicated mineral resources are
non-refractory. The estimated cut-off grades utilized in mineral resource
calculations in 2003 ranged from 0.5 g/t to 0.6 g/t.

(4) Dorlin is located in French Guiana, South America, and Golden Star owns
approximately an 86.5% beneficial interest of Dorlin. The estimated cut-off
grades utilized in mineral resource calculations in 2003 was 0.5 g/t. The
property is undeveloped and has been on a care and maintenance basis in recent
years. In 2002 Yaou and Dorlin were reported together.

NON-RESERVES  INFERRED MINERAL RESOURCES

Inferred Mineral Resources



| |  |  | Cautionary Note to US Investors concerning estimates of Inferred Mineral
Resources
| |  |  | ----------------------------------------------------------------------------------



| |  |  | This section uses the term inferred mineral resources. We advise US
investors that while this term is recognized and required by Canadian
regulations, the US Securities and Exchange Commission does not recognize
it. Inferred mineral resources have a great amount of uncertainty as
to their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an inferred
mineral resources will ever be upgraded to a higher category. Under
Canadian rules estimates of inferred mineral resources could not form the
basis of feasibility or other economic studies. US investors
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13



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| |  |  | are cautioned not to assume that part or all of the inferred mineral
resource exists, or is economically or legally mineable.
| |  |  | -----------------------------------------------------------------------------------------------------------------------------

Our inferred mineral resources, which
are reported in this Form 10-K, do not include
that part of the mineral resources converted to proven and probable mineral
reserves or measured and indicated mineral resources, and have been estimated
in conformance with definitions set out in Canadas National Instrument 43-101.
We have filed on SEDAR (www.sedar.com) Technical Reports on our mineral
reserves and mineral resources (mineral resources stated in the Technical
Reports include mineral reserves) for Bogoso/Prestea and Wassa as required in
Canadas National Instrument 43-101. We intend to file Technical Reports for
Bogoso/Prestea and Wassa as of December 31, 2003 during the first quarter of
2004. See our Glossary of Terms.

The inferred mineral resources for our properties have been estimated at
economic cut-off grades based on gold prices of $375 and $325 per ounce as of
December 31, 2003 and December 31, 2002, respectively, and economic constraints
that we believe are realistic.

The following table summarizes the total and our share of estimated
non-reserves  inferred mineral resources as of December 31, 2003 and December
31, 2002:

NON-RESERVES - INFERRED MINERAL RESOURCES(1)As of December 31, 2003
    
    As of December 31, 2002PropertyMineral Resource
    
    Tonnes
    
    Gold Grade
    
    Tonnes
    
    Gold GradeCategory
    
    (thousands)
    
    (g/t)
    
    (thousands)
    
    (g/t)Bogoso/Prestea(2)Inferred
    
    
    29,690
    
    
    
    2.43
    
    
    
    23,960
    
    
    
    2.91Wassa(3)Inferred
    
    
    30,768
    
    
    
    1.27
    
    
    
    28,843
    
    
    
    1.15Prestea Underground(4)Inferred
    
    
    1,606
    
    
    
    8.58
    
    
    
    
    
    
    
    Yaou(5)Inferred
    
    
    12,074
    
    
    
    2.63
    
    
    
    
    
    
    
    Dorlin(6)Inferred
    
    
    3,375
    
    
    
    1.43
    
    
    
    
    
    
    
    Paul Isnard(7)Inferred
    
    
    8,215
    
    
    
    1.78
    
    
    
    
    
    
    
    Attributable ShareInferred
    
    
    75,218
    
    
    
    2.06
    
    
    
    47,523
    
    
    
    1.95


Notes to Non-Reserves  Inferred Mineral Resources Table

(1) See Glossary of Terms for definitions of non-reserves  mineral resources
and inferred mineral resources.

The estimation of the Bogoso/Prestea, Wassa, and Prestea Underground inferred
mineral resources are based on information compiled and/or validated by Mr. S.
Mitchell Wasel, Exploration Manager. Mr. Wasel is a qualified geologist who
has 16 years of experience in gold and base metal exploration and is a member
of the Australasian Institute of Mining and Metallurgy.

The primary qualified person
responsible for the estimation of the inferred mineral resource for
the Yaou, Dorlin and Paul Isnard property is Mr. Colin Jones, who is
a professional geologist with 22 years of experience. Mr Jones is a Partner and Manager
(Audits) of RSG Global Pty Ltd and a member of the Australian Institute of Mining and Metallurgy.
The amount of the mineral resource at the Dorlin property that might have been removed by illegal mining is not known but could be material.

(2) Approximately 84% of the 2003 Bogoso/Prestea inferred mineral resources are
refractory. The estimated cut-off grades utilized in inferred mineral resource
calculations in 2003 ranged from 0.7 g/t to 1.8 g/t for non-refractory

14



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##### Table of Contents



material and from 0.9 g/t to 2.1 g/t for refractory material. Also included in
the December 31, 2003 inferred mineral resource category are the Dunkwa
properties mineral resources of 2.4 million tonnes of ore at an average grade
of approximately 2.69 g/t, which were purchased as part of the Dunkwa
properties acquisition in June 2003.

(3) All of the Wassa inferred mineral resources are non-refractory. The
estimated cut-off grades utilized in mineral resource calculations in 2003
ranged from 0.5 g/t to 0.6 g/t.

(4) All of the Prestea Underground inferred mineral resources are refractory.
Golden Star owns approximately a 59% beneficial interest in the property. The
estimated cut-off grade utilized in mineral resource calculations in 2003 was
4.2 g/t.

(5) Yaou is located in French Guiana, South America, and Golden Star owns
approximately an 86.5% beneficial interest in the property. The estimated
cut-off grade utilized in mineral resource calculations in 2003 was 0.5 g/t.
The property is undeveloped and has been on a care and maintenance basis in
recent years.

(6) Dorlin is located in French Guiana, South America, and Golden Star owns
approximately an 86.5% beneficial interest in the property. The estimated
cut-off grade utilized in mineral resource calculations in 2003 was 0.5 g/t.
The property is undeveloped and has been on a care and maintenance basis in
recent years.

(7) Paul Isnard is located in French Guiana, South America, and Golden Star
owns approximately a 73% beneficial interest in the property. The estimated
cut-off grades utilized in mineral resource calculations in 2003 was 0.4 g/t.
The property is undeveloped and has been on a care and maintenance basis in
recent years.

EXPLORATION

We spent approximately $8.5 million in exploration activities during 2003
including $2.2 million at Wassa establishing mineral reserves in the existing
pits and in areas outside the pits, $3.1 million at the Prestea Underground,
including underground care and maintenance costs, $2.3 million on
exploration projects outside the Wassa and Bogoso/Prestea areas and $0.9
million developing new mineral reserves in the Plant North area. Exploration
spending during 2003 was less than expected due to a shortage of drill rigs in
Ghana. Recent increases in exploration activity in Ghana by us and our
competitors have adversely impacted drill rig availability and as a result some
of our planned work was delayed, including drilling at the Prestea Underground
which was delayed several months.

Most of our exploration efforts in 2003 were focused on Ghana, with Prestea
Underground, Prestea, Wassa and the Akropong Trend properties receiving the
most attention. Late in 2003 we began to explore the newly acquired Dunkwa
properties north of Bogoso. During 2004 we plan to spend approximately $21
million on gold exploration. Approximately $6 million will be used to evaluate
surface projects in and around Bogoso/Prestea including the Akropong Trend and
Dunkwa properties. Approximately $6.6 million is planned for the continued
exploration efforts at the Prestea Underground project, $2.5 million is
scheduled for the Wassa area, $2.4 million is expected to be spent on the
properties in Sierra Leone and Mali, both in West Africa, $1.7 million is
expected to be used to identify and evaluate projects in South America,
including some of Guyanors holdings, and $1.6 million is
planned for our
project generation program.

We entered, subject to definitive documentation and government approval, into a
joint venture agreement in late 2003 to invest up to $6 million over the next
four years in the Mano River project in Sierra Leone via an earn-in agreement
with a junior exploration company which now holds a group of gold exploration
properties in Sierra Leone. The initial $6 million, if fully funded (we can
terminate the joint venture agreement after spending
$1.0 million), would yield
a 51% interest in the joint venture. Further provisions of the joint venture
agreement provide the opportunity to acquire up to 85% of the joint venture by
continued long term funding. Spending was nil in 2003.

In late 2003 we entered into a second joint venture agreement, subject to
definitive documentation and government approval, agreeing to fund exploration
work on the Mininko gold property in Mali. Funding of $2.6 million would

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earn a 51% interest in the joint venture. We can terminate the joint venture
agreement after spending $0.4 million, of which $0.1 million was spent in 2003.
The joint venture agreement provides that we can earn up to an 82.5% interest
by continued funding of exploration and development.

We also provided $0.9 million of funding during 2003 to a junior exploration
company working in South America. The Guyanor properties were maintained on a
care and maintenance basis during 2003, but we expect to initiate new
exploration efforts there in 2004 focusing on further evaluation of our
existing properties and recently acquired properties.

We do not believe it to be cost effective at this point to add exploration
staff or to establish additional exploration offices. As such, we expect to
utilize funding of joint ventures for much of our exploration activities
outside the Bogoso/Prestea area where our current exploration staff resides.

EMPLOYEE RELATIONS

As of December 31, 2003 Golden
Star, including our majority owned subsidiaries
and joint ventures, had approximately 1,000 employees and contract employees, a
9% decrease from the approximately 1,100 people employed at the end of 2002.
The total includes ten employees and four part-time or contract employees at
our principal office in Littleton, Colorado.

CUSTOMERS

All of our gold is sold to a single European bank in accordance with a
long-term contract whereby cash payment for gold sold is received in our
account two to three working days after each shipment with title passing at the
point of shipment at the Accra International Airport. The global gold market is competitive with numerous banks and
refineries willing to buy gold on short notice, therefore we believe that the
loss of our current customer would not materially delay or disrupt revenues.

COMPETITION

We compete with major mining companies and other natural mineral resource
companies in the acquisition, exploration, financing and development of new
prospects. Many of these companies are larger and better capitalized than we
are. There is significant competition for the limited number of gold
acquisition and exploration opportunities. Our competitive position depends
upon our ability to successfully and economically explore, acquire and develop
new and existing mineral prospects. Factors that allow producers to remain
competitive in the market over the long term include the quality and size of
their orebodies, costs of operation, and the acquisition and retention of
qualified employees. We also compete with other mining companies for skilled
mining engineers, mine and processing plant operators and mechanics,
geologists, geophysicists and other technical personnel. This could result in
higher turnover and greater labor costs.

AVAILABLE INFORMATION

We make available, free of charge, on or through our Internet website our
annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably
practicable after we electronically file such material with, or furnish it to,
the SEC. Our Internet address is www.gsr.com. Our Internet website and
the information contained therein or connected thereto are not intended to be
incorporated into this Annual Report on Form 10-K.

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RISK FACTORS

You should consider carefully the following discussion of risks, in addition to
the other information contained in, or incorporated by reference into, this
report.

Financial Risks

Our business is substantially dependent on gold prices.

The price of our common shares, our financial results and our exploration,
development and mining activities have previously been, and would in the future
be, significantly adversely affected by fluctuations in the price of gold. The
price of gold is volatile and is affected by numerous factors beyond our
control such as the sale or purchase of gold by various central banks and
financial institutions, inflation or deflation, fluctuation in the value of the
US dollar and foreign currencies, global and regional demand, and the political
and economic conditions of major gold-producing countries throughout the world.
If gold prices were to decline significantly or for an extended period of time,
we might be unable to continue our operations, develop our properties or
fulfill our obligations under our agreements with our partners or under our
permits and licenses. As a result, we could lose our interest in, or be forced
to sell, some of our properties.

Furthermore, mineral reserve calculations and life-of-mine plans using
significantly lower gold prices could result in reduced estimates of mineral
reserves and non-reserve mineral resources and in material write-downs of our
investment in mining properties and increased amortization, reclamation and
closure charges.

We have recorded substantial losses in the past.

While we had earnings of $22.0 million and $ 4.9 million in 2003 and 2002,
respectively, we reported net losses of $20.6 million in 2001, $14.9 million in
2000, and $24.4 million in 1999. Numerous factors, including declining gold
prices, lower than expected ore grades or higher than expected operating costs,
and impairment write-offs of mine property and/or exploration property costs,
could cause us to become unprofitable in the future. Any future operating
losses could make financing our operations and our business strategy, or
raising additional capital, difficult or impossible and could materially and
adversely affect our operating results and financial condition.

Our obligations could strain our financial position and impede our business
strategy.

We have total debts and liabilities as of December 31, 2003 of $16.6 million,
including $0.8 million payable to financial institutions, $8.0 million of
current trade payables and accrued current liabilities and $7.7 million in
environmental rehabilitation liabilities. We expect that our indebtedness and
other liabilities will increase as a result of our corporate development
activities. This indebtedness could have important consequences, including the
following:



| |  | increasing our vulnerability to general adverse economic and industry conditions;
|- |  | ---------------------------------------------------------------------------------



| |  | limiting our ability to obtain additional financing to fund future working capital, capital
expenditures, operating and 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, operating and
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.
|- |  | --------------------------------------------------------------------------------------------------------------------------

Our estimates of mineral reserves and non-reserves could be inaccurate.

There are numerous uncertainties inherent in estimating proven and probable
mineral reserves and measured, indicated and inferred mineral resources,
including many factors beyond our control. The estimation of mineral reserves
and non-reserves is a subjective process, and the accuracy of any such
estimates are a function of the quantity and quality of available data and of
the assumptions made and judgments used in engineering and

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geological interpretation, which could prove to be unreliable. There can be no
assurance that these estimates will be accurate, that mineral reserves and
non-reserves figures will be accurate, or that mineral reserves or non-reserves
could be mined or processed profitably.

Fluctuation in gold prices, results of drilling, metallurgical testing and
production and the evaluation of mine plans subsequent to the date of any
estimate could require revision of the estimate. The volume and grade of
mineral reserves mined and processed and recovery rates might not be the same
as currently anticipated. Any material reductions in estimates of our mineral
reserves and non-reserves, or of our ability to extract these mineral reserves
and non-reserves, could have a material adverse effect on our results of
operations and financial condition.

We currently have only one source of operational cash flows.

While we have recently received significant infusions of cash from sales of
equity, our only internal source of funds is operational cash flows from
Bogoso/Prestea. We expect to commence production at Wassa in early 2004,
although there can be no assurance that our Wassa production goals will be
achieved. The anticipated continuing exploration and development of our
properties will require significant expenditures over the next several years.
We expect that these expenditures will exceed free cash flows generated by
Bogoso/Prestea during that period, and therefore we expect to use our excess
cash and in the future to require additional outside capital. Lower gold prices
during the five years prior to 2002 adversely affected our ability to obtain
financing, and recurring lower gold prices could have similar effects in the
future. We cannot assure you that in the future we will be able to obtain
adequate financing on acceptable terms. If we are unable to obtain additional
financing, we might need to delay or indefinitely postpone further exploration
and development of our properties, and as a result, we could lose our interest
in, or could be forced to sell, some of our properties.

Implementation of a hedging program might be unsuccessful and incur losses.

We continue to review whether or not, in light of the potential for gold prices
to fall, it would be appropriate to establish a hedging program. To date, we
have not decided to implement a hedging program, although we have purchased and
expect to continue to purchase puts from time to time, which give us the right
to sell gold in the future at a fixed price. The implementation of a hedging
program might not, however, protect adequately against declines in the price of
gold.

In addition, although a hedging program could protect us from a decline in the
price of gold, it might also prevent us from benefiting fully from price
increases. For example, as part of a hedging program, we could be obligated to
sell gold at a price lower than the then-current market price. Finally, if
unsuccessful, the costs of any hedging program could further deplete our
financial resources.

We are subject to fluctuations in currency exchange rates, which could
materially adversely affect our financial position.

Our revenues are in US dollars, and we maintain most of our working capital in
US dollars or US dollar-denominated securities. We convert funds to foreign
currencies as payment obligations become due. A significant portion of the
operating costs at Bogoso/Prestea is based on the Ghanaian currency, the Cedi.
We are required to convert into Cedis only 20% of the foreign exchange proceeds
that we receive from selling gold, but the Government of Ghana could require us
to convert a higher percentage of such sales proceeds into Cedis in the future.
In addition, we currently have future obligations that are payable in Euros,
and receivables collectible in Euros. We obtain construction and other services
and materials and supplies from providers in South Africa and other countries,
and the costs of those services could increase due to changes in the value of
the South African Rand or other currencies. Accordingly, we are subject to
fluctuations in the rates of currency exchange between the US dollar and these
currencies, and such fluctuations could materially affect our financial
position and results of operations. Consequently, construction, development and
other costs might be higher than we anticipate. We currently do not hedge
against currency exchange risks, although we might do so from time to time in
the future. There can be no assurance that implementation of a currency hedging
program would adequately protect us from the effects of fluctuation in currency
exchange rates.

There could be no opportunity to evaluate the merits or risks of any future
acquisition undertaken by us.

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As a key element of our growth strategy, we have stepped up the active pursuit
of acquisitions of producing, development and advanced stage exploration
properties and companies. We are actively investigating potential acquisition
and merger candidates. Risks related to acquiring and operating acquired
properties and companies could have a material adverse effect on our results of
operations and financial condition. In addition, to acquire properties and
companies, we would use our available cash, incur debt, issue our common shares
or other securities, or a combination of any one or more of these. This could
limit our flexibility to raise capital, to operate, explore and develop our
properties and to make additional acquisitions, and could further dilute and
decrease the trading price of our common shares. Acquisition transactions in
our business are often initiated and completed over a particularly short period
of time. There could be no opportunity for our shareholders to evaluate the
merits or risks of any future acquisition undertaken by us except as required
by applicable laws and regulations.

Risks inherent in acquisitions that we might undertake could adversely affect
our growth and financial condition.

We are actively pursuing the acquisition of producing, development and advanced
stage exploration properties and companies, and have recently completed the
acquisition of exploration and development properties in Ghana. From time to
time, we might acquire securities of or other interests in companies with
which we could enter into acquisitions or other transactions.
Acquisition transactions involve inherent risks, including:



| |  | accurately assessing the value, strengths, weaknesses, contingent and other
liabilities and potential profitability of acquisition candidates;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  | ability to achieve identified and anticipated operating and financial synergies;
|- |  | --------------------------------------------------------------------------------



| |  | unanticipated costs;
|- |  | --------------------



| |  | diversion of management attention from existing business;
|- |  | ---------------------------------------------------------



| |  | potential loss of our key employees or the key employees of any business we acquire;
|- |  | ------------------------------------------------------------------------------------



| |  | unanticipated changes in business, industry or general economic conditions that
affect the assumptions underlying the acquisition; and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  | decline in the value of acquired properties, companies or securities.
|- |  | ---------------------------------------------------------------------

Any one or more of these factors or other risks could cause us not to realize
the benefits anticipated to result from the acquisition of properties or
companies, and could have a material adverse effect on our ability to grow and
on our financial condition.

We are subject to litigation risks.

All industries, including the mining industry, are subject to legal claims,
with and without merit. We are involved in various routine legal proceedings,
which include labor matters such as unfair termination claims, supplier matters
and property issues incidental to our business. We believe it is unlikely that
the final outcome of these legal proceedings will have a material adverse
effect on our financial position or results of operation. However, defense and
settlement costs can be substantial, even with respect to claims that have no
merit. Due to the inherent uncertainty of the litigation process, there can be
no assurance that the resolution of any particular legal proceeding will not
have a material effect on our financial position or results of operations.

Operational Risks

The technology, capital costs and cost of production of refractory mineral
reserves and non-reserves at Bogoso/Prestea remain subject to a number of
uncertainties, including funding uncertainties.

Based upon the completion of our Bogoso sulfide project feasibility study in
2001 and its subsequent review by a qualified person under
Canadas National Instrument 43-101, the refractory material at Bogoso/Prestea has been included in our
proven and probable mineral reserves. While the sulfide project feasibility
study indicated that refractory mineral reserves can be profitably mined and
processed at gold prices at or above $275 per ounce, the capital cost to
upgrade the Bogoso processing plant with a bio-oxidation or BIOX circuit to
process refractory ore, together with related mining equipment, and facilities,
is significant. The capital cost of the sulfide project together with our
other Bogoso/Prestea expansion plans including capitalized exploration, mine
development, and expanding the mining fleet is expected to be approximately $70
million expected to be spent in 2004 and 2005. We cannot assure you that we will have
access to capital, whether from internal or external sources, in the required
amounts or on acceptable terms. While the processing technology envisioned in
the feasibility study has been successfully utilized at other mines, we cannot

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assure you, in spite of our testing,
engineering and analysis, that the
technology will perform successfully at commercial production levels on the
Bogoso/Prestea refractory sulfide ores. Therefore, we cannot assure you that
our production estimates can be achieved.

Completion of development of Wassa
and the projected expansion of Bogoso/Prestea is subject to a number of
uncertainties.

We have completed a feasibility study regarding the development of and
commencement of production at Wassa in Ghana using conventional CIL processing
techniques and have commenced development of the Wassa mine. We cannot assure
you that production will commence when we currently anticipate. We
have not yet completed technical studies for the projected $70
million expansion of Bogoso/Prestea. The management of mine
development projects and start-up of new operations are complex. We
do not have a history of managing simultaneously two significant
development projects and an ongoing operation. We cannot
assure you that these development projects will be completed at the cost and on the schedule
predicted, or that gold grades and recoveries,
production rates or costs anticipated will be
achieved. Any development of Wassa and expansion of Bogoso/Prestea are subject to all of the risks described in
this Form 10-K, including Risk Factors  Operational
Risks  The development and
operation of our mining projects involve numerous uncertainties.

Declining gold prices could reduce our estimates of mineral reserves and
non-reserves and could result in delays in development until we can make new
estimates and determine new potential economic development options under the
lower gold price assumptions.

In addition to adversely affecting our mineral reserve estimates and our
financial condition, declining gold prices could impact operations by requiring
a reassessment of the feasibility of all or a portion of a particular project.
A reassessment might be the result of a management decision or could be
required under financing arrangements related to the project. Even if the
project is ultimately determined to be economically viable, the need to conduct
a reassessment could cause substantial delays or might interrupt operations
until the reassessment can be completed.

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:



| |  | environmental hazards;
|- |  | ----------------------



| |  | discharge of pollutants or hazardous chemicals;
|- |  | -----------------------------------------------



| |  | industrial accidents;
|- |  | ---------------------



| |  | labor disputes;
|- |  | ---------------



| |  | supply and shipping problems and delays;
|- |  | ----------------------------------------



| |  | unusual or unexpected geological or operating conditions;
|- |  | ---------------------------------------------------------



| |  | slope failures;
|- |  | ---------------



| |  | cave-ins of underground workings;
|- |  | ---------------------------------



| |  | failure of pit walls or dams;
|- |  | -----------------------------



| |  | fire;
|- |  | -----



| |  | changes in the regulatory environment; and
|- |  | ------------------------------------------



| |  | natural phenomena such as inclement weather conditions, floods and earthquakes.
|- |  | -------------------------------------------------------------------------------

These or other occurrences could result in damage to, or destruction of,
mineral properties or production facilities, personal injury or death,
environmental damage, delays in mining, delayed production, monetary losses and
possible legal liability. We could incur liabilities as a result of pollution
and other casualties. Satisfying such liabilities could be very costly and
could have a material adverse effect on our financial position and results of
operations.

Our mining operations are subject to numerous environmental laws, regulations
and permitting requirements that can delay production and adversely affect
operating and development costs.

We cannot assure you that compliance with existing regulations governing the
discharge of materials into the environment, or otherwise relating to
environmental protection, in the jurisdictions where we have projects will not
have a material adverse effect on our exploration activities, results of
operations or competitive position. New or expanded regulations, if adopted,
could affect the exploration or development of our projects or otherwise have a
material adverse effect on our operations.

A significant portion of our recently acquired Dunkwa property and portions of
our Wassa development property as well as some of our exploration properties in
Ghana are located within forest reserve areas. Although Dunkwa and

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Wassa have been identified by the Government of Ghana as eligible for mining
permits subject to normal procedures and a site inspection, there can be no
assurance that permits for projects in forest reserve areas will be issued in a
timely fashion, or at all, or that such permits will not contain special
requirements with which it is burdensome or expensive to comply.

Our planned development of Wassa, relocation of the processing plant to Bondaye
near Prestea, conversion of the existing Bogoso/Prestea processing plant to
process refractory sulfides and other activities will require mining and other
permits from the Government of Ghana. There can be no assurance that these
permits will be issued on a timely basis or at all, or that permits issued will
not be subject to requirements or conditions with which it is burdensome or
expensive to comply. This could adversely affect our projected production
commencement dates, production amounts and costs.

As a result of the foregoing risks, project expenditures, production quantities
and rates and cash operating costs, among other things, could be materially and
adversely affected and could differ materially from anticipated expenditures,
production quantities and rates, and costs. In addition, estimated production
dates could be delayed materially. Any such events could materially and
adversely affect our business, financial condition, results of operations and
cash flows.

The development and operation of our mining projects involve numerous
uncertainties.

Mine development projects, including our ongoing development at Wassa and
anticipated expansion at Bogoso/Prestea, typically require a number of years
and significant expenditures during the development phase before production is
possible.

Development projects are subject to the completion of successful feasibility
studies and environmental assessments, issuance of necessary governmental
permits and receipt of adequate financing. The economic feasibility of
development projects is based on many factors such as:



| |  | estimation of mineral reserves and mineral resources;
|- |  | -----------------------------------------------------



| |  | anticipated metallurgical recovery rates;
|- |  | -----------------------------------------



| |  | environmental considerations and permitting;
|- |  | --------------------------------------------



| |  | future gold prices; and
|- |  | -----------------------



| |  | anticipated capital and operating costs of such projects.
|- |  | ---------------------------------------------------------

Our mine development projects could have limited relevant operating history
upon which to base estimates of future operating costs and capital
requirements. Estimates of proven and probable mineral reserves and operating
costs determined in feasibility studies are based on geologic and engineering
analyses and might not prove to be accurate.

Any of the following events, among others, could affect the profitability or
economic feasibility of a project:



| |  | 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;
|- |  | -----------------------------------



| |  | 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.
|- |  | --------------------------------------------------

Adverse effects on the operations or further development of a project could
also adversely affect our business, financial condition, results of operations
and cash flow. Because of these uncertainties, and others identified in Risk

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Factors, there can be no assurance that our production estimates at
Bogoso/Prestea and Wassa can or will be achieved.

We need to continually obtain additional mineral reserves for gold production.

Because mines have limited lives based on proven and probable mineral reserves,
we must continually replace and expand our mineral reserves as our mines
produce gold. At current average production rates, we estimate that
Bogoso/Prestea has over ten years of mine life, but our estimates might not be
correct and the mine life would be shortened if we expand production. Our
ability to maintain or increase our annual production of gold will be dependent
in significant part on our ability to bring new mines into production and to
expand or extend the life of existing mines.

Gold exploration is highly speculative, involves substantial expenditures, and
is frequently non-productive.

Gold exploration, including the exploration of the Prestea Underground,
involves a high degree of risk and exploration projects are frequently
unsuccessful. Few prospects that are explored end up being ultimately
developed into producing mines. To the extent that we continue to be involved
in gold exploration, the long-term success of our operations will be related to
the cost and success of our exploration programs. We cannot assure you that our
gold exploration efforts will be successful. The success of gold exploration is
determined in part on the following factors:



| |  | the identification of potential gold mineralization based on superficial analysis;
|- |  | ----------------------------------------------------------------------------------



| |  | the quality of our management and our geological and technical expertise; and
|- |  | -----------------------------------------------------------------------------



| |  | the capital available for exploration and development.
|- |  | ------------------------------------------------------

Substantial expenditures are required to determine if a project has
economically mineable mineralization. It could take several years to establish
proven and probable mineral reserves and to develop and construct mining and
processing facilities. As a result of these uncertainties, we cannot assure you
that current and future exploration programs will result in the discovery of
mineral reserves, the expansion of our existing mineral reserves and the
development of mines.

We face competition from other mining companies in connection with the
acquisition of properties.

We face strong competition from other mining companies in connection with the
acquisition of properties producing, or capable of producing, precious metals.
Many of these companies have greater financial resources, operational
experience and technical capabilities. As a result of this competition, we
might be unable to maintain or acquire attractive mining properties on terms we
consider acceptable or at all. Consequently, our revenues, operations and
financial condition could be materially adversely affected.

Title to our mineral properties could be challenged.

Our policy is to seek to confirm the validity of our rights to title to, or
contract rights with respect to, each mineral property in which we have a
material interest. However, we cannot guarantee that title to our properties
will not be challenged. Title insurance generally is not available, and our
ability to ensure that we have obtained secure claim to individual mineral
properties or mining concessions could be severely constrained. We might not
have conducted surveys of all of the properties in which we hold direct or
indirect interests and, therefore, their precise area and location could be in
doubt. Accordingly, our mineral properties could be subject to prior
unregistered agreements, transfers or claims, and title could be affected by,
among other things, undetected defects. In addition, we might be unable to
operate our properties as permitted or to enforce our rights with respect to
our properties.

We depend on the services of key executives.

We are dependent on the services of key executives including our President and
Chief Executive Officer and a small number of highly skilled and experienced
executives and personnel. Due to the relatively small size of our company, the
loss of these persons or our inability to attract and retain additional highly
skilled employees could adversely affect the exploration and development of our
properties, which could have a material adverse effect on our business and
future operations.

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The period of weak gold prices prior to 2002 resulted in the depletion in the
number of trained and experienced professionals and managers in our industry.
Higher gold prices have resulted in an increased demand for these people, and
it could therefore be more difficult to attract or retain such experienced
professionals and managers without significantly increasing the cost to Golden
Star.

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; and
|- |  | ------------------------------------------



| |  | natural phenomena such as inclement weather conditions, floods and earthquakes.
|- |  | -------------------------------------------------------------------------------

Such occurrences could result in:



| |  | damage to mineral properties or production facilities;
|- |  | ------------------------------------------------------



| |  | personal injury or death;
|- |  | -------------------------



| |  | environmental damage to our properties or the properties of others;
|- |  | -------------------------------------------------------------------



| |  | delays in mining;
|- |  | -----------------



| |  | monetary losses; and
|- |  | --------------------



| |  | possible legal liability.
|- |  | -------------------------

Although we maintain insurance in amounts that we believe to be reasonable, our
insurance might not cover all the potential risks associated with our business.
We might also be unable to maintain insurance to cover these risks at
economically feasible premiums. Insurance coverage might not continue to be
available or might not be adequate to cover any resulting liability. Moreover,
insurance against risks such as environmental pollution or other hazards as a
result of exploration and production is not generally available to us or to
other companies in the mining industry on acceptable terms. We might also
become subject to liability for pollution or other hazards which we cannot
insure against or which we might elect not to insure against because of premium
costs or other reasons. Losses from these events might cause us to incur
significant costs that could have a material adverse effect upon our financial
performance and results of operations.

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 a holding company that conducts operations through foreign (principally
African) subsidiaries and joint ventures, and substantially all of our assets
consist of equity in these entities. Accordingly, any limitation on the
transfer of cash or other assets between the parent corporation and these
entities, or among these entities, could restrict our ability to fund our
operations efficiently. Any such limitations, or the perception that such
limitations might exist now or in the future, could have an adverse impact on
our valuation and stock price.

We are subject to changes in the regulatory environment where we operate.

Our mining operations and exploration activities are subject to extensive
regulation governing various matters, including:




 
 licensing  
 
 production  
 
 taxes  
 
 water disposal  
 
 toxic substances



 
 development and permitting  
 
 exports  
 
 imports  
 
 labor standards  
 
 occupational health and safety




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
 
 mine safety



 
 environmental protections




Compliance with these regulations increases the costs of the following:




 
 planning  
 
 designing  
 
 drilling  
 
 operating



 
 developing  
 
 constructing  
 
 closure and reclamation




We believe that we are in substantial compliance with current laws and
regulations in Ghana and elsewhere. However, these laws and regulations are
subject to frequent change and reinterpretation. Due to the substantial
increase in mining development during 2003 in Ghana, the Government of Ghana
has been reviewing the adequacy of reclamation bonds and guarantees throughout
the country and in some cases has requested higher levels of bonding than
previously had been required. There can be no assurance that our
bonds would not be increased. Amendments to current laws and regulations
governing operations and activities of mining companies or more stringent
implementation or interpretation of these laws and regulations could have a
material adverse impact on us, cause a reduction in levels of production and
delay or prevent the development or expansion of our properties in Ghana.

Government regulations limit the proceeds from gold sales that could be
withdrawn from Ghana. Changes in regulations that increase these restrictions
could have a material adverse impact on us, as Bogoso/Prestea is currently our
only source of internally generated operating cash flows.

The Government of Ghana has the right to participate in the ownership and
control of certain subsidiaries.

The Government of Ghana currently has a 10% carried interest in our
subsidiaries that own our Bogoso/Prestea mine, Wassa development property and
Prestea Underground property. The Government of Ghana also has: (a) the right
to acquire up to an additional 20% equity interest in each of these
subsidiaries for a price to be determined by agreement or arbitration; (b) the
right to acquire a special share or golden share in such subsidiaries at any
time for no consideration or such consideration as the Government of Ghana and
such subsidiaries might agree; and (c) a pre-emptive right to purchase all gold
and other minerals produced by such subsidiaries. We cannot assure you that
the Government of Ghana would not seek to exercise one or more of
these rights,
which could reduce our equity interest. A reduction in our equity interest
could reduce our income or cash flows from Bogoso/Prestea and/or reduce our
anticipated income or cash flows from Wassa, reducing amounts available to us
for reinvestment and adversely affecting our ability to take certain actions.

We are subject to risks relating to exploration, development and operations in
foreign countries.

Certain laws, regulations and statutory provisions in certain countries in
which we have mineral rights could, as they are currently written, have a
material negative impact on our ability to develop or operate a commercial
mine. For countries where we have exploration or development stage projects, we
intend to negotiate mineral agreements with the governments of these countries
and seek variances or otherwise be exempted from the provisions of these laws,
regulations and/or statutory provisions. We cannot assure you, however, that we
will be successful in obtaining mineral agreements or variances or exemptions
on commercially acceptable terms.

Our assets and operations are affected by various political and economic
uncertainties, including:



| |  | the risks of war, civil unrest, 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.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Illegal mining occurs on our properties, is difficult to control, can disrupt
our business and can expose us to liability.

Artisanal miners illegally work on our properties from time to time, despite
the fact that we have hired security personnel to protect our properties. The
presence of illegal miners could lead to project delays and disputes regarding
the development or operation of commercial gold deposits. The work performed by
the illegal miners could cause environmental damage or other damage to our
properties, or personal injury or death for which we could potentially be held
responsible. Extensive illegal mining could result in surface depletion of
mineral deposits, potentially making the future mining of such deposits
uneconomic.

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.

Our business, mining operations and exploration and development activities are
subject to extensive Canadian, US, Ghanaian and other foreign, federal, state,
provincial, territorial and local laws and regulations governing exploration,
development, production, exports, taxes, labor standards, waste disposal,
protection of the environment, reclamation, historic and cultural resource
preservation, mine safety and occupational health, toxic substances, reporting
and other matters, as well as accounting standards. Compliance with these laws,
regulations and standards or the imposition of new such requirements could
adversely affect operating and development costs, the timing of operations, the
ability to operate and financial results.

Market Risks

The market price of our common shares could experience volatility and could
decline significantly.

Our common shares are listed on the American Stock Exchange and the Toronto
Stock Exchange. Securities of small-cap companies have experienced substantial
volatility in the past, often based on factors unrelated to the financial
performance or prospects of the companies involved. These factors include
macroeconomic developments in North America and globally and market perceptions
of the attractiveness of particular industries. Our share price is also likely
to be significantly affected by short-term changes in gold prices or in our
financial condition or results of operations as reflected in our quarterly
earnings reports. Other factors unrelated to our performance that could have an
effect on the price of our common shares include the following:



| |  | 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 relatively small size of the public float will 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.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As a result of any of these factors, the market price of our common shares at
any given point in time might not accurately reflect our long-term value.
Securities class action litigation often has been brought against companies

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following periods of volatility in the market price of their securities. We
could in the future be the target of similar litigation. Securities litigation
could result in substantial costs and damages and divert managements attention
and resources.

You could have difficulty or be unable to enforce certain civil liabilities on
us, certain of our directors and our experts.

We are a Canadian corporation. Substantially all of our assets are located
outside of Canada and the US, and our head office is located in the US.
Additionally, a number of our directors and the experts named in this Form 10-K
are residents of Canada. Although we have appointed Koffman Kalef, Suite 1900,
885 West Georgia Street, Vancouver, British Columbia and Field LLP, 1900, 350 -
7th Avenue S.W., Calgary, Alberta as our agents for service of process in the
Provinces of British Columbia and Alberta respectively, it might not be
possible for investors to collect judgments obtained in Canadian courts
predicated on the civil liability provisions of securities legislation. It
could also be difficult for you to effect service of process in connection with
any action brought in the US upon such directors and experts. Execution by US
courts of any judgment obtained against us or, any of the directors, executive
officers or experts named in this Form 10-K in US courts would be limited to
the assets of Golden Star Resources Ltd. or the assets of such persons or
corporations, as the case might be, in the US. The enforceability in Canada of
US judgments or liabilities in original actions in Canadian courts predicated
solely upon the civil liability provisions of the federal securities laws of
the US is doubtful.

There may be certain tax risks associated with investments in our company.

Potential investors that are US taxpayers should consider that we could be
considered to be a passive foreign investment company (PFIC) for federal
income tax purposes. Although we believe that we currently are not a PFIC and
do not expect to become a PFIC in the near future, the tests for determining
PFIC status are dependent upon a number of factors, some of which are beyond
our control, and we can not assure you that we would not become a
PFIC in the
future. If we were deemed to be a PFIC, then a US taxpayer who disposes or is
deemed to dispose of our shares at a gain, or who received a so-called
excess distribution on the shares, generally would be required to treat such
gain or excess distribution as ordinary income and pay an interest charge on a
portion of the gain or distribution unless the taxpayer makes a timely
qualified electing fund election (a QEF election). A US taxpayer who makes a
QEF election generally must report on a current basis his or her share of any
of our ordinary earnings and net capital gain for any taxable year in which we
are a PFIC, whether or not we distribute those earnings. Special estate tax
rules could be applicable to our shares if we are classified as a PFIC for
income tax purposes.

We do not anticipate paying dividends in the foreseeable future.

We anticipate that we will retain all future earnings and other cash resources
for the future operation and development of our business. We do not intend to
declare or pay any cash dividends in the foreseeable future. Payment of any
future dividends will be at the discretion of our board of directors after
taking into account many factors, including our operating results, financial
condition, and current and anticipated cash needs.

Future sales of our common shares by our existing shareholders could decrease
the trading price of the common shares.

Sales of a large number of our common shares in the public markets, or the
potential for such sales, could decrease the trading price of our common shares
and could impair our ability to raise capital through future sales of our
common shares. We completed sales of units, comprised of common shares and
warrants, in January, July and December 2002 and February 2003 and sales of
common shares in August, October, and December 2003, all but the
December 2003 offering at prices
significantly less than the current market price of our common shares. Accordingly, a
significant number of our shareholders have an investment profit in our
securities that they could seek to liquidate. Substantially all of our common
shares not held by affiliates can be resold without material restriction in the
US and Canada.

The existence of outstanding rights to purchase common shares could impair our
ability to raise capital.

As of December 31, 2003
approximately 22.6 million common shares are issuable
on exercise of warrants, options or other rights to purchase common shares at
prices ranging from Cdn$1.02 to Cdn$9.07. During the life of the warrants,
options and other rights, the holders are given an opportunity to profit from a
rise in the market price of our common shares with a resulting dilution in the
interest of the other shareholders. Our ability to obtain additional financing
during the period such rights are outstanding could be adversely affected, and
the existence of the rights could have an adverse effect on the price of our
common shares. The holders of the warrants, options and other
rights can be expected to exercise them at a time when we would, in all
likelihood, be able to obtain any needed capital by new offering of securities
on terms more favorable than those provided by the outstanding rights.

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ITEM 2. DESCRIPTION OF PROPERTIES

MAP OF AFRICAN PROPERTIES

The map below shows the locations of Bogoso, Prestea, Wassa and the Prestea
Underground in Ghana, and various exploration properties. These properties are
described in further detail below.

MAP  AFRICA
Map of GOLDEN STAR PROPERTIES IN AFRICA, showing specific project locations in Ghana.

PROPERTY STATUS TABLE

The chart below summarizes information regarding certain of our properties,
which are described in further detail afterwards:

Expiration
    
    
    
    2003Property
    
    Type of Interest
    
    Date
    
    Property size
    
    Status
    
    CommentsBogoso
(Ghana)
    
    Government granted
mining leases held
by a 90% owned
subsidiary
    
    8/21/17
8/16/18
    
    95 km2
    
    Active
    
    Mining stagePrestea
(Ghana)
    
    Government granted
mining lease held
by a 90% owned
subsidiary
    
    7/6/31
    
    129 km2
    
    Active
    
    Mining stageWassa
(Ghana)
    
    Government granted
mining lease held
by a 90% owned
subsidiary
    
    9/16/22
    
    102
km2
another
172 km2
applied for
    
    Active
    
    Development stagePrestea
Underground
(Ghana)
    
    Government granted
mining lease, 59%(1) 
beneficial
interest
    
    7/6/31
    
    129 km2
Lies directly below
Prestea surface
lease
    
    Active
    
    Exploration stageDunkwaProperties
(Ghana)
    
    Various
    
    Various
    
    125 km2
    
    Active
    
    Exploration stageAkropongTrend
(Ghana)
    
    Option agreements
    
    Various
    
    697 km2
    
    Active
    
    Exploration stageObuom
(Ghana)
    
    52% interest in
joint venture
    
    Awaiting renewal
    
    44
km2
another
101 km2
applied for
    
    Inactive
    
    Exploration stageOther Africa
    
    Various
    
    Various
    

approximately
750 km2
    
    Active
    
    Exploration stageSaramacca
Properties
(Suriname)
    
    Government granted
right of
exploration and
option agreements
    
    Renewals Pending
    
    871 km2
    
    Active
    
    Exploration stageBon Espoir
(French Guiana)
    
    PER (Permit
Exclusif de
Recherches). 73%
ownership
    
    10/31/06
    
    466 km2
    
    Active
    
    Exploration stageDorlin(2)
(French Guiana)
    
    PER (Permit
Exclusif de
Recherches). 86.5%
including direct
and indirect
ownership
    
    1/31/06
    
    84 km2
    
    Inactive
    
    Exploration stageYaou(2)
(French Guiana)
    
    PER (Permit
Exclusif de
Recherches). 86.5%
including direct
and indirect
ownership
    
    1/31/06
    
    52 km2
    
    Inactive
    
    Exploration stage


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Expiration
    
    
    
    2003Property
    
    Type of Interest
    
    Date
    
    Property size
    
    Status
    
    CommentsPaul Isnard
(French Guiana)
    
    8 Concessions. 73%
ownership
    
    12/31/18
    
    150 km2
    
    Inactive
    
    Exploration stagePER (Permit
Exclusif de
Recherches). 73%
ownership
    
    12/1/02
Awaiting renewal
    
    283 km2
    
    Inactive
    
    Exploration stage


(1) The Prestea Underground Joint Venture, which owns Prestea Underground, is
owned approximately 66% by BGL, our 90% owned subsidiary.

(2) We own a 50% interest in Yaou and Dorlin and our 73% owned subsidiary,
Guyanor owns a 50% interest.

MINING IN GHANA

Ghanaian Ownership and Special Rights

Ghana is situated on the West Coast of Africa, approximately 600 kilometers
north of the equator on the Gulf of Guinea. Accra, the capital city of Ghana,
is located on the Prime Meridian. After a period as a British colony, Ghana
achieved independence in 1957 and it is now a republic with a democratically
elected government. Ghana has a population of approximately 20 million people.
English is the official and commercial language. The total land area of the
country is approximately 238,000 square kilometers and the topography is
relatively flat. Ghana has a tropical climate with two rainy seasons and two
dry seasons, each year.

Rights to explore and develop a mine are administered through the Minerals
Commission, a governmental organization designed to promote and control the
development of Ghanas mineral wealth. A company or individual can apply to the
Minerals Commission for a renewable exploration concession granting exclusive
rights to explore for a particular mineral in a selected area for a period of
two years. When exploration has successfully delineated a mineable mineral
reserve, an application is made to the Minerals Commission for conversion to a
mining lease, granting a company the right to produce a specific product from
the concession area for a period of normally 20 to 30 years. Production must
begin within two years of the date of granting a mining lease.

The Government of Ghana has a 10% carried interest in BGL and WGL, and is
entitled to acquire up to an additional 20% interest in each of BGL and WGL.
The carried interest entitles the Government of Ghana to a pro-rata share of
future dividends (none have been declared to date), if any, from BGL and WGL
once all capital is repaid, and the Government of Ghana has no obligation to
contribute development or operating expenses. BGL and WGL owe $61.1 million
and $50.3 million, respectively, to Golden Star as of December 31, 2003 for
past advances and debts and such amounts would be repaid to us before payment
of any dividends. If the Government of Ghana wishes to exercise its right to
acquire an additional 20%, it must first give reasonable notice, and pay a
mutually agreed price. If there is no agreement, the purchase price
would be
the fair market value of such interest at such time as determined by
arbitration conducted by the International Centre for the Settlement of
Investment Disputes. The Government of Ghana could also acquire further
interests in BGL and/or WGL on terms mutually acceptable to the Government and
BGL or WGL. To date the Government has indicated no intent to obtain
additional ownership in any of our properties.

The Government of Ghana is entitled to acquire a special or golden share in BGL
or WGL or any mining company at any time for no consideration or such
consideration as the Government of Ghana and BGL or WGL might agree. The
special share would constitute a separate class of shares with such rights as
the Government of Ghana and BGL or WGL might agree. In the absence of such
agreement, the special share would have the following rights:



| |  | 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;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------

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| |  | 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; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the holder of the special share would be entitled to the payment of
a nominal sum of 1,000 Ghanaian Cedis in a winding-up or liquidation
of the company in priority to any payment to other members and could
require the company to redeem the special share at any time for a
nominal sum of 1,000 Cedis.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

BGL and WGL have not issued nor to date been requested to issue any such
special share to the Government of Ghana.

The Government of Ghana has a pre-emptive right to purchase all gold and other
minerals produced by BGL and WGL. The purchase price would be such price as
the Government of Ghana and BGL and WGL might agree on, or the price
established by any gold hedging arrangement between BGL or WGL and any third
party approved by the Government, or the publicly quoted market price
prevailing for the minerals or products as delivered at the mine or plant where
the right of preemption was exercised. The Government of Ghana has agreed to
take no preemptive action pursuant to its right to purchase such gold or other
minerals so long as BGL and WGL sell gold in accordance with certain
procedures for selling gold approved by the Bank of Ghana.

Ghanaian Royalty Requirements

Under the laws of Ghana, a holder of a mining lease is required to pay
quarterly a royalty of not less than 3% per annum and not more than 12% per
annum of the total revenues earned from the lease area. The Government of
Ghana determines the royalty percentage each year based on the ratio that the
operating margin bears to the value of gold produced from a mining lease in
that year. Based on the Mineral Royalty Regulation of 1987, the royalty is 3%
when the operating ratio is 30% or less, the royalty increases 0.225% for each
1% increase in operating ratio until the royalty reaches a maximum of 12% at an
operating ratio of 70%. In 2003, 2002 and 2001 the royalty rate for BGL was 3%
of revenues, and the amounts paid were $1.9 million, $1.2 million and $0.7
million, respectively. The royalty payments from Golden Star have not exceeded
3% per annum in any year.

Ghanaian Environmental Regulations

BGL and WGL are in substantial compliance with the environmental requirements
imposed by Ghanaian laws and guidelines and applicable guidelines and standards
published by the World Bank. BGL completed significant work during 1999 to
identify the outstanding reclamation liabilities for Bogoso/Prestea and to
prepare a rehabilitation work plan. Significant work has been performed during
2001, 2002 and 2003 to advance this plan and to reduce the outstanding
reclamation liability. Expenditures for ongoing rehabilitation work, including
the capping of sulfide material, backfilling of worked out pits, and the
contouring and re-vegetation of waste dumps, were approximately $0.8 million,
$0.5 million, and $0.2 million for 2003, 2002, and 2001, respectively. As at
December 31, 2003 BGL had $3.3 million of restricted cash set aside for
environmental reclamation of the Bogoso Mine.

A reclamation liability of $2.3 million was recognized upon the acquisition of
the Wassa property in September 2002, this amount representing the discounted
estimated cost of reclamation as of the date of the acquisition.

Community Development Programs

In mid-2001 we initiated an Alternative Livelihood and Sustainable Development
Program in the Bogoso/Prestea area. In 2004 we plan to expand the program to
Wassa. The goals of the Program are to assist the communities in the
vicinity of our mining operations to create alternative employment
opportunities, promote growth of sustainable economic development and to reduce
the communitys dependence on mining.

Given the importance of agriculture in the local economy, much of our efforts
have been focused on agricultural opportunities. A demonstration farm has been
established at one of the backfilled pits at Prestea where we now have a fish
farm, a mulberry plantation and a silk production and processing facility. We
plan to add demonstration plots of citrus crops and ginger in 2004. Studied
have shown that Chinese silk production has fallen in recent years, providing an
opportunity for new supply centers, and the climate of western Ghana appears to
be well suited to sericulture.

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The farm facility is used for training and assistance to the 150 local farmers
who have signed up to participate in the Program. In addition, the farm is
providing participants with seed stock and fish and silk worms for use on their
own farms.

Working with local Ghanaian government agencies, we have encouraged formation
of agricultural cooperatives, the first of which has recently obtained a plot
of ground in the Prestea area to initiate a silk operation. We have also made
contact with various non-governmental developmental groups in hopes of
facilitating availability of micro-project financing for the Bogoso/Prestea
communities.

During 2004 we are planning to provide two new oil-palm/palm kernel processing
facilities in the local area to more efficiently process the palm oil
production already existing in the area.

In addition to the alternative livelihood projects, we are involved in the
ongoing funding of several community assistance projects. We have provided
funding and assistance for school improvements and equipment, libraries, a day
care center, community centers, potable water systems, sports facilities and
toilet facilities.

OPERATING PROPERTIES

The Bogoso/Prestea Operation

Overview of the Bogoso/Prestea Operation

Bogoso/Prestea consists of a gold mining/processing operation located along the
Ashanti Trend in western Ghana, approximately 35 kilometers northwest of the
town of Tarkwa from which it can be reached by paved roads. The mining areas
at Prestea are linked to the Bogoso processing plant by paved and gravel
haul-roads located on our properties. Equipment and facilities at
Bogoso/Prestea include several open pit mines, a nominal 6,000 tonne per day
CIL gold processing plant and a fleet of haul trucks, loaders and mining
support equipment. In addition, there are numerous ancillary support facilities
such as power and water supply equipment, haul roads, housing for management
and technical staff, a medical clinic, tailings storage facility, waste dumps,
warehouse, maintenance shops, offices and administrative facilities. The
Bogoso/Prestea properties cover 224 square kilometers and mining rights are
granted through several mining leases, which expire in or after August 2017.

Commercial mining at Bogoso dates back to the early years of the 20th century.
During its 20-year period of operations from 1935 to 1955, production totaled
over 900,000 ounces of gold at an average recovered grade of 3.73 g/t.
Underground mining has been conducted at Prestea for more than 130 years. From
1873 to 1965, the current Prestea property was comprised of a number of
different licenses operated by independent mining companies, which, in 1965,
were amalgamated by the Government of Ghana into Prestea Goldfields Limited,
under the aegis of the State Gold Mining Corporation.

BGL started surface mining operations on the Prestea concession in September
2001, with the first ore being processed at the Bogoso processing plant in
October 2001. Total gold production from the Prestea area since recorded
mining commenced in the 1870s is reported by the Ghana Chamber of Mines to be
in excess of nine million ounces, making it the second largest historical gold
producing area in Ghana, after the Obuasi mine.

The Bogoso property was acquired for a
total cost of $18.9 million in a series
of transactions beginning in 1999 with the final contingent payments being made
in February 2003. In 2001, we acquired a 90% interest in the adjoining Prestea
property for total consideration of approximately $8.0 million from Barnato
Exploration Limited (Barnex) and Prestea Gold Resources Limited. Barnex
retained a royalty interest in Prestea, which varied, according to a gold price
formula, from a minimum of $6.00 per ounce at gold prices less than $260 per
ounce to a maximum of $16.80 per ounce at gold prices at or above $340 per
ounce. We bought back all of Barnex royalty rights for approximately $12.0
million in common shares in November 2003.

Bogoso/Prestea Expansion Project

The known mineral reserves at Bogoso/Prestea can be grouped into three general
categories based on the metallurgy of the ore. They are referred to as: (a)
oxide ore which is non-refractory and has been successfully processed in the
existing Bogoso CIL and gravity circuits; (b) non-refractory transition and
sulfide ores which we expect to

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successfully process at the Bogoso processing plant following the reactivation
of the processing plants flotation circuit in early 2004; and (c) refractory
transition and sulfide ores which would require some form of oxidation process
prior to gold recovery. The oxide ores are found at surface, down to the
general level of the water table, while sulfide ores are located at depth.
Between these two distinct ore types lies the transition ore, of varying
thickness, a zone of partially oxidized ore. Our Bogoso/Prestea reserves at the end of 2003
are comprised of approximately 13% oxide ore, 15% transition ores,
and 72%
sulfide ores on a gold content basis.

The existing Bogoso processing plant is configured to process primarily oxide
ores. In recent years additions to the processing plants equipment made it
possible to treat certain transition ores but not all of the transition ores
known to exist at Bogoso/Prestea. Gold recovery from oxide ores is typically
around 80% to 85% but when processing transition ores the recovery rate drops
substantially below this. In 2001 when processing large tonnages of transition
ores from the old Bogoso pits, the gold recovery rate dropped below 50%.

To facilitate efficient processing of the sulfide and transition ores and to
expand the productive capacity of Bogoso/Prestea, we plan to make major
modification to the existing Bogoso processing plant during 2004 and 2005 and
at the same time add a second processing plant on the Prestea property, which
will be designed to process oxide ores and other non-refractory ores.

In July 2003 we purchased a used 4,500 tonne per day conventional CIL
processing plant, associated stores inventory, and a six-megawatt powerhouse
from an inactive mine site in Ghana. This facility was dismantled in the third
and fourth quarters of the year and will be moved to Prestea in early 2004.
During 2004 we plan to reassemble this processing plant at a site approximately
5 kilometers south of the town of Prestea. With the appropriate modifications
it should be able to process oxide ores and some of the transition ores found
at Bogoso/Prestea. This new processing plant is now referred to as the Bondaye
processing plant. We expect the Bondaye processing plant to be operational in
the fourth quarter of 2004 if the required approvals and permits are obtained
as expected.

Also during 2004 and into mid 2005, we plan to modify the existing Bogoso
processing plant, via the addition of a bio-oxidation (BIOX) circuit, to
process sulfide ore. The modifications would be done in a manner that will
allow the Bogoso processing plant to continue processing oxide and transition
ores during 2004 until the BIOX modifications are completed. We expect the
Bogoso processing plant upgrades to be competed in 2005 and at that point begin
to process only refractory transition and sulfide ores. Once the Bondaye
processing plant construction and the Bogoso processing plant upgrades are
completed, we anticipate being able to process all of the known ore types
existing at Bogoso/Prestea and in the surrounding area.

We currently estimate the cost to
move, reassemble and modify the Bondaye processing plant,
to add the BIOX upgrade to the existing Bogoso processing plant, and to expand the mining
fleet at Bogoso/Prestea as required to feed the expanded total complex, total
about $70 million, not including the $4.3 million initial purchase cost of the
Bondaye processing plant.

The BIOX process is designed to treat refractory gold ores prior to
cyanidization by utilizing naturally occurring bacteria capable of oxidizing
gold-bearing sulfide concentrates under controlled conditions. Prior to the
BIOX process, the ore will be crushed and ground utilizing existing equipment at
the Bogoso processing plant. A combination of flotation and gravity circuits,
including circuits already at the Bogoso processing plant, will then separate a
sulfide concentrate from the ore slurry with the gold locked in the matrix of
the sulfide minerals. The bacteria used in the BIOX process oxidize the
sulfide minerals in the concentrate thereby liberating the gold particles which
are then recovered by cyanidation. The bacteria used in the BIOX process are
non-pathogenic and pose no health risks.

The BIOX process has been successfully employed since the mid 1980s with five
operations now using the process worldwide including Ashanti Goldfields Company
Limiteds Obuasi gold mine located 100 kilometers north of Bogoso. The Obuasi
mine is currently treating approximately 1,000 tonnes of sulfide concentrates
per day with gold recoveries averaging 92%. Two new BIOX processing plants are
currently in construction, one in Australia and one in Kazakhstan. While all
plants constructed to date have reached design capacity in less than three
months after start-up, there is no assurance that we will achieve
similar results.

BIOX bench and pilot scale tests on Bogoso sulfide ores have consistently
yielded gold recoveries in excess of 86%. This compares to 55% achievable by
direct cyanide treatment. The cost of BIOX treatment is estimated to be

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approximately $10.40 per tonne of ore processed. This is higher than the
current operating costs for oxide ores at Bogoso, but is expected to be cost
effective when compared to other options for treating refractory sulfide ores.

The Bogoso/Prestea expansion plans outlined above are subject to the completion
of technical studies now underway, subsequent board approval, obtaining all
requisite environmental permits and successful resolution of potential
technical difficulties that could be encountered during the construction and
start-up of the new facilities.

Geology at Bogoso/Prestea

The Bogoso/Prestea property lies within the Eburnean Tectonic Province in the
West African Precambrian Shield. Prestea covers a 22 kilometers stretch of the
Ashanti Trend located immediately south of Bogoso. The area is dominated by a
major northeast-southwest trending structural fault zone referred to as the
Ashanti Trend, which hosts the Prestea, Bogoso, Obuasi and Konongo gold
deposits, among others. Parallel to the Ashanti Trend is the Akropong Trend,
which hosts the Ayanfuri deposit. The Akropong Trend is about 15 kilometers
west of the Ashanti Trend in the Bogoso region, and gradually converges with
it, converging at Obuasi and forming the basis for the world class Obuasi
deposit, owned and operated by Ashanti Goldfields Company Limited.

Operation Results for Bogoso/Prestea

Bogoso/Prestea Operating Results
    
    2003
    
    2002
    
    2001Ore milled (t)
    
    
    2,093,600
    
    
    
    2,271,747
    
    
    
    2,098,165Rate (t/day)
    
    
    5,736
    
    
    
    6,223
    
    
    
    5,748Grade milled (g/t)
    
    
    3.29
    
    
    
    2.31
    
    
    
    2.69Recovery %
    
    
    81.2
    
    
    
    74.4
    
    
    
    49.6Total
gold production (oz)(1)
    
    
    174,315
    
    
    
    124,400
    
    
    
    87,936Cash operating cost ($/oz)
    
    
    166
    
    
    
    193
    
    
    
    263Total cash cost ($/oz)
    
    
    184
    
    
    
    215
    
    
    
    271


(1) Gold production 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.

Mineral Reserves and Mineral Resources at Bogoso/Prestea

Bogoso/Prestea has proven and probable mineral reserves of 26.4 million tonnes
with a grade of 3.25 g/t containing approximately 2.7 million ounces of gold
before a reduction for the 10% minority interest. Total measured and indicated
mineral resources total 26.8 million tonnes with a grade of 2.50 g/t before a
reduction for the 10% minority interest. The current proven and probable
mineral reserves should support mining operations for approximately ten years,
although we expect the mine life to be extended as we continue to evaluate
mineral resources through ongoing exploration efforts. See the Proven and
Probable Mineral Reserves table and the Non-Reserves  Measured and Indicated
Mineral Resource table in Item 1 of this 10-K.

Exploration Activities at Bogoso/Prestea

Exploration activities at Prestea during 2003 successfully delineated
additional mineral resources and mineralization at the southern end of the
Prestea property. Following up on gold in soil anomalies defined in 2002, four
meter deep auger drilling was conducted during the first half of 2003. The
four meter auger program helped to define the traces of gold in the soil and
confirmed the existence of mineralized structures below one meter. Areas where
deep auger drilling confirmed subsurface gold mineralization was tested further
with drilling. Drilling programs have involved two drill rigs, one stepping
out on 100 meter spacing and the second drill rig infilling on 50 meter
spacing. The drilling program thus far has tested two sub-parallel zones along
a combined strike length of seven kilometers. During 2003 we spent
$1.6 million on exploration and completed approximately 42,000 meters of drilling.
During 2004 we plan to spend approximately $4.3 million on approximately 118,000
meters of drilling at Bogoso/Prestea.

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DEVELOPMENT STAGE PROJECT

The Wassa Development Project

Overview of the Wassa Project

In September 2002 we acquired a 90% interest in the Wassa gold property located
35 kilometers east of our Bogoso/Prestea gold operations in Ghana and
immediately began a drilling program and engineering studies designed to
evaluate the economic viability of the property as a conventional 10,000 tonnes
per day CIL gold operation. Based on initial drill results and engineering
data, a feasibility study was begun shortly after acquisition and was completed
in July 2003. In July 2003 we announced that the project would proceed and
that construction of the CIL processing plant would commence immediately. The
feasibility study was prepared by our staff supported by a team of independent
consultants led by Metallurgical Design and Management (Pty) Ltd. (MDM) of
South Africa. In July 2003 we also awarded a fixed-price contract to MDM to
construct the new CIL plant and associated processing facilities.

Wassa is owned by WGL, one of our 90% owned Ghanaian subsidiaries. As with
Bogoso/Prestea, the Government of Ghana holds a 10% carried interest and is not
required to contribute any development capital. Any future dividends (none
have been declared to date) would be split 90% and 10% between us and the
Government of Ghana, respectively. Dividend payments are not anticipated until
WGL has repaid all capital.

The first phase of the Wassa development is now nearing completion. As of
December 31, 2003 development costs totaled $27.4 million including the
feasibility study cost, equipment and construction cost. In October 2003 we
paid an additional $11.5 million to buy out all the debt and royalty
obligations due the sellers. Phase two development, which is expected to cost
$17.3 million, would consist of the purchase of a mining fleet and the
commencement of mining and is scheduled to occur early in 2005.

Wassa is scheduled to commence production operations in early 2004 by
processing material from the heap leach pads left by the previous owners.
Prior to Golden Stars acquisition, Wassa was operated as an open pit, heap
leach operation. Early reprocessing of this material will make the leach pad
area available for tailings containment. Construction of the processing plant
and CIL circuit is well underway, and the construction of the tailings dam is
scheduled for early 2004. The existing powerhouse at Wassa is being
supplemented to allow Wassa to generate 100% of its own power requirements in
the early stages of the projects life until a connection to the local power
grid is completed during 2004.

Total production from Wassa is expected to be in the range of 50,000 to 55,000
ounces of gold during 2004 at a cash operating cost of approximately $200 to
$240 per ounce. Open pit mining is scheduled to commence early in 2005 when
processing of the heap leach material is nearing exhaustion. When operating at
the planned capacity of 3.5 million tonnes of ore per year on new ore mined
from the open pit, gold production is expected to average 140,000 ounces per
year, at an average cash operating cost of approximately $200 per ounce.

Wassa was initially developed in the late 1990s by a consortium of European
mining companies and consisted of an open pit mine and a conventional heap
leach operation. While operating as a heap leach property, Wassa produced
approximately 90,000 ounces of gold per annum for a period of just over two
years beginning in 1999 and ending in mid-2001.

Geology at Wassa

Wassa lies within the Eburnean Tectonic Province in the West African
Precambrian Shield. The proterozoic rocks that comprise most of the West
African craton and host the major gold mineralization in Ghana are subdivided
into metasedimentary and volcanic rocks of the Birimian, and Tarkwaian
sequences.

Wassa is hosted within the same Birimian volcano-sedimentary greenstone package
as Bogoso/Prestea. Wassa is situated on the southeastern limb of the Tarkwa
Syncline while Bogoso and Prestea occur along the northwestern limb. The
northwestern belt hosts the Obuasi, Prestea, and Bogoso gold mines but the
southeastern limb also is characterized by gold mines and mineral occurrences.
Tarkwaian hosted deposits along the south eastern limb include Goldfields
Tarkwa and Abosso mines, while Birimian hosted gold occurrences include St.
Judes Hwini-Butre property and Wassa.

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Mineral Reserves and Mineral Resources at Wassa

Wassa has a probable mineral reserve of 16.2 million tonnes with a grade of
1.28 g/t containing approximately 0.7 million ounces of gold before the
reduction for the 10% minority interest. Total measured and indicated mineral
resources consist of 9.4 million tonnes with a grade of approximately 0.96 g/t
before a reduction for the 10% minority interest. The current mineral reserves
should support mining operations for approximately five years at planned mining
rates. See the Proven and Probable Mineral Reserves table and the Non-Reserves
- Measured and Indicated Mineral Resource table in Item 1 of this 10-K.

Exploration Activities at Wassa

Exploration at Wassa during 2003 concentrated on upgrading the mineral
resources contained within and around the current engineered pits as well as
delineation of mineral resources at a new discovery site approximately 2
kilometers from the Wassa processing plant, called South Akyempim. A total of
approximately 21,000 meters of drilling was completed during 2003. Soil and
stream sampling of the Adasse prospecting license, located just north of Wassa,
was also completed in 2003. Initial results from Adasse were marginal, but
results would be evaluated further to see if any additional follow-up work is
warranted. Two of the three reconnaissance permits applied for in 2003 are
awaiting final approval from the Government of Ghana and work is expected to
commence during the first half of 2004.

Drilling of the first of several gold exploration targets on the Wassa property
in Ghana has resulted in the discovery of a new higher-grade zone intersected
with 15 drill holes to date. The new mineralized zone, located approximately 2
kilometers southwest of the Wassa mill has an average drill width and gold
assay of approximately seven meters at 3.1 grams per tonne at depths between
the surface and 165 meters below the surface. Additional drilling is planned for 2004
to follow up on this initial drilling campaign. The new zone, which is called
South Akyempim, was identified in the drilling of the first of six geochemical
targets which exist in two parallel trends running in a southwesterly direction
over a strike length of approximately six kilometers, south of the known
reserves at Wassa.

EXPLORATION STAGE PROPERTIES IN GHANA

Prestea Underground

Overview

Prestea Underground is located directly beneath our Prestea property and
consists of currently inactive underground workings and support facilities.
A program to recondition the two main shafts and their associated hoists for
exploration purposes was undertaken during 2002 and 2003. Support facilities
include an administrative office, maintenance shops, a warehouse and electrical
substations. The former 70 year-old processing plant was dismantled by BGL in
2002 to gain access to the surface mineral reserves now being mined by BGL.
Access to the mine site is via a paved road maintained by the Government of
Ghana. A rail line connects the town of Prestea to Tarkwa, a major mining
supply center approximately 25 kilometers to the east, but there is currently
no service on the line. Any potential future production from the Prestea
Underground could be trucked to the Bogoso processing plant or planned Bondaye
processing plant for processing.

In March 2002 BGL entered into an agreement with Prestea Gold Resources
Limited, the former operator of the underground mine, and the Government of
Ghana to form a joint venture with BGL as operator and manager, with initial
interests of 45%, 45%, and 10%, respectively, to evaluate the Prestea
Underground. BGL initially contributed approximately $2.4 million to the joint
venture for their initial 45% interest, but since that time BGL has funded all
of the refurbishment and geological evaluation expenditures and has increased
its interest to approximately 66% at the end of 2003, compared to 54% at the
end of 2002.

The Prestea Underground has produced approximately nine million ounces of gold
during the last 130 years, the second highest production of any mine in Ghana.
The underground workings are extensive, reaching depths of approximately 1,400
meters and extending along a strike length of approximately ten kilometers.
Underground workings can currently be accessed via two shafts, one near the
town of Prestea and a second approximately four kilometers to the southwest.
Underground operations ceased in early 2002, following an extended period of
low gold prices.

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The Prestea Underground is contained within a mining lease which covers the
same area as the surface mining lease granted to BGL in 2001. The surface
mining lease extends to a depth of 200 meters below the elevation of the
Prestea central shaft collar, while the underground mining lease is restricted
to material deeper than 200 meters. The consolidation of the underground mine
with the activities of BGL is therefore viewed as a natural progression to the
orderly and economic development of the area.

Geology of Prestea Underground

The Prestea deposits are found along the Ashanti Trend which extends over 220
kilometers and which accounts for 80% to 90% of the total quartz lode-hosted
gold extracted in Ghana. Other mines located along the same shear are our
Bogoso pits, and the Obuasi and Konongo mines owned by others.

Two types of gold hosts have historically been recognized at Prestea:
fault-related hydrothermal quartz veins; and disseminated sulfide-hosted gold
mineralization associated with metavolcanic pods; the first type of ore was the
focus of intense mining during Presteas past production. We intend to
evaluate both types of mineralization.

Mineral Resources at Prestea Underground

Total inferred mineral resources consist of 1.6 million tonnes with a grade of
8.58 g/t before a reduction for the 41% minority interest. See the
Non-Reserves  Inferred Mineral Resource table in Item 1 of this Form 10-K.

Exploration Activities at Prestea Underground

Since the creation of the Prestea Underground joint venture, BGL, as the joint
venture manager, has been collating over 100 years worth of data and 15,000
meters of the underground workings have been mapped and digitized and entered
into our mine and mineral reserve models. Inferred mineral resources at the
Prestea Underground of 1.6 million tonnes grading 8.56 g/t at have been
conservatively categorized as inferred until validation sampling and
volumetrics have been confirmed.

While awaiting preparation of access to the less developed and less explored
lower levels of the Prestea underground workings, we initiated in mid-2003 a
series of drill holes at shallower levels where access had already been
established. A total of 28 holes were drilled averaging 97 meters in length.
These holes were in areas that had received extensive mining and development in
the past. While some significant intersections were encountered, no major new
mineralized zones were discovered. By the end of 2003 we had obtained access
to new areas deeper in the mine where we expect to concentrate our efforts in
2004.

Spending at the Prestea Underground project totaled $3.7 million during 2003,
including facility maintenance, engineering, drilling, geologic activities and
equipment purchases. Support crews continue to maintain the underground and
surface facilities in good working order and assist our underground drilling
teams.

The Prestea Underground exploration programs for 2004 will involve drilling
from underground and surface sites. Drilling of targets below the extent of the
existing mining will be conducted from a series of hanging wall cross cuts on
the lower levels of the mine. The underground drilling will test the down dip
extension of the high-grade ore zones which were previously exploited.

Akropong Trend Properties

Overview of the Akropong Trend Properties

We have entered into numerous option agreements of properties along the
Akropong Trend since the acquisition of BGL in September 1999. All of the
mineral properties are located on the Akropong Trend and within approximately
25 kilometers from the BGL plant. In addition to the option agreements, BGL
has been granted two prospecting licenses to the south and east of the Akropong
Trend and has one application for a prospecting license on the western side of
the Trend. The total surface area of the mineral properties covered in the
option agreements and applications is approximately 700 square kilometers. The
objective of this work is to identify additional mineral reserve opportunities
in the immediate vicinity of Bogoso/Prestea that could, in the future, provide
additional sources of processing plant feed for the Bogoso or planned Bondaye
processing plants. All these projects are at an

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early stage of exploration and to date they do not have, and ultimately might
not have, proven and probable mineral reserves.

Exploration Activities at Akropong Trend Properties

We spent approximately $1.0 million on Akropong projects during 2003 compared
to $0.1 million in 2002. Exploration work for 2003 involved soil geochemistry
surveys, mechanized trenching, and drilling to delineate the source of the
alluvial gold defined by the stream sampling program initiated in 2002.
Pending positive results from the soil geochemistry, these anomalies will be
drilled in 2004.

Dunkwa Properties

Overview of the Dunkwa Properties

In 2003 we purchased two prospecting licenses, Asikuma and Mansiso, along the
Ashanti Trend from Birim Goldfields Inc., which we refer to as the Dunkwa
properties. These properties cover 45 kilometers of strike along the Ashanti
Trend directly north of and contiguous with the current Bogoso Mining Lease.
The addition of the Asikuma and Mansiso prospecting licenses, which cover 56 and 69 square kilometers, respectively, increases our property
holdings along this trend to over 100 kilometers in length. In 2003 we also
acquired from Ashanti Goldfields Company Limited the rights to the Mampon
prospect located on the Asikuma license.

Past and present prospects located on the Dunkwa concessions have been explored
during the 1930s to the present day. Several prospects were discovered in the
early 1930s and consist of discontinuous gold-bearing quartz veins up to 4m
wide with limited known mineralization in the wall rocks. The Mampon prospect
was discovered in 1988 using regional geochemical methods and consists of
narrow quartz veins with strong pyrite and arsenopyrite mineralization in the
wall rocks ranging up to 15% total sulfides. These prospects are also
associated with shearing and/or graphitic faults, similar to those seen at
Bogoso. There are five known gold prospects on the Dunkwa concession. All of
these occur in the same approximate stratigraphic position within Lower
Birimian sediments from 1 to 1.5 kilometers west of the contact with the
Birimian metavolcanics.

Exploration Activities at the Dunkwa Properties

During 2003 exploration activities included infill soil geochemistry and
establishing drill access. Exploration for 2004 is expected to involve
drilling over the known occurrences as well as follow up drilling of any new
targets generated. The Mampon mineral reserves, located within the Dunkwa
prospecting licenses, add approximately 0.9 million tonnes of probable mineral
reserves grading 5.61 g/t of gold containing approximately 0.2 million ounces
of gold. At December 31, 2003 the indicated mineral resource on the
Dunkwa properties was 0.4 million tonnes grading 2.79 g/t of gold. In
addition, there are approximately 2.4 million tonnes of inferred mineral
resource at an average grade of 2.69 g/t of gold. Further mineral resource
definition drilling during 2004 is expected to cost $0.7 million.

Obuom Property

In 2003 we reapplied for a prospecting license on the Obuom concession and
anticipate that it will be approved in 2004. Exploration work scheduled for
Obuom will involve early stage exploration to confirm previous soil geochemical
work done by previous owners.

Other Active Properties in Africa

In late 2003 we added 500 and 250 square kilometers of exploration properties
in Sierra Leone and Mali, respectively. The related joint venture agreements,
which are subject to definitive documentation and government approvals, allow
Golden Star to earn in up to 85% and 82.5%, respectively, by sole funding the
development of any projects. Firm commitments during the first twelve months
of the agreements require us to spend $1.0 million and $0.4 million on the
Sierra Leone and Mali properties, respectively. Any further spending will be
dependent upon the results of the work done during the commitment period.

In addition to the ongoing exploration on the mining leases and existing
prospecting and reconnaissance permits, we are actively targeting prospective
areas for potential land acquisitions. Target generation will require the
acquisition

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and interpretation of geophysical datasets, compilation of data collected by
previous explorers, interpretation of high-resolution satellite images and
field investigation. Highly prospective areas will be selected from our
compilation and interpretation, and we will actively pursue the land position
either through joint ventures or staking of available ground.

THE SOUTH AMERICAN PROPERTIES

Overview of the South American Properties

We hold one exploration property in Suriname known as the Saramacca property.
Our other properties in South America are located in French Guiana and held
through Guyanor, our 73% owned subsidiary. French Guiana is part of French
national territory and has been an overseas Département of France since 1946.
Under the French Constitution, the same laws govern French Guiana as
metropolitan France, subject to modifications (including those affecting tax
and mining laws and regulations) that could be adopted to reflect the
historical, cultural, geographical and economic characteristics of French
Guiana and provide for regional administration.

At December 31, 2003 Guyanor owned mineral rights (either directly or through
its subsidiaries) for the Yaou, Dorlin, Paul Isnard, and Bon Espoir properties.
The Bon Espoir property was acquired in December 2003 and is discussed in more
detail below. During 2003 Guyanor spent approximately $0.2 million on care and
maintenance of its exploration properties compared to $0.3 million during 2002.

Acquisition of the Bon Espoir Property

In December 2003 Guyanor acquired the Bon Espoir property from Gold Fields
Exploration B. V. for a purchase price of $0.3 million payable
in stock and warrants. Bon Espoir is located north of the Paul Isnard
properties in western French Guiana. The purchase price of approximately $0.3
million will be payable by the issuance of 1.5 million common shares and 1.5
million warrants of Guyanor subject to various shareholder and governmental
approvals. The terms of the 1.5 million warrants, which comprise three
classes, have exercise prices ranging from 0.21 per share to 0.34 per share,
and have expiration dates of one to three years. Additional provisions include
a sliding scale royalty ranging from 0.5% to 2.0% of the net smelter returns
and a back-in-right to acquire a 65% participating interest in a future gold
project on the Bon Espoir property.

The Guiana Shield Transaction

In May 2002 we sold our interests in the Gross Rosebel, Headleys and Thunder
Mountain properties in Suriname, and our interest in Omai Gold Mines
Limited (OGML) in Guyana, to Cambior
Inc. We received $5.0 million cash in 2002 and a $1.0 million
deferred payment in 2003 from the sale of the Gross Rosebel property. We expect
to receive two additional deferred payments of $1.0 million each in 2004 and
2005. In addition, Cambior agreed to pay us a royalty equal to 10% of the
excess of the average quarterly market price above a gold price hurdle on the
first 7 million ounces of gold production from Gross Rosebel. For soft and
transitional rock the gold price hurdle is $300 per ounce and for hard rock the
gold price hurdle is $350 per ounce. For the Headleys and Thunder Mountain
properties, we are entitled to receive a deferred consideration of $0.5 million
each, when and if Cambior commences commercial mining from these properties.
As payment for our 30% equity interest and preferred shares in OGML, we
received a release and waiver from OGML, Cambior and the Guyana Government in
respect of all liabilities, of any nature, related to the Omai gold mine. In
the transaction Golden Star also acquired Cambiors 50% interests in the Yaou
and Dorlin exploration properties in French Guiana.

Cambior has stated that Gross Rosebels commercial gold production is scheduled
to begin in early 2004 and total approximately 245,000 ounces of gold
during 2004. Cambior is projecting 220,000 ounces of gold per year average
production over the mines projected nine year mine life. Based on Cambiors
announced gold production schedule, we expect royalty payments from Gross
Rosebel of approximately $2 million in 2004, assuming current gold prices.

Saramacca Property

Two successive soil auger sampling programs were completed in late 2002 and
early 2003 to evaluate the 15 to 18 kilometer long by 3 to 5 kilometer wide
series of stream sediment gold anomalies. A total of approximately $0.2

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million of direct field related costs were spent in each of the 2002 and 2003
field programs. Field work has included establishment of an 18 kilometer long
by 4 to 7 kilometer wide auger grid, with 154 kilometers of cut lines. Grid
line spacing was 600 to 800 meters with one-meter auger samples taken on 100
meter line spacings.

For 2004, approximately $0.2 million of exploration spending will be focused on
a deep augering and mechanized trenching campaign. Positive results would
likely be followed up in late 2004 or 2005 with drilling to establish potential
subsurface grades, as well as defining limits of the system. The Saramacca
property is held directly by Golden Star.

Bon Espoir Property

The area is covered by the Bon Espoir Exclusive Exploration Permit, dated
October 24, 2001 and valid until October 31, 2006. This permit covers an area
of 466 square kilometers. Financial commitments for the first five-year period
of validity ending October 31, 2006, are
3.2 million, of
which 0.9
million has already been spent in detailed exploration work on the
Wayamaga prospect which lies within the Bon Espoir property (soil geochemistry,
drilling). Planned work in 2004 consists of regional soil geochemistry to test the
totality of the 40 kilometer long prospective contact.

The Yaou and Dorlin Properties

The Yaou exploration permit covers an area of 52 square kilometers located some
210 kilometers southwest of Cayenne, French Guiana. The Dorlin exploration
permit covers an area of 84 square kilometers located some 180 kilometers
southwest of Cayenne and 60 kilometers east of Maripasoula. In 2003 the Yaou
and Dorlin properties remained on care and maintenance and expenditures totaled
less than $0.1 million. There is no significant work planned at Yaou or Dorlin
in 2004.

Paul Isnard Property

The Paul Isnard property is located in the western part of French Guiana,
approximately 180 kilometers west of Cayenne. The concessions held will expire
on December 31, 2018 but can be renewed for an additional 25 years. The
Paul-Isnard exploration permit covers an area of 283 square kilometers, and we
are waiting for the granting of its first renewal for a reduced surface area.
The total area under or awaiting permit is 433 square kilometers. Paul Isnard
remained on care and maintenance during 2003 and total costs incurred were less
than $0.1 million. There is no significant work planned at Paul Isnard in
2004.




ITEM 3. LEGAL PROCEEDINGS

We have been named as one of 14 defendants in a class action lawsuit filed in
the High Court of the Supreme Court of Judicature of Guyana on May 19, 2003
related to the August 1995 accidental release of cyanide-bearing waste into a
stream near the Omai gold mine, in which we then owned a 30% equity interest.
Other defendants include Cambior Inc., which co-owned and operated the mine in
1995 and to which we subsequently sold the mine in 2002. The plaintiffs claim
to represent residents near the stream and its tributaries. The plaintiffs
claim various environmental and other damages and have asked for substantial
damages, in excess of $1.0 billion, from all defendants, jointly and severally,
among other remedies. During the third quarter of 2003 Cambior filed a motion
to dismiss the lawsuit. We have not been served with process in this litigation. While we believe this
claim is without merit, we cannot reasonably predict the outcome of this
litigation. In connection with the sale of our interest in the Omai mine to
Cambior in 2002, Cambior indemnified us from any claims related to the mine.

We are not currently subject to any material pending legal proceedings. We
are, however, 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 noncompliance with environmental laws and
regulations.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 2003.

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PART II  OTHER INFORMATION






|        |                                                                          
|------- | -------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

In June 2002 our common shares began trading on the American Stock Exchange
under the symbol GSS. Our common shares are also traded on the Toronto Stock
Exchange (TSX) under the trading symbol GSC. From January 2001 to June
2002 our common shares had traded in the US on the NASDAQ OTC Bulletin Board.
As of January 29, 2004, 133,140,528 common shares were outstanding and we had
991 shareholders of record. On January 29, 2004, the closing price per share
for our common shares as reported by the TSX was Cdn$7.09 and as reported by
the American Stock Exchange was $5.31.

The following table sets forth, for the periods indicated, the high and low
market closing prices per share of our common shares as reported by the TSX,
the OTC Bulletin Board and the American Stock Exchange:

Toronto Stock Exchange
    
    American Stock Exchange(1)Cdn$
    
    Cdn$
    
    $
    
    $2003
    
    High
    
    Low
    
    High
    
    LowFirst Quarter
    
    
    3.49
    
    
    
    2.25
    
    
    
    2.29
    
    
    
    1.54Second Quarter
    
    
    3.77
    
    
    
    2.43
    
    
    
    2.80
    
    
    
    1.68Third Quarter
    
    
    6.15
    
    
    
    3.42
    
    
    
    4.53
    
    
    
    2.46Fourth Quarter
    
    
    10.77
    
    
    
    5.10
    
    
    
    8.30
    
    
    
    3.77


OTC Bulletin Board and American2002
    
    Toronto Stock Exchange
    
    Stock Exchange(1)First Quarter
    
    
    2.90
    
    
    
    0.86
    
    
    
    1.90
    
    
    
    0.54Second Quarter
    
    
    3.58
    
    
    
    1.70
    
    
    
    2.42
    
    
    
    1.05Third Quarter
    
    
    2.70
    
    
    
    1.34
    
    
    
    1.80
    
    
    
    0.84Fourth Quarter
    
    
    2.90
    
    
    
    1.66
    
    
    
    1.90
    
    
    
    1.04




| | (1) |  | During 2002 our stock traded on the OTC Bulletin Board until June
18, 2002 and on the American Stock Exchange on and after June 19, 2002.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------

We have not declared or paid cash dividends on our common shares since our
inception and we expect for the foreseeable future to retain all of our
earnings from operations for use in expanding and developing our business.
Future dividend decisions will consider then current business results, cash
requirements and our financial condition.

RECENT SALES OF UNREGISTERED SECURITIES

The issuances discussed under this section were exempted from registration
under Section 4(2) of the Securities Act or Rule 506 thereunder as indicated.
All purchasers of the following securities acquired the shares for investment
purposes only and all stock certificates reflect the appropriate legends.

Common Stock

1. In the fourth quarter of 2003 1,157,273 shares were issued upon exercise
of warrants for total consideration to the Company of $810,091. The warrants
exercised were originally issued in January 2002 with a $0.70 exercise price.

2. In the fourth quarter of 2003 370,000 shares were issued upon
exercise of warrants for total consideration to the Company of $555,000. The
warrants exercised were originally issued in December 2002 with a $1.50
exercise price.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following summarizes the principal Canadian federal income tax
considerations applicable to the holding and disposition of a common share of
the Company (a Common Share) by a holder (the Holder) of one or more

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Common Shares, for tax purposes, who is resident in the United States of
America and holds the Common Shares as capital property. This summary is based
on the current provisions of the Canada-United States Income Tax Convention
(1980) (the Treaty), Income Tax Act (Canada) (the Tax Act), the regulations
thereunder and all amendments to the Tax Act publicly proposed by the
Government of Canada to the date hereof. It is assumed that each such
amendment will be enacted as proposed and there is no other relevant change in
any governing law, although no assurance can be given in these respects.
Limited Liability Corporations cannot access any of the benefits of the Treaty
as described in the paragraphs.

Every Holder is liable to pay a withholding tax on every dividend that is or is
deemed to be paid or credited to him on his Common Shares. Under the Act, every
non-resident person shall pay a tax at 25%. Under the Treaty, the rate of
withholding tax is reduced to 5% of the gross amount of the dividend where the
Holder is a company that owns at least 10% of our voting stock and beneficially
owns the dividend, and 15% in any other case.

Under the Tax Act, a Holder will not be subject to Canadian tax on any capital
gain realized on an actual or deemed disposition of a Common Share, including a
deemed disposition at death, provided that he did not hold the Common Share as
capital property used in carrying on a business in Canada, and that neither he
nor persons with whom he did not deal at arms length alone or together owned
25% or more of the issued shares of any class of our stock at any time in the
60 month period immediately preceding the disposition.

A Holder who is liable under the Tax Act for Canadian tax in respect of a
capital gain realized on an actual or deemed disposition of a Common Share
could be relieved under the Treaty from such liability unless:



| | (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.
| | ----- |  | -----------------------------------------------------------------

This summary is of a general nature and is not intended, nor should it be
construed, to be legal or tax advice to any particular Shareholder.
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

Potential investors that are US taxpayers should consider that we could be
considered to be a passive foreign investment company (PFIC) for federal
income tax purposes. Although we believe that we currently are not a PFIC and
do not expect to become a PFIC in the near future, the tests for determining
PFIC status are dependent upon a number of factors, some of which are beyond
our control, and we can not assure you that we would not become a PFIC in the
future. If we were deemed to be a PFIC, then a US taxpayer who disposes or is
deemed to dispose of our shares at a gain, or who received a so-called
excess distribution on the shares, generally would be required to treat such
gain or excess distribution as ordinary income and pay an interest charge on a
portion of the gain or distribution unless the taxpayer makes a timely
qualified electing fund election (a QEF election). A US taxpayer who makes a
QEF election generally must report on a current basis his or her share of any
of our ordinary earnings and net capital gain for any taxable year in which we
are a PFIC, whether or not we distribute those

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earnings. Special estate tax rules could be applicable to our shares if we are
classified as a PFIC for income tax purposes.




ITEM 6. SELECTED FINANCIAL DATA

The selected financial data set forth below are derived from our audited
consolidated financial statements for the years ended December 31, 2003, 2002,
2001, 2000 and 1999, and should be read in conjunction with those financial
statements and the footnotes thereto. The consolidated financial statements
have been prepared in accordance with Canadian GAAP. Selected financial data
derived in accordance with US GAAP has also been provided and should be read in
conjunction with footnote 22 to the financial statements. Reference should
also be made to Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations.

Summary of Financial Condition

(Amounts in thousands except per share data)

As of
    
    As of
    
    As of
    
    As of
    
    As ofCdn GAAP
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Working capital
    
    $
    96,784
    
    
    $
    21,963
    
    
    $
    (5,149
    )
    
    $
    4,452
    
    
    $
    6,020Current assets
    
    
    104,935
    
    
    
    32,843
    
    
    
    9,636
    
    
    
    12,960
    
    
    
    13,957Total assets
    
    
    222,391
    
    
    
    74,135
    
    
    
    36,552
    
    
    
    49,469
    
    
    
    74,352Current liabilities
    
    
    8,151
    
    
    
    10,880
    
    
    
    14,785
    
    
    
    8,508
    
    
    
    7,937Shareholders equity
    
    
    198,362
    
    
    
    49,384
    
    
    
    12,342
    
    
    
    26,040
    
    
    
    40,501


For the Year
    
    For the Year
    
    For the Year
    
    For the Year
    
    For the YearCdn GAAP
    
    Ended
    
    Ended
    
    Ended
    
    Ended
    
    EndedDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Revenue
    
    $
    64,370
    
    
    $
    38,802
    
    
    $
    24,658
    
    
    $
    31,171
    
    
    $
    11,254Net income/(loss)
    
    
    21,956
    
    
    
    4,856
    
    
    
    (20,584
    )
    
    
    (14,881
    )
    
    
    (24,366
    )Net income/(loss)
per share  basic
    
    
    0.198
    
    
    
    0.070
    
    
    
    (0.488
    )
    
    
    (0.40
    )
    
    
    (0.76
    )


As of
    
    As of
    
    As of
    
    As of
    
    As ofUS GAAP
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Working capital
    
    $
    96,784
    
    
    $
    22,262
    
    
    $
    (5,149
    )
    
    $
    4,452
    
    
    $
    6,020Current assets
    
    
    104,935
    
    
    
    33,391
    
    
    
    9,636
    
    
    
    12,960
    
    
    
    13,957Total assets
    
    
    200,337
    
    
    
    62,644
    
    
    
    24,232
    
    
    
    24,020
    
    
    
    45,635Current liabilities
    
    
    8,151
    
    
    
    10,880
    
    
    
    14,785
    
    
    
    8,508
    
    
    
    7,937Shareholders equity
    
    
    180,417
    
    
    
    41,069
    
    
    
    1,533
    
    
    
    (478
    )
    
    
    11,145


For the Year
    
    For the Year
    
    For the Year
    
    For the Year
    
    For the YearUS GAAP
    
    Ended
    
    Ended
    
    Ended
    
    Ended
    
    EndedDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,
    
    December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Revenue
    
    $
    64,370
    
    
    $
    38,802
    
    
    $
    24,658
    
    
    $
    31,171
    
    
    $
    11,254Net income/(loss)
    
    
    13,357
    
    
    
    6,752
    
    
    
    (5,352
    )
    
    
    (12,465
    )
    
    
    (11,335
    )Net income/(loss)
per share  basic
    
    
    0.120
    
    
    
    0.093
    
    
    
    (0.126)
    )
    
    
    (0.33
    )
    
    
    (0.35
    )


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|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements and related notes. The
financial statements have been prepared in accordance with accounting
principles generally accepted in Canada (Cdn GAAP). For a reconciliation to
accounting principles generally accepted in the United States (US GAAP), see
Note 22 to the attached consolidated financial statements.

In this Form 10-K, the terms total cash cost and cash operating cost are used on a per ounce of
gold basis. Total cash cost per ounce is equivalent to mining operations expense for the period as found on the consolidated
statements of operations, divided by the number of ounces of gold sold during the period. Cash operating cost per ounce is equivalent to mining operations
expenses for the period less production royalties, divided by the number of ounces of gold sold during the period.

(dollar figures in thousands, except per ounce amounts)
    
    2003
    
    2002
    
    2001Mining operations expense
    
    $
    32,125
    
    
    $
    26,747
    
    
    $
    24,824Less royalties
    
    
    3,222
    
    
    
    2,768
    
    
    
    1,103Cash operating expense
    
    $
    28,903
    
    
    $
    23,979
    
    
    $
    23,721Gold sold (oz)
    
    
    174,315
    
    
    
    124,400
    
    
    
    87,936Cash operating cost per ounce ($)
    
    
    166
    
    
    
    193
    
    
    
    271


We have included total cash cost and cash operating cost information to provide investors with
information about the cost structure of our mining operations. We use this
information for the same purpose and for monitoring the performance of our
operations. This information differs from measures of performance determined
in accordance with GAAP in Canada and the United States and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP. These measures are not necessarily indicative of
operating profit or cash flow from operations as determined under GAAP and may
not be comparable to similarly titled measures of other companies.

All figures in this Item 7 are 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 dividends from the subsidiaries owning the
Bogoso/Prestea and Wassa monies.

OUR BUSINESS

Through our subsidiaries and joint ventures we own a controlling interest in
four gold properties in Southern Ghana: the Bogoso property (Bogoso), the
Prestea property (Prestea), the Wassa property (Wassa) and the Prestea
underground property (Prestea Underground). Bogoso and Prestea are adjoining
properties, operating as a single operation and referred to as
Bogoso/Prestea. Bogoso/Prestea and the Prestea Underground are owned by
our 90% owned subsidiary, Bogoso Gold Limited (BGL).

We hold a 90% equity interest in Wexford Goldfields Limited (WGL), which owns
Wassa, located some 35 kilometers east of Bogoso/Prestea.
Wassa is currently in development, and we expect gold production to commence in
early 2004.

The Prestea Underground is located on the Prestea property and consists of a
currently inactive underground gold mine and associated support facilities. As
of December 31, 2003 BGL owned an approximately 66% operating interest in this
mine and we are currently seeking to determine if the underground mine can be
reactivated on a profitable basis.

We also hold interests in gold exploration properties in Ghana, Sierra Leone,
Mali, Suriname, and French Guiana. The French Guiana properties are mainly
held through our 73%-owned subsidiary, Guyanor Ressources S.A. (Guyanor). We
hold a royalty right on the Gross Rosebel gold mine in Suriname and expect to
begin receiving cash royalties from this property during 2004.

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BUSINESS STRATEGY AND DEVELOPMENT

Our business and development strategy since 1999 has been to focus primarily on
the acquisition of producing and development stage gold properties in Ghana and
on the exploration, development and operation of these properties. Given our
significant mineral resource position, we are currently carrying out technical
studies to expand our production at Bogoso/Prestea. At our Wassa property, we
commenced development in mid-2003, and now expect to commence production in
early 2004 by processing material from the existing heap leach pads left by the
former owner. In early 2005 we plan to commence ore production from the Wassa
open pit mine. If the above mentioned expansion and development plans are
approved and permitted (as expected), our annualized production should
exceed 350,000 ounces of gold commencing in 2005. However, there can be no assurance that
development and start-up can be completed as anticipated or that our production
goals will be achieved.

Our objective is to grow our business to become a mid-tier gold producer (which
we understand to be a producer with annual production of approximately 500,000
ounces) over the next few years. Due to higher gold prices and our improved
financial condition, we believe we are well placed to pursue the acquisition of
producing, development and advanced stage exploration gold properties and
companies, primarily in Ghana and elsewhere in Africa. We are actively
investigating potential acquisition and merger candidates, some of which have
indicated to potential acquirers or their advisors that they or certain of
their properties might be available for acquisition. However, we presently have no
agreement or understanding with respect to any potential transaction. We have
increased exploration activities and expenditures on our current exploration
properties, primarily in Ghana.

OVERVIEW OF 2003

Our financial condition showed a significant improvement during 2003 with records
being set in several operating and financial parameters including, ounces sold,
revenues, net income and operating cash flow. Revenues of $64.4 million were
up 66% over 2002, based on a 40% increase in the number of ounces sold and a 17% increase
in average realized gold prices. Net income of $22.0 million was up 350% from
the prior year, primarily due to the improved revenues. Our gold sales
increased to 174,315 ounces, a 40% increase over 2002s level,
and the London P.M. fix gold
price, which began the year at $344 per ounce, trended upward though most of
2003 to finish the year at $416 per ounce. The spot price averaged $363 per
ounce during 2003.

Our cash balance at the end of 2003 was $90.0 million, an increase of $70.0
million from $20.0 million at the end of 2002. Improvements in gold prices and
gold production levels combined to provide $29.1 million of cash flow from
operations, an increase of $24.2 million as compared to 2002, and equity
offerings provided a net $102.9 million during the year. We ended 2003 with $0.8
million of debt versus $5.3 million at the end of 2002. In addition several
other significant milestones were achieved during 2003:



| |  |  | In July we completed a feasibility study and established mineral
reserves at our Wassa development property and immediately initiated
construction of a CIL processing plant. We now expect gold production
from this property early in 2004;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We acquired two new exploration land packages totaling 125 square
kilometers extending north of Bogoso/Prestea along the Ashanti Trend
which include 162,000 ounces of new mineral reserves at the Mampon
deposit;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We acquired a used 4,500 tonne per day CIL processing plant
which we plan to relocate and reassemble 6 kilometers south of the
town of Prestea, to facilitate a significant expansion of gold
production at Bogoso/Prestea by 2005;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We completed public equity offerings which
provided a net $102.9 million
of cash;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | We initiated an underground exploration drilling program in the
Prestea Underground and we continued engineering and geologic studies
of the economic potential of the property;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We purchased the gold production royalties encumbering
Bogoso/Prestea and Wassa for approximately $12.0 million and $11.5
million, respectively;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------

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| |  |  | We continued to pursue new growth opportunities for the Company;
and
| | - |  | --------------------------------------------------------------------



| |  |  | We added 900,000 ounces of new reserves at Bogoso/Prestea and
665,000 ounces of new reserves at Wassa.
| | - |  | ------------------------------------------------------------------------------------------------------

TRENDS AFFECTING OUR OPERATIONS DURING 2003

Gold prices have now trended generally upward for nearly three years from a low
of $256 in early April 2001 to $411 per ounce at January 28, 2004, an average
annual increase of 16%. The higher average gold price added
approximately $9.2
million to our revenues during 2003 over what we would have realized had gold
prices remained at 2002 levels.

Mining costs were higher in 2003 compared to 2002, mainly due to increases in
haulage costs and fuel costs, the Plant North pit being farther from the Bogoso
processing plant than were the ore sources mined during 2002. Waste stripping
costs were higher due to increased tonnages moved in 2004. Processing costs were also
higher. The metallurgical characteristics of Plant North ore required more
reagents, especially cyanide, and longer retention times during the recovery
process. Royalties were also significantly higher as compared to 2002 because
of the increase in sales revenues. While mining and processing costs per tonne
were higher, the higher grades of the Plant North ore and better gold recovery
rates more than compensated, yielding a much improved net income and decreases
in unit costs per ounce compared to 2002.

As mining proceeds deeper into the Plant North pit in 2004 we expect to
encounter increasing amounts of harder transition and sulfide ores which are
not optimally suited for processing in the Bogoso processing plant as currently configured
and thus we are expecting lower gold recovery rates and higher processing costs
than experienced with the oxide ore milled in 2003. To maximize gold
recoveries on transition and sulfide ores, the existing flotation circuit at
the Bogoso processing plant has been refurbished and will be recommissioned during 2004 at
a cost of approximately $2 million. Once the refurbished flotation circuit is
operational, we expect to successfully treat the transition ores from the Plant
North pit and other areas. While we expect that gold recovery and processing costs would be at acceptable
levels following the flotation circuit refurbishment, we cannot provide
assurance that gold recovery will be as high as experienced during 2002 and
2003 and that operating costs will be as low as those in 2003.

The market for gold company equities generally strengthened during 2003. Our
common share price began the year at $1.89 and ended the year at $6.97. The
increased interest in investing in gold and gold mining companies during the
past two years has made expansion and development capital more readily
available. As a result, we successfully raised a net $113.4 million of new
equity funds during 2003 including option and warrant exercises. We used
portions of the cash to pay debt, acquire new exploration properties and
reserves in Ghana and elsewhere in West Africa, to buy back royalties on future
Bogoso/Prestea and Wassa gold production and to fund exploration and
development activities including the work to date on the Wassa and Prestea
Underground projects. In 2004 we anticipate using our cash to complete Wassa,
to proceed with the planned expansion project at Bogoso/Prestea, to continue
our evaluation of the Prestea Underground, to fund other exploration and
development activities and for other general corporate purposes.

RESULTS OF OPERATIONS

2003 Compared to 2002

Net income totaled $22.0 million or $0.198 per share on revenues of $64.4
million for 2003, versus net income of $4.9 million or $0.070 per share on
revenues of $38.8 million during 2002. Higher gold prices, increased gold
production, a $2.3 million gain on currency exchange rates and a $1.9 million
gain on the sale of marketable securities were the major factors contributing
to the earnings improvement. Realized gold prices averaged $364 per ounce for
the year, a 17% increase from the $311 per ounce realized in 2002. Gold
revenues for 2003 were based on sales of 174,315 ounces, a 49,915 ounce
increase from 124,400 ounces in 2002.

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FINANCIAL RESULTS
    
    2003
    
    2002
    
    2001Gold sold (oz)
    
    
    174,315
    
    
    
    124,400
    
    
    
    87,936Average price realized ($/oz)
    
    
    364
    
    
    
    311
    
    
    
    271Revenues (in $ thousands)
    
    
    64,370
    
    
    
    38,802
    
    
    
    24,658Net income/(loss) (in $ thousands)
    
    
    21,956
    
    
    
    4,856
    
    
    
    (20,584
    )Net income/(loss) per share  basic ($)
    
    
    0.198
    
    
    
    0.070
    
    
    
    (0.488
    )


Higher depreciation, depletion and amortization costs are related to higher
gold production versus 2002. General and administrative costs rose by $1.7
million from 2002 due to increases in compensation expense, including stock
option expense, purchase of gold puts, travel and tax and other professional
services related to an expanded scope of corporate activities. The increase in
foreign exchange gains is mostly related to the effect of a weakening US dollar
offset by the associated impact on the value of cash equivalents invested in
Canadian dollar instruments.

We did not record a tax expense or benefit during 2003. While we have
substantial tax assets in Canada, France and Ghana from past losses, capital
allowances and tax pools, a tax valuation allowance has been provided in an
amount equal to our net tax assets. We will continue to monitor our expected
future income tax position and may in the future deem it appropriate to
recognize certain tax assets and liabilities in our balance sheet.

BOGOSO/PRESTEA OPERATIONS
    
    2003
    
    2002
    
    2001Ore mined (t)
    
    
    2,001,905
    
    
    
    2,222,767
    
    
    
    1,701,129Waste mined (t)
    
    
    6,791,926
    
    
    
    5,211,335
    
    
    
    4,851,255Ore milled (t)
    
    
    2,093,600
    
    
    
    2,271,747
    
    
    
    2,098,165Grade milled (g/t)
    
    
    3.29
    
    
    
    2.31
    
    
    
    2.69Recovery (%)
    
    
    81.2
    
    
    
    74.4
    
    
    
    49.6Cash operating cost ($/oz)
    
    
    166
    
    
    
    193
    
    
    
    271Royalties ($/oz)
    
    
    18
    
    
    
    22
    
    
    
    13Total cash cost($/oz)
    
    
    184
    
    
    
    215
    
    
    
    283


During 2003, Bogoso/Prestea processed an average of 5,736 tonnes per day of
Plant North ore at an average grade of 3.29 grams per tonne. This compares to
6,223 tonnes per day at 2.31 grams per tonne in 2002. The lower processing plant
through-put was related to increased amounts of transition ores versus 2002.
Mechanical difficulties with a long lead-time component of the processing plant conveyor
system during the second quarter of 2003 and other processing plant maintenance projects
during the year also contributed to the reduced processing plant through-put. Recoveries
rose to 81%, up from 74% in 2002. The improved grade and better recoveries
combined to yield a 40% increase in gold production versus 2002.
Bogoso/Prestea sold 174,315 ounces of gold in 2003, up from 124,400 ounces in
2002. Cash operating costs of $166 per ounce were 14% better than the $193 per
ounce costs during 2002. Similarly, total cash costs fell from $215 per ounce
in 2002 to $184 per ounce in the current year.

2002 Compared to 2001

During 2002 we generated net income of $4.9 million or $0.070 per share,
compared to a loss of $20.6 million or $0.488 per share during the twelve
months ended December 31, 2001. The major factors contributing to the improved
earnings were higher gold production primarily from Prestea ore bodies,
improved gold prices, and the absence of write-offs of deferred exploration
costs.

During much of 2001 the Bogoso processing plant was fed with transition ores mined from the
Bogoso pits. The metallurgical properties of the transition ores render them
unsuitable for effective processing in the Bogoso Processing plant, and a low gold recovery
rate of 49.6% was experienced during 2001 as a result. During 2002 the entire
Bogoso processing plant feed was comprised of oxide ores from various pits on
the northern end of the Prestea property, and the processing characteristics of
these Prestea ores were better suited for processing in the Bogoso processing plant than
were the Bogoso transition ores processed in 2001, resulting in a 74.4% overall
recovery rate during 2002. The improved recovery added just over 41,000
ounces to our production versus what would have occurred had recoveries stayed at
the 2001 rate of 49.6%.

Revenues rose from $24.7 million in 2001 to $38.8 million in 2002. In addition
to the higher gold production for the year, 2002 gold prices were higher than in
the prior year. Our realized sales price averaged $311 per ounce in 2002,

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up from $271 per ounce in 2001. Gold shipments totaled 124,400 ounces during
2002. This 41% increase over 2001 was due to the better gold recoveries and an
8% increase in tonnes milled.

While the cost of mining operations, as shown on the statement of operations,
increased 8% from the 2001 level, mostly due to an 8% increase in the number of
tonnes milled, the improvement in gold output yielded a decrease in cash
operating cost per ounce, from $271 in 2001 to $193 in 2002. Improved gold
recoveries were the most significant factor contributing to the lower cash
operating cost per ounce.

DEVELOPMENT ACTIVITIES

Wassa

In September 2002 we acquired a 90% interest in the Wassa gold property located
35 kilometers east of our Bogoso/Prestea gold operations in Ghana and
immediately began a drilling program and engineering studies designed to
evaluate the economic viability of the property as a conventional 10,000 tonnes
per day CIL gold operation. Based on initial drill results and engineering
data, a feasibility study was begun shortly after acquisition and was completed
in July 2003. In July 2003 we announced that the project would proceed and
that construction of the CIL processing plant would commence immediately. The
feasibility study was prepared by our staff supported by a team of independent
consultants led by Metallurgical Design and Management (Pty) Ltd. (MDM) of
South Africa. In July 2003 we also awarded a fixed price contract to MDM to
construct the new CIL plant and associated processing facilities.

The first phase of the Wassa development is now nearing completion. As of
December 31, 2003 development costs totaled $27.4 million including the
feasibility study cost, equipment and construction cost. In October 2003 we
paid an additional $11.5 million to buy out all the debt and royalty
obligations due the sellers. Phase two development, which is expected to cost
$17.3 million, would consist of the purchase of a mining fleet and the
commencement of mining and is scheduled to occur early in 2005.

Wassa is scheduled to commence production operations in early 2004 by
processing material from the heap leach pads left by the previous owners.
Prior to Golden Stars acquisition, Wassa was operated as an open pit, heap
leach operation. Early reprocessing of this material will make the leach pad
area available for tailings containment. Construction of the processing plant
and CIL circuit is well underway, and the construction of the tailings dam is
scheduled for early 2004. The existing powerhouse at Wassa is being
supplemented to allow Wassa to generate 100% of its own power requirements in
the early stages of the projects life until a connection to the local grid is
completed during 2004.

Total production from Wassa is expected to be in the range of 50,000 to 55,000
ounces of gold during 2004 at a cash operating cost of approximately $200 to
$240 per ounce. Open pit mining is scheduled to commence early in 2005 when
processing of the heap leach material is nearing exhaustion. When operating at
the planned capacity of 3.5 million tonnes of ore per year on new ore mined
from the open pit, gold production is expected to average 140,000 ounces per
year, at an average cash operating cost of approximately $200 per ounce.

Drilling of the first of several gold exploration targets on the Wassa property
in Ghana has resulted in the discovery of a new higher-grade zone intersected
with 15 drill holes to date. The new mineralized zone, located approximately 2
kilometers southwest of the Wassa processing plant has an average drill width and gold
assay of approximately seven meters at 3.1 grams per tonne at depths between
the surface and 165 meters below the surface. Additional drilling is planned for 2004
to follow up on this initial drilling campaign. The new zone, which is called
South Akyempim, was identified in the drilling of the first of six geochemical
targets which exist in two parallel trends running in a southwesterly direction
over a strike length of approximately six kilometers, south of the known
reserves at Wassa.

Prestea Underground

During 2003 we completed digitization of information related to the underground
workings, old drill records, survey pegs and channel chip samples. We continued
geological mapping of underground workings and geological compilations were
completed for several levels. Extensive sampling of underground workings has
resulted in the creation of a three-dimensional computer model of the
underground workings and main zones of mineralization. For the first time in
Presteas 100 year plus history, data from widely different sources and formats
have now been

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standardized and grouped into a single computer database, making interpretation
and inferences from modeling much easier.

While awaiting preparation of access to the less developed and less explored
lower levels of the Prestea underground workings, we initiated in mid 2003 a
series of drill holes at shallow levels where access had already been
established. A total of 28 holes were drilled averaging 97 meters in length.
These holes were in areas that had received extensive mining and development in
the past. No significant new mineralized zones were discovered. By the end of
the year we had obtained access to new areas deeper in the mine, where we
expect to concentrate our efforts in 2004.

Spending at the Prestea Underground project totaled $3.7 million during 2003,
including facility maintenance, engineering, drilling, geologic activities and
equipment purchases. Support crews continue to maintain the underground and
surface facilities in good working order and assist our underground drilling
teams.

The Prestea Underground exploration programs for 2004 will involve drilling
from underground and surface sites. Drilling of targets below the extent of the
existing mining will be conducted from a series of hanging wall cross cuts on
the lower levels of the mine. The underground drilling will test the down dip
extension of the high-grade ore zones which were previously exploited.

Bogoso/Prestea Expansion

The known mineral reserves at Bogoso/Prestea can be grouped into three general
categories based on the metallurgy of the ore. They are referred to as: (a)
oxide ore which is non-refractory and has been successfully processed in the
existing Bogoso CIL and gravity circuits; (b) non-refractory transition and
sulfide ores which we expect to successfully process at the Bogoso processing
plant following the reactivation of the processing plants flotation circuit in
early 2004; and (c) refractory transition and sulfide ores which would require
some form of oxidation process prior to gold recovery. The oxide ores are
found at surface, down to the general level of the water table, while sulfide
ores are located at depth. Between these two distinct ore types lies the
transition ore, of varying thickness, a zone of partially oxidized ore. Our
Bogoso/Prestea reserves at the end of 2003 are comprised of approximately 13% oxide
ore, 15%
transition ores, and 72% sulfide ores on a gold content basis.

The existing Bogoso processing plant is configured to process primarily oxide
ores. In recent years additions to the processing plants equipment made it
possible to treat certain transition ores but not all of the transition ores
known to exist at Bogoso/Prestea. Gold recovery from oxide ores is typically
around 80% to 85% but when processing transition ores the recovery rate drops
substantially below this. In 2001 when processing large tonnages of transition
ores from the old Bogoso pits, the gold recovery rate dropped below 50%.

To facilitate efficient processing of the sulfide and transition ores and to
expand the productive capacity of Bogoso/Prestea we plan to make major
modification to the existing Bogoso processing plant during 2004 and 2005 and
at the same time add a second processing plant on the Prestea property, which
will be designed to process oxide ores and other non-refractory ores.

In July 2003 we purchased a used 4,500 tonne per day conventional CIL
processing plant, associated stores inventory, and a six-megawatt powerhouse
from an inactive mine site in Ghana. This facility was dismantled in the third
and fourth quarters of the year and will be moved to Prestea in early 2004.
During 2004 we plan to reassemble this processing plant at a site approximately
6 kilometers south of the town of Prestea. With the appropriate modifications
it should be able to process oxide ores and some of the transition ores found
at Bogoso/Prestea. This new processing plant is now referred to as the Bondaye
processing plant. We expect the Bondaye processing plant to be operational in
the fourth quarter of 2004 if the required approvals and permits are obtained
as expected.

Also during 2004 and into mid 2005, we plan to modify the existing Bogoso
processing plant, via the addition of a bio-oxidation (BIOX) circuit, to
process sulfide ore. The modifications would be done in a manner that will
allow the Bogoso processing plant to continue processing oxide and transition
ores during 2004 until the BIOX modifications are completed. We expect the
Bogoso processing plant upgrades to be competed in 2005 and at that point begin
to process only refractory transition and sulfide ores. Once the Bondaye
processing plant construction and the Bogoso processing plant upgrades are
completed, we anticipate being able to process all of the known ore types
existing at Bogoso/Prestea and in the surrounding area.

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We currently estimate the cost to move, reassemble and modify the Bondaye processing plant,
to add the BIOX upgrade to the existing Bogoso processing plant, and to expand the mining
fleet at Bogoso/Prestea as required to feed the expanded processing plant complex, to total
about $70 million, not including the $4.3 million initial purchase cost of the
Bondaye processing plant.

The BIOX process is designed to treat refractory gold ores prior to
cyanidization by utilizing naturally occurring bacteria capable of oxidizing
gold-bearing sulfide concentrates under controlled conditions. Prior to the
BIOX process, the ore will be crushed and ground utilizing existing equipment at
the Bogoso processing plant. A combination of flotation and gravity circuits,
including circuits already at the Bogoso processing plant, will then separate a
sulfide concentrate from the ore slurry with the gold locked in the matrix of
the sulfide minerals. The bacteria used in the BIOX process oxidize the
sulfide minerals in the concentrate thereby liberating the gold particles which
are then recovered by cyanidation. The bacteria used in the BIOX process are
non-pathogenic and pose no health risks.

The BIOX process has been successfully employed since the mid 1980s with five
operations now using the process worldwide including Ashanti Goldfields Company
Limiteds Obuasi gold mine located 100 kilometers north of Bogoso. The Obuasi
mine is currently treating approximately 1,000 tonnes of sulfide concentrates
per day with gold recoveries averaging 92%. Two new BIOX processing plants are
currently in construction, one in Australia and one in Kazakhstan. While all
plants constructed to date have reached design capacity in less than three
months after start-up, there is no assurance that we will achieve
similar results.

BIOX bench and pilot scale tests on Bogoso sulfide ores have consistently
yielded gold recoveries in excess of 86%. This compares to 55% achievable by
direct cyanide treatment. The cost of BIOX treatment is estimated to be
approximately $10.40 per tonne of ore processed. This is higher than the
current operating costs for oxide ores at Bogoso but is expected to be cost
effective when compared to other options for treating refractory sulfide ores.

The Bogoso/Prestea expansion plans outlined above are subject to the completion
of technical studies now underway, subsequent board approval, obtaining all
requisite environmental permits and successful resolution of potential
technical difficulties that could be encountered during the construction and
start-up of the new facilities.

EXPLORATION

We spent approximately $8.5 million in exploration activities during 2003
including $2.2 million at Wassa establishing mineral reserves in the existing
pits and in areas outside the pits, $3.1 million at the Prestea Underground,
including underground care and maintenance costs, approximately $2.3 million on
exploration projects outside the Wassa and Bogoso/Prestea areas and $0.9
million developing new mineral reserves in the Plant North area. Exploration
spending during 2003 was less than expected due to a shortage of drill rigs in
Ghana. Recent increases in exploration activity in Ghana by us and our
competitors have adversely impacted drill rig availability and as a result some
of our planned work was delayed, including drilling at the Prestea Underground
which was delayed several months.

Most of our exploration efforts in 2003 were focused on Ghana, with Prestea
Underground, Prestea, Wassa and the Akropong Trend properties receiving the
most attention. Late in 2003 we began to explore the newly acquired Dunkwa
properties north of Bogoso. During 2004 we plan to spend approximately $21
million on gold exploration. Approximately $6 million will be used to evaluate
surface projects in and around Bogoso/Prestea including the Akropong Trend and
Dunkwa properties. Approximately $6.6 million is planned for the continued
exploration efforts at the Prestea Underground project, $2.5 million is
scheduled for the Wassa area, $2.4 million is expected to be spent on the
properties in Sierra Leone and Mali, both in West Africa, $1.7 million is
expected to be used to identify and evaluate projects in South America,
including some of Guyanors holdings, and $1.6 million is budgeted for our
project generation program.

We entered, subject to definitive documentation and government approval, into a
joint venture agreement in late 2003 to invest up to $6 million over the next
four years in the Mano River project in Sierra Leone via an earn-in agreement
with a junior exploration company which now holds a group of gold exploration
properties in Sierra Leone. The initial $6 million, if fully funded (we can
terminate the joint venture agreement after spending $1.0 million) would yield
a 51% interest in the joint venture. Further provisions of the joint venture
agreement provide the opportunity to acquire up to 85% of the joint venture by
continued long term funding. Spending was nil in 2003.

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In late 2003 we entered into a second joint venture agreement, subject to
definitive documentation and government approval, agreeing to fund exploration
work on the Mininko gold property in Mali. Funding of $2.6 million would earn
a 51% interest in the joint venture. We can terminate the joint venture
agreement after spending $0.4 million, of which $0.1 million was spent in 2003.
The joint venture agreement provides that we can earn up to an 82.5% interest
by continued funding of exploration and development if warranted.

We also provided $0.9 million of funding during 2003 to a junior exploration
company working in South America. The Guyanor properties were maintained on a
care and maintenance basis during 2003 but we expect to initiate new
exploration efforts there in 2004 focusing on further evaluation of our
existing properties and recently acquired properties.

We do not believe it to be cost effective at this point to add exploration
staff or to establish additional exploration offices. As such, we expect to
utilize funding of joint ventures for much of our exploration activities
outside the Bogoso/Prestea area where our current exploration staff resides.

LIQUIDITY AND CAPITAL RESOURCES

Equity offerings and profitable operations at Bogoso/Prestea contributed to a
$70.0 million net increase in cash and cash equivalents since December 31,
2002. During 2003 we raised a net $102.9 million from equity offerings, $1.9
million from exercise of stock options and $8.6 million from exercises of
warrants. Cash flow from operations before working capital changes totaled
$30.5 million, versus $7.2 million in 2002. Higher gold prices and higher gold
production were responsible for the improvement in cash from operations. Higher gold prices and a higher stock price have generated interest in
the gold industry and in our company and allowed us access to the equity
markets during 2003. There can be no assurance that such favorable market
conditions will continue or that we will be able to access the equity markets
in the future on such favorable conditions.

Investing activities consumed $70.2 million of cash during the year. Cash
spent at Wassa on the feasibility study, property-holding costs, a royalty
buy-out, and construction totaled $32.5 million while development work and new
fixed assets at Bogoso/Prestea consumed $14.9 million including $4.3 million
for the Bondaye processing plant purchase. We spent $4.5 million on deferred exploration
projects, including $2.2 million on the sulfide project, and invested an
additional $3.7 million in equipment, site maintenance, engineering and
geologic analysis at the Prestea Underground. Miscellaneous items accounted
for $1.2 million. Spending to acquire and develop the Mampon property totaled
$13.4 million. The first of three $1.0 million deferred payments from the
Gross Rosebel sale in 2001 was received early in 2003.

Liquidation of debt, including the $2.0 million due the sellers of BGL,
consumed $5.3 million of cash leaving only $0.8 million of debt on the balance
sheet at year-end. Shareholders equity stood at $198.4 million at December
31, 2003, up from $49.4 million at the end of December 2002, and working
capital totaled $96.8 million at December 31, 2003, up from $22.0 million at
the end of 2002.

Outlook

We expect that Bogoso/Prestea will continue generating positive operating cash
flows in 2004, but will require additional cash for the expansion project
described above. It is anticipated that Wassa will also generate a positive
operational cash flow once operations begin in early 2004 but will need
additional funds in late 2004 when the mining fleet is purchased.

At December 31, 2003 there was approximately $90.0 million of cash and cash
equivalents on hand. We anticipate capital spending of approximately
$88
million in 2004:

AmountProject
    
    (millions)Wassa
    
    $
    31Bogoso/Prestea
    
    
    38Prestea Underground
    
    
    9


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AmountProject
    
    (millions)Other
    
    
    10Total
    
    $
    88


LOOKING AHEAD

Our main objectives in 2004 are:



| |  |  | Continued orderly and efficient mining of Prestea Plant North ores
allowing an adequate flow of oxide and transition ores to the Bogoso
processing plant;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Completion of construction and orderly start-up of Wassa gold production;
| | - |  | -------------------------------------------------------------------------



| |  |  | Re-assembly of the Bondaye processing plant near Prestea to treat non-refractory ores by the end of 2004;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Commence conversion of the Bogoso processing plant to a BIOX facility to treat
refractory sulfide and transition ores beginning in 2005;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continued evaluation of the Prestea Underground reserve potential;
| | - |  | ------------------------------------------------------------------



| |  |  | A substantial increase in exploration efforts with a focus on Ghana
and West Africa and follow-up of certain properties in South America;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continuation of efforts to seek out and evaluate acquisition and
growth opportunities in Ghana and elsewhere; and
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Evaluate and rationalize our South American assets.
| | - |  | ---------------------------------------------------

We expect gold production at Bogoso/Prestea of approximately 135,000 to 155,000
ounces in 2004 at a projected cash operating cost of $200 to $220 per ounce and
production of approximately 50,000 to 55,000 ounces at Wassa at a cash
operating cost of about $200 to $240 per ounce bringing total 2004 production
to approximately 185,000 to 210,000 ounces at an average cash operating cost of
around $200 to $225 per ounce. The Bogoso/Prestea production estimate excludes
any contribution from the expansion project.

As more fully disclosed in Item 1 Risk Factors, numerous factors could cause our
estimates and expectations to be wrong or could lead our management to make changes in
our plans. Under any of these circumstances, the estimates
described above would likely change materially.

RECENT ACCOUNTING PRONOUNCEMENTS

In 2003, the Canadian Institute of Chartered Accountants (the CICA) issued
AcG 14  Disclosure of Guarantees. The guideline presents the views of the
Canadian Accounting Standards Board on financial statement disclosures to be
made by a guarantor about its obligations under guarantees. The guideline is
effective for all fiscal years beginning on or after January 1, 2003, which is
our fiscal year beginning January 1, 2003 in our case. The adoption of this
guideline had no material impact on our results of operations or financial
position during 2003.

In 2002, the CICA issued Section 3063  Impairment of Long-Lived Assets
(CICA 3063). The guidelines in CICA 3063 establish standards for the
recognition, measurement and disclosure of the impairment of non-monetary
long-lived assets held for use. The guideline is effective for all fiscal
years beginning on or after April 1, 2003, which is our fiscal year beginning
January 1, 2004. We have not yet determined the expected effect,
if any, on our results of operations or financial position upon the
implementation of this guideline.

In 2002, the CICA issued Section 3475  Disposal of Long-Lived Assets and
Discontinued Operations. The guidelines in CICA 3475 establish standards for
the recognition, measurement, presentation and disclosure of the

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disposal of long-lived assets. It also establishes standards for the
presentation and disclosure of discontinued operations, whether or not they
include long-lived assets. The guideline is effective for asset disposals
after May 1, 2003. The adoption of this guideline had no material impact on
our results of operations or financial position during 2003.

In 2002, the CICA issued Section 3110  Asset Retirement Obligations. The
guideline establishes standards for the recognition, measurement and disclosure
of liabilities for asset retirement obligations and the associated costs. The
guideline is effective for all fiscal years beginning on or after January 1,
2004, which is our fiscal year beginning January 1, 2004. We
adopted the provisions of CICA 3110 as of January 1, 2003 which was treated as
a change in accounting principle. See Notes 2 and 13 in the attached
financial statements for a discussion of the impact of this action.

In November 2003, the CICA amended CICA 3870  Stock-based Compensation and
Other Stock-base Payments to require recognition at the date of grant, of
expense for stock option grants after December 31, 2003 in an amount equal to
the fair value of the option. In light of this development we began
expensing stock options, as required in CICA 3870, during 2003. The impact of
this election resulted in recognition of approximately $1.0 million of stock
option expense in 2003.

In December 2001, the CICA issued Accounting Guideline 13 (AcG-13), Hedging
Relationships. The guideline establishes requirements for the identification,
documentation and effectiveness of hedging relationships, which would have been
effective for fiscal years beginning on or before July 1, 2002. During 2002,
the implementation date was delayed and the guidance is now effective for fiscal years
beginning after July 1, 2003. We do not expect AcG-13 to have a material
impact on our results of operation or financial position since we have no hedge
relationships.

MINING IN GHANA

We continuously evaluate the social and political aspects of Ghana and of West
Africa in general to apprise ourselves of the social situation and political
risks that exist in the region. Ghana has benefited from an extended period of
political stability and a democratic governmental system including orderly
governmental transitions. It is our belief that Ghana is committed to creating
a stable political and economic environment that will foster additional
economic growth.

Ghana is endowed with abundant mineral resources and is actively pursuing
policies designed to support expansion of its mineral industry. Because of the
political stability and supportive policies, several international mineral
companies have initiated activities in Ghana in recent years and we understand that these
companies now have in place plans to invest significant new sums in gold
exploration and development.

It is our intent to be a responsible corporate citizen of Ghana and as such we
have worked diligently to establish excellent working relationships with both
local and federal governmental authorities as well as with the local citizens
in the areas surrounding our operations.

We have experienced ongoing incidents of artisanal miners illegally working on
our properties in Ghana. While we are sympathetic to the economic needs of
those engaged in this activity, illegal mining typically results in
uncontrolled environmental damage and is often conducted in an unsafe manner.
In addition, failure to discourage illegal mining on our properties could
jeopardize legal title to our mineral rights. As such we have sought to
discourage this activity both by dialogue and by establishing a security
presence. The governmental authorities in western Ghana are aware of the
illegal mining situation and have been of assistance in our efforts to
discourage such activity.

SEASONALITY

Most of our operations are in tropical climates which experience annual rainy
seasons. Mining operations are not materially affected by the rainy seasons in
Ghana but exploration efforts in Ghana and in the Guiana Shield in South
America are generally timed to avoid the rainy periods to ease transportation
logistics associated with wet roads and swollen rivers.

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RELATED PARTY TRANSACTIONS

Our President and CEO, Peter J. Bradford, participated in our private placement
in January 2002, paying $0.1 million for 200,000 units, each unit consisting of
one share of our common stock and one half warrant to purchase our common
shares at $0.70 until January 11, 2004. In December 2003 Mr. Bradford
exercised the 100,000 warrants obtained in this transaction.

During 2003 we obtained legal services from a legal firm to which one of our
directors is of counsel. Total value of all services purchased during 2003 was
$0.2 million. Our director did not personally perform any legal services for
us during 2003 nor did he benefit directly or indirectly from payments for the
services performed by the firm.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our financial statements reflect the application of Cdn GAAP, which is
different in certain material respects from US GAAP. The accounting policies
reflected therein are generally those applied by similarly situated mining
companies in Canada. Our accounting policies under Canadian GAAP are
described in Note 3 to our consolidated financial statements.

Preparation of our consolidated financial statements requires the use of
estimates and assumptions that can affect reported amounts of assets,
liabilities, revenues and expenses. Accounting policies relating to asset
impairments, deprecation and amortization of mine property and property plant
and equipment, and site reclamation/closure accruals are subject to estimates
and assumptions regarding reserves, gold recoveries, future gold prices and
future mining activities.

Decisions to write off (or not to write off) all or a portion of our investment
in various properties, especially exploration properties, subject to impairment
analysis are based on our judgment as to the actual value of the properties and
are therefore subjective in most cases. In recent years we have written off
substantially all of our pre-1999 investments in exploration properties based
upon our assessments of the amounts recoverable from these properties.
Additional exploration properties were found to be impaired in the current
period and were written off during 2003. We continue to retain title to
certain properties after impairment write-offs as future events and discoveries
may ultimately prove that they have significant value.

Mine properties recorded on our financial records are amortized using a
units-of-production method over proven and probable 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.

Accruals of site reclamation and closure costs involve estimates of the extent
and timing of future environmental disturbances, the cost of and technology
available to reclaims such disturbances, changing environmental requirements,
mine life and reserves to be mined.

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OFF BALANCE SHEET ARRANGEMENTS

We have no off balance sheet arrangements.

TABLE OF CONTRACTUAL OBLIGATIONS

Payment due by periodMoreContractual Obligations
    
    
    
    
    
    Less than
    
    1-3
    
    3-5
    
    than(as of December 31, 2003)
    
    Total
    
    1 year
    
    years
    
    years
    
    5 yearsLong term debt
    
    $
    914
    
    
    $
    186
    
    
    $
    372
    
    
    $
    356
    
    
    $
    Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligations
    
    
    3,696
    
    
    
    3,696
    
    
    
    
    
    
    
    
    
    
    
    Other long term liabilities reflected on the
balance sheet under GAAP
    
    
    7,980
    
    
    
    350
    
    
    
    3,518
    
    
    
    195
    
    
    
    3,917





ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk includes, but is not limited to, the following
risks: changes in interest rates on our investment portfolio, changes in
foreign currency exchange rates and commodity price fluctuations.

Interest Rate Risk

We currently have minimal debt and thus no material interest rate exposure
related to debt. When appropriate we invest excess cash in short-term debt
instruments of the United States and Canadian Governments and their agencies on
a fixed interest rate basis. Over time the rates received on such investments
may fluctuate with changes in economic conditions. As a result our investment
income may fall short of expectations during periods of lower interest rates.
We estimate that given the cash balances expected during 2004, a one percent
change in interest rates would result in a $0.7 million change in interest
income. We may in the future actively manage our exposure to interest rate
risk.

Foreign Currency Exchange Rate Risk

The price of gold is denominated in United States dollars and the majority of
our revenues and expenses are denominated in United States dollars. To the
extent there are fluctuations in local currency exchange rates against the
dollar, the devaluation of a local currency is generally economically neutral
or beneficial to the operation because local salaries and supplies will
decrease against the US dollar revenue stream. Approximately 26% of our cash
and cash equivalents were invested in Canadian dollar treasury notes at
December 31, 2003. While we have realized exchange gains on such investments
during 2003, a decrease in the value of the Canadian dollar versus the US
dollar could result in exchange losses. We currently do not utilize market
risk sensitive instruments to manage our exposure.

Commodity Price Risk

We are engaged in gold mining and related activities, including exploration,
extraction, processing and reclamation. Gold is our primary product and, as a
result, changes in the price of gold could significantly affect our results of
operations and cash flows. According to current estimates, a $10 change in the
price of gold would result in a $2 million change in pre-tax earnings and cash
flows during 2004. We have in the past purchased puts but we have no puts
outstanding at the end of 2003. We may in the future more actively manage our
exposure through hedging programs.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements of
Golden Star Resources Ltd.

Managements Responsibility for Financial Information
    
    
    56Auditors Report
    
    
    57Consolidated Balance Sheets as of December 31, 2003 and 2002
    
    
    58Consolidated Statements of Operations for the years ended
December 31, 2003, 2002 and 2001
    
    
    59Consolidated Statement of Changes in Shareholders Equity for the years ended
December 31, 2003, 2002 and 2001
    
    
    60Consolidated Statements of Cash Flows for the years ended
December 31, 2003, 2002 and 2001
    
    
    61Notes to the Consolidated Financial Statements
    
    
    62-79


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MANAGEMENTS RESPONSIBILITY FOR FINANCIAL INFORMATION

To the Shareholders of
Golden Star Resources Ltd.:

The consolidated financial statements and all information in the Annual Report
are the responsibility of the Board of Directors and management. The
consolidated financial statements have been prepared by management based on
information available to January 29, 2004, and are in accordance with
accounting principles generally accepted in Canada.

A system of internal accounting and administrative controls is maintained by
management in order to provide reasonable assurance that financial information
is accurate and reliable, and that our assets are safeguarded. Limitations
exist in all cost effective systems of internal controls. Our systems have
been designed to provide reasonable but not absolute assurance that financial
records are adequate to allow for the completion of reliable financial
information and the safeguarding of our assets. We believe that the systems
are adequate to achieve the stated objectives.

The Audit Committee of the Board of Directors is comprised of three outside
directors, operates in accordance with its charter and meets quarterly with
management and the independent auditors to ensure that management is
maintaining adequate internal controls and systems and to approve the annual
and quarterly consolidated financial statements of the Company. The Committee
also reviews the audit plan of the independent auditors and discusses the
results of their audit and their report prior to submitting the consolidated
financial statements to the Board of Directors for approval.

The consolidated financial statements have been audited by
PricewaterhouseCoopers LLP, Chartered Accountants, who were appointed by the
shareholders. The auditors report outlines the scope of their examination and
their opinion on the consolidated financial statements.

/s/ Peter J. Bradford
    
    
    
    /s/ Allan J. MarterPeter J. Bradford
President and
Chief Executive Officer
    
    
    
    Allan J. Marter
Senior Vice President and
Chief Financial OfficerJanuary 29, 2004
    
    
    
    January 29, 2004


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AUDITORS REPORT

To the Shareholders of
Golden Star Resources Ltd.:

We have audited the consolidated balance sheets of Golden Star Resources Ltd.
as of December 31, 2003 and 2002 and the consolidated statements of operations,
changes in shareholders equity and cash flows for each of the three years in
the period ended December 31, 2003. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Canada and in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform an audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as of
December 31, 2003 and 2002, and the consolidated results of its operations and
cash flows for each of the three years in the period ended December 31, 2003,
in accordance with accounting principles generally accepted in Canada.

/s/ PricewaterhouseCoopers LLP
Chartered Accountants
Calgary, Alberta, Canada

January 29, 2004

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GOLDEN STAR RESOURCES LTD.
CONSOLIDATED BALANCE SHEETS
(Stated in thousands of United States dollars except share amounts)

As of December 31,ASSETS
    
    2003
    
    2002CURRENT ASSETSCash and cash equivalents (Note 3)
    
    $
    89,970
    
    
    $
    20,016Marketable securities (Note 5)
    
    
    
    
    
    
    906Accounts receivable
    
    
    790
    
    
    
    1,977Inventories (Note 6)
    
    
    12,661
    
    
    
    8,421Due from sale of property (Note 7)
    
    
    1,000
    
    
    
    1,000Other current assets
    
    
    514
    
    
    
    523Total Current Assets
    
    
    104,935
    
    
    
    32,843RESTRICTED CASH (Note 14)
    
    
    3,317
    
    
    
    3,365DUE FROM SALE OF PROPERTY (Note 7)
    
    
    1,000
    
    
    
    2,000DEFERRED EXPLORATION AND DEVELOPMENT COSTS (Note 8)
    
    
    9,108
    
    
    
    4,743PROPERTY, PLANT AND EQUIPMENT (Note 9)
    
    
    18,202
    
    
    
    8,490MINING PROPERTIES (Note 10)
    
    
    56,808
    
    
    
    17,580MINE CONSTRUCTION-IN-PROGRESS (Note 11)
    
    
    27,376
    
    
    
    4,543OTHER ASSETS
    
    
    1,645
    
    
    
    571Total Assets
    
    $
    222,391
    
    
    $
    74,135LIABILITIESCURRENT LIABILITIESAccounts payable
    
    $
    3,268
    
    
    $
    4,109Construction retention payable
    
    
    1,350
    
    
    
    Royalties payable
    
    
    532
    
    
    
    338Other accrued liabilities
    
    
    2,859
    
    
    
    2,870Current debt (Note 12)
    
    
    142
    
    
    
    3,563Total Current Liabilities
    
    
    8,151
    
    
    
    10,880LONG TERM DEBT (Note 12)
    
    
    657
    
    
    
    1,727ASSET RETIREMENT OBLIGATIONS (Note 13)
    
    
    7,745
    
    
    
    7,246Total Liabilities
    
    
    16,553
    
    
    
    19,853MINORITY INTEREST
    
    
    7,476
    
    
    
    4,898COMMITMENTS AND CONTINGENCIES (Note 14)SHAREHOLDERS EQUITYSHARE CAPITALFirst Preferred Shares, without
par value, unlimited shares authorized.
No shares issued
    
    
    
    
    
    
    Common shares, without par value, unlimited shares authorized. Shares
issued and outstanding: 132,924,278 at December 31, 2003; 87,400,702
at December 31, 2002
    
    
    327,578
    
    
    
    201,039DEFICIT
    
    
    (129,216
    )
    
    
    (151,655
    )Total Shareholders Equity
    
    
    198,362
    
    
    
    49,384Total Liabilities and Shareholders Equity
    
    $
    222,391
    
    
    $
    74,135


The accompanying notes are an integral part of these consolidated financial statements.

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


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

For the years ended December 31,2003
    
    2002
    
    2001REVENUEGold sales
    
    $
    63,512
    
    
    $
    38,091
    
    
    $
    23,801Interest and other
    
    
    858
    
    
    
    711
    
    
    
    85764,370
    
    
    
    38,802
    
    
    
    24,658EXPENSESMining operations
    
    
    32,125
    
    
    
    26,747
    
    
    
    24,824Depreciation, depletion and amortization
    
    
    4,993
    
    
    
    2,459
    
    
    
    3,420Accretion of asset retirement amortization
    
    
    578
    
    
    
    
    
    
    
    Exploration expense
    
    
    594
    
    
    
    485
    
    
    
    204General and administrative expense
    
    
    5,566
    
    
    
    3,886
    
    
    
    2,669Abandonment and impairment of mineral properties
    
    
    175
    
    
    
    
    
    
    
    15,010Gain on sale of assets
    
    
    
    
    
    
    (425
    )
    
    
    Interest expense
    
    
    42
    
    
    
    265
    
    
    
    833Foreign exchange gain
    
    
    (2,331
    )
    
    
    (139
    )
    
    
    (50
    )Total expenses
    
    
    41,742
    
    
    
    33,278
    
    
    
    46,910INCOME/(LOSS) BEFORE THE UNDERNOTED
    
    
    22,628
    
    
    
    5,524
    
    
    
    (22,252
    )Gain on sale of marketable securities (Note 5)
    
    
    1,905
    
    
    
    
    
    
    
    Omai preferred share redemption premium
    
    
    
    
    
    
    170
    
    
    
    583Income/(loss) before minority interest
    
    
    24,533
    
    
    
    5,694
    
    
    
    (21,669
    )Minority interest
    
    
    (2,577
    )
    
    
    (838
    )
    
    
    1,085NET INCOME/(LOSS) BEFORE TAX
    
    
    21,956
    
    
    
    4,856
    
    
    
    (20,584
    )Income tax (Note 17)
    
    
    
    
    
    
    
    
    
    
    NET INCOME/(LOSS)
    
    $
    21,956
    
    
    $
    4,856
    
    
    $
    (20,584
    )NET INCOME/(LOSS) PER COMMON SHARE  BASIC (Note 18)
    
    $
    0.198
    
    
    $
    0.070
    
    
    $
    (0.488
    )NET INCOME/(LOSS) PER COMMON SHARE  DILUTED (Note
18)
    
    $
    0.186
    
    
    $
    0.063
    
    
    $
    (0.488
    )WEIGHTED AVERAGE SHARES OUTSTANDING
(in millions of shares)
    
    
    111.0
    
    
    
    72.4
    
    
    
    42.2


The accompanying notes are an integral part of these consolidated financial statements.

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

EquityCommon
    
    
    
    
    
    
    
    
    
    ComponentStock
    
    
    
    
    
    
    
    
    
    ofNumber of
    
    Share
    
    
    
    
    
    ConvertibleShares
    
    Capital
    
    Warrants
    
    Debentures
    
    DeficitBalance at December 31, 2000
    
    
    37,588,988
    
    
    $
    159,642
    
    
    $
    1,341
    
    
    $
    984
    
    
    $
    (135,927
    )Shares issued under warrants
    
    
    2,738,660
    
    
    
    1,282
    
    
    
    
    
    
    
    
    
    
    
    Warrants issued
    
    
    
    
    
    
    
    
    
    
    401
    
    
    
    
    
    
    
    Warrants exercised
    
    
    
    
    
    
    1,332
    
    
    
    (1,332
    )
    
    
    
    
    
    
    Debenture conversions
    
    
    2,098,567
    
    
    
    1,469
    
    
    
    
    
    
    
    (439
    )
    
    
    Shares issued
    
    
    6,833,333
    
    
    
    4,204
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,584
    )Balance at December 31, 2001
    
    
    49,259,548
    
    
    
    167,929
    
    
    
    410
    
    
    
    545
    
    
    
    (156,511
    )Shares issued
    
    
    31,506,000
    
    
    
    27,507
    
    
    
    
    
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    (2,558
    )
    
    
    
    
    
    
    
    
    
    
    Shares issued under options
    
    
    547,916
    
    
    
    520
    
    
    
    
    
    
    
    
    
    
    
    Shares issued under warrants
    
    
    2,535,960
    
    
    
    1,778
    
    
    
    
    
    
    
    
    
    
    
    Stock bonus
    
    
    107,000
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    Debenture conversions
    
    
    2,994,278
    
    
    
    2,903
    
    
    
    
    
    
    
    (545
    )
    
    
    Warrants issued
    
    
    
    
    
    
    
    
    
    
    1,817
    
    
    
    
    
    
    
    Warrants exercised
    
    
    
    
    
    
    397
    
    
    
    (397
    )
    
    
    
    
    
    
    Warrants issued to acquire property
    
    
    
    
    
    
    
    
    
    
    255
    
    
    
    
    
    
    
    Other
    
    
    450,000
    
    
    
    400
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,856Balance at December 31, 2002
    
    
    87,400,702
    
    
    
    198,954
    
    
    
    2,085
    
    
    
    
    
    
    
    (151,655
    )Shares issued
    
    
    33,030,000
    
    
    
    107,598
    
    
    
    
    
    
    
    
    
    
    
    Issue costs
    
    
    
    
    
    
    (6,455
    )
    
    
    
    
    
    
    
    
    
    
    Warrants issued
    
    
    
    
    
    
    
    
    
    
    1,780
    
    
    
    
    
    
    
    Warrants exercised
    
    
    
    
    
    
    1,504
    
    
    
    (1,504
    )
    
    
    
    
    
    
    Shares issued under options
    
    
    1,518,420
    
    
    
    2,858
    
    
    
    
    
    
    
    
    
    
    
    Shares issued under warrants
    
    
    8,167,956
    
    
    
    8,595
    
    
    
    
    
    
    
    
    
    
    
    Stock bonus
    
    
    57,200
    
    
    
    118
    
    
    
    
    
    
    
    
    
    
    
    Shares issued to acquire property
    
    
    2,750,000
    
    
    
    12,045
    
    
    
    
    
    
    
    
    
    
    
    Cumulative effect of change in
accounting method (Note 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    483Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,956Balance at December 31, 2003
    
    
    132,924,278
    
    
    $
    325,217
    
    
    $
    2,361
    
    
    $
    
    
    
    $
    (129,216
    )


The accompanying notes are an integral part of these consolidated financial statements.

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

For the years ended December 31,2003
    
    2002
    
    2001OPERATING ACTIVITIES:Net income/(loss)
    
    $
    21,956
    
    
    $
    4,856
    
    
    $
    (20,584
    )Reconciliation of net income/(loss) to net cash
used in operating activities:Depreciation, depletion and amortization
    
    
    4,993
    
    
    
    2,459
    
    
    
    3,423Convertible debentures accretion
    
    
    
    
    
    
    46
    
    
    
    209Premium on Omai preferred share redemption
    
    
    
    
    
    
    (170
    )
    
    
    (583
    )Non-cash employee compensation
    
    
    1,085
    
    
    
    78
    
    
    
    Abandonment and impairment of mineral properties
    
    
    175
    
    
    
    
    
    
    
    15,010Gain on sale of assets
    
    
    
    
    
    
    (425
    )
    
    
    Change in note receivable
    
    
    
    
    
    
    
    
    
    
    (89
    )Restricted cash
    
    
    
    
    
    
    
    
    
    
    782Reclamation expenditures
    
    
    (841
    )
    
    
    (465
    )
    
    
    (244
    )Asset retirement obligation
    
    
    578
    
    
    
    
    
    
    
    Minority interest
    
    
    2,577
    
    
    
    838
    
    
    
    (1,085
    )30,523
    
    
    
    7,217
    
    
    
    (3,161
    )Changes in assets and liabilities:Accounts receivable
    
    
    1,187
    
    
    
    (746
    )
    
    
    (255
    )Inventories
    
    
    (4,240
    )
    
    
    (424
    )
    
    
    3,139Accounts payable
    
    
    690
    
    
    
    45
    
    
    
    2,742Marketable securities
    
    
    906
    
    
    
    (906
    )
    
    
    Other
    
    
    10
    
    
    
    (293
    )
    
    
    (36
    )Net Cash Provided by Operating Activities
    
    
    29,076
    
    
    
    4,893
    
    
    
    2,429INVESTING ACTIVITIES:Expenditures on deferred exploration and development
    
    
    (4,539
    )
    
    
    (208
    )
    
    
    (2,798
    )Expenditures on mining properties
    
    
    (31,142
    )
    
    
    (12,075
    )
    
    
    (2,376
    )Expenditures on property, plant and equipment
    
    
    (10,691
    )
    
    
    (3,430
    )
    
    
    (1,018
    )Expenditures on mine construction-in-progress
    
    
    (22,833
    )
    
    
    
    
    
    
    Omai preferred share redemption
    
    
    
    
    
    
    310
    
    
    
    1,068Asset retirement obligation related assets
    
    
    1,192
    
    
    
    
    
    
    
    Sale of property
    
    
    1,000
    
    
    
    5,425
    
    
    
    Other
    
    
    (1,027
    )
    
    
    (392
    )
    
    
    (62
    )Net Cash Used in Investing Activities
    
    
    (68,040
    )
    
    
    (10,370
    )
    
    
    (5,186
    )FINANCING ACTIVITIES:Issuance of share capital, net of issue costs
    
    
    113,408
    
    
    
    29,095
    
    
    
    2,282Debt repayment
    
    
    (5,289
    )
    
    
    (6,502
    )
    
    
    (1,068
    )Increase in debt
    
    
    799
    
    
    
    2,384
    
    
    
    826Other
    
    
    
    
    
    
    7
    
    
    
    235Net Cash Provided by Financing Activities
    
    
    108,918
    
    
    
    24,984
    
    
    
    2,275Increase/(decrease) in cash and cash equivalents
    
    
    69,954
    
    
    
    19,507
    
    
    
    (482
    )Cash and cash equivalents, beginning of period
    
    
    20,016
    
    
    
    509
    
    
    
    991Cash and cash equivalents end of period
    
    $
    89,970
    
    
    $
    20,016
    
    
    $
    509


See Note 19 for supplemental cash flow information

The accompanying notes are an integral part of these consolidated financial statements.

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

1. Description of Business

We are an international gold mining and exploration company producing gold in
Ghana in West Africa. Through our subsidiaries and joint ventures we own a
controlling interest in four gold properties in Ghana; the Bogoso property
(Bogoso), the Prestea property (Prestea), the Wassa property (Wassa) and
the Prestea underground property (Prestea Underground). Bogoso and Prestea
are adjoining properties and both are owned by our 90% owned subsidiary Bogoso
Gold Limited (BGL). These two properties now function as a single operation
referred to as Bogoso/Prestea.

The Prestea Underground, acquired in 2002 via a joint venture, is located under
our Prestea property and consists of a currently inactive underground gold
mine and associated support facilities, which ceased operating in early 2002.
BGL owns a 66% managing interest in this joint venture as of December 31, 2003
and studies are now underway, under our direction, to determine if the Prestea
Underground mine can be profitably reactivated under our management.

We also own a 90% equity interest in Wexford Goldfields Limited (Wexford)
which owns Wassa and its associated mining rights, located some 35 kilometers
east of Bogoso/Prestea. A CIL processing plant and associated facilities are
currently under construction at Wassa and we expect gold production to commence
early in 2004.

We hold active exploration properties in Ghana and in Suriname and, through our
73%-owned subsidiary, Guyanor Ressources S.A. (Guyanor), we hold interests in
gold exploration properties in French Guiana. We also hold interests in
exploration joint ventures, managed by our joint venture partners, in South
America, and in Mali and Sierra Leone in West Africa.

2. Changes in Accounting Policies



| | (a) |  | Asset retirement obligations  On January 1, 2003 we adopted the
provisions of Canadian Institute of Chartered Accountants Handbook
Section 3110, Asset Retirement Obligations
(CICA 3110). We also
adopted for our US GAAP financial statements, the Financial Accounting
Standards Boards Statement of Financial Accounting Standard No. 143,
Accounting for Asset Retirement Obligations
(SFAS 143) which is
essentially identical to CICA 3110 and which was effective January 1,
2003. Prior to the adoption of these new standards an accrual was made
on each ton mined in an amount designed to accumulate an accrual equal
to estimated future reclamation and closure costs. CICA 3110 and
SFAS 143 require that estimated future cash reclamation and closure costs be
discounted and an asset recorded for the discounted value of the
estimated future costs. It also requires that an accretion expense be
recognized in each period which increments the recorded liability to
eventually equal the cash reclamation costs by the time the projected
reclamation work is performed.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Stock option expense  In 2003 we adopted the provisions of CICA
3870, Stock-Based Compensation and Other Stock-Based Payments.
Accordingly we adopted a fair value based approach wherein the fair
value of option grants is established at the date of the grant using a
Black-Scholes option pricing model. Compensation expense, equal to the
options fair value, is then recognized over the options vesting
periods. For our US GAAP financial statements we also adopted
SFAS 148, Accounting for Stock-Based Compensation  Transition and
Disclosure: an amendment of SFAS 123, which prescribes essentially the
same accounting treatment for stock options as does CICA 3870.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3. Summary of Significant Accounting Policies

Basis of Consolidation and the Preparation of Financial Statements

These consolidated financial statements are prepared and reported in United
States dollars and in accordance with generally accepted accounting principles
in Canada, (Canadian GAAP) which differ in some respects from GAAP

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in the United States (US GAAP). These differences are quantified and
explained in Note 22. The consolidated financial statements include the
accounts of the Company and its majority owned subsidiaries and joint ventures.
All material inter-company balances and transactions have been eliminated.

Fiscal Year

Our fiscal year runs from January 1 to December 31.

Use of Estimates

Preparation of our consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that can affect reported amounts of assets, liabilities,
revenues and expenses. Accounting policies relating to asset impairments,
deprecation and amortization of mine property and property plant and equipment,
and site reclamation/closure accruals are subject to estimates and assumptions
regarding reserves, gold recoveries, future gold prices and future mining
activities.

Cash and Cash Equivalents

We consider all highly liquid marketable securities with maturities at date of
purchase of less than 91 days to be cash equivalents. Our cash equivalents
consist mostly of US and Canadian government treasury bills, agency notes and
money market funds.

Inventories

Stockpiled ore, in-process ore and finished inventory are recorded at the lower
of cost or market, including direct production costs and attributable operating
expenses including depreciation. Materials and supplies are valued at the
lower of average cost or replacement cost.

Marketable Securities

Short term investments in publicly traded marketable securities are recorded at
the lower of cost or quoted market prices, with unrealized losses included in
income. The market value is based on the closing price at the end of the
period, as reported on recognized securities exchanges.

Exploration Property Acquisition, Deferred Exploration and Development Costs

Acquisition, exploration and development costs of exploration properties are
capitalized until viability of the mineral interest owned, or under option, is
determined. Exploration costs not directly related to a property are expensed
as incurred.

Management periodically reviews the carrying value of investments in
acquisition, deferred exploration and development costs. A decision to
abandon, reduce or expand a specific project is based upon many factors
including general and specific assessments of reserves and mineralized
material, anticipated future mineral prices, the anticipated future costs of
exploring, developing and operating a producing mine, the expiration term and
ongoing expenses of maintaining leased mineral properties and the general
likelihood that we will continue exploration. We do not set a pre-determined
holding period for properties with unproven reserves; however, properties which
have not demonstrated suitable metal concentrations at the conclusion of each
phase of an exploration program are re-evaluated to determine if future
exploration is warranted and if their carrying values are appropriate.

If an exploration property is abandoned or it is determined that its carrying
value cannot be supported by future production or sale, the related costs are
charged against operations in the year of abandonment or determination of
value. Any costs incurred for a particular project afterward are expensed as
incurred.

The accumulated costs of mineral properties are reclassed as mine property and
depleted on a units-of-production basis at such time as production commences.

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Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. If
deemed impaired, an impairment loss is measured and recorded based upon the
recoverable value of the asset which generally will be computed using
discounted future cash flows. Estimates of future cash flows are subject to
risks and uncertainties and therefore, it is possible that unexpected changes
could affect the recoverability of investments in long-lived assets.

Property, Plant and Equipment

Property, plant and equipment assets, including buildings, machinery,
equipment, facilities and vehicles are recorded at cost, including direct
acquisition costs. Depreciation is computed using the straight-line method at
rates calculated to depreciate the cost of the assets, less their anticipated
residual values, if any, over their estimated useful lives. Buildings and
processing facilities are depreciated over the life of the reserves of the
associated mining property. Mining equipment, miscellaneous equipment and
light vehicles are depreciated over five years. The net book value of
property, plant and equipment assets at property locations is charged against
income if the site is abandoned and it is determined that the assets cannot be
economically transferred to another project or sold. Major overhauls of mining
equipment that extend the life of such equipment are capitalized and
depreciated on a straight-line basis.

Environmental Rehabilitation

Environmental reclamation and closure liabilities are recognized at the time of
environmental disturbance in amounts equal to the discounted value of expected
future reclamation and closure costs. The discounted cost of future
reclamation and closure activities is capitalized into mine property and
amortized over the life of the property. The estimated future cash costs of
such liabilities are based primarily upon environmental and regulatory
requirements of the various jurisdictions in which we operate. Cash
expenditures for environmental remediation and closure are netted against the
accrual as incurred.

Foreign Currencies and Foreign Currency Translation

Our functional currency is the United States dollar. Transaction amounts
denominated in foreign currencies are translated to US dollars at exchange rates
prevailing at the date of the transaction. The carrying value of monetary
assets and liabilities is translated at the rate of exchange prevailing at the
balance sheet date. Non-monetary assets are translated at the rates of
exchange prevailing when the assets were acquired or the liabilities assumed.
Revenue and expense items are translated at the average rate of exchange during
the period. Translation gains or losses are included in net earnings for the
period.

Canadian currency in these financial statements is denoted as Cdn$, French
currency is denoted as Euro, and Ghanaian currency is denoted as Cedi or
Cedis.

Net Income/( Loss) per Share

Basic income per share is calculated by dividing income/(loss) available to
common shareholders by the weighted average number of common shares outstanding
during the period. The calculation of diluted net income/(loss) per common
share uses the treasury stock method to compute the dilutive effects of stock
options and warrants.

Revenue Recognition

Revenue from the sale of gold is recognized when title and the risk of
ownership pass to the buyer. Title and risk of ownership pass to the buyer
when dore is delivered into the buyers custody. Our gold is sold to a
European bank and revenue is recognized when title is transferred to the
customer at the Accra International Airport in Ghana. The sales price is based
on the London P.M. fix on the day of delivery.

Stock Based Compensation

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As permitted by CICA Handbook Section 3870, Stock Based Compensation and other
Stock-based Payments we elected in the fourth quarter of 2003 to
prospectively measure and expense the fair value of options granted to
employees and directors during 2003. The fair value of options granted is
established at the date of the grant, using the Black-Scholes option-pricing
model. Compensation expense for options with immediate vesting
is recognized in the period of the grant. Compensation expense for options with
graded vesting is recognized on a straight line basis over the vesting periods.

4. Financial Instruments

(a) Fair Value Our financial instruments are comprised of cash, short-term
investments, accounts receivable, restricted cash, accounts payable, accrued
liabilities, accrued wages, payroll taxes and debt. The fair value of cash and
short-term investments, accounts receivable, accounts payable, accrued
liabilities and accrued wages, payroll taxes and debt equals their carrying
value due to the short-term nature of these items. The fair value of
restricted cash is equal to the carrying value as the cash is invested in
short-term, high-quality instruments.

(b) Commodity Instruments In the past we have purchased put option contract
(puts). Puts provide the right, but not the obligation, to sell a specified
number of ounces of gold at a specified price on a specified future transaction
date. Put options thereby provide a floor price for a portion of future
production but they do not limit the upside potential of higher gold prices in
excess of the specified price. If we opt to forego exercising a put option,
the put expires on its specified transaction date. We have not entered into a
hedging program nor do we currently otherwise manage exposure to commodity
price risk. We may in the future more actively manage our commodity price
exposure through hedging programs.

5. Marketable Securities

All of our marketable securities were sold in June 2003 for $2.8 million,
yielding a realized gain of $1.9 million.

6. Inventories

As of December 31,2003
    
    2002Stockpiled ore
    
    $
    4,167
    
    
    $
    2,039In-process
    
    
    2,821
    
    
    
    965Materials and supplies
    
    
    5,673
    
    
    
    5,417Total
    
    $
    12,661
    
    
    $
    8,421


7. Guiana Shield transaction  Gross Rosebel Royalty

In 2001 we sold our 50% interest in the Gross Rosebel exploration property in
South America to Cambior Inc. In addition to a $5.0 million payment received
at closing in 2002, terms of the sale agreement provided that Cambior would
make three deferred payments of $1.0 million each and also pay a royalty on
future gold production. The first of the deferred payments was received in the
first quarter of 2003. The second deferred payment is expected in the first
quarter of 2004, and the third and final payment is expected in the first
quarter of 2005.

8. Deferred Exploration and Development Costs

The consolidated property expenditures for our exploration projects for the
year ended December 31, 2003 were as follows:

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Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeferredExploration &
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration &Development
    
    Capitalized
    
    
    
    
    
    
    
    
    
    DevelopmentCosts
    
    Exploration
    
    
    
    
    
    Impairment
    
    Costsas of 12/31/02
    
    Expenditures
    
    Acquisitions
    
    Write-offs
    
    as of 12/31/03AFRICA:Obuom
    
    $
    269
    
    
    $
    9
    
    
    $
    
    
    
    $
    
    
    
    $
    278Bogoso Sulfide Project
    
    
    3,621
    
    
    
    119
    
    
    
    2,190
    
    
    
    
    
    
    
    5,930Akropong Trend Properties
    
    
    787
    
    
    
    972
    
    
    
    
    
    
    
    
    
    
    
    1,759Beta Boundary
    
    
    
    
    
    
    814
    
    
    
    
    
    
    
    
    
    
    
    814Other Bogoso Area Projects
    
    
    
    
    
    
    109
    
    
    
    
    
    
    
    (109
    )
    
    
    Other West Africa
    
    
    
    
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    130SURINAME:Saramacca
    
    
    
    
    
    
    
    197
    
    
    
    
    
    
    
    
    
    
    
    197FRENCH GUIANAYaou
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    Dorlin
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    (33
    )
    
    
    TOTAL
    
    $
    4,743
    
    
    $
    2,350
    
    
    $
    2,190
    
    
    $
    (175
    )
    
    $
    9,108


Bogoso Sulfide Project

The 1999 Bogoso purchase agreement required us to pay the Bogoso sellers an
amount equal to $5.0 million plus subsequent increases for inflation when we
initiated sulfide mining at Bogoso. The payment date was to be the first
anniversary of the commencement of treatment of sulfide ore at the Bogoso Mine.
In February 2003 we paid the Bogoso sellers $2.0 million, plus expenses of
approximately $0.2 million, to satisfy these obligations in full.

Consolidated property expenditures for our exploration projects for the year
ended December 31, 2002 were as follows:

Deferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeferredExploration &
    
    Capitalized
    
    
    
    
    
    
    
    
    
    Exploration &Development Costs
    
    Exploration
    
    
    
    
    
    Sale of
    
    Development Costsas of 12/31/01
    
    Expenditures
    
    Acquisitions
    
    Property
    
    as of 12/31/02AFRICA:Obuom
    
    $
    
    
    
    $
    14
    
    
    $
    255
    
    
    $
    
    
    
    $
    269Bogoso Sulfide Project
    
    
    3,572
    
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    3,621Akropong Trend Properties
    
    
    642
    
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    787SURINAME:Gross Rosebel
    
    
    8,066
    
    
    
    
    
    
    
    
    
    
    
    (8,066
    )
    
    
    FRENCH GUIANAYaou
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    33Dorlin
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    33TOTAL
    
    $
    12,280
    
    
    $
    208
    
    
    $
    321
    
    
    $
    (8,066
    )
    
    $
    4,743


9. Property, Plant and Equipment

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As of December 31, 2003
    
    As of December 31, 2002Property,
    
    
    
    
    
    Property,
    
    Property,
    
    
    
    
    
    Property,Plant and
    
    
    
    
    
    Plant and
    
    Plant and
    
    
    
    
    
    Plant andEquipment at
    
    Accumulated
    
    Equipment
    
    Equipment at
    
    Accumulated
    
    EquipmentCost
    
    Depreciation
    
    Net Book
    
    Cost
    
    Depreciation
    
    Net BookBogoso/Prestea
    
    $
    15,765
    
    
    $
    4,143
    
    
    $
    11,622
    
    
    $
    5,829
    
    
    $
    3,180
    
    
    $
    2,649Prestea Underground
    
    
    227
    
    
    
    
    
    
    
    227
    
    
    
    325
    
    
    
    
    
    
    
    325Guyanor
    
    
    1,985
    
    
    
    1,952
    
    
    
    33
    
    
    
    1,981
    
    
    
    1,940
    
    
    
    41Wassa
    
    
    6,259
    
    
    
    
    
    
    
    6,259
    
    
    
    5,460
    
    
    
    
    
    
    
    5,460Corporate & other
    
    
    782
    
    
    
    721
    
    
    
    61
    
    
    
    732
    
    
    
    717
    
    
    
    15Total
    
    $
    25,018
    
    
    $
    6,816
    
    
    $
    18,202
    
    
    $
    14,327
    
    
    $
    5,837
    
    
    $
    8,490


10. Mining Properties

As of December 31, 2003
    
    As of December 31, 2002Mine
    
    
    
    
    
    Mine
    
    Mine
    
    
    
    
    
    MineProperty at
    
    Accumulated
    
    Property, Net
    
    Property at
    
    Accumulated
    
    Property, NetCost
    
    Amortization
    
    Book Value
    
    Cost
    
    Amortization
    
    Book ValueBogoso/Prestea
    
    $
    41,885
    
    
    $
    16,856
    
    
    $
    25,029
    
    
    $
    24,798
    
    
    $
    12,842
    
    
    $
    11,956Prestea Underground
    
    
    8,560
    
    
    
    
    
    
    
    8,560
    
    
    
    5,525
    
    
    
    
    
    
    
    5,525Wassa
    
    
    9,778
    
    
    
    
    
    
    
    9,778
    
    
    
    99
    
    
    
    
    
    
    
    99Mampon
    
    
    13,441
    
    
    
    
    
    
    
    13,441
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    73,664
    
    
    $
    16,856
    
    
    $
    56,808
    
    
    $
    30,422
    
    
    $
    12,842
    
    
    $
    17,580


Some prior period numbers have been
adjusted to conform with current year presentation.

Mampon Gold Property Transaction

In June 2003, we acquired from Ashanti Goldfields Company Limited their rights
to Mampon for $9.5 million. Mampon is located on the Asikuma prospecting
license in Ghana which was owned by Birim Goldfields Inc. and which is
contiguous with the northern boundary of Bogoso/Prestea. Ashanti acquired the
rights to Mampon from Birim in 1999. Exploration data supports the
establishment of a probable mineral reserve of approximately 161,000 ounces.
In addition to the $9.5 million purchase price, we agreed to
assume the
responsibility to pay a royalty to Birim for any future production from Mampon.

Subsequent to the Mampon purchase, in a separate transaction in August 2003, we
purchased from Birim for $3.4 million its right to collect the Mampon royalty,
effectively canceling the Mampon royalty. As part of the same Birim
transaction we purchased Birims rights to the Asikuma and Mansiso prospecting
licenses which we now refer to as the Dunkwa properties.

11. Mine Construction-in-Progress

Mine construction in progress represents costs incurred at the Wassa project
subsequent to acquisition. The balance includes feasibility study costs,
equipment purchases and construction costs, including interim payments to the
construction contractor and development costs.

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12. Debt

As of December 31,2003
    
    2002Current DebtOverdraft facility at BGL (Note a)
    
    $
    
    
    
    $
    914Bank loan at BGL (Note b)
    
    
    
    
    
    
    534Accrual of liability to sellers of BGL (Note c)
    
    
    
    
    
    
    2,000Current portion bank loan at Wassa (Note d)
    
    
    
    
    
    
    115Equipment financing loans  Wassa (Note e)
    
    
    142
    
    
    
    Total Current debt
    
    $
    142
    
    
    $
    3,563Long Term debtBank loan at Wassa (Note d)
    
    $
    
    
    
    $
    1,727Equipment financing loans  Wassa (Note e)
    
    
    657
    
    
    
    Total Long Term debt
    
    $
    657
    
    
    $
    1,727


(a) Overdraft facility at BGL Revolving Over-Draft Facility at BGL from
Barclays Bank (Ghana) in the amount of $1.0 million. At December 31, 2003
no amounts were drawn on this line of credit.

(b) Bank Loan A term loan to BGL from CAL Merchant Bank in Ghana in the
original amount of $0.8 million. The final installment on this loan was paid
in December 2003.

(c) Accrual of Liability to Sellers The original BGL purchase agreement of
September 1999 included a contingent $2.0 million reserve-acquisition payment,
due the sellers of BGL, which was triggered by BGLs acquisition of the Prestea
reserves in late 2001. This liability was paid in February 2003.

(d) Wassa Bank Loan A $1.8 million term loan provided by the sellers of
Wassa. Repayment was scheduled to begin on December 13, 2003 with installments
following every three months thereafter, and final payment on September 13,
2007. Interest from September 13, 2002 until repayment begins was capitalized
into the loan. This loan, including accrued interest, was repaid in
October
2003.

(e) Caterpillar Financial
Services Corporation A $0.8 million installment
loan used to purchase mobile equipment at Wassa. Repayable in 60 equal monthly
installments beginning January 2004. Interest rate is 6.25%.

13. Asset Retirement Obligations  Change in Accounting Method

Effective January 1, 2003, we changed our accounting policy for asset
retirement obligations to comply with CICA Handbook Section 3110, Asset
Retirement Obligations. This change was made on a retroactive basis. Upon
the adoption of this new standard, we recognized a $0.5 million reduction in
the carrying value of liabilities related to future reclamation and other asset
retirement obligations. The cumulative effect of the adoption of this new
standard totaled $0.5 million and was recorded as a reduction in the deficit
account in shareholders equity.

Our Asset Retirement Obligations (ARO) recognize the present value of the
ultimate closure cost associated with reclamation, demolition and stabilization
of our mining properties. Included in this liability are the costs of mine
closure and reclamation, processing plant and infrastructure demolition, tailings pond
stabilization and reclamation and environmental monitoring costs.

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The changes in the carrying amount of the ARO during 2003:

Year endedAsset Retirement Obligations
    
    December 31, 2003Balance at beginning of the year as adjusted by the
adoption of CICA 3110
    
    $
    6,816Accretion expense
    
    
    578Reclamation work performed
    
    
    (841
    )New AROs incurred during the period
    
    
    1,192Balance at December 31, 2003
    
    $
    7,745


Prior periods have not been restated in the financial statements due to the
immaterial amounts of the adjustments. We also adopted Statement of Financial
Accounting Standard 143, Accounting for Asset Retirement Obligations for
US GAAP reporting purposes at the beginning of 2003. The provisions of SFAS
143 are very similar to the provisions of CICA 3110.

14. Commitments and Contingencies

(a) Environmental Regulations and Asset Retirement Obligations We are not
aware of any events of material non-compliance with environmental laws and
regulations in our operations which could have a material adverse effect on
our operations or financial condition. The exact nature of environmental
control problems, if any, which we may encounter in the future cannot be
predicted, primarily because of the changing character of environmental
requirements that may be enacted within foreign jurisdictions. Asset
retirement obligations, which include environmental rehabilitation liabilities
for reclamation and for closure costs, were $5.2 million at Bogoso/Prestea at
December 31, 2003, up from $4.9 million at December 31, 2002. Asset retirement
obligations at Wassa totaled $2.5 million at December 31, 2003, up from $2.3
million at the end of 2002.

(b) Cash Restricted for Environmental Rehabilitation Liabilities In 1999, we
were required, according to the acquisition agreement with the sellers of BGL,
to restrict $6.0 million of cash to be used for the ongoing and final
reclamation and closure costs at Bogoso. The withdrawal of these funds must be
agreed to by the sellers, who are ultimately responsible for the reclamation in
the event of our non-performance. In the past the sellers have agreed to allow
disbursement of portions of the restricted cash to us equal to the cash costs
we have incurred for work performed but there have been no agreements for disbursements since 2001. Following the final payment to the
sellers of BGL, we are seeking to obtain an amendment to the agreement that
would remove the restriction and in its place establish a reclamation bond to
meet Ghanas Environmental Protection Agencys reclamation bonding
requirements. At December 31, 2003, approximately $3.3 million of restricted
cash was held as a cash provision against future reclamation commitments at
Bogoso.

(c) Royalties 



| | (i) |  | Wassa: As part of the consideration paid for the Wassa assets,
a gold production royalty (First Royalty) was to be paid to the
sellers on future production from the Wassa property. The First
Royalty was set at $7.00 per ounce of gold produced, increasing by
$1.00 per ounce for each $10.00 increase in the price of gold above
$280 per ounce up to a maximum royalty of $15.00 per ounce at gold
prices of $350 per ounce and above. This royalty was capped at $38
million over the life of the mine. We also agreed to pay the sellers a
second production royalty of $8.00 per ounce capped at $5.5 million.
This royalty was in addition to the First Royalty described above. In
October 2003 both of these royalties were repurchased from the sellers
of Wassa for a total of $11.5 million.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) |  | Bogoso/Prestea: A gold production royalty was included as a
component of total consideration paid for the acquisition of Prestea in
October 2001. The royalty was payable on the first one million ounces
of gold produced from Bogoso/Prestea following our purchase of Prestea.
The amount of the royalty varied, according to a gold price formula,
from a minimum of $6.00 per ounce at gold prices less than $260 per
ounce to a maximum of $16.80 per ounce at gold prices at or above $340
per ounce. In November 2003 we repurchased this royalty for $12.0
million.
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (iii) |  | Dunkwa Properties: In August 2003, as part of the transaction
described in Note 10 above, we agreed to pay Birim a net smelter return
royalty on future gold production from the Mansiso and Asikuma
properties (the Dunkwa Properties), excluding any royalty on the first
200,000 ounces produced from Mampon which is located on the Asikuma
property. The amount of the royalty is based on a sliding scale which
ranges from 2% of net smelter return at gold prices of or below $300
per ounce up to 3.5% for gold prices in excess of $400 per ounce.
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) |  | Government of Ghana: Under the laws of Ghana, a holder of a
mining lease is required to pay an annual royalty of not less than 3%
and not more than 12% of the total revenues earned from the lease area.
The royalty is payable on a quarterly basis. We currently pay a 3%
annual royalty on gold production from Bogoso/Prestea and expect to pay
a royalty at a similar rate on Wassa production. The Government
of Ghana retains the right to increase the amount of the royalty to as
much as 12% based upon a formula related to a companys operating
margin.
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(d) Wassa Construction Contract We entered into a contract with Metallurgical
Design and Management (Pty) Ltd. (MDM), a South African company, in July
2003, for the construction of the CIL processing plant facility and other associated
processing facilities at Wassa. Payments to MDM during 2003 totaled $12.6
million. The total contract amount is set at $14.3 million.

(e) Mano River Joint Venture We entered into a joint venture agreement in
late 2003 to invest up to $6 million over the next four years in the Mano River
project in Sierra Leone via an earn-in agreement with a junior exploration
company which now holds a group of gold exploration properties in Sierra Leone.
The initial $6 million, if fully funded (we can terminate the agreement after
spending $1.0 million) would yield a 51% interest in
the joint venture. Further provisions of the joint venture agreement provide
the opportunity to acquire up to 85% of the joint venture by continued long
term funding. The joint venture agreement is subject to completion of
documentation. Spending during 2003 was nil.

(f) Mininko Joint Venture In late 2003 we entered into a joint venture
agreement, agreeing to fund exploration work on the Mininko gold property in
Mali. Funding of $2.6 million would earn a 51% interest in the joint venture.
We can terminate the joint venture after spending $0.4 million of which $0.1
million was spent in 2003 and included in deferred exploration costs. The
joint venture agreement provides that we can earn up to an 82.5% interest by
continued funding of exploration and development, if warranted. The joint
venture agreement is subject to completion of documentation.

15. Warrants

At December 31, 2003 there were five series of warrants outstanding to purchase
a total of 17.3 million common shares. Of the total, 8.7 million were issued
during 2003 and 8.6 million were issued during 2002:

Warrants
    
    Exercise
    
    
    
    
    
    ExpirationIssued with:
    
    Date issued
    
    outstanding
    
    price
    
    Term
    
    dateEquity offering
    
    July 24, 2002
    
    
    7,728,700
    
    
    Cdn$2.28
    
    2 years
    
    July 24, 2004Broker warrants
    
    July 24, 2002
    
    
    385,000
    
    
    Cdn$2.28
    
    2 years(1)
    
    July 24, 2005Private placement
    
    December 12, 2002
    
    
    490,000
    
    
    
    $1.50
    
    
    2 years
    
    December 12, 2004Equity offering
    
    February 14, 2003
    
    
    8,448,334
    
    
    Cdn$4.60
    
    4 years
    
    February 14, 2007Broker warrants
    
    February 14, 2003
    
    
    280,500
    
    
    Cdn$3.00
    
    1.25 years
    
    May 14, 2004Total
    
    
    
    
    
    
    17,332,534




| | (1) |  | The July 24, 2002 broker warrants are exercisable during a two-year
period beginning July 24, 2003.
| | --- |  | ---------------------------------------------------------------------------------------------------

The investors warrants issued in conjunction with the July 24, 2002 equity
offering are traded on the Toronto Stock Exchange under the symbol GSC.WT. The
investors warrants issued in conjunction with the February 14, 2003

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equity
offering are traded on the Toronto Stock Exchange under the symbol GSC.WT.A.
There is no public market for our other warrants.

16. Stock Based Compensation

(a) Stock Options We have one stock option plan, the 1997 Stock Option
Plan, as amended (the GSR Plan) and options are granted under this plan from
time to time at the discretion of the Board of Directors. Options granted are
non-assignable and are exercisable for a period of ten years or such other
period as stipulated in a stock option agreement between Golden Star and the
optionee. Under the GSR Plan, we may grant options to employees, consultants
and directors of the Company or its subsidiaries for up to 9,000,000 shares of
common stock. Options take the form of non-qualified stock options, and the
exercise price of each option is not less than the market price of our stock on
the date of grant. Options typically vest over periods ranging from
immediately, to four years from the date of grant. Vesting periods are
determined at the discretion of the Board of Directors.

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

2003
    
    2002
    
    2001Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Weighted-Shares
    
    Average Exercise
    
    Shares
    
    Exercise Price
    
    Shares
    
    Average ExerciseGSR Plan
    
    (000s)
    
    Price (Cdn$)
    
    (000s)
    
    (Cdn$)
    
    (000s)
    
    Price (Cdn$)Outstanding at beginning of year
    
    
    4,489
    
    
    
    1.36
    
    
    
    4,595
    
    
    
    1.42
    
    
    
    4,821
    
    
    
    1.56Granted
    
    
    2,354
    
    
    
    3.99
    
    
    
    640
    
    
    
    1.17
    
    
    
    938
    
    
    
    1.02Exercised
    
    
    (1,518
    )
    
    
    1.73
    
    
    
    (548
    )
    
    
    1.49
    
    
    
    
    
    
    
    Forfeited
    
    
    (84
    )
    
    
    2.92
    
    
    
    (198
    )
    
    
    1.76
    
    
    
    (1,164
    )
    
    
    1.69Outstanding at end of year
    
    
    5,241
    
    
    
    2.41
    
    
    
    4,489
    
    
    
    1.36
    
    
    
    4,595
    
    
    
    1.42Options vested and exercisable at year-end
    
    
    3,803
    
    
    
    1.81
    
    
    
    4,006
    
    
    
    1.40
    
    
    
    3,607
    
    
    
    1.49Weighted-average fair value of options
granted during the year
    
    
    
    
    
    
    1.25
    
    
    
    
    
    
    
    0.86
    
    
    
    
    
    
    
    1.02


Options Outstanding
    
    Options ExercisableNumber
    
    Weighted-Average
    
    Weighted-
    
    NumberGSR Plan
    
    Outstanding at
    
    Remaining
    
    Average Exercise
    
    Exercisable
    
    Weighted-AverageRange of Exercise
    
    December 31, 2003
    
    Contractual Life
    
    Price
    
    December 31, 2003
    
    Exercise PricePrices (Cdn$)
    
    (000s)
    
    (years)
    
    (Cdn$)
    
    (000s)
    
    (Cdn$)1.00 to 2.50
    
    
    3,423
    
    
    
    6.4
    
    
    
    1.41
    
    
    
    3,167
    
    
    
    1.372.51 to 4.00
    
    
    1,379
    
    
    
    9.2
    
    
    
    3.44
    
    
    
    526
    
    
    
    3.344.01 to 7.00
    
    
    225
    
    
    
    9.7
    
    
    
    5.25
    
    
    
    56
    
    
    
    5.257.01 to 10.00
    
    
    214
    
    
    
    10.0
    
    
    
    8.83
    
    
    
    54
    
    
    
    8.835,241
    
    
    
    7.4
    
    
    
    2.41
    
    
    
    3,803
    
    
    
    1.81


Options granted during 2003:

Number of
    
    
    
    
    
    
    
    
    
    Total FairDate
    
    Options
    
    Strike Price
    
    Fair Value per
    
    Value
    
    OptionGranted
    
    (000s)
    
    (Cdn$)
    
    option (Cdn$)
    
    (000s of Cdn$)
    
    LifeJanuary 30, 2003
    
    
    1,134
    
    
    
    3.14
    
    
    
    0.96
    
    
    
    1,093
    
    
    
    10 yearsMarch 21, 2003
    
    
    225
    
    
    
    2.39
    
    
    
    0.90
    
    
    
    203
    
    
    
    10 yearsJuly 30, 2003
    
    
    556
    
    
    
    4.00
    
    
    
    1.17
    
    
    
    648
    
    
    
    10 yearsSeptember 18, 2003
    
    
    225
    
    
    
    5.25
    
    
    
    1.94
    
    
    
    436
    
    
    
    10 yearsOctober 30, 2003
    
    
    32
    
    
    
    7.45
    
    
    
    2.21
    
    
    
    71
    
    
    
    10 yearsDecember 18, 2003
    
    
    182
    
    
    
    9.07
    
    
    
    2.67
    
    
    
    486
    
    
    
    10 yearsTotal
    
    
    2,354
    
    
    
    
    
    
    
    
    
    
    
    2,937


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Options granted during 2002:

Number of
    
    
    
    
    
    
    
    
    
    Total FairDate
    
    Options
    
    Strike Price
    
    Fair Value per
    
    Value
    
    OptionGranted
    
    (000s)
    
    (Cdn$)
    
    option (Cdn$)
    
    (000s of Cdn$)
    
    LifeJanuary 29, 2002
    
    
    608
    
    
    
    1.16
    
    
    
    0.83
    
    
    
    505
    
    
    
    10 yearsJuly 29, 2002
    
    
    32
    
    
    
    1.40
    
    
    
    1.27
    
    
    
    41
    
    
    
    10 yearsTotal
    
    
    640
    
    
    
    
    
    
    
    
    
    
    
    546


The fair value of options granted during 2003, 2002 and 2001 were estimated at
the grant dates using the Black-Scholes option-pricing model with the following
weighted average assumptions:

2003
    
    2002
    
    2001Expected volatility
    
    34%
    
    89% to 102%
    
    81% to 84%Risk-free interest rate
    
    3.01% - 4.46%
    
    3.68% - 4.47%
    
    4.94% - 5.08%Expected lives
    
    4 to 5 years
    
    5 years
    
    5 yearsDividend yield
    
    0%
    
    0%
    
    0%


In November 2003 the Accounting Standards Board of the Canadian Institute of
Certified Accountants amended CICA Handbook CICA 3870,  Stock-based
Compensation and other Stock-based Payments to require expensing of all stock
based compensation awards for fiscal years beginning on or after January 1,
2004. In light of this development in 2003 we adopted
the new provision of CICA 3870. As a
result we recognized stock based compensation expense of approximately $1.0
million in 2003 for stock options granted during 2003. As an incentive for
early adoption, Section 3870 did not require retroactive adjustments and
restatements of prior years financial data.

Prior to 2003 we did not recognize compensation costs related to stock options
granted. Had compensation costs been recognized for options vesting in 2002
and 2001, our net income and earnings per share would have been reduced to the
pro forma amounts shown below:

2003
    
    2002
    
    2001Net income/(loss)
    
    As reported
    
    $
    21,956
    
    
    $
    4,856
    
    
    $
    (20,584
    )Pro forma
    
    $
    21,882
    
    
    $
    4,339
    
    
    $
    (21,073
    )Net income/(loss) per share
    
    As reported
    
    $
    0.198
    
    
    $
    0.07
    
    
    $
    (0.49
    )Pro forma
    
    $
    0.198
    
    
    $
    0.06
    
    
    $
    (0.50
    )


(b) Stock Bonus Plan In December 1992, we established an Employees Stock
Bonus Plan (the Bonus Plan) for any full-time or part-time employee (whether
or not a director) of the Company or any of our subsidiaries who has rendered
meritorious services, which contributed to the success of the Company or any of
its subsidiaries. The Bonus Plan provides that a specifically designated
committee of the Board of Directors may grant bonus common shares on terms that it may
determine, within the limitations of the Bonus Plan and subject to the rules of
applicable regulatory authorities. The Bonus Plan, as amended, provided for
the issuance of 900,000 common shares of bonus stock of which 445,820 common
shares have been issued as of December 31, 2003.

During 2003, 2002 and 2001 a total of 57,200, 107,000 and nil common shares
respectively were issued to employees pursuant to the Bonus Plan. We
recognized compensation expense related to bonuses under the Bonus Plan during
2003, 2002 and 2001 of $117,800, $78,000 and nil.

17. Income Taxes

We recognize future tax assets and liabilities based on the difference between
the financial reporting and tax basis of assets and liabilities using the
enacted tax rates expected to be in effect when the taxes are paid or
recovered. We

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provide a valuation allowance against future tax assets for
which we do not consider realization of such assets to meet the required more
likely than not standard.

We have not provided current nor future income tax for any of the periods
presented because our loss carryovers and other future tax assets exceed our
future tax liabilities. A full valuation allowance has been provided against
our net future tax assets.

Our future tax assets and liabilities at December 31, 2003 and 2002 include the
following components:

2003
    
    2002Future tax assets:Offering costs
    
    $
    2,835
    
    
    $
    1,226Loss carryovers
    
    
    62,745
    
    
    
    47,287Tax
pools
    
    
    16,366
    
    
    
    13,456Valuation allowance
    
    
    (66,222
    )
    
    
    (60,295
    )Future tax assets
    
    $
    15,724
    
    
    $
    1,674Future tax liabilities:Mine property costs
    
    $
    (15,724
    )
    
    $
    (1,674
    )Future tax liabilities
    
    $
    (15,724
    )
    
    $
    (1,674
    )Net future tax assets/(liabilities)
    
    $
    
    
    
    $
    


A reconciliation of expected income tax on net income/(loss) before minority
interest at statutory rates with the actual expenses (benefit) for income taxes
is as follows:

2003
    
    2002
    
    2001Net income (loss) before minority interest
    
    $
    24,533
    
    
    $
    5,694
    
    
    $
    (22,252
    )Statutory tax rate
    
    
    34.1
    %
    
    
    36.1
    %
    
    
    45.6
    %Tax expense (benefit) at statutory rate
    
    
    8,365
    
    
    
    2,057
    
    
    
    (10,151
    )Enacted future tax rate reductions
    
    
    (490
    )
    
    
    (228
    )Foreign tax rates
    
    
    (6,489
    )
    
    
    (797
    )
    
    
    (391
    )Change in tax rates
    
    
    
    
    
    
    5,870
    
    
    
    Expired loss carryovers
    
    
    2,866
    
    
    
    1,861
    
    
    
    1,214Ghana investment allowance
    
    
    (636
    )
    
    
    (339
    )
    
    
    (79
    )Nondeductible stock option compensation
    
    
    129
    
    
    
    
    
    
    
    Loss carryover not previously recognized
    
    
    
    
    
    
    (9,766
    )
    
    
    Ghana property basis not previously
recognized
    
    
    716
    
    
    
    (5,571
    )
    
    
    Foreign exchange (gain) loss
    
    
    (8,283
    )
    
    
    (3,214
    )
    
    
    1,130Change in valuation allowance
    
    
    3,822
    
    
    
    10,127
    
    
    
    8,277Income tax expense (benefit)
    
    $
    
    
    
    $
    
    
    
    $
    


During 2003, 2002 and 2001, we
recognized $6,455,000, $2,558,000 and
$1,874,000, respectively, of share offering costs. Shareholders equity had
been credited in the amounts of $2,074,000, $822,000 and $602,000 for the tax
benefits of these deductions; however a valuation allowance had been provided
against the full amount of these tax benefits.

At December 31, 2003 we had loss carryovers expiring as follows:

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Canada
    
    Ghana
    
    France2004
    
    $
    4,513
    
    
    $
    
    
    
    $
    11,4672005
    
    
    9,483
    
    
    
    
    
    
    
    21,3012006
    
    
    2,334
    
    
    
    12,660
    
    
    
    44,1402007
    
    
    46
    
    
    
    
    
    
    
    2,5172008
    
    
    1,360
    
    
    
    
    
    
    
    2,5912009
    
    
    2,006
    
    
    
    
    
    
    
    2010
    
    
    19,564
    
    
    
    
    
    
    
    Indefinite
    
    
    50,953
    
    
    
    58,279
    
    
    
    Total
    
    $
    90,259
    
    
    $
    70,939
    
    
    $
    82,016


18. Earnings per Common Share

The following table provides a reconciliation between basic and diluted
earnings per common share:

For the years ended December 31,2003
    
    2002
    
    2001Net Income/(Loss)
    
    $
    21,956
    
    
    $
    4,856
    
    
    $
    (20,584
    )Shares (in millions)Weighted average number of common shares
    
    
    111.0
    
    
    
    72.4
    
    
    
    42.2Dilutive Securities:Options
    
    
    2.7
    
    
    
    1.6
    
    
    
    
    (1)Warrants
    
    
    4.2
    
    
    
    2.7
    
    
    
    
    (1)Weighted average number of dilutive
common shares
    
    
    117.9
    
    
    
    76.7
    
    
    
    42.2Basic Income/(Loss) Per Common Share
    
    $
    0.198
    
    
    $
    0.070
    
    
    $
    (0.488
    )Diluted Income/(Loss) Per Common Share
    
    $
    0.186
    
    
    $
    0.063
    
    
    $
    (0.488
    )




|(1) |  | Since there was a loss in 2001, inclusion of dilutive securities
would have been anti-dilutive.
|--- |  | -----------------------------------------------------------------------------------------------

19. Supplemental Cash Flow Information

The following is a summary of non-cash transactions:

For the years ended December 31,2003
    
    2002
    
    2001Investing:Depreciation charged to projects
    
    $
    
    
    
    $
    
    
    
    $
    3Repayment of note by minority interest holder
    
    
    
    
    
    
    
    
    
    
    150Adjustment to minority interest from note payments
    
    
    
    
    
    
    
    
    
    
    (150
    )Mining properties
    
    
    
    
    
    
    
    
    
    
    85Anvil Purchase transaction:Purchase of Anvils minority interest
    
    
    
    
    
    
    
    
    
    
    (1,549
    )Common shares issued for Anvils minority interest
    
    
    
    
    
    
    
    
    
    
    1,081Mining property
    
    
    
    
    
    
    
    
    
    
    (1,388
    )Extinguishment of note receivable from Anvil
    
    
    
    
    
    
    
    
    
    
    1,857Mine property Prestea reserve liability
    
    
    
    
    
    
    
    
    
    
    (2,000
    )Mine property Prestea
    
    
    
    
    
    
    
    
    
    
    (2,493
    )Prestea acquisition costs paid with common shares
    
    
    
    
    
    
    (400
    )
    
    
    Common shares issued for Prestea acquisition cost
    
    
    
    
    
    
    400
    
    
    
    Receivable on sale of property
    
    
    
    
    
    
    (3,000
    )
    
    
    Acquisition, deferred exploration and development
    
    
    
    
    
    
    3,000
    
    
    
    


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For the years ended December 31,2003
    
    2002
    
    2001Wassa property acquisitionProperty, plant and equipment
    
    
    
    
    
    
    (4,120
    )
    
    
    Reclamation liability assumed
    
    
    
    
    
    
    2,302
    
    
    
    Assumption of bank debt
    
    
    
    
    
    
    1,818
    
    
    
    Minority interest in Prestea Underground joint venture
    
    
    
    
    
    
    2,400
    
    
    
    Mine property Prestea Underground joint venture
    
    
    
    
    
    
    (2,400
    )
    
    
    Warrants issued for Obuom acquisition
    
    
    
    
    
    
    255
    
    
    
    Obuom property acquisition
    
    
    
    
    
    
    (255
    )
    
    
    Acquisition of properties in French Guiana
    
    
    
    
    
    
    (66
    )
    
    
    Guiana Shield transaction property exchange
    
    
    
    
    
    
    66
    
    
    
    Barnex royalty buy-back
    
    
    12,045
    
    
    
    
    
    
    
    Common shares issued for Barnex royalty buy-back
    
    
    (12,045
    )
    
    
    
    
    
    
    Financing:Equity component of convertible debentures
    
    
    
    
    
    
    (545
    )
    
    
    (439
    )Common shares issued upon conversion of convertible debentures
    
    
    
    
    
    
    2,903
    
    
    
    1,469Conversion of convertible debentures
    
    
    
    
    
    
    (2,358
    )
    
    
    (1,030
    )Adjustment of final amount due sellers of BGL
    
    
    
    
    
    
    
    
    
    
    (85
    )Accrual of liability due the sellers
    
    
    
    
    
    
    
    
    
    
    2,000Common shares issued to Barnex for Prestea purchase
    
    
    
    
    
    
    
    
    
    
    2,493


There was no cash paid for taxes during 2003, 2002 and 2001. Cash paid for
interest was less than $0.1 million in 2003, $0.4 million in 2002 and $0.4
million in 2001.

20. Operations by Geographic Area

The following geographic data includes revenues based on product shipment
origin and long-lived assets based on physical location. The corporate entity
has assets in Canada and in the United States.

Net
    
    IdentifiableRevenues
    
    Income(Loss)
    
    Assets2003South America
    
    $
    102
    
    
    $
    (1,411
    )
    
    $
    352Africa
    
    
    63,640
    
    
    
    23,082
    
    
    
    129,409North America  Corporate
    
    
    628
    
    
    
    285
    
    
    
    92,630Total
    
    $
    64,370
    
    
    $
    21,956
    
    
    $
    222,3912002South America
    
    $
    466
    
    
    $
    (1,106
    )
    
    $
    189Africa
    
    
    38,199
    
    
    
    8,089
    
    
    
    50,707North America  Corporate
    
    
    137
    
    
    
    (2,127
    )
    
    
    23,239Total
    
    $
    38,802
    
    
    $
    4,856
    
    
    $
    74,1352001South America
    
    $
    548
    
    
    $
    (15,373
    )
    
    $
    8,429Africa
    
    
    24,105
    
    
    
    (3,019
    )
    
    
    27,572North America  Corporate
    
    
    5
    
    
    
    (2,192
    )
    
    
    551Total
    
    $
    24,658
    
    
    $
    (20,584
    )
    
    $
    36,552


21. Related Parties

Our President and CEO, Peter J. Bradford, participated in our private placement
in January 2002, paying $98,000 for 200,000 units, each unit consisting of one
share of our common stock and one half warrant to purchase our common shares at
$0.70 until January 11, 2004. In December 2003 Mr. Bradford exercised the
100,000 warrants obtained in this transaction.

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During 2003 we obtained legal services
from a legal firm to which one of our
directors is of counsel. Total value of all services purchased during 2003 was
$169,000. Our director did not personally perform any legal services for us
during 2003 nor did he benefit directly or indirectly from payments for the
services performed by the firm.

22. Generally Accepted Accounting Principles in Canada and the United States

(a) Balance Sheets Under US GAAP

Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada which differ from US GAAP.
The effect of applying US GAAP to our financial statements is shown below.

As of December 31,2003
    
    2002Cash and short term investments
    
    $
    89,970
    
    
    $
    20,016Accounts receivable
    
    
    790
    
    
    
    1,977Inventories
    
    
    12,661
    
    
    
    8,421Due from sale of property
    
    
    1,000
    
    
    
    1,000Marketable securities (note 1)
    
    
    
    
    
    
    1,454Other current assets
    
    
    514
    
    
    
    523Total current assets
    
    
    104,935
    
    
    
    33,391Restricted cash
    
    
    3,317
    
    
    
    3,365Acquisition, deferred exploration and development costs (note 2)
    
    
    
    
    
    
    Due from sale of property
    
    
    1,000
    
    
    
    2,000Mine construction in progress
    
    
    25,647
    
    
    
    610Property, plant and equipment, net
    
    
    18,202
    
    
    
    8,490Mining property (note 3)
    
    
    46,478
    
    
    
    14,216Other assets
    
    
    758
    
    
    
    572Total Assets
    
    $
    200,337
    
    
    $
    62,644Current liabilities
    
    $
    8,151
    
    
    $
    10,880Long term debt
    
    
    657
    
    
    
    1,727Asset retirement obligations (note 4)
    
    
    7,745
    
    
    
    7,246Total Liabilities
    
    
    16,553
    
    
    
    19,853Minority interest (notes 2 and 3)
    
    
    3,367
    
    
    
    1,722Share capital
    
    
    324,609
    
    
    
    198,070Accumulated comprehensive income (note 1)
    
    
    1,316
    
    
    
    1,864Deficit (note 4)
    
    
    (145,508
    )
    
    
    (158,865
    )Total Shareholders Equity
    
    
    180,417
    
    
    
    41,069Total Liabilities and Shareholders Equity
    
    $
    200,337
    
    
    $
    62,644


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(b) Statements of Operations under US GAAP

For the Years ended December 31,2003
    
    2002
    
    2001Net income/(loss) under Cdn GAAP
    
    $
    21,956
    
    
    $
    4,856
    
    
    $
    (20,584
    )Acquisition and deferred exploration expenditures expensed per US GAAP (note 2)
    
    
    (5,252
    )
    
    
    (529
    )
    
    
    13,815Gain On Sale of exploration property (note 5)
    
    
    
    
    
    
    8,066
    
    
    
    Effect of mining property depletion
    
    
    
    
    
    
    
    
    
    
    500Capitalized mine property acquisition costs expensed for US GAAP (note 3)
    
    
    (4,763
    )
    
    
    (7,246
    )
    
    
    Other
    
    
    
    
    
    
    (7
    )
    
    
    633Net income/(loss) under US GAAP before minority interest
    
    
    11,941
    
    
    
    5,140
    
    
    
    (5,636
    )Minority interest, as adjusted (note 2 and 3)
    
    
    933
    
    
    
    1,612
    
    
    
    334Net income/(loss) under US GAAP before cumulative effect of change in accounting method
    
    
    12,874
    
    
    
    6,752
    
    
    
    (5,302
    )Cumulative effect of change in accounting method (note 4)
    
    
    483
    
    
    
    Net Income/(loss) under US GAAP
    
    
    13,357
    
    
    
    6,752
    
    
    
    (5,302
    )Other comprehensive income  gain on marketable securities (note 1)
    
    
    (548
    )
    
    
    548
    
    
    
    Comprehensive income/(loss)
    
    $
    12,808
    
    
    $
    7,300
    
    
    $
    (5,302
    )Basic net income/(loss) per share under US GAAP before cumulative effect of change in accounting method
    
    $
    0.116
    
    
    $
    0.093
    
    
    $
    (0.126
    )Cumulative effect of change in accounting method
    
    
    0.004
    
    
    
    
    
    
    
    Basic net income/(loss) per share under US GAAP after cumulative effect of change in accounting method
    
    $
    0.120
    
    
    $
    0.093
    
    
    $
    (0.126
    )Diluted net income/(loss) per share under US GAAP before cumulative effect of change in accounting method
    
    $
    0.109
    
    
    $
    0.088
    
    
    $
    (0.126
    )Cumulative effect of change in accounting method
    
    
    0.004
    
    
    
    
    
    
    
    Diluted net income/(loss) per share under US GAAP after cumulative effect of change in accounting method
    
    $
    0.113
    
    
    $
    0.088
    
    
    $
    (0.126
    )


(c) Statements of Cash Flows under US GAAP

For the years ended December 31,2003
    
    2002
    
    2001Cash provided by (used in):Operating Activities
    
    $
    19,029
    
    
    $
    1,040
    
    
    $
    799Investing activities
    
    
    (57,993
    )
    
    
    (6,517
    )
    
    
    (3,556
    )Financing activities
    
    
    108,918
    
    
    
    24,984
    
    
    
    2,275Increase/(Decrease) in cash and cash equivalents for the year
    
    
    69,954
    
    
    
    19,507
    
    
    
    (482
    )Cash and cash equivalent beginning of the year
    
    
    20,016
    
    
    
    509
    
    
    
    991Cash and cash equivalents end of the year
    
    $
    89,970
    
    
    $
    20,016
    
    
    $
    509


(d) Notes

(1) Under US GAAP, marketable securities available for sale are marked to
market and gains or losses are recognized in Other Comprehensive Income until
the securities are sold. Under Cdn GAAP, marketable securities are accounted
for at the lower of cost or market.

(2) Under US GAAP, exploration, acquisition and general and administrative
costs related to exploration projects are charged to expense as incurred.
Under Cdn GAAP, exploration, acquisition and general and administrative costs
related to exploration projects are capitalized. In each subsequent period,
the exploration, engineering, financial and market information for each
exploration project is reviewed by management to determine if any of the
capitalized costs are impaired. If found impaired, the assets cost basis is
reduce in accordance with US GAAP provisions.

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(3) Under US GAAP, the initial purchase cost of mining properties is
capitalized. Pre-acquisition costs and subsequent development costs incurred,
until such time as a final feasibility study is completed, are expensed in the
period incurred. Under Cdn GAAP, the purchase costs of new mine properties as
well as all development costs incurred after acquisition are capitalized, and
subsequently reviewed each period for impairment. If found impaired, the
assets cost basis is reduce in accordance with US GAAP provisions.

(4) Asset retirement obligations: Under US GAAP the cumulative effect of
applying SFAS 143 Accounting for Asset Retirement Obligations in January 2003
is included in net income for the period. In Cdn GAAP, under CICA 3110 Asset
Retirement Obligations, the cumulative effect of the application of this new
standard was recorded as an adjustment to beginning deficit account.

(5) The US GAAP basis in the Gross Rosebel deferred exploration had been
expensed in prior periods. Thus under US GAAP the full amount of the sales
price was a gain. In Cdn GAAP, this propertys basis approximated the sales
price and thus there was no material impact on the statement of operations from
the sale.

(e) Impact of Recently Issued Accounting Standards

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 143, Accounting for Asset
Retirement Obligations, (SFAS 143), that established a uniform methodology
for accounting for estimated reclamation and abandonment costs. The statement
was effective January 1, 2003. We adopted the provisions of SFAS 143 as of
January 1, 2003. There was no material effect on prior years reported
financial statements. See Note 13 for the impact on our current years
consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS 145 updates, clarifies and simplifies existing accounting pronouncements
by rescinding SFAS 4, which required all gains and losses from extinguishment
of debt to be aggregated and, if material, classified as an extraordinary item,
net of related income tax effect. As a result, the criteria in Accounting
Principles Board Opinion No. 30 will now be used to classify those gains and
losses. Additionally, SFAS 145 amends SFAS 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions
be accounted for in the same manner as sale-leaseback transactions. Finally,
SFAS 145 also makes technical corrections to existing pronouncements. While
those corrections are not substantive in nature, in some instances, they may
change accounting practice. The provisions of SFAS 145 that amend SFAS 13 are
effective for transactions occurring after May 15, 2002, with all other
provisions of SFAS 145 being required to be adopted by us in our consolidated
financial statements for the first quarter of fiscal year 2003. We believe that
the adoption of SFAS 145 will not have a material impact on our consolidated
financial statements.

On July 30, 2002, the FASB issued SFAS 146 Accounting for Costs Associated
with Exit or Disposal Activities. SFAS 146 requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of
costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing or other exit or disposal activity. SFAS 146 replaces
the prior guidance that was provided by EITF Issue No. 94-3 Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring). SFAS 146
is to be applied prospectively to exit or disposal activities initiated after
December 31, 2002. We believe that the adoption of SFAS 146 will not have a
material impact on our consolidated financial statements.

In December 2002, the FASB issued SFAS 148 Accounting for Stock-Based
Compensation, Transition and Disclosure, an amendment of FASB Statement No.
123. SFAS 148 provides alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for
stock-based employee compensation. It also amends the disclosure provisions of
SFAS 123 to require prominent disclosure about the effects of reported net
income of an entitys accounting policy decisions with respect to stock-based
employee compensation. Finally, this statement amends APB Opinion No. 28,
Interim Financial Reporting, to require disclosure about those effects in
interim financial information. The amendments to SFAS 123 are effective for
financial statements for fiscal years ending after December 15, 2002. We
adopted the fair value accounting provisions of SFAS 123, and the impact of the
adoption is reflected in our financial statements as of December 31, 2003.

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In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting for Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, an interpretation of FASB 5, 57 and 107
and rescission of FASB Interpretation No. 34, Disclosure of Indirect Guarantees
of Indebtedness of Others (FIN 45). FIN 45 clarifies the requirements for a
guarantors accounting for and disclosure of certain guarantees issued and
outstanding. It also requires a guarantor to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. This interpretation also
incorporates without reconsideration the guidance in FASB Interpretation No.
34, which is being superseded. The adoption of FIN 45 did not have a material
effect on our consolidated financial statements.

In January 2003, the FASB issued SFAS Interpretation No. 46, Consolidation of
Variable Interest Entities, an interpretation of Accounting Research Bulletin
(ARB) No. 51, Consolidated Financial Statements (FIN 46). FIN 46 clarifies
the application of ARB No. 51 to certain entities in which equity investors do
not have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. The adoption of
FIN 46 did not have a material effect on our consolidated financial statements.

In April 2003, the FASB issued Statement No. 149 Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement, effective as
of June 30, 2003, amends Statement 133 for decisions made (1) as part of the
derivatives Implementation Group process that effectively required amendments
to Statement 133, (2) in connection with other FASB projects dealing with
financial instruments, and (3) in connection with implementation issues raised
in relation to the application of the definition of a derivative, in particular
the meaning if an initial net
investment that is smaller than would be required for other types of contracts
that would be expected to have similar response to changes in market factors,
the meaning of underlying, and the characteristics of a derivative that
contains financing components. The adoption of SFAS 149 did not have a material
effect on our consolidated financial statements.

In May 2003 the FASB issued Statement
No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. It requires
that an issuer classify a financial instrument that is within its scope as a
liability (or an asset in some circumstances). Many of these instruments were
previously classified as equity. Some of the provisions of this statement are
consistent with the current definition of liabilities in FASBs Concept
Statement No. 6, Elements of Financial Statements. The remaining provisions of
this statement are consistent with FASBs proposal to revise the definition to
encompass certain obligations that a reporting entity can or must settle by
issuing its own equity shares, depending on the nature of the relationship
established between the holder and the issuer. FASB 150 became effective May
31, 2003 and had no material effect on our consolidated financial statements.

23. Quarterly Financial Data  Unaudited

2003First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    QuarterNet Sales
    
    $
    15,141
    
    
    $
    12,693
    
    
    $
    18,801
    
    
    $
    17,735Gross Profit
    
    
    5,572
    
    
    
    3,434
    
    
    
    7,838
    
    
    
    9,236Net Income
    
    
    3,968
    
    
    
    3,984
    
    
    
    6,090
    
    
    
    7,914Basic Earning Per Common Share
    
    $
    0.041
    
    
    $
    0.037
    
    
    $
    0.053
    
    
    $
    0.067


2002First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    QuarterNet Sales
    
    $
    9,332
    
    
    $
    9,699
    
    
    $
    8,350
    
    
    $
    11,421Gross Profit
    
    
    2,447
    
    
    
    2,954
    
    
    
    1,762
    
    
    
    1,948Net Income
    
    
    1,454
    
    
    
    1,557
    
    
    
    834
    
    
    
    1,011Basic Earnings Per Common Share
    
    $
    0.024
    
    
    $
    0.024
    
    
    $
    0.010
    
    
    $
    0.009


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|       |                                                                                     
|------ | ------------------------------------------------------------------------------------
|ITEM 9 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no disagreements with PricewaterhouseCoopers LLP, our chartered
accountants, regarding any matter of accounting principles or practices or
financial statement disclosure.




ITEM 9A CONTROLS AND PROCEDURES

We carried out an evaluation, under the supervision and with the participation
of our principal executive officer and principal financial officer, of the
effectiveness of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
report. Based on this evaluation, the principal executive officer and principal
financial officer have concluded that our disclosure controls and procedures
are effective.

We periodically conduct an evaluation, under the supervision and with the
participation of our principal executive officer and principal financial
officer as well as our Audit Committee, of our internal controls and
procedures. There have been no significant changes in our internal controls or
in other factors that could significantly affect our internal controls
subsequent to the date of the most recent evaluation.




PART III




ITEMS 10, 11, 12, 13 AND 14

In accordance with General Instruction G(3), the information required by Part
III is hereby incorporated by reference from our proxy statement to be filed
pursuant to Regulation 14A not later than 120 days after the fiscal year
covered by this report.




PART IV




ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 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, 2003 and 2002
| | - |  | ------------------------------------------------------------

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| |  |  | Consolidated Statements of Operations for the
years ended December 31,
2003, 2002 and 2001
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | Consolidated Statements of Changes in Shareholders Equity
for the years ended December 31, 2003, 2002 and 2001
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | Consolidated Statements of Cash Flows for the
years ended December 31,
2003, 2002 and 2001
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | Notes to the Consolidated Financial Statements
| | - |  | ----------------------------------------------



| | 2. |  | Financial Statement Schedules
| | -- |  | -----------------------------

Financial Statement schedules have been omitted since they are either not
required, are not applicable, or the required information is shown in the
financial statements or related notes.

(b) Reports on Form 8-K

1. A report on Form 8-K was filed with the Securities and Exchange
Commission on October 31, 2003 pursuant to Items 7 and 12 to announce
financial results for the third quarter.

2. A report on form 8-K was filed with the Securities and
Exchange Commission on December 19, 2003 with the underwriting and
agency agreements entered into in connection with the December 2003
public offering.

(c) Exhibits

3(i)
    
    Incorporating Documents of the Company, including: Articles
of Arrangement dated May 14, 1992, with Plan of Arrangement
attached, with Certificate of Amendment with respect thereto dated
May 15, 1992; Certificate of Amendment dated May 15, 1992, with
Articles of Amendment; Certificate of Amendment dated March 26,
1993, with Articles of Amendment; Articles of Arrangement dated
March 7, 1995, with Plan of Arrangement attached, with Certificate
of Amendment with respect thereto dated March 14, 1995; Certificate
of Amendment dated July 29, 1996, with Articles of Amendment; and
Certificate of Amendment dated July 10, 2002, with Articles of
Amendment (all incorporated by reference to Exhibit 4.1 to the
Companys Form 8-K filed on January 23, 2003)3(ii)
    
    Bylaws of the Company, including: Bylaw Number One, amended
and restated as of April 3, 2002 (incorporated by reference to
Exhibit 4.3 to the Companys Registration Statement on Form S-3
(Reg. No. 333-102225) filed on December 27, 2002); Bylaw Number Two,
effective May 15, 1992 (incorporated by reference to Exhibit 4.2 to
the Companys Form 8-K filed on
January 23, 2003); and Bylaw Number Three, effective May 15, 1992
(incorporated by reference to Exhibit 4.2 to the Companys Form
8-K filed on January 23, 2003)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
    
    Rights Agreement dated as of April 24, 1996, between the
Company and the R-M Trust Company as Rights Agent (incorporated by
reference to Exhibit 4.3 to the Companys Form 8-K filed on January
23, 2003); Amendment to Rights Agreement between the Company and
CIBC Mellon Trust Company (formerly, the R-M Trust Company) dated as
of June 30, 1999 (incorporated by reference to Exhibit 10.1 to the
Companys Form 10-Q for the period ended June 30, 1999)4.3
    
    Warrants dated as of September 11, 2001 between the Company
and Barnato Exploration Limited (incorporated by
reference to Exhibit 4.4 to the Companys Form 10-K for the
year ended December 31, 2002)4.4
    
    Warrants dated as of September 11, 2001 between the Company
and Ware Limited (incorporated by
reference to Exhibit 4.5 to the Companys Form 10-K for the
year ended December 31, 2002)


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4.5
    
    Form of Warrant, dated as of January 2, 2002 (incorporated by
reference to the Companys Form S-3 (Reg. No. 333-82106) filed on
February 4, 2002)4.6
    
    Warrant Indenture, dated July 17, 2002, among the Company and
CIBC Mellon Trust, as Trustee, including the Form of Warrant
(incorporated by reference to Exhibit 4.1 to the Companys Form 8-K
filed on August 5, 2002)4.7
    
    Form of Underwriters Warrants (incorporated by reference to
Exhibit 4.3 to the Companys Registration Statement on Form S-3/A
(Reg. 333-91666) filed on July 15, 2002)4.8
    
    Form of Warrant, dated December 12, 2002 (incorporated by
reference to Exhibit 4.1 to the Companys Form 8-K filed on December
13, 2002)4.9
    
    Warrant Indenture, dated as of February 14, 2003, between
Golden Star Resources Ltd. and CIBC Mellon Trust Company, including
the Form of Warrant (incorporated by reference to Exhibit 4.1 of the
Companys Form 8-K filed on February 14, 2003)4.10
    
    Form of Underwriters Warrant, dated February 14, 2003
(incorporated by reference to Exhibit 4.2 of the Companys Form 8-K
filed on February 14, 2003)10.1
    
    Summary of Executive Management Performance Bonus Plan
(incorporated by reference to Exhibit 10.1 of the Companys Form 8-K
filed on January 23, 2003)10.2
    
    Amended and Restated 1997 Stock Option Plan, effective as of
April 3, 2002 (incorporated by reference to Exhibit 10.2 of the
Companys Form 8-K filed on January 23, 2003)10.3
    
    Form of Indemnification Agreement between the Company and its
officers and directors (incorporated by reference to Exhibit 10.3 of
the Companys Form 8-K filed on January 23, 2003)10.4
    
    Summary of Severance Arrangements between the Company and
certain executive officers (incorporated by reference to Exhibit
10.4 of the Companys Form 8-K filed on January 23, 2003)10.5
    
    Employees Stock Bonus Plan amended and restated to April 6,
2000 (incorporated by reference
to Exhibit 10(j) to
the Companys Form 10-K for the year ended December 31, 2000)10.6
    
    Guyanor Ressources S.A. Stock Option Plan amended and
restated as of June 15, 1999 (English translation) (incorporated by
reference to Exhibit 10.35(a) to the Companys Form 10-K for the
year ended December 31, 1999)10.7
    
    Employment contract with Mr. Peter Bradford dated November 1,
1999 (incorporated by reference to Exhibit 10.38 (c) to the
Companys Form 10-K for the year ended December 31, 1999)10.8
    
    Employment agreement with Mr. Allan J. Marter dated November
8, 1999 (incorporated by reference to Exhibit 10.2 to the Companys
Form 10-Q for the quarter ended September 30, 2003)10.9
    
    Employment agreement with Mr. Douglas Jones dated February
16, 2003 (incorporated by reference to Exhibit 10.2 to the Companys
Form 10-Q for the quarter ended March 31, 2003)10.10
    
    Employment agreement with Mr. Bruce Higson-Smith dated
September 22, 2003 (incorporated by reference to Exhibit 10.1 to the
Companys Form 10-Q for the quarter ended September 30, 2003)


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10.11
    
    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,
200110.12
    
    Agreement for the Sale and Purchase of Certain of the Assets
of Satellite Goldfields Limited between The Law Debenture Trust
Corporation P.L.C. and Wexford Goldfields Limited dated March 1,
2002 (incorporated by reference to Exhibit 2.1 of the Companys Form
8-K filed on September 30, 2002)10.13
    
    Agreement for the Sale and Purchase of Certain of the Assets
of Satellite Goldfields Limited between Satellite Goldfields
Limited, The Law Debenture Trust Corporation P.L.C. and Wexford
Goldfields Limited dated March 15, 2002 (incorporated by reference
to Exhibit 2.2 of the Companys Form 8-K filed on September 30,
2002)10.14
    
    Common Terms Agreement for Wassa Gold Project between
Wexford Goldfields Limited, any other Obligor Party thereto from
time to time, Standard Bank London Limited and The Law Debenture
Trust Corporation P.L.C. dated June 26, 2002 (incorporated by
reference to Exhibit 2.3 of the Companys Form 8-K filed on
September 30, 2002)10.15
    
    Wassa Project Facility Agreement between Wexford Goldfields
Limited, the lenders listed in Schedule 1 thereto and Standard Bank
London Limited dated June 25, 2002 (incorporated by reference to
Exhibit 2.4 of the Companys Form 8-K filed on September 30, 2002)10.16
    
    Royalty Agreement between Wexford Goldfields Limited and The
Law Debenture Trust Corporation P.L.C. dated June 26, 2002
(incorporated by reference to Exhibit 2.5 of the Companys Form 8-K
filed on September 30, 2002)10.17
    
    Agreement for the Sale and Purchase of 90% of the Issued
Capital of Wexford Goldfields Limited between The Law Debenture
Trust Corporation P.L.C. and Wasford Holdings dated June 26, 2002,
and amendment thereto dated September 13, 2002 (incorporated by
reference to Exhibit 2.6 of the Companys Form 8-K filed on
September 30, 2002)10.18
    
    Support Agreement for Wassa Gold Project between Golden Star
Resources Ltd. and Standard Bank London Limited dated September 13,
2002 (incorporated by reference to Exhibit 2.7 of the Companys Form
8-K filed on September 30, 2002)10.19
    
    Wassa Project Conversion Agreement between Wexford
Goldfields Limited, Bayerische Hypo-Und Vereinsbank AG, Dresdner
Bank AG London Branch, Fortis Bank (Nederland) N.V. and Standard
Bank London Limited dated September 13, 2002 (incorporated by
reference to Exhibit 2.8 of the Companys Form 8-K filed on
September 30, 2002)10.20
    
    Wassa Gold Project Second Royalty Agreement between Wexford
Goldfields Limited, the persons from time to time party thereto and
Standard Bank London Limited dated September 13, 2002 (incorporated
by reference to Exhibit 2.9 of the Companys Form 8-K filed on
September 30, 2002)


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10.21
    
    Sale of Shares Agreement with Barnato Exploration Ltd.,
dated June 21, 2001, for the purchase of Prestea mining lease rights
and Barnex Isle of Man (incorporated by reference to Exhibit 10(z)
of the Companys Form 10-K for the year ended December 31, 2001)10.22
    
    Agreement, dated November 16, 2001, between Bogoso Gold
Limited and Prestea Gold Resources Limited for the purchase of
Prestea mining lease rights and option payments (incorporated by
reference to Exhibit 10.2 to the Companys Form 8-K filed on March
6, 2002)10.23
    
    Share and Asset Acquisition Agreement, dated August 6, 2001,
among Anvil Mining NL, Anvil International Finance Limited and the
Company, regarding purchase of 20% interest in Bogoso Gold Limited
(incorporated by reference to Exhibit 10(bb) to the Companys Form
10-K for the year ended December 31, 2001)10.24
    
    Guiana Shield Transaction Agreement with Cambior Inc. dated
October 25, 2001 for the sale and swap of Golden Stars interest in
Gross Rosebel and other properties (incorporated by reference to
Exhibit 10.3 to the Companys Form 8-K filed March 6, 2002)10.25
    
    Mining lease, dated June 29, 2001, between the Government of
the Republic of Ghana and Bogoso Gold Limited, relating to the
Prestea property (incorporated by reference to Exhibit 10.1 to the
Companys Form 8-K filed on March 6, 2002)10.26
    
    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)10.27
    
    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)21
    
    Subsidiaries of the Company23
    
    Consent of PricewaterhouseCoopers LLP31.1
    
    Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certificate of Principal Executive Officer pursuant to 18 U.S.C.
1350 (Section 906 of the Sarbanes-Oxley Act of 2002)32.2
    
    Certificate of Principal Financial Officer pursuant to 18
U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)


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SIGNATURES

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

GOLDEN STAR RESOURCES LTD.
Registrant

By:
    
    /s/ Peter J. BradfordPeter J. Bradford
President and Chief Executive OfficerDate:
    
    January 30, 2004


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

By:
    
    /s/ Peter J. Bradford
    
    By:
    
    /s/ Allan J. MarterName:
    
    Peter J. Bradford
    
    Name:
    
    Allan J. MarterTitle:
    
    President and Chief Executive Officer
    
    Title:
    
    Senior Vice-President and Chief Financial OfficerDate:
    
    January 30, 2004
    
    Date:
    
    January 30, 2004By:
    
    /s/ James E. Askew
    
    By:
    
    /s/ David K. FaginName:
    
    James E. Askew
    
    Name:
    
    David K. FaginTitle:
    
    Director
    
    Title:
    
    DirectorDate:
    
    January 30, 2004
    
    Date:
    
    January 30, 2004By:
    
    /s/ Ian MacGregor
    
    By:
    
    /s/ Lars-Eric JohanssonName:
    
    Ian MacGregor
    
    Name:
    
    Lars-Eric JohanssonTitle:
    
    Director
    
    Title:
    
    DirectorDate:
    
    January 30, 2004
    
    Date:
    
    January 30, 2004By:
    
    /s/ Robert R. StoneName:
    
    Robert R. StoneTitle:
    
    DirectorDate:
    
    January 30, 2004


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EXHIBITS

3(i)
    
    Incorporating Documents of the Company, including: Articles
of Arrangement dated May 14, 1992, with Plan of Arrangement
attached, with Certificate of Amendment with respect thereto dated
May 15, 1992; Certificate of Amendment dated May 15, 1992, with
Articles of Amendment; Certificate of Amendment dated March 26,
1993, with Articles of Amendment; Articles of Arrangement dated
March 7, 1995, with Plan of Arrangement attached, with Certificate
of Amendment with respect thereto dated March 14, 1995; Certificate
of Amendment dated July 29, 1996, with Articles of Amendment; and
Certificate of Amendment dated July 10, 2002, with Articles of
Amendment (all incorporated by reference to Exhibit 4.1 to the
Companys Form 8-K filed on January 23, 2003)3(ii)
    
    Bylaws of the Company, including: Bylaw Number One, amended
and restated as of April 3, 2002 (incorporated by reference to
Exhibit 4.3 to the Companys Registration Statement on Form S-3
(Reg. No. 333-102225) filed on December 27, 2002); Bylaw Number Two,
effective May 15, 1992 (incorporated by reference to Exhibit 4.2 to
the Companys Form 8-K filed on January 23, 2003); and Bylaw Number
Three, effective May 15, 1992 (incorporated by reference to Exhibit
4.2 to the Companys Form 8-K filed on January 23, 2003)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
    
    Rights Agreement dated as of April 24, 1996, between the
Company and the R-M Trust Company as Rights Agent (incorporated by
reference to Exhibit 4.3 to the Companys Form 8-K filed on January
23, 2003); Amendment to Rights Agreement between the Company and
CIBC Mellon Trust Company (formerly, the R-M Trust Company) dated as
of June 30, 1999 (incorporated by reference to Exhibit 10.1 to the
Companys Form 10-Q for the period ended June 30, 1999)4.3
    
    Warrants dated as of September 11, 2001 between the Company
and Barnato Exploration Limited (incorporated by
reference to Exhibit 4.4 to the Companys Form 10-K for the
year ended December 31, 2002)4.4
    
    Warrants dated as of September 11, 2001 between the Company
and Ware Limited (incorporated by
reference to Exhibit 4.5 to the Companys Form 10-K for the
year ended December 31, 2002)4.5
    
    Form of Warrant, dated as of January 2, 2002 (incorporated by
reference to the Companys Form S-3 (Reg. No. 333-82106) filed on
February 4, 2002)4.6
    
    Warrant Indenture, dated July 17, 2002, among the Company and
CIBC Mellon Trust, as Trustee, including the Form of Warrant
(incorporated by reference to Exhibit 4.1 to the Companys Form 8-K
filed on August 5, 2002)4.7
    
    Form of Underwriters Warrants (incorporated by reference to
Exhibit 4.3 to the Companys Registration Statement on Form S-3/A
(Reg. 333-91666) filed on July 15, 2002)4.8
    
    Form of Warrant, dated December 12, 2002 (incorporated by
reference to Exhibit 4.1 to the Companys Form 8-K filed on December
13, 2002)4.9
    
    Warrant Indenture, dated as of February 14, 2003, between
Golden Star Resources Ltd. and CIBC Mellon Trust Company, including
the Form of Warrant (incorporated by reference to Exhibit 4.1 of the
Companys Form 8-K filed on February 14, 2003)4.10
    
    Form of Underwriters Warrant, dated February 14, 2003
(incorporated by reference to Exhibit 4.2 of the Companys Form 8-K
filed on February 14, 2003)


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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
    
    Amended and Restated 1997 Stock Option Plan, effective as of
April 3, 2002 (incorporated by reference to Exhibit 10.2 of the
Companys Form 8-K filed on January 23, 2003)10.3
    
    Form of Indemnification Agreement between the Company and its
officers and directors (incorporated by reference to Exhibit 10.3 of
the Companys Form 8-K filed on January 23, 2003)10.4
    
    Summary of Severance Arrangements between the Company and
certain executive officers (incorporated by reference to Exhibit
10.4 of the Companys Form 8-K filed on January 23, 2003)10.5
    
    Employees Stock Bonus Plan amended and restated to April 6,
2000 (incorporated by reference to Exhibit 10(j) to the Companys
Form 10-K for the year ended December 31, 2000)10.6
    
    Guyanor Ressources S.A. Stock Option Plan amended and
restated as of June 15, 1999 (English translation) (incorporated by
reference to Exhibit 10.35(a) to the Companys Form 10-K for the
year ended December 31, 1999)10.7
    
    Employment contract with Mr. Peter Bradford dated November 1,
1999 (incorporated by reference to Exhibit 10.38 (c) to the
Companys Form 10-K for the year ended December 31, 1999)10.8
    
    Employment agreement with Mr. Allan J. Marter dated November
8, 1999 (incorporated by reference to Exhibit 10.2 to the Companys
Form 10-Q for the quarter ended September 30, 2003)10.9
    
    Employment agreement with Mr. Douglas Jones dated February
16, 2003 (incorporated by reference to Exhibit 10.2 to the Companys
Form 10-Q for the quarter ended March 31, 2003)10.10
    
    Employment agreement with Mr. Bruce Higson-Smith dated
September 22, 2003 (incorporated by reference to Exhibit 10.1 to the
Companys Form 10-Q for the quarter ended September 30, 2003)10.11
    
    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,
200110.12
    
    Agreement for the Sale and Purchase of Certain of the Assets
of Satellite Goldfields Limited between The Law Debenture Trust
Corporation P.L.C. and Wexford Goldfields Limited dated March 1,
2002 (incorporated by reference to Exhibit 2.1 of the Companys Form
8-K filed on September 30, 2002)


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10.13
    
    Agreement for the Sale and Purchase of Certain of the Assets
of Satellite Goldfields Limited between Satellite Goldfields
Limited, The Law Debenture Trust Corporation P.L.C. and Wexford
Goldfields Limited dated March 15, 2002 (incorporated by reference
to Exhibit 2.2 of the Companys Form 8-K filed on September 30,
2002)10.14
    
    Common Terms Agreement for Wassa Gold Project between
Wexford Goldfields Limited, any other Obligor Party thereto from
time to time, Standard Bank London Limited and The Law Debenture
Trust Corporation P.L.C. dated June 26, 2002 (incorporated by
reference to Exhibit 2.3 of the Companys Form 8-K filed on
September 30, 2002)10.15
    
    Wassa Project Facility Agreement between Wexford Goldfields
Limited, the lenders listed in Schedule 1 thereto and Standard Bank
London Limited dated June 25, 2002 (incorporated by reference to
Exhibit 2.4 of the Companys Form 8-K filed on September 30, 2002)10.16
    
    Royalty Agreement between Wexford Goldfields Limited and The
Law Debenture Trust Corporation P.L.C. dated June 26, 2002
(incorporated by reference to Exhibit 2.5 of the Companys Form 8-K
filed on September 30, 2002)10.17
    
    Agreement for the Sale and Purchase of 90% of the Issued
Capital of Wexford Goldfields Limited between The Law Debenture
Trust Corporation P.L.C. and Wasford Holdings dated June 26, 2002,
and amendment thereto dated September 13, 2002 (incorporated by
reference to Exhibit 2.6 of the Companys Form 8-K filed on
September 30, 2002)10.18
    
    Support Agreement for Wassa Gold Project between Golden Star
Resources Ltd. and Standard Bank London Limited dated September 13,
2002 (incorporated by reference to Exhibit 2.7 of the Companys Form
8-K filed on September 30, 2002)10.19
    
    Wassa Project Conversion Agreement between Wexford
Goldfields Limited, Bayerische Hypo-Und Vereinsbank AG, Dresdner
Bank AG London Branch, Fortis Bank (Nederland) N.V. and Standard
Bank London Limited dated September 13, 2002 (incorporated by
reference to Exhibit 2.8 of the Companys Form 8-K filed on
September 30, 2002)10.20
    
    Wassa Gold Project Second Royalty Agreement between Wexford
Goldfields Limited, the persons from time to time party thereto and
Standard Bank London Limited dated September 13, 2002 (incorporated
by reference to Exhibit 2.9 of the Companys Form 8-K filed on
September 30, 2002)10.21
    
    Sale of Shares Agreement with Barnato Exploration Ltd.,
dated June 21, 2001, for the purchase of Prestea mining lease rights
and Barnex Isle of Man (incorporated by reference to Exhibit 10(z)
of the Companys Form 10-K for the year ended December 31, 2001)10.22
    
    Agreement, dated November 16, 2001, between Bogoso Gold
Limited and Prestea Gold Resources Limited for the purchase of
Prestea mining lease rights and option payments (incorporated by
reference to Exhibit 10.2 to the Companys Form 8-K filed on March
6, 2002)10.23
    
    Share and Asset Acquisition Agreement, dated August 6, 2001,
among Anvil Mining NL, Anvil International Finance Limited and the
Company, regarding purchase of 20% interest in Bogoso Gold Limited
(incorporated by reference to Exhibit 10(bb) to the Companys Form
10-K for the year ended December 31, 2001)10.24
    
    Guiana Shield Transaction Agreement with Cambior Inc. dated
October 25, 2001 for the sale and swap of Golden Stars interest in
Gross Rosebel and other properties (incorporated by reference to
Exhibit 10.3 to the Companys Form 8-K filed March 6, 2002)


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10.25
    
    Mining lease, dated June 29, 2001, between the Government of
the Republic of Ghana and Bogoso Gold Limited, relating to the
Prestea property (incorporated by reference to Exhibit 10.1 to the
Companys Form 8-K filed on March 6, 2002)10.26
    
    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)10.27
    
    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)21
    
    Subsidiaries of the Company23
    
    Consent of PricewaterhouseCoopers LLP31.1
    
    Certification of Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certificate of Principal Executive Officer pursuant to 18 U.S.C.
1350 (Section 906 of the Sarbanes-Oxley Act of 2002)32.2
    
    Certificate of Principal Financial Officer pursuant to 18
U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)


89